MANUFACTURING AGREEMENT

dated as of May 7, 2003,

between

STERIS CORPORATION

and

STERION INCORPORATED

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ARTICLE I

EXCLUSIVE ARRANGEMENT

1

ARTICLE II

PRICING AND INVOICING

2

ARTICLE III

ORDERS

3

ARTICLE IV

SHIPPING AND PACKAGING

4

ARTICLE V

MANUFACTURE AND QUALITY

5

ARTICLE VI

LABELING OF PRODUCTS

6

ARTICLE VII

TECHNICAL ASSISTANCE

7

ARTICLE VIII

REPRESENTATIONS AND WARRANTIES; CERTAIN COVENANTS

7

ARTICLE IX

TERM; TERMINATION

8

ARTICLE X

CONFIDENTIALITY

10

ARTICLE XI

ASSIGNMENT OF INTELLECTUAL PROPERTY RIGHTS

11

ARTICLE XII

USE MAINTENANCE AND TITLE TO EQUIPMENT

12

ARTICLE XIII

RIGHTS OF FIRST REFUSAL

13

ARTICLE XIV

RISK OF LOSS, INDEMNIFICATION AND INSURANCE

14

ARTICLE XV

REQUIRED NOTICES

17

ARTICLE XVI

MISCELLANEOUS

17

EXHIBITS

A

Prices

B

Form of Manufacturing Order

C

Quality and Regulatory Requirements

SCHEDULES

Schedule 12.1

Equipment

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MANUFACTURING AGREEMENT

THIS MANUFACTURING AGREEMENT (this “Agreement”) is made as of this 7th day of
May 2003 (the “Effective Date”), by and between STERIS CORPORATION, an Ohio
corporation (“STERIS”), and STERION INCORPORATED, a Minnesota corporation
(“STERION”).

WITNESSETH:

WHEREAS, STERIS and STERION have entered into an Asset Purchase Agreement, dated
as of May 7, 2003 (the “Purchase Agreement”), pursuant to which STERIS acquired
from STERION certain assets, including the intellectual property necessary to
manufacture the Products (as defined in the Purchase Agreement), and assumed
certain liabilities; and

WHEREAS, the parties hereto desire to have STERION manufacture and supply the
Products for STERIS under the terms and conditions set forth in this Agreement.

AGREEMENT:

NOW, THEREFORE, in consideration of these premises and the agreements,
covenants, representations, warranties and indemnities set forth in this
Agreement, and for other good and valuable consideration had and received, the
receipt and sufficiency of which are hereby acknowledged, STERIS and STERION
agree as follows:

ARTICLE I
EXCLUSIVE ARRANGEMENT

1.1

Subject to the terms and conditions contained in this Agreement, STERION shall
manufacture the Products (as defined in the Purchase Agreement) exclusively for
STERIS.  

1.2

STERIS retains the right to manufacture, or arrange for a third party to
manufacture, the Products.  The parties acknowledge and agree that STERIS may
sell products manufactured and/or distributed by STERIS or third parties that
are competitive in nature with the Products.  STERIS shall not be liable for
damages resulting from the failure to achieve any particular volume of sales for
the Products.

1.3

STERION shall not market, distribute, sell or otherwise use the Products.
 Except as permitted by the Purchase Agreement, STERION shall not, directly or
indirectly, enter into any agreements, arrangements or relationships (i) with
any third parties to develop, manufacture, market, distribute, sell or otherwise
use the Products, or any products that are competitive with the Products,
(ii) with third parties for the integration into other sterilization products of
the Products or any products competitive with any Products or (iii) that would
enable any third party to develop, manufacture, market, distribute, sell or
otherwise use the Products, or any products that are competitive with the
Products.

1.4

STERIS agrees to share with STERION all intellectual property, manufacturing
techniques and methods and other proprietary information owned by STERIS
necessary for the manufacture of the Products, to the extent necessary for
STERION to manufacture the Products, subject to the confidentiality and use
restrictions contained in the Purchase Agreement and  of this Agreement.

ARTICLE II
PRICING AND INVOICING

2.1

Except as otherwise specifically provided in this Agreement, all payments to be
made by STERIS to STERION pursuant to this Agreement shall be invoiced by
STERION and the terms for all such payments shall be 45 days net.  All payments
shall be made in U.S.  dollars.  STERION shall invoice STERIS for Products at
the time of shipment.  Each invoice for Products shall contain the individual
order number, mode of transportation, date of shipment, payment terms and any
other information required by the individual Manufacturing Order (as herein
defined).

2.2

The prices to manufacture the Products are set forth in Exhibit A (the
“Prices”).  The Prices shall not include costs of shipping the finished
Products.  Prices shall be subject to adjustment, which adjustment shall be
based solely on changes in unit costs, on May 7, 2004 and annually on every
anniversary of the Effective Date thereafter during the Initial Term (as herein
defined) and thereafter (as adjusted for the following calendar year, the
“Adjusted Prices”).  STERION shall provide the Adjusted Prices to STERIS no
later than February 7, 2004 and annually on or before every February 7th
thereafter during the Initial Term and thereafter.  On or before the date on
which STERION is required to provide STERIS with the Adjusted Prices, STERION
shall provide STERIS with documentation to substantiate any increases in the
Adjusted Prices as compared to the previous year’s Prices or Adjusted Prices, as
the case may be, which documentation shall be, in STERIS’s commercially
reasonable judgment, reasonably sufficient.

2.3

STERIS and STERION may mutually agree for STERION to manufacture additional
Products by an amendment to this Agreement, subject to resolution by STERIS and
STERION of the prices, quantities and other terms that would apply to such
additional Products.  Any Products added by amendment to this Agreement shall
become “Products” for all purposes under this Agreement, and shall be supplied
by STERION to STERIS upon the terms and subject to the conditions contained in
this Agreement.  The acceptance by STERION of any Manufacturing Order containing
additional Products shall be deemed an amendment to this Agreement.  Subject to
Section 5.2 of the Purchase Agreement, STERION is not prohibited from entering
into manufacturing agreements with third parties.

