Document:

PLEDGE
      AGREEMENT

    

    THIS
      PLEDGE AGREEMENT (the “Pledge Agreement”) is made and dated this 6th
      day of
      June, 2006 by and among Patient Safety Technologies, Inc., a Delaware
      corporation (“Debtor”), and Alan E. Morelli, an individual (“Secured
      Party”).

    

    RECITALS

    

    A. Secured
      Party has agreed to extend credit to Debtor on the terms and subject to the
      conditions set forth in that certain Secured Convertible Promissory Note dated
      as of even date herewith (as the same may be amended, extended or replaced
      from
      time to time, the “Note”). The Note is being issued pursuant to that certain
      Note and Warrant Purchase Agreement dated as of even date herewith (as the
      same
      may be amended, extended or replaced from time to time, the “Purchase
      Agreement”). Capitalized terms used herein without definition have the meanings
      assigned thereto in the Purchase Agreement.

    

    B. To
      induce
      Secured Party to extend such credit, Debtor has agreed to pledge and to grant
      to
      Secured Party a security interest in and lien upon certain property of Debtor
      described more particularly herein.

    

    NOW,
      THEREFORE, in consideration of the above Recitals and for other good and
      valuable consideration, the receipt and adequacy of which are hereby
      acknowledged, the parties hereto hereby agree as follows:

    

    AGREEMENT

    

    1. Pledge.

    

    Debtor
      hereby pledges, assigns and grants to Secured Party a security interest in
      the
      property described in Section 2 below (collectively and severally, the
“Collateral”) to secure payment and performance of the Obligations (as defined
      below).

    

    2. Collateral.

    

    The
      Collateral consists of all right, title and interest of Debtor in and to the
      following, whether now existing or hereafter acquired: (a) all equity interests
      listed on Schedule 1 to this Pledge Agreement and all other equity interests
      obtained by Debtor and the certificates representing all such equity interests
      (the “Pledged Interests”) and all security accounts, deposit accounts, and
      commodity accounts in which such equity interests are held; (b) all other
      property that may be delivered to and held by Secured Party pursuant to the
      terms of this Pledge Agreement; (c) all payments of dividends, cash, securities,
      instruments and other property from time to time received, receivable or
      otherwise distributed, in respect of, in exchange for or upon the conversion
      of
      the securities referred to in subparagraph
      (a)
      above;
      (d) all rights, powers and privileges of Debtor with respect to the Collateral
      referred to above; and (e) all proceeds of the foregoing Collateral.

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    Upon
      delivery to Secured Party (a) any stock certificates, promissory notes or other
      securities now or hereafter included in the Collateral (the “Pledged
      Securities”) shall be accompanied by stock powers duly executed in blank or
      other instruments of transfer satisfactory to Secured Party and by such other
      endorsement, instruments and documents as Secured Party may reasonably request
      and (b) all other property comprising part of the Collateral shall be
      accompanied by proper instruments of assignment duly executed by Debtor and
      such
      other endorsements, instruments or documents as Secured Party may reasonably
      request. Debtor promises promptly to deliver to Secured Party any and all
      Pledged Securities and any and all certificates or other instruments or
      documents representing the Collateral. Each delivery of Pledged Securities
      shall
      be accompanied by a schedule describing the securities theretofore and then
      being pledged hereunder, which schedule shall be attached hereto as Schedule
      I
      and made a part hereof. Each schedule so delivered shall supersede any prior
      schedules so delivered.

    

    As
      of the
      date of this Pledge Agreement, all of the Pledged Securities are maintained
      by
      Debtor in an account (the “Securities Account”) with Ault Glazer Bodnar
      Securities, LLC (the “Broker”). Substantially concurrently with the execution
      and delivery of this Pledge Agreement, Debtor, Secured Party and Broker are
      entering into an Account Control Agreement (as the same may be amended, extended
      or replaced from time to time, the “Account Control Agreement”). The provisions
      of the preceding paragraph relating to delivery of Pledged Securities shall
      not
      apply to any Pledged Securities maintained in the Securities Account so long
      as
      the Account Control Agreement remains in effect. For all purposes of this Pledge
      Agreement, Pledged Securities maintained in the Securities Account shall be
      deemed to be “delivered” to Secured Party so long as the Account Control
      Agreement remains in effect. 

