##### 



Exhibit 10.19

STOCK PURCHASE AGREEMENT

This Agreement is entered into this      day of May, 2002 by and between
Metalclad Corporation, a Delaware corporation (Purchaser), and Surg II, Inc.,
a Minnesota corporation, (the Company); Theodore A. Johnson a Minnesota
resident (Johnson); and Charles B. McNeil, a Minnesota resident (McNeil).

Recitals

A.     The Company recently sold substantially all of its assets under the
terms of an Asset Purchase Agreement between the Company and Oxboro Medical,
Inc., dated October 4, 2001 (the Oxboro Agreement), has no material
liabilities, and is desirous of providing additional value for its
shareholders.

B.     The Companys common stock is registered under Section 12 of the
Securities Exchange Act of 1934, and is traded on the OTC Bulletin Board under
the symbol SUGR.

C.     The Purchaser is desirous of owning at least 90% of the Company, and
utilizing the Company for the acquisition of an active business which Purchaser
believes has good prospects for future growth.

D.     Johnson is a principal shareholder, the Chairman of the Board and a
member of the Board of Directors of the Company, and McNeil is a principal
shareholder, the Executive Vice President, Treasurer and a member of the Board
of Directors of the Company.

Agreement

NOW, THEREFORE,in consideration of the premises and mutual covenants
contained herein, the parties agree as follows:

ARTICLE I.

PURCHASE OBLIGATION, PRICE, ETC.

I.1 Purchase of Shares.At the Closing, as hereafter defined, Purchaser
will purchase from the Company, and the Company will sell to the Purchaser,
145,000,000 shares (the Shares) of the Companys authorized but unissued no
par value common stock (the Common Stock) for an aggregate purchase price of
$3,000,000 U.S. in immediately available good funds (the Purchase Price),
subject to the terms and conditions set forth herein.

I.2 Closing.The event at which the Purchase Price shall be paid to the
Company and the certificates representing the Shares shall be delivered to
Purchaser, is referred to as the Closing, and the time at which the Closing
is to occur is referred to as the Time of Closing. The Time of Closing shall
be 3:00 p.m., Minneapolis, Minnesota time, Monday, May 29, 2002, and will be
held at Suite 4200, 225 South Sixth Street, Minneapolis, Minnesota, USA, or at
such other time or place as the parties hereto may mutually agree.





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ARTICLE II.

WARRANTIES AND REPRESENTATIONS OF THE COMPANY, JOHNSON AND MCNEIL

The Company, Johnson and McNeil warrant and represent to Purchaser, which
warranties and representations will be true as of the time of Closing as they
are on the date hereof, and which warranties and representations made by
Johnson and McNeil will only be as to their knowledge (as used herein,
knowledge means actual knowledge without any obligation to have performed any
independent investigation), as follows:

II.1 No Disability.Johnson and McNeil each have the power to enter into
and perform their respective obligations under this Agreement, and neither is
under any disability which would affect the enforceability of this Agreement.

II.2 Corporate Authority.The Company has the power and authority to
enter into and perform its obligations under this Agreement; and the execution
and delivery of this Agreement, and the consummation of the transactions and
compliance with the terms contemplated and contained herein, have been duly
authorized by the Board of Directors of the Company, and do not require
approval by the shareholders of the Company.

II.3 Corporate Existence.The Company is a corporation duly incorporated,
validly existing and in an active status under the laws of the state of
Minnesota, and has all corporate powers and authority required to carry on its
business as now conducted.

II.4 Enforceability.This Agreement has been duly executed, and
constitutes a valid and binding agreement of the Company, Johnson and McNeil,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting enforcement of creditors rights generally, and by general equitable
principles, regardless of whether such enforcement is considered in a
proceeding in equity or at a law.

II.5 Conflict.The execution and delivery of this Agreement and the
consummation of the transaction contemplated herein does not and will not
violate or conflict with, or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets
of the Company or the Shares, under any of the terms, conditions or provisions
of the Articles of Incorporation or By-Laws of Company, or any note, bond,
debt, order, decree, license, lease or other instrument to which Company is a
party or is subject.

II.6 Governmental Authorization.The execution, delivery and performance
by the Company, Johnson and McNeil of this Agreement and the consummation of
the transactions contemplated hereby by the Company require no action by or in
respect of, or filing with, any governmental body, agency, official or
authority, other than such consents, approvals, actions, filings and notices
which the failure to make or obtain could not be reasonably expected to have a
Material Adverse Effect on the Company or on the ability of the Company to
consummate the transactions contemplated hereby. As used herein, Material
Adverse Effect with respect to any person means a material adverse effect on
the financial condition, business, assets or results of operations of such
person taken as a whole, provided that Material Adverse Effect shall not
include any state of facts, event, change or effect disclosed in this Agreement
or any schedule hereto to the extent of the Companys estimate of liability or
obligation (but only to such extent, and only if an estimate is specifically
made). Material Adverse Effect shall include, but not be limited to, any
liability or any liabilities in the aggregate not reflected on the Financial
Statements (as hereafter defined) in excess of $7,500.

