exv10w1



 




Exhibit 10.1


Confidential


 


ASSET PURCHASE AGREEMENT




AMONG




HERAEUS VADNAIS, INC.,




HERAEUS MATERIALS CARIBE, INC.,




AND




HERAEUS MATERIALS S.A.,




as Buyers,




AND




SYNOVIS INTERVENTIONAL SOLUTIONS, INC.




SYNOVIS CARIBE, INC.




AND




SYNOVIS LIFE TECHNOLOGIES, INC.,




as Seller Parties




Dated as of January 8, 2008


 


 









 





	 	 	 	 	 	 	 	 	 
	1.	 	DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	2.	 	BASIC TRANSACTION	 	 	10	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	Purchase and Sale of Assets
	 	 	10	 
	 

	 	(b)
	 	Assumption of Liabilities
	 	 	12	 
	 

	 	(c)
	 	Purchase Price
	 	 	12	 
	 

	 	(d)
	 	Adjustments to Purchase Price
	 	 	12	 
	 

	 	(e)
	 	Adjustments to Closing Payments
	 	 	12	 
	 

	 	(f)
	 	Payment Procedure
	 	 	13	 
	 

	 	(g)
	 	The Closing
	 	 	13	 
	 

	 	(h)
	 	Allocation of Purchase Price
	 	 	14	 
	 

	 	(i)
	 	Sale and Transfer Taxes
	 	 	14	 
	 

	 	(j)
	 	Escrow Agent
	 	 	14	 
	 

	 	(k)
	 	Employee Benefit Plans
	 	 	14	 
	 

	 	(l)
	 	Assets Not Assignable
	 	 	15	 
	 

	 	(m)
	 	Ongoing or Transition Services
	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	3.	 	REPRESENTATIONS AND WARRANTIES OF THE SELLERS	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	Organization, Qualification, and Corporate Power
	 	 	16	 
	 

	 	(b)
	 	Noncontravention; Consents
	 	 	16	 
	 

	 	(c)
	 	Customers and Suppliers
	 	 	17	 
	 

	 	(d)
	 	Subsidiaries
	 	 	17	 
	 

	 	(e)
	 	Assets
	 	 	17	 
	 

	 	(f)
	 	Inventory
	 	 	18	 
	 

	 	(g)
	 	Financial Statements
	 	 	18	 
	 

	 	(h)
	 	Events Subsequent to June 30, 2007
	 	 	18	 
	 

	 	(i)
	 	Absence of Undisclosed Liabilities
	 	 	20	 
	 

	 	(j)
	 	Legal Compliance
	 	 	20	 
	 

	 	(k)
	 	Litigation
	 	 	20	 
	 

	 	(l)
	 	Licenses, Permits and Medical Device Regulations
	 	 	21	 
	 

	 	(m)
	 	Tax Matters
	 	 	22	 
	 

	 	(n)
	 	Real Property
	 	 	22	 
	 

	 	(o)
	 	Intellectual Property
	 	 	25	 
	 

	 	(p)
	 	Contracts
	 	 	28	 
	 

	 	(q)
	 	Notes and Accounts Receivable
	 	 	29	 
	 

	 	(r)
	 	Accounts and Notes Payable
	 	 	29	 
	 

	 	(s)
	 	Insurance
	 	 	29	 
	 

	 	(t)
	 	Product Warranty
	 	 	29	 
	 

	 	(u)
	 	Employment Matters
	 	 	30	 
	 

	 	(v)
	 	Employees
	 	 	30	 
	 

	 	(w)
	 	Employee Benefit Matters
	 	 	33	 
	 

	 	(x)
	 	Environmental Matters
	 	 	34	 
	 

	 	(y)
	 	Related Party Transactions
	 	 	36	 
	 

	 	(z)
	 	Brokers’ Fees
	 	 	36	 
	 

	 	(aa)	 	Disclosure	 	 	36	 






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	4.	 	REPRESENTATIONS AND WARRANTIES OF THE BUYERS	 	 	36	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	Organization, Qualification, and Corporate Power
	 	 	36	 
	 

	 	(b)
	 	Authorization
	 	 	36	 
	 

	 	(c)
	 	Noncontravention
	 	 	37	 
	 

	 	(d)
	 	Availability of Funds
	 	 	37	 
	 

	 	(e)
	 	Litigation
	 	 	37	 
	 

	 	(f)
	 	Brokers’ Fees
	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	5.	 	PRE-CLOSING COVENANTS	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	Conduct of Business
	 	 	37	 
	 

	 	(b)
	 	Additional Covenants
	 	 	39	 
	 

	 	(c)
	 	Notification of Certain Matters
	 	 	40	 
	 

	 	(d)
	 	Risk of Loss
	 	 	40	 
	 

	 	(e)
	 	Efforts to Consummate
	 	 	41	 
	 
	 	 	 	 	 	 	 	 
	6.	 	POST CLOSING COVENANTS	 	 	41	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	General
	 	 	41	 
	 

	 	(b)
	 	Litigation Support
	 	 	41	 
	 

	 	(c)
	 	Transition
	 	 	42	 
	 

	 	(d)
	 	Confidentiality
	 	 	42	 
	 

	 	(e)
	 	Covenants Not to Compete
	 	 	42	 
	 

	 	(f)
	 	Non-Solicitation
	 	 	43	 
	 

	 	(g)
	 	Sharing of Data
	 	 	43	 
	 

	 	(h)
	 	Employment Matters
	 	 	44	 
	 

	 	(i)
	 	Tax Assistance
	 	 	45	 
	 

	 	(j)
	 	Redirection of Email, Website and Documents
	 	 	45	 
	 

	 	(k)
	 	Migration of Information Technology Systems
	 	 	45	 
	 

	 	(l)
	 	Preparation of Preliminary Final Financials
	 	 	45	 
	 
	 	 	 	 	 	 	 	 
	7.	 	OBLIGATIONS AT CLOSING	 	 	46	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	Conditions Precedent to Obligations of Buyers
	 	 	46	 
	 

	 	(b)
	 	Conditions Precedent to Obligations of Seller Parties
	 	 	48	 
	 

	 	(c)
	 	Conditions Precedent to Obligations of All Parties
	 	 	49	 
	 
	 	 	 	 	 	 	 	 
	8.	 	REMEDIES FOR BREACH OF THIS AGREEMENT	 	 	49	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	Survival of Representations and Warranties
	 	 	49	 
	 

	 	(b)
	 	Indemnification Provisions for Benefit of the Buyers
	 	 	50	 
	 

	 	(c)
	 	Indemnification Provisions for the benefit of the Sellers
	 	 	51	 
	 

	 	(d)
	 	Matters Involving Third Parties
	 	 	52	 
	 

	 	(e)
	 	Determination of Adverse Consequences
	 	 	53	 
	 

	 	(f)
	 	Adjustment to Purchase Price
	 	 	53	 
	 

	 	(g)
	 	Limitations on Indemnification
	 	 	53	 
	 

	 	(h)
	 	Sole Remedy
	 	 	54	 
	 

	 	(i)
	 	No Duplication
	 	 	54	 






-ii-









 






	 	 	 	 	 	 	 	 	 
	9.	 	TERMINATION	 	 	54	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	Termination
	 	 	54	 
	 

	 	(b)
	 	Procedure for and Effect of Termination
	 	 	55	 
	 
	 	 	 	 	 	 	 	 
	10.	 	MISCELLANEOUS	 	 	55	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	Fees and Expenses
	 	 	55	 
	 

	 	(b)
	 	Press Releases and Public Announcements
	 	 	55	 
	 

	 	(c)
	 	No Third-Party Beneficiaries
	 	 	56	 
	 

	 	(d)
	 	Entire Agreement
	 	 	56	 
	 

	 	(e)
	 	Succession and Assignment
	 	 	56	 
	 

	 	(f)
	 	Counterparts
	 	 	56	 
	 

	 	(g)
	 	Headings
	 	 	56	 
	 

	 	(h)
	 	Notices
	 	 	56	 
	 

	 	(i)
	 	Governing Law
	 	 	57	 
	 

	 	(j)
	 	Amendments and Waivers
	 	 	57	 
	 

	 	(k)
	 	Severability
	 	 	57	 
	 

	 	(l)
	 	Construction
	 	 	57	 
	 

	 	(m)
	 	Disclosure Schedule; Representations
	 	 	58	 
	 

	 	(n)
	 	Incorporation of Exhibits and Schedules
	 	 	58	 
	 

	 	(o)
	 	Specific Performance
	 	 	58	 
	 

	 	(p)
	 	Submission to Jurisdiction
	 	 	58	 
	 

	 	(q)
	 	Waiver of Jury Trial
	 	 	59	 
	 

	 	(r)
	 	Non-Recourse
	 	 	59	 
	 
	 	 	 	 	 	 	 	 
	11.	 	PROVISIONS RELATING TO THE SELLER PARTIES AND THE BUYERS	 	 	59	 







-iii-









 








ASSET PURCHASE AGREEMENT




     This Asset Purchase Agreement (the “Agreement”) is entered into as of January 8, 2008
(the “Effective Date”), by and among Heraeus Vadnais, Inc., a Minnesota corporation
(“Heraeus Vadnais”), Heraeus Materials Caribe, Inc., a Puerto Rico corporation
(“Heraeus Materials Caribe”), Heraeus Materials S.A. (“Heraeus Materials” and
together with Heraeus Vadnais and Heraeus Materials Caribe, the “Buyers”), Synovis
Interventional Solutions, Inc., a Minnesota corporation (“Synovis Interventional”), Synovis
Caribe, Inc., a Puerto Rico corporation (“Synovis Caribe” and together with Synovis
Interventional, each a “Seller” and collectively, the “Sellers”), and Synovis Life
Technologies, Inc., a Minnesota corporation (“Synovis Life” and together with the Sellers,
the “Seller Parties”). The Buyers and the Sellers may each be referred to hereinafter as a
“Party” or collectively as the “Parties”.



     This Agreement contemplates a transaction more fully set forth below in which (a) the Buyers
desire (i) to purchase for cash substantially all of the Seller Parties’ assets relating to the
Sellers’ “interventional business”, which offers contract services to develop, prototype,
manufacture and assemble certain micro-components and micro-component products (the
“Interventional Products”), including, but not limited to, coils, helices, stylets,
guidewires and complex micro-wires, polymer and machined components for the medical device
industry, as set forth on Schedule 3(t) attached hereto (the “Business”), and (ii) to
assume only certain liabilities of Sellers specified below, and (b) the Sellers desire (i) to sell
and transfer such assets and liabilities to Buyers and (ii) to retain all other liabilities of
Sellers not specifically assumed by the Buyers, all upon terms and conditions set forth in this
Agreement. The transactions contemplated by this Agreement are referred to hereinafter as the
“Asset Purchase.”



     The Parties intend that the Asset Purchase as it relates to Synovis Caribe shall qualify for
bulk sale exemption under Puerto Rican Internal Revenue Code Section 2301(ww).



     Now, therefore, in consideration of the premises and the mutual promises herein made, and in
consideration of the representations, warranties, and covenants herein contained, the Parties agree
as follows.



     1. Definitions. Capitalized terms used herein shall have the meanings set forth in
this Section 1.



     “Accounts Receivable” has the meaning set forth in Section 2(a)(xi).



     “Acquired Assets” has the meaning set forth in Section 2(a).



     “Adulterated or Misbranded” has the meaning set forth in Section 3(l)(ii).



     “Adverse Consequences” means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, liabilities, Taxes,
liens, losses, expenses, and fees, including court costs and reasonable attorneys’ fees.



1









 





     “Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgated
under the Securities Exchange Act.



     “Approval” means any action, approval, authorization, consent, certification, filing,
notice, qualification or registration, or any waiver of any of the foregoing, required to be
obtained from, or any notice, statement or other communication required to be filed with or
delivered to, any Governmental Authority or any Person not a party to this Agreement.



     “Asset Purchase” has the meaning set forth in the preface above.



     “Assigned Insurance Policies” has the meaning set forth in Section 2(a)(xii).



     “Assumed Contracts” has the meaning set forth in Section 2(a)(vii).



     “Assumed Liabilities” means (a) the Liabilities of the Sellers set forth on Exhibit B
hereto; and (b) all obligations and Liabilities, in addition to those listed on Exhibit B, with
respect to the Business or Acquired Assets arising, to be paid or otherwise performed after the
Closing under the Assumed Contracts and other agreements, contracts, licenses, leases and rights
which are among the Acquired Assets. For the avoidance of doubt, Buyers shall not assume any
obligation or liability of Sellers relating to claims arising out of actions (or inaction) or other
events occurring on or prior to the Closing.



     “Balance Sheet and Statement of Income” has the meaning set forth in Section 3(g).



     “Basket Amount” has the meaning set forth in Section 8(g).



     “Benefit Arrangement” means any employment, severance or similar contract or
arrangement (whether or not written) or any plan, policy, fund, program or contract or arrangement
(whether or not written) providing for compensation, bonus, profit-sharing, stock option, or other
stock related rights or other forms of incentive or deferred compensation, vacation benefits,
insurance coverage (including any self-insured arrangements), health or medical benefits,
disability benefits, workers’ compensation, supplemental unemployment benefits, severance benefits
and post-employment or retirement benefits (including compensation, pension, health, medical or
life insurance or other benefits) that (i) is not an Employee Plan; (ii) is entered into,
maintained, administered or contributed to, as the case may be, by Sellers or any of their
Affiliates or ERISA Affiliates or (iii) covers any current or former employee, director, or
independent contractor of the Business who is employed by or performs services for the Sellers in
the United States or Puerto Rico.



     “Books and Records” has the meaning set forth in Section 2(a)(viii).



     “Business” has the meaning set forth in the preface above.



     “Buyer Representative” has the meaning set forth in Section 11(c).



     “Buyers” has the meaning set forth in the preface above.



     “Cap” has the meaning set forth in Section 8(g).



2









 





     “Casualty Event” has the meaning set forth in Section 5(d)(i).



     “CERCLA” means the U.S. Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601, et. seq.), as amended, and all rules regulations, and final
orders issued thereunder.



     “cGMP” has the meaning set forth in Section 3(l)(ii).



     “Claims” has the meaning set forth in Section 2(a)(ix).



     “Closing” has the meaning set forth in Section 2(g).



     “Closing Date” has the meaning set forth in Section 2(g).



     “Closing Payment” has the meaning set forth in Section 2(f)(i).



     “COBRA” means the Consolidated Omnibus Budget and Reconciliation Act of 1985.



     “Code” means the Internal Revenue Code of 1986, as amended.



     “Competitive Business” has the meaning set forth in Section 6(e)(ii).



     “Condemnation” has the meaning set forth in Section 5(d)(ii).



     “Condemnation Proceeds” has the meaning set forth in Section 5(d)(ii).



     “Continuing Employees” means Employees who accept offers of employment with Buyers
pursuant to Section 6(h).



     “Customer List” has the meaning set forth in Section 3(c)(i).



     “Customer Requirements” has the meaning set forth in Section 3(l)(iii).



     “Disclosure Schedule” has the meaning set forth in Section 3.



     “Effective Date” has the meaning set forth in the preface above.



     “Employee Benefit Plan” means the Benefit Arrangements and the Employee Plans.



     “Employee Plan” means any “employee benefit plan,” as defined in Section 3(3) of
ERISA, that (i) is subject to any provision of ERISA, (ii) is maintained, administered or
contributed to by the Sellers or any of their Affiliates or ERISA Affiliates or (iii) covers any
current or former employee, director, or independent contractor of the Business who is employed by
or performs services for the Sellers in the United States or Puerto Rico.



     “Employees” has the meaning set forth in Section 3(u).



     “Encumbrance” means any claim, charge, lease, covenant, easement, levy, encumbrance,
security interest, lien, option, mortgage, pledge, assessment against, rights of others, or



3









 




restriction (whether on voting, sale, transfer, disposition or otherwise), whether imposed by
agreement, understanding, law, equity or otherwise.




     “Environmental Laws” shall mean any environmental or health and safety law,
regulation, rule, ordinance, or by-law at the federal, state, county, or municipal level, including
without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, 42 U.S.C. §§ 9601 et. seq., the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. §§ 5101 et. seq., the Resource Conservation and Recovery Act, as amended, 42
U.S.C. §§ 6901 et. seq., the Federal Clean Water Act, as amended, 33 U.S.C. §§ 1251 et. seq., the
Federal Clean Air Act, as amended, 42 U.S.C. §§ 7401 et. seq., the Occupational Safety and Health
Act, 29 U.S.C. §§ 651 et. seq., and their state counterparts, and any requirements pertaining to
environmental matters or Hazardous Substances that are set forth in a permit, approval, or order
issued by, or an agreement with, a governmental agency or an order or decision issued by a court.



     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended and the
rules and regulations promulgated thereunder.



     “ERISA Affiliate” of an entity means any other entity which, together with such
entity, would be treated as a single employer under Section 414 of the Code.



     “Escrow Agent” means The Bank of New York.



     “Escrow Agreement” has the meaning set forth in Section 2(j).



     “Escrow Amount” has the meaning set forth in Section 2(c)(iii).



     “Excluded Assets” means all assets, properties, interests and rights of Sellers other
than the Acquired Assets including, without limitation, the following, which Sellers shall not
convey, assign, transfer or deliver to the Buyers, and the Buyers shall not acquire from Sellers
(and the Acquired Assets shall not include): (i) the property listed on Exhibit A-2, including,
without limitation, all cash, cash equivalents and short-term investments; (ii) Sellers’ tax
returns and supporting documentation related thereto, corporate franchise, record books, record
books containing minutes of meetings of directors, managers, shareholders and members or records of
meetings or actions of partners, as applicable, and such other records as have to do exclusively
with the Sellers’ organization, stock capitalization or equity participation in Sellers or their
Affiliates (collectively, the “Seller Records”); provided, however, that Sellers shall
provide the Buyers with access during normal business hours to any of the foregoing records and
record books after Closing to the extent they relate directly to any of the Acquired Assets; (iii)
Sellers’ rights under this Agreement and all other agreements, certificates, instruments, documents
and writings delivered by Sellers in connection with the transactions contemplated in this
Agreement to which it is or will be a party; (iv) all Employee Benefit Plans; (v) the Excluded
Marks; and (vi) all employee medical records and other personnel records that Sellers are required
by law to retain in its possession (provided, that Sellers will provide Buyers with a copy of such
records for Continuing Employees unless expressly prohibited by law).



4









 





     “Excluded Marks” means the mark Synovis, any associated logos and all common law and
statutory rights, including trademark or service mark registrations or domain names containing
“Synovis” and applications for registration in the preceding.



     “FDA” has the meaning set forth in Section 3(l)(ii).



     “FDCA” has the meaning set forth in Section 3(l)(ii).



     “Financial Statements” has the meaning set forth in Section 3(g).



     “Final Calculation of Working Capital Change” has the meaning set forth in Exhibit
A-7.



     “Final Statement of Net Assets” has the meaning set forth in Exhibit A-7.



     “Forecasted Revenue for 2008” means Sellers’ budgeted revenue as provided in the
Sellers’ 2008 Forecast as previously provided to Buyers.



     “GAAP” means United States generally accepted accounting principles as in effect from
time to time and at the time in question.



     “Governmental Authority” means any government, court, regulatory or administrative
agency, legislative body, board, bureau, commission or authority or other governmental
instrumentality, whether federal, state or local, domestic, foreign or multinational, including any
intermediary, carrier, instrumentality or agency thereof.



     “Hazardous Substances” shall mean any pollutant, contaminant, toxic substance,
hazardous substance, hazardous constituent, hazardous material, or hazardous waste, or any oil,
petroleum, or petroleum product or derivative, as defined in or pursuant to any Environmental Law,
the generation, handling, storage, release, transportation, or disposal of which is prohibited,
limited, or regulated under any Environmental Law.



     “Indemnified Party” has the meaning set forth in Section 8(d)(iii).



     “Indemnifying Party” has the meaning set forth in Section 8(d)(iii).



     “Intellectual Property” means the following intellectual property that is used
exclusively in connection with the Business: (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, patent disclosures and invention disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions and re-examinations thereof, (b) all
trademarks, service marks, trade dress, logos and trade names, together with all translations,
adaptations, derivations, and combinations thereof and including all goodwill associated therewith,
and all applications, registrations, and renewals in connection therewith (exclusive of any
Excluded Marks), (c) all copyrightable works, all copyrights, and all applications, registrations,
and renewals in connection therewith, (d) all mask works and all applications, registrations, and
renewals in connection therewith, (e) all trade secrets and confidential business information
(including ideas, research and development, know how (including work instructions and product
specifications), formulas, compositions, manufacturing and production processes



5









 




and techniques, technical data, designs, drawings, specifications, customer and supplier
lists, pricing and cost information, and business and marketing plans and proposals), (f) all
computer software (including data and related documentation), (g) all other proprietary rights, and
(h) all copies and tangible embodiments thereof (in whatever form or medium).