    

    3. Obligations.

    

    The
      Obligations secured by this Pledge Agreement consists of any and all debts,
      obligations, and liabilities of Debtor to Secured Party arising out of or
      related to the Note, the Purchase Agreement and this Pledge Agreement (whether
      principal, interest, fees or otherwise, whether now existing or hereafter
      arising, whether voluntary or involuntary, whether or not jointly owed with
      others, whether direct or indirect, absolute or contingent, contractual or
      tortious, liquidated or unliquidated, arising by operation of law or otherwise,
      whether or not from time to time decreased or extinguished and later increased,
      created or incurred and whether or not extended, modified, rearranged,
      restructured, refinanced, or replaced, including without limitation,
      modifications to interest rates or other payment terms of such debts,
      obligations, or liabilities).

    

    
      
         

      

      
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    4. Representations
      and Warranties. 

    

    In
      addition to all representations and warranties of Debtor set forth in the Note
      and the Purchase Agreement which are incorporated herein by this reference,
      Debtor hereby represents and warrants that: (a) the Pledged Interests represent
      that percentage set forth on Schedule I of the issued and outstanding equity
      interests of the issuer with respect thereto, based on the most recent filings
      by the respective issuer if such issuer is a publicly reporting company, and
      in
      all other cases based on the corporate records of such issuer, in each case
      as
      of the date of this Agreement; (b) except for the security interest granted
      hereunder, Debtor (i) is and will at all times continue to be the direct owner,
      beneficially and of record, of the Pledged Securities indicated on Schedule
      I,
      (ii) holds the same free and clear of all liens except the lien in favor of
      Secured Party, and the lien in favor of the Herbert Langsam Revocable Trust
      (the
“Trust”), which lien has been subordinated pursuant to a Subordination Agreement
      among Secured Party, the Trust and Debtor dated as of even date herewith, (iii)
      will not dispose of or make any assignment, pledge, hypothecation or transfer
      of, or create or permit to exist any security interest in or other lien on,
      the
      Collateral, other than pursuant hereto, and (iv) will cause any and all
      Collateral, whether for value paid by Debtor or otherwise, to be forthwith
      pledged or assigned hereunder and deposited with Secured Party pursuant hereto
      or, if the Account Control Account remains in effect, deposited in the
      Securities Account and; (c) Debtor (i) has the power and authority to pledge
      the
      Collateral in the manner hereby done or contemplated and (ii) will defend its
      title or interest thereto or therein against any and all liens (other than
      the
      liens created by this Pledge Agreement), however arising, of all persons
      whomsoever; (d) no consent of any other person (including stockholders or
      creditors of Debtor and stockholders or creditors of any issuer of Pledged
      Securities) and no consent or approval of any governmental authority or any
      securities exchange was or is necessary to the validity or enforceability of
      the
      pledge effected hereby, except such consents as have been obtained and are
      in
      full force and effect; (e) by virtue of the execution and delivery by Debtor
      of
      this Pledge Agreement, when the Pledged Securities, certificates or other
      documents representing or evidencing the Collateral are delivered to Secured
      Party in accordance with this Pledge Agreement or, if a security interest in
      the
      Collateral may not under applicable law be perfected by possession, then upon
      the filing of appropriate financing statements, Secured Party will obtain a
      valid and perfected first lien upon and security interest in such Pledged
      Securities as security for the payment and performance of the Obligations;
      (f)
      all of the pledged equity interests have been duly authorized and validly issued
      and are fully paid and nonassessable and are in certificated form; provided
      that
      the representation and warranty set forth in this clause (f) is to the best
      knowledge of Debtor with respect to equity interests in any issuer that is
      not a
      subsidiary of Debtor; provided, further, however, that in the event that any
      such pledged equity interests do not comply with the representation and warranty
      set forth in this clause (f), Debtor shall be required to take all necessary
      action to cause such pledged equity interests to satisfy the representation
      and
      warranty set forth in this clause (f) within 30 days after obtaining knowledge
      of same; (g) the Collateral will not be represented by any certificates, notes,
      securities, documents, or other instruments other than those delivered
      hereunder; and (h) the terms of the governing documentation for the persons
      whose equity interests are pledged under this Pledge Agreement will at all
      times
      expressly provide that the equity interests are securities governed by Article
      8
      of the Uniform Commercial Code as in effect in the State of California and
      that
      such equity interests will at all times be represented by a certificate or
      certificates duly delivered to Secured Party under this Pledge
      Agreement.

