Exhibit
10.1


[*Confidential
treatment has been requested as to certain portions of this document. Each such
portion, which has been omitted herein and replaced with a series of three
asterisks in brackets [***], has been filed separately with the Securities and
Exchange Commission.]


EXECUTION VERSION


	
  STOCK PURCHASE
  AGREEMENT

  
	
   

  
	
  among

  
	
   

  
	
   

  
	
  CARDIOTECH
  INTERNATIONAL, INC.

  
	
   

  
	
  and

  
	
   

  
	
   

  
	
  MEDOS
  MEDIZINTECHNIK AG

  
	
   

  
	
   

  
	
  Effective as of
  June 30, 2007

  
	
   

  
	
   

  
	
  Entered into on
  July 3, 2007

  



 



 1















TABLE
OF CONTENTS


	
  1.

  	
  DEFINITIONS

  	
  5

  
	
   

  	
   

  	
   

  
	
  2.

  	
  SALE AND TRANSFER OF SHARES; CLOSING

  	
  14

  
	
   

  	
   

  	
   

  
	
  2.1.

  	
  Shares

  	
  14

  
	
  2.2.

  	
  Purchase Price

  	
  14

  
	
  2.3.

  	
  Closing

  	
  14

  
	
  2.4.

  	
  Closing
  Obligations

  	
  15

  
	
  2.5.

  	
  Purchase Price
  Adjustment

  	
  15

  
	
  2.6.

  	
  Determination
  Respecting Financial Matters

  	
  16

  
	
  2.7.

  	
  Escrow

  	
  16

  
	
   

  	
   

  	
   

  
	
  3.

  	
  REPRESENTATIONS AND WARRANTIES OF SELLER AND GISH

  	
  17

  
	
   

  	
   

  	
   

  
	
  3.1.

  	
  Organization and
  Good Standing

  	
  17

  
	
  3.2.

  	
  Authority; No
  Conflict

  	
  17

  
	
  3.3.

  	
  Capitalization

  	
  18

  
	
  3.4.

  	
  Financial
  Statements

  	
  19

  
	
  3.5.

  	
  Books And Records

  	
  19

  
	
  3.6.

  	
  Title to
  Properties; Encumbrances

  	
  19

  
	
  3.7.

  	
  Condition and
  Sufficiency of Assets

  	
  20

  
	
  3.8.

  	
  Accounts
  Receivable

  	
  20

  
	
  3.9.

  	
  Inventory

  	
  21

  
	
  3.10.

  	
  Taxes

  	
  21

  
	
  3.11.

  	
  No Material
  Adverse Change

  	
  24

  
	
  3.12.

  	
  Labor and
  Employment Matters

  	
  24

  
	
  3.13.

  	
  Compliance with
  Legal Requirements; Governmental Authorizations

  	
  26

  
	
  3.14.

  	
  Legal
  Proceedings; Orders

  	
  29

  
	
  3.15.

  	
  Products
  Liability

  	
  30

  
	
  3.16.

  	
  Absence of
  Certain Changes and Events

  	
  30

  
	
  3.17.

  	
  Contracts; No
  Defaults

  	
  32

  
	
  3.18.

  	
  Insurance

  	
  35

  
	
  3.19.

  	
  Environmental
  Matters

  	
  36

  
	
  3.20.

  	
  Employees

  	
  38

  
	
  3.21.

  	
  Labor Relations;
  Compliance

  	
  38

  
	
  3.22.

  	
  Intellectual
  Property

  	
  39

  
	
  3.23.

  	
  No Intragroup
  Liabilities

  	
  44

  
	
  3.24.

  	
  Certain Payments

  	
  44

  
	
  3.25.

  	
  Disclosure

  	
  44

  
	
  3.26.

  	
  Brokers or
  Finders

  	
  44

  
	
   

  	
   

  	
   

  
	
  4.

  	
  REPRESENTATIONS AND WARRANTIES OF BUYER

  	
  45

  
	
   

  	
   

  	
   

  
	
  4.1.

  	
  Organization and
  Good Standing

  	
  45

  
	
  4.2.

  	
  Authority; No
  Conflict

  	
  45

  
	
  4.3.

  	
  Certain
  Proceedings

  	
  46

  



 



 2
 









 


	
  4.4.

  	
  Brokers or
  Finders

  	
  46

  
	
   

  	
   

  	
   

  
	
  5.

  	
  COVENANTS OF SELLER AND GISH PRIOR TO CLOSING DATE

  	
  46

  
	
   

  	
   

  	
   

  
	
  5.1.

  	
  Access and
  Investigation

  	
  46

  
	
  5.2.

  	
  Operation of the
  Businesses

  	
  46

  
	
  5.3.

  	
  Negative
  Covenants

  	
  47

  
	
  5.4.

  	
  Required
  Approvals

  	
  47

  
	
  5.5.

  	
  Notification

  	
  47

  
	
  5.6.

  	
  No Negotiation

  	
  48

  
	
  5.7.

  	
  Tax Matters

  	
  48

  
	
  5.8.

  	
  Best Efforts

  	
  48

  
	
   

  	
   

  	
   

  
	
  6.

  	
  COVENANTS OF BUYER

  	
  48

  
	
   

  	
   

  	
   

  
	
  6.1.

  	
  Covenants Prior
  to Closing Date

  	
  48

  
	
  6.2.

  	
  Notification

  	
  49

  
	
   

  	
   

  	
   

  
	
  7.

  	
  CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE

  	
  49

  
	
   

  	
   

  	
   

  
	
  7.1.

  	
  Accuracy of
  Representations

  	
  49

  
	
  7.2.

  	
  Seller’s
  Performance

  	
  49

  
	
  7.3.

  	
  Consents

  	
  50

  
	
  7.4.

  	
  Additional
  Documents

  	
  50

  
	
  7.5.

  	
  No Proceedings

  	
  50

  
	
  7.6.

  	
  No Claim
  Regarding Stock Ownership or Sale Proceeds

  	
  50

  
	
  7.7.

  	
  No Prohibition

  	
  51

  
	
  7.8.

  	
  Cash in Gish at
  Closing

  	
  51

  
	
   

  	
   

  	
   

  
	
  8.

  	
  CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE

  	
  51

  
	
   

  	
   

  	
   

  
	
  8.1.

  	
  Accuracy of
  Representations

  	
  51

  
	
  8.2.

  	
  Buyer’s
  Performance

  	
  51

  
	
  8.3.

  	
  Additional
  Documents

  	
  52

  
	
  8.4.

  	
  No Proceedings

  	
  52

  
	
   

  	
   

  	
   

  
	
  9.

  	
  TERMINATION

  	
  52

  
	
   

  	
   

  	
   

  
	
  9.1.

  	
  Termination
  Events

  	
  52

  
	
  9.2.

  	
  Effect of
  Termination

  	
  53

  
	
   

  	
   

  	
   

  
	
  10.

  	
  INDEMNIFICATION; REMEDIES

  	
  53

  
	
   

  	
   

  	
   

  
	
  10.1.

  	
  Survival; Right
  to Indemnification Not Affected by Knowledge

  	
  53

  
	
  10.2.

  	
  Indemnification
  And Payment Of Damages By Seller

  	
  53

  
	
  10.3.

  	
  Indemnification
  and Payment of Damages by Buyer

  	
  54

  
	
  10.4.

  	
  Time Limitations

  	
  55

  
	
  10.5.

  	
  Limitations On
  Amount—Seller

  	
  55

  
	
  10.6.

  	
  Limitations On
  Amount-Buyer

  	
  56

  
	
  10.7.

  	
  Calculation of
  Indemnity Payments

  	
  56

  
	
  10.8.

  	
  Tax Treatment of
  Indemnification

  	
  56

  



 



 3
 









 


	
  10.9.

  	
  Procedure For
  Indemnification-Third Party Claims

  	
  56

  
	
  10.10.

  	
  Procedure for
  Indemnification-Other Claims

  	
  58

  
	
  10.11.

  	
  Arbitration

  	
  58

  
	
   

  	
   

  	
   

  
	
  11.

  	
  TAX MATTERS

  	
  58

  
	
   

  	
   

  	
   

  
	
  11.1.

  	
  Tax
  Indemnification

  	
  58

  
	
  11.2.

  	
  Straddle Period

  	
  59

  
	
  11.3.

  	
  Filing of Tax
  Returns through the Closing Date

  	
  59

  
	
  11.4.

  	
  Cooperation on
  Tax Matters

  	
  60

  
	
  11.5.

  	
  Tax-Sharing
  Agreements

  	
  60

  
	
  11.6.

  	
  Certain Taxes
  and Fees

  	
  60

  
	
  11.7.

  	
  Audits

  	
  61

  
	
  11.8.

  	
  Carrybacks

  	
  61

  
	
  11.9.

  	
  Contests

  	
  61

  
	
   

  	
   

  	
   

  
	
  12.

  	
  GENERAL PROVISIONS

  	
  62

  
	
   

  	
   

  	
   

  
	
  12.1.

  	
  Non-Competition/Non-Solicitation

  	
  62

  
	
  12.2.

  	
  Expenses

  	
  64

  
	
  12.3.

  	
  Public
  Announcements

  	
  64

  
	
  12.4.

  	
  Confidentiality

  	
  64

  
	
  12.5.

  	
  Notices

  	
  65

  
	
  12.6.

  	
  Jurisdiction;
  Service of Process

  	
  66

  
	
  12.7.

  	
  Further
  Assurances

  	
  66

  
	
  12.8.

  	
  Waiver

  	
  67

  
	
  12.9.

  	
  Entire Agreement
  and Modification

  	
  67

  
	
  12.10.

  	
  Disclosure
  Schedule

  	
  67

  
	
  12.11.

  	
  Assignments,
  Successors, and No Third-Party Rights

  	
  67

  
	
  12.12.

  	
  Severability

  	
  68

  
	
  12.13.

  	
  Section
  Headings, Construction

  	
  68

  
	
  12.14.

  	
  Time Of Essence

  	
  68

  
	
  12.15.

  	
  Governing Law

  	
  68

  
	
  12.16.

  	
  Counterparts

  	
  68

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  exhibits

  
	
   

  
	
  Exhibit 2.4(a)

  	
  License Agreement

  	
   

  
	
  Exhibit 2.4(b)

  	
  Wiring Instructions

  	
   

  
	
  Exhibit 2.7

  	
  Escrow Agreement

  	
   

  
	
  Exhibit 3.10(l)

  	
  Pages 60 - 63 of Form 1120 of Seller

  	
   

  
	
  Exhibit 7.4(a)

  	
  Opinion by Seyfarth Shaw LLP

  	
   

  
	
  Exhibit 10.2(g)

  	
  List of employees

  	
   

  
				



 



 4















STOCK
PURCHASE AGREEMENT


This Stock Purchase Agreement (“Agreement”) is
effective as of June 30, 2007, and is made by and among CardioTech
International Inc, a Massachusetts corporation (“Seller”), Gish
Biomedical, Inc., a California corporation (“Gish”) and MEDOS
Medizintechnik AG, a company organized under the laws of the Federal Republic
of Germany (the “Buyer”).


BACKGROUND.


(a)           Gish is a wholly owned subsidiary of
Seller.  Gish is engaged in the business
of designing, manufacturing, marketing and selling disposable medical devices
and products for various surgical specialties including cardiovascular surgery,
orthopedics, and oncology, including custom cardiovascular tubing systems,
blood reservoirs, cardioplegia delivery systems, oxygenators, central venous
access catheters and ports, and blood recovery devices for post-operative use
in orthopedic surgeries (collectively, the “Business”).


(b)           For the consideration contemplated by this
Agreement and subject to and upon the terms and conditions set forth in this
Agreement, Seller desires to sell, and Buyer desires to purchase, all of the
issued and outstanding shares (the “Shares”) of the capital stock of
Gish.


The parties, intending to be legally bound, agree as
follows:


1.                                       DEFINITIONS.


For purposes of this Agreement, the following terms
have the meanings specified or referred to in this Section 1:


“Accounts Receivable” shall have the meaning as
defined in Section 3.8 hereof.


“Affiliate” means with respect to any Person,
any Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such Person.


“Applicable Contract” means any Contract (a)
under which Gish has or may acquire any rights, (b) under which Gish has or may
become subject to any obligation or liability, or (c) by which Gish or any of
the assets owned or used by it is or may become bound.


“Audit” means any audit, assessment,
investigation, examination, or proposed claim or adjustment, of or by the IRS,
any other Governmental Body and/or any judicial, administrative or other
proceeding or litigation (including any appeal of any such judicial,
administrative or other proceeding or litigation), relating to any Tax or Tax
Return.



 5
 









“Balance Sheet” shall have the meaning defined
in Section 3.4 hereof.


“Business” shall have the meaning defined in
the Background section of this Agreement.


“Business Day”
shall mean a day other than a Saturday, Sunday or any other day on which
commercial banks in New York City are authorized or required by law to close.


“Breach” of a representation, warranty,
covenant, obligation, or other provision of this Agreement or any instrument
delivered pursuant to this Agreement will be deemed to have occurred if there
is or has been any inaccuracy in or breach of, or any failure to perform or
comply with, such representation, warranty, covenant, obligation, or other
provision.


“Buyer” shall have the meaning defined in the
first paragraph of this Agreement.


“Cash” means, as of any date of determination,
the sum of Gish’s cash, cash equivalents and investments on hand in financial
institution accounts, and any lock box receipts received on or prior to the
close of business on June 29, 2007, less the total amount of any checks
which have been written but have not cleared the bank as of such date.


“Closing” shall have the meaning defined in
Section 2.3 hereof.


“Closing Date” shall have the meaning defined
in Section 2.3 hereof.


“Closing Date Schedule” shall have the meaning
defined in Section 2.3 hereof.


“Closing Payment” shall have the meaning
defined in Section 2.2 hereof.


“Closing Purchase Price” shall have the meaning
defined in Section 2.2 hereof.


“Code” means the Internal Revenue Code of 1986,
as amended, or any successor law, and regulations issued by the IRS pursuant to
the Internal Revenue Code or any successor law.


“Consent” means any approval, consent,
ratification, waiver, or other authorization (including any Governmental
Authorization).


“Contract” means any agreement, contract,
obligation, promise, or undertaking (whether written or oral and whether
express or implied) that is legally binding.


“Controlled Group Liability” shall have the
meaning defined in Section 3.12 hereof.


“Damages” shall have the meaning defined in
Section 10.2 hereof.



 6
 









“Disclosure Schedule” means the disclosure
schedule delivered by Sellers to Buyer concurrently with the execution and
delivery of this Agreement.


“Draft Post-Closing Statement” shall have the
meaning defined in Section 2.5 hereof.


“Employee Plan” shall have the meaning defined
in Section 3.12 hereof.


“Encumbrance” means any charge, claim,
community property interest, condition, encumbrance, equitable interest, lien,
option, pledge, security interest, right of first refusal, or restriction of
any kind, including any restriction on use, voting, transfer, receipt of
income, or exercise of any other attribute of ownership.


“Environment” means soil, land surface or
subsurface strata, surface waters (including navigable waters, ocean waters,
streams, ponds, drainage basins, and wetlands), groundwaters, drinking water
supply, stream sediments, ambient air (including indoor air), plant and animal
life, and any other environmental medium or natural resource.


“Environmental, Health, and Safety Liabilities”
means any cost, damages, expense, liability, obligation, or other
responsibility arising from or under Environmental Law or Occupational Safety
and Health Law and consisting of or relating to:


(a)           any environmental, health, or safety matters
or conditions (including on-site or off- site contamination, occupational
safety and health, and regulation of chemical substances or products);


(b)           fines, penalties, judgments, awards,
settlements, legal or administrative proceedings, damages, losses, claims,
demands and response, investigative, remedial, or inspection costs and expenses
arising under Environmental Law or Occupational Safety and Health Law;


(c)           financial responsibility under Environmental
Law or Occupational Safety and Health Law for cleanup costs or corrective
action, including any investigation, cleanup, removal, containment, or other
remediation or response actions (“Cleanup”) required by applicable
Environmental Law or Occupational Safety and Health Law (whether or not such
Cleanup has been required or requested by any Governmental Body or any other
Person) and for any natural resource damages; or


(d)           any other compliance, corrective,
investigative, or remedial measures required under Environmental Law or
Occupational Safety and Health Law.



 7
 









(e)           The terms “removal,” “remedial,” and “response
action,” include the types of activities covered by the United States
Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. 9601 et seq., as amended (“CERCLA”).


“Environmental Law”
means any Legal Requirement that requires or relates to:


(a)           advising appropriate authorities, employees,
and the public of intended or actual releases of pollutants or hazardous
substances or materials, violations of discharge limits, or other prohibitions
and of the commencements of activities, such as resource extraction or
construction, that could have significant impact on the Environment;


(b)           preventing or reducing to acceptable levels
the release of pollutants or hazardous substances or materials into the
Environment;


(c)           reducing the quantities, preventing the
release, or minimizing the hazardous characteristics of wastes that are
generated;


(d)           assuring that products are designed,
formulated, packaged, and used so that they do not present unreasonable risks
to human health or the Environment when used or disposed of;


(e)           protecting the Environment, natural
resources, species, or ecological amenities;


(f)            reducing to acceptable levels the risks
inherent in the transportation of hazardous substances, pollutants, oil, or
other potentially harmful substances;


(g)           cleaning up pollutants that have been
released, preventing the threat of release, or paying the costs of such clean
up or prevention; or


(h)           making responsible parties pay private
parties, or groups of them, for damages done to their health or the
Environment, or permitting self-appointed representatives of the public
interest to recover for injuries done to public assets.