II.7 Capitalization.The authorized capital stock of the Company consists
of 200,000,000 shares having no par value which, unless otherwise designated
upon the issuance thereof, are designated as common stock (the Common Stock),
and of which 1,600,000 shares have been designated and issued as preferred
stock. There are, or will be at the Time of Closing, 14,667,085 shares of
Common Stock outstanding, including shares issuable as provided in Schedule
2.12, warrants outstanding for the purchase of 325,000 shares of common stock
and no shares of preferred stock outstanding, all of which outstanding shares
are (or will be upon the exercise of the warrants) duly authorized, validly
issued, fully paid and nonassessable. Except for the warrants to purchase up
to 325,000 shares of





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##### 



Common Stock as set forth on Schedule 2.7, there are no
outstanding options or other rights to acquire from the Company, and no
obligation of the Company to issue, any capital stock or securities convertible
or exchangeable for capital stock, of the Company. There are no outstanding
obligations of the Company to repurchase, redeem or otherwise acquire any of
the Companys capital stock, rights to acquire capital stock or any other
securities of the Company.

II.8 Financial Statements.The balance sheets of the Company as of
December 31, 2000 and 2001, along with the statement of operations for the 12
month periods then ended, audited by McGladrey & Pullen, LLP, and the unaudited
balance sheet of the Company as of March 31, 2002, along with the unaudited
statement of operations for the three month period then ended, all of which are
included in either the Form 10-KSB Annual Report of the Company for the fiscal
year ended December 31, 2001, or the Form 10-QSB Quarterly Report for the
quarterly period ended March 31, 2002, are referred to herein as the Financial
Statements. The Financial Statements have been prepared in accordance with
generally accepted accounting principles, consistently applied in all periods
and at all times, and fairly represent, at the specified dates
and for the specified periods, the financial condition and results of the
operations of the Company.

II.9 Liabilities.Except for previously incurred liabilities and fees and
expenses which may be incurred in connection with the negotiations of this
Agreement and the consummation of the transactions contemplated hereby, which
shall not exceed $115,000 in the aggregate, including the obligations set forth
on Schedule 2.12, the Company has no liabilities, whether accrued, contingent,
absolute, determinable or otherwise, including but not limited to any liability
for any breach of covenant, warranty or representation given or made by the
Company in the Oxboro Agreement.

II.10 Litigation.Except as set forth in Schedule 2.10, there is no
action, suit or proceeding pending before any court of competent jurisdiction,
or, to the knowledge of the Company, threatened against the Company, and there
is no inquiry, investigation or proceeding pending, or to the knowledge of the
Company, threatened against the Company, before any court of competent
jurisdiction, or governmental or regulatory authority or agency, and neither
the Company, Johnson nor McNeil are aware of any basis for any such claim
action, lawsuit, inquiry, investigation or proceeding. Except as set forth in
Schedule 2.10, the Company is not a party to or subject to any order, judgment,
decree or consent decree issued by any court or governmental or regulatory
authority or agency relating to any past or present business practice,
transaction or other activity. There is no action, suit or proceeding pending
before any court of competent jurisdiction, or, to the knowledge of the
Company, Johnson or McNeil, threatened against Company which seeks to enjoin or
otherwise prohibit any of the transactions contemplated by this Agreement.

II.11 Related Party Transactions.No officer or director of the Company,
or shareholder of the Company owning more than 5% of the outstanding shares of
its common stock, (a) has borrowed money from the Company since the beginning
of the Companys last fiscal year, or currently has any outstanding
indebtedness or other similar obligations to the Company, (b) has since the
beginning of the Companys last fiscal year loaned or advanced money to the
Company, including the incurrence of reimbursable expenses, or (c) is a
director, officer, employee, partner, affiliate, associate, or consultant of
any lender to, or any borrower from, the Company.

II.12 Brokers.All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on between the Purchaser and
the Company, through its authorized agents, in such manner as not to give rise
to any valid claim against Purchaser or the Company for a brokerage commission,
finders fee or other like payment in connection with this Agreement or the
transactions contemplated hereby, except as provided under Schedule 2.12.

II.13 Patents, Trademarks and Copyrights.The Company does not own,
license or use any patent, patent application, registered trademark, trademark
application, or other trade name or mark, other than its name Surg II, Inc.

II.14 Taxes.Except as set forth in Schedule 2.14 hereto:



| |                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. the Company has timely filed, and will, prior to the Closing,
timely file all returns, declarations and reports and information,
returns and statements required to be filed or sent by or relating to the
Company prior to the Closing relating to any Taxes (as defined below)
with respect to income,





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##### 





| |                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | properties or operations of the Company prior to
the Closing, including the Companys United States income tax return for
the period ended December 31, 2001, and employee income tax withholding
and FUTA reports through March 31, 2002 (collectively, the Returns);



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. as of the time of filing, the Returns (i) correctly reflected
(and, as to any Returns not filed as of the date hereof, will correctly
reflect) the facts regarding the income, business, assets, operations,
activities and status of the Company, and any other information required
to be shown therein, (ii) constitute (and, as to any Returns not filed as
of the date hereof, will constitute) complete and accurate
representations of the Tax liabilities for the periods covered, and (iii)
accurately set forth all items (to the extent required to be included or
reflected in the Returns) relevant to future Tax liabilities, including
the Tax bases of properties and assets;
|
| | c. the Company has timely paid all Taxes that have been shown as due
and payable on the Returns that have been filed;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | d. the Company has made or will make provision for all Taxes payable
for any periods that ended before the Closing for which no Returns have
yet been filed and for any periods that begin before the Closing and end
after the closing to the extent such Taxes are attributable to the
portion of any such period ending at the Closing;                                                                                                                                                                                                                                                                                                                                                      
|
| | e. the charges, accruals and reserves for Taxes reflected on the
Financial Statements including the taxes payable, if any, with respect to
the sale of its assets to Oxboro Medical, Inc., are adequate to cover the
Tax liabilities accruing or payable by the Company in respect of periods
prior to the date of the Financial Statements;                                                                                                                                                                                                                                                                                                                                                    
|
| | f. the Company is not delinquent in the payment of any Taxes and has
not requested any extension of time within which to file or send any
Return, which Return has not since been filed or sent;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | g. no deficiency for any Taxes has been asserted or assessed against
the Company for which the Company has not provided adequate reserves in
accordance with generally accepted accounting principles;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | h. the Company has not granted any extension of the limitation
period applicable to any Tax claims and the Company has not waived any
such limitation period;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | i. the Company is not and has not been a party to any tax sharing
agreement with any corporation; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | j. the Companys fiscal year end for United States income tax
purposes is December 31.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