    

    
      
         

      

      
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    5. Registration
      in Nominee Name; Denominations.

    

    After
      the
      occurrence and during the continuance of an Event of Default, Secured Party
      shall have the right (in its sole and absolute discretion) to hold the Pledged
      Securities in its own name as pledgee, the name of its nominee (as pledgee
      or as
      sub-agent) or the name of Debtor, endorsed or assigned in blank or in favor
      of
      Secured Party. Debtor will promptly give to Secured Party copies of any notices
      or other communication received by it with respect to the Pledged Securities
      registered in the name of Debtor. After the occurrence and during the
      continuance of an Event of Default, Secured Party shall have the right to
      exchange the certificates representing Pledged Securities for certificates
      of
      smaller or larger denominations for any purpose consistent with this Pledge
      Agreement. Debtor hereby grants to Secured Party an exclusive, irrevocable
      power
      of attorney, with full power and authority in the place and stead of Debtor
      to
      take all such action permitted under this Section 5. Debtor agrees to reimburse
      Secured Party upon demand for any costs and expenses, including, without
      limitation, reasonable attorneys’ fees, Secured Party may incur while acting as
      Debtor’s attorney-in-fact hereunder, all of which costs and expenses are
      included in the Obligations secured hereby. It is further agreed and understood
      between the parties hereto that such care as Secured Party gives to the
      safekeeping of its own property of like kind shall constitute reasonable care
      of
      the Collateral when in Secured Party’s possession; provided, however, that
      Secured Party shall not be required to make any presentment, demand or protest,
      or give any notice and need not take any action to preserve any rights against
      any prior party or any other person in connection with the Obligations or with
      respect to the Collateral.

    

    6. Administration
      of the Pledged Securities.

    

    (a) Until
      there shall have occurred and be continuing an Event of Default, Debtor shall
      be
      entitled to vote or consent with respect to the Pledged Securities in any manner
      not inconsistent with this Pledge Agreement or any document or instrument
      delivered or to be delivered pursuant to or in connection herewith and to
      receive all regular dividends paid with respect to the Pledged Securities;
      provided, however, that Debtor will not be entitled to exercise any such right
      if the result thereof could materially and adversely affect the rights inuring
      to a holder of the Pledged Securities or the rights and remedies of Secured
      Party under this Pledge Agreement, the Purchase Agreement or the Note or the
      ability of Secured Party to exercise the same. If there shall have occurred
      and
      be continuing an Event of Default and Secured Party shall have notified Debtor
      that Secured Party desires to exercise its proxy rights with respect to all
      or a
      portion of the Pledged Securities, Debtor hereby grants to Secured Party an
      irrevocable proxy for the Pledged Securities pursuant to which proxy Secured
      Party shall be entitled to vote or consent, in its discretion, and in such
      event
      Debtor agrees to deliver to Secured Party such further evidence of the grant
      of
      such proxy as Secured Party may request. Upon the occurrence and during the
      continuance of an Event of Default, all rights of Debtor to exercise the voting
      and consensual rights and powers it is entitled to exercise pursuant to this
      Pledge Agreement shall cease, and all such rights shall thereupon become vested
      in Secured Party, which shall have the sole and exclusive right and authority
      to
      exercise such voting and consensual rights and powers.