2.4

STERIS shall be responsible for any sales or use taxes, and for any other
charges or assessment imposed by federal, state or local governmental
authorities on the manufacture and/or delivery of the Products (“Taxes”) other
than STERION’s income taxes.  Taxes may be included on the invoice for the
Products delivered pursuant to this Agreement.  If the Products are exempt from
sales or use taxes, STERIS shall provide appropriate certificates and
documentation to STERION to evidence such exemption.  

2.5

In the event of any termination of a Manufacturing Order or of this Agreement
other than pursuant to Section , STERIS shall pay STERION the out-of-pocket cost
for, and receive from STERION, any raw materials which have been obtained for
use in the ordinary course of business in the manufacture of the Products and
any work-in-process, and shall purchase from STERION all finished Products in
accordance with the terms of such Manufacturing Order.

ARTICLE III
ORDERS

3.1

STERIS shall, at the time it places an order or at least monthly, provide
STERION with non-binding forecasts of its anticipated requirements for the
Products during the subsequent six months.  STERIS shall update its forecasts
when circumstances render the previously-delivered forecast materially
inaccurate.  STERIS shall place firm orders every 30 days.  STERION shall
maintain sufficient manufacturing capacity and inventory levels to permit the
delivery of the Products in accordance with STERIS’s forecasts.

3.2

All orders for manufacturing the Products under this Agreement shall be placed
pursuant to STERIS’s standard manufacturing order in effect at the time of the
applicable order (the “Manufacturing Order”).  A copy of STERIS’s current
standard Manufacturing Order is attached hereto as Exhibit B.  The Manufacturing
Order shall be binding upon the parties hereto upon STERION’s receipt of the
Manufacturing Order.  STERION shall acknowledge in writing within three business
days each Manufacturing Order delivered by STERIS under this Agreement (the
“Acknowledgement”) but such Acknowledgement is not required to make the
Manufacturing Order binding upon the parties hereto.

3.3

All transfers of Products made by STERION to STERIS shall be governed by the
terms and conditions contained in the Manufacturing Order.  In the event of any
conflict between the terms and conditions of this Agreement and the terms and
conditions of any Manufacturing Order or any Acknowledgement, the terms and
conditions of this Agreement shall control.  In the event of any conflict
between the terms and conditions of any Manufacturing Order and any
Acknowledgement, the terms and conditions of the Manufacturing Order shall
control.

3.4

STERION shall, in the event of a delay or threat of delay in the production or
delivery of Products, immediately notify STERIS in writing and shall include
with such notice all relevant information with respect to such delay or
threatened delay.  If STERION for any reason cannot comply with the delivery
dates specified in any Manufacturing Order (each, a “Delivery Date”), in
addition to the exercise of any other rights or remedies available to STERIS
under this Agreement or applicable law, STERIS may terminate the Manufacturing
Order or cancel any shipments under such Manufacturing Order without any
liability of STERIS to STERION.

3.5

STERIS shall inspect the Products upon delivery to its facility for the sole
purpose of identifying the Products and general verification of quantities in
order to provide a basis for payment, if any.  Such inspection will not be
construed as acceptance of any Products whether or not in conformance with the
Manufacturing Order.  If, when delivered, there are apparent defects in the
Products, STERIS will give notice thereof to STERION.  STERION shall, within 48
hours of receipt of such notice and without cost to STERIS, correct the defect
or replace the Products with non-defective Products.  STERIS may refuse to
accept delivery of any Products that are apparently defective.  If there are no
apparent defects, STERIS shall accept delivery.

3.6

If any Product delivered hereunder shall fail to conform to the provisions of
this Agreement or to meet the Specifications (as herein defined), and STERIS
(unaware of such nonconformity), or STERIS’s customer to whom such Products were
delivered directly (a “Customer”), accepts delivery of such nonconforming
Products, STERIS may return, or cause its Customer to return, such nonconforming
Products to STERION after STERIS’s or such Customer’s receipt thereof, and
STERION shall accept and pay for redelivery of such nonconforming Products and
credit STERIS’s account promptly after such nonconforming Products are
redelivered to STERION.  STERION will bear all risk of loss with respect to all
nonconforming Products.  STERIS’s payment for any nonconforming Products will
not (i) be construed as acceptance of such nonconforming Products, (ii) limit or
impair STERIS’s right to exercise any rights or remedies to which STERIS is
entitled or (iii) relieve STERION of responsibility for such nonconforming
Products.

ARTICLE IV
SHIPPING AND PACKAGING

4.1

STERION shall ship the Products FOB STERION Jacksonville, Texas or such other
shipping location as designated by the parties from time to time (the “FOB
Point”) in the manner and to the STERIS facility or other location specified by
STERIS in the Manufacturing Order (the “Delivery Location”).  STERION shall use
a carrier designated by STERIS to ship the Products to the Delivery Location
with shipping charges to be billed to STERIS’s account with such carrier.
 STERIS shall be responsible for payment of all shipping invoices resulting from
the shipment of Products to the Delivery Location.  STERION shall ensure that
the Products are delivered to the Delivery Location by the Delivery Date.
 Deliveries more than seven days in advance of the Delivery Date shall require
STERIS’s prior written approval.

4.2

STERION shall package the Products as directed by STERIS and in cartons that
promote STERIS’s marketing image.  STERIS shall provide STERION with copies of
its camera-ready artwork and logos for packaging the Products.  STERION shall
submit all packaging materials to STERIS for its advance review and written
approval.  STERIS will inspect the packaging art work as part of STERIS’s
inspection process.

4.3

STERION shall package the finished Products for shipment according to the
specifications provided by STERIS in the Manufacturing Order and in a manner
that provides adequate protection of the Products.  STERION shall ensure that
the form of labeling of the Products is as directed by STERIS.  STERIS shall
notify STERION of any known damage to any Products due to inadequate packaging
within a reasonable time of the receipt (i) of the Products from STERION or (ii)
of notice from any third party to whom STERION delivered the Products directly.
 STERION shall provide replacements, at its expense, for the damaged Products
due to inadequate packaging.  Unless otherwise specifically agreed to by STERIS
and STERION in writing, all risk for loss of, or damage to, the Products and
parts thereof shall pass from STERION to STERIS upon proper delivery of the
Products for shipping to the FOB Point.  Until such time as the Products have
been shipped from the FOB Point, STERION shall be responsible for all of the
Products and all of the work performed with respect thereto.