Tax (and with the corresponding meaning Taxes and Taxable) shall include
(i) any net income, gross income, gross receipts, sales, use, ad valorem,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property or windfall profit tax, custom
duty or other tax, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest and any penalty, addition to tax or
additional amount imposed by any taxing authority (domestic or foreign) and
(ii) any liability for the payment of any amount of the type described in
clause (i) as a result of being a member of an affiliated or combined group.

II.15 Absence of Certain Changes.

Except as disclosed in the Company SEC Reports (as defined under Section
2.24) filed and publicly available prior to the date hereof, or in Schedule
2.15 hereto, since December 31, 2001, and other than the sale of substantially
all of its assets to Oxboro Medical, Inc. (now known as Sterion Incorporated)
on January 22, 2002 pursuant to the Oxboro Agreement, there has not been any
event, occurrence or development of a state of circumstances or facts which
alone or together with another fact could reasonably be expected to have a
Material Adverse Change on the business, financial condition or results of
operations of the Company; or any guarantee by the Company of any indebtedness
of a third party; or any grant of any severance or termination pay to any
director, officer or employee of the Company.





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II.16 Employees.The Company has no employees or persons similarly
engaged as independent contractors (such as leased employees), and has not had
any such employees or independent contractors since January 22, 2002. During
the fiscal year ended December 31, 2001, and through January 22, 2002, the
Company had four employees, each of whom thereafter became employees or
independent contractors of Sterion Incorporated, formerly known as Oxboro
Medical, Inc.

II.17 Bank Accounts.Attached hereto as Schedule 2.17 are the names of
each bank or other financial institution at which the Company has an account,
credit line or safety deposit box, along with the corresponding account number
and the names of the persons entitled to draw thereon or have access thereto.

II.18 Contracts.Except for its obligations under the Oxboro Agreement
and this Agreement, the Company is not a party to any executory contract, and
has no obligations under any agreement which could give rise to any liability
or obligation to the Company, whether contingent or otherwise.

II.19 Benefit Plans.The Company has not adopted, and there are not in
effect, any employee plans as defined under, or which would be subject to, the
U.S. Employment Retirement Income Security Act of 1974.

II.20 Corporate Record Book.The Company has provided, or will at the
Time of Closing provide, Purchaser with a copy of the actions taken by the
Board of Directors of the Company, an index of which is attached as Schedule
2.20, which constitutes an accurate and complete record of all action taken by
the shareholders and the Board of Directors of the Company from the Companys
inception.

II.21 Shareholders List.Attached as Exhibit A, is an accurate list of
the names and addresses of the holders of record of the Companys outstanding
common stock, along with their respective share holdings, as of the close of
business on March 29, 2002, and a list of the names and addresses of persons
who became, or are or will be at the Time of Closing, entitled to become, by
Board of Directors resolution, warrant, agreement, warrant or otherwise,
holders of the Companys common stock after March 29, 2002. Exhibit A
identifies all shares of the Companys capital stock which are deemed
restricted as provided under the Securities Act of 1933, as amended.
Schedule 2.21 sets forth the shares held of record and beneficially by holders
of 5% or more of the Companys outstanding voting stock, and by all
affiliates of the Company, as defined under the Securities Act of 1933, as
amended, and contains a list of all warrants issued by the Company, copies of
which have or shall be provided to purchasers prior to the Time of Closing.

II.22 Subsidiaries.The Company does not have any subsidiaries.

II.23 Shares.The Shares, when duly issued by the Company to Purchaser,
will be fully paid and non-assessable, subject to no lien, encumbrance or other
restriction, except for restrictions on transferability which may be imposed
under the Securities Act of 1933, as amended, or applicable state blue sky
laws.

II.24 1934 Act Compliance.The Companys common stock is and has been
registered under Section 12 of the Securities Exchange Act of 1934 for at least
the past two years. For at least the past two years, the Company has timely
filed reports, statements and documents with the Securities and Exchange
Commission as required under the Securities Exchange Act of 1934, as amended,
and the Securities Act of 1933, as amended (which reports, statements and
documents are referred to as the SEC Reports). Specifically, and included
with the SEC Reports, the Company has provided the Purchaser with a copy of or
access to its annual reports on Form 10-KSB for its fiscal year ended on
December 31, 2000 and 2001, its quarterly reports on Form 10-QSB for the
quarter ended March 31, 2002, its proxy statement relating to the last meeting
of its shareholders held on January 22, 2002, and its Forms 8K dated February
6, 2002. As of their respective dates, the SEC Reports complied in all
material respects with all applicable requirements of the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended, and the
respective rules and regulations promulgated thereunder, as the case may be,
each in effect on the dates such SEC Reports were filed. As of their
respective dates, each of the SEC Reports did not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading.