    

    
      
         

      

      
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    (b) In
      the
      event that at any time or from time to time after the date hereof, Debtor,
      as
      record and beneficial owner of the Pledged Securities, shall receive or shall
      become entitled to receive, any dividend or any other distribution whether
      in
      securities or property by way of stock split, spin-off, split-up or
      reclassification, combination of shares or the like, or in case of any
      reorganization, consolidation or merger, and Debtor, as record and beneficial
      owner of the Pledged Securities, shall thereby be entitled to receive securities
      or property in respect of such Pledged Securities, then and in each such case,
      Debtor shall deliver to Secured Party and Secured Party shall be entitled to
      receive and retain all such securities or property as part of the Pledged
      Securities as security for the payment and performance of the Obligations.
      

    

    (c) Upon
      the
      occurrence and during the continuance of an Event of Default, all rights of
      Debtor to regular dividends and distributions that Debtor is authorized to
      receive pursuant to this Pledge Agreement shall cease, and all such rights
      shall
      thereupon become vested in Secured Party, which shall have the sole and
      exclusive right and authority to receive and retain such dividends and
      distributions. All dividends and distributions received by Debtor contrary
      to
      the provisions of this Pledge Agreement shall be held in trust for the benefit
      of Secured Party, shall be segregated from other property or funds of Debtor
      and
      shall forthwith be delivered to Secured Party upon demand in the same form
      as so
      received (with any necessary endorsement). Any and all money and other property
      paid over to or received by Secured Party pursuant to the provisions of this
      subparagraph (c) shall be retained by Secured Party in an account to be
      established by Secured Party upon receipt of such money or other property and
      shall constitute Collateral under this Pledge Agreement to be applied in
      accordance herewith.

    

    (d) Upon
      the
      occurrence and during the continuance of an Event of Default, Secured Party
      is
      authorized to sell the Pledged Securities and, at any such sale of any of the
      Pledged Securities, if it deems it advisable to do so, to restrict the
      prospective bidders or purchasers to persons or entities who (1) will represent
      and agree that they are purchasing for their own account, for investment, and
      not with a view to the distribution or sale of any of the Pledged Securities;
      and (2) satisfy the offeree and purchaser requirements for a valid private
      placement transaction under Section 4(2) of the Securities Act of 1933, as
      amended (the “Act”), and under Securities and Exchange Commission Release Nos.
      33-6383; 34-18524; 35-22407; 39-700; IC-12264; AS-306, or under any similar
      statute, rule or regulation. Debtor agrees that disposition of the Pledged
      Securities pursuant to any private sale made as provided above may be at prices
      and on other terms less favorable than if the Pledged Securities were sold
      at
      public sale, and that Secured Party has no obligation to delay the sale of
      any
      Pledged Securities for public sale under the Act. Debtor agrees that a private
      sale or sales made under the foregoing circumstances shall be deemed to have
      been made in a commercially reasonable manner. In the event that Secured Party
      elects to sell the Pledged Securities, or part of them, and there is a public
      market for the Pledged Securities, in a public sale Debtor shall use its best
      efforts to register and qualify the Pledged Securities, or applicable part
      thereof, under the Act and all state Blue Sky or securities laws required by
      the
      proposed terms of sale and all expenses thereof shall be payable by Debtor,
      including, but not limited to, all costs of (i) registration or qualification
      of, under the Act or any state Blue Sky or securities laws or pursuant to any
      applicable rule or regulation issued pursuant thereto, any Pledged Securities,
      and (ii) sale of such Pledged Securities, including, but not limited to,
      brokers’ or underwriters’ commissions, fees or discounts, accounting and legal
      fees, costs of printing and other expenses of transfer and sale.

    

    
      
         

      

      
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    (e) If
      any
      consent, approval or authorization of any state, municipal or other governmental
      department, agency or authority should be necessary to effectuate any sale
      or
      other disposition of the Pledged Securities, or any part thereof, Debtor will
      execute such applications and other instruments as may be required in connection
      with securing any such consent, approval or authorization, and will otherwise
      use its best efforts to secure the same.

    

    (f) Nothing
      contained in this Section 6 shall be deemed to limit the other obligations
      of
      Debtor contained in the Purchase Agreement, the Note or this Pledge Agreement
      and the rights of Secured Party hereunder or thereunder.