“ERISA” means the Employee Retirement Income
Security Act of 1974 or any successor law, and regulations and rules issued
pursuant to that Act or any successor law.


“Escrow Account” shall
have the meaning defined in Section 2.7 hereof.


“Escrow Agent” means Citizens Bank.



 8
 









“Escrow Agreement” means the agreement with the
Escrow Agent as set forth in Exhibit 2.7 hereof.


“Escrow Fund” shall have the meaning defined in
Section 2.7 hereof.


“Facilities” means any real property,
leaseholds, or other interests currently or formerly owned or operated by Gish
and any buildings, plants, structures, or equipment (including motor vehicles,
tank cars, and rolling stock) owned or operated by Gish.


“FDA” means the United States Food and Drug
Administration.


GAAP” means United States generally
accepted accounting principles, as in effect from time to time, applied on a
consistent basis.


“Governmental Authorization” means any rule,
regulation, approval, consent, license, permit, clearance, waiver, supplement
or amendment, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.


“Governmental Body”
means any:


(a)           nation, state, county, city, town, village,
district, or other jurisdiction of any nature;


(b)           federal, state, local, municipal, foreign,
or other government;


(c)           governmental or quasi-governmental authority
of any nature (including any governmental agency, branch, department, official,
or entity and any court or other tribunal);


(d)           multi-national organization or body; or


(e)           body exercising, or entitled to exercise,
any administrative, executive, judicial, legislative, police, regulatory, or
taxing authority or power of any nature.


“Guarantee” means
a guarantee, an endorsement, a contingent agreement to purchase or to furnish
funds for the payment or maintenance of, or otherwise to be or become
contingently liable under or with respect to, the Indebtedness, other
obligations, net worth, working capital or earnings of any Person, a guarantee
of the payment of dividends or other distributions upon the capital stock of
any Person, an agreement to purchase, sell or lease (as lessee or lessor)
property, products, materials, supplies or services primarily for the purpose
of enabling a debtor to make payment of his, her or its obligations or an
agreement to assure a creditor against loss, and including, without limitation,
causing a bank to open a letter of credit for the benefit of another 



 9
 









Person, but excluding endorsements for collection or
deposit in the Ordinary Course of Business. 
The terms “Guarantee” and “Guaranteed” used as a verb
shall have a correlative meaning.


“Hazardous Activity” means the distribution,
generation, handling, importing, management, manufacturing, processing,
production, refinement, Release, storage, transfer, transportation, treatment,
or use (including any withdrawal or other use of groundwater) of Hazardous
Materials in, on, under, about, or from the Facilities or any part thereof into
the Environment, and any other act, business, operation, or thing that
increases the danger, or risk of danger, or poses an unreasonable risk of harm
to persons or property on or off the Facilities, or that may affect the value
of the Facilities or Gish.


“Hazardous Materials” means any waste or other
substance that is listed, defined, designated, or classified as, or otherwise
determined to be, hazardous, radioactive, or toxic or a pollutant or a
contaminant under or pursuant to any Environmental Law, including any admixture
or solution thereof, and specifically including petroleum and all derivatives
thereof or synthetic substitutes therefore and asbestos or asbestos-containing
materials.


“Indebtedness”
shall mean, as to any Person:  (a)
indebtedness created, issued or incurred by such Person for borrowed money
(whether by loan or the issuance and sale of debt securities); (b) obligations
of such Person to pay the deferred purchase or acquisition price of property or
services, other than trade accounts payable (other than for borrowed money)
arising, and accrued expenses incurred, in the ordinary course of business; (c)
Indebtedness of others secured by an Encumbrance on the property of such
Person, whether or not the respective Indebtedness so secured has been assumed
by such Person; (d) obligations of such Person in respect of letters of credit
or similar instruments issued or accepted by banks and other financial
institutions for the account of such Person; (e) capital lease obligations of
such Person; and (f) Indebtedness of others Guaranteed by such Person.


“Indemnified Persons” shall have the meaning
defined in Section 10.2 hereof.


“Initial Purchase Price” shall have the meaning
defined in Section 2.2 hereof.


“Intellectual Property Assets” shall have the
meaning defined in Section 3.22 hereof.


“Intragroup Liabilities” shall have the meaning
defined in Section 3.23.


“Inventory” means raw materials, components,
parts, work-in-process, finished goods, in process and bulk products, goods for
resale, operating supplies, maintenance materials, merchandise, labels,
inserts, packaging materials and other supplies or accessories related thereto
which are held at, or are in transit from or to, any manufacturing location of
Gish.



 10
 









“IRS” means the United States Internal Revenue
Service or any successor agency, and, to the extent relevant, the United States
Department of the Treasury.


“IT Systems” means any and all information
technology and computer systems (including computers, software, databases,
middleware, firmware, servers, workstations, routers, hubs, switches, networks,
data communications lines and hardware) relating to the transmission, storage,
organization, processing or analysis of data and information, which technology
and systems are used in or necessary to the conduct of the Business.


“Knowledge” means with respect to:  (a) an individual respecting a particular
fact or other matter, that such individual is actually aware of such fact or
other matter, or a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the course of conducting
a reasonably comprehensive investigation concerning the existence of such fact
or other matter; and (b) a Person (other than an individual) respecting a
particular fact or other matter, that any individual who is serving, or who has
at any time served, as a director, officer, partner, executor, or trustee of
such Person or any Person in similar capacity has, or at any time had,
Knowledge of such fact or other matter.


“Legal Requirement” means any federal, state,
local, municipal, foreign, international, multinational, or other
administrative order, constitution, law, ordinance, principle of common law,
regulation, statute, or treaty.


“Occupational Safety and Health Law” means any
Legal Requirement designed to provide safe and healthful working conditions and
to reduce occupational safety and health hazards, and any program, whether
governmental or private (including those promulgated or sponsored by industry
associations and insurance companies), designed to provide safe and healthful
working conditions.


“Order” means any award, decision, injunction,
judgment, order, ruling, subpoena, or verdict entered, issued, made, or
rendered by any court, administrative agency, or other Governmental Body or by
any arbitrator.


“Ordinary Course of Business” an action taken
by a Person will be deemed to have been taken in the “Ordinary Course of
Business” only if such action is consistent with the past practices of such
Person and is taken in the ordinary course of the normal day-to-day operations
of such Person.


“Organizational Documents” means (a) the
articles or certificate of incorporation and the bylaws of a corporation; (b)
the partnership agreement and any statement of partnership of a general
partnership; (c) the limited partnership agreement and the certificate of
limited partnership of a limited partnership; (d) the certificate or articles
of organization or formation, 



 11
 









and limited liability
company or operating agreement of a limited liability company; (e) any charter
or similar document adopted or filed in connection with the creation,
formation, or organization of a Person; and (f) any amendment to any of the
foregoing.


“Party” shall mean Seller, on the one hand, and
Buyer, on the other hand, and shall be referred to collectively as the “Parties.”


“Person” means any individual, corporation
(including any non-profit corporation), general or limited partnership, limited
liability company, joint venture, estate, trust, association, organization,
labor union, or other entity or Governmental Body.


“Post-Closing Adjustment” shall have the
meaning defined in Section 2.5 hereof.


“Post-Closing Statement” shall have the meaning
defined in Section 2.5 hereof.


“Proceeding” means any action, arbitration,
audit, hearing, investigation, litigation, or suit (whether civil, criminal,
administrative, investigative, or informal) commenced, brought, conducted, or
heard by or before, or otherwise involving, any Governmental Body or
arbitrator.


“Proprietary Rights Agreement” shall have the
meaning defined in Section 3.21.


“Purchase Price” shall have the meaning defined
in Section 2.2 hereof.


“Purchase Price Adjustment” means the amount by
which (x) the Total Stockholder Equity as of March 31, 2007 as set forth
on the Balance Sheet exceeds (or is less than) (y) Total Stockholder Equity as
of the Closing Date as set forth in the Post Closing Statement.


“Release” means any spilling, leaking,
emitting, discharging, depositing, escaping, leaching, dumping, or other
releasing into the Environment, whether intentional or unintentional.


“Representative” means, with respect to a
particular Person, any director, officer, employee, agent, consultant, advisor,
or other representative of such Person, including legal counsel, accountants,
and financial advisors.


“Restricted Period” shall have the meaning
defined in Section 12.1 hereof.


“Securities Act” means the Securities Act of
1933 or any successor law, and regulations and rules issued pursuant to that
Act or any successor law.


“Seller” shall have the meaning defined in the
first paragraph of this Agreement.


“Shares” shall have the meaning defined in the
Background section of this Agreement.



 12
 









“Straddle Period” shall have the meaning
defined in Section 11.2 hereof.


“Subsidiary” means with respect to any Person
(the “Owner”), any corporation or other Person of which securities or
other interests having the power to elect a majority of that corporation’s or
other Person’s board of directors or similar governing body, or otherwise
having the power to direct the business and policies of that corporation or
other Person (other than securities or other interests having such power only
upon the happening of a contingency that has not occurred) are held by the
Owner or one or more of its Subsidiaries; when used without reference to a
particular Person, “Subsidiary” means a Subsidiary of Gish.


“Tax” and “Taxes”
mean any and all federal, state, local and foreign taxes, assessments and other
governmental charges, duties, impositions, levies and liabilities, including,
without limitation, taxes based upon, measured by, or with respect to income,
net income, gross income, earnings, profits or gross receipts, or any sales,
use, ad valorem, transfer, franchise, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, windfall
profits, environmental, alternative, add-on minimum, custom duties, capital
stock, social security (or similar), unemployment, disability, gains,
recapture, estimated, or other taxes, fees, assessments or charges of any kind
whatsoever, together with any interest, penalty, and addition thereto.


“Tax Claim” shall
have the meaning defined in Section 11.9 hereof.


“Tax Indemnitee”
shall have the meaning defined in Section 11.1 hereof.


“Tax Return” means
any return (including any information return), report, statement, schedule,
notice, form, or other document or information (and including any amended
return, report, statement, schedule, notice, form or other document or
information) filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection, or payment of or otherwise in respect of any Tax or in
connection with the administration, implementation, or enforcement of or
compliance with any Legal Requirement relating to any Tax.


“Threat of Release” means a substantial
likelihood of a Release that may require action in order to prevent or mitigate
damage to the Environment that may result from such Release.


“Threatened” means any claim, Proceeding,
dispute, action, or other matter for which any demand or statement has been
made (orally or in writing) or any notice has been given (orally or in
writing), or if any other event has occurred or any other circumstances exist,
that would lead a prudent Person to conclude that such a claim, Proceeding,
dispute, action, or other matter is likely to be asserted, commenced, taken, or
otherwise pursued in the future.



 13
 









“Total Stockholder Equity” has the meaning as
defined under GAAP.


2.                                       SALE
AND TRANSFER OF SHARES; CLOSING


2.1.          Shares.


Subject to the
terms and conditions of this Agreement, at the Closing, Seller will sell and
transfer the Shares to Buyer, and Buyer will purchase the Shares from Seller.


2.2.          Purchase Price.


(a)           At the Closing, Buyer shall pay to Seller
the following amount: (i) US Dollars seven million five hundred thousand
(USD 7,500,000), plus (ii)
US Dollars One Million (USD 1,000,000) equal to Cash, as
reflected on the Post-Closing Statement (the aggregate of (i) and (ii), the “Initial
Purchase Price”), minus (iii) the
Escrow Fund (the Initial Purchase Price as so adjusted, the “Closing
Purchase Price”) and minus (iv)
Fifty Thousand US Dollars (USD 50,000) previously paid by Buyer to
Seller as a deposit (the aggregate of (i), (ii), (iii) and (iv) the “Closing
Payment”). The Closing Purchase Price shall be subject to a post-closing
adjustment calculated pursuant to Section 2.5 hereof (the Closing Purchase
Price, as so adjusted, the “Purchase Price”).


(b)           To the extent that Buyer or any agent of
Buyer is required by law to deduct and withhold Tax from the consideration
otherwise payable pursuant to this Agreement, Buyer shall be entitled to deduct
and withhold such Tax, and the amount of such withheld Tax shall be treated for
all purposes of this Agreement as having been paid to the person in respect of
which such Tax withholding was made by Buyer.


2.3.          Closing.


(a)           The purchase and sale of the Shares (the “Closing”)
provided for in this Agreement will take place at the offices of Seller at
10:00 a.m. (local time) on the later of (i) 10 (ten) Business Days following the
satisfaction or waiver by the party entitled to waive the condition of all
conditions to the closing set forth in Section 2.4 hereof (other than
those conditions that by their nature are to be satisfied at the Closing, but
subject to the satisfaction or waiver of such conditions), or (ii) at such
other time and place as the parties may agree in writing (the “Closing Date”).


(b)           Immediately prior to the Closing, the Seller
shall deliver a schedule (the “Closing Date Schedule”) to the Buyer
setting forth all of the components of the Purchase Price and specifying the
manner (including wire instructions) pursuant to which all such payments shall
be made.  The Closing Date Schedule is
set forth in Section 2.3 of the Disclosure Schedule.



 14
 









2.4.          Closing Obligations.


At the
Closing:


(a)           Seller shall execute, acknowledge (if
appropriate) and deliver or cause to be delivered to Buyer of:


(i)            A certificate or
certificates representing the Shares, duly endorsed (or accompanied by duly
executed stock powers) in blank for transfer to Buyer;


(ii)           [***];


(iii)          a copy of the License
Agreement between Seller and Gish, dated June 29, 2007, in the form of
Exhibit 2.4(a) to this Agreement; and


(iv)          to Buyer and Escrow
Agent an executed copy of the Escrow Agreement.


(b)           Buyer will deliver or cause to be delivered:


(i)            to Seller the Closing
Payment by wire transfer to the respective account referred to in Exhibit
2.4(b);


(ii)           to Escrow Agent the
Escrow Fund amount by wire transfer to the respective account referred to in
Exhibit 2.4(b); and


(iii)          to Seller and Escrow
Agent an executed copy of the Escrow Agreement.


2.5.          Purchase Price Adjustment.


(a)           As promptly as practicable following the
Closing Date, but in no event more than 20 (twenty) days following the Closing
Date, Seller shall prepare and deliver to Buyer a closing statement in the form
of a balance sheet for Gish as at the Closing Date, certified by its chief
executive officer (the “Draft Post-Closing Statement”), setting forth
Seller’s final calculation of the Purchase Price Adjustment.


(b)           If Buyer has any objections to the Draft
Post-Closing Statement, then it must deliver a statement describing its
objections to Seller within 40 (forty) days after Seller delivers the Draft
Post-Closing Statement to Buyer.  If
Seller has not delivered to Buyer the Draft Post-Closing Statement within 30
(thirty) days after the Closing, Buyer shall prepare at Seller’s expense the
Draft Post-Closing Statement. During the 40-day period, during the 20-day 



 15
 









period set forth in Section 2.5(a) and any other time, following
the Closing, Buyer, Seller and their respective Representatives shall be
provided full access to all of the working papers relating to the preparation
of the Draft Post-Closing Statement.  Seller
and Buyer shall make a diligent, good faith effort to promptly resolve any
objections to the Draft Post-Closing Statement. 
If Seller and Buyer are unable to resolve all objections to the Draft
Post-Closing Statement within 30 (thirty) days after Seller receives Buyer’s
statement of objections, the Parties shall resolve them in the manner specified
in Section 10.11 hereof.


(c)           The Draft Post-Closing Statement shall be
regarded as the “Post-Closing Statement” (i) if it has been adjusted
based on the written agreement of Seller and Buyer, or (ii) in case Seller and
Buyer are able to resolve all objections, if it has been adjusted, based on the
final judgment arrived at in accordance with Section 10.11 hereof, if such
arbitration proceedings were used, or (iii) as delivered to Seller, if Seller
did not object to the Draft Post-Closing Statement in the manner and time
specified in Section 2.5(b) hereof, or (iv) if prepared by Buyer, if
Seller has failed to deliver to Buyer a Draft Post-Closing Statement within 30
(thirty) days after Closing.  The “Post-Closing
Adjustment” shall be the amount of the Purchase Price Adjustment as set
forth on the Post-Closing Statement.


(d)           The Closing Purchase Price shall be adjusted
as follows:


(i)            If the amount of the
Closing Adjustment is greater than zero, the Seller shall pay to Buyer an
amount equal to such difference.  Such
payment shall be made within 5 (five) Business Days of the date on which the
Post-Closing Statement is determined pursuant to Section 2.5(c) hereof.


(ii)           If the amount of the
Closing Adjustment is less than zero, then Buyer shall pay to Seller an amount
equal to such difference.  Such payment
shall be made within 5 (five) Business Days of the date on which the
Post-Closing Statement is determined pursuant to Section 2.5(c) hereof.