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II.25 Insurance.A products liability insurance policy is in full force
and effect, with the premium prepaid for five years, providing for coverage on
products manufactured by the Company on or before January 22, 2002, with
aggregate annual limits of $1,000,000 and per occurrence limits of $1,000,000
on all product liability claims.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser warrants and represents to the Company, which warranties and
representations will be true as of the time of Closing, as follows:

III.1 Corporate Authority.Purchaser has the power and authority to enter
into and perform its obligations under this Agreement; and the execution and
delivery of this Agreement, and the consummation of the transactions and
compliance with the terms contemplated and contained herein, have been duly
authorized by the Board of Directors of the Purchaser, and do not require
approval by the shareholders of the Purchaser.

III.2 Corporate Existence.Purchaser is a corporation duly incorporated,
validly existing and in an active status under the laws of the state of
Delaware, and has all corporate powers and authority required to carry on its
business as now conducted.

III.3 Enforceability.This Agreement has been duly executed, and
constitutes a valid and binding agreement of Purchaser, enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
enforcement of creditors rights generally, and by general equitable principles,
regardless of whether such enforcement is considered in a proceeding in equity
or at a law.

III.4 Conflict.The execution and delivery of this Agreement and the
consummation of the transaction contemplated herein does not and will not
violate or conflict with, or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under any of the terms, conditions or provisions of
the Articles of Incorporation or Bylaws of Company, or any note, bond, debt,
order, decree, license, lease or other instrument to which Company is a party
or is subject.

III.5 Governmental Authorization.The execution, delivery and performance
by Purchaser of this Agreement and the consummation of the transactions
contemplated hereby by Purchaser requires no action by or in respect of, or
filing with, any governmental body, agency, official or authority, other than
such consents, approvals, actions, filings and notices which the failure to
make or obtain could not be reasonably expected to have a Material Adverse
Effect on the Purchaser to consummate the transactions contemplated hereby.

III.6 Investment Intent.Purchaser has been advised that neither the
offer nor the sale of the Shares to Purchaser will have been registered under
the Securities Act of 1933 (the 33 Act) or any state law on the grounds that
it will be exempt from such registration, and that the Companys reliance upon
such exemption or exemptions is predicated in part on Purchasers
representation, herein made, that Purchaser is acquiring such Shares for
investment for Purchasers own account with no present intention of disposing
of the same, except in compliance with applicable provisions of the 33 Act.
Any certificate or other document representing the Shares will bear a legend
stating in effect that the issuance or sale of the Shares has not been
registered under the Act or any applicable state securities laws, and that the
Shares are restricted as defined under the Act.

III.7 Accredited Investor.Purchaser is an accredited investor as
defined under the Securities Act of 1933.





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ARTICLE IV.

CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER

The obligation of the Purchaser to purchase the Shares pursuant to this
Agreement shall be subject to the satisfaction, on or prior to the Time of
Closing, of each of the following conditions precedent, any of which may be
waived by the Purchaser.

IV.1 Accuracy of Representations and Performance of Obligations.All
warranties and representations made by the Company, Johnson and McNeil in this
Agreement shall be true and correct in all material respects on and as of the
Time of Closing with the same effect as if such warranties and representations
had been made on and as of the Time of Closing, and the Company shall have
performed or complied in all material respects with the covenants, agreements
and conditions contained in this Agreement on their part required to be
performed or complied with at or prior to the Closing.

IV.2 No Litigation or Contrary Judgment.The Closing shall not violate
any order, decree or judgment of any court or governmental body having
competent jurisdiction.

IV.3 Resignations.Upon the effectiveness of the Closing, each member of
the Companys Board of Directors shall have resigned as a member thereof, and
shall have elected Kenneth W. Brimmer and Brian D. Niebur to fill vacancies
created on the Board of Directors and constitute all of the members thereof ,
and shall have elected Kenneth Brimmer and Brian Niebur to serve as the
Companys Chief Executive Officer and Chief Financial Officer, respectively.

IV.4 Trading of Common Stock.The Companys common stock will be trading
on the OTC Bulletin Board under the symbol SUGR, subject to no order or notice
of a potential or actual suspension of such trading, or the removal of such
common stock from price quotation on the OTC Bulletin Board.

IV.5 Bank Account.The Board of Directors of the Company shall have
established a checking account in the Companys name (the New Account) with a
bank to be designated by the Purchaser, naming as the only signatories thereto,
with authority to withdraw funds on behalf of the Company, the persons
specified as the proposed Chief Executive Officer and Chief Financial Officer
in Section 4.3.

ARTICLE V.

CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY

The obligations of the Company to sell the Shares pursuant to this
Agreement shall be subject to the satisfaction, on or prior to the Time of
Closing, of each of the following conditions precedent, any of which may be
waived by the Company:

V.1 Accuracy of Representations and Warranties.All warranties and
representations made by the Purchaser in this Agreement shall be true and
correct in all material respects on and as of the Time of Closing with the same
effect as if such warranties and representations had been made on and as of the
Time of Closing and the Purchaser shall have performed or complied in all
material respects with the covenants, agreements and conditions contained in
this Agreement on its part required to be performed or complied with at or
prior to the Time of Closing.