    

    7. Default.

    

    An
      event
      of default (an “Event of Default”) shall be deemed to exist under this Pledge
      Agreement if Debtor shall fail to observe any term or condition of the Note,
      the
      Purchase Agreement or this Pledge Agreement (in each case after any applicable
      cure period expressly provided in such instrument or agreement).

    

    8. Remedies.

    

    (a) Upon
      the
      occurrence of an Event of Default, Secured Party may, without notice to or
      demand on Debtor and in addition to all rights and remedies available to Secured
      Party with respect to the Obligations, at law, in equity or otherwise, do any
      one or more of the following: 

    

    (1) Foreclose
      or otherwise enforce Secured Party’s security interest in any manner permitted
      by law or provided for in this Pledge Agreement.

    

    (2) Sell,
      lease, license or otherwise dispose of any Collateral at one or more public
      or
      private sales at Secured Party’s place of business or any other place or places,
      including, without limitation, any broker’s board or securities exchange,
      whether or not such Collateral is present at the place of sale, for cash or
      credit or future delivery, on such terms and in such manner as Secured Party
      may
      determine.

    

    (3) Recover
      from Debtor all costs and expenses, including, without limitation, reasonable
      attorneys’ fees (including the allocated cost of internal counsel), incurred or
      paid by Secured Party in exercising any right, power or remedy provided by
      this
      Pledge Agreement.

    

    (4) In
      connection with the disposition of any Collateral, disclaim any warranty
      relating to title, possession or quiet enjoyment.

    

    (b) Unless
      the Collateral threatens to decline speedily in value or is of a type
      customarily sold on a recognized market, Debtor shall be given ten (10) days’
prior notice of the time and place of any public sale or of the time after
      which
      any private sale or other intended disposition of Collateral is to be made
      pursuant to this Pledge Agreement, which notice Debtor hereby agrees shall
      be
      deemed reasonable notice thereof. 

    

    
      
         

      

      
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    (c) Upon
      any
      sale or other disposition pursuant to this Pledge Agreement, Secured Party
      shall
      have the right to deliver, assign and transfer to the purchaser thereof the
      Collateral or portion thereof so sold or disposed of. Each purchaser at any
      such
      sale or other disposition (including Secured Party) shall hold the Collateral
      free from any claim or right of whatever kind, including any equity or right
      of
      redemption of Debtor and Debtor specifically waives (to the extent permitted
      by
      law) all rights of redemption, stay or appraisal which it has or may have under
      any rule of law or statute now existing or hereafter adopted. 

    

    (d) Any
      deficiency with respect to the Obligations which exists after the disposition
      or
      liquidation of the Collateral shall be a continuing liability of Debtor to
      Secured Party and shall be immediately paid by Debtor to Secured
      Party.

    

    (e) Notwithstanding
      anything else contained in this Pledge Agreement, if any non-cash proceeds
      are
      received in connection with any sale or disposition of any Collateral, Secured
      Party shall not apply such non-cash proceeds to the Obligations unless and
      until
      such proceeds are converted to cash; provided, however, that if such non-cash
      proceeds are not expected on the date of receipt thereof to be converted to
      cash
      within one year after such date, Secured Party shall use commercially reasonable
      efforts to convert such non-cash proceeds to cash within such one year
      period.

    

    9. Cumulative
      Rights.

    

    The
      rights, powers, and remedies of Secured Party under this Pledge Agreement shall
      be in addition to all rights, powers, and remedies given to Secured Party by
      virtue of any statute or rule of law, the Purchase Agreement, the Note or any
      other agreement, all of which rights, powers, and remedies shall be cumulative
      and may be exercised successively or concurrently without impairing Secured
      Party’s security interest in the Collateral.

    

    10. Waiver.

    

    Any
      waiver, forbearance or failure or delay by Secured Party in exercising any
      right, power, or remedy shall not preclude the further exercise thereof, and
      every right, power, or remedy of Secured Party shall continue in full force
      and
      effect until such right, power or remedy is specifically waived in a writing
      executed by Secured Party. Debtor waives any right to require Secured Party
      to
      proceed against any person or to exhaust any Collateral or to pursue any remedy
      in Secured Party’s power.

