**Exhibit10.1**

**ASSETPURCHASE AGREEMENT**

 

This Asset Purchase Agreement(the “Agreement”) isentered into as of this 4th day of October, 2001 (the “Effective Date”) by and between Oxboro Medical, Inc.(“Buyer”) and Surgidyne, Inc. (“Seller”).

 

**RECITALS:**

 

A.            Sellerconducts a business (the “Business”) which manufactures, sells and distributessurgical drainage and/or fluid containment systems as described on Exhibit A(the “Products”).

 

B.            Buyer desires topurchase and assume from Seller, and Seller desires to sell and transfer toBuyer certain of the assets and liabilities of Seller relating to the Business,upon the terms and subject to the conditions set forth herein;

 

**AGREEMENTS:**

 

**NOW, THEREFORE**, in consideration of the foregoing, ofthe mutual promises herein contained and of other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged,the parties hereto, intending to be legally bound, hereby agree as follows:

 

ARTICLE1.

PURCHASEOF ASSETS; NO ASSUMPTION OF LIABILITIES

 

1.1.          Purchaseof Assets.  Subject to the terms andconditions of this Agreement, Seller agrees on the Closing Date (as defined inthis Agreement) to assign, sell, transfer, convey, and deliver to Buyer, andBuyer agrees on the Closing Date to purchase from Seller, all of the assets andpersonal property of Seller (excepting only the assets specifically identifiedas “Excluded Assets” in Section 1.2 below) related to or used in the operationof the Business, wherever the same may be located (collectively referred to asthe “Purchased Assets”) as follows:

 

a.                                       Allfurniture, equipment, machinery and tooling (“Equipment”) described in Exhibit1.1(a) hereto;

 

b.                                      Allintangible personal property, business records, telephone numbers, and customerlists and goodwill (together with all documents, records, files, computer tapesor discs, or other media on or in which the same may be evidenced ordocumented) (“Intangible Property”), including without limitation thefollowing:

 

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(i)                                     Thecorporate name of Seller and all assumed names under which it conducts theBusiness;

 

(ii)                                  Alltradenames, trademarks or service mark registrations and applications, commonlaw trademarks, copyrights and copyright registrations and applications(“Trademarks”) as identified on Exhibit 1.1(b)(ii) hereto and all goodwillassociated therewith;

 

(iii)                               Alldomestic and foreign letters patent, patent applications, and patent andknow-how licenses (“Patents”) as listed on Exhibit 1.1(b)(iii) hereto; and

 

(iv)                              Alltechnology, know-how, trade secrets, manufacturing processes, formulae,drawings, designs and computer programs related to or used or useful in theBusiness, and all documentary evidence thereof (“Technology”) as listed on Exhibit 1.1(b)(iv) hereto;

 

(v)                                 Allwebsite and domain names, including without limitation the domain namewww.surgidyne.com;

 

(vi)                              All of Seller’s business records andfiles, relating to the Business and Purchased Assets, including, withoutlimitation, customer lists and records, sales information, supplier records,cost and pricing information, and other records and copies of such records onwhatever media such records or copies are maintained (the “Business Records”);provided however that Seller may keep a copy of such records as may benecessary for purpose of government or similar record keeping requirements.

 

c.                                       Allinventory, materials, supplies and work-in-progress as of the Closing Date(“Inventory”);

 

d.             Allaccounts receivable reflected on the Seller’s books as of the Closing Date(“Receivables”);

 

e.                                       Alllicenses and permits, to the extent transferable (“Licenses and Permits”) asset forth in Exhibit 1.1(e) hereto;

 

f.                                         Allrights of Seller under contracts, agreements, commitments and otherarrangements relating to the Business to which Seller is a party or isotherwise bound (the “Contracts”), listed on Exhibit 1.1(f) hereto, including,without limitation, all contracts:

 

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(i)                                     whichrestricts in any manner Seller’s right to compete with anyone in any part ofthe world or restricts Seller’s right to sell to or purchase from anyone;

 

(ii)           forthe payment or receipt of license fees or royalties to or from any person orentity;

 

(iii)          ofbrokerage, agency, representation, distribution, or franchise;

 

(iv)          forthe advertisement, display or promotion of any of the Products of the Seller;

 

(v)           forservice, consulting or management affecting any of the Assets or the Business;

 

(vi)          whichis a guaranty, performance, bid or completion bond, or surety orindemnification contract;

 

(vii)         whichrequires the making of a charitable contribution; or

 

(viii)                        whichprovides for the receipt or expenditure by Buyer in excess of $15,000 at anytime following the Closing Date.

 

(ix)                                whichthe requirements for performance extend beyond one (1) year from the date ofthis Agreement.

 

Notwithstanding the listing of contracts on Exhibit1.1(f), only those specifically designated thereon as a contract to be assumed by Buyer shall be consideredan Assumed Contract (collectively, the “Assumed Contracts”).

 

1.2.          ExcludedAssets.  Notwithstanding anythingherein to the contrary, Buyer does not purchase, and Seller does not sell, anyof the following assets (“Excluded Assets”):

 

a                                          Allcash or cash equivalents on hand or on deposit at any bank as of the ClosingDate.

 

b.                                      Anyinterest in real property.

 

c.                                       Allclaims or causes of action which seller may have relating to Excluded Assets orrelating to Excluded Liabilities.

 

d.                                      Seller’scorporate minute book, stock records, and similar records, including financialrecords and tax returns.

 

e.                                       Allof Seller’s rights in Contracts which are not Assumed Contracts.

 

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f.                                         Allassets in any of Seller’s Employee Plans.

 

g.                                      Seller’s rights under this Agreement.

 

1.3.          Assumptionof Liabilities.  On the ClosingDate, Buyer hereby assumes the following obligations and liabilities (the“Assumed Liabilities”):

 

a.                                       Allobligations arising from and after the Closing Date under any contractsspecifically identified in Schedule 1.1(f) as the Assumed Contracts (providedthat Buyer does not assume, and Seller shall pay, all past-due obligationsthereunder).

 

b.                                      Alltrade accounts payable or other accounts payable of the Seller which have beendue for 120 days, but only in the amounts (i) set forth on Exhibit 1.3(b) or(ii) set forth on Closing Payables Sheet.

 

c.                                       Anyliabilities of Seller specifically identified on Exhibit 1.3(c) hereto, butonly in the amounts set forth on Exhibit 1.3(c).

