**OPTION AND ASSET PURCHASEAGREEMENT**

THISOPTION AND ASSET PURCHASE AGREEMENT(this "Agreement") isentered into and made effective as of September 16, 1997 (the"Effective Date"), by andamong MENTOR CORPORATION, aMinnesota corporation, or its assignee (collectively, "Mentor"),ALCHEMY ENGINEERING, LLC, a California limitedliability company d/b/a SiTech, LLC("SiTech"), and Richard A. Compton and DelJ. Petraitis, the individual members of SiTech (such individuals, the "Members"). Allcapitalized terms used herein and not otherwise defined shall have the meaningsascribed to them in that certain Exclusive Supply Agreement, of even dateherewith, by and between SiTech and Mentor (the"Supply Agreement").

**RECITALS**

WHEREAS,the Members are presently the sole members of SiTech;

WHERAS, SiTech hasbeen formed to engage in the business of manufacturing silicone dispersions,silicone gel and silicone elastomers (the"Business") in a manufacturing facility located at 6125 CampusCircle, Irving, Texas 75038 (the "Texas Facility");

WHEREAS, simultaneously herewith, SiTech andMentor are entering into a Supply Agreement, whereby SiTechshall manufacture such materials in the Texas Facility exclusively for Mentor, and Mentor shall purchase such materials exclusivelyfrom SiTech;

WHEREAS, Mentor desires to obtain an option to purchase all of theassets of SiTech used in the Business, in order tosecure a permanent source of supply of such materials; and

WHERAS, as a condition to execution of theSupply Agreement, SiTech has agreed and the Membershave agreed to cause SiTech, among other things, togrant to Mentor an exclusive option to purchase all of the assets of SiTech used in the Business pursuant to the terms andconditions of this Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenantshereinafter set forth and other good and valuable consideration, the receiptand sufficiency of which hereby are acknowledged, the parties agree as follows:

**ARTICLE IOPTION TOPURCHASE**

** **1.1 Grant of Option. SiTech herebygrants Mentor an irrevocable option (the "Option") to purchase, as agoing concern, all of the right, title and interest in and to all of thetangible and intangible assets owned by SiTech or towhich it is entitled and belonging to or used or intended to be used in theBusiness, of every kind and description and wherever located (collectively, the"Assets"), as of and with effect from the Closing Date (as defined inSection *1.5(a)*below), upon the terms and conditions set forth in thisAgreement. The term of the Option shall commence on the Effective Date andshall expire upon the earlier of: (i) the seven (7)year anniversary of the Effective Date; (ii) the successful closing of theexercise of Mentor's Option hereunder (the "Closing") or (iii) theearly termination of this Agreement pursuant to Article VIII below (the"Option Term"). The Assets shall be conveyed free and clear of allliabilities, obligations, liens, claims and encumbrances, except only thoseliabilities and obligations that are to be assumed by Mentor as expresslyprovided in Section 1.4 below. From and after the Closing Date, SiTech will have no further right to use,market or otherwise transfer the Assets. All of SiTech'sclaims and rights under all existing agreements to be assigned to Mentor shallbe assigned to Mentor as of the Closing Date, and where necessary to permitsuch assignment, SiTech shall use its best efforts toobtain the written consent of the other parties to such agreements to theassignments thereof to Mentor.

1.2 The Assets. The Assets to be sold and purchased hereunder,include, but shall not be limited to:

(i)   all cash balances of SiTech;

(ii)  allof the accounts receivable of SiTech;

(iii) all inventories of SiTech, including without limitation all raw materials,work in progress, finished goods (including inventories of finished productsheld for packaging and/or shipping and all types of inventories which are intransit or being held by third parties) and all production, shipping and packagingsupplies;

(iv) allprepaid expenses, including deposits and credits of SiTech;

(v) allfixed assets of SiTech, including all machinery, equipment,tools, handling equipment and accessories and supplies;

(vi)all office furniture and furnishings, equipment andsupplies of  SiTech;

(vii)all of SiTech's right, titleand interest as tenant in and to leases and interests in real property (the"Real Property"), together with all of SiTech'sright, title and interest in and to all easements, rights and appurtenancesthereto;

(viii) all of SiTech'sright, title and interest in and to all plants, buildings, structures,erections, improvements and fixtures located on or forming part of the RealProperty;

(ix)                   all of SiTech's right, title and interest in, to and under alldomestic and foreign patents, patent applications, patent licenses, assignablesoftware licenses, assignable know-how licenses and technology transferagreements, trade names, trademarks, brand names, logos, copyrights, unpatented inventions, discoveries, conceptions, reductionsto practice, service marks, trademark and service mark registrations andapplications, including without limitation that certain License and TechnologyTransfer Agreement (the "License and Technology Transfer Agreement")between SiTech and NuSilTechnology ("NuSil");

(x)  all of SiTech's right, title and interest in and to trade secrets,know-how (including, without limitation, proprietary know-how and use andapplication know-how) manufacturing, engineering and other drawings,technology, technical information, engineering data, design and engineeringspecifications, formulae, processes, blueprints, sketches, schematics, flowsheets, flow diagrams, magnetic media such as audio tapes, computer disks, micromedia such as microfilm and microfiche, promotionalliterature and similar data, including without limitation the Master DeviceFiles (as defined in the Supply Agreement) (all rights referred to in 1 .2(ix)and 1.2(x) together referred to as the "Intellectual Property");

(xi)  allof the Business's existing books, general, financial, tax and personnelrecords, correspondence and other documents, records and files, and all datasystems and customer information to enable Mentor to continue the design,manufacture and sale of the Business's products and services;

(xii) the full benefit of all leases of, and conditional salescontracts and title retention agreements relating to, machinery and equipmentof which SiTech is lessee;

(xiii)  the full benefit of all contracts or commitments to which SiTech is entitled, including without limiting thegenerality of the foregoing,

(A)   allunfilled orders received by SiTech; and

(B)   allforward commitments to SiTech for fixed assets,subleases, services, inventory, supplies or materials entered into in the usualand ordinary course of the Business, whether or not there are any writtencontracts with respect thereto;

(xiv)                 the full benefit of all licenses, and all registrations andpermits of SiTech pertaining to environment, healthand safety matters, and all other assignable registrations and permits;

(xv)                  the goodwill of SiTech;

(xvi)                 all computer aided design and other product development equipmentof SiTech; and

(xvii)                allclaims, causes of action, rights of recovery, refunds and rights of set-off ofany kind of SiTech, except insofar as necessary tooffset a claim against SiTech but for which SiTech does not recover money.

(xviii)                all insurance proceeds and the full benefit of all insurancepolicies of SiTech, including without limitationthose described in Section 3.12 hereof.

1.3       Excluded Assets.Notwithstanding the provisions of Section 1.2 above to the contrary, the Assetsshall not include:

(i)                     SiTech's minute book, membership or other ownership ledgerand records and tax records not necessary for Mentor to continue the Business;and

(ii)                    assets related to employee benefit plans which are notassumed by Mentor.

1.4       Liabilities.

(a)        Assumed Liabilities.Subject to Section 1.4(b) below, Mentor shall assume, pay, fulfill, perform orotherwise discharge SiTech's liability for (i) post-Closing obligations under the facility andequipment leases of SiTech as of the Closing Date onterms acceptable to Mentor and the lessorsthereunder; (ii) contracts and accounts payable relating tothe purchase of inventory, sale of products and similar agreements that mayarise prior to the Closing Date in the ordinary course of operations of theBusiness in accordance with SiTech's prior practice;(iii) SiTech's bank line of credit or other indebtednessfor borrowed money; (iv) all sales and transfer taxes and fees, if any,generated by the exercise by Mentor of its Option hereunder and its purchase ofthe Assets hereby and (v) any accrued but unpaid obligations of SiTech to make distributions under Section 1.6(a) hereof,all pursuant to an agreement governing the assumption of liabilities to beexecuted by SiTech and Mentor in the form attachedhereto as Exhibit A (the "Assignment and AssumptionAgreement").

(b)        ExcludedLiabilities. Except as provided in the Assignment and Assumption Agreement,Mentor shall not assume, pay, perform, defend or discharge any, and SiTech shall solely retain, pay, perform, defend anddischarge, all of SiTech's liabilities andobligations of any and every kind whatsoever, whether disclosed, undisclosed,direct, indirect, absolute, contingent, secured, unsecured, accrued orotherwise, whether known or unknown, including but not limited to:  (i) [IntentionallyOmitted];  (ii) specifically excludingthe tax obligations described in Section 1.4(a)(iv) above, all income,withholding, or other taxes or fees resulting from the transfer of the Assetsand Business or otherwise; (iii) any obligations or liabilities of SiTech to is employees, including but not limited toaccrued but unpaid payroll, accrued obligations or liabilities under anyemployment or consulting agreements, employee's beneficial interests or optionsto purchase beneficial interests in SiTech, employeebenefit plans or person, profit-sharing or retirement plans or vacationarrangements; (iv) any obligations or liabilities under the ConsolidatedOmnibus Budget Reconciliation Act of *1985,*as amended("COBRA"); (v) any liabilities or expenses of SiTech,including brokers', attorneys' and other professionals' fees incurred innegotiating, executing and completing SiTech'sobligations under this Agreement; (vi) any obligations or liabilities relatingto any products alleged to have been manufactured, or sold by SiTech and alleged to have been defective, improperly designedor manufactured or improperly labeled; and (vii) any obligations or liabilitiesarising under any Environmental Law (as defined in Section 3.*5*below) orany other law (collectively, the "Excluded Liabilities").

1.5       Exerciseof Option. Due Diligence and Closing Date.

(a)        The Option may beexercised by Mentor, in its sole discretion, by delivering written notice (the"Option Notice") to SiTech prior to theexpiration of the Option Term. Such Option Notice shall specify the tentativetime and date of the Closing (which shall be not be less than ninety (90) daysand not more than 120 days from the date of delivery of the. Option Notice),and shall specify the due diligence materials and information (the "DueDiligence Information") to be furnished to Mentor to complete its duediligence investigation in connection with its purchase of the Assets from SiTech at the Closing. SiTechshall promptly prepare and provide to Mentor all Due Diligence Information sorequested and the. Disclosure Schedule (as defined in Section 3.1 below) tothis Agreement (as updated to the Closing) within thirty (30) days after SiTech's receipt of the Option Notice and due diligencerequest from Mentor. Mentor shall approve or disapprove all of the DueDiligence Information and the updated Disclosure Schedule within sixty (60)days after receipt thereof (the "Due Diligence Period") and, providedMentor shall have approved the same, the Closing shall occur on the firstbusiness date following the expiration of the Due Diligence Period (the"Closing Date").

(b)       In the event a Closingdoes not occur, for any reason, within 120 days from the date of Mentor'sdelivery of an Option Notice to SiTech, thisAgreement shall continue in full force and effect until the earlier of: (i) the seven (7) year anniversary of the Effective Date;(ii) a successful Closing pursuant to Mentor's delivery of an Option Notice to SiTech; or (iii) the early termination of this Agreementpursuant to Article VIII below.

1.6       Certain Tax Liabilities.

(a)        Notwithstanding anyother provision of this Agreement, during each year SiTechmay distribute to each of its members an amount equal to their respectivefederal and state net income tax liability resulting from their interest in SiTech, calculated to the time immediately prior toClosing, taking into account items of such year's income, loss, deduction andcredit, and any other nonseparately computed items ofincome or loss as described in Section 1366(a) of the Internal Revenue Code(the "Code") (collectively, the "SiTech Items")imputed to such member for that year, pursuant to the terms in Section 1.6(b)below.

(b)       The tax liabilitiesdescribed in Section 1.6(a) above shall be calculated by the following method;Each member shall submit to an independent Certified Public Accountant,mutually agreed upon by SiTech and Mentor (the"CPA"), two sets of federal and state tax returns, with and without the SiTech Items.  TheCPA may not alter the members tax returns as submitted, but may,in calculating the net tax effect of the SiTechitems, make only those changes necessary to correct numerical errors or tocomply with federal and state law. The aggregate difference in each members'net tax liability due to the inclusion of the effect of such member's interestin SiTech, as determined by the CPA, shall bedistributed to each member by SiTech on either anannual or quarterly basis, to coincide with each member's filing obligations,within 30 days of the CPA completing his or her review of each member's taxreturns. The expenses associated with the CPA will be borne by SiTech in the ordinary course of business.