ARTICLE V
MANUFACTURE AND QUALITY

5.1

STERION shall manufacture the Products in accordance with (i) the specifications
supplied by STERIS (the “Specifications”) and (ii) all of the quality and
regulatory requirements set forth in this Agreement, including those set forth
in Exhibit C.  From time to time, STERIS may modify the Specifications for the
Products and shall provide STERION notice of such modifications, the receipt of
which STERION will acknowledge in writing.  Such modified specifications shall
be deemed to modify the Specifications and shall be binding upon the parties
hereto upon STERION’s receipt of such modified specifications.  No changes shall
be made to the Specifications or the materials, and/or processes, used to
manufacture and deliver the Products without the advance written approval of
STERIS.  STERION may not substitute any Product for any other type of Product
without the advance approval of STERIS.  STERION shall be responsible for
meeting all Specifications and for all costs and expenses incurred in connection
with the manufacture and delivery of the Products, except as specifically set
forth in this Agreement.  STERION and STERIS shall share the costs associated
with any destructive testing or sampling resulting from customer complaints or
failure to comply with the Specifications.  STERION and STERIS shall mutually
agree when any such destructive testing or sampling is required; provided,
however, that if STERION and STERIS are unable to agree on destructive testing,
STERIS shall have the right to require STERION to conduct destructive testing.

5.2

If STERIS proposes to modify the Specifications of Products that are already in
production and beyond the point of alteration, STERIS, at its option, may order
STERION to cease production of such Products, in which case STERIS shall pay
STERION an amount equal to STERION’s actual costs incurred through the point of
termination.

5.3

In the event that STERION determines that changes are required to correct
defects in the Products, to enhance the safety of Products or to otherwise
improve the quality of the Products, STERION shall provide STERIS with notice of
the same promptly upon STERION’s determination that such changes are necessary,
and STERIS shall notify STERION whether it approves any such changes and the
implementation of such changes.  STERIS and STERION shall determine whether any
such changes require a 510(k) submission, and STERIS shall make any such
required submissions.  STERION shall prepare and deliver to STERIS a written
protocol for handling quality and safety issues relating to the Products, which
shall be satisfactory to STERIS.

5.4

All Products shall be manufactured in accordance with the Quality Systems
Regulations (“QSR”) of the U.S. Food and Drug Administration (the “FDA”), and
any new or revised standards issued by the FDA, in a facility that is registered
with the FDA.  STERION agrees that the Products shall be properly listed with
the FDA in accordance with all applicable laws and regulations.  The Products,
as of the Delivery Date, as delivered to the Delivery Location shall not be, and
STERION guarantees that the Products shall not be, adulterated or misbranded
within the meaning of the Federal Food, Drug and Cosmetic Act (the “Act”) and
shall not be prohibited from introduction into interstate commerce under the
provisions of Section 301 of the Act.  STERION shall ensure that the Products
are manufactured in accordance with current, applicable regulatory standards,
including, without limitation, those standards promulgated by the International
Organization for Standardization (ISO).

5.5

STERION shall cooperate with STERIS in communicating with Customers to which the
Products are sold with respect to the safety or efficacy of the Products as
required by the FDA or determined by STERIS to be reasonably necessary.  STERION
shall report to STERIS any problems relating to the safety or efficacy of the
Products within a reasonable time after STERION learns of the existence of such
problems.  STERION shall abide by the provisions of 21 C.F.R. 820.198 regarding
complaint handling.

5.6

STERION shall maintain quality files and all related product information
relating to the Products for audit by STERIS and the FDA.  STERIS shall have the
right to inspect all facilities used by or for STERION to manufacture the
Products and to inspect the documentation relating to the manufacturing
processes of the Products.  Either party may request a discussion with the other
party concerning any quality control procedure relating to the Products and
STERIS or STERION, as applicable, shall implement any reasonable comments and
recommendations.

5.7

If during the term of this Agreement the requirements of the FDA change or are
applied in such a manner as to require changes in the design of the Products,
then STERIS shall promptly take all steps necessary to modify the Products, as
applicable, to comply with such FDA requirements.  STERION hereby agrees to
maintain and make available to the FDA and STERIS, or their respective
authorized representatives, all contracts, books, documents and records relating
to the Products.

5.8

STERION shall notify STERIS in the event that the FDA requests documents from
STERION or undertakes any administrative action, including the issuance of any
complaint, order or decision with respect to the Products.  STERION shall submit
any written responses, including the production of documents, for STERIS’s
advance review and written approval before STERION transmits any such response
to the FDA.  

ARTICLE VI
LABELING OF PRODUCTS

6.1

STERION shall label and individually package the Products in such a manner that
the Products are ready for market and delivery to the Customer, unless otherwise
directed by STERIS.  For each individual Product package, STERION shall provide
label instructions for use in all countries as directed by STERIS.  STERION
shall be responsible for ensuring that the Products are labeled, and include
product label instructions, in accordance with all applicable laws, regulations
and registrations.  STERION shall label the Products with the STERIS trademark
and logo (the “STERIS Mark”), such other brand names and logos as are specified
by STERIS (the “Other Marks”) and, for a period of no more than six months from
the Effective Date, the STERION trademark and logo (the “STERION Mark”) in
accordance with the terms and conditions of the Purchase Agreement, in the
manner directed by STERIS.  Except for the STERIS Mark, the Other Marks and the
STERION Mark, no other brand name, trademark or logo shall be affixed to the
labeling or packaging of the Products.

6.2

STERIS shall provide STERION with copies of its artwork for the STERIS Mark, the
Other Marks and the STERION Mark to be used on the labeling and individual
packaging of the Products.  STERION shall submit all labeling materials to
STERIS for its advance review and written approval.  STERION shall comply
strictly with the directions of STERIS regarding the manner of application of
the STERIS Mark, the Other Marks and the STERION Mark.  The symbol ® shall be
used in conjunction with the STERIS Mark and the applicable symbols shall be
used with the Other Marks and the STERION Mark on all of the labeling and
individual packaging of the Products.

6.3

STERION shall not use the STERIS Mark or the Other Marks or any other name or
mark confusingly similar to any of such marks other than as provided in this
Agreement.