     “Intellectual Property Rights” means, the following intellectual property rights that
are used exclusively in the Business: any and all rights existing now or in the future under patent
law (including patents or patent applications and any utility patent, design patent, patent of
importation, patent of addition, certificate of addition, certificate or model of utility, whether
domestic or foreign, and all divisions, continuations, continuations-in-part to the extent that the
subject matter of the claims in the continuation-in-part which was previously in the listed patent
applications, reissues, reexaminations, renewals or extensions thereof, and any letters patent that
issue thereon), copyright law (including both common law and statutory rights, including copyright
registrations and applications for registration thereof), neighboring rights law, industrial design
rights law, semiconductor chip and mask work protection law, moral rights law, database protection
law, trade secret law, trademark law (including both common law and statutory rights, including
trademark or service mark registrations and applications for registration thereof but excluding any
rights in Excluded Marks), unfair competition law, publicity rights law, privacy rights law,
licenses and other conveyances and any and all similar proprietary rights, and any and all
renewals, extensions, and restorations thereof, now or hereafter in force and effect, whether
worldwide or in individual countries or regions.



     “Interventional Product” has the meaning set forth in the Recitals.



     “Interventional Statement of Net Assets” has the meaning set forth in Exhibit A-7.



     “Inventory” has the meaning set forth in Section 2(a)(iv).



     “Key Employees” has the meaning set forth in Section 5(a).



     “Knowledge” or “knowledge” of a particular fact or other matter of any Person
that is not an individual, means (i) with respect to Sellers, the actual knowledge of Richard
Kramp, Brett Reynolds (Messrs. Kramp and Reynolds are referred to together as “Sellers’ Senior
Management”), Steve Blakemore and Mark Otero and (ii) with respect to Buyers means, the actual
knowledge of Roland Gerner and Mark Kempf (“Buyers’ Senior Management”), as well as the
constructive knowledge of any facts or events which Sellers’ Senior Management or Buyers’ Senior
Management could reasonably have discovered or otherwise become aware of in the course of
conducting an inquiry of the employees of such Person and its subsidiaries who, in the course of
performing the duties of such employment may reasonably be expected to have actual awareness of
such fact or other matter.



     “Liability” means any liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including any liability for Taxes.



     “Licenses and Permits” has the meaning set forth in Section 3(l)(i).



     “Leased Real Property” has the meaning set forth in Section 2(a)(iii).



6









 





     “Material Contract” has the meaning set forth in Section 3(p).



     “Medical Device” has the meaning set forth in Section 3(l)(ii).



     “Migration Period” has the meaning set forth in Section 6(k).



     “Minnesota Phase I Report” means the Phase I Environmental Site Assessments and
Limited Compliance Reviews entitled “Phase I Environmental Site Assessment and Limited Compliance
Review (400 Apollo Drive, Lino Lakes, Minnesota)” and “Phase I Environmental Site Assessment and
Limited Compliance Review (471 and 475 Apollo Drive, Lino Lakes, Minnesota)” dated July 2007,
prepared by Environmental Resources Management.



     “Non-Compete Parties” has the meaning set forth in Section 6(e)(i).



     “Option” has the meaning set forth in Section 3(n)(ii)(3).



     “Other Current Assets” has the meaning set forth in Section 2(a)(xvi).



     “Owned Real Property” has the meaning set forth in Section 2(a)(iii).



     “Party” has the meaning set forth in the preface above.



     “Payoff Letters” has the meaning set forth in Section 7(a)(v).



     “Permits” has the meaning set forth in Section 2(a)(vi).



     “Permitted Encumbrances” means (A) Encumbrances for taxes not yet due and payable, (B)
statutory liens of lessors, liens of carriers, warehousemen, mechanics and materialmen incurred in
the ordinary course of business for sums not yet due and which are not, individually or in the
aggregate, material to the Business, (C) Encumbrances incurred or deposits made in the
ordinary course of business in connection with workers’ compensation, unemployment insurance and
other types of social security, or to secure the performance of statutory obligations (none of
which are individually or in the aggregate material to the Business), and (D) easements, covenants,
or similar matters of record affecting title which do not materially impair the occupancy or use of
the Acquired Assets for the purpose for which it is currently used in connection with the Business.



     “Person” means an individual, a partnership, a corporation, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization, or a governmental entity
(or any department, agency, or political subdivision thereof).



     “Personal Property” has the meaning set forth in Section 2(a)(i).



     “Phase I Reports” means the Minnesota Phase I Report and the Puerto Rico Phase I
Report.



     “Preliminary Final Financials” has the meaning set forth in Section 6(l).



     “PRIDCO Lease” has the meaning set forth in Section 2(l)(iii).



7









 





     “Publicly Available Software” has the meaning set forth in Section 3(o)(vi).



     “Puerto Rico Employees” means those Puerto Rico employees of each of the Sellers who
are primarily employed in connection with the Business and set forth on Exhibit F hereto.



     “Puerto Rico Phase I Report” means the Phase I Environmental Site Assessment and
Limited Compliance Review entitled “Phase I Environmental Site Assessment and Limited Compliance
Review (415 Road 693, Dorado, Puerto Rico)” dated August 2007, prepared by Environmental Resources
Management.



     “Puerto Rico Code” means the Puerto Rico Internal Revenue Code of 1994, as amended.



     “Puerto Rico Tax Grant” has the meaning set forth in Section 2(a)(xix).



     “Purchase Price” has the meaning set forth in Section 2(c)(i).



     “QSR” has the meaning set forth in Section 3(l)(ii).



     “Real Property” means the Owned Real Property and the Leased Real Property.



     “Real Property Lease” has the meaning set forth in Section 3(n)(ii)(3).



     “Restricted Interests” has the meaning set forth in Section 2(l)(i).



     “Retained Liabilities” means all Liabilities of Sellers other than the Assumed
Liabilities, including, without limitation, (i) Liabilities arising from the Sellers’ ownership,
use or operation of the Acquired Assets, the sale, licensing or other disposition of its products,
or the operation of the Business, prior to the Closing, (ii) any Liability of Sellers for Taxes
arising prior to the Closing, (iii) any product warranty, Liability or similar claims relating to
products delivered on or prior to Closing, and (iv) any obligation or liability of Sellers relating
to claims arising out of actions (or inaction) or other events occurring on or prior to the
Closing.



     “Securities Act” means the Securities Act of 1933, as amended.



     “Securities Exchange Act” means the Securities Exchange Act of 1934, as amended.



     “Seller Representative” has the meaning set forth in Section 11(a).



     “Seller Material Adverse Effect” means a material adverse effect on the business,
assets, properties, prospects of the Business, results of operations or financial condition of the
Business including, without limitation, a product recall, that, individually or in the aggregate,
results in, or could reasonably be expected to result in a twenty percent (20%) or more reduction
to Forecasted Revenue for 2008; provided, that any adverse change, effect, event, occurrence or
state of facts (a) relating to, caused by or resulting from the United States economy or the
industries in which the Business operates in general (in each case, provided that the Business is
not disproportionately affected thereby), (b) arising from or relating to direct engagement by the
United States in hostilities, whether or not pursuant to the declaration of a national emergency or
war, or the occurrence of any military or terrorist attack anywhere in the world, (c) arising from



8









 




or relating to material disruptions to the financial, banking or securities markets, (d) as a
result of changes in GAAP or (e) as a result of or related to actions taken by the Seller Parties
with Buyers’ written consent or in compliance with the requirements of this Agreement or the
announcement of the transactions contemplated by this Agreement shall not constitute a Seller
Material Adverse Effect.




     “Sellers” has the meaning set forth in the preface above.



     “September 2007 Working Capital” means the aggregate of (i) $5,536,295 for Synovis
Interventional, plus (ii) $1,275,341 for Synovis Caribe, as compiled in the calculation on Schedule
I of Exhibit A-7.



     “Statement of Net Assets” has the meaning set forth in Exhibit A-7.



     “Subsidiary” means any Person of which the securities having ordinary voting power to
elect a majority of its board of directors (or managing or general partners or other persons having
similar functions), or other ownership interests (including partnership and membership interests)
ordinarily constituting a majority interest in the capital, profits or cash flow of such Person,
are at the time, directly or indirectly, owned or controlled by the Sellers and/or by one or more
other Subsidiaries of the Sellers.



     “Surveys” has the meaning set forth in Section 7(a)(xii)



     “Synovis Caribe Statement of Net Assets” has the meaning set forth in Exhibit A-7.



     “Synovis Product” has the meaning set forth in Section 2(a)(xiii).



     “Tax” means any United States federal, state, Commonwealth of Puerto Rico, local, or
foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section 59A), customs duties,
capital stock, franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer, registration, value added,
alternative or add on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.



     “Tax Returns” means all returns, declarations, reports, statements, schedules,
notices, forms or other documents or information required to be filed in respect of the
determination, assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of any legal requirement relating to any Tax, and the
term “Tax Return” means any one of the foregoing Tax Returns.



     “Third Party Claim” has the meaning set forth in Section 8(d)(i).



     “Title Company” has the meaning set forth in Section 7(a)(xi).



     “Trade Accounts Payable” has the meaning set forth on Exhibit B hereto.



9









 





     “United States Employees” means those United States employees of each of the Sellers
who are primarily employed in connection with the Business and set forth on Exhibit F
hereto.



     “WARN Act” means the Worker Adjustment and Retraining Notification Act, as amended.



     “Working Capital” means net Accounts Receivable, Other Current Assets and Inventory,
minus Trade Accounts Payable to be consistently calculated and compiled in accordance with Schedule
I to Exhibit A-7.



     “Working Capital Change” has the meaning set forth in Exhibit A-7.



     2. Basic Transaction.



          (a) Purchase and Sale of Assets. On and subject to the terms and conditions of this
Agreement, the Buyers agree to purchase from the Sellers, and the Sellers agree to sell, transfer,
convey, and deliver to the Buyers, all of the Acquired Assets at the Closing for the consideration
specified below in Section 2(c). The “Acquired Assets” are all of the rights, titles and
interests that the Sellers possess in and to all of the assets owned or used by the Sellers in the
operation of the Business (other than the Excluded Assets) free and clear of all Encumbrances,
other than Permitted Encumbrances, as the same may exist at Closing, including but not limited to:




               (i) All equipment (including office equipment, manufacturing equipment, transportation
equipment and warehouse equipment), machinery, computer hardware and software, rolling stock,
supplies, furniture, furnishing, racks, shelves, decorations, fixtures, tools, tooling,
improvements and other tangible personal property of Sellers, whether held by Sellers or third
parties (collectively, the “Personal Property”), including, without limitation, the items
listed on Exhibit A-1 and all rights to the warranties received from the manufacturers and
distributors of all such personal property and fixtures and any related claims, credits, rights of
recovery and setoffs with respect to such personal property and fixtures;



               (ii) All leases and rental agreements in respect of equipment and other Personal Property
employed by Sellers in the operation of the Business or otherwise, including, without limitation,
those leases and agreements listed on Exhibit A-1;



               (iii) All (A) the owned real property listed on Exhibit A-1 (the “Owned Real
Property”) and (B) the leases and sub-leases for Real Property listed on Exhibit A-1
(the “Leased Real Property”), including, with respect to (A) and (B), all of Sellers’
right, title and interest in and to all land, buildings, structures, easements, appurtenances,
improvements (including construction in progress) and fixtures located thereon;



               (iv) All of Sellers’ inventories of raw materials, work-in-process, finished goods,
merchandise and supplies, parts, packaging materials and other similar items, net of reserves,
existing at the Closing Date, as listed on Exhibit A-1 (“Inventory”);



10









 





               (v) All Intellectual Property (other than the Excluded Marks), including the Intellectual
Property owned by Synovis Life related to the Business, as listed on Exhibit A-1;



               (vi) All of Sellers’ licenses, sublicenses, permits, approvals, certifications, endorsements,
qualifications, accreditations and authorizations of all applicable federal, state and local
governmental entities (collectively, the “Permits”) necessary for the conduct of the
Business as of the Closing Date by Sellers, including, without limitation, the Permits listed on
Exhibit A-1;



               (vii) All contracts (A) to which Sellers are a party relating to the Acquired Assets and the
Business, including those which are listed on Exhibit A-1 (the “Assumed
Contracts”), or (B) to which Synovis Life is a party that relate exclusively to the Business,
but in all cases excluding such contracts which are Excluded Assets;



               (viii) All records and documentation of Sellers (including all discs, tapes and other
media-storage data and information) relating to the Business and its customers, distributors and
suppliers including, without limitation, customer, distributor and supplier lists), and all other
records relating to the Business (including, without limitation, copies of all historical accounts
of Sellers) other than the Seller Records (collectively, the “Books and Records”);



               (ix) Any claim, cause of action or right in action against third parties that has arisen or
may arise relating to the Acquired Assets (the “Claims”);



               (x) All of Sellers’ goodwill relating to the Business including, to the extent practicable,
Sellers’ goodwill associated with all vendor, distributor, service provider, contractor and
customer relationships;



               (xi) All of Sellers’ accounts and notes receivable, negotiable instruments and chattel papers,
net of reserves (the “Accounts Receivable”), including those listed on Exhibit A 1;



               (xii) All insurance proceeds paid or payable to Sellers in respect of any damage to or
destruction or loss of any Acquired Assets or rights of Sellers described in this Section 2 or
reflected on the Disclosure Schedules referred to in this Section 2, including any assets of
Sellers that, as far as could reasonably be foreseen, would have been included in the Acquired
Assets but for such damage, destruction or loss, and all of Sellers’ rights to such proceeds, to
the extent transferable, under the insurance policies listed on Exhibit A-1 (collectively,
the “Assigned Insurance Policies”);



               (xiii) All of the products or services, other than the Interventional Products produced under
contract service for customers, that the Business distributes, services, markets, sells,
manufactures, assembles or otherwise produces (each such product or service shall be referred to
herein as a “Synovis Product”) including, without limitation, the products listed on
Exhibit A-1, and all raw materials and intermediates utilized in the provision of the
foregoing, and all of Sellers’ right to provide, make, use and sell the Synovis Products and
derivatives based on the Synovis Products;



11









 





               (xiv) All telephone numbers used exclusively in connection with the Business, including those
listed on Exhibit A-1;



               (xv) All vehicles owned by Sellers and used in connection with the Business, including those
listed on Exhibit A-1;



               (xvi) All prepayments, performance and other bonds, security and other deposits, advances,
advance payments, prepaid credits and deferred charges, including the deposits and advances listed
on Exhibit A-1 (collectively, the “Other Current Assets”);



               (xvii) All rights in, to and under claims for refunds, rebates or other discounts due from
suppliers or vendors and rights to offset in respect thereof, including those rebates and credits
listed on Exhibit A-1;



               (xviii) All lock boxes, safe deposit boxes and the contents thereof which contain any assets
of the Business (excluding any cash, cash equivalents, short-term investments, or any other
Excluded Asset contained therein), including the accounts listed on Exhibit A-1; and



               (xix) Puerto Rico Tax Grant issued pursuant to Act 135 of December 2, 1997, as amended, in
Case No. 03-135-I-9 (the “Puerto Rico Tax Grant”).



               All references to “Exhibit A-1” in this Section 2(a) refers to such exhibit as updated as
of the Closing Date.



          (b) Assumption of Liabilities. On and subject to the terms and conditions of this
Agreement, the Buyers agree to assume, pay, perform and become responsible for all of the Assumed
Liabilities at the Closing. The Buyers will not assume or have any responsibility, however, with
respect to any Retained Liability and the Sellers shall be solely and fully liable for all Retained
Liabilities.




          (c) Purchase Price. The “Purchase Price” shall consist of $29,500,000 as
adjusted pursuant to the provisions of Section 2(d) below. It shall be apportioned among Sellers
and Buyers according to Exhibit C(I) and be allocated according to Exhibit C(II).




          (d) Adjustments to Purchase Price. The Buyers shall prepare a Statement of Net Assets
as of the Closing Date in accordance with Exhibit A-7. Following the final determination
of the Statement of Net Assets in accordance with Exhibit A-7, if Working Capital:




               (i) Is less than the September 2007 Working Capital, then the Purchase Price will be decreased
by the difference between these two figures; or



               (ii) Is more than the September 2007 Working Capital, then the Purchase Price will be
increased by the difference between these two figures.



          (e) Adjustments to Closing Payments.




12









 








               (i) Reimbursement for Unused Vacation Time as of Closing. The Closing Payment shall
be reduced by an amount equivalent to the cost of the unused vacation time of the Continuing
Employees of Sellers, which shall not exceed (i) five (5) days per employee of Synovis
Interventional, and (ii) ten (10) days per employee of Synovis Caribe, the methodology of which
calculation is set forth on Exhibit E(i).



               (ii) Prorated Rebates and Credits. The Closing Payment shall be reduced by an amount
equivalent to the Sellers’ portion of certain rebates and credits owed to third parties, the
methodology of which calculation is set forth on Exhibit E(ii).



          (f) Payment Procedure.




               (i) $26,550,000 of the Purchase Price shall be paid to the Sellers at Closing in cash by wire
transfer to an account designated by the Sellers, less the amount, if any, to be paid by Buyers at
the Closing in settlement of any outstanding indebtedness of Sellers (other than trade payables)
provided for in the Payoff Letters (the “Closing Payment”).



               (ii) $2,950,000 (the “Escrow Amount”) of the Purchase Price (without regard to any
adjustments made pursuant to Section 2(d) above) shall be placed in escrow pursuant to the terms of
the Escrow Agreement for a period of eighteen (18) months from the Closing Date as a non-exclusive
means of providing security toward (A) the rights of the Buyers with respect to an indemnification
claim of the Buyers under Section 8, and (B) the rights of the Buyers to any adjustment provided
for in Section 2(d) above.



               (iii) If, after the application of any increase or decrease, as the case may be, to the
Purchase Price in accordance with Section 2(d) and any reimbursement in accordance with Section
2(e), any additional amount is due from one party to the other, the obligor thereof shall pay such
additional amount to the other within ten (10) business days after the agreement or determination
of the Final Statement of Net Assets in accordance with Exhibit A-7.



               (iv) Any such payment pursuant to subsection (iii) above shall be made with interest at the
rate of 5.5% per annum calculated on the basis of a 360-day year from the Closing Date to the
payment.



               (v) All payments required to be made pursuant to Section 2(e)(iii) above shall be made by
check or wire transfer by the Buyers to the Sellers or vice versa as the case may be; provided,
however, that in the Buyers’ sole discretion, any amounts owed to the Buyers may be deducted from
the Escrow Amount and paid to the Buyers via joint written instructions from the Buyer
Representative and the Seller Representative to the Escrow Agent.



          (g) The Closing.




               (i) The Buyers and the Sellers agree that the closing of the Asset Purchase (the
“Closing”) shall occur at 10:00 a.m. on January 31, 2008; provided, that if the conditions
set forth in Section 7(a)(ix) are not met by such date, the Closing shall occur on the last day of
the next month in which all of the conditions precedent in Section 7(a)(ix) are met (the
“Closing Date”), subject to the satisfaction of all of the conditions precedent set forth
herein (or waiver by the party for whom such condition runs).




13









 








               (ii) The Closing shall take place at the offices of Dorsey & Whitney LLP, 50 South Sixth
Street, Suite 1500, Minneapolis, Minnesota.




               (iii) Deliveries at the Closing.




                      (1) At the Closing, (i) the Sellers will deliver to the Buyers the various certificates,
instruments, and documents referred to in Section 7(a) below, and (ii) the Buyers will deliver to
the Sellers the various certificates, instruments, and documents referred to in Section 7(b) below.



                      (2) Buyers shall deliver to Sellers the Closing Payment by wire transfer in immediately
available funds pursuant to the wire transfer instructions provided by the Seller Representative to
Buyers.



                      (3) Buyers shall deliver the Escrow Amount to the Escrow Agent by wire transfer in immediately
available funds pursuant to the wire transfer instructions set forth in the Escrow Agreement.



                      (4) Buyers shall wire transfer such amounts required to satisfy in full the outstanding
indebtedness in accordance with the Payoff Letters obtained pursuant to Section 7(a)(v), if any.