(c)        After the ClosingDate, and solely with respect to each annual or quarterly tax period for amember (i) that either includes the Closing Date orfor which distributions pursuant to Section 1.6(a) could not reasonably havebeen made prior to the Closing Date due to the time requirements set forth inSection 1.6(b) above and (ii) for which distributions have not been made tosuch member pursuant to Section 1.6(a), Mentor hereby agrees to distribute toeach of the members of SiTech (who are members of SiTech as of the Closing Date) an amount equal to theirrespective federal and state net income tax liability resulting from theirinterest in SiTech, with respect and calculated tothe time ending immediately prior to Closing, taking into account the SiTech Items imputed to such member for that year, pursuantto the terms of Section 1.6(b) above.

**ARTICLE IIPURCHASEPRICE AND CLOSING**

** **2.1       Purchase Price.The aggregate purchase price for the Assets shall be Fourteen Million SixHundred Thousand Dollars ($14,600,000). Notwithstanding the foregoing, suchaggregate purchase price shall be subject to adjustment in the event SiTech shall have failed to meet, to Mentor's satisfaction,as of the Closing Date, one or more of the mutuallyagreed upon milestones set forth on Exhibit B attached hereto requiredthereby to have been achieved by such time (the "Milestones"). Insuch event the Purchase Price shall be adjusted by subtracting the amount(s)set forth opposite such failed Milestone(s) on ExhibitB attachedhereto (as so adjusted, the "Purchase Price").

2.2       Allocation of thePurchase Price. The Purchase Price shall be allocated among the Assets forall purposes in the manner set forth on Exhibit C, which shall beprepared by Mentor and attached hereto on the Closing Date, and each of theparties shall file all applicable federal, state and local income tax returnsand other forms with ail applicable tax authorities on a basis consistenttherewith.

2.3             Closing.

(a)       Upon exercise of the Option by Mentor,the Closing shall occur on the Closing Date at the offices of Mentor, 5425Hollister Avenue, Santa Barbara, California 93111, or such other date and placeas the parties mutually agree.

(b)        At the Closing, subject to Article VIbelow, SiTech shall deliver to Mentor:

(i)         a duly executed Bill of Sale substantially in the formattached hereto as Exhibit D;

(ii)         dulyexecuted assignments of SiTech's right, title and interestin and to, or licenses to practice, the Intellectual Property;

(iii)                   duly executed assignments of SiTech's right, title and interest in, to and under eachcontract and license to be assigned pursuant to this Agreement;

(iv)                   evidenceof the release of all liabilities, obligations, liens, claims and encumbranceson or against the Assets;

(v)                    such other instruments ofassignment or conveyance as Mentor may reasonably request as necessary orappropriate to vest in Mentor good and marketable title to the Assets; and

                                    (vi)                  possessionof all tangible assets of the Business.

(c)        At the Closing,subject to Article V below, Mentor shall pay the Purchase Price to SiTech by wire transfer of immediately available federalfunds to an account designated by SiTech, subject toescrow of the Holdback (as defined in and pursuant to Section 2.4 below) andthe Purchase Price adjustment described in Section 2.1 above.

2.4       The Holdback.

(a)        At the Closing, TwoMillion Dollars ($2,000,000) of the Purchase Price (the "Holdback")shall be deposited in an interest bearing escrow account with a party to bemutually agreeable to Mentor and SiTech as escrowagent (the "Escrow Agent"), to be held and administered in accordancewith the terms and conditions set forth in this Section 2.4. Mentor and SiTech shall share equally the expenses associated withsuch escrow account.

(b)       If the Holdback has notbeen released to Mentor pursuant to Section 2.4(d) hereof and no claims byMentor to the Escrow Agent have been made for the release of any of theHoldback on the first business day which is one (1) year following the ClosingDate, the Escrow Agent shall release and deliver One Million Dollars($1,000,000) of the Holdback to SiTech, without thenecessity for any further instruction from either Mentor or SiTech.

(c)        Subject to Section2.3(d) hereof, the Escrow Agent shall release the Holdback (or such portion ofthe Holdback that SiTech is entitled to receive aftersubtracting any of the Holdback released to Mentor in recovery of Damages (asdefined in Section 7.1 below) pursuant to Section 2.3(d) hereof or any of theHoldback released pursuant to Section 2.3(b) hereof) on the first business daywhich is two (2) years following the Closing Date, and on such date the EscrowAgent shall release and deliver all or such portion of the Holdback includinginterest to which SiTech is entitled to SiTech, without the necessity for any further instructionfrom either Mentor or SiTech.

(d)       Mentor shall beentitled to recover any Damages that may be suffered by Mentor and that are indemnifiable pursuant to Article VII below against theHoldback. The applicable parties hereto shall negotiate in good faith for areasonable period of time (prior to seeking judicial resolution) regarding theamount of Damages that are indemmfiable. Upon a finalsettlement between the applicable parties or judgment by a court of competentjurisdiction as to the mutually agreed or judicially determined amount of theDamages that are indemnifiable, that portion of theHoldback equaling the amount of the Damages to which Mentor is entitled torecover shall be released by the Escrow Agent to Mentor to satisfy suchDamages.

(e)        Mentor and SiTech hereby agree to execute and deliver any agreement(the "Escrow Agreement") reasonably required by the Escrow Agentwhich sets forth the rights and obligations of the Escrow Agent with respect tothe escrow and re sale of the Holdback.

*2.5      *CertainDistributions. In the event distributions are made to members of SiTech for ongoing income tax liability, as provided for inSection 1.6 of this Agreement, and such distributions in the aggregate exceedor will exceed forty-three percent (43 %) of the net taxable income of SiTech as reflected on the K-ischedules for all SiTech members during the time forwhich distributions are to be made, the Purchase Price to be paid by Mentor, asset forth in Section 2.1 above, shall be reduced by an amount equal to suchexcess. In the event not all distributions provided for in Section 1.6 shallhave been made as of the Closing Date, the Purchase Price shall be adjusted, ifat all, as of the Closing Date in accordance with the foregoing sentence withrespect to the periods for which distributions were actually made. As soon aspracticable after all distributions to be made pursuant to Section 1.6 havebeen made, Mentor shall pay to SiTech (if the amountof clause (ii) below exceeds that of clause (i)below), or SiTech shall pay to Mentor (if the amountof clause (i) exceeds that of clause (ii)), an amountequal to the difference between (i) the PurchasePrice payable on the Closing Date and (ii) the Purchase Price that would havebeen payable on the Closing Date if the tax and other information, with respectto all distributions to be made pursuant to Section 1.6, required for thecalculations in the first sentence hereof were knowable and known at such time.

**ARTICLE IIIREPRESENTATIONSAND WARRANTIES OF SITECH AND MEMBERS**

**                        **Exceptas set forth on the Disclosure Schedule attached as Exhibit E  hereto, which specifically identifies all therelevant sections thereon (the "Disclosure Schedule"), SiTechand, solely with respect to Sections 3.1, 3.2, 3.5(c), (d) and (e), 3.17, 3.20and 3.21 of this Article III, the Members, jointly and severally, represent andwarrant to Mentor, as of the Effective Date and, after the Disclosure Scheduleis updated, as of the Closing Date, as follows:

3.1       Existence. GoodStanding and Authority. SiTech is a limitedliability company duly organized, validly existing and in good standing under thelaws of the State of California, and is qualified to conduct business as aforeign limited liability company in all jurisdictions in which suchqualification is required. SiTech has all necessarypower and authority and has taken all actions necessary to enter into thisAgreement, the Supply Agreement, the License and Technology Transfer Agreement,and to consummate the transactions contemplated hereby and thereby and toperform its obligations hereunder and thereunder, andno other actions or proceedings on the part of SiTechare necessary to authorize this Agreement, the Supply Agreement or the Licenseand Technology Transfer Agreement, or to consummate the transactionscontemplated hereby and thereby. This Agreement and each of the SupplyAgreement and the License and Technology Transfer Agreement has been duly andvalidly executed and delivered by SiTech, andconstitutes a legal, valid and binding obligation of SiTech,enforceable against SiTech in accordance with itsterms, except as enforcement may be limited by equitable principles orbankruptcy, insolvency, reorganization, moratorium or similar laws relating tocreditors' rights generally. Neither the execution ordelivery of this Agreement, the Supply Agreement or the License and TechnologyTransfer Agreement, nor the consummation of the transactions contemplatedhereby or thereby or performance hereunder or thereunder,will violate the terms of the Articles of Organization or Operating Agreementof SiTech.

3.2       Capitalization.The amount of authorized, issued and/or outstanding ownership or membershipinterests of or in SiTech (the "SiTech Membership Interests"), as applicable, are asset forth in the Disclosure Schedule. Except as set forth in Section 3.2 of theDisclosure Schedule, all of the SiTech MembershipInterests have been issued by SiTech to, and areowned beneficially or of record by, the Members, and are duly authorized,validly issued, fully paid and nonassessable. Exceptas set forth in Section 3.2 of the Disclosure Schedule, there are no options,warrants, conversion rights, rights of exchange or other rights, plans,agreements or commitments of any nature whatsoever (including withoutlimitation conversion or preemptive rights) providing for the purchase,issuance or sale of any ownership interests in SiTechor the SiTech Membership Interests or any securitiesconvertible into or exchangeable for any SiTechMembership Interests.

3.3       AffiliateRelationships. Except for SiTech's contractualarrangement(s) with Mentor, SiTech does not have, andon the Closing Date will not have, any material interest, direct or indirect,in any supplier to or customer of any party to any contract or otherarrangement which is material to SiTech.

3.4       Financial Statements.SiTech shall prepare and deliver to Mentor (i) annually, the balance sheet and related statements ofincome and cash flows of SiTech at and for eachfiscal year beginning with the year in which the Effective Date occurs andending with the year immediately prior to the year in which the Option Noticeis delivered (the "Financial Statements"); (ii) quarterly, the unaudited balance sheet and related statements of incomeand cash flows of SiTech for each quarter of eachfiscal year beginning with the year in which the Effective Date occurs andending with the quarterly period next preceding the date of the Option Notice(the "Interim Financial Statements"); and (iii) at Mentor's written request,audited Financial Statements for any fiscal year beginning with the year inwhich the Effective Date occurs and for the period beginning with the beginning of the fiscalyear in which the Option Notice is given and ending on the date of the OptionNotice (the "Audited Financial Statements"). As of the Closing, theinternal books and records of SiTech from which theFinancial Statements, the Interim Financial Statements and the AuditedFinancial Statements are prepared will not contain any information which isfalse or misleading. All Financial Statements, Interim Financial Statements andAudited Financial Statements (i) will be prepared inaccordance with such books and records; (ii) will be prepared in accordancewith SiTech's accounting policies and principles, andwill be in accordance with generally accepted accounting principlesconsistently applied ("GAAP"); and (iii)will present fairly SiTech's financial position andresults of operations at the dates and for the periods reflected therein.

3.5 *     *Absence ofCertain Changes. Notwithstanding anything to the contrary in thisAgreement, from the Effective Date until the Closing Date, SiTechshall not, and solely with respect to Sections 3.5(c), (d) and (e) hereof, theMembers shall not and shall not permit

SiTech to, do or permit any of the itemslisted below. Notwithstanding the foregoing sentence, -Mentor may waive any and all objections it mayhave with respect to such action, and such

waiver and consent shall be deemed for all purposes to have been givenwith respect to a proposed (and not then current) activity described in thisSection *3.5*if, within 15 days of receiving notice of a proposed action,Mentor does not deliver to SiTech in writing anobjection to such action and the basis therefor.