2.6.          Determination Respecting Financial
Matters.


All determinations respecting financial matters of
Gish, including the preparation of the Draft Closing Statement and the
Post-Closing Statement, shall be made in accordance with GAAP, it being
understood and agreed that Seller shall not be required to cause any of the
Draft Closing Statement or Post-Closing Statement to be audited.


2.7.          Escrow.


(a)           On the Closing Date, Buyer shall deposit an
amount equal to 1,000,000 US Dollars (USD One Million; the “Escrow
Fund”) in an interest bearing escrow 



 16
 









account (the “Escrow Account”) with the Escrow Agent.  It is agreed and understood that all right,
title and interest in the Escrow Account and all monies or other property in
the Escrow Account shall remain the property of Buyer until released to Seller
from the Escrow Account.


(b)           In the event that any portion of the Escrow
Fund remains in the Escrow Account 12 (twelve) months after the Closing Date
and that there are no claims by Buyer pending pursuant to this Agreement, the
portion of the Escrow Fund remaining in the Escrow Account, if any, shall be
released from the Escrow Account to Seller.


(c)           In the event that the Escrow Amount is not
sufficient to satisfy Buyer’s claim or claims under this Agreement, Seller
shall continue to be liable for any such excess amount (each such claim, an “Excess
Amount”), subject to the limits otherwise provided by this Agreement and
the Escrow Fund shall be released from the Escrow Account to Buyer.


3.                                       REPRESENTATIONS
AND WARRANTIES OF SELLER AND GISH


Seller and Gish represent
and warrant to Buyer as follows:


3.1.          Organization and Good Standing.


(a)           Gish is a corporation organized, validly
existing, and in good standing under the laws of the State of California, with
full corporate power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under Applicable Contracts.  Gish is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the properties owned
or used by it, or the nature of the activities conducted by it, requires such
qualification.


(b)           Seller has delivered or made available to
Buyer copies of the Organizational Documents of Gish, as currently in effect.


3.2.          Authority; No Conflict.


(a)           This Agreement constitutes the legal, valid,
and binding obligation of each of Seller and Gish, enforceable against each of
Seller and Gish in accordance with its terms. 
Upon the execution and delivery by each of Seller and Gish of this
Agreement and the agreements contemplated hereby, this Agreement (and such
other agreements) will constitute the legal, valid, and binding obligations of
each of Seller and Gish, enforceable against each of Seller and Gish in
accordance with their respective terms. 
Each of Seller and Gish has the absolute and unrestricted right, power,
and authority to execute and deliver this Agreement and to perform its
obligations under this Agreement.



 17
 









(b)           Except as set forth in Part 3.2 of the
Disclosure Schedule, neither the execution and delivery of this Agreement by
each of Seller and Gish nor the consummation or performance by each of Seller
and Gish of any of the transactions contemplated hereby will give any Person or
Governmental Body the right to (A) prevent, delay, or otherwise interfere with
directly or indirectly, with or without notice or lapse of time, the
performance of the transactions contemplated hereby, (B) declare a default,
accelerate the maturity or performance of, or to cancel, terminate, or modify,
any Applicable Contract, (C) exercise any remedy or obtain any relief under any
Legal Requirement or any Order to which Gish or Seller, the Shares or any of
the assets owned or used by Gish, may be subject, (D) impose or create any
Encumbrance upon or with respect to the Shares or any of the assets owned or
used by Gish, (E) give any Person or Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate, or modify, any Governmental Authorization
that is held by Gish or that otherwise relates to the business of, or any of
the assets owned or used by, Gish, or (F) hold Buyer or Gish liable for the
payment of any Tax or reassess or revalue any of the assets owned by Gish,
pursuant to:


(i)            any provision of each
of Seller’s and Gish’s Organizational Documents;


(ii)           any resolution adopted
by the board of directors or the stockholders of each of Seller or Gish;


(iii)          any Legal Requirement or
Order to which each of Seller and Gish may be subject; or


(iv)          any Contract to which
each of Seller and Gish is a party or by which each of Seller and Gish may be
bound.


Except as set forth in Part 3.2 of the Disclosure
Schedule, neither Seller nor Gish is or will be required to give any notice to
or obtain any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
transactions contemplated hereby.


3.3.          Capitalization.


Seller is and
will be on the Closing Date the record and beneficial owner and holder of the
Shares, free and clear of all Encumbrances. 
No legend or other reference to any purported Encumbrance appears upon
any certificate representing the Shares, and all of the Shares have been duly
authorized and validly issued and are fully paid and nonassessable.  There are no Contracts relating to the
issuance, sale, or transfer of any equity securities or other securities of Gish,
and the Shares represent 100% of the issued and outstanding capital stock of
Gish.  None of the Shares was issued in
violation of the Securities Act or any other Legal Requirement.  Gish 



 18
 









neither owns,
nor has any Contract to acquire, any equity securities or other securities of
any Person or any direct or indirect equity or ownership interest in any other
business.


3.4.          Financial Statements.


Part 3.4
of the Disclosure Schedule contains true and correct copies of the unaudited
balance sheet of Gish as at March 31, 2007 (the “Balance Sheet”),
and as at March 31, 2006 and as at March 31, 2005, and the related
statements of income and cash flow for each of the fiscal years then
ended.  Such financial statements fairly
present the financial condition and the results of operations and cash flow of
Gish as at the respective dates thereof and for the periods referred to in such
financial statements, all in accordance with GAAP. The financial statements
referred to in this Section 3.4 reflect the consistent application of such
accounting principles throughout the periods involved.


3.5.          Books And Records.


Part 3.5
of the Disclosure Schedule contains a complete and accurate general ledger as
of March 31, 2007. Part 3.5 of the Disclosure Schedule also contains
a complete and accurate customer list, stating the customer’s full name,
shipping address and billing address, as of June 19, 2007. The books of
account, minute books, stock record books, and other records of Gish, all of
which have been made available to Buyer, are complete and correct and have been
maintained in accordance with sound business practices.  The minute books of Gish contain accurate and
complete records of all meetings held of, and corporate action taken by, the
stockholders and the Board of Directors of Gish, and no meeting of any such
stockholders or Board of Directors has been held for which minutes have not
been prepared and are not contained in such minute books.  At the Closing, all of those books and
records will be in the possession of Gish.


3.6.          Title to Properties; Encumbrances.


Part 3.6
of the Disclosure Schedule contains a complete and accurate list of all real
property, leaseholds, or other interests therein owned by Gish.  Gish owns (with good and marketable title in
the case of real property, subject only to the matters permitted by the
following sentence) all the properties and assets (whether real, personal, or
mixed and whether tangible or intangible) that it purports to own, including
all of the properties and assets reflected in the Balance Sheet (except for
assets held under capitalized leases disclosed in Part 3.6 of the
Disclosure Schedule and personal property sold since the date of the Balance
Sheet in the Ordinary Course of Business), and all of the properties and assets
purchased or otherwise acquired by Gish since the date of the Balance Sheet
(except for personal property acquired and sold since the date of the Balance
Sheet in the Ordinary Course of Business and consistent with past practice),
other than



 19















Inventory and
short-term investments, are listed in Part 3.6 of the Disclosure
Schedule.  All material properties and
assets reflected in the Balance Sheet are free and clear of all Encumbrances
and are not, in the case of real property, subject to any rights of way,
building use restrictions, exceptions, variances, reservations, or limitations
of any nature except, with respect to all such properties and assets, (a)
mortgages or security interests shown on the Balance Sheet as securing
specified liabilities or obligations, with respect to which no default (or
event that, with notice or lapse of time or both, would constitute a default)
exists, (b) mortgages or security interests incurred in connection with the
purchase of property or assets after the date of the Balance Sheet (such
mortgages and security interests being limited to the property or assets so
acquired), with respect to which no default (or event that, with notice or
lapse of time or both, would constitute a default) exists, (c) liens for current
taxes not yet due, and (d) with respect to real property, (i) minor
imperfections of title, if any, none of which is substantial in amount,
materially detracts from the value or impairs the use of the property subject
thereto, or impairs the operations of Gish, and (ii) zoning laws and other land
use restrictions that do not impair the present or anticipated use of the
property subject thereto.


3.7.          Condition and Sufficiency of Assets.


(a)           The buildings, plants, structures, and
equipment of Gish are structurally sound, are in good operating condition and
repair, normal wear and tear excepted, and are adequate for the uses to which
they are being put, and none of such buildings, plants, structures, or
equipment is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cost. The building,
plants, structures, and equipment of Gish are sufficient for the continued
conduct of the businesses of Gish after the Closing in substantially the same
size, scope and manner as conducted prior to the Closing.


(b)           Part 3.7 of the Disclosure Schedule
contains a complete and accurate list of all of Gish’s fixed assets valued at
more than  US Dollars Five Thousand (USD 5,000) as of
March 31, 2007, together with an asset analysis, setting forth the initial
acquisition value of each such asset.


3.8.          Accounts Receivable.


Part 3.8 of the Disclosure Schedule contains a
complete and accurate list of all of Gish’s accounts receivable as of
March 31, 2007. All accounts receivable of Gish that are reflected on the
Balance Sheet, in the Disclosure Schedule or on the Post-Closing Statement (in
each case, the “Accounts Receivable”) represent or, with respect to the
Post-



 20
 









Closing Statement, will represent valid obligations arising
from sales actually made or services actually performed pursuant to bona fide
arrangements that were the subject of arm’s length negotiations.  Unless paid or satisfied prior to the Closing
Date, the Accounts Receivable are or, with respect to the Post-Closing
Statement, will be as of the Closing Date current and collectible net of the
respective reserves shown on the Post-Closing Statement or on the accounting
records of Gish as of the Closing Date (which reserves are adequate and
calculated consistent with past practice and, in the case of the reserve as of
the Closing Date, will not represent a greater percentage of the Accounts
Receivable as of the Closing Date than the reserve reflected in the Balance
Sheet represented of the Accounts Receivable reflected therein and will not
represent a material adverse change in the composition of such Accounts
Receivable in terms of aging).  Subject
to such reserves, each of the Accounts Receivable either has been or will be
collected in full, without any set-off. 
There is no contest, claim, or right of set-off, other than returns in
the Ordinary Course of Business, under any Contract with any obligor of an
Accounts Receivable relating to the amount or validity of such Accounts
Receivable.  Part 3.8 of the Disclosure
Schedule contains a complete and accurate list of all Accounts Receivable as of
the date of the Balance Sheet, which list sets forth the aging of such Accounts
Receivable.


3.9.          Inventory.


Part 3.9 of the Disclosure Schedule contains a
complete and accurate list of all Inventory balances as shown on the Gish
general ledger as of March 31, 2007. All Inventory, whether or not
reflected in the Balance Sheet, consists of a quality and quantity usable and
salable in the Ordinary Course of Business, except for obsolete items and items
of below-standard quality, which have been written off or written down to net
realizable value in the Balance Sheet or on the accounting records of Gish as
of the Closing Date, as the case may be, in each case consistent with GAAP.  All inventories not written off have been
priced at the lower of cost or net realizable value.  The quantities of each item of Inventory are
reasonable in the present circumstances of Gish.


3.10.        Taxes.


(a)           Gish has filed or
caused to be filed (on a timely basis since January 1, 2004) all Tax
Returns that were required to be filed by it or any of its Subsidiaries or in
respect of the Business pursuant to applicable Legal Requirements.  Seller has delivered, or made available, to
Buyer copies of all such Tax Returns as well as copies of all examination
reports and statements of deficiencies assessed against or agreed to by Gish or
any Subsidiary in respect of any income Taxes for any period beginning on or
after January 1, 2004.  All Taxes
that have, or may have, become due pursuant to any such Tax Returns or
otherwise, pursuant to any assessment of Gish received by Seller or Gish,
except for those Taxes, if any, as are listed in Part 3.10 of the
Disclosure Schedule and are being contested in good faith and as to which
adequate reserves (determined in accordance with GAAP) have been provided in
the Balance Sheet, have been timely paid.



 21
 









(b)           Part 3.10 of the Disclosure Schedule
contains a complete and accurate list of all completed, pending or in-progress
Audits and administrative or judicial Proceedings, if any, of such Tax Returns,
including a reasonably detailed description of the nature and outcome of each
such Audit or Proceeding.  All
deficiencies proposed as a result of any such Audits or Proceedings have been
paid, reserved against, settled, and/or, as described in Part 3.10 of the
Disclosure Schedule, are being contested in good faith by appropriate
proceedings.  Neither Seller nor Gish has
given or been requested to give waivers or extensions (or is or would be
subject to a waiver or extension given by any other Person) of any statute of
limitations relating to the payment of Taxes of Gish or for which Gish may be
liable.


(c)           The charges, accruals, and reserves with
respect to Taxes on the books of Gish are adequate (as determined in accordance
with GAAP).  To the Knowledge of Seller
or Gish, no Tax deficiencies have been claimed, proposed or assessed against
Gish and neither Gish nor any Subsidiary has received any written notice of, or
otherwise has Knowledge of, any potential claim, proposal or assessment against
Gish or any Subsidiary for any such Tax deficiency, except as disclosed in the
Balance Sheet or in Part 3.10 of the Disclosure Schedule and there are no
matters under discussion between Gish or any Subsidiary, on the one hand, and
any Taxing authority, on the other hand, with respect to Taxes.  All Taxes that Gish was required by Legal
Requirements to withhold or collect have been duly withheld or collected and,
to the extent required, have been paid to the proper Governmental Body or other
Person.


(d)           All Tax Returns filed by or on behalf of (or
that include on a consolidated basis) Gish are true, correct, and
complete.  There is no tax allocation or
sharing agreement or similar arrangement that will require any payment by Gish
after the Closing Date.  Neither Gish nor
any Subsidiary (i) has been a member of an affiliated group of corporations
filing a consolidated federal income Tax Return, other than a group the common
parent of which is Seller, or (ii) has any liability for the Taxes of any
Person other than Gish and its Subsidiaries, under Treasury Regulations
Section 1.1502-6, as a transferee or successor, by contract or
otherwise.  Gish is not, and at no time
within the period beginning April 7, 2003 and ending on the Closing Date or, to
the Knowledge of Seller, prior to such period has been, an “S” corporation.


(e)           No claim has ever been made in writing to
Seller, Gish or any Subsidiary by any Governmental Body in a jurisdiction where
Gish or any such Subsidiary does not file Tax Returns that Gish or such
Subsidiary is or may be subject to taxation by that jurisdiction.


(f)            None of Seller, Gish or any Subsidiary has
engaged in any transaction that, at the time when undertaken, was a “listed
transaction” (within the meaning of Treasury Regulations
Section 1.6011-4(b)(2)).



 22
 









(g)           As of the date of this Agreement, there are
no Liens with respect to any Taxes upon any of the assets of Gish or any
Subsidiary, other than for Taxes not yet due and payable or delinquent.


(h)           Gish is not, and has not been, a “United
States real property holding corporation” within the meaning of
Section 897(c)(2) of the Code during the five-year period ending on the
date of this Agreement.


(i)            Since April 7, 2003, through the date
of this Agreement (and to the Knowledge of Seller, prior to April 7,
2003), neither Gish nor any Subsidiary has constituted (or did constitute)
either a “distributing corporation” or a “controlled corporation” in a
distribution of stock qualifying, or intended to qualify, for tax-free
treatment under Section 355 of the Code.


(j)            Since the date of Gish’s last financial
statements, neither Gish nor any Subsidiary has incurred any liability for
Taxes other than Taxes as to transactions entered into in the ordinary course
of business.


(k)           Neither Gish nor any Subsidiary will be
required to include any item of income in, or exclude any item of deduction
from, taxable income for any taxable period (or portion thereof) ending after
the Closing Date (i) under either Section 481(a) or Section 482 of
the Code (or an analogous provision of state, local, or foreign law), or (ii)
as a result of any (A) change in method of accounting for a taxable period
ending on or prior to the Closing Date, or (B) closing agreement described in
Section 7121 of the Code (or an analogous provision of state, local, or
foreign law) executed on or prior to the Closing Date.


(l)            Attached hereto as Exhibit 3.10(l) are
pages 60 through 63 of Seller’s Form 1120 as filed for the fiscal year
ended March 31, 2006, which reflect cumulative
net operating losses of Gish and annual limitations thereof as of
March 31, 2006.  Seller will file
such comparable return for the fiscal year ended March 31, 2007 on or
before the applicable filing deadline in a manner consistent with past
practices.  All such Tax returns are or
will be true, correct and complete.  For
the avoidance of doubt, Seller makes no representation or warranty with respect
to (i) the usability of such losses or credits because of (A) changes in Tax
law after the Closing Date or (B) actions taken by Gish or Buyer after the
Closing and (ii) any limitation or restriction of the usability of such losses
or credits. Seller shall indemnify the realization and availability of such NOL’s
by Gish for five years (5) from the Closing Date and up to a maximum cumulative
amount of US Dollars five hundred thousand (USD 500,000) of Tax
liability of Gish.



 23
 









3.11.        No Material Adverse Change.


Except as set forth in Part 3.11 of the
Disclosure Schedule, since the date of the Balance Sheet, there has not been
any material adverse change in the business, operations, properties, prospects,
assets, or condition of Gish, and to the Knowledge of each of Seller and Gish,
no event has occurred or circumstance exists that reasonably may be expected to
result in such a material adverse change. 
Without limiting the generality of the foregoing, and except as set
forth in Part 3.11 of the Disclosure Schedule, there has been no complaint from
any material customer or supplier of Gish and no notice of breach or of
termination under any Contract with a material customer or supplier of Gish.