    

    11. Setoff.

    

    Debtor
      agrees that Secured Party may exercise its rights of setoff with respect to
      the
      Obligations in the same manner as if the Obligations were
      unsecured.

    

    
      
         

      

      
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    12. Binding
      Upon Successors.

    

    All
      rights of Secured Party under this Pledge Agreement shall inure to the benefit
      of its successors and assigns, and all obligations of Debtor shall bind its
      heirs, executors, administrators, successors, and assigns.

    

    13. Severability.

    

    If
      any of
      the provisions of this Pledge Agreement shall be held invalid or unenforceable,
      this Pledge Agreement shall be construed as if not containing those provisions
      and the rights and obligations of the parties hereto shall be construed and
      enforced accordingly.

    

    14. Choice
      of Law.

    

    This
      Pledge Agreement shall be construed in accordance with and governed by the
      laws
      of California, without giving effect to choice of law rules, and, where
      applicable and except as otherwise defined herein, terms used herein shall
      have
      the meanings given them in the Uniform Commercial Code of such
      state.

    

    15. Amendment.

    

    This
      Pledge Agreement may not be amended or modified except by a writing signed
      by
      each of the parties hereto.

    

    16. Addresses
      for Notices.

    

    All
      demands, notices, and other communications to Debtor or Secured Party provided
      for hereunder shall be in writing or by telephone, promptly confirmed in
      writing, mailed, delivered, or sent by telefacsimile, addressed or sent to
      it to
      the address or telefacsimile number, as the case may be, of Debtor or Secured
      Party set forth beneath such party’s signature below, or to such other address
      as shall be designated by a party in a written notice to the other party. All
      such demands, notices, and other communications shall, when mailed or sent
      by
      telefacsimile, be effective when deposited in the mails, delivered or so sent,
      as the case may be, addressed as aforesaid.

    

    
      
         

      

      
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    17. Execution
      in Counterparts.

    

    This
      Pledge Agreement may be executed in counterparts each of which when so executed
      shall be deemed to be an original and all of which when taken together shall
      constitute one and the same agreement.

    

    EXECUTED
      as of the date first written above.

     

    
      	
              DEBTOR:

            	
              PATIENT
                SAFETY TECHNOLOGIES, INC.,

              a
                Delaware corporation

              

              By:
                /s/
                Lynne
                Silverstein                                  
                

              

              Name:
                Lynne
                Silverstein                                   
                

              

              Title:
                President                                                    
                

              

              Address:  
                1800
                Century Park East, Suite 200

              Los
                Angeles, California 90067

            
	 	 
	
              SECURED
                PARTY:

            	
               

               

              By:
                _______________________________

              

              Name:
                Alan E. Morelli

              

              Address:   225
                Mantau Road 

              Pacific
                Palisades, CA 90272 

            

    

    
 

    
      
         

      

      
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    Schedule
      I

    

    Pledged
      Securities

     

    
      	
              Name
                of Issuer

            	 	
              Certificate
                No.

            	 	
              No.
                of Shares

            	 	
              %
                of Ownership in Issuer

            
	
              Digicorp

            	 	
              Uncertificated;
                Held through AGB Securities

            	 	
              2,421,292

            	 	
              7.2%

            
	 	 	 	 	 	 	 
	
              IPEX
                Inc.

            	 	
              Uncertificated;
                Held through AGB Securities

            	 	
              950,000

            	 	
              7.8%

            
	 	 	 	 	 	 	 
	
              Automotive
                Services Group, Inc.

            	 	
              1

            	 	
              200

            	 	
              100%

            
	 	 	 	 	 	 	 
	
              Alacra,
                Inc.

            	 	
              F-6

            	 	
              321,543

            	 	
              1.6%

            
	 	 	 	 	 	 	 
	
              Surgicount
                Medical, Inc.