(a)        permitto occur any Material Adverse Effect (as defined in Section *5.6*below);

(b)       increasethe compensation paid or payable by SiTech, otherthan in the ordinary course of business, to any of its officers, directors,employees or agents;

(c)        (i)except as set forth in Section 1.6 hereof, pay any compensation to any memberof SiTech, (except in his, her or its capacity as afull-time, on-site employee of SiTech; or (ii) paycompensation to any employee of NuSil who remainsemployed by NuSil in any capacity;

(d)       except as set forth inSection 1.6 hereof, declare, set aside or pay dividends or distributions inrespect of ownership interests m SiTech including SiTech Membership Interests (except in the event and to theextent SiTech's members' equity (as determined inaccordance with GAAP) at such time is equal to orgreater than Seven Million Dollars ($7,000,000)), or directly or indirectlyredeem, purchase or otherwise acquire any such ownership interests or agree todo any of the foregoing; provided, however, that no such declaration,set aside or payment, or agreement to do same, may occur if SiTechis liable for any bank line of credit or other indebtedness for borrowed money,or trade or other debt, other than accounts payable incurred in the ordinarycourse of business and not more than thirty (30) days past due.

(e)        issue, transfer, sellof pledge any SiTech Membership Interests or othersecurities, or any commitment, option (other than options to purchaseadditional SiTech Membership Interests which may bereserved for grant to employees and consultants of SiTech), right or privilege under which SiTech is or may become obligated to issue any SiTech Membership Interests or other securities;

(f)        incurany indebtedness, except such as may have been incurred or entered into in theordinary course of business;

(g)        make any loan or agreeto make any loan, or become liable or agree to become liable as a guarantorwith respect to any loan (other than the initial capitalization requirements ofSiTech as set forth in the Disclosure Schedule);

(h)        waiveor compromise any right or rights of material value or any payment, direct orindirect, of any material debt, liability or other obligation;

(i)         change the accounting methods,practices or policies followed by SiTech from thosein effect on the Effective Date;

(j)        sell,assign or transfer any patents, trademarks, copyrights, trade secrets, know-howor other intangible assets or Intellectual Property of material value;

(k)       purchase or otherwiseacquire, sell, lease, dispose of, mortgage, pledge or subject to any lien orencumbrance, any of its material property or assets, tangible or intangible, oragree to do any of the foregoing, except in the ordinary course of business andfor any single purchase or event (or group or series thereof, to the extentreasonable to be viewed as a single ongoing transaction or occurrence) in anamount not greater than (i) One Hundred ThousandDollars ($100,000) with respect to inventory or raw materials purchases, or(ii) Fifty Thousand Dollars ($50,000) with respect to fixed assets or otherpurchases and events; provided, however, that such dollar limits shall notapply with respect to the start-up costs of the Texas Facility and whichstart-up costs, to the extent conducted reasonably, shall be considered to bein the ordinary course of business for the purposes of this Section 3.5(k);

(1)       terminate or lose (i) any material contract, lease, license or other agreementto which it is, as of the Effective Date, or becomes thereafter, during theOption Term, a party; or (ii) any certificate or other authorization itrequires for the continued operation of any material portion of the Business;

(m)       agreeor commit to do any of the things prohibited by this Section 3.5.

3.6       Properties. SiTech does not own or hold tide to any real properly. Withrespect to all real and personal property leased by it, SiTechis in compliance in all material respects with such leases and holds a validleasehold interest free of any liabilities, obligations, liens, claims orencumbrances of any kind whatsoever.  Setforth in the Disclosure Schedule is: (i) a list ofall leases or rental contracts under which SiTech isa lessee, lessor, sublesseeor sublease and (ii) a list of all equipment used by SiTechin the operation of the Business which is owned or leased by SiTech and which had an original cost of $25,000 ormore.  SiTechhas beneficial ownership of, and good and marketable title to, all personalproperty used in its operations or necessary for the conduct of the Business,and such property is subject to no mortgages, pledges, loans, liabilities, obligations,liens, claims or encumbrances of any kind whatsoever. All real and tangiblepersonal property, including machinery, equipment and fixtures, currently usedby SiTech in the operation of the Business is in goodoperating condition and repair, ordinary wear and tear excepted,and is adequate and suitable for the purposes for which it is presently beingused. To the best knowledge of SiTech, allimprovements on owned or leased property used by SiTechin the operation of the Business and the present use thereof are in accordancewith all applicable laws. The value of any fixed asset used by SiTech in the operation of the Business has not beenwritten up or down, other than pursuant to depreciation or amortizationexpenses in accordance with GAAP and past practice.

3.7       Inventory. SiTech's inventory consists, and at the time of Closingwill consist, solely of inventory of the kind and quality regularly andcurrently used in the Business.

3.8       Indebtedness.The Disclosure Schedule contains a complete list of each -and every agreement or otherinstrument under which SiTech has outstandingindebtedness for borrowed money equal to or greater than$25,000. Prior to the Effective Date SiTech shallfurnish Mentor with true and correct copies of each such agreement andinstrument, including all amendments with respect thereto (and, with respect tosuch agreements and instruments entered into after the Effective Date, SiTech shall furnish Mentor with true and correct copies ofeach such agreement and instrument, including all amendments with respectthereto, prior to the Closing). SiTech is not indefault in any material respect under any such agreement or instrument and, tothe best knowledge of SiTech, no party to any such agreement or instrument is in defaultin any material respect thereunder.

3.9       Litigation.Except as set forth on the Disclosure Schedule, there are no actions, causes ofaction, claims, suits, proceedings, orders, writs, investigations, injunctionsor decrees pending or, to the best knowledge of SiTechthreatened, against SiTech or affecting theoperations of SiTech (or its properties, assets orthe businesses) or the consummation of the transactions contemplated herein, atlaw or in equity, or before or by any court or any governmental department,commission, board, bureau, agency or instrumentality, domestic or foreign. SiTech is in compliance with all applicable laws andregulations.

3.10     Taxes. SiTech has (i) duly and timelyfiled or caused to be filed all federal, state and local tax returns requiredto be filed, if any, prior to the Closing Date which relate to SiTech or with respect to which SiTechis liable or otherwise is in any way subject, and

(ii)  haspaid all such federal, state and local taxes due and payable. No taxliabilities, disallowances or assessments relating to the Business, the Assetsor the employees or independent contractors of SiTechare outstanding, and to the best knowledge of SiTechthere is no basis for any such liabilities, disallowances or assessments.

3.11  Employeesand Service Providers.  SiTech had not been and is not currently involved in anylabor discussion with any group seeking to become the bargaining unit for anyof SiTech's employees.  The Disclosure Schedule contains a listing of(i) each employment, consulting, severance, deferredcompensation, bonus, ownership interest option, purchase or appreciation andany other employee benefit plan (whether or not in writing) providing forcompensation or other benefits to employees (including officers), or independentcontractors, individually or as a group, to which SiTechis a party or by which it is bound; (ii) each "employee pension benefitplan" as defined in Section 3(2) of the Employee Retirement IncomeSecurity Act of 1974 ("ERISA") and notexempted under Section 4(b) or Section 201 of ERISAmaintained by SiTech or to which SiTechis required to contribute including any multi-employer pension plan; and (iii)each "employee welfare benefit plan" as defined in Section 3(1,) of ERISA maintained by SiTech or towhich SiTech contributes or is required tocontribute. SiTech has complied in all materialrespects with all applicable laws, rules and regulations relating toemployment. All of SiTech's employee benefits plans,as defined in Section 3(3) of ERISA, including allbenefit plans subject to Title IV of ERISA, in effectat any time since inception of SiTech are now, andhave always been, established, maintained and operated in accordance, in allmaterial respects, with all applicable laws (including, without limitation, ERISA and the Internal Revenue Code) and all regulationsand interpretations thereunder and in accordance withtheir plan documents.

3.12     Insurance. Thefollowing insurance policies are in full force and effect and have been in fullforce and effect, without gaps, continuously since the Effective Date:

(i)         worker's compensation insurance coverage in theamount required by Texas law;

(ii)        generalcomprehensive liability insurance, with contractual liability and propertydamage endorsements in the minimum amount of Two Million Five Hundred ThousandDollars ($2,500,000)eachoccurrence and in the aggregate, including coverage for business interruption(with coverage limits and terms customary and reasonable for the industry); and

(iii)       environmentalimpairment liability insurance for non-sudden and accidental occurrences, ifrequired by applicable law or regulation.

Copies of the above policies have been made or will be made availableto Mentor for inspection. SiTech is not aware of anyfacts concerning SiTech, the Business or itsoperations, assets and liabilities, contingent or otherwise, upon which aninsurer might be justified in reducing coverage or increasing premiums onexisting policies and all such insurance polices can be maintained in fullforce and effect without substantial increase in premium or reducing thecoverage thereof following the Closing Date. All insurance coverage shallconsist of 100% replacement coverage, to the extent applicable.

3.13         Contracts and Permits.

(a)        The Disclosure Schedule contains a trueand complete list of each of the following written or oral contracts,agreements or other arrangements to which SiTech is aparty as of the Effective Date (to be updated prior to Closing to describe allcontracts, agreements or other arrangements to which SiTechhas become a party after Effective Date) and which are not already disclosedpursuant to other provisions in the Agreement:

(i)         allloan agreements, indentures, debentures, notes or letters of credit relating tothe borrowing of money or to mortgaging, pledging or otherwise placing a lienon any material asset of SiTech;

(ii)        all leases oragreements under which SiTech is lessee of, or holdsor operates, any property, real or personal, owned by any other party, exceptfor any lease under which the aggregate annual rental payments do not exceed *$5,000;*

(iii) all contracts and agreements that (A) involve the payment orpotential payment, pursuant to the terms of any such contract or agreement, by SiTech of more than $25,000 annually, and (B) cannot beterminated within thirty (30) days after giving notice of termination withoutresulting in any cost or penalty to SiTech;

(iv) a list of the Master Device Files withrespect to each product manufactured by SiTech; and

(v)        allmaterial permits, licenses and other, certificates or authorizations issued to SiTech by any governmental authority having jurisdictionover the Texas Facility (collectively, the "Permits").

(b)       Each contract disclosedin the Disclosure Schedule is in full force and effect and constitutes a legal,valid and binding agreement, enforceable in accordance with its terms, of eachparty thereto and will continue to be legal, valid, binding and enforceableafter the Closing. SiTech has performed all of its requiredobligations under, and is not, in any material respect, in violation or breachof or default under, any contract except as set forth in the DisclosureSchedule. Except as set forth on the Disclosure Schedule, the Permits are, andas of the Closing will be, in full force and effect and the continuing validityand effectiveness of such Permits will not be affected in any manner by thesale and transfer of the Assets to Mentor as herein contemplated.

3.14     Compliance with Law:Governmental Consents. The Business has been and is being conducted by SiTech in compliance with all laws, rules, regulations andlicensing requirements applicable thereto, except where failure to be so incompliance would not have a Material Adverse Effect (as defined in Section 5.6below). SiTech is not aware of any facts which mightform the basis for a claim that any material violation of such laws exists.There are no unresolved notices of deficiency or charges of violation broughtor, to the best knowledge of SiTech, threatenedagainst SiTech, under any federal, state or locallaws or regulations. Except for any filing requirements under the HSR Act (as defined in Section 4.3 below) and except as setforth on the Disclosure Schedule attached hereto, no consent, approval, orderor authorization of, or registration. qualification,designation,. declaration or filing with, any federal, state or localgovernmental authority on the part of SiTech isrequired in connection with the execution, delivery and performance by SiTech of this Agreement, the consummation of thetransactions contemplated hereby, or Mentor's operation of the Businessfollowing the Closing Date.

3.15     Environmental Matters.

(a)        For purposes of thisAgreement, the term "Environmental Laws" shall mean all federal,state, local and foreign laws, codes, regulations, common law, requirements,directives, orders and administrative or judicial interpretations thereof, allas in effect on the date hereof or on the Closing Date, that may be enforced byany governmental or regulatory authority, relating to pollution, the protectionof the environment or the emission, discharge, disposal, release or threatenedrelease of Hazardous Materials in or into the environment, and the term"Hazardous Materials" shall mean pollutants, contaminants orchemical, industrial, hazardous or toxic materials or wastes.