6.4

STERION acknowledges and agrees that all intellectual property rights in and
relating to the STERIS Mark and the Other Marks shall remain the property of
STERIS, and STERION shall not acquire any rights in respect of any names, marks
or other intellectual property rights of STERIS by reason of the application of
this Agreement.

ARTICLE VII
TECHNICAL ASSISTANCE

7.1

STERION shall use its commercially reasonable efforts to transition
manufacturing to STERIS or its designee in any such event described in Section
 or upon termination of this Agreement for any reason in accordance with , which
shall include but not be limited to STERION’s full disclosure to STERIS of all
designs, formulas, data and manufacturing techniques and methods used by STERION
to manufacture the Products, providing technical training to STERIS’s employees
or its designees and granting any licenses necessary for the manufacture of the
Products by STERIS or its designee.

7.2

STERION shall participate in, and provide all reasonable cooperation in
connection with, any beta-site testing that STERIS shall reasonably determine to
undertake relating to the Products, the reasonable documented costs and
out-of-pocket expenses of which participation and cooperation shall be
reimbursed by STERIS.  

ARTICLE VIII
REPRESENTATIONS AND WARRANTIES;
CERTAIN COVENANTS

8.1

STERION represents and warrants to STERIS that its operations comply, and
covenants that its operations shall comply, with all applicable federal, state
and local laws and regulations, including the Act and FDA regulations,
Environmental Law (as defined in Section ) and industrial standards applicable
to the Products and as otherwise required by this Agreement.  STERION shall
comply with, and shall, at STERIS’s request, demonstrate such compliance with,
the U.S. Foreign Corrupt Practices Act and all applicable export laws,
restrictions, and regulations of the U.S. Department of Commerce, the
U.S. Department of Treasury and any other U.S. or foreign agency or authority.
 STERION will not export or re-export, or allow the export or re-export of any
Product or information it obtains or learns pursuant to this Agreement (or any
direct product thereof) in violation of any such law, restriction or regulation;
provided, however, that STERION shall provide STERIS, upon STERIS’s request,
with documentation that identifies the countries from which the supplies and
materials used to manufacture the Products originated for purposes of compliance
with such applicable laws.  STERIS shall obtain and bear all expenses relating
to any necessary licenses and/or exemptions with respect to the export from the
United States of any Products to any location in compliance with all applicable
laws and regulations prior to delivery thereof by STERION.

8.2

STERION warrants that the Products shall be (i) free from defects in material
and workmanship, (ii) in a merchantable condition and (iii) fit for the purpose
for which they were sold by STERION pursuant to STERION’s instructions for the
use of the Products as of the date of this Agreement.  STERION warrants that the
Products will meet the Specifications, as the same may be amended pursuant to
the terms of this Agreement.

ARTICLE IX
TERM; TERMINATION

9.1

This Agreement shall commence as of the date of this Agreement and shall extend
through December 31, 2006 (the “Initial Term”).  Thereafter, the parties shall
negotiate in good faith to extend the Agreement.

9.2

This Agreement may be terminated at any time by written agreement executed by
STERIS and STERION.

9.3

Either party may terminate this Agreement upon:

(a)

the material breach by the other party of any provision of this Agreement, which
breach shall not have been cured by the breaching party within 30 days after
receipt of notice of such breach by the non-breaching party;

(b)

the commencement of any administrative or governmental action or measure that
suspends or terminates the other party’s business and such suspension or
termination is not vacated within 30 days;

(c)

the insolvency of the other party or the failure of the other party to meet its
debts as they become due;

(d)

the other party’s general assignment for the benefit of creditors or
commencement of liquidation, bankruptcy or receivership;

(e)

the other party’s discontinuation of its corporate existence or merger or
consolidation with (where it is not the surviving entity), or sale or lease of
all or substantially all of its assets to, any other entity without the prior
written consent of the other party hereto;

(f)

a change of control of the other party without the prior written consent of the
other party hereto; provided that for the purposes of this Agreement a “change
of control” shall occur when a party to this Agreement consummates a merger,
consolidation, share exchange, division or other transaction or series of any of
the foregoing transactions with any person resulting in the shareholders of such
party immediately prior to such transaction beneficially owning, directly or
indirectly, 50% or less of the combined voting power of the outstanding voting
securities of such party; or

(g)

the other party ceasing to carry on business or committing any act amounting to
business failure.

The termination of this Agreement pursuant to this Section  shall not relieve
the breaching party of any liability to the other party for any damages suffered
as a result of such breach.

9.4

STERIS may terminate this Agreement as of the first anniversary of the date of
this Agreement or any time thereafter by providing 90 days’ prior notice to
STERION of such termination.  

9.5

STERIS shall have the right to (i) terminate this Agreement (ii) terminate any
existing Manufacturing Orders and/or (iii) cancel any shipments under such
Manufacturing Orders, in each of clauses (i) through (iii) of this Section
 without any liability of STERIS to STERION in the event:

(a)

STERION is unable or fails to manufacture or deliver the Products in accordance
with the terms and conditions contained in this Agreement for a period of more
than 30 consecutive days;

(b)

a quality failure occurs that requires a field correction as ordered by a
regulatory authority;

(c)

STERIS terminates this Agreement pursuant to Section ; or

(d)

STERIS and STERION fail to reach agreement on pricing for any renewal term
pursuant to Section .

9.6

STERION shall use its best efforts to provide STERIS with prior written notice
when STERION believes or has reason to believe that it will be unable or
unwilling to manufacture the Products for a period of more than 30 consecutive
days.

9.7

Upon termination of this Agreement for any reason, all obligations under this
Agreement shall terminate; except that:

(a)

all open Manufacturing Orders not terminated pursuant to Section  hereof shall
be processed as provided in this Agreement;

(b)

the confidentiality provisions contained in  shall survive as provided therein;

(c)

the provisions of  shall survive as provided therein;

(d)

STERION’s obligations to assist in the relocation and transition of the
manufacturing services as described in Section  shall survive;

(e)

indemnification provided in  shall survive the termination of this Agreement
without limitation as to time; and

(f)

the provisions of Section 9.0 of attached Exhibit C shall survive.