V.2 No Litigation or Contrary Judgment.The Closing shall not violate any
order, decree or judgment of any court or governmental body having competent
jurisdiction.

ARTICLE VI.

TRANSACTIONS AT CLOSING

VI.1 Deliveries by the Company.The Company shall deliver, or cause to be
delivered, to the Purchaser at or prior to the Closing the following:





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| |                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. Certificates representing the Shares, registered in the
Purchasers name;                                                                                                                             
|
| | b. The resignation and appointment of members of the Companys Board
of Directors as set forth in Section 4.3.                                                                                           
|
| | c. A certificate of good standing under the laws of the State of
Minnesota, dated as of a date within 15 days of the Time of Closing.                                                                    
|
| | d. An opinion of counsel for the Company in form reasonably
satisfactory to the Purchaser.                                                                                                               
|
| | e. A Stock Escrow and Security Agreement in the form of Exhibit B
hereto, executed by the Company and the Shareholders.                                                                                  
|
| | f. Certification of the Shareholders and other officers of the
Company verifying that the warranties and representations contained in
Article II are, to their knowledge, true as of the Time of Closing.
|
| | g. Access to all records of the Company.                                                                                                                                                                 
|
| | h. Such other documents or certificates as shall be reasonably
requested by the Purchaser or his legal counsel.                                                                                          

VI.2 Deliveries by the Purchaser.The Purchaser shall deliver or cause to
be delivered to the Company at or prior to the Closing the following:



| |                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------
| | a. $3,000,000 in available good funds deposited to the New Account;                                                                 
|
| | b. A certificate of good standing under the laws of the State of
Delaware, dated as of a date within 15 days of the Time of Closing.
|
| | c. An opinion of counsel for the Purchaser in form reasonably
satisfactory to the Company.                                          
|
| | d. A Stock Escrow and Security Agreement in the form of Exhibit B
hereto, executed by Purchaser.                                    
|
| | e. Such other documents or certificates as shall be reasonably
requested by the Company or his legal counsel.                       

ARTICLE VII.

INDEMNIFICATION AND SURVIVAL

VII.1 Indemnification by Johnson and McNeil.Except as set forth
elsewhere in this Agreement or in any Schedule hereto, Johnson and McNeil
severally, but not jointly, agree to indemnify and hold harmless Purchaser and
its officers, directors and agents, against and in respect of any and all
claims, liabilities, obligations, losses, costs, expenses, deficiencies,
litigation, proceedings, taxes, levies, imposts, duties, deficiencies,
assessments, attorneys fees, charges, allegations, demands, damages, or
judgments of any kind or nature whatsoever (Claims) related to, arising from,
or associated with:



| |                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------
| | a. Any breach or violation of the covenants made in this Agreement
by the Company;                                      
|
| | b. Any breach of any of the representations and warranties made by
Johnson or McNeil in Article II of this Agreement; or





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| |                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | c. Any acts, omissions, events, occurrences, circumstances or
transactions occurring prior to the Closing Date (not covered under
Subsections 7.1(a) or 7.1(b) above), of whatsoever type or nature
associated with, arising out of or relating to the ownership or operation
of the Company.

Any indemnification provided for under this Section shall be deemed also to
extend to agents, consultants, representatives, successors, transferees and
assigns of Purchaser.

VII.2 Indemnification by Purchaser.Except as set forth elsewhere in this
Agreement or any Schedule hereto, Purchaser shall indemnify and hold harmless
the Company, and its officers, directors and agents against and in respect of
all Claims related to, arising from, or associated with:



| |                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. Any breach or violation of the covenants made in this Agreement
by Purchaser;                                                                                                                                                                                                           
|
| | b. Any breach of any of the representations or warranties made in
Article III of this Agreement by Purchaser; or                                                                                                                                                                           
|
| | c. Any acts, omissions, events, occurrences, circumstances or
transactions, occurring after the Closing Date (not covered under
Subsections 7.2(a) or 7.2(b) above), of whatsoever type or nature
associated with, arising out of or relating to the ownership or operation
of the Company.

Any indemnification provided for under this Section shall be deemed also to
extend to agents, consultants, representatives, successors, transferees and
assigns of Metalclad and the Company.

VII.3 Insurance and Third-Party Obligations.Any indemnification
otherwise payable pursuant to Section 7.1 or 7.2 of this Agreement shall be
reduced by the amount of any insurance or other amounts (net of deductibles and
allocated paid loss retro-premiums) that would be payable by any party to the
Indemnitee or on the Indemnitees behalf in the absence of this Agreement. No
insurer or any other third-party shall be (i) entitled to a benefit it would
not be entitled to receive in the absence of the foregoing indemnification
provisions, (ii) relieved of the responsibility to pay any claims for which it
is obligated, or (iii) entitled to any subrogation rights with respect to any
obligation hereunder.