(b)       (i)SiTech has not received any notices, directives,violation reports, actions or claims from or by (A) any federal, state or localgovernmental agency concerning SiTech and anyEnvironmental Law, or (B) any person alleging that, in connection withHazardous Materials, conditions at any real property owned or leased by SiTech have****resulted in or caused or threatened toresult in or cause injury or death to any person or damages to any property,including, without limitation, damage to natural resources; and to the bestknowledge of SiTech no such notices, directives,violation reports, actions, claims, assessments or allegations exist; (ii)throughout the period of operation of any real property by SiTech,SiTech has operated and continues to operate suchreal property in compliance with all Environmental Laws and in a manner whichshould not give rise to any liability under any Environmental Laws and (iii) SiTech is not aware of any facts, events or conditions(including, without limitation, the generation, treatment, transport, storage,emission, disposal, release or other placement, deposit or location of anysubstance) which materially interfere with or prevent continued compliance by SiTech with, or give rise to any present or potentialliability (including with respect to past activities) under any EnvironmentalLaws.

3.16     Operation ofFacilities. SiTech shall at all times operate theTexas Facility and manufacture its products in conformance with ISO-9002 andcurrent Good Manufacturing Practices Quality Systems Regulations (the "GMPs"), as promulgated by the United States Food and Drug Administration.

3.17     Consents ofNon-Governmental Third Parties. No consent, waiver or approval of anynon-governmental third party is necessary for the consummation by SiTech and the Members of the transactions contemplated bythis Agreement, the Supply Agreement or the License and Technology TransferAgreement.

3.18     Intellectual PropertyRights. SiTech owns all right, title and interest in andto or has the unrestricted right to grant licenses to, fully exploit andexercise all of the Intellectual Property necessary in any material respect forthe ownership, maintenance and operation of the Business, all as morespecifically described in the Disclosure Schedule.  The Intellectual Property does not infringedor otherwise violate the rights of any thirdparty.  There are no claims orallegations asserted by any person challenging such ownership or licenses, orthe validity or enforceability of the Intellectual Property and all suchIntellectual Property is freely transferable. To the best knowledge of SiTech, theIntellectual Property is not being infringed or otherwise violated by any party.  The consummation of the transactions contemplatedby this Agreement (and specifically the purchase by Mentor of the Assets of SiTech) and the Supply Agreement, will not, in any way,alter or impair SiTech's ownership of, and/or rights,in the Intellectual Property, nor its ability to freely transfer such rights toMentor. As of the Closing, Mentor will have full ownership of, and/or rightswith respect to, the Intellectual Property free and clear of all liabilities,obligations, liens, claims and encumbrances, which Intellectual Property willconstitute after the transfer to Mentor all of the Intellectual Propertynecessary in any material respect for the ownership, maintenance and operationof the Business as conducted at the time of Closing.

3.19         No Undisclosed Liabilities. SiTech has no liabilities other than as disclosed herein(absolute, accrued, fixed, contingent, liquidated, unliquidatedor otherwise) which may have a Material Adverse Effect (as defined in Section5.6 below).

3.20         No Fraudulent Conveyance. SiTech and the Members have not disposed of or transferredany of SiTech's assets in a manner that wouldconstitute, and the consummation by SiTech and theMembers of the transactions contemplated hereby will not constitute, a fraudulentconveyance or fraud on creditors of SiTech underapplicable law.

3.21        Representations Complete. Neitherthe representations and warranties made by SiTechand, as applicable, the Members herein nor any statement made in any Exhibit,Schedule or certificate furnished pursuant to this Agreement, contains as ofthe Effective Date or as of the Closing Date, as applicable, any untruestatement of a material fact, or omits to state any material fact required tobe stated therein, or necessary in order to make the statements made, in lightof the circumstances under which they were made, not misleading.

**ARTICLE IVCOVENANTS OF SITECH AND THE MEMBERS**

4.1           DevelopmentofBusiness.From the Effective Date until the Closing Date, SiTechshall use its best efforts to carry on the development of the Business in orderfor SiTech to achieve the Milestones set forth on ExhibitB hereto, and to fulfill its obligations under this Agreement, the SupplyAgreement and the License and Technology Transfer Agreement.

4.2          Conduct ofBusiness.

(a)        Notwithstanding anything to the contraryin this Agreement, from the Effective Date until the Closing, SiTech shall not, and specifically with respect to Sections4.2(a)(xii) and (xiii), the Members shall not permit SiTechto, do or permit any of the items listed below in thisSection4.2(a).  Notwithstanding the foregoingsentence, Mentor may waive any and all objections it may have with respect tosuch action under this Section 4.2(a), and such waiver and consent shall bedeemed for all purposes of such Section to have been given with respect to aproposed (and not then current) action described in this Section if, within 15days of receiving notice of a proposed action , Mentordoes not deliver to SiTech in writing an objection tosuch action and the basis therefore. 

(i)         incur any additional indebtedness, or guarantee anyindebtedness or obligation of any other party; provided, however, that SiTech may obtain a working capital line of credit of notmore than $100,000;

(ii)        issue, redeem or purchaseany of SiTech's Membership interests or otherownership interests in SiTech or securitiesconvertible into same or grant or issue any options (other than options topurchase additional SiTech Membership Interests whichmay be reserved for grant to employees and consultants of SiTech),warrants or rights to subscribe for SiTech MembershipInterests in SiTech or securities convertible intosame or commit to do any of the foregoing;

(iii) enter into any agreement to manufactureor sell any products or materials of any nature to any party other than theproducts and materials to be purchased by Mentor under the Supply Agreement;

(iv) enterinto, amend or terminate any material agreement or arrangement, other than inthe ordinary course of business;

(v) increase the compensation payable or to become payable to any of SiTech's officers, employees or agents (except in theordinary course of business), or adopt or amend any employee benefit plan orarrangement other than to adopt a option or bonus plan under which options topurchase beneficial interests in SiTech may bereserved for grant to employees and consultants of SiTech);

(vi) enter into any employment contract or agreement with any existingor prospective employee (other than to the extent such individual agrees to bebound by confidentiality provisions or by which he or she may receive orpurchase beneficial interests in SiTech), includingwithout limitation, the payment of or entering into obligations with respect toany severance benefits ("Severance Benefits");

(vii) pay any obligation or liability, fixedor contingent, other than in the ordinary course of business;

(viii) cancel, without full payment, anynote, loan or other obligation owing to SiTech;

(ix) acquire or dispose of any properties orassets used in the Business except **in**the ordinary course of business;

(x)        createor suffer to be imposed any mortgage, security interest, charge, liability,obligation, lien, claim or encumbrance on or against any of SiTech'sproperties or assets;

(xi)       engage in any business, activity or transaction outside theordinary course of the Business as proposed to be conducted as of the EffectiveDate;

(xii) make or adopt any change in the Articles of Organization orOperating Agreement of SiTech as in force and effecton the Effective Date (except to the extent of increasing the authorized SiTech Membership Interests for issuance to present NuSil or SiTech employees as ofthe date hereof, or in connection with issuances of beneficial interests in SiTech to employees); or

(xiii) take any action, or omit to take any action, within itscontrol, that would cause, and shall promptly notify Mentor in writing of anyevent or occurrence which causes, any of the representations and warranties setforth in Article III hereof, to the extent applicable to SiTechor such Members, to become untrue, incomplete or inaccurate in any materialrespect prior to or as of the Closing Date.

(b)       From the Effective Dateuntil the Closing Date, except as otherwise expressly permitted in thisAgreement, SiTech shall:

(i)         operatethe Texas Facility and manufacture its products in conformance with ISO-9002and with the GMPs, with all relevant United Statesfederal and state laws and regulations applicable to the products manufacturedby SiTech and with such other foreign regulatoryauthorities as requested by Mentor;

(ii)          maintainSiTech's insurance policies at the coverage levelsdescribed in Section 3.12 hereof, and not take any action to terminate ormodify such insurance policies;

(iii)        maintainSiTech's books and records consistent with SiTech's past practices and policies and in accordance withGAAP;

(iv)        maintain in goodworking condition, ordinary wear and tear excepted, and in compliance in allmaterial respects with all applicable laws and regulations, all fixed assetsowned, leased or operated, as the case may be, by SiTech;

(v)        (A) observe andperform, and remain in compliance with, SiTech'sobligations in agreements and contracts the breach or violation of which wouldhave, individually or in the aggregate, a Material Adverse Effect (as definedin Section 5.6 below) and (B) not enter into any agreements or contractsoutside the ordinary course of business or which would require payments by SiTech, for any single agreement or contract (or group orseries thereof, to the extent reasonable to be viewed as a single ongoingtransaction), over any period of twelve (12) months of more than (i) One Hundred Thousand Dollars ($100,000) with respect to inventory or raw materials purchases, or otherwise(ii) Fifty Thousand Dollars *($50,000);*provided, however, thatsuch dollar limits shall not apply with respect to the start-up costs of theTexas Facility and which start-up costs, to the extent conducted reasonably,shall be considered to be in the ordinary course of business for the purposesof this Section 4.2(b)(v); and provided, further, that notwithstanding theforegoing Section 4.2(b)(v)(B), Mentor may waive any and all objections it mayhave with respect to such contract or agreement under Section 4.2(b)(v)(B), andsuch waiver and consent shall be deemed for all purposes of such Section tohave been given with respect to a proposed (and not then current) contract or agreementif, within 15 days of receiving notice of a proposed contract or agreement,Mentor does not deliver to SiTech in writing anobjection to such contract or agreement and the basis therefor.

(vi) use its best efforts to maintain allPermits held by SiTech or under which it operates orconducts the Business in full force and effect.

4.3       Necessary Consents. Certificates and Films.

(a)        Prior to the Closing, SiTech, and specifically with respect to Sections 4.3(a)(i) and (iv), the Members, shall use their reasonable bestefforts to (i) take, or cause to be taken, allappropriation action, and do, or cause to be done, all things necessary, properor advisable under applicable law or otherwise to consummate and make effectivethe transactions contemplated as promptly as practicable, including withoutlimitation voting in favor of same, (ii) obtain from any governmentalauthorities any consents, licenses, permits, waivers, approvals, authorizationsor orders required to be obtained by SiTech or any ofSiTech's subsidiaries in connection with theauthorization, execution and delivery of this Agreement and the consummation ofthe transactions contemplated, (iii) use its best efforts to obtain such estoppel certificates from the landlord of the TexasFacility as required by Mentor (the "EstoppelCertificates"), (iv) make all necessary filings, and thereafter make anyother required submissions, with respect to this Agreement and the transactionscontemplated herein required under the Hart-Scott-RodinoAntitrust Improvements Act of 1976 (the "HSRAct") and the rules and regulations promulgated thereunder,and any related governmental request thereunder, ifapplicable, and any other applicable law; provided that SiTechand Mentor shall cooperate with each other in connection with the making of allsuch filings, including providing copies of all necessary documents to theother and its advisors prior to filing, and, if requested, accepting allreasonable additions, deletions or changes suggested in connection therewith.

(b)       Without limiting thegenerality of its undertakings pursuant to Section 4.3(a) above, SiTech shall (i) use itsreasonable best efforts to prevent the entry in a judicial or administrativeproceeding brought under any antitrust law by any governmental authority withjurisdiction over enforcement of any applicable antitrust laws or any otherparty of a preliminary injunction or other order that would make consummationof the transactions contemplated hereby in accordance with the terms of thisAgreement unlawful or would prevent or delay such consummation; and (ii) takepromptly, in the event that such an injunction or order has been issued in sucha proceeding, all steps necessary to prosecute an appeal of such injunction ororder; provided, however, that SiTech shall not berequired to undertake more than one such appeal.

            4.4                   Accessto Information.  SiTechshall give Mentor and its accountants, legal counsel and other representativesfull access, during normal business hours throughout the period commencing onthe date hereof and through the Closing Date, to all of the properties, books,contracts, commitments and nonprivileged recordsrelating to the Business, the Assets and the liabilities of SiTech,and will furnish Mentor, its accountants, legal counsel and otherrepresentatives during such period all such information concerning its affairsas Mentor may reasonably request, including but not limited to the annualdelivery of the Financial Statements or the Audited Financial Statements, asapplicable, and the quarterly delivery of the Interim Financial Statementspursuant to Section 3.4 above. Mentor shall also have the right to audit SiTech to ensure conformance by SiTechwith ISO-9002 and conformance with applicable regulatory requirements,including the GMPs, provided that such audits will bescheduled during normal business hours upon at least thirty (30) days priorwritten notice to SiTech. Any furnishing ofinformation pursuant hereto by Mentor shall not affect Mentor's right to relyon the representations, warranties and covenants made by SiTechand, to the extent applicable, the Members in this Agreement.