          (h) Allocation of Purchase Price. The Buyers and the Sellers shall allocate the
Purchase Price, as adjusted pursuant to Section 2(d), among the Acquired Assets as set forth on
Exhibit C(II). The Buyers (and the owner of the Buyers for federal income tax purposes)
and the Sellers agree to use such allocation in filing their respective Tax Returns and
declarations for all federal, state, local and foreign income tax purposes.




          (i) Sale and Transfer Taxes. Sellers shall pay any and all transfer, sales, purchase,
recording, registration, use, value added, excise or similar tax imposed under the laws of the
United States and/or Puerto Rico, or any state or political subdivision thereof, which arises out
of the transfer by the Sellers to the Buyers of any of the Acquired Assets. The Seller Parties
will, at their own expense, file all necessary Tax Returns and other documentation with respect to
all such transfer, documentary, sales, use, registration and other Taxes and fees, and the Buyers
shall, at the reasonable request and expense of the Seller Parties, cooperate in the preparation of
such Tax Returns and, if required by applicable law, join in the execution of such Tax Returns and
other documentation. The Sellers and Buyers shall cooperate to the extent necessary to qualify the
Asset Purchase for the bulk sale exemption in the Puerto Rican Internal Revenue Code Section
2301(ww).




          (j) Escrow Agent. All payments made to the Escrow Agent shall be held and distributed
in accordance with an agreement substantially in the form of Exhibit D hereto ( the
“Escrow Agreement”).




          (k) Employee Benefit Plans. Except as provided in Section 6(h), Buyers shall not
assume, honor or accept any Employee Benefit Plan. The Sellers shall be solely liable and
responsible for satisfying all obligations (whether arising under federal, state or local law, or
pursuant to contract or otherwise) that may arise or that may have arisen on or before the Closing



14









 






Date in connection with (i) the employment by Sellers of their respective employees (or the
termination thereof), (ii) the engagement of consultants, agents or other non-employee service
providers, (iii) the creation, funding or operation of any of the Sellers’ respective Employee
Benefit Plans that cover any of the Sellers’ respective employees, consultants, agents or
non-employee service providers, or (iv) the transactions described in this Agreement, including but
not limited to compliance with the health care continuation requirements under ERISA and the Code
for current or former employees of the Sellers (or their eligible dependents). At or prior to
Closing, Sellers agree to pay to their employees amounts owing to such employees for (A) the
pro-rata portion, if any, of amounts payable under the management by objectives program, the sales
commission program and the management incentive plan for the portion of the current fiscal year
ending on the Closing Date and (B) accrued and unused vacation time of the Continuing Employees in
excess of the amounts provided on Exhibit E, all in accordance with the guidelines set
forth on Schedule 2(k) attached hereto.




          (l) Assets Not Assignable.




               (i) To the extent that any interest in any of the Acquired Assets is not capable of being
assigned, transferred or conveyed without the consent, waiver or authorization of any Person and
that consent, waiver or authorization is not obtained, or if such assignment, transfer or
conveyance or attempted assignment, transfer or conveyance would constitute a material breach of
any contract that is called for to be set forth on the Disclosure Schedule in response or as an
exception to Section 3(p) below, or a violation of any law, statute, decree, rule, regulation or
other governmental edict or is not immediately practicable, then this Agreement shall not
constitute an assignment, transfer or conveyance of such interest, or an attempted assignment,
transfer or conveyance of such interest (such interests being hereinafter collectively referred to
as “Restricted Interests”). Any other interest in an Acquired Asset, which is transferable
notwithstanding such Restricted Interest, shall be transferred at Closing from the Sellers to the
Buyers as provided in this Section 2(l).



               (ii) In consultation with the Buyers as to the practicalities of proposed actions, the Sellers
shall use their commercially reasonable efforts to assist the Buyers in obtaining such consents,
waivers and authorizations and to resolve any impracticalities of assignment referred to in Section
2(l)(i) hereof.



               (iii) To the extent that the consents, waivers and authorizations referred to in Section
2(l)(i) hereof are not obtained by the Buyers or the Sellers, or until the impracticalities of
transfer referred to therein are resolved, the Sellers shall use commercially reasonable efforts to
(A) provide to the Buyers the benefits of any Restricted Interests, (B) cooperate in reasonable and
lawful arrangements designed to provide such benefits to the Buyers and (C) enforce, at the request
of the Buyers for the account of the Buyers and at the Buyer’s expense, any rights of the Sellers
arising from any Restricted Interests (including the right to elect to terminate the Restricted
Interest in accordance with the terms thereof upon the request of the Buyers), including, obtaining
the authorization from the Office of Industrial Tax Exemption of Puerto Rico for the transfer of
the Puerto Rico Tax Grant, and the assignment of the real estate lease by the Puerto Rico
Industrial Development Company (“PRIDCO Lease”); provided, that such efforts shall not
include any requirement that Seller Parties commence any




15











 




litigation,
offer or grant any accommodation
(financial or otherwise) or make any payment to any third party.




          (m) Ongoing or Transition Services. Seller Parties and Buyers agree that, as of the
Closing Date, all data processing, accounting, insurance, banking, personnel, legal, communications
and other products and services previously provided to the Business by Seller Parties or their
Affiliates, including any agreements or understanding with respect to the Business or the Acquired
Assets, will terminate with respect to the Business and the Acquired Assets and will not be
provided by Seller Parties, except as expressly set forth in Section 6 hereof.




     3. Representations and Warranties of the Sellers. The Sellers represent and warrant
to the Buyers that the statements contained in this Section 3 are true and correct as of the
Effective Date, except as set forth in the disclosure schedule accompanying this Agreement (the
“Disclosure Schedule”). The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Section 3.



          (a) Organization, Qualification, and Corporate Power. Each of the Sellers is a
corporation duly organized, validly existing, and in good standing under their respective
jurisdictions. Each of the Sellers has full corporate power and authority to conduct business as
currently conducted and is in good standing in each jurisdiction set forth on Schedule
3(a), which constitute all jurisdictions in which the nature of its business or the ownership,
operation or leasing of its properties makes such qualification necessary. Sellers have full
corporate power and authority to execute and deliver this Agreement and each other agreement,
document, instrument or certificate contemplated by this Agreement, to perform their obligations
hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.
Neither of the Sellers is in violation of any term of its organization documents. Neither of the
Sellers is insolvent or has filed for protection under any applicable bankruptcy or insolvency
laws.




          (b) Noncontravention; Consents. Neither the execution and the delivery of this
Agreement and each of the documents to be delivered hereunder, nor the consummation of the
transactions contemplated hereby or thereby will (i) violate any provision of the organizational
documents of either of the Sellers, (ii) violate any applicable law, statute, regulation, rule,
injunction, judgment, order, decree, ruling, or other restriction of any government, governmental
agency, or court to which the Business or any Seller Party is subject, (iii) conflict with, result
in a breach of, constitute a default under, result in the acceleration of, create in any Person the
right to accelerate, terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which either of the Sellers is a
party or by which either of them are bound or to which any of their assets are subject or (iv)
result in the imposition of any Encumbrance (other than Permitted Encumbrances or Encumbrances
created by Buyers) upon any of the Acquired Assets. Except as set forth in Schedule 3(b), neither
of the Sellers is required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any governmental agency or authority or other third party in
order for the Parties to consummate the transactions contemplated by this Agreement.




16









 








          (c) Customers and Suppliers.




               (i) Customers. Schedule 3(c)(i) sets forth, for the fiscal years ended
October 31, 2005, 2006 and 2007, and for the one-month period ending November 30, 2007, the 20
largest customers relating to the Business, including the names and addresses of and revenue
attributable to the customers (the “Customer List”). Except as set forth on Schedule
3(c)(i), since June 30, 2007, Sellers have not received any notice and, to Sellers’ Knowledge,
none of the 20 largest customers set forth on Schedule 3(c)(i), have ceased, or will cease to use
the products, equipment, goods or services of the Business or has substantially reduced, or will
substantially reduce, the use of such products, equipment, goods or services at any time. The
Customer List and the information contained therein has not, at any time been sold, disseminated,
or otherwise disclosed to any third party for any reason.



               (ii) Suppliers. Schedule 3(c)(ii) sets forth the names and addresses of all
the suppliers from which Sellers ordered raw materials, supplies, merchandise and other goods for
the Business having an aggregate purchase price of $5,000 or more during the fiscal year ended
October 31, 2007, and for the one-month period ending November 30, 2007, and the amount for which
each such supplier invoiced Sellers during such period. Since June 30, 2007, no supplier listed on
Schedule 3(c)(ii) has notified Sellers that any such supplier will not sell raw materials,
supplies, merchandise and other goods at any time after the Closing Date on terms and conditions
substantially similar to those used in its current sales to Sellers, subject only to general and
customary price increases. Except as set forth on Schedule 3(c)(ii), no raw materials,
supplies, merchandise or other goods supplied to Sellers are such that they may not be generally
available in the market from more than one source.



          (d) Subsidiaries. With the exception of Synovis Caribe, which is a Subsidiary of
Synovis Interventional, the Sellers have no Subsidiaries and do not control, directly or
indirectly, and have no direct or indirect interest in, any corporation, partnership, trust, joint
venture or other business association.




          (e) Assets.




               (i) Title to Assets. Except with respect to Intellectual Property and Real Property,
which are the subjects of Sections 3(n) and 3(o), the Sellers are the sole and exclusive owners of
all right, title and interest in and has good and marketable title to, or a valid leasehold
interest in, the Acquired Assets, free and clear of all Encumbrances, except for the Permitted
Encumbrances.



               (ii) Condition and Sufficiency of Assets. Except with respect to the Real Property,
which is the subject of Section 3(o), and except as set forth on Schedule 3(e)(ii), all of
the Acquired Assets have been, at all times since June 30, 2007, maintained in accordance with good
business practice, and all such tangible assets and properties are in good operating condition and
repair and are suitable for the purposes for which they are used and intended to be used, and none
of such tangible assets or properties is in need of maintenance or repairs which are estimated to
cost in excess of $10,000 individually or $50,000 in the aggregate. Exhibit A-1 shall be
updated on the Closing Date. Exhibit A-1, as updated as of the Closing Date, contains a



17









 




true and correct list of all of the Acquired Assets, including, without limitation, the Personal
Property, which shall constitute all assets necessary for the conduct of the Business as of the
Closing Date, excluding the Excluded Assets.




          (f) Inventory.




               (i) The Inventory of the Business, which is a part of the Acquired Assets (A) is properly
valued at the lower of cost or market value in accordance with GAAP and (B) consists of raw
materials, supplies and finished goods, all of which meets the specifications provided by the
customer for which it was procured or manufactured and none of which is slow moving, obsolete,
damaged, or defective, with the exception of those for which reserves have been provided in the Net
Asset Statement. Since June 30, 2007, neither of the Sellers has taken any action to either reduce
or increase inventory to levels inconsistent with past practice and outside of the ordinary course
of the Business.



               (ii) To the extent that Sellers have entered into an agreement with any customer to provide a
fixed purchase price for any of the precious metal material set forth on Schedule 3(f)(ii),
Sellers have supply agreements in place with institutional counterparties that enable Sellers to
acquire a sufficient amount of such material, at a purchase price not exceeding the selling price
of such material, to fulfill such outstanding customer requirement, and to the extent Sellers have
committed to purchase more of the materials set forth on Schedule 3(f)(ii) than is required
pursuant to existing customer obligations, Sellers have arrangements in place to sell or dispose of
such excess material to the customer at the purchase price paid by Sellers for the purchase
thereof.



          (g) Financial Statements. Sellers have delivered to Buyers copies of the
following financial statements (collectively, the “Financial Statements”): (i) audited
balance sheet and statements of income, changes in stockholders’ equity, and cash flows of Synovis
Caribe as of and for the fiscal year ended October 31, 2006; (ii) an unaudited balance sheet and
unaudited statement of income for Synovis Interventional as of and for the fiscal year ended
October 31, 2006; (iii) an unaudited balance sheet and unaudited statement of income for each
Seller as of September 30, 2007 for the eleven (11) months then ended (the “Balance Sheet and
Statement of Income”); (iv) an unaudited balance sheet and unaudited statement of income for
the Sellers on a consolidated basis as of and for the fiscal year ended October 31, 2006; and (v)
an unaudited balance sheet and unaudited statement of income for the Sellers on a consolidated
basis as of September 30, 2007 for the eleven (11) months then ended. The Financial Statements
(including the notes thereto) (A) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby (subject, in the case of unaudited
statements, to year-end adjustments and to the absence of footnotes), (B) present fairly in all
material respects the financial condition of the Business of each of the Sellers, as the case may
be, as of such dates and the results of operations of the Business of each of the Sellers for such
periods and (C) are consistent with the books and records of the Business of each of the Sellers,
as the case may be.




          (h) Events Subsequent to June 30, 2007. Since June 30, 2007, the Sellers have
operated the Business in the ordinary course, consistent with past practice. Without




18









 





limiting the
generality of the foregoing, since June 30, 2007, except as set forth on Schedule 3(h),
each of the Sellers has not:




               (i) sold, leased or otherwise disposed of or agreed to sell, lease or otherwise dispose of,
any of its assets, properties, rights or claims of the Business, except for (A)



               sales of inventory in the ordinary course of business and at prices and on terms consistent
with past practice, or (B) sales of other assets with values, in the aggregate, equal to or less
than $50,000;



               (ii) had any Encumbrance placed upon any of the Acquired Assets, tangible or intangible
necessary to the conduct of the Business, except for Permitted Encumbrances;



               (iii) failed to maintain, keep, and preserve all of its tangible properties necessary or
useful in the proper conduct of the Business in good working order and condition, ordinary wear and
tear excepted;



               (iv) sold, assigned, leased, licensed, transferred or otherwise Encumbered any Intellectual
Property or other intangible assets, or disclosed any material proprietary confidential information
to any person, except pursuant to the terms of a confidentiality agreement entered into in the
ordinary course of business, or abandoned or permitted to lapse any Intellectual Property or other
intangible asset;



               (v) entered into, amended or terminated, or agreed to enter into, amend or terminate any
Material Contract (as defined below), or failed to comply with its obligations under any Material
Contract;



               (vi) failed to comply in all material respects with applicable laws, rules, regulations, and
orders material to the Business, such compliance to include, without limitation, paying before the
same becomes delinquent all Taxes, assessments, and governmental charges imposed upon it or upon
its property (subject to adequate reserves);



               (vii) merged or consolidated with or agreed to merge or consolidate with, purchased or agreed
to purchase any assets or capital stock of, or otherwise acquired, in each case, any corporation,
partnership, limited liability company or other business organization or division thereof material
to the Business;



               (viii) incurred or become subject to, or agreed to incur or become subject to, any debt or
Liability, contingent or otherwise, in excess of $25,000 individually or $50,000 in the aggregate,
except for trade payables incurred in the ordinary course of business;



               (ix) forgiven or canceled any debts or claims, or waived any rights of the Business, in excess
of $25,000 individually or $50,000 in the aggregate;



               (x) made Capital Expenditures either involving, in the aggregate, more than $50,000 or outside
the ordinary course of the Business;



19









 





               (xi) entered into, amended or terminated or agreed to enter into, amend or terminate any
employment, bonus, incentive, equity, tax gross-up, retention, severance or retirement contract,
plan or arrangement, or any Employee Benefit Plan, or increased or agreed to increase any salary or
other form of compensation or benefits payable or to become payable to any Employee other than
salary raises granted in the ordinary course of business;



               (xii) suffered any loss, or any development that, to the Knowledge of the Sellers, is expected
to result in a loss of any significant supplier, customer or distributor of the Business (other
than in the ordinary course of the Business in connection with specific projects for customers);



               (xiii) secured any obligation or liability to any of its officers, directors, stockholders or
employees or made any loans or advances to any of its officers, directors, stockholders or
employees except expense allowances payable to officers and employees in the ordinary course of
business consistent with past practice or under any Employee Benefit Plan;



               (xiv) made any material change in accounting methods or practices with respect to the
Business, except as required by GAAP or applicable law; or



               (xv) taken or omitted to take any action which could reasonably be expected to result in a
Seller Material Adverse Effect.



          (i) Absence of Undisclosed Liabilities. As of the Effective Date, the Business does
not have any Liabilities except for (i) Liabilities set forth on the Financial Statements, (ii)
Liabilities incurred in connection with this transaction, (iii) Retained Liabilities and (iv)
Liabilities incurred in the ordinary course of business and consistent with past practice since
September 30, 2007.




          (j) Legal Compliance. The Business complies in all material respects, and, to the
Knowledge of the Sellers, has complied in all material respects with all applicable laws (including
rules, regulations, codes, injunctions, judgments, orders, decrees, and rulings of federal, state
and local governments and all agencies thereof). No notice from any governmental body or other
Person of any violation of any applicable law has been received by the Sellers with respect to the
Business and the Sellers have no Knowledge of any meritorious basis therefor. The Sellers have
submitted or filed on behalf of the Business all reports and statements required by all applicable
laws in a timely manner and all such reports and statements were true and correct when submitted or
filed. Neither of the Sellers is in noncompliance in any material respect with any governmental
agreement or other regulatory restriction.




          (k) Litigation. None of the Sellers is (i) subject to any outstanding injunction,
judgment, order, decree, ruling, or charge, or (ii) a party, or to the Knowledge of the Sellers, is
threatened to be made a party, to any action, suit, proceeding, hearing, or investigation of, in,
or before any court or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator. Synovis Life is not (i) subject to any outstanding
injunction, judgment, order, decree, ruling, or charge relating directly to the Business or which
seeks to prevent, enjoin, alter or materially delay the transactions contemplated by this
Agreement, or (ii) a party, or to the Knowledge of the Sellers, is threatened to be made a party,
to any action,



20









 







suit, proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator relating directly to the Business or which seeks to prevent, enjoin, alter or
materially delay the transactions contemplated by this Agreement. Schedule 3(k) sets forth
a description of all material litigation claims, proceedings or investigations involving the
Business or, to the Knowledge of the Sellers, any of its officers, directors or stockholders in connection with
the Business occurring, arising or existing during the past five (5) years.


          (l) Licenses, Permits and Medical Device Regulations.



               (i) Schedule 3(l)(i) contains a complete list of each license, permit, certificate,
approval, exemption, registration or authorization, including any pending applications therefor,
used by the Sellers and material to the conduct of the Business (collectively, the “Licenses
and Permits”), which constitute all licenses, permits, certificates, approvals, exemptions,
registrations or authorizations necessary for the conduct of the Business as presently conducted.
The Business is and, to the Knowledge of Sellers, has been in compliance with all Licenses and
Permits. The Licenses and Permits are valid and in full force and effect and there are not
pending, nor, to the Knowledge of the Sellers, threatened, any proceedings which could result in
the termination, revocation, limitation or impairment of any License or Permit. The execution of
this Agreement and the consummation of the transactions contemplated hereby will not alter or
result in the termination or modification of any License or Permit.



               (ii) Sellers represent and warrant that, to the extent Sellers design, manufacture,
distribute, promote or sell Synovis Products that subject the Sellers to regulation as a medical
device manufacturer by any Governmental Authority (any such product, a “Medical Device”),
(A) such Synovis Products have been designed, manufactured, distributed, promoted or sold, as the
case may be, by Sellers in compliance with all Governmental Authority requirements, including but
not limited to compliance with the U.S. Food and Drug Administration’s (“FDA”) current good
manufacturing practices (“cGMP”), and the Quality System Regulation (“QSR”), and
other Governmental Authority requirements of similar import, (B) no such Synovis Product was
distributed or otherwise offered for sale adulterated or misbranded by Sellers within the meaning
of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. 301 et. seq. (“FDCA”), or any other
Governmental Authority law of similar import (“Adulterated or Misbranded”), and (C) to the
extent held in inventory and in process, no Medical Device is Adulterated or Misbranded. Sellers
represent and warrant that, with respect to the Interventional Products sold by Sellers prior to
the Closing Date, they are not subject to regulation as a medical device manufacturer by any
Governmental Authority.