VII.4 Actions and Claims Other Than Third-Party Claims: Notice and Payment
of Claims.Upon obtaining knowledge of any Claims, other than third-party
Claims, which any person entitled to indemnification (the Indemnitee)
believes may give rise to a claim under Section 7.1 or 7.2 of this Agreement,
the Indemnitee shall promptly notify the party liable for such indemnification
(the Indemnitor) in writing of such Claims which the Indemnitee has
determined has given or could give rise to a claim under Section 7.1 or 7.2
hereof (such written notice being hereinafter referred to as a Notice of
Claim); provided, however, that failure of an Indemnitee timely to give a
Notice of Claim to the Indemnitor shall not release the Indemnitor from its
indemnity obligations set forth in this Article VII except to the extent that
such failure adversely affects the ability of the Indemnitor to defend such
Claim or materially increases the amount of indemnification which the
Indemnitor is obligated to pay hereunder, in which event the amount of
indemnification which the Indemnitee shall be entitled to receive shall be
reduced to an amount which the Indemnitee would have been entitled to receive
had such Notice of Claim been timely given. A Notice of Claim shall specify in
reasonable detail the nature and estimated amount of any such Claim giving rise
to a right of indemnification. The Indemnitor shall have 30 business days
after receipt of a Notice of Claim to notify the Indemnitee whether or not it
disputes its liability to the Indemnitee with respect to such Notice of Claim
and setting forth the basis for such objection. If the Indemnitor fails to
respond to the Indemnitee within such thirty business day period, the
Indemnitor shall be deemed to have acknowledged its responsibility for such
Claim. The Indemnitor shall pay and discharge any such Claim which is not
contested within sixty days after its receipt of a Notice of Claim.

VII.5 Third-Party Claims: Notice, Defense and Payment.Promptly following
the earlier of (i) receipt of notice of the commencement of a third-party
claim, or (ii) receipt of information from a third-party alleging the existence
of such a third-party claim, any Indemnitee who believes that it is or may be
entitled to indemnification by any Indemnitor under Section 7.1 or 7.2 with
respect to such third-party claim shall deliver a Notice of Claim to the
Indemnitor. Failure of an Indemnitee timely to give a Notice of Claim to the
Indemnitor shall not release the Indemnitor from its indemnity obligations set
forth in this Section 7.5 except to the extent that such





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failure adversely
affects the ability of the Indemnitor to defend such Claim or materially
increases the amount of indemnification which the Indemnitor is obligated to
pay hereunder, in which event the amount of indemnification which the
Indemnitee shall be entitled to receive shall be reduced to an amount which the
Indemnitee would have been entitled to receive had such Notice of Claim been
timely given. Indemnitee shall not settle or compromise any third-party claim
in excess of $5,000 prior to giving a Notice of Claim to Indemnitor. In
addition, if an Indemnitee settles or compromises any third-party claims prior
to or within 30 business days after giving a Notice of Claim to an Indemnitor,
the Indemnitor shall be released from its indemnity obligations to the extent
that such settlement or compromise was not made in good faith and was not
commercially reasonable. Within thirty days after receipt of such Notice of
Claim (or sooner if the nature of such third-party claim so requires) the
Indemnitor may (i) by giving written notice thereof to the Indemnitee,
acknowledge liability for, and at its option elect to assume, the defense of
such third-party claim at its sole cost and expense, or (ii) object to the
claim of indemnification set forth in the Notice of Claim delivered by the
Indemnitee; provided that if the Indemnitor does not within the same thirty day
period give the Indemnitee written notice either objecting to such claim and
setting forth the grounds therefor or electing to assume the defense, the
Indemnitor shall be deemed to have acknowledged its responsibility to accept
the defense and its ultimate liability, if any, for such third-party claim.
Any contest of a third-party claim as to which the Indemnitor has elected to
assume the defense shall be conducted by attorneys employed by the Indemnitor
and reasonably satisfactory to the Indemnitee; provided that the Indemnitee
shall have the right to participate in such proceedings and to be represented
by attorneys of its own choosing at the Indemnitees sole cost and expense. If
the Indemnitor assumes the defense of a third-party claim, the Indemnitor may
settle or compromise the third-party claim without the prior written consent of
Indemnitee; provided that the Indemnitor may not agree to any such settlement
pursuant to which any such remedy or relief, other than monetary damages for
which the Indemnitor shall be responsible hereunder, shall be applied to or against the Indemnitee,
without the prior written consent of the Indemnitee, which consent shall not be
unreasonably withheld. If the Indemnitor does not assume the defense of a
third-party claim for which it has acknowledged liability for indemnification
under Section 7.1 or 7.2, the Indemnitee may require the Indemnitor to
reimburse it on a current basis for its reasonable expenses of investigation,
reasonable attorneys fees and reasonable out-of-pocket expenses incurred in
defending against such third-party claim and the Indemnitor shall be bound by
the result obtained with respect thereto by the Indemnitee, provided that the
Indemnitor shall not be liable for any settlement effected without its consent,
which consent shall not be unreasonably withheld. The Indemnitor shall pay to
the Indemnitee in cash the amount for which the Indemnitee is entitled to be
indemnified (if any) within fifteen days after the final resolution of such
third-party claim (whether by settlement, a final non-appealable judgment of a
court of competent jurisdiction or otherwise) or, in the case of any
third-party claim as to which the Indemnitor has not acknowledged liability,
within fifteen days after such Indemnitors objection has been resolved by
settlement, compromise or judicial decision. The Indemnitee shall make
available to the Indemnitor or its representatives all records and other
materials reasonably required for use in contesting any third-party claim and
shall cooperate fully with the Indemnitor in the defense of all such claims.
If the Indemnitor does not so elect to defend any such third-party claims, the
Indemnitee shall have no obligation to do so.

VII.6 Limitation of Liability.The liability of Johnson and McNeil under
Section 7.1 shall be limited to the value, from time to time, of an aggregate
of 1,000,000 shares of the Companys common stock owned by Johnson and McNeil
under the terms of a Stock Escrow and Security Agreement in the form attached
hereto as Exhibit B, to which the Purchaser, the Company and the Shareholders
shall enter into at the Closing.