4.5*      *Certain Defaults: Litigation: ChangedCircumstances. SiTech will give prompt notice toMentor of:

(a)        any notice of defaultreceived by SiTech subsequent to the date of thisAgreement and through the Closing Date under any instrument or agreement towhich SiTech is a party or by which SciTech or theAssets are bound, which default could, if not -remedied, have a Material Adverse Effect (as definedin Section 5.6 below) or which would render incorrect any representation orwarranty made herein; - -

(b)        any suit, action, proceeding or investigationinstituted or threatened against or affecting SiTechsubsequent to the date of this Agreement and prior to the Closing which, ifadversely determined, could have a Material Adverse Effect (as defined inSection *5.6*below) or which would render incorrect any representation orwarranty made herein; and

(c)        anychange in circumstances or action resulting in a breach of any representationand warranty set forth in Section 3 above, including without any limitation anyactions in breach of Section 3.5 above.

4.6       Other Negotiations.Prior to the Closing, or such earlier date on which this Agreement isterminated in accordance with its terms, SiTech andthe Members will not, and SiTech and the Members willcause SiTech's officers, directors, employees, agentsand representatives not to, directly or indirectly, initiate discussions ornegotiate, or authorize any person or entity to discuss or negotiate with anyother, or entertain or consider any inquiries or proposals received from anyother person or entity, concerning the possible disposition of the Business orthe Assets, in whole or in part. l)during such time, SiTech and the Members will not furnish any informationconcerning SiTech to any person or entity other thanMentor for the purpose of, or with the intent of, permitting such person orentity to evaluate a possible acquisition of the Business or the Assets, inwhole or in part. SiTech and the Members will giveprompt notice to Mentor of any inquiries or proposals received by SiTech or the Members from any third party concerning thedisposition of the Business and the Assets.

4.7             Confidential Information.

(a)        Fromtime to time during the term hereof, one or more of the parties may acquireform one or more of the other parties hereto certain secret, confidential orproprietary information (whether or not reduced to writing and whether or not patentable or copyrightable) which is or in any manner maybe related to the Materials (as defined in the Supply Agreement) or thebusiness of another party hereto (collectively, "ProprietaryInformation"). Any party receiving Proprietary Information of anotherparty hereunder shall keep strictly secret and confidential and shall not,either during or after the term of this Agreement, without such other party'sprior written consent, disclose to any third party or use such ProprietaryInformation; provided, however, that such party may disclose such ProprietaryInformation to those of its employees who reasonably need to know suchProprietary Information in order to perform their duties under this Agreementor under the Supply Agreement. Each party shall use his or its best efforts tocompel any person or entity to whom or which such party discloses ProprietaryInformation hereunder to keep such Proprietary Information strictly secret andconfidential in accordance with the provisions of this Section 4.7.

(b)       The obligations of the parties underSection 4.7(a) above shall not apply to:

(i) Proprietary Information that isgenerally known to the public at the time of disclosure or subsequently becomesgenerally known to the public through no breach of Section 4.7(a) above by anyparty to this Agreement;

(ii) Proprietary Information that was in the receiving party'spossession prior to disclosure hereunder;

(iii) Proprietary Information that was obtained by the receiving partyin good faith from a third party lawfully possessing and having a right todisclose the same;

(iv) Proprietary Information that the receiving party is required bylaw or court order to disclose, provided that any party receiving any subpoenaor governmental, judicial or administrative request for any ProprietaryInformation of Mentor shall notify Mentor of the request immediately, and shallnot disclose such Proprietary Information absent Mentor's consent or a courtorder requiring such disclosure; or

(v)         ProprietaryInformation that the receiving party has affirmatively demonstrated to thedisclosing party's reasonable satisfaction prior to disclosure or use wasindependently developed by the receiving party without the aid, application,reference or use in any way to Proprietary Information received from thedisclosing party.

(c)       Within thirty (30) daysfollowing the termination or expiration of this Agreement or the request of a disclosing party hereto, theparties shall each return all Proprietary Information belonging to the otherparties and all copies thereof, and any other records containing such ProprietaryInformation, to the other parties, except that SiTechmay retain copies of such Proprietary Information to the extent necessary tomeet any continuing obligations it may have to Mentor under this Agreement.

(d)        The parties hereto acknowledge that anybreach or violation of provisions of Section 4.7(a) above will result inirreparable and continuing damage to the other parties for which there may beno adequate remedy at law, and the parties agree that in the event of any suchbreach or violation by any of them, the injured party shall be entitled to seekboth damages and injunctive relief.

(e)        The obligations of theparties under this Section 4.7 shall survive the Closing or termination of thisAgreement and shall continue in full force and effect in perpetuity.

(f)         SiTechshall require, prior to any person becoming a member of SiTech,that such person agree in writing to become subject to all the obligations ofthis Section 4.7 as if he, she or it were a party hereto.

4.8       [Intentionally Omitted]

4.9       Insurance. SiTech shall provide Mentor with a Certificate ofInsurance, within sixty (60) days of the Effective Date and annually thereafterduring the Option Term, verifying theinsurance policies described in Section 3.12 above. SiTechcovenants that anyinsurance proceeds attributable to a loss,which may be repaired, replaced or cured, will be used solely for the purposesof repairing, replacing or curing such loss.

4.10     Bankruptcy ofLicensors. In the event any grantor or licensor of Intellectual Property (a"Licensor") to SiTech becomes the subjectof a voluntary or involuntary bankruptcy proceeding, SiTechwill not consent to termination of any license, technology transfer or otheragreement of similar nature SiTech may have with suchLicensor.

**ARTICLE VCONDITIONS PRECEDENT TO OBLIGATIONS OF MENTOR**

** **The obligation of Mentor to consummate the transactions contemplatedby this Agreement is subject to the satisfaction, at or before the Closing, ofall the following conditions, unless waived in writing by Mentor:

5.1       Representations andWarranties True. All representations and warranties of SiTech and the Members in this Agreement and the Schedulesand Exhibits hereto, or in any written statement or certificate that shall bedelivered to Mentor by SiTech and the Members,respectively, under this Agreement, shall be true and correct on and as of theClosing Date as if made on the date thereof.

5.2       Covenants Performed.  SiTech and theMembers shall have performed, satisfied and compiled with all covenants, agreementsand conditions required by this Agreement to be performed, satisfied orcomplied with by SiTech and the Members on or beforethe Closing Date.

5.3       Certificate.  Mentor shall have received from SiTech a certificate, dated the Closing Date, certifying,in such detail as Mentor and its counsel may reasonably request, that theconditions specified in this Article V have been satisfied.

5.4*      *Opinion of Counsel for SiTech.Mentor shall have received an opinion from counsel for SiTechdated the Closing Date in a form reasonably acceptable to Mentor.

5.5*      *No Violations; No Actions. Consummation ofthe transactions contemplated by this Agreement shall not violate any order,decree or judgment of any court or governmental body having competent jurisdictionand no action or proceeding shall have been instituted or threatened by anyperson, entity or governmental agency which, in any such case, in the solejudgment of Mentor, has a reasonable probability of resulting in (i) the obtaining of material damages from Mentor; (ii) anorder, judgment or decree restraining, prohibiting or rendering unlawful theconsummation of the transactions contemplated by this Agreement; or (iii) otherrelief in connection therewith.

5.6*      *No Material Adverse Effect. During theperiod from the date of this Agreement to the Closing, there shall not haveoccurred an event or condition which has resultedor which reasonablymay be expected to result in a material adverse change in the businesscondition (financial or otherwise), operations, properties, assets, liabilitiesor prospects of the Business (a "Material Adverse Effect"), andMentor shall have received a certificate from SiTechdated the Closing Date to the foregoing effect. For purposes of this Agreement,"Material Adverse Effect," as defined above, to the extent it isquantifiable, shall mean an event which would require SiTechto make payments or otherwise incur liability of more than $50,000 for any oneitem or $100,000 in the aggregate over any period of twelve (12) months;provided, however, that notwithstanding the foregoing sentence, a MaterialAdverse Effect shall not include the specific act by SiTechof entering into any contract or other agreement that is expressly allowedunder Section 4.2(b)(v) (including by waiver or deemed waiver by Mentor) or anyoccurrence that would be a violation of Section 3.5(k) hereof but for the factthat Mentor waived (or is deemed to have waived) its objections to suchoccurrence under such Section.

5.7  *    *Authorizations.The managers, if any, and, to the extent required by law, the members of SiTech shall have approved this Agreement and thetransactions contemplated hereby.

5.8       Documents.Unless otherwise specified hereunder, all documents and instruments incident tothe transactions contemplated by this Agreement shall be in form and substancereasonably satisfactory to Mentor and its counsel, and Mentor shall havereceived all such counterpart originals or certified or other copies of suchdocuments as it reasonably may request.

5.9       Delivery of Documents. Mentorshall have received all of the following documents and other items to bedelivered by SiTech and, to the extent applicable,the Members before or at the Closing:

(a)        Documents.  The Bill of Sale, deeds, instruments ofassignment, other instruments of conveyance and transfer, the Escrow Agreementand all other documents to be delivered by SiTech andthe Members to Mentor at the Closing, in form and substance reasonablysatisfactory to Mentor.  

(b)        [Intentionally Omitted].

(c)       Resolutions. Resolutions and/orconsent of the managers, if any, and, to the extent required by law, themembers of SiTech authorizing the execution, deliveryand performance of this Agreement and the transactions contemplated hereby,certified by SiTech's Secretary as being true andcorrect and in full force and effect as of the Closing Date.

(d)       Certificates of Good Standing.Certificates of Good Standing (including tax) with respect to SiTech, issued by the Secretaries of State of the States ofCalifornia and Texas, dated within ten (10) days of the Closing Date.

(e)        Consents. Evidence that allconsents, approvals or authorizations of or notifications to any third parties(including governmental agencies), if any, required to sell the Assets and toconsummate the transactions contemplated hereby have been obtained by SiTech and the Members.

(f)        Opinion ofCounsel. The opinion of counsel for SiTechprovided in Section 5.4above.

(g)       Certificates. Certificate from SiTech, dated the Closing Date, containing the informationrequired pursuant to Sections *5.3*and *5.6*above.

(h)        EstoppelCertificates. The Estoppel Certificates, ifobtainable through SiTech's best efforts.

(i)         OtherDocuments. Such other documents and instruments as Mentor or its counselreasonably shall deem necessary to consummate the transactions contemplatedhereby.

5.10     Existing Liens. All outstandingliabilities, obligations, liens, claims and encumbrances against SiTech or any of the Assets as of the Closing Date shall bereleased at or prior to the Closing.

5.11     Due Diligence. Mentor and itscounsel shall have completed their due diligence investigation of SiTech and the Business on or before the Closing Date, andthe results of such due diligence investigation shall be satisfactory in allrespects to Mentor (including approval of all Due Diligence Informationprovided by SiTech and the Members to Mentor).

5.12     Schedule and Exhibits. SiTech and the Members shall have completed and attachedhereto all updated Schedules and Exhibits required by this Agreement withinfive (5) business days prior to the Closing Date, and all such Schedules andExhibits shall be acceptable to Mentor, in its sole discretion.

5.13     Required Consents.  All consents, approvals and waivers fromthird parties and governmental authorities necessary for consummation of thetransactions contemplated hereby and to the continued validity andeffectiveness of the Permits shall have been obtained without the imposition onMentor of any conditions, restrictions or obligations that are not acceptableto Mentor in its sole discretion.