               (iii) Sellers represent and warrant that, to the extent Sellers design, manufacture,
distribute, promote or sell Interventional Products that are not subject to direct regulation as
Medical Devices, but which are known to Sellers, or reasonably should be known to Sellers, to be
used in the manufacture of Medical Devices as components, accessories or otherwise to be
incorporated into Medical Devices, (A) such Interventional Products have been designed,
manufactured, distributed, promoted and sold in full, in conformity with all agreed to customer
specifications and specified customer manufacturing requirements as set out in Assumed Contracts
and documents related thereto, including without limitation specified customer requirements for
manufacturing quality systems, including change control procedures



21









 




and notifications, ISO and
similar manufacturing certifications (“Customer Requirements”), (B) Sellers have in place
procedures and processes to comply with Customer Requirements; (C) that regular and periodic audits
have confirmed Sellers’ conformity to Customer Requirements, and (D) that Sellers have no Knowledge
that any Customer Requirements require substantial change in the six month period from the date
hereof.




          (m) Tax Matters. Except as set forth in Schedule 3(m):




               (i) Each of the Sellers, as applicable, has timely and properly filed all Tax Returns it was
required to file with respect to the Business. All such Tax Returns were true and correct in all
material respects. All Taxes owed by either of them shown due on any such Tax Return have been
paid. All required Tax estimates, deposits, prepayments and similar reports or payments for
current periods with respect to the Business have been properly made. No written claim has been
received from an authority in a jurisdiction where either of them do not file Tax Returns with
respect to the Business that claims that either of them is or may be subject to taxation by that
jurisdiction. There are no Encumbrances on the Acquired Assets that arose in connection with any
failure (or alleged failure) to pay any Tax.



               (ii) Each of the Sellers has withheld and paid all Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party in connection with the Business.



               (iii) No adjustment of or deficiency for any Tax or claim for additional Taxes has been
asserted, assessed or, or to the Knowledge of the Sellers, threatened against either of the Sellers
with respect to the Business. There are no audit examinations being conducted or, to the Knowledge
of the Sellers, threatened, and there is no deficiency or refund litigation or controversy in
progress or, to the Knowledge of the Sellers, threatened, with respect to any Taxes previously paid
by either of the Sellers or with respect to any Tax Returns previously filed by or on behalf of any
of the Sellers, in each case with respect to the Business.



               (iv) Neither of the Sellers has waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a Tax assessment or deficiency with respect to the
Business.



               (v) The Sellers have complied with all material terms and conditions of the Puerto Rico Tax
Grant and the PRIDCO Lease, and that the terms of the Puerto Rico Tax Grant and the PRIDCO Lease
are in full force and effect.



          (n) Real Property.




               (i) Owned Real Property. Schedule 3(n)(i) contains a complete list of all
Owned Real Property (including the address and a description of such Owned Real Property) and title
reports in respect of the property constituting the Owned Real Property true and complete copies of
which have been made available to the Buyers. Each of the Sellers has good and marketable fee
simple title to its respective Owned Real Property, insurable at reasonable rates, free and clear
of all Encumbrances of any nature whatsoever, except for Permitted Encumbrances which are set forth
in the title reports listed on Schedule 3(n)(i), and upon the



22









 




consummation of the Asset
Purchase at the Closing, the Buyers shall have good and marketable fee simple title to the Owned
Real Property, free and clear of all Encumbrances of any nature whatsoever, except those listed in
Buyer’s title reports and not objected to by Buyers and any Encumbrances created or approved in
writing by the Buyers. There are no unrecorded documents creating legal or equitable rights for
the benefit of any third party with respect to any
Owned Real Property, including any option to purchase, right of first offer to purchase or
right of first refusal to purchase




               (ii) Leased Real Property.



                    (1) Schedule 3(n)(ii) lists: (A) the street address of each parcel of Leased Real
Property, (B) the identity of the lessor, lessee and current occupant (if different from lessee) of
each parcel of Leased Real Property, including any sub-lessee, (C) the current rental period and
rental payment amount pertaining to each parcel of Leased Real Property, (D) the current permitted
use of each parcel of Leased Real Property and (E) all security deposits paid by the Sellers with
respect to each parcel of Leased Real Property.



                    (2) Schedule 3(n)(ii) sets forth a true and complete list of all leases and sub-leases
relating to the Real Property and any and all ancillary documents directly pertaining thereto
(including all amendments, modifications, supplements, exhibits, schedules, addenda and
restatements thereto and thereof and all consents, including consents for alterations, assignments
and sublets, documents recording variations, memoranda of lease, options and rights of expansion,
extension, first refusal and first offer and evidence of commencement dates and expiration dates).



                    (3) With respect to each lease relating to the Real Property (“Real Property Lease”),
neither Sellers nor their Affiliates have exercised or given any un-written notice of exercise, and
no lessor or lessee has exercised or received any written notice of exercise by a lessor or lessee
of, any option, right of first offer or right of first refusal contained in any such Real Property
Lease, including any such option or right pertaining to purchase, expansion, renewal, extension or
relocation (collectively, “Options”). The Sellers have the right to exercise any Options
contained in the Leases pertaining to the Leased Real Property on the terms and conditions
contained therein and upon due exercise would be entitled to enjoy the full benefit of such Options
with respect thereto.



                    (4) The rental set forth in each Real Property Lease of the Leased Real Property is the actual
rental being paid, and there are no separate agreements or understandings with respect thereto.



                    (5) Except as set forth on Schedule 3(n)(ii)(5), the Sellers have not leased (as
lessor) any parcel or any portion of any parcel of Real Property to any other Person and no other
Person has any rights to the use, occupancy or enjoyment thereof pursuant to any lease or other
contract, and no Seller has assigned its interest under any lease listed in Schedule
3(n)(ii) to any third party.



                    (6) With respect to the Real Property Leases, neither the respective lessors nor the
respective lessees are in default thereunder beyond applicable notice or



23









 




cure periods and no event
has occurred that, with the giving of notice or the passage of time, or both, would constitute an
event of default under such Real Property Leases.




                    (7) (1) Each of the Real Property Leases are in full force and effect, and constitute the
entirety of the agreement between the lessor and lessee; (2) with respect to Seller, and to
Sellers’ Knowledge with respect to any other party thereto, there is no event of
default under any of the Real Property Leases, nor has any lessor alleged that lessee is in
default under any of the Real Property Leases; (3) there are no unwritten agreements providing for
indirect or undisclosed payments or other consideration due or which shall become due to the
parties to such agreements except as expressly set forth in the written terms of the Real Property
Leases listed on Schedule 3(n)(ii); (4) Sellers have valid leasehold title to each parcel
of Leased Real Property subject to the terms of the respective Real Property Leases; (5) Sellers
have not received any written notices stating or claiming that Sellers do not have a valid lease
with respect to any Leased Real Property; and (6) Sellers have not received written notice of, or
been served with, any pending or threatened litigation, claim, condemnation, or sale in lieu
thereof with respect to any portion of the (B) Leased Real Property.



               (iii) The Real Property constitutes all interests in real property currently used, occupied or
currently held for use in connection with the Business and which are necessary for the operation of
the Business as it is currently operated. Except as set forth on Schedule 3(n)(iii), (1)
all of the Real Property, fixtures and improvements thereon owned by the Sellers are in good
operating condition without material structural defects, and (2) all mechanical and other systems
located thereon and owned by the Sellers (including, without limitation, roofs, electrical,
plumbing, drainage, septic, sewage and HVAC) are (A) in good operating condition, and no condition
presently exists requiring imminent material repairs, alterations or corrections, and (B) suitable,
sufficient and appropriate in all material respects for their current and contemplated uses.



               (iv) (A) All certificates of occupancy and forms of zoning relief necessary for the current
use and operation of the Real Property have been issued. None of such certificates of occupancy is
a temporary certificate of occupancy, is limited by the ownership of the Business or Acquired
Assets, or has any condition on the current use thereof by the Business, each of the same is in
full force and effect, and no Seller has received any notice of any violation thereunder.



                    (B) The Real Property complies in all applicable respects with the Americans with Disabilities
Act of 1990, as amended, and all fire safety and physical plan requirements of the Life Safety Code
of the National Fire Protection Association – 1985 edition, that are applicable to the operation
of the Business, or that any waivers of any violations thereof have been received and disclosed to
Buyers.



               (v) There is no (A) pending or, to the Sellers’ Knowledge, proposed eminent domain,
condemnation or similar proceeding or conveyance in lieu thereof affecting all or any portion of
the Real Property, or (B) to Sellers’ Knowledge, proposed or pending proceeding to change or
redefine the zoning classification of all or any portion of the Real Property.



24









 





               (vi) The Sellers have not received notice from any insurance company that has issued a policy
with respect to any Real Property requiring performance of any structural or other major repairs or
alterations to such Real Property.



               (vii) None of the Real Property is now damaged or injured in any material respect as a result
of any fire, explosion or other similar casualty.



               (viii) All premiums for insurance policies covering the Real Property have been paid in full.
No material default exists under any such insurance policy. The Sellers have not caused, nor to
Sellers’ Knowledge, has any act or omission occurred which would cause the insurance coverage
provided in such insurance policies to be reduced, canceled, denied or disputed and no notice or
request from any insurance company or Board of Fire Underwriters (or organization exercising
functions similar thereto) has been received by the Sellers canceling or threatening to cancel any
of such insurance policies or denying or disputing coverage thereunder.



               (ix) The current use and occupancy by Sellers of the Real Property complies in all material
respects with all laws applicable to the Real Property (including any building, planning, health,
traffic, sewer/septic, flood control, fire safety, handicap access or zoning law) and the Seller
has not received notice from any Governmental Authority of any violation of any law applicable to
the Real Property.



               (x) All consents from Governmental Authorities required for the construction, use or occupancy
of the Real Property have been obtained and are in full force and effect and will remain in full
force and effect upon the consummation of the transactions contemplated by this Agreement
(including Buyers’ ownership of and exercising control over the Acquired Assets and assumption and
discharge of the Assumed Liabilities), except for permits and licenses which have to be reissued or
newly issued upon transfer, a listing of which is specifically set forth on Schedule
3(n)(x).



               (xi) All existing water, sewer, steam, gas electricity, telephone, cable, fiber optic cable,
internet access and other utilities required for the construction, use, occupancy, operation and
maintenance of the Real Property are adequate for the conduct of the Business as it has been and
currently is conducted at such locations. To Sellers’ Knowledge, there are no material latent
defects or material adverse physical conditions affecting the Real Property or any of the
facilities, buildings, structures, improvements, fixtures, fixed assets or personalty of a
permanent nature annexed, affixed to, attached to, located on or forming part of the Real Property.
The plants, buildings and structures included in the Real Property have access to public roads or
valid easements over private streets and private property for ingress to and egress from all such
plans, buildings and structures.



               (xii) Except as set forth on Schedule 3(n)(xii), all improvements on each parcel of
the Real Property are wholly within the lot limits of such parcel and do not encroach on any
adjoining premises or Encumbrances benefiting such Real Property, and there are no encroachments on
any Real Property or any easement or property right or benefit appurtenant thereto by any
improvements located on any adjoining premises.



          (o) Intellectual Property.




25









 








               (i) The attached Schedule 3(o)(i) contains a complete and accurate list of all (A)
Intellectual Property Rights that the Sellers and Synovis Life (with regard to the Business) own
and which are subject to a registration under any other Intellectual Property Right, including
patents and pending patent applications and applications for other Intellectual Property Rights
filed by or on behalf of the Sellers and Synovis Life (with regard to the Business), and (B)
material unregistered Intellectual Property that the Sellers and Synovis Life
(with regard to the Business) own. Except as noted on Schedule 3(o)(i), all patents,
patent applications, registered marks and applications for registrations, registered copyrights and
applications for copyright registrations and domain name registrations set forth on Schedule
3(o)(i) have been duly registered in, filed in, or issued by the United States Patent and
Trademark Office, United States Register of Copyrights, Network Solutions, Inc. (or other
authorized domain name registry) or the corresponding offices of any other country, state, or other
jurisdiction to the extent set forth on Schedule 3(o)(i), and, where registered, have been
properly maintained or renewed in accordance with all applicable provisions of law. Except as
otherwise noted in Schedule 3(o)(i), all Intellectual Property Rights listed on
Schedule 3(o)(i) are covered by valid, enforceable and subsisting Intellectual Property
Rights.



               (ii) The attached Schedule 3(o)(ii) contains a complete and accurate list of (A) all
agreements, licenses, royalty agreements, and other rights granted by the Sellers and Synovis Life
(with regard to the Business) to any third party with respect to any Intellectual Property set
forth on Schedule 3(o)(i), and (B) all licenses, agreements, and other rights granted by
any third party to the Sellers and Synovis Life (with regard to the Business) with respect to any
Intellectual Property of such third party (other than “shrink-wrapped” or “off-the-shelf” software
licenses licensed by the Sellers and Synovis Life (with regard to the Business)), in each case
identifying the subject Intellectual Property. All agreements, licenses, royalty agreements, and
other rights set forth on Schedule 3(o)(ii) are in full force and effect, and there is no
default thereunder by the Sellers or Synovis Life (with regard to the Business), nor to the
Sellers’ Knowledge, by any other party thereto. The Sellers and Synovis Life (with regard to the
Business) are not making any unlicensed use of any Intellectual Property or Intellectual Property
Rights granted to the Sellers or Synovis Life (with regard to the Business) under such agreements,
licenses, royalty agreements, and other rights set forth on Schedule 3(o)(ii). Except as
otherwise set forth on Schedule 3(o)(ii) hereto, no royalties or fees are payable by the
Sellers or Synovis Life (with regard to the Business) to any Person by reason of the ownership or
use of any of the Intellectual Property set forth on Schedule 3(o)(ii). There are no
outstanding and, to the Knowledge of the Sellers, no threatened disputes or disagreements with
respect to any such agreement, licenses, royalty agreements or other rights set forth on
Schedule 3(o)(ii) or the Intellectual Property Rights set forth in Schedule
3(o)(i). Except as set forth on Schedule 3(o)(ii), the Sellers and Synovis Life (with
regard to the Business) possess sole, exclusive, valid and unencumbered title to the Intellectual
Property Rights set forth in Schedule 3(o)(i). Except as set forth in Schedule
3(o)(ii), the Sellers and Synovis Life (with regard to the Business) have not granted (A) any
licenses, sublicenses or agreements to any other Person relating to the Intellectual Property set
forth on Schedule 3(o)(i); and (B) any Encumbrances on or to any of the Intellectual
Property set forth in Schedule 3(o)(i).



               (iii) Except as set forth on Schedule 3(o)(iii), the Intellectual Property Rights set
forth on Schedule 3(o)(i) and licensed-in agreements set forth on Schedule 3(o)(ii)
comprise all Intellectual Property necessary or material for the conduct of the Business as



26









 




presently conducted. Sellers and Synovis Life (with regard to the Business) are not currently
using and it will not be necessary for Buyers to use any Intellectual Property developed, invented
or made during or prior to either the employment of any of Sellers’ or Synovis Life’s former or
current employees or service by any of Sellers’ or Synovis Life’s former or current consultants
except for any such Intellectual Property that has been effectively and enforceably assigned to
Sellers and Synovis Life (with regard to the Business) and except for any such Intellectual
Property that constitutes “works made for hire” for the benefit of a Seller or Synovis Life
under the United States Copyright Act. No present or former employee or consultant of the Sellers
or Synovis Life (with regard to the Business) and no other Person owns or has a proprietary,
financial or other interest, direct or indirect, in whole or in part in any Intellectual Property
which the Sellers and Synovis Life (with regard to the Business) purport to own.




               (iv) Except as set forth on Schedule 3(o)(iv), no loss or expiration of any
Intellectual Property Rights in any Intellectual Property owned (or purportedly owned) or licensed
by the Sellers or Synovis Life (with regard to the Business) has occurred prior to the Closing and
no loss or expiration of any such Intellectual Property Right is threatened in writing, or is
pending or has been orally threatened.



               (v) Except as set forth on Schedule 3(o)(v), (A) there have been no written claims
made against the Sellers or Synovis Life (with regard to the Business) asserting the invalidity,
misuse or unenforceability of any Intellectual Property Right covering any of the Intellectual
Property set forth on Schedule 3(o)(i), (B) the Sellers and Synovis Life (with regard to
the Business) have not received any written notices of any infringement or misappropriation by, or
in conflict with, any third party with respect to any Intellectual Property (including any demand
or request that the Sellers or Synovis Life (with regard to the Business) license any rights from a
third party), (C) the conduct of the Business during the past five (5) years and to the Knowledge
of Sellers, as reasonably contemplated in the remainder of the current fiscal year assuming conduct
consistent with Sellers’ past practice, has not and will not infringe, misappropriate or conflict
with any Intellectual Property Rights of any other Person, and (D) to the Knowledge of Sellers, no
Person has infringed upon or is currently infringing upon any Intellectual Property Rights of the
Sellers or Synovis Life (with regard to the Business). The Asset Purchase will not have an adverse
effect on the right, title or interest in and to (1) the Intellectual Property owned by the Sellers
and listed on the Schedule 3(o)(i) and (2) the Intellectual Property licensed to the
Sellers and listed on Schedule 3(o)(ii) and all material items of such Intellectual
Property shall be owned by or licensed to the Buyers on substantially identical terms and
conditions immediately after the Closing.



               (vi) The Intellectual Property set forth on Schedule 3(o)(i) does not include,
incorporate, link to or constitute derivative works of any Publicly Available Software and the
Sellers and Synovis Life (with regard to the Business) have not used Publicly Available Software in
whole or in part in the development of any part of such Intellectual Property in a manner that may
subject that Intellectual Property in whole or in part, to all or part of the license obligations
of any Publicly Available Software. “Publicly Available Software” means each of (i) any
software that contains, or is derived in any manner (in whole or in part) from, any software that
is distributed as free software, open source software (e.g. Linux), or pursuant to similar
licensing and distribution models; and (ii) any software that requires as a condition of use,
modification, and/or distribution of such software that such software or other software



27









 




incorporated into, derived from, or distributed with such software (1) be disclosed or distributed
in source code form; (2) be licensed for the purpose of making derivative works; or (3) be
redistributable at no or minimal charge. Publicly Available Software includes, without limitation,
software licensed or distributed pursuant to any of the following licenses or distribution models
similar to any of the following: (A) GNU General Public License (GPL) or Lesser/Library GPL
(LGPL), (B) the Artistic License (e.g. PERL), (C) the Mozilla Public
License, (D) the Netscape Public License, (E) the Sun Community Source License (SCSL), the Sun
Industry Source License (SISL), and the Apache Server License.




          (p) Contracts. Schedule 3(p) sets forth a complete list of all of the
following contracts, commitments, agreements and understandings to which either of the Sellers is a
party or is bound in connection with the Business (the “Material Contracts”):




               (i) any agreement for the purchase or sale of products or other personal property, or for the
furnishing or receipt of services, in either case, that involves consideration in excess of
$50,000;



               (ii) any agreement constituting a partnership or joint venture;



               (iii) any agreement under which the Sellers have created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease obligation;



               (iv) any agreement for the lease of personal property to or from any Person providing for
lease payments in excess of $50,000 per annum;



               (v) any agreement for the lease of real property;



               (vi) any confidentiality agreement or non-competition agreement;



               (vii) any agreement with any stockholder or their Affiliates;



               (viii) any employment contract or severance agreement or other contract for the performance of
services;



               (ix) any profit sharing, stock option, stock purchase, stock appreciation, deferred
compensation, bonus, incentive, severance, or other plan or arrangement for the benefit of their
current or former directors, officers, and employees;



               (x) any agreement under which any of the Sellers has advanced or loaned any amount to any of
their directors, officers, and employees;



               (xi) any contract, lease or agreement which is not cancelable by any of the Sellers without
penalty on not less than sixty (60) days notice;



               (xii) any contract containing covenants directly or indirectly limiting in any material
respect the freedom of any of the Sellers to compete in any line of business or with any Person; or



28









 





               (xiii) any other material contract, commitment, agreement or understanding not executed in the
ordinary course of the Business.



     All Material Contracts are valid, binding and enforceable, by and against any of the Seller
Parties, as applicable, in accordance with their terms (subject to applicable bankruptcy,
insolvency and similar laws and general principles of equity) and are in full force and
effect. None of the Seller Parties is and, to the Knowledge of the Sellers, none of the other
parties to any Material Contract is in breach of, violation of, or in default under the terms of
any such Material Contract. To the Knowledge of the Sellers, no event has occurred which with
notice or passage of time or both would result in a breach of, violation of, or default under, the
terms of any Material Contract.



          (q) Notes and Accounts Receivable. All notes and accounts receivable of either of the
Sellers related to the Business (i) are reflected properly on their respective books and records,
(ii) are valid claims arising from bona fide transactions in the ordinary course of the Business
subject to no pending setoff or counterclaims, and (iii) are current and collectible net of any
applicable reserve for return or allowance for doubtful accounts provided thereon as reflected in
the Net Asset Statement. Except as set forth on Schedule 3(q), as of November 30, 2007 and as of
the Closing Date, no account debtor or note debtor is delinquent in its payment by more than sixty
(60) days and no account debtor or note debtor has refused or to Sellers’ Knowledge, threatened to
refuse to pay its obligations for any reason.