            	 	
              1

            	 	
              1,000

            	 	
              100%

            

    

    

    
      
         

      

      
        10SUBORDINATION
      AGREEMENT

    

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

    

    RECITALS

    

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

     

    B. Borrower
      has executed one or more promissory notes in favor of Subordinated Creditor
      (the
“Subordinated
      Notes”)
      and
      one or more security agreement, mortgages or other agreement pursuant to which
      Borrower has granted a security interest in favor of Subordinated Creditor
      (the
“Subordinated
      Security Agreements”)
      by and
      between Subordinated Creditor and Borrower.

    

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

    

    AGREEMENT

    

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

    

    1. DEFINITIONS

    

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

    

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

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

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

    

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

    

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

    

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

    

    2. SUBORDINATION

    

    (a) On
      the
      terms and conditions set forth below, Subordinated Creditor’s right to payment
      and performance of the Subordinated Debt and any and all liens and security
      interests securing the Subordinated Debt are hereby subordinated to Senior
      Creditor’s right to full and indefeasible payment and performance of the Senior
      Debt and all liens and security interests securing the Senior Debt. Subject
      to
      and except as set forth in Section 3, Subordinated Creditor shall not ask,
      demand, sue for, take or receive from Borrower, by setoff or in any other
      manner, the whole or any part of any monies which may now or hereafter be owing
      by Borrower to Subordinated Creditor, or be owing by any other person to
      Subordinated Creditor under a guaranty or similar instrument, on account of
      the
      Subordinated Debt, nor any collateral security for any of the foregoing,
      including, without limitation, any personal property collateral granted to
      Subordinated Creditor pursuant to the Subordinated Loan Documents, unless and
      until the Senior Debt shall have been fully paid in cash or converted to common
      stock of Borrower pursuant to the terms of the Senior Note.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (b) Subordinated
      Creditor shall not create, maintain or perfect any security interest in or
      lien
      on any property of Borrower (other than any security interests or liens that
      may
      exist and be perfected on the date hereof in favor of Subordinated Creditor
      in
      certain of Borrower’s personal property under and as described in the
      Subordinated Loan Documents, which liens and security interests shall be, and
      hereby are agreed to be, junior and subordinated to the security interests
      and
      liens securing the Senior Debt). If, notwithstanding the foregoing, any lien
      shall be created or shall arise in favor of Subordinated Creditor, whether
      by
      operation of law or otherwise, in or on any property of Borrower to secure
      all
      or any portion of the Subordinated Debt, then the liens granted by Borrower
      in
      any such property in favor of Senior Creditor to secure the Senior Debt shall
      in
      all respects be first and senior liens, superior to such liens that may be
      created or arise, and superior to any security interest or lien that may exist
      on the date hereof, in either case which liens are in favor of Subordinated
      Creditor securing the Subordinated Debt notwithstanding (i) the date, manner
      or
      order of creation, attachment or perfection of any such security interests
      or
      liens, (ii) the provisions of the UCC or any other applicable statutes or
      court decisions that would provide otherwise in the absence of this agreement,
      (iii) the provisions of any contract between Subordinated Creditor and Borrower,
      and (iv) whether Subordinated Creditor or any agent or bailee thereof holds
      possession of any part any such collateral. In the event Subordinated Creditor
      shall have or obtain possession of any such property or shall, in contravention
      of this agreement, foreclose upon or enforce its security interest or lien
      upon
      any such property, whether by self-help, judicial action or otherwise, then
      (i)
      all such property shall be immediately delivered to Senior Creditor or, if
      not
      deliverable, all cash or non-cash proceeds and profits of such property shall
      be
      paid over to Senior Creditor, without any deduction or offset, and (ii) until
      duly deliver or paid to Senior Creditor, any such property or cash or non-cash
      proceeds and profits of such property shall be held in trust for the benefit
      of
      Senior Creditor, in the case of each of clause (i) and clause (ii), unless
      and
      until all of the Senior Debt shall have been paid in cash in full or converted
      to common stock of Borrower pursuant to the terms of the Senior
      Note.