 

1.4.          Exclusionof Liabilities.  Except for theforegoing Assumed Contracts and the Assumed Liabilities, Buyer shall not assumeany liabilities, obligations or undertakings of Seller of any kind or naturewhatsoever, whether fixed or contingent, known or unknown, determined ordeterminable, due or not yet due (“Excluded Liabilities”).  Without limiting the generality of theforegoing sentence, the Excluded Liabilities include:

 

a.                                       Liabilitiesor obligations arising out of an event that occurred, Products sold or servicesperformed by Seller, or Seller’s ownership of its assets or the operation ofthe Business on or prior to, the Closing Date; provided, however, that Buyer shall be responsible for deliveringProducts which were sold prior to the Closing Date and for which Seller has acceptedand entered the order as of the Closing Date.

 

b.                                      Liabilities and obligations of Seller foraccrued audit fees, accrued commissions, accrued payroll (including associatedemployer taxes or employee withholdings), accrued insurance premiums, and garnishmentspayable of the Business incurred by Seller

 

c                                          Liabilities or obligations for foreign,federal, state, county, local or other governmental taxes of Seller relating tothe operation of the Business or the ownership of the Assets on or prior to theClosing Date;

 

d.                                      Liabilities or obligations related to orarising out of any Employee Plan, workers’ compensation claim or any otherliabilities to employees or former employees of Seller;

 

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e.                                       Liabilitiesor obligations arising out of any litigation or administrative or arbitrationproceeding to which Seller is a party or any claims by or against Sellerarising from events or facts existing on or prior to the Closing Date;

 

f.                                         Liabilitiesor obligations resulting from any breach by Seller on or prior to the ClosingDate of any contract or agreement to which the Seller is party or by which theSeller is bound, including, without limitation, any Assumed Contract;

 

g.                                      Liabilitiesor obligations resulting from any violation by Seller, the Shareholders, or anyemployee, director or agent of Seller, or any predecessor for which Seller maybe liable, of any applicable foreign, federal, state, county, local or othergovernmental laws, decrees, ordinances or regulations, or any permit, license,consent, certificate, approval or authorization issued pursuant to such laws,decrees, ordinances or regulations, including, without limitation, thoseapplicable to discrimination in employment, employment practices, wage andhour, retirement, labor relations, occupational safety, health, tradepractices, environmental matters, competition, pricing, product warranties,product liability and product advertising;

 

h.                                      Liabilitiesor obligations to any investment banker, broker, finder or other intermediarywhich has been retained by or is authorized to act on behalf of Seller who maybe entitled to or may claim any fee or commission from Buyer in connection withthe transactions contemplated by this Agreement.

 

i.                                          Liabilitiesor obligations (whether interest, principal, fees, penalties or otherwise) ofSeller (i) for borrowed money; (ii) evidenced by bonds, debentures, notes orother similar instruments, (iii) to pay the deferred purchase price of propertyor services, except trade accounts payable arising in the ordinary course ofbusiness, (iv) and any of the foregoing guaranteed by Seller.

 

j.                                          Liabilitiesor obligations relating to the Seller’s Series A Preferred Stock, whetherarising before, on or after the Closing Date.

 

k.             Seller’sobligations under this Agreement.

 

1.5.          Salesand Use Tax.  Buyer shall beresponsible for payment of any sales or use tax assessable with respect to thetransactions herein.

 

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ARTICLE2.

PURCHASEPRICE AND PAYMENT OF PURCHASE PRICE

 

2.1           PurchasePrice.  The purchase price (the“Purchase Price”) for the Purchased Assets and the performance by Seller of itsobligations under this Agreement shall be Two Hundred Thousand Dollars($200,000), payable to the Seller in full in immediately available funds on theClosing Date.

 

2.2           Allocationof Purchase Price.  The PurchasePrice shall be allocated among the Purchased Assets as set forth in Exhibit2.2.  The parties agree to report thistransaction for federal tax purposes in accordance with the allocations setforth in Exhibit 2.2.

 

ARTICLE 3

EMPLOYEE MATTERS

 

3.1           Employees. During the period after the date of this Agreement, but before theClosing Date, Buyer will have the option of interviewing and making an offer inwriting of employment at will to those employees listed on Exhibit 3.1 hereto(each, a “**SelectedEmployee**”). While Seller will cooperate with Buyer to assist Buyerto hire and retain the services of all Selected Employees, Buyer acknowledgesand agrees that the Selected Employee has the final decision whether totransfer with the Business and the failure of one or more Selected Employee(s)to accept an offer of employment from Buyer shall not be deemed to be a breachof this Agreement.

 

3.2           Benefits.  EachSelected Employee will be covered under the Employee Plans of Buyer availableto other employees of Buyer who are employed in similar categories ofemployment.  Buyer shall offer eachSelected Employee the opportunity, as of the Closing Date, to participate inall of Buyer’s Employee Plans for which each such Selected Employee would be eligibleunder the guidelines for such plans. Before the Closing Date, Buyer shall provide to the Selected Employeessummaries of the material terms and conditions of and guidelines for Buyer’sEmployee Plans (including, but not limited to, medical and dental insuranceplans, life insurance plan, pension plan, savings plan, short-term andlong-term disability plans, employee stock ownership plan, vacation plan andseverance or termination plan).

 

ARTICLE 4

REPRESENTATIONSAND WARRANTIES OF SELLER

 

Except as set forth in Exhibit 4 hereto, Seller makesthe following representations and warranties to Buyer with the intention thatBuyer may rely upon the same, and acknowledges that 

 

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the same shall be true as of the Closing Date (as if made at theClosing) and shall survive the Closing of this transaction.

 

4.1           Organization.  Seller is a corporation duly organized,validly existing and in good standing under the laws of the State of Minnesota,has all requisite corporate power and authority, corporate and otherwise, toown its properties and assets and conduct the Business, as it is currentlyconducted.  Seller does not have anysubsidiary and Seller is not a shareholder, partner or joint venturer with anyother person or legal entity.  Sellerhas not failed to qualify as a foreign corporation in any other state or stateswhere such failure may have a material adverse effect on the Business.

 

4.2           CorporateAuthority.  The Seller has allrequisite  power and authority to enterinto and perform this Agreement.  Theexecution and delivery of this Agreement and the consummation of thetransactions contemplated in this Agreement have been duly authorized by allrequisite action of Seller’s Board of Directors and shareholders.  This Agreement has been executed and deliveredby a duly authorized officer of Seller and is a valid and binding agreement ofthe Seller, enforceable against them in accordance with its terms.

 

4.3           FinancialStatements.

 

a.                                       FinancialStatements.  Seller has furnishedBuyer a true and complete copy of its audited balance sheets and statements ofincome for its fiscal years ended December 31, 1998, 1999, 2000, and hasfurnished unaudited update thereof as of and for the period ending June 30,2001 (collectively the “Financial Statements”, all of which are attached asSchedule 4.3(a) hereto).  The auditedFinancial Statements have been prepared in conformance with generally acceptedaccounting principles and procedures applied on a basis consistent with priorperiods and will fairly present in all material respects the financialcondition of Seller as of the represented dates thereof and the results ofSeller’s operations for the periods covered thereby.  For purposes of this Agreement, the Financial Statements shall bedeemed to include any notes thereto.