3.12.        Labor and Employment Matters.


(a)           Gish is in compliance in all material
respects with all applicable laws, agreements and contracts relating to
employment, employment practices, immigration, wages, hours, and terms and
conditions of employment, including, but not limited to, employee compensation
matters, and has correctly classified employees as exempt employees and non exempt
employees under the Fair Labor Standards Act and applicable state laws. A list
of all employees, officers and consultants of Gish and their current title
and/or job description, current compensation rates, bonuses paid during the
last fiscal year, and accrued vacation and sick leave for all employees is set
forth in Part 3.12 of the Disclosure Schedule as of March 31,
2007.  Except as set forth in
Part 3.12 of the Disclosure Schedule, Gish does not have any employment
contracts or consulting agreements currently in effect that are not terminable
at will (other than agreements with the sole purpose of providing for the
confidentiality of proprietary information or assignment of inventions).


(b)           Gish (i) is not a party to or bound by any
collective bargaining agreement, (ii) is not subject to any other contract,
written or oral, with any trade or labor union, employees’ association or
similar organization, and (iii) has no current labor disputes.  Neither Seller nor Gish has knowledge (i) of
any facts indicating that the consummation of the transactions contemplated by
this Agreement will have a Material Adverse Effect on the employment relations
of Gish, or (ii) that any of Gish’s employees intends to leave Gish’s
employ.  All of Gish’s employees are
legally permitted to be employed by Gish in the United States in their current
job capacities under applicable laws.


(c)           Part 3.12 of the Disclosure Schedule
lists (i) all “employee benefit plans” within the meaning of Section 3(3)
of ERISA, and (ii) all other material employee benefit, bonus or other
incentive compensation, stock option, stock purchase, stock appreciation,
severance pay, lay-off or reduction in force, change in control, sick pay,
vacation pay, salary continuation, retainer, leave of absence, educational
assistance, service award, employee discount, fringe benefit plans,
arrangements, policies or practices, to which Gish contributes to or has any
obligation to or liability for (collectively, the “Employee Plans”).  Seller has made available to 



 24
 









Buyer true and complete copies of each Employee Plan.  Each Employee Plan provides that it may be
amended or terminated at any time and, except for benefits protected under
Section 411(d) of the Code or Section 204(g) of ERISA or benefits to
which a plan participant or beneficiary has accrued a vested right, all
benefits payable to current or terminated employees or any beneficiary may be
amended or terminated by Gish at any time without liability.  Since April 7, 2003, none of the
Employee Plans is (and to the Knowledge of Seller prior to such date none of
the Employee Plans was) subject to Section 302 or Title IV of ERISA
or Section 412 of the Code (a “Defined Benefit Plan”) or is (or
was) a “multiemployer plan” within the meaning of Section 3(37) of ERISA (a
“Multiemployer Plan”) and since April 7, 2003, Gish has not (and to
the Knowledge of Seller, prior to such date Gish never) (i) sponsored,
maintained or contributed to, or been obligated to contribute to, a Defined
Benefit Plan or (ii) contributed to, or been obligated to contribute to, a
Multiemployer Plan.  Since April 7,
2003 (and to the Knowledge of Seller, prior to such date) no circumstances have
occurred and are continuing that could reasonably be expected to result in, any
“Controlled Group Liability” for Gish following the Closing. For purposes
hereof, Controlled Group Liability” means (i) any and all liabilities under
Title IV of ERISA, (ii) under the minimum funding requirement of
Section 302 of ERISA or Section 412 of the Code, (iii) under Section 4971
of the Code and (iv) as a result of failure to comply with the continuation
coverage requirements of Section 601 et seq. of ERISA and 4980B of the
Code.  Gish does not maintain or
contribute to any welfare benefit plan that provides health benefits to an
employee after the employee’s termination of employment or retirement except as
required under Section 4980B of the Code and Sections 601 through 608
of ERISA (“COBRA”) or other applicable legal requirements. All expenses
and liabilities relating to all of the Employee Plans described in
Part 3.12 of the Disclosure Schedule have been, and will on the Closing
be, fully and properly accrued on Gish’s books and records and are disclosed on
the Balance Sheet and such Employee Plans have no unfunded liabilities not
reflected on the Balance Sheet.


(d)           Each Employee Plan has been operated in all
material respects in accordance with its terms and the requirements of all
applicable law.  Each Employee Plan that
is intended to be a qualified plan under Section 401(a) of the Code has
received a favorable determination letter that has not been revoked, and Seller
knows of no existing circumstances that could adversely affect the qualified
states of any Employee Plan or the related trust.


(e)           Each independent contractor that currently
performs or has in the past performed services for Gish is subject to written
agreements with Gish, copies of which have been provided to counsel for
Buyer.  All such independent contractors
have been fully paid all amounts owing to them by Gish through the date hereof,
and there are no disputes or controversies between any such independent
contractor and Gish whatsoever, including without limitation, disputes
regarding amounts owned or ownership of Gish intellectual property.  All 



 25
 









such written agreements are in full force and effect, and neither Gish
nor any such independent contractor is in breach thereof.


(f)            There is no agreement, plan, arrangement or
other Contract covering any employee that, considered individually or
considered collectively with any other such agreements, plans, arrangements or
other Contracts, will, or could reasonably be expected to, give rise directly
or indirectly to the payment of any amount that would be characterized as a “parachute
payment” within the meaning of Section 280G(b)(1) of the Code.  There is no agreement, plan, arrangement or
other Contract by which Gish is bound to compensate any employee for excise
taxes paid pursuant to Section 4999 of the Code.


(g)           Part 3.12 of the Disclosure Schedule
lists each “nonqualified deferred compensation plan” (as such term is defined
in Section 409A(d)(1) of the Code) sponsored or maintained by Gish.  Each such nonqualified deferred compensation
plan has been operated since May 1, 2003, in good faith compliance with
Section 409A of the Code and any IRS guidance issued with respect
thereto.  No such nonqualified deferred
compensation plan has been “materially modified” (within the meaning of IRS
Notice 2005-1) at any time after October 3, 2004.


3.13.        Compliance with Legal Requirements;
Governmental Authorizations.


(a)           Except as set forth in Part 3.13 of the
Disclosure Schedule:


(i)            Gish is, and at all
times has been, in material compliance with each Legal Requirement that is or
was applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets;


(ii)           no event has occurred
or circumstance exists that (with or without notice or lapse of time) (A) may
constitute or result in a violation by Gish of, or a failure on the part of
Gish to comply with, any Legal Requirement, or (B) may give rise to any
obligation on the part of Gish to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature; and


(iii)          Gish has not received,
at any time since May 1, 2003, any notice or other communication (whether
oral or written) from any Governmental Body or any other Person regarding (A)
any actual, alleged, possible, or potential violation of, or failure to comply
with, any Legal Requirement, or (B) any actual, alleged, possible, or potential
obligation on the part of Gish to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature.



 26
 









(b)           Part 3.13 of the Disclosure Schedule
contains a complete and accurate list of each Governmental Authorization that
is held or required to be held by Gish or that otherwise relates to the
Business, or to any of the assets owned or used by, Gish.  Each Governmental Authorization listed or
required to be listed in Part 3.13 of the Disclosure Schedule is valid and
in full force and effect.  Except as set
forth in Part 3.13 of the Disclosure Schedule:


(i)            Gish is, and at all
times has been, in full compliance with all of the terms and requirements of
each Governmental Authorization identified or required to be identified in
Part 3.13 of the Disclosure Schedule;


(ii)           no event has occurred
or circumstance exists that may (with or without notice or lapse of time) (A)
constitute or result directly or indirectly in a violation of or a failure to
comply with any term or requirement of any Governmental Authorization listed or
required to be listed in Part 3.13 of the Disclosure Schedule, or (B)
result directly or indirectly in the revocation, withdrawal, suspension,
cancellation, or termination of, or any modification to, any Governmental
Authorization listed or required to be listed in Part 3.13 of the
Disclosure Schedule;


(iii)          Gish has not received,
at any time since May 1, 2003, any notice or other communication (whether
oral or written) from any Governmental Body or any other Person regarding (A)
any actual, alleged, possible, or potential violation of or failure to comply
with any term or requirement of any Governmental Authorization listed or
required to be listed in Part 3.13 of the Disclosure Schedule, or (B) any
actual, proposed, possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any Governmental Authorization
listed or required to be listed in Part 3.13 of the Disclosure Schedule;
and


(iv)          all applications
required to have been filed for the renewal of the Governmental Authorizations
listed or required to be listed in Part 3.13 of the Disclosure Schedule
have been duly filed on a timely basis with the appropriate Governmental
Bodies, and all other filings required to have been made with respect to such
Governmental Authorizations have been duly made on a timely basis with the
appropriate Governmental Bodies.


(c)           Gish possesses all material Governmental
Authorizations and such material Governmental Authorizations are in full force
and effect.  Gish is, and its products
are, in compliance in all material respects with all Governmental
Authorizations, including, but not limited to, all laws, statutes, rules,
regulations, or orders administered, issued or enforced by the United States
Food and Drug Administration (“FDA”) or any other Governmental Body
having authority over Gish or any of its products.  Neither Gish nor Seller has received from the
FDA or 



 27
 









any other Governmental Body any
written notice of adverse findings, regulatory letters, notices of violations,
warning letters, criminal proceeding notices under Section 305 of the
Federal Food, Drug, and Cosmetic Act, in each case alleging or asserting
material noncompliance with any statute, rule or regulation of any federal,
state, local or foreign Governmental Body or any Governmental Authorizations,
and there have been no seizures conducted by the FDA or other Governmental
Body, and no recalls, market withdrawals, field notifications, notifications of
misbranding or adulteration, or safety alerts relating to the safety or
efficacy of Gish’s products conducted or requested by the FDA or other
Governmental Body relating to the products sold by Gish.  Except as set forth in Part 3.13(c) of
the Disclosure Schedule, Gish has not, either voluntarily or involuntarily,
initiated, conducted, or issued or caused to be initiated, conducted or issued,
any recall, market withdrawal, safety alert, “dear doctor” letter, or other
similar notice or action relating to the alleged lack of safety or efficacy of
any of Gish’s products or any alleged product defect or violation, and neither
Seller nor Gish has Knowledge that any Governmental Body has initiated,
conducted or intends to initiate any such notice or action.  Neither Gish nor Seller has received written
notice of any Proceeding from any Governmental Body alleging that any product,
operation or activity is in material violation of any statute, rule or
regulation of any Governmental Body or Governmental Authorization and neither
Seller nor Gish has Knowledge that any such Governmental Body is considering
any such Proceeding.  Neither Seller nor
Gish is aware of any facts that are reasonably likely to cause (i) the
withdrawal or recall of any products sold or intended to be sold by Gish, (ii)
a material change in the marketing classification or labeling of any such
products, except as would not, individually or in the aggregate, have resulted
or could reasonably be expected to result in a Material Adverse Change, (iii) a
termination or suspension of marketing clearance of any such products, or (iv)
a suspension or revocation of any of Gish’s Governmental Authorizations.  Neither Seller nor Gish has received written
notice (whether complete or pending) of any proceeding seeking recall,
suspension or seizure of any products sold or intended to be sold by Gish.


(d)           To the Knowledge of each of Seller and Gish,
(i) during the last five years no officer, employee, consultant or agent of
Seller or Gish has made an untrue statement of a material fact or fraudulent
statement to the FDA or any other Governmental Body, failed to disclose a
material fact required to be disclosed to the FDA or any other Governmental
Body, or committed an act, made a statement or failed to make a statement that,
at the time such disclosure was made, could reasonably be expected to provide a
basis for the FDA or any other Governmental Body to invoke with respect to Gish
its policy respecting “Fraud, Untrue Statements of Material Facts, Bribery, and
Illegal Gratuities”, set forth in 56 Fed. Reg. 46191
(September 10, 1991) or any similar policy and (ii) no officer, employee,
consultant or agent of Gish has been convicted of any crime or engaged in any
conduct for which debarment is mandated by 21 U.S.C. Section 335a or
any similar law or authorized by 21 U.S.C. Section 335a or any
similar law.



 28
 









3.14.        Legal Proceedings; Orders.


(a)           Except as set forth in Part 3.14 of the
Disclosure Schedule, there is no pending Proceeding:


(i)            that has been
commenced by or against Gish or that otherwise relates to or may affect the
business of, or any of the assets owned or used by, Gish; or


(ii)           that challenges, or
that may have the effect of preventing, delaying, making illegal, or otherwise
interfering with, any of the transactions contemplated by this Agreement.


To the
Knowledge of Seller and Gish, (A) no such Proceeding has been Threatened, and
(B) no event has occurred or circumstance exists that may give rise to or serve
as a basis for the commencement of any such Proceeding.  Seller and Gish have delivered to Buyer
copies of all pleadings, correspondence, and other documents relating to each
Proceeding listed in Part 3.14 of the Disclosure Schedule.


(b)           Except as set forth in Part 3.14 of the
Disclosure Schedule:


(i)            there is no Order to
which Gish, or any of the assets owned or used by Gish, is subject;


(ii)           neither Gish nor Seller
is subject to any Order that relates to the Shares or business of, or any of
the assets owned or used by, Gish; and


(iii)          to the Knowledge of Seller
and Gish, no officer, director, agent, or employee of Gish is subject to any
Order that prohibits such officer, director, agent, or employee from engaging
in or continuing any conduct, activity, or practice relating to the business of
Gish.


(c)           Except as set forth in Part 3.14 of the
Disclosure Schedule:


(i)            Gish is, and at all
times since May 1, 2003, has been, in full compliance with all of the
terms and requirements of each Order to which it, or any of the assets owned or
used by it, is or has been subject;


(ii)           no event has occurred
or circumstance exists that may constitute or result in (with or without notice
or lapse of time) a violation of or failure to comply with any term or
requirement of any Order to which Seller, Gish, or any of the assets owned or
used by Gish, is subject; and



 29
 









(iii)          Gish has not received,
at any time since May 1, 2003, any notice or other communication (whether
oral or written) from any Governmental Body or any other Person regarding any
actual, alleged, possible, or potential violation of, or failure to comply
with, any term or requirement of any Order to which Gish, or any of the assets
owned or used by Gish, is or has been subject.


3.15.        Products Liability.


Neither Seller nor Gish has received any written
notice relating to, any claim involving any product manufactured, produced,
distributed or sold by or on behalf of the Company or the Subsidiary resulting
from an alleged defect in design, manufacture, materials or workmanship, or any
alleged failure to warn, or from any breach of implied warranties or
representations, other than notices or claims that have been settled or
resolved by Gish prior to the date hereof.


3.16.        Absence of Certain Changes and Events.


Except as set forth in Part 3.16 of the
Disclosure Schedule, since March 31, 2007, Gish has conducted its
businesses only in the Ordinary Course of Business and there has not been any:


(a)           change in Gish’s
authorized or issued capital stock; grant of any stock option or right to
purchase shares of capital stock or any other ownership interests in Gish;
issuance of any security convertible into such capital stock or ownership
interest; grant of any registration rights; purchase, redemption, retirement,
or other acquisition by Gish of any shares of any such capital stock or
ownership interest; or declaration or payment of any dividend or other
distribution or payment in respect of shares of capital stock;


(b)           amendment or other
change to the Organizational Documents of Gish;


(c)           action with regard to
any recapitalization, reorganization, liquidation or dissolution of Gish;


(d)           payment, or increase in
the payment, of any bonuses, salaries, or other compensation to any
stockholder, director, officer, or (except in the Ordinary Course of Business)
employee or entry into any employment, severance, or similar Contract with any
director, officer, employee or other Person;


(e)           adoption of, or
increase in the payments to or benefits under, any collective bargaining,
profit sharing, stock option, bonus, compensation, deferred compensation,
savings, insurance, pension, retirement, or other employee or fringe benefit
plan, Contract, policy or arrangement for or with any directors, officers,
employees or consultants of Gish;



 30
 









(f)            damage to or destruction or loss of any
asset or property of Gish, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial condition, or
prospects of Gish, taken as a whole;


(g)           entry into, amendments or termination of,
receipt of notice of termination, lapse or expiration or failure to renew of
(i) any material license, distributorship, dealer, sales representative, joint
venture, credit, or similar Contract, (ii) any Contract or transaction
involving a total remaining commitment by or to Gish of at least
US Dollars 100,000 (USD hundred thousand), or (iii) any
Contracts relating to the Intellectual Property Assets or pursuant to which
rights in any patents, copyrights, trademarks or other intellectual property
are in any manner transferred, conveyed, granted, restricted or waived to which
Gish is a party or by which it is bound;


(h)           sale (other than sales of Inventory in the
Ordinary Course of Business), lease, or other disposition of any material asset
or property of Gish or mortgage, pledge, or imposition of any Encumbrance on
any material asset or property of  Gish,
including the sale, lease, or other disposition of any of the Intellectual
Property Assets, or any abandonment, failure to enforce or failure to maintain
any Intellectual Property Asset;


(i)            cancellation, release, settlement,
compromise or waiver of any claims or rights with a value to Gish in excess of
US Dollars 10,000 (USD ten thousand);


(j)            incurrence of Indebtedness for borrowed
money or issuance of any debt securities or assumption, guarantee or
endorsement, and Gish has not otherwise become responsible for, the obligations
of any Person, or made any loans or advances;


(k)           any material change in the levels of
Inventories currently maintained by or for Gish, except in the Ordinary Course
of Business;


(l)            material change in any pricing, investment,
accounting, financial reporting, inventory, credit or allowance practice or
policy or in any method of calculating any bad debt, contingency or other
reserve for accounting or financial reporting purposes;


(m)          settlement or compromise of any pending or
threatened suit, action or claim in any way involving or otherwise relating,
directly or indirectly, to Gish or its properties, assets, liabilities,
business or employees; or


(n)           agreement, whether oral or written, by Gish
to do any of the foregoing.