          (r) Accounts and Notes Payable. All accounts payable and notes payable by either of
the Sellers to third parties arose in connection with the Business, arose in the ordinary course of
business and there is no such account payable or note payable delinquent in its payment.




          (s) Insurance. Schedule 3(s) sets forth a complete and correct list and
summary description of all policies of liability, theft, fidelity, fire, product liability,
workmen’s compensation, indemnification of directors and officers and other similar forms of
insurance (including the name of the carrier, coverage, premium and expiration date) to which
either of the Sellers is a party, a named insured, or otherwise the beneficiary of coverage, in
each case in connection with the Business. Each such insurance policy is in full force and effect
and neither of the Sellers nor, to the Knowledge of the Sellers, any other party to the policy is
in breach or default (including with respect to the payment of premiums or the giving of notices),
and no event has occurred which, with notice or the lapse of time, would constitute such a breach
or default, or permit termination, modification, or acceleration, under the policy. To the
Knowledge of the Sellers, there is no threatened termination of any such policies or arrangements.




          (t) Product Warranty. Schedule 3(t) sets forth a complete list of all
Interventional Products from November 1, 2006 through December 31, 2007 and shall be updated by
Sellers as of the Closing Date, as well as all outstanding product and service warranties and
guaranties on any of the Interventional Products. Each Interventional Product has been in
conformity with all applicable contractual commitments and all express and implied warranties, and
neither of the Sellers has Liability for replacement or repair thereof, except as has been reserved
on the balance sheet for the Business dated September 30, 2007.




29









 








          (u) Employment Matters. With respect to the United States Employees and the Puerto
Rico Employees (collectively, the “Employees”), each of the Sellers has paid or made
provision for the payment of all salaries, wages, bonuses, commissions, benefits and other
compensation accrued to or for the benefit of the Employees, including, without limitation, the
2007 Christmas Bonus as provided for by Puerto Rico Act 148 of June 30, 1969, as amended. All
Employees have all necessary authorization and documentation from the applicable governmental
authority to perform the services for the Sellers at the site where they perform such services.




          (v) Employees.




               (i) Except as set forth on Schedule 3(v)(i), no executive, key employee, or group of
employees who is an Employee has given the Sellers written or oral notice that he or she intends to
terminate employment with either of them.



               (ii) Except as set forth in Schedule 3(v)(ii), the Sellers are in compliance in all
material respects with all applicable foreign, federal, state, Commonwealth of Puerto Rico and
local laws, rules and regulations respecting employment, employment practices, terms and conditions
of employment and wages and hours, in each case, with respect to the Employees and former
Employees; the Sellers have withheld all amounts required by law or by agreement to be withheld
from the wages, salaries and other payments to the Employees and former Employees; the Sellers are
not liable for any arrears of wages or any Taxes or any penalty for failure to comply with any of
the foregoing; and are not liable for any payment to any trust or other fund or to any Governmental
Authority with respect to unemployment, short term disability, social security for chauffeurs,
workers compensation, social security or other benefits or obligations for the Employees or former
Employees.



               (iii) With respect to the Business, to the Knowledge of the Sellers, no union organizing or
election activities involving any nonunion Employees are in progress or threatened. Neither Seller
is a party to any collective bargaining agreement or any other understanding with respect to the
Employees. There is no labor strike, slowdown, work stoppage or lockout in effect or, to the
Knowledge of the Sellers, threatened against any of them nor has any such labor strike, slowdown,
work stoppage or lockout occurred within the past three (3) years. The Sellers have not received
notice during the preceding three (3) years of the intent of any Governmental Authority responsible
for the enforcement of labor or employment laws to conduct an investigation of the Sellers and, to
the Seller’s Knowledge, no such investigation is in process.



               (iv) Except as set forth in Schedule 3(v)(iv), there is no, and there has not been for
the preceding three (3) years, any claim with respect to payment of wages, salary or overtime pay
that has been asserted or is now pending or to Sellers’ Knowledge, threatened before any
Governmental Authority with respect to any Persons currently or formerly employed by the Sellers.



               (v) Except as set forth in Schedule 3(v)(v), there is no, and there has not been for
the preceding three (3) years, any charge or proceeding with respect to a violation of



30









 




any
occupational safety or health standard under federal or state law, rule or regulation that has been
asserted or is now pending or threatened with respect to the Sellers.




               (vi) Except as set forth in Schedule 3(v)(vi), there are no, and there has not been
for the preceding three (3) years, any investigations, administrative proceedings,
charges or formal complaints of discrimination (including without limitation discrimination
based upon sex, age, race, national origin, sexual preference, disability, veteran status or other
legally protected category) pending or threatened before the Equal Employment Opportunity
Commission or any federal, state or local agency or court against or involving the Sellers. There
are no, and there has not been for the last three (3) years, any discrimination and/or retaliation
claim pending or , to Sellers’ Knowledge, threatened against the Sellers under the 1866, 1877, 1964
or 1991 Civil Rights Acts, the Equal Pay Act, the Age Discrimination in Employment Act, the
Americans with Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards Act,
ERISA, the Worker Adjustment and Retraining Notification Act or any other federal law relating to
employment or any comparable state or local fair employment practices act regulating discrimination
in the workplace, and no wrongful discharge, libel, slander, invasion of privacy or other claim
(including but not limited to violations of the Fair Credit Reporting Act and any applicable
whistleblower statutes) under any state or federal law pending or, to Sellers’ Knowledge,
threatened against the Company.



               (vii) There are no controversies pending or, to the Knowledge of the Sellers, threatened,
between the Sellers and any of their respective Employees, which controversies have or could
reasonably be expected to result in an action, suit, proceeding, claim, arbitration or
investigation before any agency, court or tribunal, foreign or domestic.



               (viii) The Sellers are not a party to, or otherwise bound by, any consent decree with, or
citation by, any Governmental Authority relating to employees or employment practices.



               (ix) The Sellers have complied with all and any notices to any Governmental Authority and
labor organizations representing the Sellers’ Employees, required by law and/or by the Sellers’
policies and/or practices.



               (x) To the Knowledge of the Sellers, no Employees are in violation of any term of any
employment contract, patent disclosure agreement, enforceable noncompetition agreement, or any
enforceable restrictive covenant to a former employer relating to the right of any such employee to
be employed by the Sellers because of the nature of the business conducted or presently proposed to
be conducted by the Sellers or to the use of trade secrets or proprietary information of others.



               (xi) No Employee, officer or director of the Sellers is a party to, or is otherwise bound by,
any agreement or arrangement, including any confidentiality, non-competition, or proprietary rights
agreement, between such Employee, officer or director and any other party that in any way adversely
affects or will affect (i) the performance of his duties as an Employee, officer or director of the
Sellers, or (ii) the ability of the Sellers to conduct its Business, including any agreement with
the Sellers by any such Employee, officer or director.



31









 





               (xii) Except as set forth in Schedule 3(v)(xii), the Sellers are neither party to, nor
are bound by:



                    (1) any agreements or arrangements that contain any severance pay or post-employment
liabilities or obligations;



                    (2) any bonus, deferred compensation, pension, profit sharing or retirement plans, or any
other Employee Benefit Plan or arrangements;



                    (3) any employment or consulting agreement, contract or commitment with an Employee, former
Employee or individual consultant or any consulting agreement, contract or commitment under which
any firm or other organization provides services to the Sellers; or



                    (4) any agreement or plan, including, without limitation, any non-qualified deferred
compensation plan, stock option plan, stock appreciation rights plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which will be accelerated,
by the occurrence of the contemplated transaction or the value of any of the benefits of which will
be calculated on the basis of any of the contemplated transaction.



               (xiii) Except as set forth in Schedule 3(v)(xiii), no Employee Benefit Plan provides,
or has any liability to provide, life insurance, medical or other Employee benefits to any Employee
upon his or her retirement or termination of employment for any reason and the Sellers have never
represented, promised or contracted (whether in oral or written form) to any Employee or former
Employee (either individually or as a group) that such Employee(s) or former Employee(s) would be
provided with life insurance, medical or other Employee welfare benefits upon their retirement or
termination of employment.



               (xiv) Except as set forth in Schedule 3(v)(xiv), the Sellers are not involved in or
threatened with any labor dispute, grievance, or litigation relating to labor, safety or
discrimination matters involving any Employee or former Employee, including without limitation
charges or complaints of unfair labor practices, wrongful discharge, discrimination, retaliation,
harassment, wage and hours, or under any Employee Benefit Plan.



               (xv) Except as set forth in Schedule 3(v)(xv), there are no material controversies
pending or threatened before any court or Governmental Authority, between the Sellers and any of
its Employees or former Employees.



               (xvi) Except as set forth in Schedule 3(u)(xvi), the Sellers are not a party to any
employment contract or arrangement with respect to any of its Employees or former Employees
(including, without limitation, so called “golden parachute” or severance agreements), nor have the
Sellers in any other manner limited their right to terminate the employment relationships with
their Employees or former Employees except as provided in Puerto Rico Act 80 of May 30, 1976.



               (xvii) The Sellers maintain in full force and effect insurance with the Corporation of the
State Insurance Fund of Puerto Rico; and the Sellers have paid all premiums on such insurance, and
have no outstanding debts with respect thereto. No work-related




32











 




accidents have been reported to the Corporation of the State Insurance Fund of Puerto Rico nor has
any work related accident occurred for which the Sellers are or may be classified as an uninsured
employer.




               (xviii) None of the Employees of the Sellers are currently on short-term or long-term or
temporary or permanent disability leave.



               (xix) The Sellers are in compliance with the employment provisions of the Immigration Reform
Act.



               (xx) The Sellers are calculating and paying all hours worked by each and every Employee, and
have paid all former Employees, as required by the applicable wage and hours laws and regulations.



          (w) Employee Benefit Matters.



               (i) List of Benefit Plans. Schedule 3(w)(i) sets forth a complete and correct
list of all Employee Benefit Plans.



               (ii) Provision of Employee Benefit Plans. With respect to each Employee Benefit Plan,
Sellers have provided Buyers with a true, legible and complete copy of (i) the plan document or
other governing contract, (ii) the most recently distributed summary plan description and summary
of material modifications and (iii) the most recently received IRS or Puerto Rican Department of
Treasury determination letter and application therefor.



               (iii) Administration; Compliance. The Employee Benefit Plans have been operated and
administered and have received contributions, in all material respects, in accordance with their
terms and the applicable requirements of the Code, ERISA and other applicable laws (including the
Puerto Rican Tax Code) and regulations, and nothing has occurred with respect to the operation of
the Employee Benefit Plans that would cause the imposition of any Liability, penalty or tax to
Buyers under ERISA, the Code or the Puerto Rican Tax Code. Each Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code or under the Puerto Rican Tax Code has
received a favorable determination letter, or has pending or has time remaining in which to file an
application for such determination, and the Sellers are not aware of any reason why such
determination letter should be revoked or not reissued or any event since the date of determination
which would adversely affect such qualification.



               (iv) Absence of Certain Plans. Neither the Sellers, nor any of their respective ERISA
Affiliates sponsors, maintains, or contributes to, or has in the past six (6) years sponsored,
maintained or contributed to an Employee Benefit Plan subject to Title IV of ERISA, or a
multiemployer plan as defined in Section 3(37) of ERISA.



               (v) No Continuing Obligation; Acceleration of Payments. Sellers do not maintain or
have an obligation to contribute to, or provide coverage under, any retiree life or retiree health
plans or arrangements that provide for continuing benefits or coverage for current or former
officers, directors or employees of the Business, except (i) as might be required under part 6 of
Title I of ERISA and at the sole expense of the participant or the participant’s beneficiary or
(ii) pursuant to a medical expense reimbursement account described in



33









 




Section 125 of the Code. Except as set forth on Schedule 3(w)(v), the consummation of the
transactions contemplated by this Agreement will not (either alone or together with any other
event) entitle any current or former employee, director or consultant of the Sellers to any bonus,
retirement, severance, job security or similar benefit or enhance such benefit or accelerate the
time of payment or vesting or exercisability or trigger any payment of funding (through any grantor
trust or otherwise) of compensation or benefits under, or increase the amount payable or trigger
any other obligation pursuant to, any Employee Benefit Plan. There is no contract, plan or
arrangement (written or otherwise) covering any Employee that, individually or collectively, could
give rise to the payment of any amount that would not be deductible pursuant to the terms of
Section 280G of the Code.




               (vi) Employee Benefit Plan Assets. None of the assets of any Employee Benefit Plan is
a security of Sellers or any of their Affiliates or property leased to or jointly owned by Sellers
or any of their Affiliates.



               (vii) COBRA Matters.



                    (1) None of the Sellers’ former employees are currently receiving benefits under COBRA.



                    (2) The Sellers have complied with all of their obligations under COBRA and maintain a group
health plan for all qualified beneficiaries who elect or had elected COBRA continuation coverage
under a group health plan of the Sellers. The term “qualified beneficiary”, as used in this
section, shall have the meaning set forth in Section 4980B(g) of the Code and Section 607(3) of
ERISA.



                    (3) Schedule 3(w)(vii)(3) includes a list of all qualified beneficiaries under COBRA
under any of Sellers’ employee benefit plans subject to COBRA who experienced a qualifying event
under such plan as of or prior to the Effective Date, and to the extent allowed by law the Sellers
agree to provide, with respect to each such qualified beneficiary, his or her name, address, date
of qualifying event, COBRA premium payment history, and copies of all COBRA notices provided by or
on behalf of the Sellers.



                    (4) None of the Sellers’ qualified beneficiaries, nor their dependents who are qualifying
beneficiaries receiving COBRA continuation coverage under a group health plan of Sellers, are
“merger and acquisition qualified beneficiaries”, as said term is defined in 26 C.F.R. Sec.
54.4980B-9, Q&A 4.



                    (5) The Sellers and the Buyers agree that the Buyers are not intended to be and are not a
successor employer to Sellers for any purpose, including with respect to COBRA, and that no benefit
plan sponsored or maintained by Buyers is intended to be and no such plan shall be a successor plan
to any Sellers’ Employee Benefit Plan.



          (x) Environmental Matters.



               (i) To the Knowledge of the Sellers, the information and data provided in the Phase I Reports
are accurate.



34









 





               (ii) The real property and facilities of the Business operated and leased by the Sellers and
the operations of the Business thereon comply in all material respects, and, to the Knowledge of
the Sellers, have at all times complied in all material respects, with all Environmental Laws.



               (iii) None of the operations of the Business is subject to any judicial or administrative
proceedings, pending or, to the Knowledge of the Sellers, threatened, alleging the violation of or
any liability under any Environmental Laws.



               (iv) None of the operations of the Business is the subject of a federal, state or local
investigation, pending or, to the Knowledge of the Sellers, threatened, evaluating whether any
remedial action is needed to respond to a release of any Hazardous Substance.



               (v) Neither of the Sellers, in the conduct of the Business, has generated Hazardous Substances
in its operations which are regulated by an Environmental Law except in compliance in all material
respects with Environmental Law; and, to the Knowledge of the Sellers, no Hazardous Substances and
no other materials, chemicals or substances regulated or controlled under any Environmental Law
have ever been generated, treated, stored, used, disposed of or otherwise deposited by or on behalf
of the Sellers at any location except in compliance with Environmental Law.



               (vi) Neither of the Sellers has had a spill or release of a Hazardous Substance, except as in
compliance with Environmental Laws.



               (vii) Neither of the Sellers has received (A) notice of any potential liability under any
Environmental Law or any violation or alleged violation of any Environmental Law and has not
received a request for information pursuant to any Environmental Law regarding any sites or
facilities, including but not limited to sites on the National Priorities List, sites proposed for
listing on the National Priorities List, sites currently or previously owned or operated by any of
the Sellers or, to the Knowledge of the Sellers, sites where any of the Sellers sent Hazardous
Substances for treatment or disposal, or (B) any letter or request for information under Section
104 of CERCLA or comparable state law.



               (viii) In connection with the Business, (A) each of the Sellers possesses all Licenses and
Permits required by Environmental Laws and all of such Licenses and Permits are in full force and
effect in accordance with their respective terms, and (B) each of them has complied in all material
respects with its obligations under each of such Licenses and Permits, and none of them has
received any notice from any governmental authority that administers Environmental Laws or any
other person or entity to the effect that any additional permits are required or that there has
been a violation of any of the terms or conditions of any such Licenses and Permits.



               (ix) There is no Hazardous Substance on any of the Real Property, or to the actual Knowledge
of Sellers, in the immediately adjacent vicinity of its Real Property, whether natural or man-made,
which, to Sellers’ Knowledge, poses a threat of damage to the health of persons, to property, to
natural resources, or to the environment, except as in compliance with Environmental Laws.



35









 





               (x) Schedule 3(x)(x) identifies all environmental audits or assessments or
occupational health studies undertaken by or on behalf of either of the Sellers or, to the
Knowledge of the Sellers, governmental agencies, with respect to the operation of the Business,
assets, employees, facilities or properties or the results of groundwater and soil testing,
underground storage tank tests, soil samples, and written reports to federal, state or local
governments on environmental and OSHA matters relating to the Business.



          (y) Related Party Transactions. Except as set forth on Schedule 3(y) and
except for compensation to regular Employees, no current director or officer of Sellers or to
Sellers’ Knowledge, during the past three (3) years, no former director or officer of Sellers or
any member of such director’s or officer’s immediate family or any Person controlled by such
director, officer or shareholder or his or her immediate family (i) has any interest in or owns any
property or right used in the conduct of the Business, (ii) is presently, or during the last three
(3) fiscal years has been, a party to any transaction with either of the Sellers relating to the
Business (including, but not limited to, any contract, agreement or other arrangement providing for
the furnishing of services by, or rental of real or personal property from, or otherwise requiring
payments to, any such director, officer or shareholder), and (iii) is the direct or indirect owner
of an interest in any corporation, firm, association or business organization which is a present
competitor, supplier or customer of the Business (other than non-affiliated holdings in
publicly-held companies), nor, to the Knowledge of the Sellers, does any such person receive income
from any source other than the Sellers which relates to the Business.



          (z) Brokers’ Fees. Except as set forth on Schedule 3(z), the Sellers have no
liability to pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.



          (aa) Disclosure. None of the representations of Sellers contained in this Agreement
or in any other document, certificate or written statement furnished to Buyers by or on behalf of
Sellers in connection with the transactions contemplated hereby contain any untrue statement of
material fact or intentionally omits to state any material fact necessary to make any such
representations, in light of the circumstances under which they were made, not misleading.



     4. Representations and Warranties of the Buyers. Buyers represent and warrant,
jointly and severally, to the Sellers as follows:



          (a) Organization, Qualification, and Corporate Power. Each Buyer is duly organized,
validly existing, and in good standing under their respective jurisdictions. Each Buyer has full
corporate power and authority and all licenses, permits, and authorizations necessary to carry on
the businesses in which it is engaged and to own and use the properties owned and used by it.



          (b) Authorization. Each Buyer has full corporate power and authority to execute and
deliver this Agreement and the documents to be delivered hereunder, and to perform its obligations
hereunder and thereunder. The execution, delivery and performance of this Agreement and the
documents to be delivered hereunder by each Buyer have been duly authorized and approved by its
board of directors, and no other corporate proceedings on the part of each Buyer are necessary to
authorize this Agreement and the documents to be delivered



36









 




hereunder, and the transactions contemplated hereby or thereby. This Agreement and the
documents to be delivered hereunder constitute the valid and legally binding obligation of each
Buyer enforceable in accordance with its and their terms.




          (c) Noncontravention. Neither the execution and the delivery of this Agreement and
each of the documents to be delivered hereunder, nor the consummation of the transactions
contemplated hereby or thereby will (i) violate any provision of the organizational documents of
the Buyers, (ii) violate any law, statute, regulation, rule, injunction, judgment, order, decree,
ruling, or other restriction of any government, governmental agency, or court to which the Buyers
are subject, (iii) conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license, instrument, or other arrangement
to which the Buyers are a party or by which it is bound or to which any of its assets is subject or
(iv) result in the imposition of any Encumbrance upon any of its assets, except, in the case of
clauses (ii), (iii) or (iv), for such violations, breaches, defaults, or rights of acceleration,
termination, modification or cancellation or notification or imposition which, individually or in
the aggregate, would not materially adversely affect the ability of Buyers to consummate the
transactions contemplated by this Agreement. The Buyers are not required to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any governmental agency
or authority or other third party in order for the Parties to consummate the transactions
contemplated by this Agreement, other than those which have been obtained.