5.14     HSR Act. All applicablerequirements under the HSR Act and the rules andregulations promulgated thereunder, if any, shallhave been met, including, without limitation, the expiration of all applicablewaiting periods thereunder, and neither theDepartment of Justice nor the Federal Trade Commission shall have raisedobjections to the transactions contemplated hereby.

5.15*     *BulkSales. SiTech shall have complied with all applicable bulk saleslaws, and shall have paid or made arrangements for the payment in full of allcreditors of SiTech on or prior to the Closing Dateon terms satisfactory to Mentor in its sole discretion.

5.16     Appraisals andSolvency Options. If requested by Mentor within thirty (30) days prior tothe Closing Date, SiTech shall have provided Mentorwith appraisals from one or more independent appraisers mutually acceptable to SiTech and Mentor confirming (i)that the royalties paid by SiTech to NuSil under the License and Technology Transfer Agreementconstitute fair value paid by SiTech for the rightsand benefits received thereunder, (ii) that theexercise price to be paid by Mentor on exercise of the Option constitutes fairvalue for the Assets, and (iii) that SiTech will notbe rendered insolvent by virtue of Mentor's purchase of the Assets hereunder.

5.17     Business Judgment ofMentor. Mentor shall have deemed on the Closing Date, in its sole andabsolute discretion, that completion of the transactions contemplated by thisAgreement are in the best interest of Mentor and its shareholders.

**ARTICLE VICONDITIONS PRECEDENT TO OBLIGATIONS OF SITECH**

The obligation of SiTech to consummate thetransactions contemplated by this Agreement is subject to the satisfaction, ator before the Closing, of all the following conditions, unless waived inwriting by SiTech:

6.1       Opinion of Counsel.Mentor shall have furnished to SiTech an opinion,dated the Closing Date, of Brobeck, Phleger & Harrison LLP,counsel for Mentor, in a form reasonably acceptable to SiTech.

6.2**      **No Violations; No Actions**.**Consummationof the transactions contemplated by this Agreement shall not violate any order,decree or judgment of any court or governmental body having competentjurisdiction and no action or proceeding shall have been instituted orthreatened by any person, entity or governmental agency which, in any suchcase, in the judgment of SiTech, has a reasonableprobability if resulting in (i) the obtaining ofmaterial damages from SiTech, (ii) an order, judgmentor decree restraining, prohibiting or rendering unlawful the consummation ofthe transactions contemplated by this Agreement, or (iii) other relief inconnection therewith.

6.3       Proceedings andDocuments. Unless otherwise specified hereunder, all documents andinstruments incident to the transactions contemplated by this Agreement shallbe in form and substance reasonably satisfactory to SiTechand its counsel, and SiTech shall have received allsuch counterpart originals or certified or other copies of such documents asthey reasonably may request.

6.4       Delivery ofDocuments. SiTech shall have received all of thefollowing documents and other items to be delivered by Mentor simultaneouslywith the deliveries of SiTech pursuant to Section *5.9*above:

(a)        Documents. The Assignment and Assumption Agreement and all other documents tobe delivered by Mentor to SiTech at the Closing, inform and substance reasonably satisfactory to SiTech.

(b)       Resolutions.Resolutions of the Board of Directors of Mentor authorizing the execution,delivery and performance of this Agreement and the transactions contemplatedhereby, certified by Mentor's Secretary as being true and correct and in fullforce and effect as of the Closing Date.

(c)        PaymentofthePurchase Price. The Purchase Price, subject to the Holdback,and any adjustments thereto provided for herein.

(d)       Opinion of Counsel.The BP&H Opinion.

(e)        OtherDocuments.Such other documents and instruments as SiTech or itscounsel reasonably shall deem necessary to consummate the transactionscontemplated hereby.

6.5*      *HSR Act.All applicable requirements under the HSR Act and therules and regulations promulgated thereunder, if any,shall have been met, including, without limitation, the expiration of allapplicable waiting periods thereunder, and neitherthe Department of Justice nor the Federal Trade Commission shall have raisedobjections to the transactions contemplated hereby.

**ARTICLE VIIOBLIGATIONS OF THE PARTIES AFTER CLOSING**

7.1       Indemnification by SiTech and the Members. SiTechand, solely with respect to and to the extent of the obligations of the Membersas expressly set forth in the Agreement, the Member, jointly and severally,shall indemnify and hold harmless Mentor and its officers, directors,employees, attorneys, representatives, successors and assigns in respect of anyand all claims, actions, suits or other proceedings and any and all losses,costs, expenses, liabilities, fines, penalties, interest and damages, whether tonot arising out of any claim, action suit or other proceeding, and includingreasonable attorneys' and accountants' fees and expenses and all otherreasonable costs and expenses of investigation, defense or settlement of claimsand amounts paid in settlement, (collectively, "Damages"), incurredby, imposed on or borne by Mentor arising out of, resulting from or in anymanner relating to:

(a)        thebreach of any of the representations or warranties made by SiTechand the Members in this Agreement;

(b)       thebreach or the failure of performance by SiTech or theMembers of any of the covenants that they are to perform hereunder;

(c)        the payment of anytaxes (including interest and penalties) of any kind or nature imposed, whetherbefore or after the Closing, by any government or subdivision thereof upon thebusiness, assets or employees of SiTech or otherwiseresulting from or relating to the respective businesses or operations of SiTech prior to the Closing or any of its properties orassets as they existed as of or any time prior to the Closing;

(d)       the existence prior tothe Closing of Hazardous Materials upon, about or beneath any real propertyowned, leased or operated by SiTech on -or before theClosing or migrating or threatening to migrate from such real property, or theexistence of a violation of Environmental Law pertaining to such real property,regardless of whether the existence of such Hazardous Materials or theviolation of Environmental Law arose prior to the present ownership oroperation of such real property by SiTech or wasdisclosed to Mentor by SiTech or the Members;

(e)        alldebts, obligations and liabilities of SiTech arisingout of, resulting from or in any manner relating to the Severance Benefits, ifany;

(f)        the death of or injuryto any person or damage to property that occurred prior to the Closing andarose out of or in connection with the business or operations of SiTech (whether asserted, discovered or established beforeor after the Closing), and whether or not it is the subject matter of a claimor action disclosed in the Disclosure Schedule to this Agreement;

(g)        all employment-relatedclaims and causes of action, including, without limitation, those referenced inthe Disclosure Schedule, and all other claims and causes of action that havearisen or arise out of or in connection with the operations of the businessesof SiTech conducted prior to the Closing (whetherasserted, discovered or established before or after the Closing); and

(h)        thefailure of the transactions contemplated in this Agreement to Close as a resultof SiTech's failure to fulfill its materialobligations under this Agreement that would materially affect the value of SiTech to Mentor.

Damages recoverablehereunder shall exclude any payment amount which Mentor shall have receivedunder any insurance policy with respect thereto.  Notwithstanding anything to the contrary inthis Agreement, any liability of the Members under this Section 7.1 is expresslylimited to the extent of their ownership interests in SiTechand any funds received in violation of this Agreement.

7.2       Indemnification byMentor. Mentor shall indemnify and hold harmless the Members, SiTech and SiTech's officers,directors, employees, attorneys, representatives, successors and assigns inrespect of any and all Damages incurred by, imposed on or borne by SiTech andthe Members arising out of, resulting from or in any manner relating to: 

(a)        thebreach of any of the representations or warranties made by Mentor in thisAgreement; or

(b)       thebreach or the failure of performance by Mentor of any of the covenants that itis to perform hereunder.

Damages recoverable hereunder shall exclude any payment amount which SiTech-orthe Members shall have received under any insurance policy with respectthereto:

7.3       IndemnificationProcedureforClaims. Whenever any claim shall arise for indemnificationhereunder, the party entitled to indemnification (the "indemnifiedparty") shall promptly notify the other party or parties (collectively,the "indemnifying party") of the claim and, when known, the factsconstituting the basis for such claim; provided, that the indemnified party'sfailure to give such notice shall not affect any rights or remedies of anindemnified party hereunder with respect to indemnification for Damages exceptto the extent that the indemnifying party is materially prejudiced thereby. Inthe event of any claim for indemnification hereunder resulting from or inconnection with any claim or legal proceedings by a third party, the notice tothe indemnifying party shall specify, if known, theamount or an estimate of the amount of the liability arising therefrom. The indemnifying party shall not settle orcompromise any claim by a third party for which it is entitled toindemnification hereunder, without the prior written consent of the indemnifiedparty (which shall not be unreasonably withheld) unless suit shall have beeninstituted solely against the indemnifying party.

7.4       Defense byIndemnifying Party. In connection with any claim giving rise to indemnityhereunder or resulting from or arising out of any claim or legal proceeding bya person who is not a party to this Agreement, the indemnifying party at itssole cost and expense may, upon written notice to the indemnified party, assumethe defense of any such claim or legal proceeding if it acknowledges to theindemnified party in writing its obligations to indemnify the indemnified partywith respect to all elements of such claim, and thereafter diligently conductsthe defense thereof with counsel reasonably acceptable to the indemnifiedparty. The indemnified party shall be entitled to participate in (but notcontrol) the defense of any such action, with its counsel and at is ownexpense.  If the indemnifying party doesnot assume or fails to conduct in a diligent manner the defense of any suchclaim or litigation resulting therefrom, (i) the indemnified party may defend against such claim orlitigation, in such manner as it may deem appropriate, including, withoutlimitation, settling such claim or litigation, after giving notice of the sameto the indemnifying party, on such terms as the indemnified party may deemappropriate, and (ii) the indemnifying party shall be entitled to participatein (but not control) the defense of such action, with its counsel and it itsown expense.  If the indemnifying partythereafter seeks to question the manner in which the indemnified party defendedsuch third party claim or the amount or nature of any such settlement, theindemnifying party shall have the burden to prove by a preponderance of theevidence that the indemnified party did not defend or settle such third partyclaim in a reasonably prudent manner. Each party agrees to cooperate fully withthe other, such cooperation to include, without limitation, attendance atdepositions and the provision of relevant documents as may be reasonablyrequested by the indemnifying party; provided, that the indemnifying party willhold the indemnified party harmless from all of its expenses, includingreasonable attorneys' fees, incurred in connection with such cooperation by theindemnified party.

7.5       Manner ofIndemnification. All indemnification hereunder shall be effected by paymentof cash or delivery of a certified or official bank check to the indemnified party, or on behalf of such indemnified party to such thirdparty as the indemnified party may direct, and where Mentor is the indemnifiedparty, at Mentor's option, by payment from the Holdback.

7.6       Limitations onIndemnification Notwithstanding any provision of this Agreement to thecontrary, SiTech and the Members on the one hand, andMentor on the other, shall (i) have no obligation toindemnify any indemnified party entitled to indemnity under this Article VIIunless and until the aggregate claims for indemnification against suchindemnifying party exceed $50,000 (the "Threshold"), in which eventthe indemnified party shall be entitled to recover from the indemnifying partythe full cumulative amount thereof and (ii) the aggregate liability of SiTech and the Members under Section 7.1 shall in no eventexceed the Purchase Price; provided, that notwithstanding the foregoing theThreshold shall not apply with respect to any of the matters set forth inSections 7.1(c), 7.1(d), 7.1(e) or 7.1(f) or any breach of the representationsset forth in Section 3.1 above. Notwithstanding any provisionof this. Agreement to the contrary, the Members shall not be obligatedto indemnify Mentor pursuant to this Article VII with respect to covenants,representations, warranties or other agreements made by SiTechherein, and shall solely be liable under this Article VII with respect to andto the extent of the obligations of the Members as are expressly set forth inthis Agreement.

7.7       Survival ofRepresentations and Warranties. All representations and warranties made bythe parties herein or in any instrument or document furnished in connectionherewith shall survive the Closing and (a) the representations and warrantiesset forth in Sections 3.1 and 3.2 will continue in full force and effect inperpetuity, (b) the representations and warranties set forth in Sections 3.9,3.10 and 3.14 will survive until the expiration of the respective statute oflimitations with respect to such matters and (c) all other representations andwarranties set forth herein or in any instrument or document furnished inconnection herewith will expire onthe four (4) year anniversary of theClosing Date. No****claim or action for indemnity pursuant to Sections 7.1or 7.2 hereof for breach of any representation or warranty shall be asserted ormaintained by any party hereto after the expiration of such representation orwarranty pursuant to Section 7.7 except for claims made in writing prior tosuch expiration and actions (whether instituted before or after suchexpiration) based on any claim made in writing prior to such expiration.  Each party hereto may rely on therepresentations and warranties made by the other parties hereto notwithstandingany investigation of the facts constituting the basis of the representationsand warranties of any party by any other party hereto.