 31
 









3.17.        Contracts; No Defaults.


(a)           Part 3.17(a) of the Disclosure Schedule
contains a complete and accurate list, and Seller and Gish have delivered to
Buyer true and complete copies, of:


(i)            each Applicable
Contract that involves performance of services or delivery of goods or
materials by Gish of an amount or value in excess of
US Dollars 50,000 (USD fifty thousand);


(ii)           each Applicable
Contract that involves performance of services or delivery of goods or
materials to Gish of an amount or value in excess of
US Dollars 50,000 (USD fifty thousand);


(iii)          each Applicable Contract
that was not entered into in the Ordinary Course of Business and that involves
expenditures or receipts of Gish in excess of US Dollars 50,000 (USD
fifty thousand);


(iv)          each lease, rental or
occupancy agreement, license, installment and conditional sale agreement, and
other Applicable Contract affecting the ownership of, leasing of, title to, use
of, or any leasehold or other interest in, any real or personal property
(except personal property leases and installment and conditional sales
agreements having a value per item or aggregate payments of less than
US Dollars 10,000 (USD ten thousand) and with terms of less than
one year);


(v)           each licensing
agreement or other Applicable Contract with respect to patents, trademarks,
copyrights, or other intellectual property, including agreements with current
or former employees, consultants, or contractors regarding the appropriation or
the non-disclosure of any of the Intellectual Property Assets;


(vi)          each collective
bargaining agreement and other Applicable Contract to or with any labor union
or other employee representative of a group of employees;


(vii)         each joint venture,
partnership, and other Applicable Contract (however named) involving a sharing
of profits, losses, costs, or liabilities by Gish with any other Person;


(viii)        each contract and
agreement that in any way limits or purports to limit the ability of Gish to
compete in any line of business or with any Person or in any geographic area or
during any period of time;



 32
 









(ix)           each Applicable
Contract providing for payments to or by any Person based on sales, purchases,
or profits, other than direct payments for goods;


(x)            each Contract between
Gish and each of Seller and its Affiliates;


(xi)           each Contract providing
for a negative profit margin;


(xii)          each Contract which
provides for a “purchase on approval” or any other option for the purchaser to
consummate the purchase of a Gish product after a period of one month or longer
following receipt of such product;


(xiii)         each power of attorney
that is currently effective and outstanding;


(xiv)        each Applicable Contract
entered into other than in the Ordinary Course of Business that contains or
provides for an express undertaking by Gish to be responsible for consequential
damages;


(xv)         each Applicable Contract
for capital expenditures in excess of US Dollars 50,000
(USD fifty thousand);


(xvi)        each written warranty,
guaranty, and or other similar undertaking with respect to contractual
performance extended by Gish other than in the Ordinary Course of Business;


(xvii)       each Applicable Contract
providing for a commitment of employment for a specified or unspecified term or
otherwise relating to employment or the termination of employment;


(xviii)      each Applicable Contract
relating to the future disposition or acquisition of any assets and properties
individually or in the aggregate in excess of US Dollars 50,000
(USD fifty thousand);


(xix)         each Applicable Contract
relating to collective bargaining or similar labor Applicable Contract;


(xx)          each other Applicable
Contract that is material to Gish or the non-performance of which would be
reasonably likely to have a material adverse change in the business,
operations, properties, prospects, assets or condition of Gish;


(xxi)         each other Applicable
Contract with a term of greater than one  year
and



 33
 









(xxii)        each amendment,
supplement, and modification (whether oral or written) in respect of any of the
foregoing.


Part 3.17(a) of the
Disclosure Schedule sets forth reasonably complete details concerning such
Contracts that are not written, if any, including the parties to such
Contracts, the amount of the remaining commitment of Gish under such Contracts,
and the other material terms respecting such Contracts.


(b)           Except as set forth in Part 3.17(b) of the
Disclosure Schedule:


(i)            Seller does not have
any rights or obligations or liabilities under, any Contract that relates to
the business of, or any of the assets owned or used by, Gish; and


(ii)           to the Knowledge of
Seller and Gish, no officer, director, agent, employee, consultant, or
contractor of Gish is bound by any Contract that purports to limit the ability
of such officer, director, agent, employee, consultant, or contractor to (A)
engage in or continue any conduct, activity, or practice relating to the
Business, or (B) assign to Gish or to any other Person any rights to any
invention, improvement, or discovery.


(c)           Except as set forth in Part 3.17(c) of the
Disclosure Schedule, each Contract identified or required to be identified in
Part 3.17(a) of the Disclosure Schedule is in full force and effect and is
valid and enforceable in accordance with its terms.


(d)           Except as set forth in Part 3.17(d) of the
Disclosure Schedule:


(i)            Gish is, and at all
times since inception of such Applicable Contract, has been in material
compliance with all applicable terms and requirements of each Applicable
Contract;


(ii)           each other Person that
has or had any obligation or liability under any Applicable Contract is, to the
Knowledge of Seller and Gish, in material compliance with all applicable terms
and requirements of such Applicable Contract;


(iii)          no event has occurred or
circumstance exists that (with or without notice or lapse of time) may
contravene, conflict with in any material respect, or result in a material
violation or breach of, or give Gish or other Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or performance
of, or to cancel, terminate, or modify, any Applicable Contract; and



 34
 









(iv)          Gish has not given to or
received from any other Person, any notice or other communication (whether oral
or written) regarding any actual, alleged, possible, or potential violation or
breach of, or default under, any Applicable Contract.


(e)           There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material amounts paid or
payable to Gish under current or completed Contracts with any Person and, to
the Knowledge of Seller and Gish, no such Person has made written demand for
such renegotiation.


(f)            The Contracts relating to the sale, design,
manufacture, or provision of products or services by Gish have been entered
into in the Ordinary Course of Business and have been entered into without the
commission of any act alone or in concert with any other Person, or any
consideration having been paid or promised, that is or would be in violation of
any Legal Requirement.


3.18.        Insurance.


(a)           Gish carries valid insurance policies with
respect to its assets, properties and business in type and quantity considered
adequate, sufficient and customary for participants in the industries in which
Gish operates.


(b)           Seller and Gish have delivered to Buyer:


(i)            true and complete
copies of all policies of insurance to which Gish is a party or under which
Gish, or any director or officer of Gish, is or has been covered at any time
within the three (3) years preceding the date of this Agreement;


(ii)           true and complete
copies of all pending applications for policies of insurance; and


(iii)          any statement by the
auditor of Gish’s financial statements with regard to the adequacy of such
entity’s coverage or of the reserves for claims.


(c)           Part 3.18(c)of the Disclosure Schedule
describes:


(i)            any self-insurance
arrangement by or affecting Gish, including any reserves established
thereunder;


(ii)           any Contract or
arrangement, other than a policy of insurance, for the transfer or sharing of
any risk by Gish; and


 



 35















(iii)          all obligations of Gish to third
parties with respect to insurance (including such obligations under leases and
service agreements) and the policy under which such coverage is provided.


(d)           Neither
Seller nor Gish has received (A) any refusal of coverage or any notice that a
defense will be afforded with reservation of rights, or (B) any notice of
cancellation or any other indication that any insurance policy is no longer in
full force or effect or will not be renewed or that the issuer of any policy is
not willing or able to perform its obligations thereunder.


(e)           Gish
and/or Seller have paid all premiums due, and have otherwise performed its
obligations, under each policy to which Gish is a party or that provides
coverage to Gish or any director or officer of Gish.


(f)            Gish
has given timely notice to the insurer of all claims that may be insured
thereby.


3.19.        Environmental
Matters.


Except as set forth in
Part 3.19 of the Disclosure Schedule:


(a)           Gish
is, and at all times has been, in material compliance with, and has not been
and is not in material violation of or liable under, any Environmental
Law.  Neither Seller nor Gish has any
basis to expect, nor has any of them or any other Person for whose conduct they
are or may be held to be responsible received, any actual or Threatened order,
notice, or other communication from any other Person of any actual or potential
violation of or failure to comply with any Environmental Law, or of any actual
or Threatened obligation to undertake or bear the cost of any Environmental,
Health, and Safety Liabilities including with respect to any of the Facilities
or any other properties or assets (whether real, personal, or mixed) in which
Seller or Gish has had an interest, or with respect to any property or Facility
at or to which Hazardous Materials were generated, manufactured, refined,
transferred, imported, used, or processed by or on behalf of Seller, Gish, or
any other Person for whose conduct they are or may be held responsible, or from
which Hazardous Materials have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.


(b)           There
are no pending or, to the Knowledge of Seller and Gish, Threatened claims,
Encumbrances, or other restrictions of any nature, resulting from any Environmental,
Health, and Safety Liabilities or arising under or pursuant to any
Environmental Law, with respect to or affecting any of the Facilities or any
other properties and assets (whether real, personal, or mixed) in which Seller
or Gish has or had an interest.



 36
 









(c)           Neither
Seller nor Gish has any basis to expect, nor has any of them or any other
Person for whose conduct they are or may be held responsible, received, any
citation, directive, inquiry, notice, Order, summons, warning, or other
communication that relates to Hazardous Activity, Hazardous Materials, or any
alleged, actual, or potential violation of or failure to comply with any
Environmental Law, or of any alleged, actual, or potential obligation to
undertake or bear the cost of any Environmental, Health, and Safety Liabilities
including with respect to any of the Facilities or any other properties or
assets (whether real, personal, or mixed) in which Seller or Gish had an
interest, or with respect to any property or facility to which Hazardous
Materials generated, manufactured, refined, transferred, imported, used, or
processed by Seller, Gish, or any other Person for whose conduct they are or
may be held responsible, have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.


(d)           Neither
Seller nor Gish, or any other Person for whose conduct they are or may be held
responsible, has any Environmental, Health, and Safety Liabilities with respect
to the Facilities or, to the Knowledge of Seller and Gish, with respect to any
other properties or assets (whether real, personal, or mixed).


(e)           There
are no Hazardous Materials present on or in the Environment at the Facilities,
including any Hazardous Materials contained in barrels, above or underground
storage tanks, landfills, land deposits, dumps, equipment (whether moveable or
fixed) or other containers, either temporary or permanent, and deposited or
located in land, water, sumps, or any other part of the Facilities, or
incorporated into any structure therein or thereon.  Neither Seller, Gish, or any other Person for
whose conduct they are or may be held responsible, or to the Knowledge of
Seller and Gish, any other Person, has permitted or conducted, or is aware of,
any Hazardous Activity conducted with respect to the Facilities or any other
properties or assets (whether real, personal, or mixed) in which Seller or Gish
has or had an interest.


(f)            There
has been no Release or, to the Knowledge of Seller and Gish, Threat of Release,
of any Hazardous Materials at or from the Facilities or at any other locations
where any Hazardous Materials were generated, manufactured, refined,
transferred, produced, imported, used, or processed from or by the Facilities,
or from or by any other properties and assets (whether real, personal, or
mixed) in which Gish has an interest.


(g)           Seller
and Gish have delivered to Buyer true and complete copies and results of any
reports, studies, analyses, tests, or monitoring possessed or initiated by
Seller or Gish pertaining to Hazardous Materials or Hazardous Activities in,
on, or under the Facilities, or concerning compliance by Gish or any other
Person for whose conduct Gish is responsible, with Environmental Laws.



 37
 









3.20.        Employees.


(a)           Part 3.20
of the Disclosure Schedule contains a complete and accurate list of the
following information for each employee or director of Gish, including each
employee on leave of absence or layoff status: 
name; job title; current compensation paid or payable and any change in
compensation since January 1, 2005; vacation accrued; and service credited
for purposes of vesting and eligibility to participate under Gish’s pension,
retirement, profit-sharing, thrift-savings, deferred compensation, stock bonus,
stock option, cash bonus, employee stock ownership (including investment credit
or payroll stock ownership), severance pay, insurance, medical, welfare, or
vacation plan, other Employee Pension Benefit Plan or Employee Welfare Benefit
Plan, or any other employee benefit plan or any Director Plan.


(b)           No
employee or director of Gish is a party to, or is otherwise bound by, any
agreement or arrangement, including any confidentiality, noncompetition, or
proprietary rights agreement, between such employee or director and any other
Person (“Proprietary Rights Agreement”) that in any way adversely
affects or will affect (i) the performance of his duties as an employee or
director of Gish, or (ii) the ability of Gish to conduct its business.  To Seller’s and Gish’s Knowledge, no officer
or other key employee of Gish intends to terminate his employment with Gish.


3.21.        Labor
Relations; Compliance.


Gish is not, and since its inception has not been, a
party to any collective bargaining or other labor Contract.  Since May 1, 2003, there has not been,
there is not presently pending or existing, and to the Knowledge of Seller and
Gish there is not Threatened, (a) any strike, slowdown, picketing, work
stoppage, or employee grievance process, (b) any Proceeding against or
affecting Gish relating to the alleged violation of any Legal Requirement
pertaining to labor relations or employment matters, including any charge or
complaint filed by an employee or union with the National Labor Relations
Board, the Equal Employment Opportunity Commission, or any comparable
Governmental Body, organizational activity, or other labor or employment
dispute against or affecting Gish or its premises, or (c) any application for
certification of a collective bargaining agent. 
To the Knowledge of Seller and Gish no event has occurred or
circumstance exists that could provide the basis for any work stoppage or other
labor dispute.  There is no lockout of
any employees by Gish, and no such action is contemplated by Gish.  Gish has complied in all material respects
with all Legal Requirements relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes, occupational
safety and health, and plant closing. Gish is not liable for the payment of any
compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.



 38
 









3.22.        Intellectual
Property.


(a)           The
term “Intellectual Property Assets” includes all U.S. and non-U.S.:


(i)            patents, utility models,
supplementary protection certificates and applications therefore (including
provisional applications, invention disclosures, certificates of invention and
applications for certificates of invention) and divisionals, continuations,
continuations-in-part, patents of addition, reissues, renewals, extensions,
re-examinations, and equivalents thereof (collectively, “Patents”)


(ii)           fictional business names, trading
names, registered and unregistered trademarks, service marks, and applications
for the foregoing together with the goodwill associated with or symbolized by
any of the foregoing (collectively, “Marks”);


(iii)          copyrights in both published works and
unpublished works (collectively, “Copyrights”);


(iv)          URLs and internet domain names,
including without limitation www.gishbiomedical.com;


(v)           know-how, trade secrets, confidential
information, inventions or discoveries (in each case, whether or not
patentable), customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively, “Trade Secrets”);
and


(vi)          other intellectual property,
industrial rights or proprietary rights (however defined); in each case, owned,
used, or licensed by Gish as licensee or licensor.


(b)           Part
3.22(b) of the Disclosure Schedule contains a complete and accurate list and
summary description, including any royalties paid or received by the Gish, of
all Contracts relating to the Intellectual Property Assets to which Gish is a
party or by which Gish is bound, except perpetual, paid-up licenses for
commonly retail-available software programs under which Gish is the
licensee.  There are no outstanding and,
to Seller’s and Gish’s Knowledge, no Threatened disputes or disagreements with
respect to any such agreement.


(c)           Intellectual
Property necessary for the Business:


(i)            The Intellectual Property Assets are
those necessary for or used in the operation of the Business as it is currently
conducted and contemplated to be conducted. 
Except as set forth in Part 3.22(c) of the Disclosure Schedule,
Gish is the owner of all right, title, and interest in and to each of the
Intellectual Property Assets, free 



 39
 









and clear of
all liens, security interests, charges, Encumbrances, equities, and other
adverse claims, and has the right to use without payment to a third party all
of the Intellectual Property Assets.


(ii)           Except as set forth in a license
agreement between Gish as licensor and Seller as licensee, dated as of the date
of this Agreement, Seller holds no right, title or claim to know how subject to
United States patent application 10/080,749
(pub. no. 20030161938), PCT/US 2003/004284 (WO/2003/072154), European
patent application 03716020.7, Japanese patent application 2003-570897,
trade secret MP 194 with the title “Heparin Coating Formulation” or any
other Intellectual Property Assets subject to the Intellectual Property
Assignment and Asset Transfer Agreement between Seller and Gish, dated
February 21, 2007. The Parties agree to treat such agreement as though it
never existed, and no right, title, claim, demand or any other right or action
may be based on said agreement.  Neither
Seller nor any of its Affiliates has transferred or purported or offered to
transfer any of these Intellectual Property Assets to any Person.  None of Seller, its Affiliates or Gish
reasonably expects any Person to base right, title, claim, demand or any other
right or action on such agreement.