    

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

    

    3. ASSIGNMENT
      OF SUBORDINATED DEBT

    

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

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    4. SENIOR
      CREDITOR’S PRIORITY

    

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

    

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

    

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

    

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

    

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

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    5. GRANT
      OF AUTHORITY

    

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

    

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

    

    6. PAYMENTS
      RECEIVED BY SUBORDINATED CREDITOR

    

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

    

    7. FURTHER
      ASSURANCES; COOPERATION

    

    Subordinated
      Creditor agrees to cooperate with Senior Creditor and to take all actions that
      Senior Creditor may reasonably require to enable Senior Creditor to realize
      the
      full benefits of this Agreement.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    8. TERMINATION
      OR AMENDMENT OF AGREEMENT; NO AMENDMENTS

    

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

    

    9. ADDITIONAL
      AGREEMENTS FOR SENIOR CREDITOR 

    

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

    

    10. SUBROGATION

    

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

    

    11. SUBORDINATED
      CREDITOR’S WAIVERS AND COVENANTS

    

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

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

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

    

    12. DEFAULTS
      ON SUBORDINATED NOTES

    

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

    

    13. REINSTATEMENT
      OF SENIOR DEBT

    

    To
      the
      extent that Senior Creditor receives payments on or in respect of the Senior
      Debt or proceeds of any collateral security for the Senior Debt, which payments
      or proceeds are subsequently invalidated, declared to be fraudulent or
      preferential, set aside or required to be repaid to a trustee, receiver or
      any
      other party under any bankruptcy law, state or federal law, common law, or
      equitable cause, then, to the extent of such payments or proceeds invalidated,
      declared to be fraudulent or preferential, set aside or required to be repaid,
      the Senior Debt, or part thereof, intended to be satisfied shall be revived
      and
      continue in full force and effect as if such payments or proceeds had not been
      received by Senior Creditor.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    14. NO
      WAIVERS

    

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

    

    15. INFORMATION
      CONCERNING BORROWER; CREDIT ADMINISTRATION

    

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

    

    16. NOTICES

    

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

    

    If
      to Senior Creditor:

    

    Alan
      E.
      Morelli

    225
      Mantau Road

    Pacific
      Palisades, CA 90272

    Facsimile:
      (310) 231-5520

    

    If
      to Subordinated Creditor:

    

    Ault
      Glazer Bodnar Acquisition Fund, LLC

    1800
      Century Park East, Suite 200

    Los
      Angeles, CA 90067

    Attention:
      __________________________

    Facsimile:
      __________________________

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    17. SEVERABILITY

    

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

    

    18. GOVERNING
      LAW 

    

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

    

    19. ASSIGNMENT

    

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

    

    20. MUTUAL
      WAIVER OF JURY TRIAL

    

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

    

    21. COUNTERPARTS

    

    This
      Agreement and any amendments, waivers, consents or supplements hereto may be
      executed in any number of counterparts, and by different parties hereto in
      separate counterparts, each of which when so executed and delivered shall be
      deemed an original, but all of which counterparts together shall constitute
      but
      one and the same instrument.

    
       

      
         

      

      
        9

        
          

        

      

      
         

      

    

    

    IN
      WITNESS WHEREOF,
      this
      Agreement has been executed as of the date first above written.

    

    
      	
              SENIOR
                CREDITOR:

               

               

               

              Signature:   
                /s/ Alan E.
                Morelli                              
                

              Print
                Name:  ALAN
                E. MORELLI

              Title:             ___________________________

            	
              SUBORDINATED
                CREDITOR:

               

              AULT
                GLAZER BODNAR ACQUISITION FUND, LLC

               

              By:
                Ault Glazer Bodnar Investment Management LLC

               

              Signature:   
                /s/
                Milton C. Ault
                III                
                

              Print
                Name:  Milton
                C. Ault
                III                     
                

              Title:              Managing
                Member                 
                

            

    

    

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

    

    BORROWER:

     

    
      PATIENT
        SAFETY TECHNOLOGIES, INC.

       

      By:/s/
        Lynne
        Silverstein                                   

      Name:Lynne
        Silverstein                                    

      Title:
        President                                                    
        

    

     

     

    
      
         

      

      
        10

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