          (d) Availability of Funds. Buyers have cash, or the ability to obtain cash by means
of credit facilities with financially responsible third parties, in an amount sufficient to enable
them to perform all of their obligations hereunder, including, without limitation, payment of the
Purchase Price.



          (e) Litigation. No Buyer is (i) subject to any outstanding injunction, judgment,
order, decree, ruling, or charge, or (ii) a party, or to the Knowledge of the Buyers, is threatened
to be made a party, to any action, suit, proceeding, hearing, or investigation of, in, or before
any court or quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator that would adversely affect the ability of Buyers to
consummate the transactions contemplated by this Agreement.



          (f) Brokers’ Fees. Except as set forth on Schedule 4(f), the Buyers have no
Liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect
to the transactions contemplated by this Agreement.



     5. Pre-Closing Covenants.



          (a) Conduct of Business. Except as expressly permitted by this Agreement or as
required by applicable law, during the period from the date of this Agreement until the Closing,
each of the Sellers shall, with respect to the Acquired Assets and the operation of the Business,
(w) conduct its business in the ordinary course consistent with past practice, which shall include,
without limitation, the timely payment, in the ordinary course of business of the Sellers, of all
bills, including liabilities for Taxes due and payable with respect to the Acquired Assets or the
Business and the effecting of capital expenditures consistent with the operation of



37









 




the Business in the ordinary course, (x) comply in all material respects with all applicable
laws (including, without limitation, maintaining any governmental licenses and/or approvals
required for the current operation of the Leased Real Property), and all requirements of all
Material Contracts and all Permits, (y) use commercially reasonable efforts to maintain and
preserve intact its business organization and the goodwill of those having business relationships
with it and retain the services of its present officers and those employees set forth on
Schedule 5(a) (the “Key Employees”), and (z) keep in full force and effect all
material policies maintained by it, other than changes to such policies made in the ordinary course
of business. Without limiting the generality of the foregoing, except as expressly permitted by
this Agreement or as required by applicable law, during the period from the date of this Agreement
to the Closing, neither of the Sellers shall cause or permit itself or any Affiliate of any Seller
to, without the prior written consent of (or in the case of (iii) below notice to) the Buyer
Representative to (provided that any such limitation on an Affiliate of any of the Sellers shall be
applicable solely with respect to conduct relating to or affecting the Acquired Assets and the
operation of the Business):




               (i) sell, transfer, lease, mortgage, encumber or otherwise dispose of, or subject to any
Encumbrance, other than Permitted Encumbrances, any of the Acquired Assets to any Person, except
(A) pursuant to contracts in force at the date of this Agreement and listed on Schedule
5(a)(i) hereto, true and correct copies of which have been made provided to the Buyers, (B)
dispositions of obsolete or worthless Acquired Assets (provided that Sellers shall replace any such
Acquired Asset required for the operation of the Business) or (C) sales of inventory in the
ordinary course of business.



               (ii) make any acquisition (by purchase of securities or assets, merger or consolidation, or
otherwise) of any other Person or business;



               (iii) (A) enter into, terminate, waive any portion of or amend any Material Contract, (B)
enter into or extend the term or scope of any contract that purports to restrict the Sellers from
engaging in any line of business or in any geographic area, or (C) enter into any contract that
would be breached by, or require the consent of any third party in order to continue in full force
following, consummation of the Asset Purchase provided that in the case of each of (A), (B) and
(C), the Seller Representative shall notify the Buyer Representative of any such termination,
waiver or amendment, and Buyers shall have a right to terminate this Agreement if the terms of such
termination, waiver or amendment are not acceptable to Buyers in their reasonable discretion;



               (iv) increase the compensation of or pay any bonus to, any of its officers, directors,
consultants, or employees or enter into, establish, amend or terminate any employment, consulting,
retention, tax gross-up, change in control, collective bargaining, bonus or other incentive
compensation, profit sharing, health or other welfare, stock option or other equity (or equity
based), pension, retirement, vacation, severance, deferred compensation or other compensation or
benefit plan, policy, agreement, trust, fund or arrangement with, for or in respect of, any
officer, other employee, director, or consultant, other than (A) as required pursuant to applicable
law or the terms of contracts in effect on the date of this Agreement (true and correct copies of
which have been provided to the Buyers), and (B) increases in salaries, wages and benefits of
employees made in the ordinary course of business and in amounts and in a manner consistent with
past practice.



38









 





               (v) make any changes in financial accounting methods, principles or practices (or change an
annual accounting period), except insofar as may be required by a change in GAAP or applicable law;



               (vi) amend any certificate of incorporation, formation or limited partnership, bylaws,
operating agreement or partnership agreement of any of the Sellers in a manner that would preclude
or otherwise interfere with the consummation of the Asset Purchase;



               (vii) take any action or omit to take any action, or permit any act or omission, that could be
reasonably expected to result in a breach of any Material Contract;



               (viii) take any action or omit to take any action, or permit any act or omission, which,
individually or in the aggregate, will cause or result in (A) a material violation of any
requirement of material law applicable to the Business or any of the Acquired Assets, or (B)(1)
notice from any governmental authority of a termination, revocation, rescission, suspension or
refusal to renew a business license, or (2) the institution of a penalty enforcement action;



               (ix) whether directly or indirectly, have any discussions, negotiations (preliminary or
otherwise) or other dealings with any other Person regarding the sale or lease of the Business or
any of the Acquired Assets, or any other transaction having a similar effect;



               (x) have any material discussions, negotiations (preliminary or otherwise), communications or
other dealings with any labor union, other than (A) in the ordinary course of business, or (B) as
may otherwise be required by law or any collective bargaining agreement, provided that Seller
Representative shall give reasonable advance notice to the Buyer Representative of any matters
specified in the preceding clause (B), consult with the Buyer Representative with respect to such
matters, and keep the Buyer Representative reasonably informed as to such matters as they proceed;



               (xi) make any material alterations to the Business;



               (xii) grant any easements or other rights with respect to the Real Property; or



               (xiii) agree to take any of the actions precluded by this Section 5(a).



          (b) Additional Covenants.



               (i) Maintenance of Assets. The Sellers shall continue to maintain and service the
Business, consistent with their past practice, and shall continue to maintain the inventory,
supplies, and other similar items as may be reasonably necessary for the operation of the Business
at levels which are consistent with prior practice and in material compliance with all applicable
laws and shall otherwise maintain and keep in full force and effect all Permits applicable to the
Business.



               (ii) Liabilities; Encumbrances. The Sellers shall timely pay when due all Taxes,
assessments and governmental charges, lawfully levied or assessed upon them or the



39









 




Business or the operations thereof for periods ending on or prior to the Closing Date, unless
contested in good faith, in which case the Sellers shall timely pay such amounts after a final
determination that such amounts are due.




               (iii) Operating Policies and Procedures. The Sellers shall ensure that all operating
policies and procedures manuals and related materials for the Business are complete and correct,
and are located at one of the applicable headquarters office of the Business on the Closing Date.



          (c) Notification of Certain Matters.



               (i) The Seller Representative shall give prompt notice to the Buyer Representative, and the
Buyer Representative shall give prompt notice to the Seller Representative, of (i) any notice or
other communication received by such party from any Governmental Authority in connection with the
Asset Purchase or from any Person alleging that the consent of such Person is or may be required in
connection with the Asset Purchase, (ii) any actions, suits, or legal, administrative, arbitration
or other proceedings or governmental investigations commenced or, to such party’s Knowledge,
threatened against, relating to or involving or otherwise affecting such party which relate to the
Asset Purchase (exclusive of general economic or regulatory factors affecting business in general),
(iii) the discovery of any fact or circumstance that, or the occurrence or non occurrence of any
event the occurrence or non occurrence of which, would cause any representation or warranty made by
such party contained in this Agreement (A) that is qualified as to materiality or Buyers’ or
Sellers’ Material Adverse Effect, to be untrue, and (B) that is not so qualified, to be untrue in
any material respect, and (iv) any failure of such party to comply with or satisfy any covenant or
agreement to be complied with or satisfied by it hereunder.



               (ii) The delivery of any notice pursuant to this Section 5(c) shall not (x) cure any breach
of, or non compliance with, any other provision of this Agreement, or (y) limit the rights and
remedies available to the party receiving such notice. In respect of any of the events described
in Section 5(c)(i), the Buyers shall be entitled to be involved in such Seller’s response thereto,
and the Sellers shall cooperate with the Buyers in respect of such response.



          (d) Risk of Loss. The risk of loss or damage to the Business, by fire or otherwise,
or by condemnation or any governmental taking, is upon the Sellers until the Closing of the Asset
Purchase.



               (i) If at any time prior to the Closing, the Business, or any “material part” of the Business,
is damaged or destroyed by fire or other casualty (a “Casualty Event”), the Seller
Representative shall immediately notify the Buyer Representative by written notice and the Buyers
shall have the right, within ten (10) days after the Buyer Representative receiving such notice, to
either (i) exclude such Acquired Assets from the Asset Purchase, with a reduction in the Purchase
Price or (ii) continue to include such Acquired Assets herein, with no reduction in the Purchase
Price and the Sellers shall cause to be assigned and transferred to the Buyers at the Closing (by
written instrument reasonably satisfactory to the Buyers and acknowledged by the insurer) all of
the Sellers’ right, title and interest in and to all insurance proceeds which are thereafter
payable to the Sellers on account of such Casualty Event.



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               (ii) If at any time prior to the Closing, title to or the use of the Business, or any material
part of the Business, is taken or threatened to be taken by condemnation, eminent domain or other
similar governmental taking (a “Condemnation”), upon its receipt of notice thereof, the
Seller Representative shall promptly notify the Buyer Representative by written notice and the
Buyers shall have the right, within ten (10) days after the Buyer Representative receiving such
notice, to either (i) exclude Acquired Assets from the Asset Purchase, with a reduction in the
Purchase Price or (ii) continue to include such Acquired Assets herein, with no reduction in the
Purchase Price and the Sellers shall cause to be assigned and transferred to the Buyers at the
Closing (by written instrument reasonably satisfactory to the Buyers) all of the Sellers’ right,
title and interest in and to any awards or other amounts (the “Condemnation Proceeds”)
which may be payable by any Governmental Authority as the result of such Condemnation. Prior to the
Closing, the Buyers shall have the right to participate in any hearings or proceedings with respect
to any Condemnation.



               (iii) For purposes of this Section 5(d), a “material part” of the Business shall mean any part
which the Buyers reasonably determine would have a Seller Material Adverse Effect if damaged,
destroyed or taken by Condemnation.



          (e) Efforts to Consummate. Each of the parties shall take such actions and do such
things as are commercially reasonable and in accordance with applicable law to consummate the Asset
Purchase as provided in this Agreement, including, without limitation, (i) cooperating to obtain
all consents required pursuant to the Material Contracts required to be listed on Schedule
3(p) and the Licenses and Permits required to be listed on Schedule 3(l) to transfer
such Material Contracts and Licenses and Permits or otherwise necessary in order to consummate the
Asset Purchase, (ii) filing all forms, registrations and notices required to be filed by or on
behalf of such party in order to consummate the Asset Purchase, and taking all actions necessary to
obtain any requisite material Approvals by any third party or Governmental Authority, (iii) perform
such party’s obligations under this Agreement, and (iv) avoid taking any action that could
reasonably be expected to materially delay the obtaining of, or result in not obtaining, any
Approval from any third party or Governmental Authority necessary to be obtained prior to the
Closing.



     6. Post Closing Covenants. The Parties agree as follows with respect to the period
following the Closing.



          (a) General. In case at any time after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, each of the Parties will take such further
action (including the execution and delivery of such further instruments and documents) as the
other Party reasonably may request (including, without, limitation assignments of patents, patent
applications and patent rights and inventions included among the Acquired Assets), at the sole cost
and expense of the requesting Party (unless the requesting Party is entitled to indemnification
therefor under Section 8 below), provided, that no Party has the obligation to become liable or
responsible for any obligation by which it is not already bound (pursuant to this Agreement or
otherwise), to carry out any of the provisions of this Agreement.



          (b) Litigation Support. In the event and for so long as any Party actively is
contesting or defending against any action, suit, proceeding, hearing, investigation, charge,



41









 




complaint, claim, or demand in connection with (i) any transaction contemplated under this
Agreement or (ii) any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Sellers and their activities in connection with the Business or Acquired Assets, the
other Party will cooperate with the contesting or defending Party and its counsel in the contest or
defense, make available its personnel, and provide such testimony and access to its books and
records as shall be necessary in connection with the contest or defense, all at the sole cost and
expense of the contesting or defending Party (unless the contesting or defending Party is entitled
to indemnification therefor under Section 8 below).




          (c) Transition. The Sellers will not take any action that is designed or intended to
have the effect of discouraging any lessor, licensor, customer, supplier, or other business
associate of any of the Sellers from maintaining the same business relationships with the Buyers
with respect to the Business after the Closing as it maintained with the Sellers prior to the
Closing. The Sellers will refer all customer inquiries relating to the Business to the Buyers from
and after the Closing.



          (d) Confidentiality. All information which is not public knowledge disclosed
heretofore or hereafter by any party to any other party (including its attorneys, accountants or
other representatives) in connection with this Agreement (including the existence of this Agreement
and the terms thereof) shall be kept confidential by such other party(ies), and shall not be used
by such other party(ies) except for use as herein contemplated, except to the extent (i) it is or
hereafter becomes public knowledge or becomes lawfully obtainable from other sources, including a
third party who is under no obligation of confidentiality to the party(ies) disclosing such
information or to whom information was released without restriction; (ii) such other party(ies) is
compelled to disclose such information by judicial or administrative process or, in the opinion of
its counsel, by other requirements of law; (iii) such duty as to confidentiality and non-use is
required by such disclosing party(ies); (iv) such information is required to be disclosed to
transfer the Licenses and Permits required to be listed on Schedule 3(l); or (v) in the
reasonable judgment of the party, such information is required to be disclosed pursuant to Law or,
in the case of Seller Parties, in connection with Synovis Life’s obligations as a publicly held,
exchange-listed company; provided, however, in the case of clause (ii) or (v), that the party(ies)
required to make such disclosure shall, to the extent reasonably possible, provide the other
party(ies) with prompt notice of such requirement prior to making any disclosure so that the other
party(ies) may seek an appropriate protective order.



          (e) Covenants Not to Compete.



               (i) Noncompetition. To the maximum extent permitted by applicable law, and subject to
subsection (ii) below, for a period of five (5) years from and after the Closing Date, the Seller
Parties, their non-individual Affiliates (excluding Synovis Life’s shareholders) and Richard Kramp
(collectively, the “Non-Compete Parties”) will not engage directly or indirectly (including
by ownership of more than 5% of any entity that so engages) in a business that competes with the
Business as currently conducted. If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 6(e) is invalid or unenforceable, the Buyers
and the Seller Parties agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration, or area of the




42












 




term or provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified.




               (ii) Acquisition of Competing Business. Notwithstanding subsection (i) above, the
Non-Compete Parties may purchase a business in which less than fifty percent (50%) of the revenue
of such business is derived from activities that are competitive with the Business as currently
conducted (a “Competitive Business”); provided, that to the extent that a Non-Compete Party
does acquire a Competitive Business, such Non-Compete Party shall grant to Buyers a period of
twenty five (25) days after the closing of such acquisition to make a first offer to purchase such
Competitive Business. If (A) Buyers decline or fail to make such an offer during such twenty five
(25) day period, (B) Sellers reject Buyers’ offer, or (C) Buyers fail to close the acquisition of
the Competing Business within one hundred twenty (120) days of signing a letter of intent to
purchase the Competing Business from the Non-Compete Party, the Non-Compete Party shall have no
obligation to sell or offer to sell the Competitive Business to the Buyers; provided, however, the
Non-Compete Party shall divest itself of such Competitive Business within twelve (12) months of
Buyers’ rejection or failure to complete the acquisition or Sellers’ rejection of Buyers’ offer.



               (iii) The Seller Parties hereby acknowledge that they shall be jointly and severally liable
for any breaches of this Section 6(e) by Non-Compete Parties who are not parties to this Agreement
as if, and to the extent that, such breach had been committed by the Seller Parties.



          (f) Non-Solicitation. Except as may be allowed by law, or otherwise agreed to by the
Buyers and the Seller Parties, for a period of three (3) years following the Closing, neither the
Buyers nor their Affiliates nor the Seller Parties nor their Affiliates shall solicit any person
who was an employee of the other party(ies) immediately after the Closing for the purpose of
becoming an employee of the soliciting party. Notwithstanding this provision, (i) each of the
Seller Parties and Buyers shall be entitled to solicit and employ any individual whose employment
has been terminated by the other party(ies), and (ii) neither the Buyers nor the Seller Parties
shall be prohibited from engaging in a general solicitation that does not target such individuals.



          (g) Sharing of Data. Upon reasonable request by Buyers, the Sellers shall furnish to
the Buyers, at the Buyers’ cost, copies of all books, records (including Tax records relating to
the Business), agreements, financial data and other documents relating to the Business. Upon
reasonable request by Buyers and to the extent permitted by law, Sellers shall give Buyers copies
of the personnel records of Continuing Employees while retaining the originals. Except as
otherwise provided in Section 6(i), the Seller Parties shall have the right for a period of three
(3) years following the Closing Date upon reasonable request to have reasonable access during
normal business hours to such books, records and accounts, including financial and Tax information,
correspondence, production records, employment records and other similar information as are
transferred to the Buyers pursuant to the terms of this Agreement for the limited purposes of
concluding Sellers’ involvement in the Business prior to the Closing Date and for complying with
its obligations under applicable securities, Tax, environmental,



43









 




employment or other laws and regulations. Except as otherwise provided in Section 6(i),
Buyers shall have the right for a period of three (3) years following the Closing Date upon
reasonable request to have reasonable access during normal business hours to those books, records
and accounts, including financial and Tax information, correspondence, production records,
employment records and other records which are retained by the Sellers pursuant to the terms of
this Agreement to the extent that any of the foregoing relates to the Business or is otherwise
needed by the Buyers in order to comply with its obligations under applicable securities, Tax,
environmental, employment or other laws and regulations.




          (h) Employment Matters.



               (i) Employment Matters. Effective as of the Closing, Buyers shall offer employment to
all Employees on terms substantially equivalent to the Employees’ current employment terms with
Sellers. Buyers agree, for a period of eighteen (18) months after the Closing, not to (A) relocate
the portion of the Business located in Puerto Rico and (B) relocate the portion of the Business
located in Lino Lakes, Minnesota more than twenty five (25) miles from its current location,
provided, that with respect to subsection (B) either, Buyers must comply with the relocation notice
provisions in that certain letter agreement between Synovis Life and Cardiac Pacemakers, Inc.,
dated as of December 19, 2007 or Cardiac Pacemakers, Inc. must waive such notice
provisions if Buyers intend to take any action inconsistent with such letter. In addition, Buyers
and their Affiliates shall recognize each Continuing Employee’s service with the Sellers, including
in conformance with Puerto Rico Act 80 of May 30, 1976, as amended, prior to the Closing Date as
service with Buyers and their Affiliates in connection with any Employee Benefit Plan or other
similar arrangement (including vacation and holiday entitlement) maintained by Buyers or any of
their Affiliates in which such employee participates and which is made available following the
Closing Date by Buyers or any of their Affiliates for purposes of any waiting period, vesting,
eligibility and benefit entitlement in accordance with the terms of any such plan or arrangement.
Buyers shall not be responsible for any Liability with respect to any employee who is offered but
rejects an equivalent position with the Buyer and thereby is not a Continuing Employee (provided,
that conditioning employment with the Buyer upon an Employee’s execution of a non-compete agreement
with Buyers shall not constitute a non-equivalent position), and with respect to Continuing
Employees, shall be responsible only to the extent that such obligation or Liability relates to the
period beginning on or after the Closing Date. Except as agreed upon under Section 2(e), Sellers
shall pay all Employees all accrued salaries, accrued and unused vacation days and any other
eligible accrued benefits as of the Closing Date. Sellers shall pay any bonuses and incentives
(even on a prorated basis) owed to the Employees under Sellers’ policies and programs as of the
Closing Date, including, but not limited to, those payments set forth on Schedule 2(k).
Sellers shall comply with all applicable provisions under COBRA, ERISA and the WARN Act. Sellers
shall be responsible for all owed wages, including overtime pay and meal periods penalties (to
non-exempt Employees) and for accrued benefits under applicable laws and Sellers’ Employee Benefits
Plans.