(iii)          Except as set forth in
Part 3.22(c) of the Disclosure Schedule, all employees of Gish have
executed written Contracts with Gish that effectively assign to Gish all rights
to any inventions, improvements, discoveries, or information relating to the
Business.  No employee of Gish has
entered into any Contract that restricts or limits in any way the scope or type
of work in which the employee may be engaged or requires the employee to
transfer, assign, or disclose information concerning his work to anyone other
than the Gish.


(d)           Patents.


(i)            Part 3.22(d) of the Disclosure
Schedule contains a complete and accurate list and summary description of all
Patents. Gish is the owner of all right, title, and interest in and to each of
the Patents, free and clear of all liens, security interests, charges,
Encumbrances, entities, and other adverse claims.


(ii)           All of the Patents are currently in
compliance with formal legal requirements (including payment of filing,
examination, and maintenance fees and proofs of working or use), are valid and
enforceable, and, except as set forth in Part 3.22(d) of the Disclosure
Schedule, are not subject to any maintenance fees or taxes or actions falling
due within 90 (ninety) days after the date of this Agreement.



 40
 









(iii)          No Patent has been or is now involved
in any interference, reissue, reexamination, or opposition proceeding. To
Seller’s and Gish’s Knowledge, there is no potentially interfering patent or
patent application of any third party.


(iv)          Except for the infringement of the
Gish oxygenator patent, USA Patent No. 5,762,869, by the Hilite family of
products produced and sold by an affiliate of Buyer, no Patent is infringed or
has been challenged or, to Seller’s and Gish’s Knowledge, Threatened in any
way. None of the products manufactured and sold, nor any process or know-how
used, by, or on behalf of, Gish infringes or is alleged to infringe any patent
of any other Person.


(v)           All products made, used, or sold
under the Patents have been marked with proper patent notices.


(e)           Trademarks.


(i)            Part 3.22(e) of Disclosure
Schedule contains a complete and accurate list and summary description of all
Marks.  Gish is the owner of all right,
title, and interest in and to each of the Marks, free and clear of all liens,
security interests, charges, Encumbrances, equities, and other adverse claims.


(ii)           All Marks that have been registered
with the United States Patent and Trademark Office are currently in compliance
with all formal legal requirements (including the timely post-registration
filing of affidavits of use and incontestability and renewal applications), are
valid and enforceable, and are not subject to any maintenance fees or taxes or
actions falling due within ninety days (90) after the date of this Agreement.


(iii)          No Mark has been or is now involved in
any opposition, invalidation, or cancellation and, to Seller’s and Gish’s
Knowledge, no such action is Threatened with the respect to any of the Marks.


(iv)          To Seller’s and Gish’s Knowledge,
there is no potentially interfering trademark or trademark application of any
third party.


(v)           No Mark is infringed, has been challenged
or, to Seller’s and Gish’s Knowledge, Threatened in any way.  None of the Marks used by Gish infringes or
is alleged to infringe any trade name, trademark, or service mark of any third
party.


(vi)          All products and materials containing
a Mark bear the proper registration notice where permitted by law.



 41
 









(f)            Copyrights.


(i)            Part 3.22(f) of the Disclosure
Schedule contains a complete and accurate list and summary description of all
Copyrights.  Gish is the owner of all
right, title, and interest in and to each of the Copyrights, free and clear of
all liens, security interests, charges, Encumbrances, equities, and other
adverse claims.


(ii)           All the Copyrights have been
registered and are currently in compliance with formal legal requirements, are
valid and enforceable, and are not subject to any maintenance fees or taxes or
actions falling due within ninety (90) days after the date of this Agreement.


(iii)          No Copyright is infringed or has been
challenged or, to Seller’s and Gish’s Knowledge, Threatened in any way.  None of the subject matter of any of the
Copyrights  infringes or is alleged to
infringe any copyright of any third party or is a derivative work based on the
work of a third party.


(iv)          All works encompassed by the
Copyrights have been marked with the proper copyright notice.


(g)           Trade
Secrets.


(i)            With respect to each Trade Secret,
the documentation relating to such Trade Secret is current, accurate, and
sufficient in detail and content to identify and explain it and to allow its
full and proper use without reliance on the knowledge or memory of any
individual.


(ii)           Gish has taken reasonable precautions
and actions to protect the secrecy, confidentiality, and value of its Trade
Secrets.


(iii)          Gish has good title and (not
necessarily exclusive) right to use the Trade Secrets.  The Trade Secrets are not part of the public
knowledge or literature, and, to Seller’s and Gish’s Knowledge, have not been
used, divulged, or appropriated either for the benefit of any Person (other
than  Gish) or to the detriment of
Gish.  No Trade Secret is subject to any
adverse claim or has been challenged or, to the Knowledge of Seller and Gish,
Threatened in any way.


(h)           Without
limiting Sections 3.22(d)(iv), 3.22(e)(v) and 3.22(f)(iii), no
Intellectual Property Asset is infringed or misappropriated (except for the
infringement of the Gish oxygenator patent, USA Patent No. 5,762,869, by
the Hilite family of products produced and sold by an affiliate of Buyer) or
has been challenged or, to Seller’s Knowledge, Threatened 



 42
 









in any way.  None of the
Intellectual Property Assets and none of the products manufactured or sold by,
or on behalf of, Gish infringes or misappropriates or is alleged to infringe or
misappropriate any intellectual property, industrial property right or other
proprietary right of a third party.


(i)            The
consummation of the transactions contemplated by this Agreement will not (i)
result in the loss of, or otherwise adversely affect, any rights of Gish in any
Intellectual Property Assets; (ii) grant or require Gish to grant to any Person
any rights with respect to any Intellectual Property Assets; (iii) subject Gish
to any increase in royalties or other payments in respect of any Intellectual
Property Assets; or (iv) diminish any royalties or other payments Gish would
otherwise be entitled to in respect of any Intellectual Property Assets.


(j)            Information
Technology. 


(i)            The IT Systems have been properly
maintained by technically competent personnel in accordance with standards set
by the manufacturers or otherwise in accordance with standards prudent in the
Business for proper operation, monitoring and use.  The IT Systems are in good working condition
to effectively perform all information technology operations necessary or
advisable for the conduct of the Business. 
Gish has not experienced within the past twelve (12) months any material
disruption to, or material interruption in, its conduct of the Business
attributable to a defect, bug, breakdown or other failure or deficiency on the
part of the IT Systems.


(ii)           Except for scheduled or routine
maintenance which would not reasonably be expected to cause any material
disruption to, or material interruption in, the conduct of the Business, the IT
Systems are available for use during normal working hours.  Gish has taken commercially reasonable steps
to provide for the backup and recovery of the data and information critical to
the conduct of the Business (including such data and information that is stored
on magnetic or optical media in the ordinary course of business) without
material disruption to, or material interruption in, the conduct of the
Business.


(iii)          Gish is in compliance with all Legal
Requirements regarding the collection, use and protection of personal
information and Gish’s published and internal privacy and data security
policies and procedures, including without limitation the U.S. Health Insurance
Portability and Accountability Act of 1996 (as may be amended from time to
time), and any foreign equivalents thereof.



 43
 









3.23.        No
Intragroup Liabilities.


As of the
Closing Date, Gish will not be indebted to or liable for any payment of any sum
to Seller or any of its Affiliates (“Intragroup Liabilities”).


3.24.        Certain
Payments.


Neither Gish nor any director, officer, agent, or
employee of Gish, or to Seller’s and Gish’s Knowledge any other Person
associated with or acting for or on behalf of Gish, has directly or indirectly
(a) made any contribution, gift, bribe, payoff, influence payment, kickback, or
other payment to any Person, private or public, regardless of form, whether in
money, property, or services (i) to obtain favorable treatment in securing
business, (ii) to pay for favorable treatment for business secured, (iii) to
obtain special concessions or for special concessions already obtained, for or
in respect of Gish, or (iv) in violation of any Legal Requirement, (b)
established or maintained any fund or asset that has not been recorded in the
books and records of Gish.


3.25.        Disclosure.


(a)           No
representation or warranty of Seller or Gish in this Agreement and no statement
in the Disclosure Schedule omits to state a material fact necessary to make the
statements herein or therein, in light of the circumstances in which they were
made, not misleading.


(b)           No
notice given pursuant to Section 5.5 will contain any untrue statement or
omit to state a material fact necessary to make the statements therein or in
this Agreement, in light of the circumstances in which they were made, not
misleading.


(c)           There
is no fact known to Seller that has specific application to Gish (other than
general economic or industry conditions) and that materially adversely affects
or, as far as Seller can reasonably foresee, materially threatens, the assets,
business, prospects, financial condition, or results of operations of Gish that
has not been set forth in this Agreement or the Disclosure Schedule.


3.26.        Brokers
or Finders.


Except for fees payable to Silverwood Partners LLC by
Seller, Seller, Gish and their agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders’ fees or agents’ commissions
or other similar payment in connection with this Agreement or the transactions
contemplated hereby and will indemnify and hold Buyer harmless from any such
payment alleged to be due by or through Seller or Gish as a result of the
action of Seller, Gish or their officers or agents.



 44
 









4.                                       REPRESENTATIONS
AND WARRANTIES OF BUYER


Buyer represents and
warrants to Sellers as follows:


4.1.          Organization
and Good Standing.


Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the Federal Republic of
Germany.


4.2.          Authority;
No Conflict.


(a)           This
Agreement constitutes the legal, valid, and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms.  Upon the execution and delivery by Buyer of
this Agreement and the agreements contemplated hereby, this Agreement (and such
other agreements) will constitute the legal, valid, and binding obligations of
Buyer, enforceable against Buyer in accordance with their respective
terms.  Buyer has the absolute and
unrestricted right, power, and authority to execute and deliver this Agreement
and to perform its obligations under this Agreement.


(b)           Neither
the execution and delivery of this Agreement by Buyer nor the consummation or
performance by Buyer of any of the transactions contemplated hereby will give
any Person the right to prevent, delay, or otherwise interfere with the
performance of the transactions contemplated hereby pursuant to:


(i)            any provision of Buyer’s
Organizational Documents;


(ii)           any resolution adopted by the board
of directors or the stockholders of Buyer;


(iii)          any Legal Requirement or Order to
which Buyer may be subject; or


(iv)          any Contract to which Buyer is a party
or by which Buyer may be bound.


(c)           Except
as set forth in Schedule 4.2, Buyer is not and will not be required to
obtain any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
transactions contemplated hereby.



 45
 









4.3.          Certain
Proceedings.


There is no pending Proceeding that has been commenced
against Buyer and that challenges, or may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, this Agreement or any
of the transactions contemplated hereby. 
To Buyer’s Knowledge, no such Proceeding has been Threatened.


4.4.          Brokers
or Finders.


Buyer and its officers and agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders’
fees or agents’ commissions or other similar payment in connection with this
Agreement and will indemnify and hold Seller harmless from any such payment
alleged to be due by or through Buyer as a result of the action of Buyer or its
officers or agents.


5.                                       COVENANTS
OF SELLER AND GISH PRIOR TO CLOSING DATE


5.1.          Access
and Investigation.


Between the date of this Agreement and the Closing
Date, Seller will, and will cause Gish and its Representatives to, (a) afford
Buyer and its Representatives (collectively, “Buyer’s Advisors”)
reasonable access to Gish’s personnel, properties, contracts, books and
records, and other documents and data, (b) furnish Buyer and its
Representatives with copies of all such contracts, books and records, and other
existing documents and data as Buyer may reasonably request, and (c) furnish
Buyer and its Representatives with such additional financial, operating, and
other data and information as Buyer may reasonably request.


5.2.          Operation
of the Businesses.


Between the date of this Agreement and the Closing
Date, Sellers will, and will cause Gish to:


(a)           conduct
the Business only in the Ordinary Course of Business;


(b)           use
their reasonable best efforts to preserve intact the current business
organization of Gish, keep available the services of the current officers,
employees, and agents of Gish, and maintain the relations and good will with
suppliers, customers, landlords, creditors, employees, agents, and others
having business relationships with Gish;


(c)           confer
with Buyer concerning operational matters of a material nature; and


(d)           otherwise
report to Buyer periodically and at such other times and in the format as Buyer
may reasonably request concerning the status of the Business, and the
operations and finances of Gish.



 46
 









5.3.          Negative
Covenants.


Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, Seller will
not, and will cause Gish not to, without the prior consent of Buyer (which
consent shall not be unreasonably withheld), take any affirmative action, or
fail to take any reasonable action within its control, as a result of which any
of the changes or events listed in Section 3.16 could be reasonably
expected to occur.  Such proscribed
actions shall include, but not be limited to the issuance of any capital stock
or options, warrants or other rights convertible into or exchangeable for
capital stock, the authorization or payment of any dividends or other
distributions to Sellers, or the authorization or consummation of any
consolidation, merger, or sale of assets other than in the Ordinary Course of
Business, or the purchase of the assets or business of any Person, or any other
extraordinary corporate transaction.


5.4.          Required
Approvals.


As promptly as practicable after the date of this
Agreement, Seller will, and will cause Gish to, make all filings required by
Legal Requirements to be made by them in order to consummate the transactions
contemplated by this Agreement.  Between
the date of this Agreement and the Closing Date, Seller will, and will cause
Gish to, (a) cooperate with Buyer with respect to all filings that Buyer elects
to make or is required by Legal Requirements to make in connection with the
transactions contemplated by this Agreement, and (b) cooperate with Buyer in
obtaining all consents identified in Schedule 4.2.


5.5.          Notification.


Between the date of this Agreement and the Closing
Date, Seller will promptly notify Buyer in writing if Seller or Gish becomes
aware of any fact or condition that causes or constitutes a Breach of any of
representations and warranties of Seller or Gish as of the date of this
Agreement, or if Seller or Gish becomes aware of the occurrence after the date
of this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a Breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition.  Should any such fact or condition require any
change in the Disclosure Schedule if the Disclosure Schedule were dated the
date of the occurrence or discovery of any such fact or condition, Seller will
promptly deliver to Buyer a supplement to the Disclosure Schedule specifying
such change.  During the same period,
Seller will promptly notify Buyer of the occurrence of any Breach of any
covenant of Seller in this Section 5 or of the occurrence of any event
that may make the satisfaction of the conditions in Section 7 impossible or
unlikely.



 47
 









5.6.          No
Negotiation.


Until such time, if any, as this Agreement is
terminated pursuant to Section 9, Seller will not, and will cause Gish and
each of their Representatives not to, directly or indirectly solicit, initiate,
or encourage any inquiries or proposals from, discuss or negotiate with,
provide any non-public information to, or consider the merits of any
unsolicited inquiries or proposals from, any Person (other than Buyer) relating
to any transaction involving the sale of the business or assets (other than in
the Ordinary Course of Business) of Gish, or any of the capital stock of Gish,
or any merger, consolidation, business combination, or similar transaction
involving Gish.


5.7.          Tax
Matters.


Without the prior written consent of Buyer, none of
Gish, any Subsidiary or, to the extent related to the Business, Seller shall
make or change any election, change an annual accounting period, adopt or
change any accounting method, file any amended Tax Return, enter into any
closing agreement, settle any Tax claim or assessment relating to Gish or any
Subsidiary, surrender any right to claim a refund of Taxes, consent to any
extension or waiver of the limitation period applicable to any Tax claim or
assessment relating to Gish or any Subsidiary, or take any other similar action
relating to the filing of any Tax Return or the payment of any Tax, if such
election, adoption, change, amendment, agreement, settlement, surrender,
consent or other action would have the effect of increasing the Tax liability
of Gish or any Subsidiary for any period ending after the Closing Date or
decreasing any Tax attribute of Gish or any Subsidiary existing on the Closing
Date.


5.8.          Best
Efforts.


Between the date of this Agreement and the Closing
Date, Seller will use its reasonable best efforts to cause the conditions in
Sections 7 and 8 to be satisfied.


6.                                       COVENANTS
OF BUYER


6.1.          Covenants
Prior to Closing Date.


(a)           As
promptly as practicable after the date of this Agreement, Buyer will, and will
cause each of its Affiliates to, make all filings required by Legal
Requirements to be made by them to consummate this Agreement and the
transactions contemplated hereby. 
Between the date of this Agreement and the Closing Date, Buyer will, and
will cause each Affiliate to, cooperate with Seller and Gish with respect to
all filings that Seller or Gish is required by Legal Requirements to make in
connection with the execution, delivery and performance of this Agreement, and
(ii) cooperate with Seller in obtaining all consents identified in Part 3.2
of the Disclosure Schedule; provided that this Agreement will not require Buyer
to dispose of or make any change in any portion of its business or to incur any
other burden to obtain a Governmental Authorization.



 48
 









(b)           Except
as set forth in the proviso to Section 6.1(a), between the date of this
Agreement and the Closing Date, Buyer will use its reasonable best efforts to
cause the conditions in Sections 7 and 8 to be satisfied.