 

b.                                      NoAdverse Changes.  Since June 30,2001, there has not occurred or arisen (whether or not in the ordinary courseof business, except subsection (iii) below): (i) any material adverse change inthe in the Business, Purchased Assets, relationships with customers orsuppliers, backlogs, sales, income, profit margins, assets, liabilities orfinancial condition of Seller, (ii) any change in Seller’s accounting methodsor practices, (iii) any sale or transfer of any asset or any amendment of anyagreement of Seller whether or not  inthe ordinary course of business, (iv) any loss of or damage to the PurchasedAssets due to abuse, misuse, fire, damage, destruction or other casualty,whether or not covered by insurance, affecting any of the Purchased Assets orany portion of the Business (v) any labor trouble, (vi)  to Seller’s knowledge any reasonably 

 

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foreseeable increase in operating costs of theBusiness not commensurate with increased production, (vii) any materialwarranty or liability claims or losses, or (viii) any other event or conditionknown to Seller to have occurred or to exist which, singly or in the aggregate,materially and adversely affect the Purchased Assets or the Business.

 

c.                                       UndisclosedLiabilities.  Except as set forth onSchedule 4.3(c),  Seller has noliabilities (whether known or unknown, accrued, absolute, contingent orotherwise) for which Seller would be liable in any single instance for morethan $1000 or in the aggregate more than $5000, that exist or arise out of anytransaction or state of facts existing on or prior to the Closing Date otherthan as and to the extent reflected or reserved against in the FinancialStatements (none of which is a liability for borrowed money (other than undercurrent credit facilities), breach of contract, breach of warranty, tort,infringement or lawsuit).

 

4.4           TaxReports, Returns and Payment. Seller has timely filed (subject to extension) all federal andapplicable state, local, and foreign tax or assessment reports and returns of everykind required to be filed by Seller with relation to the Business, including,without limitation, income tax, sales and use tax, real estate tax, personalproperty tax and unemployment tax, and has duly paid all taxes and othercharges (including interest and penalties) due to or claimed to be due by anytaxing authorities.  True and correctcopies of the reports and returns filed by Seller during the last three taxyears have been made available to Buyer. Where required, timely estimated payments or installment payments of taxliabilities have been made to all governmental agencies in amounts sufficientto avoid underpayment penalties or late payment penalties applicablethereto.  During the three (3) years precedingthe Closing Date, such income tax returns have not been subjected to anyexamination or audit by governmental authorities.

 

4.5           Titleto Assets.  Other than the ExcludedAssets and the employees of the Business, the Purchased Assets constitute allproperty owned by Seller which is necessary for the conduct of the Business asnow conducted.  Seller is the sole ownerof the Purchased Assets, except for the leased, licensed or lent Equipmentidentified on Exhibit 1.1(a), and holds good and marketable title thereto freeand clear of all liens, charges, encumbrances or third party claims orinterests of any kind whatsoever.

 

4.6           TangiblePersonal Property.  All personalproperty included in the Purchased Assets is in substantially the sameoperating condition as existed on June 30, 2001, ordinary wear and tearexcepted.  Seller hereby assigns toBuyer as of the Closing Date any and all warranties covering such propertyexisting as of the Closing Date.

 

4.7           Inventory.  The Inventory reflected on Seller’s booksand records has been valued at the lower of cost or market in accordance withgenerally accepted accounting principles applied on a basis consistent withSeller’s past practices.  In the twelve(12) months prior to the Closing Date, there has not been a material change inthe level of Seller’s Inventory other than changes in the ordinary course ofbusiness consistent with Seller’s past practices.  All raw 

 

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material and work-in-progress Inventory included in the PurchasedAssets is of a quality and quantity usable in the ordinary course of business.

 

4.8           Trademarks.  Seller has filed the trademarksregistrations for the Trademarks listed on Exhibit 1.1(b)(ii).  Exhibit 1.1(b)(ii) sets forth all Trademarksowned, used by, accruing to thebenefit of or necessary or useful to the operation of the Business by Seller.  The Trademarks and other names are notlicensed to or licensed from any other person or entity.  Seller has not received any notice or claimthat Seller’s title to or use of the Trademarks is impaired, encumbered orinvalid or is unenforceable by it.  Tothe best of Seller’s knowledge, Seller’s use of any Trademark does not infringeupon any intellectual property rights held by any other person or entity.  There is no claim or action pending orthreatened with respect to the Trademarks. There has been no infringement or improper use of any Trademark by anythird party.

 

4.9           Patents.  Exhibit 1.1(b)(iii) sets forth all Patents owned, used by, accruing to the benefitof or necessary or useful to the operation of the Business by Seller.The Patents are not licensed to or licensed from any other person orentity.  Seller has not received anynotice or claim that Seller’s title to or use of the Patents is impaired,encumbered or invalid or is unenforceable by it.  To the best of Seller’s knowledge, Seller’s use of any Patentdoes not infringe upon any intellectual property rights held by any otherperson or entity and there is no claim or action pending or threatened withrespect to the Patents.  There has beenno infringement or improper use of any Patent by any third party.

 

4.10         Licensesand Permits.  To the best ofSeller’s knowledge, Seller possesses all necessary permits, licenses andapprovals, governmental or otherwise, without which it could not conduct theBusiness in its present form and at its present location, all of which arelisted on Exhibit 1.1(e).  All of theLicenses and Permits are valid and in good standing and Seller has not receivedany notice that the Licenses and Permits will lapse or be terminated by actionof any governmental authority or otherwise. Except as set forth on Exhibit 1.1(e), to the best of Seller’sknowledge, all of the Licenses and Permits are freely assignable andtransferable to Buyer at the Closing and will continue to be in full force andeffect after such transfer.

 

4.11         Agreements,Contracts and Commitments.

 

a.                                       EmployeePlans.  There is no liability thatwill be imposed upon Buyer with respect to any Employee Plan.  “Employee Plan” means any pension,retirement, disability, medical, dental, or other health insurance plan, lifeinsurance or other death benefit plan, profit sharing, deferred compensation,stock option, bonus or other incentive plan, vacation benefit plan, severanceplan, or other employee benefit plan or arrangements including, withoutlimitation, any “pension plan” as defined in Section 3(2) of the EmployeeRetirement Income Security Act of 1974, as amended (“ERISA”), and any “welfareplan” as defined in Section 3(1) of ERISA, whether or not any of the foregoingis funded, (i) to which Seller is a party or by which Seller is bound; or (ii)with respect to which 

 

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Seller has made any payments or contributions sinceJanuary 1, 1998, or may otherwise have any liability (including any such planor other arrangement formerly maintained by Seller).