               (ii) Savings Plan. Continuing Employees will participate in Buyers’ savings plan in
accordance with the terms, conditions, benefits and payment options of Buyers’ savings plan.
Notwithstanding the above, Buyers shall grant Continuing Employees past service credit for purposes
of eligibility to participate in and vesting under Buyers’ savings plan.



44









 




If permitted by applicable laws and regulations, Continuing Employees shall be eligible to effect a
direct rollover (as described in Section 401(a)(31) of the Code and Section 1165(b)(2)(A) of the
Puerto Rico Code) of all of any such Continuing Employee’s balance under Sellers’ savings plan
(including after-tax employee contributions but not promissory notes attributable to loans made to
such Continuing Employees under Sellers’ savings plan), to Buyers’ savings plan, subject to the
terms and conditions of each such plan.




          (i) Tax Assistance. Following the Closing, the Buyers and the Sellers shall provide
each other with such assistance as may reasonably be requested by any of them in connection with
the preparation of any Tax Return, any audit or other examination by any taxing authority, or any
judicial or administrative proceedings relating to the Business. The Party requesting assistance
hereunder shall reimburse the other for reasonable out-of-pocket expenses incurred in providing
such assistance. The Buyers and the Sellers shall (i) preserve and cause to be preserved all
information, returns, books, records and documents relating to any liabilities for Taxes of the
Business with respect to a taxable period until the later of sixty (60) days after the expiration
of all applicable statutes of limitation and extensions thereof, or the conclusion of all
litigation with respect to Taxes for such period and (ii) give reasonable written notice to the
other Party prior to transferring, destroying or discarding any such information, returns, books,
records or documents and, if the other Party so requests, allow the other Party to take possession
of such information, returns, books, records or documents.



          (j) Redirection of Email, Website and Documents. Following the Closing, Sellers and
Buyers shall cooperate and use commercially reasonable efforts to redirect to Buyer all email
correspondence, website traffic, contracts, production orders and other similar items that Sellers
receive related to the Business.



          (k) Migration of Information Technology Systems. As of the Closing, the Seller
Parties shall maintain the high speed data line, providing information systems functionality that
is consistent with past practice, to the Business for a period of time that permits Buyers to
install their own data line to the Business, provided, that such obligation shall not extend beyond
ninety (90) days after the Closing Date without the mutual consent of the Seller Representative and
the Buyer Representative, which consent shall not be unreasonably withheld (the “Migration
Period”). During the Migration Period, the Buyers shall use reasonable efforts to install
their own high speed data service to the Business and the Seller Parties shall cooperate with
Buyers regarding the installation of such service by Buyers. Buyers and Seller Parties shall cause
their respective personnel to maintain the confidentiality of the other Parties’ proprietary
information during the Migration Period. The Seller Parties shall provide the Business with
hardware for a voicemail system that is equivalent to the voicemail system currently provided to
the Business prior to the end of the Migration Period and Buyers shall cooperate with Seller
Parties regarding the installation of such system by Seller Parties.



          (l) Preparation of Preliminary Final Financials. The Buyers shall reasonably cooperate
with Sellers in Sellers’ preparation of a preliminary draft of the balance sheet, statements of
income, changes in stockholders’ equity, and cash flows of Synovis Interventional and Synovis
Caribe for the monthly and quarterly periods ending January 31, 2008 in order to facilitate
Sellers’ compliance with its public company quarterly reporting requirements. (the
“Preliminary Final Financials”). Buyers agree, to provide or make available at the Lino
Lakes



45









 




facility, all supporting documentation for the Preliminary Final Financials, including working
papers and the accounting books and records of the Business, requested on reasonable notice by
Sellers as well as accounting staff of Buyers to assist in the preparation of the Preliminary
Financial Financials consistent with past practices of Sellers’ in such preparation. Buyers shall
permit Synovis Life and its advisors or representatives to make copies of such books, records and
working papers. Buyers obligation to reasonably cooperate hereunder shall not (a) render Buyers
liable in any way for the contents of the Preliminary Financial Statements or (b) have any impact
on the other rights and obligations of the parties hereunder including, but not limited, the
preparation and calculation of the Statement of Net Assets.




     7. Obligations at Closing.



          (a) Conditions Precedent to Obligations of Buyers. The obligation of Buyers, or
Buyers’ designee(s) pursuant to Section 10(e) hereof, to consummate the transactions contemplated
by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the
following conditions (any or all of which may be waived by Buyers, in whole or in part, in their
sole discretion, to the extent permitted by applicable law):



               (i) Sellers and Synovis Life, as appropriate, shall have delivered, or caused to be delivered,
duly executed Bills of Sale, Assignment and Assumption Agreements and such assignments (including
Intellectual Property transfer documents) and related documents, in substantially the forms
attached hereto as Exhibits A-3, A-4 and A-6, assigning to the Buyers, or
Buyers’ designee(s) pursuant to Section 10(e) hereof, to the extent assignable, Sellers’ right,
title and interest in and to the Acquired Assets.



               (ii) Sellers shall have delivered, or caused to be delivered, an executed Escrow Agreement.



               (iii) Sellers shall have delivered, or caused to be delivered, such documents as are necessary
to terminate and release all Encumbrances in the Acquired Assets, except for the Permitted
Encumbrances.



               (iv) Sellers shall have delivered, or caused to be delivered, (a) executed landlord consents
and waivers, estoppel certificates, subordination and non-disturbance agreements and notices of
lease for all Leased Real Property in reasonable and customary forms, including the form attached
hereto as Exhibits A-5; and (b) reasonable and customary real property conveyancing
documents (including, without limitation, warranty deeds) for each parcel of Owned Real Property.



               (v) Sellers shall have delivered, or caused to be delivered, payoff letters from creditors of
Sellers, together with UCC-3 termination statements with respect to any financing statements filed
against the Business or the Acquired Assets, terminating all Encumbrances on any of the Acquired
Assets (excluding Permitted Encumbrances and any purchase money security interests and related debt
on the applicable Acquired Assets transferred or under leasing arrangements) (the “Payoff
Letters”).



46









 





               (vi) An opinion of counsel to the Seller Parties in form and substance as set forth in Exhibit
G attached hereto, addressed to the Buyers and dated as of the Closing Date.



               (vii) Sellers shall have delivered, or caused to be delivered, an executed Surgical Supply
Agreement, the general terms of which will be as set forth in Exhibit H (the “Surgical Supply
Agreement”).



               (viii) Sellers shall have delivered, or caused to be delivered, the consents or approvals of
any parties required with respect to the Material Contracts and the Licenses and Permits in
connection with the transactions contemplated hereby, all as set forth on Schedule
7(a)(viii) attached hereto.



               (ix) Buyers shall have received written notification from the appropriate Governmental
Authority that (i) Heraeus Materials Caribe qualifies for a new Puerto Rico Tax Grant, or that the
assignment of the Puerto Rico Tax Grant to Heraeus Materials Caribe will be approved; and (ii) that
the PRIDCO Lease will be assigned to Heraeus Materials Caribe or a new PRIDCO lease will be issued
to Heraeus Materials Caribe, which new PRIDCO lease includes a five (5) year extension option for
the tenant commencing in December 2007 on the same terms as the PRIDCO Lease.



               (x) Buyers shall have been able to obtain title insurance commitments committing to insure the
parcel of Real Property located at 400 Apollo Drive, Lino Lakes, Minnesota, at standard rates by a
national title insurance company of Buyers’ choice (the “Title Company”), free from all
Encumbrances, other than Permitted Encumbrances, and encroachments from or on the Real Property
except those Encumbrances set forth in the title reports listed on Schedule 3(n)(i),
identified on one or more title insurance commitments and not objected to in writing by Buyer, or
any Encumbrances created or approved in writing by the Buyers, with such available endorsements as
Buyers may reasonably require. The cost of the title policy premium plus the cost of any
endorsements shall be paid by the Buyers at the Closing.



               (xi) Intentionally omitted.



               (xii) Prior to the Closing Date, Sellers shall cause a complete physical inventory of the
Inventory to be taken jointly by Sellers and Buyers as of the Closing Date. The results of such
inventory shall be used to determine the amount of Inventory of the Business on the Closing Date to
be included in the Statement of Net Assets pursuant to Exhibit A-7.



               (xiii) Sellers shall have paid the amounts described on Schedule 2(k).



               (xiv) Sellers shall have complied with the provisions, if any, of any bulk sales or transfer
laws in the State of Minnesota and the Commonwealth of Puerto Rico.



               (xv) The Title Company shall have agreed in writing that all conditions to the issuance of a
title insurance policy required to be satisfied by Sellers have been satisfied.



47









 





               (xvi) Certificates of a recent date, issued by the applicable Secretary of State or other
similar authority of the legal existence and good standing of the Sellers, or the qualification to
do business, as the case may be, in each jurisdiction in which the Sellers are qualified to do
business;



               (xvii) A certificate of the Secretary of each of the Seller Parties, in each case, certifying
as to (i) the names of the officers of such Seller Party authorized to sign this Agreement and the
other documents, instruments or certificates to be delivered pursuant to this Agreement by such
Seller Party, or any of its officers, together with the true signatures of such officers, and (ii)
the accuracy of resolutions adopted by such Seller Party in connection with the transactions
contemplated hereby and that such resolutions are in full force and effect as of the Closing Date;



               (xviii) A certificate of the President of each of the Seller Parties to the effect that (1)
each of the representations and warranties contained in this Agreement are true and correct in all
material respects as of the Closing with the same effect as if made on and as of the Closing;
provided, that (A) all materiality qualifications that are contained in such representations and
warranties and that limit the scope of such representations and warranties shall be disregarded;
(B) any update of or modification to the Disclosure Schedule made or purported to have been made on
or after the date of this Agreement shall be disregarded and (C) any representation or warranty
expressly made as of a specified date will only need to have been true on and as of such date and
(2) each of the Seller Parties has complied with, fulfilled and performed each of the covenants,
terms and conditions to be complied with, fulfilled or performed by it under this Agreement;



               (xix) All Real Property rents and expenses (including, without limitation, operating expenses
and utility charges) will be prorated on a monthly basis as of the Closing;



               (xx) Since the Effective Date, there shall not have been any event, fact, circumstance or
change that has had or result in, a Seller Material Adverse Effect; and



               (xxi) Such other supporting documents and certificates as Buyers may reasonably request and as
may be required pursuant to this Agreement.



          (b) Conditions Precedent to Obligations of Seller Parties. The obligations of the
Seller Parties to consummate the transactions contemplated by this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following conditions (any or all of
which may be waived by the Seller Parties, in whole or in part, in their sole discretion to the
extent permitted by applicable law):



               (i) Buyers, or Buyers’ designee(s) pursuant to Section 10(e) hereof, shall have delivered, or
caused to be delivered, the Purchase Price as specified in Section 2(c) above;



               (ii) Buyers shall have delivered, or caused to be delivered, an executed Escrow Agreement;



48









 





               (iii) Buyers shall have delivered, or caused to be delivered, an executed Surgical Supply
Agreement; and



               (iv) A certificate of the Secretary of each Buyer certifying as to (i) the names of the
officers of such Buyer authorized to sign this Agreement and the other documents, instruments or
certificates to be delivered pursuant to this Agreement by such Buyer, or any of its officers,
together with the true signatures of such officers, and (ii) the accuracy of resolutions adopted by
such Buyer in connection with the transactions contemplated hereby and that such resolutions are in
full force and effect as of the Closing Date;



               (v) A certificate of the President of each Buyer to the effect that (1) each of the
representations and warranties contained in this Agreement are true and correct in all material
respects as of the Closing with the same effect as if made on and as of the Closing; provided, that
(A) all materiality qualifications that are contained in such representations and warranties and
that limit the scope of such representations and warranties shall be disregarded and (B) any
representation or warranty expressly made as of a specified date will only need to have been true
on and as of such date and (2) each of the Buyers has complied with, fulfilled and performed each
of the covenants, terms and conditions to be complied with, fulfilled or performed by it under this
Agreement;



               (vi) All Real Property rents and expenses (including, without limitation, operating expenses
and utility charges) will be prorated on a monthly basis as of the Closing; and



               (vii) Such other supporting documents and certificates as the Sellers may reasonably request
and as may be required pursuant to this Agreement.



          (c) Conditions Precedent to Obligations of All Parties. No law, investigation,
injunction, judgment or ruling enacted, promulgated, issued, entered, amended or enforced by any
Governmental Authority shall be in effect or threatened by any Person that would have the effect of
(i) enjoining, restraining, preventing, or prohibiting consummation of the Asset Purchase, or
making the consummation of the Asset Purchase illegal, or imposing damages on any Party as a result
of consummating the Asset Purchase or (ii) otherwise preventing the consummation of the Asset
Purchase or (iii) imposing limitations on the Asset Purchase and/or the ability of any Party to
perform its obligations hereunder or operate the Business after the Closing.



     8. Remedies for Breach of This Agreement.



          (a) Survival of Representations and Warranties. The representations and warranties of
Seller Parties and Buyers made in this Agreement and in the documents and certificates delivered in
connection herewith shall survive the Closing, provided that in no event shall any Party be
entitled to seek indemnification in respect of any breach of any representation or warranty made
herein pursuant to this Section 8 unless the Party seeking indemnification has made a written claim
therefor to either the Buyer Representative or the Seller Representative, as appropriate, pursuant
to Section 10(h) below on or prior to the date that is eighteen (18) months from the Closing Date
(the “Survival Period”). Notwithstanding the preceding sentence, (i) the



49









 




representations and warranties contained in each of Section 3(m)(Tax Matters) and Section
3(w)(Employee Benefit Matters) shall survive for the applicable statute of limitations and (ii) the
representations and warranties contained in each of Section 3(o)(Intellectual Property) and Section
3(x)(Environmental Matters) shall survive for five (5) years from the Closing Date;
provided, however, that, notwithstanding the foregoing, claims for indemnification pursuant
to this Section 8 for (w) breaches of Section 3(a) or 4(a), (x) breaches of any representations and
warranties arising from fraud or intentional misrepresentation and (y) liability of Sellers for
Retained Liabilities, liability of Buyers for Assumed Liabilities and (z) breaches of any of Seller
Parties’ covenants or any of Buyers’ covenants herein shall survive indefinitely.




          (b) Indemnification Provisions for Benefit of the Buyers.



               (i) Provided that the Buyer Representative makes a written claim for indemnification against
the Sellers to the Seller Representative pursuant to Section 10(h) below within the applicable
period set forth in Section 8(a) above, then the Seller Parties agree, jointly and severally, to
indemnify the Buyers from and against any Adverse Consequences the Buyers may suffer through and
after the date of the claim for indemnification resulting from, arising out of, relating to, in the
nature of, or caused by, without duplication (A) the breach of any of the representations,
warranties, covenants or agreements made by Sellers in this Agreement; (B) any Retained Liability;
and (C) any brokerage, finder’s or other similar fees or expenses payable by Sellers or their
Affiliates to any broker, finder, investment bank or similar agent in connection with the
transactions contemplated by this Agreement. Subject to the limitations set forth in Section 8(g)
hereof, Buyers shall be entitled to recover any Adverse Consequences for which Sellers are
obligated to indemnify under this Section 8(b), (x) first, from the Escrow Agent (out of the Escrow
Amount), an amount equal to any Adverse Consequences any such Buyer may suffer hereunder and (ii)
second, if and only to the extent that the Escrow Amount is not sufficient to cover such Adverse
Consequences, from the Seller Parties.



               (ii) The Seller Parties shall be obligated to indemnify the Buyers under Section 8(b)(i) only
for those claims giving rise to Adverse Consequences as to which the Buyer Representative has given
the Seller Representative written notice prior to the end of the applicable Survival Period set
forth in Section 8(a), if any. Any written notice delivered by the Buyer Representative to the
Seller Representative with respect to Adverse Consequences shall set forth with reasonable
specificity the basis of the claim for Adverse Consequences if reasonably determinable at such time
and the amount of Adverse Consequences claimed. Subject to the procedures with respect to Third
Party Claims under Section 8(d) hereof, if such written notice (or an amended notice) states the
amount of Adverse Consequences claimed and the Seller Representative notifies the Buyer
Representative that it does not dispute the claim described in such notice or fails to notify the
Buyer Representative within forty five (45) business days after delivery of such notice by the
Buyer Representative whether the Seller Representative disputes the claim described in such notice,
Adverse Consequences in the amount specified in such notice will be admitted by the Seller Parties,
and the Seller Parties shall be responsible for the payment of such Adverse Consequences to the
Buyer(s). If the Seller Representative has timely disputed the Seller Parties’ liability with
respect to such claim by delivery of notice in accordance with this Section 8(b)(ii), the Buyer
Representative and the Seller Representative will proceed in good faith to negotiate a resolution
of such dispute. Any written notice delivered by the Seller Representative to the Buyer
Representative for purposes of



50









 




disputing a claim for Adverse Consequences shall provide in reasonable detail the basis for
any objection to the matters set forth in Buyer’s notice and the portion of the claim (if less than
all) which is the subject of the dispute notice.




               (iii) Subject to the limitations set forth in Section 8(g) and Buyers’ obligation to first
seek recovery for Adverse Consequences from the Escrow Amount in accordance with Section 8(b)(i),
the Seller Parties will pay the amount of any Adverse Consequences to the Buyers within ten (10)
days following the date on which the Seller Parties’ liability for and the amount of such Adverse
Consequences is determined. The Seller Parties hereby acknowledge and agree that, subject to the
limitations set forth in Section 8(g), any undisputed amount of such Adverse Consequences that are
not recovered from the Escrow Amount shall be payable by them.



          (c) Indemnification Provisions for the benefit of the Sellers.



               (i) Provided that the Seller Representative makes a written claim for indemnification against
the Buyers to the Buyer Representative pursuant to Section 10(h) below within the applicable period
set forth in Section 8(a) above, then the Buyers agrees to indemnify the Sellers from and against
any Adverse Consequences the Sellers may suffer through and after the date of the claim for
indemnification resulting from, arising out of, relating to, in the nature of, or caused by,
without duplication (A) the breach of any of the representations, warranties, covenants or
agreements made by Buyers in this Agreement; (B) any Assumed Liability; (C) any Acquired Asset; (D)
Buyers’ operation of the Business after the Closing Date; and (E) any brokerage, finder’s or other
similar fees or expenses payable by Buyers or their Affiliates to any broker, finder, investment
bank or similar agent in connection with the transactions contemplated by this Agreement.



               (ii) Buyers shall be obligated to indemnify the Seller Parties under Section 8(c)(i) only for
those claims giving rise to Adverse Consequences as to which the Seller Representative has given
the Buyer Representative written notice prior to the end of the applicable survival period set
forth in Section 8(a). Any written notice delivered by the Seller Representative to the Buyer
Representative with respect to Adverse Consequences shall set forth with reasonable specificity the
basis of the claim for Adverse Consequences if reasonably determinable at such time and the amount
of Adverse Consequences claimed. Subject to the procedures with respect to Third Party Claims
under Section 8(d), if such written notice (or an amended notice) states the amount of Adverse
Consequences claimed and the Buyer Representative notifies the Seller Representative that it does
not dispute the claim described in such notice or fails to notify the Seller Representative within
forty five (45) business days after delivery of such notice by the Seller Representative whether
the Buyer Representative disputes the claim described in such notice, Adverse Consequences in the
amount specified in such notice will be admitted by Buyers, and Buyers shall be responsible for the
payment of such Adverse Consequences to the Seller Parties. If the Buyer Representative has timely
disputed Buyers’ liability with respect to such claim by delivery of notice in accordance with this
Section 8(c), the Buyer Representative and the Seller Representative will proceed in good faith to
negotiate a resolution of such dispute. Any written notice delivered by the Buyer Representative
to the Seller Representative for purposes of disputing a claim for Adverse Consequences shall
provide



51









 




in reasonable detail the basis for any objection to the matters set forth in Buyer’s notice
and the portion of the claim (if less than all) which is the subject of the dispute notice.




               (iii) Subject to the limitations set forth in Section 8(g), Buyers will pay the amount of any
Adverse Consequences to the Seller Parties within ten (10) days following the date on which Buyers’
liability for and the amount of such Adverse Consequences is determined.



          (d) Matters Involving Third Parties.