6.2.          Notification.


Between the date of this Agreement and the Closing
Date, Buyer will promptly notify the Seller in writing if Buyer becomes aware
of any fact or condition that causes or constitutes a Breach of any of Buyer’s
representations and warranties as of the date of this Agreement, or if Buyer
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a Breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition.  During the
same period, Buyer will promptly notify the Seller of the occurrence of any
Breach of the occurrence of any event that may make the satisfaction of the conditions
in Section 8 impossible or unlikely.


7.                                       CONDITIONS
PRECEDENT TO BUYER’S OBLIGATION TO CLOSE


Buyer’s obligation to purchase the Shares and to take
the other actions required to be taken by Buyer at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by Buyer, in whole or in part):


7.1.          Accuracy
of Representations.


All of the representations and warranties of Seller
and Gish set forth in this Agreement (considered collectively), and each of
these representations and warranties (considered individually), shall be true
and correct in all material respects (without regard to any materiality or
knowledge qualifications set forth in such representation or warranty) as of
the Closing Date as if made on the Closing Date, without giving effect to any
supplement to the Disclosure Schedule, and on the Closing Date Seller shall
have delivered to Buyer an officer’s certificate to such effect.


7.2.          Seller’s
Performance.


(a)           All
of the covenants and obligations that Seller is required to perform or to
comply with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), must have been duly performed and complied with in all material
respects (other than any covenant or obligation that is qualified as to
materiality, which must have been duly performed and complied with in all
respects).



 49
 









(b)           Each
document required to be delivered pursuant to Section 2.4 must have been
delivered, and each of the other covenants and obligations in Section 5 must
have been performed and complied with in all material respects (other than any
covenant or obligation that is qualified as to materiality, which must have
been duly performed and complied with in all respects).


7.3.          Consents.


Each of the Consents identified Part 3.2 of the
Disclosure Schedule, and each Consent identified in Schedule 4.2, must
have been obtained and must be in full force and effect.


7.4.          Additional
Documents.


Each of the following
documents must have been delivered to Buyer:


(a)           an
opinion of Seyfarth Shaw  LLP, dated the
Closing Date, in the form of Exhibit 7.4(a); and


(b)           such
other documents as Buyer may reasonably request for the purpose of (i)  evidencing the accuracy of any of Sellers’
representations and warranties, (ii) evidencing the performance by Seller or
Gish of, or the compliance by Seller or Gish with, any covenant or obligation
required to be performed or complied with by Seller or Gish, (iii) evidencing
the satisfaction of any condition referred to in this Section 7, or (iv)
otherwise facilitating the consummation or performance of any of the
transactions contemplated by this Agreement.


7.5.          No
Proceedings.


Since the date of this Agreement, there must not have
been commenced or Threatened against Buyer or any of its Affiliates or Seller
or Gish, any Proceeding (a) involving any challenge to, or seeking damages or
other relief in connection with, this Agreement or the transactions
contemplated hereby, or (b) that may have the effect of preventing, delaying,
making illegal, or otherwise interfering with the performance of this Agreement
or the transactions contemplated hereby.


7.6.          No
Claim Regarding Stock Ownership or Sale Proceeds.


There must not have been made or Threatened by any
Person any claim asserting that such Person (a) is the holder or the beneficial
owner of, or has the right to acquire or to obtain beneficial ownership of, the
Shares or any stock of, or any other voting, equity, or ownership interest in, Gish,
or (b) is entitled to all or any portion of the Purchase Price payable for the
Shares.



 50
 









7.7.          No
Prohibition.


Neither the consummation nor the performance of this
Agreement or any of the transactions contemplated hereby will be prohibited or
will directly or indirectly (with or without notice or lapse of time),
materially contravene, or conflict with, or result in a material violation of,
or cause Buyer or any of its Affiliates to suffer any material adverse
consequence under, (a) any applicable Legal Requirement or Order, or (b) any
Legal Requirement or Order that has been published, introduced, or otherwise
formally proposed by or before any Governmental Body.


7.8.          Cash
in Gish at Closing.


Regardless of
any amount of Cash that Seller transfers out of Gish accounts at or prior to
Closing, Seller shall leave Cash in the amount of US Dollars One
Million (USD 1,000,000) in Gish accounts as of the close of business on
June 29, 2007.


8.                                       CONDITIONS
PRECEDENT TO SELLER’S OBLIGATION TO CLOSE


Seller’s obligation to sell the Shares and to take the
other actions required to be taken by Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Seller, in whole or in part):


8.1.          Accuracy
of Representations.


All of the representations and warranties of Buyer set
forth in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), shall be true and
correct in all material respects (without regard to any materiality or
knowledge qualifications set forth in such representation or warranty) as of
the Closing Date as if made on the Closing Date, without giving effect to any
supplement to the Disclosure Schedule and on the Closing Date Seller shall have
delivered to Buyer an officer’s certificate to such effect.


8.2.          Buyer’s
Performance.


(a)           All
of the covenants and obligations that Buyer is required to perform or to comply
with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), must have been performed and complied with in all material
respects.


(b)           Buyer
must have delivered each of the documents required to be delivered by Buyer pursuant
to Section 2.4 and must have made the cash payments  required to be made pursuant to Sections
2.4(b)(i) and 2.4(b)(ii).



 51















8.3.          Additional
Documents.


Buyer must have caused to be delivered to Seller such
other documents as Seller may reasonably request for the purpose of (i)
evidencing the accuracy of any representation or warranty of Buyer, (ii)
evidencing the performance by Buyer of, or the compliance by Buyer with, any
covenant or obligation required to be performed or complied with by Buyer,
(iii) evidencing the satisfaction of any condition referred to in this
Section 8, or (iv) otherwise facilitating the consummation or performance
of any of the transactions contemplated by this Agreement.


8.4.          No Proceedings.


Since the date of this Agreement, there must not have
been commenced or Threatened against Gish or Seller, or against any of their
respective Affiliates, any Proceeding (a) involving any challenge to, or
seeking damages or other relief in connection with, this Agreement or any of
the transactions contemplated hereby, or (b) that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with this
Agreement or any of the transactions contemplated hereby.


9.                                       TERMINATION


9.1.          Termination Events.


This Agreement may, by
notice given prior to or at the Closing, be terminated:


(a)           by either Buyer or Seller if a material
Breach of any provision of this Agreement has been committed by the other party
and such Breach has not been waived;


(b)           (i) by Buyer if any of the conditions in
Section 7 has not been satisfied as of the Closing Date or if satisfaction
of such a condition is or becomes impossible (other than through the failure of
Buyer to comply with its obligations under this Agreement) and Buyer has not
waived such condition on or before the Closing Date; or (ii) by Seller, if any
of the conditions in Section 8 have not been satisfied as of the Closing Date
or if satisfaction of such a condition is or becomes impossible (other than
through the failure of Seller or Gish to comply with their respective
obligations under this Agreement) and Seller has not waived such condition on
or before the Closing Date;


(c)           by mutual written consent of Buyer and
Seller; or


(d)           by either Buyer or Seller if the Closing has
not occurred (other than through the failure of any party seeking to terminate
this Agreement to comply fully with its obligations under this Agreement)
within 60 (sixty) days after signing and delivery by the Parties of this
Agreement, or such later date as the parties may agree upon.



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9.2.          Effect of Termination.


Each party’s right of termination under
Section 9.1 is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of a right of termination will not be
an election of remedies.  If this
Agreement is terminated pursuant to Section 9.1, all further obligations
of the parties under this Agreement will terminate, except that the obligations
in Sections 12.1 and 12.3 will survive; provided,
however, that if this Agreement is terminated by a party because of
the Breach of the Agreement by the other party or because one or more of the
conditions to the terminating party’s obligations under this Agreement is not
satisfied as a result of the other party’s failure to comply with its
obligations under this Agreement, the terminating party’s right to pursue all
legal remedies will survive such termination unimpaired.


10.                                 INDEMNIFICATION;
REMEDIES


10.1.        Survival; Right to Indemnification Not
Affected by Knowledge.


All representations, warranties, covenants, and
obligations in this Agreement, the Disclosure Schedule, the supplements to the
Disclosure Schedule, and any other certificate or document delivered pursuant
to this Agreement shall survive the Closing. 
The right to indemnification, payment of Damages or other remedy based
on such representations, warranties, covenants, and obligations will not be
affected by any investigation conducted with respect to, or any Knowledge
acquired (or capable of being acquired) at any time, whether before or after
the execution and delivery of this Agreement or the Closing Date, with respect
to the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation.  The
waiver of any condition based on the accuracy of any representation or
warranty, or on the performance of or compliance with any covenant or obligation,
will not affect the right to indemnification, payment of Damages, or other
remedy based on such representations, warranties, covenants, and obligations.


10.2.        Indemnification And Payment Of Damages By
Seller.


Seller will indemnify and hold harmless Buyer and
Gish, and their respective Representatives and Affiliates (collectively, the “Indemnified
Persons”) for, and will pay to the Indemnified Persons the amount of, any
loss, liability, claim, damage (including incidental and consequential
damages), expense (including costs of investigation and defense and reasonable
attorneys’ and accountants’ fees) or diminution of value, whether or not
involving a third-party claim (collectively, “Damages”), arising,
directly or indirectly, from or in connection with:


(a)           any Breach of any representation or warranty
made by Seller or Gish in this Agreement, the Disclosure Schedule, the
supplements to the Disclosure Schedule, or any other certificate or document
delivered by Seller or Gish pursuant to this Agreement;



 53
 









(b)           any Breach of any representation or warranty
made by Seller or Gish in this Agreement as if such representation or warranty
were made on and as of the Closing Date without giving effect to any supplement
to the Disclosure Schedule;


(c)           any Breach by Seller of any of its covenants
or obligations in this Agreement;


(d)           any claim by any Person arising from any
incident connected to or detailed in an adverse event report, a product recall
or any similar event relating to products shipped or actions taken or omitted
prior to Closing;


(e)           any claim in connection with the transaction
by any Person based on an employment agreement, whether oral or written, or any
similar Contract between Gish and any of its former or current employees;


(f)            any Tax liability or any other liability of
Buyer or Gish in connection with any bonus payments that may be made by Seller
to Gish employees in connection with the consummation of the transactions
contemplated by this Agreement;


(g)           any claim against Gish by any of the persons
identified on Exhibit 10.2(g) to this Agreement;


(h)           [***];


(i)            [***]; and


(j)            any claim by any Person for brokerage or
finder’s fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with Seller or Gish
(or any Person acting on its behalf) in connection with this Agreement or the
transactions contemplated hereby.


10.3.        Indemnification and Payment of Damages by
Buyer.


Buyer will indemnify and hold harmless Seller, and
will pay to Seller the amount of any Damages arising, directly or indirectly,
from or in connection with (a) any Breach of any representation or warranty
made by Buyer in this Agreement or in any certificate delivered by Buyer
pursuant to this Agreement, (b) any Breach by Buyer of any covenant or obligation
of Buyer in this Agreement, or (c) any claim by any Person for brokerage or
finder’s fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by such Person with Buyer (or any
Person acting on its behalf) in connection with any of the transactions
contemplated by this Agreement.



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10.4.        Time Limitations.


(a)           If
the Closing occurs, Seller will have no liability (for indemnification or
otherwise) with respect to any representation or warranty other than those in
Sections 3.3, 3.10, and 3.19 unless within 12 (twelve) months of the Closing
Date or, with respect to the representations and warranties set forth in
Section 3.13(c), within 24 (twenty four) months of the Closing Date, Buyer
notifies Seller in writing of a claim specifying the factual basis of that
claim in reasonable detail to the extent then known by Buyer; a claim with
respect to Sections 3.3, 3.10, 3.19, 10.2(h) or 10.2(i) may be made at any time
within 60 (sixty) days after the expiry of the applicable statute of
limitations.  If the Closing occurs,
Seller will have no liability with respect to any Breach of any covenant or
obligation, unless Buyer notifies Seller in writing of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by
Buyer within 60 (sixty) days after the expiry of the applicable statute of
limitations. If the Closing occurs, Buyer will have no liability (for
indemnification or otherwise) with respect to any representation or warranty,
unless on or before the first anniversary of the Closing Seller notifies Buyer
in writing of a claim specifying the factual basis of that claim in reasonable
detail to the extent then known by Seller. If the Closing occurs, Buyer will
have no liability with respect to any Breach of any covenant or obligation,
unless Seller notifies Buyer in writing of a claim specifying the factual basis
of that claim in reasonable detail to the extent then known by Seller within 60
(sixty) days after the expiry of the applicable statute of limitations.


10.5.        Limitations On Amount—Seller.


(a)           Subject
to Section 11, Seller will have no liability (for indemnification or
otherwise) with respect to the matters described in clause (a) and clause (b)
of Section 10.2 until the total of all Damages with respect to such
matters exceeds US Dollars 200,000 (USD two hundred thousand),
at which time Seller shall be obligated to indemnify Buyer for the full amount
of such losses, subject to the limitations set forth in this Section 10.  However, this Section 10.5 will not
apply to Sections 3.22(c)(ii), Error! Reference source
not found. and Error! Reference source
not found. hereof, any Breach of any of Seller’s representations and
warranties of which Seller or Gish had Knowledge at any time prior to the date
on which such representation and warranty is made or any Breach by Seller of
any covenant or obligation under this Agreement, and Seller will be liable for
all Damages with respect to such Breaches.


(b)           Subject
to Section 11, the maximum amount of Damages (other than Damages due to fraud,
intentional misrepresentation, Breach of Section 3.3, 3.10, 3.13(c), 3.19,
3.22, Error! Reference source not found. or Error! Reference source not found. or Breach of covenants or
obligations) with respect to which Seller shall be obligated to pay Indemnified
Persons under this Agreement shall not exceed an amount equal to the Escrow
Fund.



 55
 









10.6.        Limitations On Amount-Buyer.


(a)           Buyer will have no liability (for
indemnification or otherwise) with respect to the matters described in clause
(a) or (b) of Section 10.3 until the total of all Damages with respect to
such matters exceeds US Dollars 200,000 (USD two hundred
thousand), at which time Buyer shall be obligated to indemnify Seller for the
full amount of such losses, subject to the limitations set forth in this
Section 10.6.  However, this
Section 10.6 will not apply to any Breach of any of Buyer’s
representations and warranties of which Buyer had Knowledge at any time prior
to the date on which such representation and warranty is made or any
intentional Breach by Buyer of any covenant or obligation, and Buyer will be
liable for all Damages with respect to such Breaches.


(b)           The maximum amount of Damages with respect
to which Buyer shall be obligated to pay Indemnified Persons under this
Agreement shall not exceed an amount equal to the
US Dollars 1,000,000 (USD One Million).


10.7.        Calculation of Indemnity Payments.


Subject to Section 10.8 requiring treatment of
indemnity payments as adjustments to the Purchase Price, the amount of any
Damages for which indemnification is provided under this Section 10 shall
be (a) increased to take account of any net Tax cost actually incurred by the
Buyer Indemnified Party arising from the receipt or accrual of indemnity payments
hereunder (grossed up for such increase) and (b) reduced to take account of any
net Tax benefit actually realized by the Buyer Indemnified Party arising from
the incurrence of payment or accrual of any such indemnified amount.


10.8.        Tax Treatment of Indemnification.


For all Tax purposes, unless otherwise required by
law, the parties hereto agree to treat (and shall cause each of their
respective Affiliates to treat) any indemnity payment under this Agreement as
an adjustment to the Purchase Price.


10.9.        Procedure For Indemnification-Third Party
Claims.


(a)           Promptly after receipt by an indemnified
party under Section 10.2 or 10.3 of notice of the commencement of any
Proceeding against it, such indemnified party will, if a claim is to be made
against an indemnifying party under such Section, give notice to the
indemnifying party of the commencement of such claim, but the failure to notify
the indemnifying party will not relieve the indemnifying party of any liability
that it may have to any indemnified party, except to the extent that the
indemnifying party demonstrates that the defense of such action is prejudiced
by the indemnifying party’s failure to give such notice.



 56
 









(b)           If any Proceeding referred to in
Section 10.9(a) is brought against an indemnified party and it gives
notice to the indemnifying party of the commencement of such Proceeding, the
indemnifying party will, unless the claim involves Taxes, be entitled to
participate in such Proceeding and, to the extent that it wishes (unless (i)
the indemnifying party is also a party to such Proceeding and the indemnified
party determines in good faith that joint representation would be
inappropriate, or (ii) the indemnifying party fails to provide reasonable
assurance to the indemnified party of its financial capacity to defend such
Proceeding and provide indemnification with respect to such Proceeding), to
assume the defense of such Proceeding with counsel reasonably satisfactory to
the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Section 10 for any fees of
other counsel or any other expenses with respect to the defense of such
Proceeding, in each case subsequently incurred by the indemnified party in
connection with the defense of such Proceeding, other than reasonable costs of
investigation.  If the indemnifying party
assumes the defense of a Proceeding, (i) it will be conclusively established
for purposes of this Agreement that the claims made in that Proceeding are
within the scope of and subject to indemnification; (ii) no compromise or
settlement of such claims may be effected by the indemnifying party without the
indemnified party’s consent unless (A) there is no finding or admission of any
violation of Legal Requirements or any violation of the rights of any Person
and no effect on any other claims that may be made against the indemnified
party, and (B) the sole relief provided is monetary damages that are paid in
full by the indemnifying party; and (iii) the indemnified party will have no
liability with respect to any compromise or settlement of such claims effected
without its prior written consent.  If
notice is given to an indemnifying party of the commencement of any Proceeding
and the indemnifying party does not, within ten (10) days after the indemnified
party’s notice is received by the indemnifying party, give notice to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will be bound by any determination made in such Proceeding
or any compromise or settlement effected by the indemnified party.