 

b.             Unionand Employment Contracts and Other Employment Matters.

 

(i)                                     Selleris not a party to any collective bargaining agreement or any other writtenemployment agreement, nor is Seller a party to any other contract orunderstanding (oral or written) that contains any severance pay liabilities orobligations, except for accrued, unused vacation pay or accrued and unused sickleave pay.

 

(ii)                                  Duringthe last three (3) years Seller has experienced no work stoppages, walkouts orstrikes or attempts by its employees to organize a union.

 

(iii)                               Exceptas disclosed in Schedule 4.12(b)(iii) hereto, there have been no employee or ex–employeelawsuits or claims, or any claims of unfair labor practices or the like, in thepast three (3) years.

 

d.                                      Breach.  Seller has performed in all materialrespects all obligations required to be performed by Seller to date under eachAssumed Contract; and neither Seller nor, to the knowledge of Seller, any otherparty is in default under any Assumed Contract.  No event has occurred which after the giving of notice or thelapse of time or otherwise would constitute a default under, or result in abreach of by Seller of any Assumed Contract.

 

e.                                       Copiesof Contracts; Terms and Binding Effect. Exhibit 1.1(f) contains an accurate and complete list of allContracts.  True, complete and correctcopies of all Assumed Contracts have been delivered to Buyer or are attached tothe Schedules where required by this Agreement; there are no amendments to ormodifications of, or agreements of the parties relating to, any such AssumedContracts which have not been delivered to Buyer; and each such AssumedContract is considered valid and binding on Seller to it in accordance with itsrespective terms (except as such enforceability may be limited by the effect ofbankruptcy, insolvency or similar laws affecting creditor rights generally orby general principles of equity).

 

4.12                           Insurance.  Seller maintains the insurance identified inSchedule 4.12.

 

4.13         Litigationand Related Matters.

 

a.                                       Exceptas set forth on Schedule 4.13, there are no claims (including, withoutlimitation, workers’ compensation claims), action, suits, inquiries,investigations, or proceedings pending or threatened or imminent, relating 

 

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to the Seller, the Purchased Assets, any portion ofthe Business, any of the Assumed Liabilities or the transactions contemplatedby this Agreement, and, to the best knowledge of Seller, there is no basis forany such claim, action or proceeding.Seller has complied in all materialrespects with all statutes, laws and regulations, orders, rules, regulationsand requirements (“Laws”) applicable to it, the Business, or the PurchasedAssets, including Laws relating to environmental matters and Laws promulgatedby governmental or other authorities, relating to the Purchased Assets and theoperation of the Business.  Withoutlimiting the generality of the foregoing, Seller has not used or storedhazardous, toxic or contaminating wastes or substances on any real property ordischarged or released any such substances upon any real property, including,but not limited to, underground injection of such substances, in violation ofany environmental Laws for which Seller would be liable in any single instancefor more than $1000 or in the aggregate more than $5000.

 

b.                                      Selleris not subject to any material existing judgment, order, decree, or otheraction affecting the operation of the Business or the Purchased Assets or whichwould prevent, impede, or make illegal the consummation of the transactionscontemplated in this Agreement, or which would have a material adverse effecton Seller or on the Business or any of the Purchased Assets.

 

c.                                       Nolegal actions have been commenced against Seller with respect to the Businessor the Purchased Assets within the three (3) years prior to the Closing Date.

 

4.14         Customers.  Except as provided in Schedule 4.14, nosingle customer of Seller accounted for more than ten percent (10%) of Seller’srevenues in the Business during the fiscal year ending prior to the date ofthis Agreement.  Seller has received nowritten notice that any customer intends to cease doing business with Seller ormaterially alter the amount of business or terms upon which it does with Seller.

 

4.15         Products.  To the best of Seller’s knowledge, allProducts sold by Seller conform in all material respects to all applicablelaws, ordinances, regulations, trade and industry standards, contractspecifications and descriptive material or advertisements associated with theProducts.  Schedule 4.15 discloses allwritten claims received by Seller within the last three years based uponalleged breach of product warranty, strict liability in tort, or any otherallegation of liability arising from Seller’s sale of goods, including Products(hereafter collectively referred to as “Product Liability Claims”).

 

4.16         Conflicts;Required Consents.  Except asprovided in Schedule 4.16, neither the execution and delivery of this Agreementby Seller nor compliance by Seller with the terms and provisions of thisAgreement will (a) conflict with or result in a breach of (i) any of the terms,conditions or provisions of the Articles of Incorporation, Bylaws or othergoverning instruments 

 

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of Seller, (ii) any judgment, order, decree or ruling to which theSeller is a party, (iii) any injunction of any court or governmental authorityto which either of them is subject, or (iv) any Assumed Contract; or (b)require the affirmative consent or approval of any third party other than theapproval of Seller’s shareholders.

 

4.17         BindingObligation.  This Agreementconstitutes the legal, valid and binding obligation of Seller in accordancewith the terms hereof.  Seller is notsubject to any charter, mortgage, lien, lease, agreement, contract, instrument,law, rule, regulation, order, judgment or decree, or any other restriction ofany kind or character, which would prevent the consummation of the transactionscontemplated in this Agreement.

 

4.18         Maintenanceof Business.  Since June 30, 2001,Seller has conducted the Business only in the usual and ordinary manner,including:

 

a.                                       timelypayment and discharge of all bills and monetary obligations and timely andproper performance of all of its obligations and commitments under all AssumedContracts;

 

b.                                      preservationand maintenance of its Business assets, including customer, vendor and employeerelationships consistent with past practices;

 

c.                                       processingor shipment of any customer orders in a manner consistent with ordinarybusiness practices.

 

Further, since June 30, 2001, Seller has not:

 

d.                                      toits knowledge, created or suffered to exist any Encumbrances with respect toany of the Purchased Assets which has not been discharged;

 

e.                                       soldor transferred any assets of a type similar to the Purchased Assets, except forsales of inventory in the ordinary course of its business;

 

f.              madeany change in the conduct or nature of the Business;

 

g.             changedany method of accounting; or

 

h.             waivedany rights that are the subject of this Agreement.

 

4.19         Receivables.  A schedule of all of Seller’s receivables isattached hereto as Schedule 4.19. Except for any reserves shown on Schedule 4.19, to the best of Seller’sknowledge, all of the receivables are collectible within 90 days of the datehereof.