7.8       Payment of Creditors. SiTech will cause SiTechto, pay all debts and obligations of SiTechin existence on the Closing Date in full on or before the due date thereof.

**ARTICLE VIIITERMINATION**

8.1       Termination. This Agreement may beterminated and the transactions contemplated herein may be abandoned at anytime prior to the Closing:

(a)       by mutualwritten consent of Mentor and SiTech;

(b)       by Mentor or SiTech if the Closing shall not have occurred on or beforethe seven (7) year anniversary of this Agreement; provided (i)that the right to terminate this Agreement under this Section 8.1(b) shall notbe available to any party whose failure~ to fulfillany of its obligations under this Agreement has been the cause of, or resultedin, the failure of the Closing to occur on or before such date; (ii) that if arequest for additional information is received from a governmental authoritypursuant to the HSR Act, such Closing shall beextended to the 90th day following the acknowledgement by such governmentalauthority that the parties have complied with such request, provided that inthe event any of the parties litigates the order or injunction of agovernmental authority challenging the transactions contemplated hereby onantitrust grounds through an appeal, such Closing will be extended through thecompletion of such appeal and (iii) that in the event SiTechshall have failed to meet one of the Milestones set forth on Exhibit Bfor twelve (12) months or more, this Agreement shall be automatically renewedfor an additional twelve (12) month period unless Mentor gives written noticeof its intention to terminate the Agreement; and

(c)       byMentor at any time upon thirty (30) days' prior written notice to SiTech.

8.2       EffectofTermination. In the event of termination as provided above, thisAgreement shall forthwith become of no further force or effect and, except asprovided in Section 7.1 above, all parties hereto shall bear their own costsassociated with this Agreement and the transactions contemplated hereby;provided, that Sections 4.7, 9.3, *9.5,*9.11 and 9.12 hereof shallsurvive such termination and continue in fullforce and effect, and such termination ~hal1 not relieve any person of liabilityfor breach of or interference with this Agreement.

**ARTICLE IXGENERAL PROVISIONS**

9.1       Further Assurances.      At the request of any of the partieshereto, and without further consideration, the other parties agree to executesuch documents and instruments and to do such further acts as may be necessaryor desirable to effectuate the transactions contemplated hereby.

9.2       No Broker or Finder.Each of the parties represents and warrants that he or it has not dealt withany broker or finder in connection with any of the transactions contemplated bythis Agreement, and, insofar as such party knows, no broker or other person isentitled to any conversion or finder's fee, in connection with the transactionscontemplated hereby. SiTech and the Members, on theone hand, and Mentor, on the other, further agree to indemnify and holdharmless the other against any loss, liability, damage, cost, claim or expenseincurred by reason of any brokerage commission or finder's fee alleged to bepayable because of any act, omission or statement of the indemnifying party.

9.3       EachPartytoBearOwn Costs. Each of the parties shall pay all costsand expenses incurred or to be incurred by such party in negotiating andpreparing this Agreement and the Supply Agreement, and in closing and carryingout the transactions contemplated by this Agreement and the Supply Agreement.

9.4       Headings. Thesubject headings of the Articles and Sections of this Agreement are includedfor purposes of convenience only, and shall not affect the construction orinterpretation of any of its provisions.

9.5       Entire. Agreement:Waivers. This Agreement (and the Exhibits and Schedules hereto), the SupplyAgreement and the License and Technology Transfer Agreement (and the Exhibitsand Schedules thereto) constitute the entire agreement among the partiespertaining to the subject matter hereof. No supplement, modification oramendment of this Agreement shall be binding unless executed in writing by allparties hereto. No waiver of any of the provisions of this Agreement shall bedeemed, or shall constitute, a waiver of any other provision, whether or notsimilar, nor shall any waiver constitute a continuing waiver. No waiver shallbe binding unless executed in writing by the party making the waiver.

9.6       Third Parties.Nothing in this Agreement, whether express or implied, is intended to conferany rights or remedies under or by reason of this Agreement on any personsother than the parties to it and their respective successors and assigns, noris anything in this Agreement intended to relieve or discharge the obligationor liability of any third person to any party to this Agreement, nor shall anyprovision give any third persons any right of subrogation or action overagainst any party to this Agreement.

9.7       Successors andAssi2ns. This Agreement shall be binding on, and shall inure to the benefitof, the parties to it and their respective heirs, legal representatives,successors and assigns. Neither this Agreement nor any right, interest orobligation hereunder may be assigned by any party hereto without the priorwritten consent of the other parties hereto, and any attempt to do so will bevoid, except that any party's rights to indemnification under Article 7may be freely assigned to any of its Affiliates.

9.8       Consent to TransferMembership Interests; Obligations of Transferees and Assigns.  During the term of this Agreement, SiTech will not sell or transfer any of its assets otherthan in the ordinary course of business, and the Members will not voluntarilyassign or transfer any interest in their SiTechMembership Interests without (i) first obtaining theprior written consent of Mentor (which consent shall not be unreasonablywithheld) and (ii) complying with California law. Additionally, any transfereeor assignee to whom SiTech Membership Interests aretransferred or assigned by any Member during the Option Term, whethervoluntarily or by operation of law, shall be subject to all of the obligationsof a Member under this Agreement to the same extent as if such transferee orassignee shall have agreed in writing to be subject to such obligations inconnection with such transfer or assignment, and SiTechand the Members will cause such transfer or assignee, as a condition to theeffectiveness of such transfer or assignment, to become a party to thisAgreement and subject to all of the obligations of a Member hereunder.

9.9       Third PartyPurchasers. All third party purchasers of the ownership interests in SiTech including SiTechMembership Interests shall be subjected to all the obligations and liabilitiesof the member or Member under this Agreement from whom such third partypurchaser purchased such SiTech Membership Interests,including without limitation all representations, warranties, covenants andindemnification obligations of such member or Member.

9.10     Notices. Allnotices, requests and other communications -hereunder must be in writing andwill be deemed to have been duly given only if delivered personally againstwritten receipt or by facsimile transmission with answer back confirmation ormailed (postage prepaid by certified or registered mail, return receiptrequested) or by overnight courier to the parties at the following addresses orfacsimile numbers:

To Mentor:Chief Legal CounselMentor Corporation5425 Hollister AvenueSanta Barbara, California 93111Facsimile No. (805) 681-6006Attn:    Douglas H. Altschuler,Esq.

witha copy to**:**Brobeck, Phieger& Harrison LLP550 South Hope Street, 21st FloorLos Angeles, CA 90071-2604Facsimile No.: (213) *745-3345*Attn:    V.Joseph Stubbs, Esq.

To SiTech:Alchemy Engineering, LLC d/b/a SiTech, LLCc/o Mr. Richard Compton P.O. Box 1018Carpentaria, California 93014

To the Members:Mr. Richard ComptonMr. Del PetraitisP.O. Box 1018Carpentaria, California 93014

All such notices, requests and other communications will (i) if delivered personally to the address as provided inthis Section 9.10, be deemed given upon delivery, (ii) if delivered by facsimiletransmission to the facsimile number as provided in this Section 9.10, bedeemed given upon receipt, and (iii) if delivered by mail in the mannerdescribed above to the address as provided in this Section 9.10, be deemedgiven five (5) days after deposit in the United States mail (in each caseregardless of whether such notice, request or other communication is receivedby any other person to whom a copy of such notice, request or othercommunication is to be delivered pursuant to this Section 9.10). Any party fromtime to time may change his or its address, facsimile number or otherinformation for the purpose of notices to that party by giving noticespecifying such change to the other parties hereto.

9.11     Governin2 Law.This Agreement shall be governed by and construed in accordance with the lawsof the State of California applicable to contracts executed and performed insuch State, without giving effect to conflicts of laws principles.

9.12      Consentto Jurisdiction and Forum Selection. The parties agree that allactions or proceedings arising in connection with this Agreement shall be triedand litigated exclusively in the state and federal courts located in the Countyof Los Angeles, State of California. Such choice of venue is intended by theparties to be mandatory and not permissive in nature, thereby precluding thepossibility of litigation between the parties with respect to or arising out ofthis Agreement in any jurisdiction other than that specified in this Section9.12. Each party hereby waives any right it may have to assert the doctrine of forumnon convenes or similar doctrine or to object to venue with respect to anyproceeding brought in accordance with this Section 9.12, and stipulates thatthe state and federal courts located in the County of Los Angeles, State ofCalifornia shall have in personal jurisdiction and venue over each of them forthe purposes of litigating any dispute, controversy or proceeding arising outof or related to this Agreement. Each party hereby authorizes and acceptsservice of process sufficient for personal jurisdiction in any action againstit as contemplated by this Section 9.12 by registered or certified mail, returnreceipt requested, postage prepaid, to its address for the giving of notices asset forth in this Agreement.. Any final judgmentrendered against a party in any action or proceeding shall be conclusive as tothe subject of such final judgment and may be enforced in other jurisdictionsin any manner provided by law.

9.13     Counterparts.This Agreement may be executed in two (2) or more counterparts, each of whichshall be deemed an original but all of which shall constitute one and the sameinstrument.

9.14     Severability. All provisions contained herein are severable and in the event that any of them shall be heldto be to any extent invalid or otherwise unenforceable by any court ofcompetent jurisdiction, such provision shall be construed as if it were writtenso as to effectuate to the greatest possible extent the parties' expressedintent; and in every case the remainder of this Agreement shall not be affectedthereby and shall remain valid and enforceable, as if such affected provisionwere not contained herein.

9.15     Publicity. Theparties shall cooperate with each other in the development and distribution ofall news releases and other public disclosures relating to the transactionscontemplated hereby. None of the parties shall issue or make, or cause to haveissued or made, any press release or announcement concerning the transactionscontemplated hereby without the advance approval in writing of the form andsubstance thereof by the other parties, unless otherwise required by applicablelaw.

9.16     Attorneys' Fees.  If any action at law or in equity isnecessary to enforce or interpret the terms of this agreement, the prevailingparty will be entitled to reasonable attorneys' fees, costs and necessarydisbursements in addition to any other relief to which such party may beentitled.

IN WITNESSWHEREOF, the parties hereto have executed this Option and Asset Purchase Agreement as of the date first above written.

**MENTORCORPORATION **

By: /S/GARYE. MISTLINName:  Gary E. MistlinIts: VicePresident of Finance

"Mentor"

**ALCHEMYENGINEERING, LLC*d/b/a*****SITECH, LLC**

By:  /S/RICHARD A. COMPTONName:  Richard A. ComptonIts:  President

"SiTech"

/S/RICHARDA. COMPTON

/S/D.J. PETRAITIS

"Members"

** EXHIBIT AASSIGNMENT AND ASSUMPTION AGREEMENT**

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this"Assignment Agreement") is entered into in connection with thatcertain Option and Asset Purchase Agreement, dated as of September __, 1997 (the"Agreement"), by and among MENTOR CORPORATION, a Minnesotacorporation, or its assignee (collectively. "Mentor"), ALCHEMYENGINEERING, LLC, a California limited liabilitycompany d/b/a SiTech, LLC("SiTech"), and Richard A. Compton and DelJ. Petraitis, the individual members of SiTech (such individuals, the "Members"),pursuant to which Mentor has been granted, and has exercised, an option to buysubstantially all of the assets of SiTech and assumecertain liabilities of SiTech. All capitalized termsused herein and not otherwise defined shall have the meanings ascribed to themdirectly or by reference in the Agreement.