VII.7 Survival of Representations and Warranties.All of the
representations and warranties made by either party in Articles II and III of
this Agreement, as well as the covenant of Section 7.1(c), shall survive for
the lesser of a period of 12 months following the date of any change in
control, or 24 months from the Closing Date, and thereafter to the extent a
claim is made with respect to any breach of such representation or warranty,
prior to the expiration of such period. For the purpose of this provision, a
change of control will occur if the Purchaser owns less than 50% of the
outstanding Common Stock of the Company. No party shall be entitled to
indemnification for breach of any representation and warranty set forth in
Articles II or III of this Agreement unless a Notice of Claim of such breach
has been given to the breaching party or parties within the period of survival
of such representation and warranty as set forth herein.

VII.8 De Minimus Claim.Notwithstanding anything herein to the contrary,
no party to this Agreement shall seek indemnification under Sections 7.1(b) or
7.2(b) with respect to any Claims so long as such Claims aggregate less than
$7,500 over the 12 or 24 month period specified in Section 7.7.





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ARTICLE VIII.

ADDITIONAL COVENANTS

VIII.1 Conduct of Business Until Closing.Except as Purchaser may
otherwise consent to or approve in writing on and after the date hereof and
prior to the Closing Date, the Company, Johnson and McNeil agree:



| |                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. Not to enter into or authorize any agent to enter into on his
behalf discussions relating to the sale of all or substantially all of
stock or assets of the Company;                                                                                                                                                                                                                            
|
| | b. To conduct and cause the conduct of, the business, operations,
activities and practices of the Company only in the usual, regular and
ordinary manner and, to the extent consistent with such business,
operations, activities and practices, to cause the Company to use its
best efforts to preserve its current business organization and existing
business relationships and prospects; and 
|
| | c. Neither to enter into any transaction nor perform any act or to
cause or permit the Company to perform any act, which would result in any
of the representations and warranties of Company, Johnson or McNeil
contained in this Agreement not being true and correct in all material
respects at and as of the time immediately after the occurrence of such
transaction or on the Closing Date.

VIII.2 Diligence.Prior to Closing, the parties shall proceed with due
diligence and in good faith to take such actions as may be necessary to satisfy
the conditions to Closing set forth in Articles IV and V, hereof.

VIII.3 Additional Information.On or after the Closing Date, the parties
shall, on request, cooperate with one another by furnishing any additional
information, executing and delivering any additional documents and instruments,
including contract assignments, and doing any and all such other things as may
be reasonably required by the parties or their counsel to consummate or
otherwise implement the transactions contemplated by this Agreement, and to
facilitate the control and operation of the Company by Purchaser.

8.4 Access to Information.For a period of three years after the Closing
Date, and during normal business hours, the Company will give Johnson and
McNeil reasonable access to the records of the Company developed or relating to
business conducted prior to the closing for any legitimate business purpose.

ARTICLE IX.
MISCELLANEOUS

IX.1 Expenses.Each party shall pay all of its costs and expenses
(including attorneys, accountants and investment bankers fees, legal costs
and expenses) incurred in connection with this Agreement and the consummation
of the transactions contemplated hereby.

IX.2 Notices.To be effective, all notices or other communications
required or permitted hereunder shall be in writing. A written notice or other
communication shall be deemed to have been given hereunder (i) if delivered by
hand, when the notifying party delivers such notice or other communication to
all other parties to this Agreement, (ii) if delivered by overnight delivery
service, on the second business day following the date such notice or other
communication is timely delivered to the overnight courier, (iii) if delivered
by telecopier or e-mail, on the first business day following the date such
notice or communication is transmitted, or (iv) if delivered by mail, on the
fourth business day following the date such notice or other communication is
deposited in the U.S. mail by certified or registered mail addressed to the
other party, whichever occurs earlier. The determination of a business day
shall be made at the location of the recipient of the notice or other
communication. Mailed, telecopied or e-mailed communications shall be directed
as follows unless written notice of a change of address or telecopier number
has been given in writing in accordance with this Section:





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If to Purchaser: Metalclad Corporation



| | 800 Nicollet Mall, Suite 2690
Minneapolis, MN 55402
Facsimile No: (612) 338-7332
| | --------------------------------------------------------------------------------

With a copy to: Felhaber, Larson, Fenlon & Vogt, P.A.



| | 601 Second Avenue South, Suite 4200
Minneapolis, MN 55402-4302
Attention: Roger H. Frommelt
Facsimile No: (612) 338-4608
E-mail address: rfrommelt@felhaber.com
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

If to the Company: Surg II, Inc.



| | 825 Southgate Office Plaza
5001 West 80th Street
Bloomington, MN 55437
Facsimile No: (952) 830-1232
E-mail address: tjohnson@mncoop.com
| | ---------------------------------------------------------------------------------------------------------------------------------------

With a copy to: Gray, Plant, Mooty, Mooty & Bennett, P.A.



| | 33 South Sixth Street, Suite 3400
Minneapolis, MN 55402
Attention: Frank Vargas
Facsimile No: (612) 333-0066
E-mail address: frank.vargas@gpmlaw.com
| | ----------------------------------------------------------------------------------------------------------------------------------------------------