               (i) If any third party shall notify any party(ies) to this Agreement (the “Indemnified
Party”) with respect to any matter (a “Third Party Claim”) which may give rise to a
claim for indemnification against the other party(ies) to this Agreement (the “Indemnifying
Party”) under this Section 8, then the Indemnified Party’s representative shall promptly notify
the Indemnifying Party’s representative thereof in writing; provided, however, that no delay on the
part of the Indemnified Party’s representative in notifying the Indemnifying Party’s representative
shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is materially prejudiced.



               (ii) The Indemnifying Party will have the right to defend the Indemnified Party against the
Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party so
long as (A) the Indemnifying Party notifies the Indemnified Party in writing within twenty (20)
days after the Indemnified Party has given notice of the Third Party Claim that the Indemnifying
Party will assume the defense of the Third Party Claim (but in all events, at least five Business
Days prior to the date that an answer to such Third Party Claim is due to be filed); provided that
the assumption of such defense will not be deemed a waiver of the Indemnifying Party’s right to
contest it’s obligation to provide any indemnity hereunder, and (B) the Indemnifying Party conducts
the defense of the Third Party Claim actively and diligently.



               (iii) So long as the Indemnifying Party is conducting the defense of the Third Party Claim in
accordance with Section 8(d)(ii) above, (A) the Indemnified Party may retain separate co counsel at
its sole cost and expense and participate in (but not control) the defense of the Third Party
Claim, (B) the Indemnified Party will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (C) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnified Party (not to be withheld unreasonably)
(unless the claimant provides to the Indemnified Party an unqualified release from all liability in
respect of the Third Party Claim and any such settlement contains no provisions that will have
materially impacted the Business).



               (iv) In the event either of the conditions in Section 8(d)(ii) above is or becomes unsatisfied
or the Indemnifying Party does not seek to defend the Third Party Claim, however, (A) the
Indemnified Party may defend against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it reasonably may deem appropriate
(and the Indemnified Party need not consult with, or obtain any consent from, the Indemnifying
Party in connection therewith), (B) the Indemnifying Party



52









 




will reimburse the Indemnified Party promptly and periodically for the costs of defending
against the Third Party Claim (including reasonable attorneys’ fees and expenses), and (C) the
Indemnifying Party will remain responsible for any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party
Claim to the fullest extent provided in this Section 8.




          (e) Determination of Adverse Consequences. In determining Adverse Consequences for
purposes of this Section 8:



               (i) the parties shall take into account the time cost of money, assuming a discount rate
equal to ten percent (10%) per annum; and



               (ii) the amount of any losses for which indemnification is provided shall be net of any
“tax benefits” (i.e., the amount by which the Tax liability of the Party (or group including the
Party) is actually reduced, including by deduction, entitlement to refund, credit or otherwise)
and amounts actually recovered or recoverable by the Indemnified Party under insurance policies
or otherwise with respect to such losses (net of any Tax or expenses incurred in connection with
such recovery).



          (f) Adjustment to Purchase Price. All indemnification payments under this Section 8
shall be deemed adjustments to the Purchase Price.



          (g) Limitations on Indemnification.



               (i) Baskets. Notwithstanding anything to the contrary in this Agreement, neither the
Seller Parties nor the Buyers shall be liable (for indemnification or otherwise) with respect to
the matters described herein unless the aggregate amount of claims shall collectively exceed a
total of $217,000, (the “Basket Amount”) and then only for the amount by which such claims
exceed the Basket Amount. However, the Basket Amount shall not apply to claims based upon (A) any
intentional misrepresentation or willful breach of any matter contained herein or fraud; (B)
breaches of the representations and warranties contained in Section 3(a) or 4(a)(Organization,
Qualification, and Corporate Power), Section 3(o)(Intellectual Property) and Section
3(x)(Environmental Matters) or (C) any indemnification by Sellers for Retained Liability, any
indemnification by Buyers for Assumed Liabilities, or breaches of any of Seller Parties’ covenants
or Buyers’ covenants herein. Neither the Seller Parties nor the Buyer shall be liable (for
indemnification or otherwise) for any claim in an amount less than $10,000, provided, that when any
such claim is based upon (A) any intentional misrepresentation or willful breach of any matter
contained herein or fraud (B) breaches of the representations and warranties contained in Section
3(o)(Intellectual Property) or Section 3(x)(Environmental Matters) or (C) any Retained Liability,
Assumed Liability or breaches of any of Seller Parties’ covenants or Buyers’ covenants herein and
exceeds $10,000, the Seller Parties or the Buyers, as the case may be, shall, subject to the
limitations in this Section 8(g) and the other provisions of this Agreement, be liable for the
entire amount of such claim without regard to any deductible or threshold amount.



               (ii) Cap. Notwithstanding Section 8(g)(i), the maximum liability under the indemnity
section that may be imposed upon the Seller Parties or the Buyers with



53









 




respect to breaches of representations and warranties shall be $2,950,000 (the “Cap”).
However, the Cap shall not apply to claims based upon (A) any intentional misrepresentation or
willful breach of any matter contained herein or fraud; (B) breaches of the representations and
warranties contained in Section 3(a) or 4(a)(Organization, Qualification, and Corporate Power),
Section 3(o)(Intellectual Property), and Section 3(x)(Environmental Matters); or (C) any Retained
Liability or any Assumed Liability or breaches of any of Seller Parties or any of Buyers’ covenants
herein. With respect to breaches of the representations and warranties contained in Section
3(o)(Intellectual Property) and Section 3(x)(Environmental Matters), the maximum liability under
the indemnity section that may be imposed upon the Seller Parties in the aggregate shall be
$8,500,000.




          (h) Sole Remedy. The Parties agree that, except as set forth in Section 10(o) or with
respect to claims for fraud, the sole and exclusive remedy of any Party to this Agreement or their
respective affiliates with respect to this Agreement or any certificate or instrument delivered
pursuant hereto, the events giving rise to this Agreement and the transactions contemplated by this
Agreement, shall be limited to the indemnification provisions set forth in this Section 8, and all
other rights and remedies in respect of such a breach or breaches (excluding any act or omission
which constitutes fraud by any of the Parties hereto) by any such Party are hereby expressly
forever waived. Each Party hereby covenants not to sue or seek indemnification from any other
party in connection with any other such rights and remedies.



          (i) No Duplication. Any liability for indemnification under this Agreement shall be
determined without duplication of recovery by reason of the state of facts giving rise to such
liability constituting a breach of more than one representation, warranty, covenant or agreement or
to the extent taken into account in determining any adjustment to the Purchase Price under Section
8(f).



     9. Termination.



          (a) Termination. This Agreement may be terminated and the transactions contemplated
by this Agreement may be abandoned at any time prior to the Closing Date:



               (i) by mutual written consent of the Seller Representative and the Buyer Representative;



               (ii) by the Seller Representative or the Buyer Representative if the Closing shall not have
occurred by January 31, 2008 (the “Outside Date”), however, if the Closing has not occurred by
such date by reason of nonsatisfaction of any of the conditions set forth in Section 7(a)(ix) and
all other conditions set forth in Section 7 have been satisfied or waived or are then capable of
being satisfied, then such date shall automatically be extended to the last day of the month in
which such conditions are met (which shall then be the “Outside Date”); provided, that a party
will not be entitled to terminate this Agreement pursuant to this Section 9(a)(ii) if such party’s
breach of its obligations under this Agreement has prevented the Closing from occurring and
provided, further that the Outside Date shall in no case be later than March 31, 2008;



               (iii) by Buyers, if



54









 





                    (1) any Seller Party has breached any (A) covenant or agreement contained in this Agreement in
any material respect, or (B) representation or warranty of Seller Parties contained in this
Agreement in any material respect; provided, that, in the event of a breach of a representation,
warranty or covenant that is capable of being cured, notice of the breach of such covenant has been
delivered by the non-breaching party and the breaching party does not cure such breach by the
earlier to occur of the tenth (10th) business day after receipt of such notice or the
date provided in Section 9(a)(ii);



                    (2) any of the conditions set forth in Section 7(a) have become impossible to satisfy;



               (iv) by Sellers, if



                    (1) any Buyer has breached any (A) covenant or agreement contained in this Agreement in any
material respect, or (B) representation or warranty contained in this Agreement in any material
respect; provided, that, in the event of a breach of a representation, warranty or covenant that is
capable of being cured, notice of the breach of such covenant has been delivered by the
non-breaching party and the breaching party does not cure such breach by the earlier to occur of
the tenth (10th) business day after receipt of such notice or the date provided in
Section 9(a)(ii); or



                    (2) any of the conditions set forth in Section 7(b) have become impossible to satisfy.



          (b) Procedure for and Effect of Termination. In the event of termination of this
Agreement by the parties under Section 9(a) of this Agreement, other than the terms of Sections 9,
10(b), 10(i) and 10(p) of this Agreement, which shall survive any such termination, this Agreement
shall become null and void and of no further effect, except that each party shall be liable for any
fraud or willful misrepresentation or material breach of any representation or warranty or any
covenant included in this Agreement prior to such termination.



     10. Miscellaneous.



          (a) Fees and Expenses. All fees and expenses incurred in connection with this
Agreement and the Asset Purchase shall be paid by the party incurring such expenses.



          (b) Press Releases and Public Announcements. Prior to the Closing, (i) the Buyer
Representative and the Seller Representative shall consult with each other before either the Buyers
or the Seller Parties issue any press release or other public statement with respect to the Asset
Purchase or this Agreement and (ii) the Buyers and the Seller Parties shall not issue any such
press release or make any such public statement without the prior consent of the representative of
the other parties, which shall not be unreasonably withheld; provided, however, that any Party
hereto may make any disclosure or announcement which such Party, in the opinion of its legal
counsel, is obligated to make by laws or the rules of any securities exchange; in such case, the
Party desiring to issue the press releases or make the public announcement shall consult with the
other party hereto prior to issuing the press releases or making such public announcement or
announcement and use their commercially reasonable efforts to agree upon a mutually satisfactory
text in any press release or public announcement.



55









 





          (c) No Third-Party Beneficiaries. Notwithstanding Section 6(h) or any other Section
of this Agreement, this Agreement is solely for the benefit of the Seller Parties and their
successors and permitted assigns, with respect to the obligations of Buyer under this Agreement,
and this Agreement shall not confer any rights or remedies upon any Person other than the Parties
and their respective successors and permitted assigns.



          (d) Entire Agreement. This Agreement (including the documents referred to herein)
constitutes the entire agreement between the Parties and supersedes any prior understandings,
agreements, or representations by or between the Parties, written or oral, to the extent they have
related in any way to the subject matter hereof.



          (e) Succession and Assignment. This Agreement shall be binding upon and inure to the
benefit of the Parties named herein and their respective successors and permitted assigns. No
Party may assign either this Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of the other Party; provided, however, that (A) the Buyers may
(i) assign any or all of their rights and interests hereunder to one or more of their Affiliates
and (ii) designate one or more of their Affiliates to (1) perform their obligations hereunder (in
any or all of which cases the Buyers nonetheless shall remain responsible for the performance of
all of their obligations hereunder) or (2) receive specific assets to be acquired hereunder;
provided, further, that Buyers remain responsible for the performance of all of their obligations
under this Agreement, and (B) either Buyers or Seller Parties may assign any or all of their rights
and interests hereunder to a successor entity that purchases such Party’s business, provided, that
such successor entity agrees to assume all obligations under this Agreement of the Party selling
its business.



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



          (g) Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation of this Agreement.



          (h) Notices. All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder
shall be deemed duly given if (and then two business days after) it is sent by registered or
certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient
as set forth below:



	 	 	 	 	 
	 

	 	If to the Sellers and/or
	 	Synovis Life Technologies, Inc.
	 

	 	Synovis Life:
	 	2575 University Avenue West
	 

	 	 	 	St. Paul, MN 55114-1024
	 

	 	 	 	Fax: (651) 642-9018
	 

	 	 	 	Attn: Chief Executive Officer
	 
	 	 	 	 





56









 






	 	 	 	 	 
	 

	 	Copy to:
	 	Dorsey & Whitney LLP
	 

	 	 	 	50 South Sixth Street, Suite 1500
	 

	 	 	 	Minneapolis, MN 55402-1498
	 

	 	 	 	Fax: (612) 340-8738
	 

	 	 	 	Attn: Timothy S. Hearn
	 
	 	 	 	 
	 

	 	If to the Buyers:
	 	Heraeus Vadnais, Inc.
	 

	 	 	 	1375 Willow Lake Boulevard
	 

	 	 	 	St. Paul, MN 55110
	 

	 	 	 	Fax: (651) 254-2611
	 

	 	 	 	Attn: President
	 
	 	 	 	 
	 

	 	Copy to:
	 	McDermott Will & Emery LLP
	 

	 	 	 	28 State Street
	 

	 	 	 	Boston, MA 02109
	 

	 	 	 	Fax: (617) 535-3800
	 

	 	 	 	Attn: Christopher Donovan






     Any Party may send any notice, request, demand, claim, or other communication hereunder to the
intended recipient at the address set forth above using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended recipient. Any Party may
change the address to which notices, requests, demands, claims, and other communications hereunder
are to be delivered by giving the other Party notice in the manner herein set forth.



          (i) Governing Law. This Agreement shall be governed by and construed in accordance
with the domestic laws of the State of Delaware without giving effect to any choice or conflict of
law provision or rule that would cause the application of the laws of any jurisdiction other than
the State of Delaware.



          (j) Amendments and Waivers. No amendment of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by the Buyers and the Sellers. No waiver by
any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.



          (k) Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction.



          (l) Construction. The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption



57









 




or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship
of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise. The word “including” shall mean including without
limitation.




          (m) Disclosure Schedule; Representations.



               (i) Nothing in the Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Disclosure Schedule identifies the exception with
reasonable particularity and describes the relevant facts in reasonable detail. Without limiting
the generality of the foregoing, the mere listing (or inclusion of a copy) of a document or other
item shall not be deemed adequate to disclose an exception to a representation or warranty made
herein (unless the representation or warranty has to do with the existence of the document or other
item itself). Sellers may, at their option, include in the Disclosure Schedule items that are not
material in order to avoid any misunderstanding, and such inclusion shall not be deemed to be an
acknowledgement or representation that such items are material. Information disclosed in the
Disclosure Schedule shall constitute a disclosure for all purposes under this Agreement
notwithstanding any reference to a specific section so long as it is reasonably clear from the
context of the disclosure that it should or could qualify other representations and warranties,
including but not limited to, the use of cross-references to other schedules.



               (ii) The Parties intend that each representation, warranty, and covenant contained herein
shall have independent significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the relative levels of
specificity) which the Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.



          (n) Incorporation of Exhibits and Schedules. The Exhibits and Schedules identified in
this Agreement are incorporated herein by reference and made a part hereof.



          (o) Specific Performance. Each of the Parties acknowledges and agrees that the other
Parties would be damaged irreparably in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are breached. Accordingly, each of
the Parties agrees that the other Parties shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any action instituted in any court of the United States or any
state thereof having jurisdiction over the Parties and the matter (subject to the provisions set
forth in Section 10(p) below), in addition to any other remedy to which it may be entitled, at law
or in equity.



          (p) Submission to Jurisdiction. Each of the Parties (a) submits to the jurisdiction
of any United States District Court or state district court sitting in the State of Delaware in any
action or proceeding arising out of or relating to this Agreement and agrees that all claims in
respect of the action or proceeding may be heard and determined in any such court, and (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion or



58









 




other request for leave from any such court, and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated by this Agreement in any court
other than a United States District Court or state district court sitting in the State of Delaware.
Each of the Parties waives any defense of inconvenient forum to the maintenance of any action or
proceeding so brought and waives any bond, surety, or other security that might be required of any
other Party with respect thereto. Any Party may make service on the other Party by sending or
delivering a copy of the process to the Party to be served at the address and in the manner
provided for the giving of notices in Section 10(h) above. Each Party agrees that a final judgment
in any action or proceeding so brought shall be conclusive and may be enforced by suit on the
judgment or in any other manner provided by law or in equity.




          (q) Waiver of Jury Trial. EACH OF THE BUYERS, THE SELLERS AND THE SELLER
REPRESENTATIVE AND BUYER REPRESENTATIVE HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HERBY OR THE ACTIONS OF BUYERS, SELLERS
OR THE SELLER REPRESENTATIVE OR BUYER REPRESENTATIVE IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.



          (r) Non-Recourse. With the exception of Liabilities for fraud and intentional
misrepresentation and the Liabilities and obligations of Synovis Life set forth in this Agreement,
no past, present or future director, officer, employee, incorporator, member, partner, stockholder,
Affiliate, agent, attorney or representative (including the Seller Representative) of Sellers or
their Affiliates or Synovis Life shall have any liability for any obligations or liabilities of
Sellers under this Agreement or any agreement contemplated hereby of or for any claim based on, in
respect of, or by reason of, the transactions contemplated hereby and thereby. With the exception
of Liabilities for fraud and intentional misrepresentation and the Liabilities and obligations of
the Buyers, no past, present or future director, officer, employee, incorporator, member, partner,
stockholder, Affiliate, agent, attorney or representative (including the Buyer Representative) of
Buyers or their Affiliates shall have any liability for any obligations or liabilities of Buyers
under this Agreement or any agreement contemplated hereby of or for any claim based on, in respect
of, or by reason of, the transactions contemplated hereby and thereby.



     11. Provisions Relating to the Seller Parties and the Buyers. Notwithstanding any
other provision of this Agreement:



          (a) The Seller Parties shall from time to time designate one person (the “Seller
Representative”) to represent the interests of the Seller Parties and their respective
assignees under this Agreement. The initial Seller Representative shall be the Chief Executive
Officer of Synovis Life. A different Seller Representative may be designated by the Seller Parties
and their respective assignees from time to time by giving written notice of such designation to
the Buyer Representative as set forth in Section 10(h). All actions taken by the Seller
Representative on behalf of the Sellers and their respective assignees shall be binding upon, and
shall be treated as the actions of, the Seller Parties and their respective assignees.



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          (b) All amounts payable to the Seller Parties under this Agreement shall be paid to such
persons, and in such proportions, as the Seller Representative may from time to time direct in
written instructions.



          (c) The Buyers shall from time to time designate one person (the “Buyer
Representative”) to represent the interests of the Buyers and their respective assignees under
this Agreement. The initial Buyer Representative shall be the President of Heraeus Vadnais. A
different Buyer Representative may be designated by the Buyers and their respective assignees from
time to time by giving written notice of such designation to the Seller Representative as set forth
in Section 10(h). All actions taken by the Buyer Representative on behalf of the Buyers and their
respective assignees shall be binding upon, and shall be treated as the actions of, the Buyers and
their respective assignees.



          (d) All amounts payable to the Buyers under this Agreement shall be paid to such persons, and
in such proportions, as the Buyer Representative may from time to time direct in written
instructions.



* * * * *




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     IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above
written.



	 	 	 	 	 
	 	BUYERS:



HERAEUS VADNAIS, INC.

 	 
	 	By:  	/s/ Mark Kempf	 
	 	 	Name:  	Mark Kempf	 
	 	 	Title:  	President	 
	 
	 	HERAEUS MATERIALS CARIBE, INC.

 	 
	 	By:  	/s/ Mark Kempf	 
	 	 	Name:  	Mark Kempf	 
	 	 	Title:  	President	 
	 
	 	HERAEUS MATERIALS S.A.

 	 
	 	By:  	/s/ Dr. Roland Gerner	 
	 	 	Name:  	Dr. Roland Gerner	 
	 	 	Title:  	President	 
	 	 

 	 
	 	By:  	/s/ Dr. Nicolas Guggenheim	 
	 	 	Name:  	Dr. Nicolas Guggenheim	 
	 	 	Title:  	Delegate	 
	 
	 	SELLERS:



SYNOVIS INTERVENTIONAL SOLUTIONS, INC.

 	 
	 	By:  	/s/ Richard W. Kramp	 
	 	 	Name:  	Richard W. Kramp	 
	 	 	Title:  	President and CEO	 
	 
	 	SYNOVIS CARIBE, INC.

 	 
	 	By:  	/s/ Richard W. Kramp	 
	 	 	Name:  	Richard W. Kramp	 
	 	 	Title:  	President and CEO	 



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	 	SYNOVIS LIFE:



SYNOVIS LIFE TECHNOLOGIES, INC.

 	 
	 	By:  	/s/ Richard W. Kramp	 
	 	 	Name:  	Richard W. Kramp	 
	 	 	Title:  	President and CEO	 
	 




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