 

4.20         Absenceof Certain Business Practices. Neither Seller nor any officer, employee or agent of Seller, nor anyother person acting on its behalf, has directly or indirectly, within the pastfive years given or agreed to give any gift or similar benefit to any customer,supplier, 

 

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governmental employee or other person who is or may be in a position tohelp or hinder the Business (or assist Seller in connection with any actual orproposed transaction) which (i) would subject Seller to any damage or penaltyin any civil, criminal or governmental litigation or proceeding, or (ii) if notcontinued in the future, would materially adversely affect the Assets of theBusiness, or the prospects of the Business or which would subject Seller tosuit or penalty in any private or governmental litigation or proceeding.

 

 

4.21         Disclosure.  No material representation or warranty inthis Agreement or in any certificate, schedule, statement or other documentfurnished or to be furnished pursuant hereto or in connection with thetransactions contemplated hereby contains or will contain any untrue statementof a material fact or omits or will omit to state any material fact required tobe stated herein or therein or necessary to make the statements herein ortherein not misleading.

 

ARTICLE 5

REPRESENTATIONSAND WARRANTIES OF BUYER

 

Buyer makes the following representations andwarranties to Seller with the intention that Seller may rely upon the same, andacknowledges that the same shall be true as of the Closing Date (as if made atthe Closing) and shall survive the Closing of this transaction.

 

5.1           Organization.  Buyer is a corporation, duly organized,validly existing in good standing under the laws of the State of Minnesota, andhas all requisite corporate power and authority, corporate and otherwise, toown its properties and conduct the business in which it is presently engaged.

 

5.2           CorporateAuthority.  Buyer has allrequisite  power and authority to enterinto and perform this Agreement.  Theexecution and delivery of this Agreement and the consummation of thetransactions contemplated in this Agreement have been duly authorized by allrequisite action of Buyer’s Board of Directors and shareholders.  This Agreement has been executed anddelivered by a duly authorized officer of Buyer and is a valid and bindingagreement of the Buyer, enforceable against them in accordance with its terms.

 

5.3           Breachesof Contracts; Required Consents. Neither the execution and delivery of this Agreement by Buyer, norcompliance by Buyer with the terms and provisions of this Agreement, will (a)conflict with or result in a breach of: (i) any of the terms, conditions or provisions of the Articles ofIncorporation, Bylaws or other governing instruments of Buyer, (ii) anyjudgment, order, decree or ruling to which the Buyer is a party, (iii) anyinjunction of any court or governmental authority to which it is subject, or(iv) any agreement, contract or commitment listed on any Exhibit hereto andwhich is material to the financial condition of Buyer; or (b) require theaffirmative consent or approval of any third party.

 

5.4           BindingObligation.  This Agreementconstitutes the legal, valid and binding obligation of Buyer in accordance withthe terms hereof.  Buyer is not subjectto any charter, mortgage, lien, lease, agreement, contract, instrument, law,rule, regulation, order, judgment or 

 

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decree, or any other restriction of any kind or character, which wouldprevent the consummation of the transactions contemplated in this Agreement.

 

5.5           Disclosure.  No material representation or warranty inthis Agreement or in any certificate, schedule, statement or other documentfurnished or to be furnished pursuant hereto or in connection with thetransactions contemplated hereby contains or will contain any untrue statementof a material fact or omits or will omit to state any material fact required tobe stated herein or therein or necessary to make the statements herein ortherein not misleading.

 

ARTICLE 6

CONDITIONS PRECEDENT TOCLOSING

 

6.1           ConditionsPrecedent to Obligations of Seller. The obligations of Seller under this Agreement are subject tofulfillment prior to or at the Closing of each of the following conditions,unless waived in writing by Seller:

 

a.                                       Representationsand Warranties.  Each of the representationsand warranties made by Buyer in this Agreement or in any instrument, schedule,certificate or writing delivered by Buyer pursuant to this Agreement, shall betrue and correct when made and shall be true and correct at and as of theClosing Date as though such representation and warranties were made or given onand as of the Closing Date.  Buyer shallhave performed or complied with all obligations and covenants required by thisAgreement to be performed or complied with by Buyer by the Closing Date.  Seller shall have received a certificatesigned by the appropriate officer of Buyer to the foregoing effect.

 

b.                                      Absenceof Certain Legal Proceedings.  Nosuit or other legal proceeding shall have been commenced seeking to restrict orprohibit the transactions contemplated by this Agreement.

 

c.                                       OtherMatters.  Buyer shall have deliveredthe documents required under Section 7.3.

 

d.                                      Preservationof Business.  Seller shall usecommercially reasonable efforts to preserve intact its business organization andgoodwill, keep available the services of its respective officers and employeesand maintain satisfactory relationships with those persons having businessrelationships with it.

 

e.                                       Opinion of Counsel. Seller shall have received a legal opinion of Lindquist & Vennum,P.L.L.P, counsel to Buyer, dated the Closing Date, that all action required tobe taken under Buyer’s Articles of Incorporation, Bylaws or otherwise, by anyof Buyer’s Board of Directors or 

 

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shareholders,has been duly and validly taken to authorize the execution, delivery andperformance of this Agreement and the transactions contemplated thereby

 

6.2           ConditionsPrecedent to Obligations of Buyer. The obligations of Buyer under this Agreement are subject to fulfillmentprior to or at Closing of each of the following conditions, unless waived inwriting by Buyer:

 

a.                                       Representationsand Warranties.  Each of therepresentations and warranties made by Seller in this Agreement, or in anyinstrument, schedule, certificate or writing delivered by Seller pursuant tothis Agreement, shall be true and correct when made and as of the ClosingDate.  Seller shall have performed orcomplied with all obligations and covenants required by this Agreement to be performedor complied with by Seller by the Closing Date.  Buyer shall have received a certificate signed by the appropriateofficer of Seller to the foregoing effect.

 

b.                                      Approvals;Absence of Certain Legal Proceedings. All required approvals or consents shall have been obtained by Sellerand no suit or other legal proceeding shall have been commenced seeking torestrict or prohibit the transactions contemplated by this Agreement.

 

c.                                       Corporate Authorization. All action required by law, Seller’s Articles of Incorporation, Bylawsor otherwise to be taken by the Boards of Directors and shareholders of Sellerto authorize the execution, delivery and performance of this Agreement and thetransactions contemplated thereby shall have been duly and validly taken.

 

d.                                      Opinion of Counsel. Buyer shall have received a legal opinion of Gray, Plant, Mooty, Mooty& Bennet, P.A., counsel to Seller, dated the Closing Date, that all actionrequired to be taken under Seller’s Articles of Incorporation, Bylaws orotherwise, by any of the Seller’s Board of Directors or shareholders , has beenduly and validly taken to authorize the execution, delivery and performance ofthis Agreement and the transactions contemplated thereby

 

e.                                       OtherMatters.  Seller shall havedelivered the documents required under Section 7.2.