If to Johnson: Theodore A. Johnson



| | 825 Southgate Office Plaza
5001 West 80th Street
Bloomington, MN 55437
Facsimile No: (952) 830-1232
E-mail address: tjohnson@mncoop.com
| | ---------------------------------------------------------------------------------------------------------------------------------------

With a copy to: Gray, Plant, Mooty, Mooty & Bennett, P.A.



| | 33 South Sixth Street, Suite 3400
Minneapolis, MN 55402
Attention: Frank Vargas
Facsimile No: (612) 333-0066
E-mail address: frank.vargas@gpmlaw.com
| | ----------------------------------------------------------------------------------------------------------------------------------------------------





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If to McNeil: Charles B. McNeil



| | 3115 Maplewood Road
Wayzata, MN 55391
E-mail address: cmcneil@sterion.com
| | -------------------------------------------------------------------------

With a copy to: Gray, Plant, Mooty, Mooty & Bennett, P.A.



| | 33 South Sixth Street, Suite 3400
Minneapolis, MN 55402
Attention: Frank Vargas
Facsimile No: (612) 333-0066
E-mail address: frank.vargas@gpmlaw.com
| | ----------------------------------------------------------------------------------------------------------------------------------------------------

IX.3 Arbitration.All disputes or claims arising out of or in any way
relating to this Agreement shall be submitted to and determined by final and
binding arbitration. Arbitration proceedings may be initiated by any party to
this Agreement upon notice to the other party and to the American Arbitration
Association, and shall be conducted by three arbitrators under the rules of the
American Arbitration Association in Minneapolis, Minnesota; provided, however,
that the parties may agree following the giving of such notice to have the
arbitration proceedings conducted with a single arbitrator. The notice must
specify in general the issues to be resolved in any such arbitration
proceeding. The arbitrators shall be selected by agreement of the parties to
the arbitration proceeding from a list of five or more arbitrators proposed to
the parties by the American Arbitration Association or may be persons not on
such list as agreed to by the parties to such arbitration. If the parties to
the arbitration proceeding fail to agree on one or more of the persons to serve
as arbitrators within fifteen days after delivery to each party hereto of the
list as proposed by the American Arbitration Association, then at the request
of any party to such proceeding, such arbitrators shall be selected at the
discretion of the American Arbitration Association. Where the arbitrators
shall determine that an arbitration proceeding was commenced by a party
frivolously or without a basis or primarily for the purpose of harassment of
delay, the arbitrators may assess such party the cost of such proceedings
including reasonable attorneys fees of any other party. In all other cases,
each party to the arbitration proceeding shall bear its own costs and its
pro-rata share of the fees and expenses charged by the arbitrators and the
American Arbitration Association in connection with any arbitration proceeding.
Any award or equitable relief granted by the arbitrators may be enforced in
accordance with the provisions of Minnesota law. Notwithstanding the
foregoing, nothing herein will prevent a party from seeking and obtaining
equitable relief from a court of competent jurisdiction pending a final
decision of the arbitrators and the proper filing of such decision with such
court.

IX.4 Entire Agreement.This Agreement (including the Schedules hereto)
contain the entire agreement between the parties with respect to the
transactions contemplated hereby, and supersedes all written or oral
negotiations, representations, warranties, commitments, offers, bids, bid
solicitations, and other understandings prior to the date hereof.

IX.5 Severability.If any provision hereof shall be held invalid or
unenforceable by any court of competent jurisdiction or as a result of future
legislative action, such holding or action shall be strictly construed and
shall not affect the validity or effect of any other provision hereof.

IX.6 Assignability.This Agreement shall be binding upon and inure to the
benefit of the heirs, personal representatives, successors and assigns of the
parties hereto; provided that, except as otherwise provided for





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herein, neither
this Agreement nor any right hereunder shall be assignable by any party hereto,
without the prior written consent of the other party.

IX.7 Legal Representation.Each party to this Agreement acknowledges his
right to, and his opportunity and the advisability of, obtaining legal counsel
in connection with the execution of this Agreement.

IX.8 Captions.The captions of the various Articles and Sections of this
Agreement have been inserted only for convenience of reference, and shall not
be deemed to modify, explain, enlarge or restrict any provision of this
Agreement or affect the construction hereof.

IX.9 Governing Law.The validity, interpretation and effect of this
Agreement shall be governed exclusively by the laws of the state of Minnesota,
without giving effect to the conflict of laws provision thereof.

IX.10 Counterparts.This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single agreements.

IX.11 Remedies Cumulative.Except as otherwise expressly limited herein,
the rights, powers and remedies given to any party by this Agreement shall be
in addition to all rights, powers and remedies given to that party by any
statute or rule of law. Any forbearance or failure to delay in exercising any
right, power or remedy hereunder shall not be deemed to be a waiver of such
right, power or remedy, and any single or partial exercise of any right, power
or remedy shall not preclude the further exercise thereof or be deemed to be a
waiver of any other right, power or remedy.





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

|                          |  |                                           
|------------------------- |  | ------------------------------------------
|PURCHASER                 |  | THE COMPANY                               
|                          |  |                                           
|                          |  |                                           
|Metalclad Corporation     |  | Surg II, Inc.                             
|                          |  |                                           
|                          |  |                                           
|By:                       |  | By:                                       
|                          |  |                                           
|Wayne W. Mills, President |  | Theodore A. Johnson, Chairman of the Board
|                          |  |                                           
|                          |  |                                           
|                          |  |                                           
|Theodore A. Johnson       |  | Charles B. McNeil