ARTICLE X
CONFIDENTIALITY

10.1

Each party will keep in strict confidence, and will not, directly or indirectly,
at any time during the Initial Term or thereafter or after the termination of
this Agreement, disclose, furnish, disseminate, publish, make available or,
except in the course of exercising such party’s rights or performing such
party’s obligations under this Agreement, use any trade secrets or confidential
business or technical information of the other party or its products,
intellectual property, customers, licensees, suppliers or development or
alliance partners or vendors, regardless of when or how such party may have
acquired such information (“Confidential Information”).  Such Confidential
Information shall include, without limitation, the terms of this Agreement, the
terms of the Purchase Agreement, the Intellectual Property (as defined in the
Purchase Agreement), the other party’s product development methods and business
techniques, work plans, formulas, test results and information, applications,
algorithms, technical information, manufacturing information, design
information, cost or pricing information, know-how, technology, prototypes,
ideas, inventions, improvements, training, sales volume service and business
manuals, promotional materials, development partnerships and other alliances,
customer lists, prospective customer lists and other business information,
materials and property, and all Improvements (as herein defined).  

10.2

Each of the parties hereto may disclose the Confidential Information to those of
its employees, sub-contractors, sub-distributors or agents as may be reasonably
necessary to carry out the provisions of this Agreement; provided that before
any such disclosure, the disclosing party shall make those employees,
sub-contractors, sub-distributors and agents aware of the disclosing party’s
obligations of confidentiality under this Agreement and shall at all times
procure compliance by, and be responsible for any non-compliance by, those
employees, sub-contractors, sub-distributors or agents with such confidentiality
obligations.

10.3

Each party specifically acknowledges that all Confidential Information, whether
reduced to writing, maintained on any form of electronic media, or maintained in
the mind or memory of such party and whether compiled by either or both parties,
(i) derives independent economic value from not being readily known to or
ascertainable by proper means by others who can obtain economic value from its
disclosure or use, (ii) that reasonable efforts have been made by the other
party to maintain the secrecy of such information, (iii) that such information
is the sole property of the other party and (iv) that any retention and use of
such information by such party during the Initial Term or thereafter (except in
the course of exercising such party’s rights or performing such party’s
obligations under this Agreement) or after the termination of this Agreement
constitutes a misappropriation of the other party’s trade secrets.  The
foregoing shall not apply to information that (i) has become generally available
and publicly known through no wrongful act or breach of any obligation of
confidentiality by such party; (ii) was approved in writing for release by the
other party; or (iii) was received by such party from a third party who has no
obligation of confidentiality to the other party regarding this information.

10.4

In the event that either party hereto shall be legally compelled or required (by
written interrogatories, depositions, court order, requests for information or
documents, subpoenas, civil investigative demands or similar compulsory process
or the requirements of the federal securities laws and the rules and regulations
promulgated thereunder, the Securities and Exchange Commission (the “SEC”) or
any state securities commission or a representative of any securities market)
(for purposes of this Section , a “Compelled Party”) to disclose any of the
Confidential Information, the Compelled Party shall promptly provide written
notice to the other party to enable such other party to seek a protective order,
in camera process or other appropriate remedy to avoid public or third-party
disclosure of the Confidential Information.  In the event that such protective
order or other remedy is not obtained, the Compelled Party shall furnish only so
much of the Confidential Information that it is legally compelled to disclose
and shall exercise its best efforts to obtain reliable assurance that
confidential treatment will be accorded the Confidential Information.  The
Compelled Party shall cooperate with and assist the other party in seeking any
protective order or other relief requested pursuant to this Section .
 Notwithstanding the foregoing, STERIS acknowledges that STERION is required to
disclose the terms of this Agreement and the Purchase Agreement by filing a
Current Report on Form 8-K with the SEC and to file this Agreement and the
Purchase Agreement as exhibits to such Form 8-K and on its Annual Report on Form
10-K SB and that such filings, other than the filing of any schedules or
exhibits to this Agreement or the Purchase Agreement, will not be subject to the
provisions of this Section 10.4; provided, however, that STERION will provide
STERIS a copy of such Form 8-K at least three business days prior to filing and
give STERIS an opportunity to comment thereon, which comments must be received
at least one business day prior to filing such Form 8-K.

10.5

Upon termination of this Agreement for any reason, each party hereto shall
promptly return to the other party all tangible forms of Confidential
Information of the other party held by such party.

ARTICLE XI
ASSIGNMENT OF INTELLECTUAL PROPERTY RIGHTS

11.1

STERION acknowledges and agrees that, without further consideration, all right,
title and interest STERION now has or may in the future acquire in any and all
works, discoveries, inventions and know-how, whether or not patentable and
whether or not reduced to practice, including, without limitation, any and all
content, copy, test data, findings, designs, machines, devices, apparatus,
compositions, methods or processes, or any improvements thereof, made,
conceived, discovered, created, authored or developed by STERION, whether alone
or in conjunction with others, in whole or in part, that are derived from, are
based upon, or utilize in any way the Confidential Information owned by or
licensed to STERIS, whether during the Initial Term or thereafter or after the
termination of this Agreement (all of the foregoing collectively, the
“Improvements”), shall be owned by STERIS.  The Improvements are subject to the
confidentiality and use restrictions contained in .

11.2

STERION agrees, without further consideration, to assign to STERIS, and does
hereby assign to STERIS, STERION’s entire right, title and interest in and to
all Improvements.  STERION further agrees upon STERIS’s request and for no
additional consideration, to execute any and all patent applications,
affidavits, assignments and/or other documents deemed necessary or desirable by
STERIS to acknowledge, confirm, perfect, secure or support the conveyance of
title in any of the Improvement to STERIS, or to record the same in any country
of the world, or to apply for or secure intellectual property protection in any
country of the world, or to claim priority therefor, or to enforce the rights
therein in any court or other proceeding, whether during the Initial Term of
this Agreement or at any time thereafter, and to testify or otherwise assist and
cooperate with STERIS and its agents and attorneys in connection therewith, at
STERIS’s expense.  Any copyright or patent application filed by or on behalf of
STERION within one year following the termination or expiration of this
Agreement which relates to the subject matter of an Improvement shall be
presumed to be the property of STERIS pursuant to this Section .

11.3

STERION shall communicate to STERIS promptly upon discovery or conception, and
subsequently upon embodiment of a work or information, or reduction to practice
of a concept, in such form as STERIS requests, all information, details, and
data pertaining to any Improvement.