 

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ARTICLE 7

CLOSING

 

7.1           Closing.  The closing of the transaction contemplatedby this Agreement (“Closing”) shall be held at the offices of Lindquist & Vennum P.L.L.P., 4200IDS Center, Minneapolis, MN 55402 no later than 9:00 a.m. on November30, 2001, but effective at the close of business on such date (the “ClosingDate”); provided,  Buyer may set aClosing Date earlier than November 30, 2001, upon five (5) days’ written noticeto Seller.  Such date ofClosing shall be referred to herein as the “Closing Date.”

 

7.2           Seller’sDeliveries.  Seller agrees toexecute and/or deliver the following documents to Buyer at the Closing:

 

a.                                       Allcertificates, schedules, exhibits, and attachments in completed form andspecifying the information required by the provisions of this Agreement.

 

b.                                      Acertificate of the Secretary of Seller certifying as to (i) a copy ofresolutions of the Seller’s Board of Directors which authorize the execution,delivery and performance of this Agreement as having been duly adopted and asbeing in full force and effect on the Closing Date, (ii) a copy ofresolutions of the shareholders of Seller which authorize this Agreement andthe transactions contemplated herein as having been duly adopted and as beingin full force and effect on the Closing Date, (iii) a copy of the Seller’sArticles of Incorporation as certified by the Secretary of State of Minnesotain effect as of the Closing Date, and (iv) a true and correct copy of theSeller’s Bylaws in effect as of the Closing Date.

 

c.                                       Acertificate of good standing of Seller certified by the Secretary of State ofMinnesota as of no more than two (2) days prior to the Closing Date.

 

d.                                      ABill of Sale, a Trademark Assignment and instruments of assignment and transferfor the sale of the Purchased Assets.

 

f.                                         Amendmentto Seller’s Articles of Incorporation changing Seller’s name, in form completeand adequate for filing.

 

g.                                      Allnecessary consents under the Assumed Contracts.

 

h.             Acopy of the Consulting Agreement between Buyer and Charles B. McNeil, in theform of Exhibit A.

 

i.                                          Aschedule of those accounts payable or trade payables incurred in the ordinary course and consistent with pastpractice, from the date hereof to 

 

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the Closing Date (the “Closing Payables Sheet”) asagreed to by Buyer and only in the amounts set forth on the Closing PayablesSheet.

 

j.                                          Acertificate (the “Closing Receivables Certificate”) by an officer of Seller,dated as of the Closing Date, certifying that, except for any reserves shownthereon and to the best of Seller’s knowledge, all of the Receivables arecollectible within 90 days of the Closing Date.

 

k.                                       Suchother documents as Buyer may reasonably request for the purpose of assigning,transferring, granting, conveying, and confirming to Buyer or reducing to itspossession, any and all assets, property and rights to be assigned, conveyed,or transferred pursuant to the terms of this Agreement.

 

7.3           Buyer’sDeliveries.  Buyer agrees to executeand/or deliver the following to Seller at the Closing:

 

a.                                       ThePurchase Price.

 

b.                                      ConsultingAgreement with Charles B. McNeil in the form of Exhibit A.

 

c.                                       Acertificate of the Secretary of Buyer certifying as to (i) a copy ofresolutions of the Buyer’s Board of Directors which authorize the execution,delivery and performance of this Agreement as having been duly adopted and asbeing in full force and effect on the Closing Date, (ii) a copy of theBuyer’s Articles of Incorporation as certified by the Secretary of State ofMinnesota in effect as of the Closing Date, and (iii) a true and correctcopy of the Buyer’s Bylaws in effect as of the Closing Date.

 

d.                                      Suchother documents as Seller reasonably may request to carry out the transactionscontemplated under this Agreement.

 

ARTICLE 8

POSTCLOSING OBLIGATIONS

 

8.1           FurtherDocuments and Assurances.  At anytime and from time to time after the Closing Date, each party shall, uponrequest of another party, execute, acknowledge and deliver all such further andother assurances and documents, including such documents as may be necessary orappropriate to perfect title in the Intellectual Property in Buyer, and willtake such action consistent with the terms of this Agreement, as may bereasonably requested to carry out the transactions contemplated herein and topermit each party to enjoy its rights and benefits hereunder.  If requested by Buyer, Seller further agreesto prosecute or otherwise enforce in their own respective names for the benefitof Buyer, any claim, right or benefit transferred by this Agreement that mayrequire prosecution or enforcement in Seller’s name.

 

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8.2           Paymentof Debts and Liabilities.  Sellershall pay all of its liabilities and debts which have arisen on or prior to theClosing Date, except for the Assumed Liabilities and amounts which Seller contestsin good faith and to which it maintains an adequate reserve.

 

8.3           Insurance.  Fora period of one year, Seller shall maintain its current product liabilityinsurance for the benefit of Buyer as an additional insured to provide forcoverage of losses or liability relating to Products sold prior to the ClosingDate and Products sold after the Closing Date which were finished goodsInventory as of the Closing Date.

 

ARTICLE 9

INDEMNIFICATION

 

9.1           Survivalof Representations, Warranties and Agreements. The representations,warranties and agreements contained in this Agreement or in any certificatedelivered pursuant to this Agreement shall survive the Closing Date and remainin full force and effect after the Closing Date for a period of one (1) year.

 

9.2           Indemnificationby Seller.  For a period of one (1)year and subject to Section 9.6, Seller shall indemnify and hold Buyer harmlessat all times from and after the date of this Agreement, against and in respectof all damages, losses, costs and expenses (including reasonable attorney fees)which Buyer may suffer or incur in connection with any of the following:

 

a.                                       Anyclaim, demand, action or proceeding asserted by a creditor of Seller orrespecting any liabilities of Seller that are included in the ExcludedLiabilities.

 

b.             Thematerial breach of any of the representations, warranties or covenants ofSeller in this Agreement.

 

c.                                       Anyand all claims by third parties arising out of Seller’s conduct of the Businessor use or ownership of any assets, including Purchased Assets, on or prior tothe Closing Date.

 

d.                                      Thirdparty product liability claims  filedwithin twelve months following the Closing Date concerning productsmanufactured by Seller which are finished goods included in the Inventory onthe Closing Date and sold in the Business after the Closing Date.

 

e.                                       Anyreasonable costs and expenses associated with defending against any of theforegoing claims, liabilities, obligations, costs, damages, losses andexpenses.

 

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9.3           Indemnificationby Buyer.  Buyer shall indemnify andhold Seller harmless at all times from and after the date of this Agreement,against and in respect of all damages, losses, costs and expenses (includingreasonable attorney fees) which Seller may suffer or incur in connection withany of the following:

 

a.                                       Anyclaim, demand, action or proceeding asserted by any third party respecting anyliabilities that are included in the Assumed Liabilities.