WHEREAS, the execution and delivery of thisAssignment Agreement is a condition precedent to the closing of the Agreement;

NOW, THEREFORE, for good and valuable consideration,the receipt and sufficiency of which is hereby acknowledged, SiTech and Mentor agree as follows:

1.         Liabilities.Subject to the terms and conditions of the Agreement:

(a)        Assumed Liabilities.Subject to Section 1(b) below, Mentor does hereby agree to assume, pay,fulfill, perform or otherwise discharge SiTech'sliability for (i) post-Closing obligations under thefacility and equipment leases of SiTech as of thedate hereof on terms acceptable to Mentor and the lessorsthereunder; (ii) contracts and accounts payablerelating to the purchase of inventory, sale of products and similar agreementsthat may arise prior to the date hereof in the ordinary course of operations ofthe Business in accordance with SiTech's priorpractice; (iii) SiTech's bank line of credit or otherindebtedness for borrowed money; (iv) all sales and transfer taxes and fees, ifany, generated by the exercise by Mentor of its Option under the Agreement andits purchase of the Assets thereby and (v) any accrued but unpaid obligationsof SiTech to make distributions under Section 1.6(a)of the Agreement.

(b)       ExcludedLiabilities. Except as expressly set forth in Section 1(a) above, Mentorshall not and does not hereby assume, pay, perform, defend or discharge any, and SiTechdoes and shall hereby solelyretain, pay, perform, defend anddischarge, all of SiTech's liabilitiesand obligations of any and every kindwhatsoever, whether disclosed, undisclosed, direct, indirect, absolute,contingent, secured, unsecured, accrued or otherwise, whether known or unknown,including but not limited to: (i) [IntentionallyOmitted]; (ii) specifically excluding the tax obligations described in Section1 (a)(iv) above, all income, withholding, or other taxes or fees resulting fromthe transfer of the Assets and Business or otherwise; (iii) any obligations orliabilities of SiTech to its employees, including butnot limited to accrued but unpaid payroll, accrued obligations or liabilities underany employment or consulting agreements, employee's beneficial interests oroptions to purchase beneficial interests in SiTech,employee benefit plans or pension, profit-sharing or retirement plans orvacation arrangements; (iv) any obligations or liabilities under theConsolidated Omnibus Budget Reconciliation Act of 1985, as amended("COBRA"); (v) any liabilities or expenses of SiTech,including brokers', attorneys' and other professionals' fees incurred innegotiating, executing and completing SiTech'sobligations under the Agreement: (vi) any obligations or liabilities relatingto any products alleged to have been manufactured, or sold by SiTech and alleged to have been defective, improperlydesigned or manufactured or improperly labeled; and (vii) any obligations orliabilities arising under any Environmental Law (as defined in Section 3.15 ofthe Agreement) or any other law (collectively, the "ExcludedLiabilities").

2.         No Impact onAgreement. Except as may be expressly provided herein,the execution of this Assignment Agreement is intended to implement theprovisions of the Agreement without in any manner altering or amending theprovisions thereof.

3.         Further Assurances.SiTech and Mentor further covenant and agree withsuch other party hereto that it will, from time to time, at the reasonablerequest of  such other party, execute and deliver or cause to be executed anddelivered, all such further assignments, assumptions, and other instruments oftransfer and agreements as may be reasonably required by such other party tomore effectively assign to Mentor the liabilities assumed hereby and otherwiseeffect the purposes hereof.

4.         Successors and Assigns.~This Assignment Agreement shall be binding on, and shall inure to the benefitof, the parties to it and their respective heirs, legal representatives,successors and assigns.

*5.         *Counterparts.This Assignment Agreement may be executed in two (2) or more counterparts, eachof which shall be deemed an original but all of which shall constitute one andthe same instrument.

6.         Governing Law. This AssignmentAgreement shall be governed by and construed in accordance with the laws of theState of California applicable to contracts executed and performed in suchState, without giving effect to conflicts of laws principles.

IN WITNESSWHEREOF, the parties hereto have executed and delivered this instrument as ofthe _____ day of __________.

**MENTORCORPORATION**By: /S/GARYE. MISTLINName:  Gary E. MistlinIts: VicePresident of Finance

"Mentor"

**ALCHEMYENGINEERING, LLCd/b/aSITECH, LLC**

By:  /S/RICHARD A. COMPTONName:  Richard A. ComptonIts:  President

"SiTech"

**EXHIBIT BMILESTONES AND PURCHASE PRICE ADJUSTMENT**

[*]redacted

**EXHIBIT CALLOCATION OF PURCHASE PRICE**

**EXHIBIT DBILL OF SALE**

THIS BILL OF SALE (this "Bill of Sale") isentered into in connection with that certain Option and Asset PurchaseAgreement, dated as of September __,1997 (the "Agreement"), by and among MENTOR CORPORATION, aMinnesota corporation, or its assignee (collectively, "Mentor"),ALCHEMY ENGINEERING, LLC, a California limitedliability company d/b/a SiTech, LLC("SiTech"), and Richard A. Compton and DelJ. Petraitis, the individual members of SiTech (such individuals, the "Members"),pursuant to which Mentor has been granted, and has exercised, an option to buysubstantially all of the assets of SiTech. Allcapitalized terms used herein and not otherwise defined shall have the meaningsascribed to them directly or by reference in the Agreement.

WHEREAS, the execution and delivery of this Bill ofSale is a condition precedent to the closing of the Agreement;

NOW, THEREFORE, for good and valuable consideration,the receipt and sufficiency of which is hereby acknowledged, SiTech and Mentor agree as follows:

1.         Sale of Assets. Subject to theterms and conditions set forth in the Agreement, SiTechhereby sells and transfers to Mentor and Mentor hereby purchases, as a goingconcern, all of the right, title and interest in and to all of the tangible andintangible assets owned by SiTech or to which it isentitled and belonging to or used or intended to be used in the Business, ofevery kind and description and wherever located (collectively, the"Assets"), as of and with effect from the date hereof, upon the termsand conditions set forth in the Agreement. SiTechhereby represents and warrants that the Assets are conveyed free and clear ofall liabilities, obligations, liens, claims and encumbrances, except only thoseliabilities and obligations that are to be assumed by Mentor as expresslyprovided in Section 1.4 of the Agreement. From and after the date hereof, SiTech will have no further right to use,market or otherwise transfer the Assets.

2.          TheAssets. The Assets sold and purchased hereunder, include, but shall not belimited to:

                                     (i)                   all cash balances of SiTech;                                    (ii)                   all of the accountsreceivable of SiTech;

                                   (iii)                   all inventories of SiTech, including without limitation all raw materials,work in progress, finished goods (including inventories of finished products heldfor packaging and/or shipping and all types of inventories which are in transitor being held by third parties) and all production, shipping and packagingsupplies;

                                   (iv)                   allprepaid expenses, including deposits and credits of SiTech;

(v)all fixed assets of SiTech,including all machinery, equipment, tools, handling equipment and accessoriesand supplies;

                                    (vi)                   all office furniture andfurnishings, equipment and

supplies of SiTech;

(vii)                  allof SiTech 's right, title and interest as tenant inand to leases and interests in real property (the "Real Property"),together with all of SiTech's right, title andinterest in and to all easements, rights and appurtenances thereto;

(viii)                 allof SiTech's right, title and interest in and to allplants, buildings, structures, erections, improvements and fixtures located onor forming part of the Real Property;

(ix)                   allof SiTech's right, title and interest in, to andunder all domestic and foreign patents, patent applications, patent licenses,assignable soft*are licenses, assignable know-how licenses and technologytransfer agreements, trade names, trademarks, brand names, logos, copyrights, unpatented inventions, discoveries, conceptions, reductionsto practice, service marks, trademark and service mark registrations andapplications, including without limitation that certain License and TechnologyTransfer Agreement (the "License and Technology Transfer Agreement")between SiTech and NuSilTechnology ("NuSil");

(x)                   allof SiTech's right, title and interest in and to trade secrets, know-how (including, withoutlimitation, proprietary know-how and use and application know-how)manufacturing, engineering and other drawings, technology, technicalinformation, engineering data, design and engineering specifications, formulae,processes, blueprints, sketches, schematics, flow sheets, flow diagrams,magnetic media such as audio tapes, computer disks, micromediasuch as microfilm and microfiche, promotional literature and similar data (allrights referred to in 2(ix) and 2(x) together referred to as the "Intellectual Property");

(xi)                   allof the Business's existing books, general, financial, tax and personnelrecords, correspondence and other documents, records and files, and all datasystems and customer information to enable Mentor to continue the design,manufacture and sale of the Business's products and services;

(xii)                  thefull benefit of all leases of, and conditional sales contracts and title retentionagreements relating to, machinery and equipment of which SiTechis lessee;

(xiii)                 thefull benefit of all contracts or commitments to which SiTechis entitled, including without limiting the generality of the foregoing, 

                        (A)        all unfilledorders received by SiTech; and

7.                     GoverningLaw. This Bill of Sale shall be governed by and construed in accordancewith the laws of the State of California applicable to contracts executed andperformed in such State, without giving effect to conflicts of laws principles.

(B)        all forward commitments to SiTech for fixed assets, subleases, services, inventory,supplies or materials entered into in the usual and ordinary course of theBusiness, whether or not there are any written contracts with respect thereto;

(xiv)                 the full benefit of all licenses, and all registrations andpermits of SiTech pertaining to environmental, healthand safety matters, and all other assignable registrations and permits;

(xv)                  the goodwill of SiTech;

(xvi)                 all computer aided design and other product developmentequipment of SiTech; and

(xvii)                all claims, causes of action,rights of recovery, refunds and rights of set-off of any kind of SiTech, except insofar as necessary to offset a claimagainst SiTech but for which SiTechdoes not recover money. - - -

(xviii) allinsurance proceeds and the full benefit of all insurance policies of SiTech, including without limitation those described inSection 3.12 hereof.

3.         ExcludedAssets. Notwithstanding the provisions of Section 2 above to the contrary,the Assets shall not include:

                                    (i)                    SiTech's minute book, membership or other ownership

ledger and records and tax recordsnot necessary for Mentor to continue the Business; and

(ii)                    assets related to employee benefit plans which are notassumed by Mentor.

4.         NoImpact on Agreement. Except as may be expressly providedherein, the execution of this Bill of Sale is intended to implement theprovisions of the Agreement without in any manner altering or amending theprovisions thereof.

*5.        *Further Assurances. SiTech further covenantsand agrees with Mentor that SiTechwill, from timeto time, at the reasonablerequest ofMentor, execute and deliver or cause to be executed and delivered, allsuch further bills of sale, assignments, limited powers or attorney, and otherinstruments of transfer and agreements as may be reasonably required by Mentorto more effectively vest or perfect title in Mentor to the Assets herebyconveyed or intended to be conveyed.

6.         Successorsand Assigns.  This Bill of Sale shallbe binding on, and shall inure to the benefit of, SiTechand Mentor and their respective heirs, legal representatives, successors andassigns.

IN WITNESS WHEREOF, Mentor and SiTech have executed and delivered this instrument as ofthe _________day of__________.

**MENTOR CORPORATION**By: /S/GARYE. MISTLINName:  Gary E. MistlinIts: VicePresident of Finance

"Mentor"

**ALCHEMYENGINEERING, LLCd/b/aSITECH, LLC**By:  /S/RICHARD A. COMPTONName:  Richard A. ComptonIts:  President

"SiTech"

**EXHIBIT EDISCLOSURE SCHEDULE**

** **3.2*      *Capitalization. Themembers of SiTech and their respective interests areas set forth below:

            Richard A. Compton                           66.6 %            Del J. Petraitis                                     33.4 %

Capitalization of SiTechhas not yet been completed. SiTech has reserved theright to issue additional membership interests and this schedule will beamended to reflect the issuance of such interests, the issuance of anynon-membership interests, and any loans or other commitments of funding whichshall be deemed necessary for SiTech to carry out itsbusiness purposes.

3.6       Properties.3.8       Indebtedness.

3.9       Litigation.

3.11     Employeesand ServiceProviders.

3.13     ContractsandPermits.

SiTech has entered into a Licenseand Technology Transfer Agreement with NuSilTechnology dated January 7, 1997 in which SiTech hasacquired a license to certain technology as described therein to enable SiTech to produce certain silicone materials specificallyset forth on Exhibit A to said Agreement in return for good and valuable considerationas described therein.