11.4

STERION acknowledges and agrees that all intellectual property rights in and to
the patents, manufacturing techniques, methods, know how and other proprietary
information relating to the manufacture of the Products is and shall remain the
exclusive property of STERIS and STERION shall not acquire any rights in respect
of any of the foregoing by reason of the application of this Agreement or
otherwise other than to the extent necessary to manufacture the Products
pursuant to the terms of this Agreement.

ARTICLE XII
USE MAINTENANCE AND TITLE TO EQUIPMENT

12.1

STERION is in possession of certain of STERIS’s equipment, which is set forth on
Schedule  (the “Equipment”).  STERION (a) shall use and shall cause the
Equipment to be used solely in the manufacture and shipment of the Products and
in a careful and proper manner; and (b) shall not (i) part with possession of
or, to the extent any Equipment is in the possession of someone other than
STERION, permit such person to part with possession of, or (ii) enter into any
sublease or assignment with respect to, all or any of the Equipment, or any part
thereof; without the prior written consent of STERIS, which consent may be
withheld for any reason whatsoever.  STERION shall not make any material
alterations to the Equipment without the prior written consent of STERIS.
 STERION will not alter or remove any insignia, lettering or numerals which are
currently on the Equipment or which are hereafter placed thereon to identify the
Equipment and/or to indicate STERIS’s ownership thereof.  STERION agrees, at any
time during the Initial Term, at STERIS’s reasonable request, to affix in a
prominent place on the Equipment such labels, plates or other markings supplied
by STERIS identifying the Equipment as property of STERIS.

12.2

STERION shall maintain the Equipment in proper working order throughout the term
of this Agreement, provided that STERIS shall reimburse STERION for all costs
and expenses associated with any maintenance conducted with the prior written
approval of STERIS which is required as a result of ordinary wear and tear on
the Equipment.  Any costs and expenses associated with any repairs to the
Equipment required as a result of misuse or negligence on the part of STERION
shall be the sole responsibility of STERION.

12.3

STERION acknowledges that title to the Equipment remains in STERIS.  STERION at
its own cost and expense shall protect and defend the title of STERIS from and
against claims made by creditors of STERION or any other party based upon its
relationships with STERION.  STERION shall give STERIS immediate written notice
of all levies, encumbrances, attachments, liens and charges or other judicial
process of every kind whatsoever that may be executed by creditors of STERION,
and shall indemnify and save STERIS harmless from any loss or damage caused
thereby.  STERION will cooperate with STERIS to enable STERIS to file, register
or record, and refile, re-register and re-record a memorandum of this Section
 in such offices as STERIS may determine and whatever required or permitted by
law for the proper protection of STERIS’s title to the Equipment.

ARTICLE XIII
RIGHTS OF FIRST REFUSAL

13.1

STERION hereby grants STERIS the exclusive right of first refusal to purchase
all of STERION’s tooling and all other manufacturing assets, patents,
trademarks, copyrights, intellectual properties and other proprietary rights
necessary to manufacture, package and deliver the Products, excluding the
Sterion Mark (the “Manufacturing Assets”), that STERIS has not purchased
pursuant to the Purchase Agreement, in the event that STERION:

(a)

determines that it will not continue its business in a manner that would permit
STERION to perform its obligations under this Agreement; or

(b)

desires to sell or otherwise dispose of all or a significant part of the
Manufacturing Assets to any third party, whether through a sale of assets or
equity or otherwise, and such third party does not agree to assume this
Agreement.

13.2

STERION shall provide prompt written notice to STERIS upon the occurrence of
either event described in Section , along with an offer to sell the
Manufacturing Assets to STERIS in accordance with the provisions of Section .
 The offer made by STERION shall include the proposed purchase price for the
Manufacturing Assets and the other material terms of the offer.  STERION shall
provide STERIS with any information reasonably requested by STERIS in its review
of the offer.  STERIS shall respond to the offer within 60 days after its
receipt of the offer.  During the 60-day period after STERIS receives the offer
from STERION (the “Negotiation Period”), the parties shall negotiate in good
faith towards a purchase of the Manufacturing Assets by STERIS on mutually
agreeable terms.  If STERIS and STERION are unable to reach agreement for the
purchase of the Manufacturing Assets during the Negotiation Period, STERION
shall be free to deal with third parties with respect to the Manufacturing
Assets at terms no more favorable than those offered to STERIS.  If STERION does
not make a sale to a third party during the 12-month period following the end of
the Negotiation Period, the provisions of this  shall again apply to the
Manufacturing Assets sought to be transferred by STERION.

ARTICLE XIV
RISK OF LOSS, INDEMNIFICATION AND INSURANCE

14.1

In the event of a recall, correction or removal, both STERIS and STERION shall
consult prior to initiation of corrective action in order to identify all
potentially affected devices.  STERIS shall conduct any recall of the Products.
 STERION shall be responsible for any costs associated with such corrective
action.

14.2

Except to the extent Liabilities (as defined below) are caused by the negligence
or intentional acts or omissions of STERION or its employees, sub-contractors,
sub-distributors or agents, STERIS shall indemnify, defend and hold harmless
STERION and its officers, directors, employees and Affiliates (as defined in the
Purchase Agreement) from and against any and all claims, losses (including,
without limitation, losses of earnings), liabilities, obligations, payments,
damages (including, without limitation, actual, incidental, consequential and
punitive damages), charges, actions, suits, demands, assessments, awards,
judgments, fines, penalties, diminution in value, amounts paid in settlement,
and costs, fees and expenses (including, without limitation, interest that may
be imposed in connection therewith, costs and expenses of investigation, suits,
proceedings, demands and assessments and fees, expenses and disbursements of
counsel, consultants and other experts) (“Liabilities”) that any of them may
incur or suffer that arise out of or result from:

(a)

any breach by STERIS of any provision contained in this Agreement that is
applicable to STERIS;

(b)

the negligence or intentional acts or omissions of STERIS or its employees;

(c)

any third party complaints or suits related to the design or use of the Products
manufactured pursuant to this Agreement; or

(d)

any and all Liabilities incident to any of the foregoing.