 

b.                                      Allclaims by third parties arising out of the conduct of the Business or use orownership of any of the Purchased Assets from and after the Closing (including,without limitation, any product liability claims concerning Products which aresold by Buyer from and after the Closing Date, unless covered by Section9.1(d)).

 

c.             Thebreach of any of the representations, warranties or covenants of Buyer in thisAgreement.

 

d.                                      Anycosts and expenses associated with defending against any of the foregoingclaims, liabilities, obligations, costs, damages, losses and expenses.

 

9.4           Cooperation;Notice.  In the event a party hereto(the “Indemnifying Party”) is indemnifying the other party hereto (the“Indemnified Party”), the Indemnified Party agrees to provide the IndemnifyingParty such cooperation, information or assistance as the Indemnifying Party mayreasonably request.  The IndemnifiedParty shall give notice to the Indemnifying Party of each matter, claim,demand, fact or other circumstances upon which a claim for indemnification(“Claim”) under this Article 9 is based. Such notice shall contain, with respect to each Claim, such facts andinformation as are then reasonably available, and the specific basis forindemnification hereunder.

 

9.5           Defenseof Claims.  The Indemnifying Partyshall have the right to assume defense of and to settle any Claim asserted by athird party against the Indemnified Party with counsel reasonably acceptable tothe Indemnified Party so long as the Indemnifying Party is diligently defendingsuch Claim; provided that the Indemnified Party may, at its expense, participatein such proceeding.  The IndemnifyingParty shall not settle any Claim without the consent of the Indemnified Party(which consent shall not be unreasonably withheld, conditioned or delayed),unless such settlement requires no admission of liability on the part of theIndemnified Party and no assumption of any obligation or monetary payment forwhich the Indemnified Party has not been fully indemnified and protectedagainst.  The Indemnified Party may notsettle any Claim for which it may seek indemnification from an IndemnifyingParty without the Indemnifying Party’s consent, such consent not to beunreasonably withheld, conditioned or delayed.

 

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9.6           Limitation;Insurance Offset.  Notwithstanding anything in Section 9.2or 9.3, in no event shall Buyer have or assert any claim against Seller, and inno event shall Seller be liable to Buyer for any damages, losses,costs and expenses (including reasonable attorney fees) in an amount in excess of $20,000.  Further, any losses calculated for purposesof Sections 9.2 or 9.3 shall take into account any offsetting proceeds frominsurance paid because of such losses to an Indemnified Party, provided that(a) the insurance proceeds are paid to the Indemnified Party without dispute orchallenge by the insurer and (b) the Indemnified Party shall have no obligationto contest any determination by any insurer.

 

ARTICLE 10

GENERAL

 

10.1         Public Announcements. None of the parties to this Agreement shall issue or make any pressrelease or other public statements with respect to this Agreement or thetransactions described herein to employees, customers, distributors, suppliersor other persons except and unless such release, statement or announcement hasbeen jointly approved by the parties (which approval shall not be unreasonablywithheld or delayed), except as may be required by applicable law (including,but not limited to the Securities Exchange Act of 1934) or by obligationspursuant to any listing agreement with any securities market or any securitiesmarket regulations.  If any party is sorequired to issue or make a press release, public statement or otherannouncement, such party shall inform the other party prior to issuing ormaking any such press release, public statement or announcement and shall reasonablyconsult with the other party regarding the content thereof if practicable.

 

10.2         Counterparts.  This Agreement may be executed incounterparts and by different parties on different counterparts with the sameeffect as if the signatures thereto were on the same instrument.  This Agreement shall be effective andbinding upon all parties to this Agreement at such time as all parties haveexecuted a counterpart of this Agreement.

 

10.3         Notices.  Any notice or other communication requiredor permitted hereunder shall be in writing and shall be deemed to have beengiven, when received, if personally delivered, and, three days after deposited,if placed in the U.S. mails for delivery by registered or certified mail,return receipt requested, postage prepaid, addressed to the address of therespective party as stated under such party’s signature space on thisAgreement.  Addresses may be changed bywritten notice given pursuant to this Section.

 

10.4         Successorsand Assigns.  This Agreement shallbe binding upon and inure to the benefit of the parties to this Agreement andtheir successors or assigns.

 

10.5         Expenses.  Except as otherwise provided herein, eachparty hereto shall each bear and pay for its own costs and expenses incurred byit or on its behalf in connection with the transactions contemplated hereby,including, without limitation, all fees and disbursements of lawyers,accountants, financial consultants, brokers or finders incurred through theClosing Date.

 

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10.6         Headingsand Construction.  The descriptiveheadings of the several Articles and Sections of this Agreement and of theseveral Exhibits to this Agreement are inserted for convenience only and do notconstitute a part of this Agreement. This Agreement shall not be construed against either party since eachparty has negotiated its provisions and contributed to its drafting.

 

10.7         EntireAgreement; Modification and Waiver. This Agreement, together with the Exhibits and the related writtenagreements specifically referred to herein, represents the only agreement amongthe parties concerning the subject matter hereof and supersedes all prioragreements, whether written or oral, relating thereto.  No purported amendment, modification orwaiver of any provision hereof shall be binding unless set forth in a writtendocument signed by all parties (in the case of amendments or modifications) orby the party to be charged thereby (in the case of waivers).  Any waiver shall be limited to the provisionhereof and the circumstance or event specifically made subject thereto andshall not be deemed a waiver of any other term hereof or of the samecircumstance or event upon any recurrence thereof.

 

10.8         Jurisdiction.  The parties agree that the forum for anycontroversy arising under this Agreement shall be exclusively in the State ofMinnesota.

 

10.9         GoverningLaw.  This Agreement and the legalrelations between the parties shall be governed by and construed in accordancewith the laws of the State of Minnesota (without giving effect to principles ofconflict of law thereof).

 

10.10       AttorneysFees.  Subject to Section 9.6, in anaction to enforce a party’s rights hereunder, the prevailing party shall beentitled to recover its cost and expenses (including attorneys’ fees, whetheror not suit is brought) from the other party.

 

10.11       Benefit.  Nothing in this Agreement, expressed orimplied, is intended to confer on any person other than the parties to thisAgreement or their respective successors or assigns, any rights, remedies,obligations or liabilities under or by reason of this Agreement.

 

10.12                     Mediation.

 

a.                                       Anydispute, controversy or claim arising out of this agreement, or theinterpretation, application, breach, termination or validity thereof, includingany claim of inducement by fraud or otherwise, shall, before submission toarbitration in accordance with the following Section of this Agreement, firstbe mediated through non-binding mediation in accordance with the ModelProcedures for the Mediation of Business Disputes promulgated by the Center forPublic Resources (“**CPR**”) then in effect, except where thoserules conflict with these provisions, in which case these provisionscontrol.  The mediation shall beconducted in Minneapolis, Minnesota and shall be attended by a senior executivewith authority to resolve the dispute from each of the operating companies thatare parties.