14.3

Except to the extent Liabilities are caused by the negligence or intentional
acts or omissions of STERIS or its employees, sub-contractors, sub-distributors
or agents, STERION shall indemnify, defend and hold harmless STERIS and its
officers, directors, employees and Affiliates from and against any and all
Liabilities that any of them may incur or suffer that arise out of or result
from:

(a)

any misrepresentation or breach by STERION of any provision contained in this
Agreement that is applicable to STERION;

(b)

the negligence or intentional acts or omissions of STERION or its employees;

(c)

any third party complaints or suits related to the manufacture of the Products;

(d)

any Environmental Condition; or

(e)

any and all Liabilities incident to any of the foregoing.

14.4

For purposes of this , the following words and phrases shall have the following
meanings:

“Environment” means soil, surface waters, groundwater, land, stream sediments,
surface or subsurface strata, ambient air, indoor air or indoor air quality,
interior and/or exterior, including, without limitation, any material or
substance used in the physical structure, of any building or improvement and any
environmental medium.

“Environmental Condition” means any condition of the Environment with respect to
the Real Property regardless of whether such condition occurred before the date
of this Agreement, during the Initial Term of this Agreement or thereafter or
after the termination of this Agreement, or with respect to any other real
property at which any Hazardous Material generated in connection with the
manufacture of the Products at any time has been treated, stored, disposed of,
transported, handled, recycled or discharged, which violates any Environmental
Law, or even though not violative of any Environmental Law, nevertheless results
in any Release, or Threat of Release, or Liability, alleged or imposed by any
Person (including, without limitation, any Governmental Body).

“Environmental Law” means applicable statutes, rules, regulations, decisions or
orders of any Governmental Body relating to the protection or restoration of the
Environment, human exposure to hazardous or toxic substances, or the use,
storage, handling, production, disposal, discharge, control or clean-up of any
hazardous or toxic substances, materials or wastes.

“Governmental Body” means any court, department, body, board, bureau,
administrative agency or commission or other governmental authority or
instrumentality, whether federal, state, local or foreign.

“Hazardous Material” means any pollutant, toxic substance including
polychlorinated byphenyls asbestos and asbestos-containing materials, toxic
mold, hazardous waste, solid waste, hazardous material, hazardous substance,
contaminant, petroleum, petroleum-containing materials, crude oil or fraction
thereof as defined in or the subject of any Environmental Law.

“Person” means an individual, corporation, partnership, limited liability
company, joint venture, association, group, trust, business trust or other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.

“Real Property” means any and all of the real property and interests in real
property, including real property ownership, leaseholds and subleaseholds,
purchase options, easements, licenses, rights to access and rights of way held
by the STERION or its Affiliates or used in or associated with manufacture of
the Products.

“Release” means any actual or alleged releasing, spilling, leaking, pumping,
pouring, emitting, generating, emptying, discharging, injecting, escaping,
mitigating, leaching, disposing or dumping of a Hazardous Material into or
within the Environment.

“Threat of Release” means any condition that presents risk of a Release that
requires action to prevent or mitigate damage to the Environment that might
result from such Release.

14.5

Any party claiming it may be entitled to indemnification under this  (the
“Indemnified Party”) shall give notice to the other party (the “Indemnifying
Party”) of each matter, action, cause of action, claim, demand, fact or other
circumstances upon which a claim for indemnification (a “Claim”) under this  may
be based.  Such notice shall contain, with respect to each Claim, such facts and
information as are then reasonably available, and the specific basis for
indemnification hereunder.

14.6

The Indemnified Party shall permit the Indemnifying Party, at the Indemnifying
Party’s option and expense, to assume the complete defense of any Claim based on
any action, suit, proceeding, claim, demand or assessment by any third party
with full authority to conduct such defense and to settle or otherwise dispose
of the same and the Indemnified Party will fully cooperate in such defense;
provided the Indemnifying Party will not, in defense of any such action, suit,
proceeding, claim, demand or assessment, except with the consent of the
Indemnified Party (which consent will not be unreasonably withheld), consent to
the entry of any judgment or enter into any settlement which provides for any
relief other than the payment of monetary Liabilities and which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to the
Indemnified Party of a release from all liability in respect thereof.  After
notice to the Indemnified Party of the Indemnifying Party’s election to assume
the defense of such action, suit, proceeding, claim, demand or assessment, the
Indemnifying Party shall be liable to the Indemnified Party for such legal or
other expenses subsequently incurred by the Indemnified Party in connection with
the defense thereof at the request of the Indemnifying Party.  As to those
actions, suits, proceedings, claims, demands or assessments with respect to
which the Indemnifying Party does not elect to assume control of the defense,
the Indemnified Party will afford the Indemnifying Party an opportunity to
participate in such defense, at its cost and expense, and will consult with the
Indemnifying Party prior to settling or otherwise disposing of any of the same.

14.7

Each of the parties shall maintain occurrence based insurance coverage, with an
insurance carrier reasonably acceptable to the other party and having a rating
of at least A or higher by A.M. Best Company, which shall include general
liability in an amount of not less than $1 million per occurrence and $2 million
annual aggregate.  Each such policy shall name the other party as an additional
insured and shall provide that the other party hereto shall receive at least 30
days prior written notice of any cancellation, modification or termination of
the policy.  Each party shall, concurrently with the execution of this
Agreement, provide to the other party a certificate of insurance evidencing the
policy obtained by it pursuant to this Section .

ARTICLE XV
REQUIRED NOTICES

15.1

Each party hereto shall promptly notify the other in the event of:

(a)

any merger (other than a merger with an Affiliate of such party), change of
control, or sale or lease of all or substantially all of the assets of a party’s
business;

(b)

any suspension of payments to creditors generally, or the initiation of any
voluntary bankruptcy or reorganization proceeding under any federal or state law
for the relief of debtors, or the initiation of any composition of debt with its
creditors;

(c)

any judgment in any litigation that has been entered against such party for
which all appeals have been exhausted and whose size, in such party’s good faith
opinion, will materially affect the ability of such party to perform this
Agreement;

(d)

any levy of execution against the assets of such party for unpaid taxes is
commenced and is not subject to any defense or appeal, which levy will
materially affect the ability of such party to perform this Agreement; or

(e)

any resolution or determination of such party to dissolve its business or any
commencement of proceedings to liquidate or dissolve such party under federal or
state law.

15.2

Upon receiving notice that any event described in Section  has occurred, the
other party hereto shall have the right to take any commercially reasonable
steps to protect itself from the consequences of a failure by the other party to
perform this Agreement.

ARTICLE XVI
MISCELLANEOUS

16.1

Neither party hereto is in any way the legal representative or agent of the
other.  Neither party is authorized or empowered to assume any obligation of any
kind, implied or express, on behalf of the other party hereto.  Nothing in this
Agreement shall create or be deemed to create an employer/employee, agency,
joint venture or partnership relationship between the parties.

16.2

STERION, for itself, its permitted subcontractors, materialmen, laborers and for
all other persons performing labor or furnishing any services, labor or
materials for the Products to be provided hereunder, hereby waives to the
fullest extent permitted by law, all rights to have filed or maintained any
mechanics or other liens or claims for or on account of the Products, services
or labor to be furnished hereunder.  STERION shall, at any time as required by
STERIS, execute or have executed such additional documents as are deemed
necessary by STERIS to properly implement this release and waiver.

16.3

The provisions of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns; provided that
no party may assign, delegate or otherwise transfer any of its rights and
obligations under this Agreement without the consent of the other party hereto.
 

16.4

The failure of a party to insist in any one or more instances upon the
performance of any provision of this Agreement shall not be construed as a
waiver or relinquishment of the party’s right to future performance of such
provision, and the other party’s obligation in respect of such future
performance shall continue in full force and effect.

16.5

Any notice, request, instruction or other document to be given hereunder by a
party hereto shall be in writing and shall be deemed to have been given (a) when
received if given in person or by courier or a courier service, (b) on the date
of transmission if sent by facsimile or (c) three business days after being
deposited in the U.S. mail, certified or registered mail, postage prepaid:

If to STERIS:

STERIS CORPORATION
5960 Heisley Road
Mentor, Ohio 44060-1834
Attention:  Mark D. McGinley,

Vice President, General Counsel

and Secretary
Fax No.:   (440) 357-2344

If to STERION:

STERION INCORPORATED
13828 Lincoln Street N.E.
Ham Lake, Minnesota  55304-6949
Attention:  Mr. J. David Berkley, President
Fax No.:   (763) 755-95l6

with a copy to:

Lindquist & Vennum
4200 IDS Center
80 South Eighth Street
Minneapolis, Minnesota  55402
Attention:  Girard P. Miller, Counsel
Fax No.:   (612) 371-3207

or to such other individuals or addresses as may be specified from time to time
in a written notice given by such party.

16.6

This Agreement, the exhibits hereto and the schedule(s) hereto constitute the
entire agreement, and except with respect to the Purchase Agreement and the
transactions contemplated thereby, supersede all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.

16.7

Any provision in this Agreement may be amended or waived, but only if such
amendment or waiver is in writing and is signed, in the case of the amendment,
by each party to this Agreement, or in the case of a waiver, by the party
against whom the waive is to be effective.  

16.8

No provision of this Agreement is intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.

16.9

Except as otherwise provided herein, all costs and expenses incurred in
connection with this Agreement, including fees of counsel and accountants, shall
be paid by the party incurring such expenses.  

16.10

This Agreement shall not be construed against the party preparing it, and shall
be construed without regard to the identity of the person who drafted it or the
party who caused it to be drafted.  This Agreement shall be construed as if all
parties had jointly prepared this Agreement and it shall be deemed their joint
work product, and each and every provision of this Agreement shall be construed
as though all of the parties hereto participated equally in the drafting hereof,
and any uncertainty or ambiguity shall not be interpreted against any one party.
 As a result of the foregoing, any rule of construction that a document is to be
construed against the drafting party shall not be applicable.

16.11

If any provision of this Agreement, or any application thereof, shall be
declared invalid or unenforceable by any court of competent jurisdiction, the
remaining provisions of this Agreement, and any other application of such
provision, shall continue in full force and effect to the fullest extent
permitted by applicable law.

16.12

This Agreement shall be governed by and construed in accordance with the laws of
the State of Illinois, without regard to the conflicts of law rules of such
state, in all respects, including all matters of validity, construction and
performance of this Agreement.

16.13

In connection with any action or proceeding arising out of or relating to this
Agreement or any of the documents contemplated hereby, each of the parties
submits to the jurisdiction of any competent federal or state court sitting in
Ohio or Minnesota. Any action or proceeding initially commenced by STERION shall
be commenced solely in a competent court located in Ohio, and any action or
proceeding initially commenced by STERIS shall be commenced solely in a
competent court located in Minnesota, except that any action for injunctive or
other equitable relief may be commenced in any competent court.  Each of the
parties hereto waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought.  Each party hereto agrees that a final
judgment in any action or proceeding so brought shall be conclusive and may be
enforced by suit on the judgment in any other manner provided by law or at
equity.

16.14

The descriptive headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning and interpretation of this
Agreement.  Unless otherwise indicated, all references to Articles, Sections,
subsections, clauses, Schedules or Exhibits in this Agreement refer to the
Articles, Sections, subsections and clauses of, and the Schedules or Exhibits
to, this Agreement.

16.15

This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.

16.16

Each party hereto shall have the right to off-set any and all claims or amounts,
regardless of the origin, which are due or which may become due from the other
party against any amount it owes to that other party.

16.17

Each party acknowledges and agrees that the remedies at law available to the
other party for such party’s breach of this Agreement would be inadequate.  Each
party therefore agrees that, in addition to any other rights or remedies that
the other party may have at law or in equity, temporary and permanent injunctive
relief and/or specific performance may be granted in any proceeding that may be
brought to enforce any provision hereof without the necessity of proof of actual
damage and without the posting of bond or other security, and that such rights
are in addition to whatever other remedies the other party may have, at law or
in equity, in any court of competent jurisdiction for any breach or
non-compliance.

(Signatures are on the following page.)

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth above by and through their respective duly authorized officers.

STERIS CORPORATION

  

By: /s/ Laurie Brlas

Name: Laurie Brlas

Title: Senior Vice President and

Chief Financial Officer

STERION INCORPORATED

By: /s/ J. David Berkley

Name J. David Berkley

Title: President