 

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b.                                      Themediator shall be an attorney specializing in business litigation who has atleast 15 years of experience as a lawyer with a law firm or corporation of over10 lawyers or was a judge of a court of general jurisdiction and who shall beappointed from the list of neutrals maintained by CPR.

 

c.                                       Theparties shall promptly confer in an effort to select a mediator by mutualagreement.  In the absence of such anagreement, the mediator shall be selected from a list generated by CPR witheach party having the right to exercise challenges for cause and two peremptorychallenges within 72 hours of receiving the CPR list.

 

d.                                      Themediator shall confer with the parties to design procedures to conclude themediation within no more than 45 days after initiation.  Under no circumstances shall thecommencement of arbitration under Section 11.13 below be delayed more than 45days by the mediation process specified herein.

 

e.                                       Eachparty agrees to toll all applicable statutes of limitation during the mediationprocess and not to use the period or pendency of the mediation to disadvantagethe other party procedurally or otherwise. No statements made by either side during the mediation may be used bythe other during any subsequent arbitration.

 

f.                                         Eachparty has the right to pursue provisional relief from any court, such asattachment, preliminary injunction, replevin, etc., to avoid irreparable harm,maintain the statusquo, or preserve the subject matter of thearbitration, even though mediation has not been commenced or completed.

 

10.13       Arbitrationof Disputes.

 

a.                                       Anydispute, claim or controversy arising from or related in any way to thisAgreement or the interpretation, application, breach, termination or validitythereof, including any claim of inducement of this Agreement by fraud orotherwise, will be submitted for resolution to arbitration pursuant to thecommercial arbitration rules then pertaining of the CPR, except where thoserules conflict with these provisions, in which case these provisionscontrol.  The arbitration will be heldin Minneapolis, Minnesota.

 

b.                                      Thepanel shall consist of one arbitrator chosen from the CPR Panels ofDistinguished Neutrals who is a lawyer specializing in business litigation withat least 15 years experience with a law firm or corporation of over 10 lawyersor was a judge of a court of general jurisdiction.

 

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c.                                       Theparties agree to cooperate (1) to obtain selection of the arbitratorwithin 30 days of initiation of the arbitration, (2) to meet with thearbitrator within 30 days of selection and (3) to agree at that meeting orbefore upon procedures for discovery and as to the conduct of the hearing whichwill result in the hearing being concluded within no more than 9 months afterselection of the arbitrator and in the award being rendered within 60 days ofthe conclusion of the hearings, or of any post-hearing briefing, which briefingwill be completed by both sides with 20 days after the conclusion of thehearings.  In the event no suchagreement is reached, the CPR will select an arbitrator, allowing appropriatestrikes for reasons of conflict or other cause and three peremptory challengesfor each side.  The arbitrator shall seta date for the hearing, commit to the rendering of the award within 60 days ofthe conclusion of the evidence at the hearing, or of any post-hearing briefing(which briefing will be completed by both sides in no more than 20 days afterthe conclusion of the hearings), and provide for discovery according to thesetime limits, giving recognition to the understanding of the parties hereto thatthey contemplate reasonable discovery, including document demands anddepositions, but that such discovery be limited so that the time limitsspecified herein may be met without undue difficulty.  In no event will the arbitrator allow either side to obtain morethan a total of 40 hours of deposition testimony from all witnesses, includingboth fact and expert witnesses.  To thatend each of the parties hereto agrees to pursue no more than the followingdiscovery in the aggregate from all parties and non-parties to the action: atotal of no more than 20 requests for documents (including subparts) set forthin no more than two separately served document demands; a total of no more than20 interrogatories (including subparts) set forth in no more than twoseparately served sets of interrogatories. In the event multiple hearing daysare required, they will be scheduled consecutively to the greatest extentpossible.

 

d.                                      Thearbitrator shall render its award following the substantive law ofMinnesota.  The arbitrator shall renderan opinion setting forth findings of fact and conclusions of law with thereasons therefor stated.  A transcriptof the evidence adduced at the hearing shall be made and shall, upon request,be made available to either party.

 

e.             Tothe extent possible, the arbitration hearings and award will be maintained inconfidence.

 

f.                                         TheUnited States District Court for the District of Minnesota may enter judgmentupon any award.  In the event thepanel’s award exceeds $5 million in monetary Damages or includes or consists ofequitable relief, then the court shall vacate, modify or correct any awardwhere the 

 

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arbitrators’ findings of fact are clearly erroneous,and/or where the arbitrators’ conclusions of law are erroneous; in other words,it will undertake the same review as if it were a federal appellate courtreviewing a district court’s findings of fact and conclusions of law renderedafter a bench trial.  An award for lessthan $5 million in Damages and not including equitable relief may be vacated,modified or corrected only upon  thegrounds specified in the Federal Arbitration Act.  The parties consent to the jurisdiction of the above-specifiedCourt for the enforcement of these provisions, the entry of judgment on anyaward, and the vacatur, modification and correction of any award as abovespecified.  In the event such Courtlacks jurisdiction, then any court having jurisdiction of this matter may enterjudgment upon any award and provide the same relief, and undertake the samereview, as specified herein.

 

g.                                      Eachparty has the right before or during the arbitration to seek and obtain fromthe appropriate court provisional remedies such as attachment, preliminaryinjunction, replevin, etc. to avoid irreparable harm, maintain the statusquo, or preserve the subject matter of the arbitration.

 

h.             EACHPARTY HERETO WAIVES ITS RIGHT TO TRIAL OF ANY ISSUE BY JURY.

 

i.                                          EACHPARTY HERETO WAIVES ANY CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES FROM THE OTHER.

 

j.                                          EACHPARTY HERETO WAIVES ANY CLAIM OF CONSEQUENTIAL DAMAGES FROM THE OTHER.

 

[Signatures to AssetPurchase Agreement on next page]

 

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Each of the parties hereto has caused this AssetPurchase Agreement to be executed in the manner appropriate to each, all as ofthe day and year first above written.

 
|   | OXBORO MEDICAL, INC |
|--------|---------------------|
|   |                |   |   |
|   | By:                 |   | /s/  David Berkley |
|   |                |   | David Berkley,  President |
|   |                |   |   |
|   | SURGIDYNE, INC.     |
|   |                |   |   |
|   | By:                 |   | /s/  Theodore Johnson |
|   |                |   | Theodore Johnson,  Chairman of the Board |

 

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