(c)           Notwithstanding the foregoing, if an
indemnified party determines in good faith that there is a reasonable
probability that a Proceeding may adversely affect it or its affiliates other
than as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the indemnified party may, by notice to
the indemnifying party, assume the exclusive right to defend, compromise, or
settle such Proceeding, but the indemnifying party will not be bound by any
determination of a Proceeding so defended or any compromise or settlement
effected without its consent (which may not be unreasonably withheld).



 57
 









10.10.      Procedure for Indemnification-Other Claims.


A claim for
indemnification for any matter not involving a third-party claim may be
asserted by notice to the party from whom indemnification is sought.


10.11.      Arbitration.


Any dispute, controversy, or claim arising out of or
relating to a failure to reach agreement on a financial calculation as
described in Section 2.4(b) shall be settled by an arbitration proceeding
conducted in accordance with this Section 10.11; provided, however, that such arbitration proceedings shall be binding on the
parties and their principals, successors, assigns, subsidiaries and affiliates
only with respect to a dispute described in Section 2.4(b).  Such arbitration proceeding shall be
conducted before a panel of three (3) arbitrators, one of whom shall be
selected by Buyer, one of whom shall be selected by Seller, and one of whom
shall be selected by the first two (2) arbitrators so selected.  The arbitration proceeding shall take place
in New York City, New York. Such arbitration shall be conducted in accordance
with the commercial arbitration procedures of the American Arbitration
Association. The Parties agree that a final judgment on the arbitration award
respecting a dispute described in Section 2.4(b) may be entered by any
court having jurisdiction thereof.  The
cost of any arbitration under this section shall be borne equally by the Seller
and the Buyer.


11.                                 TAX
MATTERS


11.1.        Tax Indemnification.


(a)           Seller shall indemnify Gish, its
Subsidiaries, Buyer and any Affiliates, officers, directors, employees,
stockholders and agents thereof (each a “Tax Indemnitee”) and hold them
harmless from and against any loss, claim, liability, expense, or other Damages
incurred, accrued or suffered at any time by any Tax Indemnitee arising out of
or attributable to any and all Taxes (or the nonpayment thereof) of (i) Gish
and its Subsidiaries for all taxable periods ending on or before the Closing
Date and the portion through the end of the Closing Date for any taxable period
that includes (but does not end on) the Closing Date (each, a “Pre-Closing Tax
Period”), (ii) any member of an affiliated, consolidated, combined or unitary
group of which Gish or any Subsidiary (or any predecessor of either) is or was
a member on or prior to the Closing Date, including pursuant to Treasury
Regulation Section 1.1502-6 or any analogous or similar state, local, or
foreign law or regulation, and (iii) of any person (other than Gish and its
Subsidiaries) imposed on Gish or any Subsidiary as a transferee or successor,
by contract or pursuant to any law, rule, or regulation, which Taxes relate to
an event or transaction occurring before the Closing.



 58
 









(b)           Any recovery to which a Tax Indemnitee is
entitled under this Section 11.1 shall not be limited by the time
limitations set forth in Section 10.4 or any of the limitations on the
amount of Damages set forth in Section 10.5, regardless of whether the
Damages giving rise to the claim are Damages described in Section 10.2.


11.2.        Straddle Period.


In the case of any
taxable period that includes (but does not end on) the Closing Date (a “Straddle
Period”), the amount of any Taxes based on or measured by income or
receipts of Gish and its Subsidiaries for the Pre-Closing Tax Period shall be
determined based on an interim closing of the books as of the close of business
on the Closing Date (and for such purpose, the taxable period of any
partnership or other pass-through entity in which Gish or any Subsidiary holds
a beneficial interest shall be deemed to terminate at such time) and the amount
of other Taxes of Gish and its Subsidiaries for a Straddle Period that relates
to the Pre-Closing Tax Period shall be deemed to be the amount of such Tax for
the entire taxable period multiplied by a fraction the numerator of which is
the number of days in the taxable period ending on the Closing Date and the
denominator of which is the number of days in such Straddle Period.


11.3.        Filing of Tax Returns through the Closing
Date.


Seller shall include the
income of Gish and its Subsidiaries (including any deferred items under Reg.
§1.1502-13 and any excess loss account under Reg. §1.1502-19) required to be
recognized under applicable Tax law as income on Seller’s consolidated federal
income Tax Returns for all periods through the Closing Date and pay any federal
income Taxes attributable to such income. For all taxable periods ending on or
before the Closing Date, Seller shall cause Gish and its Subsidiaries to join
in Seller’s consolidated federal income tax return and, in jurisdictions
requiring separate reporting from Seller, to file separate company state and
local income tax returns. All such Tax Returns shall be prepared and filed in a
manner consistent with prior practice, except as otherwise required by
applicable law. Buyer shall have the right to review and comment on any such
Tax Returns prepared by Seller as the same relate to Gish.  Buyer shall cause Gish and its Subsidiaries
to furnish information to Seller as reasonably requested by Seller to allow
Seller to satisfy its obligations under this Section 11. Gish and its
Subsidiaries and Buyer shall consult and cooperate with Seller as to any
elections to be made on returns of Gish and its Subsidiaries for periods ending
on or before the Closing Date. Buyer shall cause Gish and its Subsidiaries to
file income Tax Returns or shall include Gish and its Subsidiaries in its
combined or consolidated income Tax Returns, for all periods other than periods
ending on or before the Closing Date.



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11.4.        Cooperation on Tax Matters.


(a)           Buyer, Gish and its Subsidiaries, and Seller
shall cooperate fully, as and to the extent reasonably requested by the other
party, in connection with the filing of Tax Returns pursuant to this Section 11
and any Audit. Such cooperation shall include providing powers of attorney and
similar authorizations, the retention and (upon the other party’s request) the
provision of records and information that are reasonably relevant to any such
Audit and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder. Gish
and its Subsidiaries and Seller agrees to (A) retain all books and records with
respect to Tax matters pertinent to Gish and its Subsidiaries relating to any
taxable period beginning before the Closing Date until the expiration of the
statute of limitations (and, to the extent notified by Buyer or Seller, any
extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any taxing authority, and (B)
give the other party reasonable written notice prior to transferring,
destroying or discarding any such books and records and, if the other party so
requests, Gish and its Subsidiaries or Seller, as the case may be, shall allow
the other party to take possession of such books and records.


(b)           Buyer and Seller further agree, upon
request, to use commercially reasonable efforts to obtain any certificate or
other document from any governmental authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the transactions contemplated
hereby).


(c)           Buyer and Seller further agree, upon
request, to provide the other party with all information that either party may
be required to report pursuant to Section 6043 or Section 6043A of the Code, or
Treasury Regulations promulgated thereunder.


11.5.        Tax-Sharing Agreements.


All (if any) tax-sharing
agreements or similar agreements with respect to or involving Gish and its
Subsidiaries shall be terminated as of the Closing Date and, after the Closing
Date, Gish and its Subsidiaries shall not be bound thereby or have any
liability thereunder.


11.6.        Certain Taxes and Fees.


All transfer,
documentary, sales, use, stamp, registration and other such Taxes, and all
conveyance fees, recording charges and other fees and charges (including any
penalties and interest) incurred in connection with consummation of the
transactions contemplated by this Agreement shall be shared equally by Buyer
and Seller and Buyer and Seller will, at their joint and equal expense, file
all necessary Tax Returns and other documentation with respect to all such
Taxes, fees and charges.



 60
 









11.7.        Audits.


Seller shall give notice
and allow Gish and its counsel to observe any Audit of Seller’s consolidated
federal income Tax Returns to the extent that such returns relate to Gish and
its Subsidiaries.  Seller shall not
settle any such Audit in a manner that could result in a liability or
obligation to pay in excess of US Dollars ten thousand
(USD 10,000) on the part of Gish and/or its Subsidiaries after the Closing
Date without the prior written consent of Buyer, which consent shall not be
unreasonably withheld, conditioned or delayed.


11.8.        Carrybacks.


Seller shall immediately
pay to Buyer any Tax refund (or reduction in Tax liability) resulting from a
carryback of a post-acquisition Tax attribute of any of Gish and its
Subsidiaries into the Seller consolidated Tax Return, when such refund (or
reduction) is actually realized by Seller’s group. At Buyer’s request and
expense, Seller will cooperate with Gish and its Subsidiaries in obtaining such
refund (or reduction), including through the filing of amended Tax Returns or
refund claims.


11.9.        Contests.


(a)           After the Closing Date, Buyer shall notify
Seller in writing within ten (10) days of the date a claim is made or
threatened in writing by any Taxing Authority that, if successful, may
reasonably be expected to result in an indemnity payment by Seller under
Section 11.1 (a “Tax Claim”). 
Such notice shall contain factual information describing in reasonable
detail the nature and basis of such claim and the amount thereof, to the extent
known, and shall include copies of any notice or other document received from
any Taxing Authority in respect of any such asserted Tax liability.  Failure by Buyer to give such notice to the
Seller shall not relieve the Seller of any liability that it may have on
account of its indemnification obligation under this Section 11, except to
the extent that Seller demonstrates that the defense of such claim is
prejudiced by Buyer’s failure to give such notice.


(b)           Seller will have the right, at its option,
upon timely notice to Buyer, to assume at its own expense control of any Audit
or other defense of any Tax Claim (other than a Tax Claim relating solely to
Taxes of Gish for a Straddle Period, which as described below, the parties
shall jointly control) with its own counsel, provided that Seller’s notice
acknowledges Seller’s indemnification liability for such claim.  Seller’s right to control a Tax Claim will be
limited to issues in respect of which amounts in dispute would be paid by
Seller or for which Seller would be liable pursuant to Section 11.1.  Costs of defending or contesting such Tax
Claims are to be borne by Seller unless the Tax Claim relates to a Straddle
Period, in which event such costs shall be fairly apportioned as described
below.  Buyer and Gish at their own
expense each shall cooperate with Seller in contesting any Tax Claim, which
cooperation shall include the retention and, upon Seller’s request, the
provision of records and information that are 



 61
 









reasonably relevant to such Tax Claim and making employees available on
a mutually convenient basis to provide additional information or explanation of
any material provided hereunder. 
Notwithstanding the foregoing, Seller shall neither consent nor agree to
the settlement of any Tax Claim with respect to any liability for Taxes in
excess of US Dollars ten thousand (USD 10,000) on the part of Gish or
any affiliated group (as defined in Section 1504(a) of the Code) of which
Gish is a member for any Post-Closing Tax Period without the prior written
consent of Buyer, which consent shall not be unreasonably withheld, conditioned
or delayed. Neither Seller, nor any Affiliate of Seller, shall file an amended
Tax Return that may increase the liability for Taxes of Gish for any
Post-Closing Tax Period without the prior written consent of Buyer, which
consent shall not be unreasonably withheld, conditioned or delayed.  For the avoidance of doubt, unless otherwise
authorized by Seller in writing, only Seller is authorized to file any Tax
return respecting Gish and any of its Subsidiaries for any pre-Closing Tax
period, including the portion of the Tax year ending on the Closing Date.  Buyer and Seller shall jointly control all
proceedings taken in connection with any Tax Claims relating solely to a
Straddle Period of Gish and each party shall bear its own out-of-pocket costs
and expenses of the contest and all joint costs and expenses of the contest
shall be borne in the same ratio as the applicable proposed Tax would be allocated.


12.                                 GENERAL
PROVISIONS


12.1.        Non-Competition/Non-Solicitation.


(a)           For a period of five years after the Closing
(the “Restricted Period”), the Seller shall not (and shall cause its
Affiliates not to) engage, directly or indirectly, in any business that
develops, manufactures, produces, markets or supplies products or services, or
conducts other commercial activities, of the kind developed, manufactured,
produced, marketed, supplied or conducted by Gish (or its successors) prior to
the Closing or during the Restricted Period (including products, services and
activities that are actively being considered by such entities) or, without
prior written consent of the Buyer, directly or indirectly, own an interest in,
manage, operate, join, control, lend money or render financial or other
assistance to or participate in or be connected with, as an officer, employee,
partner, stockholder, consultant or otherwise, any Person engaged in
developing, manufacturing, producing, marketing or supplying products or services,
or engaged in other activities, of the kind developed, manufactured, produced,
marketed, supplied or conducted by Buyer, Gish or their respective successors
(including products and services that are actively being considered by such
entities) prior to the Closing or during the Restricted Period; provided,
however, that for the purposes of this Section 12.1, (i) the sale by
Seller or its Affiliates to any Person, including any Person engaged in
competition with Gish, Buyer or any Affiliate of Buyer, of materials for any
purpose (exclusive of any material containing any of the GBS family of Heparin
and/or non-Heparin coatings), and (ii) the ownership of securities having no
more than one percent of the outstanding voting power of any 



 62
 









competitor which are listed on any national securities exchange shall
not be deemed to be in violation of this Section 12.1 as long as (with
respect to the exception stated in clause (ii)), the Person owning such
securities has no other connection or relationship with such competitor.


(b)           As a separate and independent covenant, the
Seller agrees with the Buyer that, during the Restricted Period, Seller and its
Affiliates will not in any way, directly or indirectly, for the purpose of
conducting or engaging in any business that manufactures, produces or supplies
products or services of the kind manufactured, produced or supplied by Gish (or
its respective successors) prior to the Closing or during the Restricted
Period, call upon, solicit, advise or otherwise do, or attempt to do, business
with any customers of Gish with whom Gish had any dealings during any part of a
two year period prior to Closing or during the Restricted Period or take away
or interfere or attempt to interfere with any custom, trade, business or
patronage of Gish (or its successors), or interfere with or attempt to
interfere with the officers, employees, representatives or agents of either
Buyer or Gish (or their respective successors), or induce or attempt to induce
any of them to leave the employ of Buyer or Gish or violate the terms of their
contracts, or any employment arrangements, with Buyer or Gish; provided,
however, that the foregoing will not prohibit a general solicitation to the
public of general advertising.


(c)           The Restricted Period for Seller and its
Affiliates shall be extended by the length of any period during which such
Seller or such Affiliate is in Breach of the terms of this Section 12.1.


(d)           If, at the time of enforcement of this
Section 12.1, a court shall hold that the duration, scope, area or other
restrictions stated herein are unreasonable under circumstances then existing,
each of Seller and Buyer agree that it is the intention of the parties hereto
that such provision should be enforceable to the maximum extent permissible
under applicable law.


(e)           In the event of a Breach or Threatened
Breach of any of the provisions contained in this Section 12.1, Seller
agrees that Buyer shall be entitled to injunctive or other equitable relief in
a court of appropriate jurisdiction to remedy any such Breach or Threatened
Breach, and Seller acknowledges that damages would be inadequate and
insufficient.  The existence of this
right to injunctive and other equitable relief shall not limit any other rights
or remedies that the Buyer may have at law or in equity including, without
limitation, the right to monetary, compensatory and punitive damages.


(f)            Seller acknowledges that the covenant of
the Sellers set forth in this Section 12.1 is an essential element of this
Agreement and that, but for the agreement of Seller to comply with the
covenant, Buyer would not have entered into this Agreement.  Seller acknowledges that (i) this
Section 12.1 constitutes an independent covenant that shall not be 



 63
 









affected by the performance or nonperformance of any other provision of
this Agreement by Buyer.  Seller has
independently consulted with its counsel and after such consultation agrees
that the covenants set forth in this Section 12.1 are reasonable and
proper.


12.2.        Expenses.


Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the transactions contemplated by this Agreement, including all
fees and expenses of agents, representatives, counsel, and accountants.  In the event of termination of this
Agreement, the obligation of each party to pay its own expenses will be subject
to any rights of such party arising from a breach of this Agreement by another party.


12.3.        Public Announcements.


Any public announcement or similar publicity with
respect to this Agreement will be issued, if at all, at such time and in such
manner as Buyer and Seller jointly determine in advance; provided, however,
that Seller may issue a press release or make a public filing respecting the
execution of this Agreement or the Closing if it determines that such
disclosure is necessary or prudent under applicable Legal Requirements.  Except as set forth in this
Section 12.4, prior to the Closing each party shall keep this Agreement
strictly confidential and may not make any disclosure of this Agreement to any
Person.  Seller and Buyer will consult
with each other concerning the means by which Gish’s employees, customers, and
suppliers and others having dealings with Gish will be informed of this
Agreement or the transactions contemplated hereby.


12.4.        Confidentiality.


Between the date of this Agreement and the Closing
Date, Buyer and Seller will maintain in confidence, and will cause the directors,
officers, employees, agents, and advisors of Buyer, Seller and Gish to maintain
in confidence, and not use to the detriment of another party or Gish any
written, oral, or other information obtained in confidence from another party
or Gish in connection with this Agreement or transactions contemplated hereby,
unless (a) such information is already known to such party or to others not
bound by a duty of confidentiality or such information becomes publicly
available through no fault of such party, (b) the use of such information is
necessary or appropriate in making any filing or obtaining any consent or
approval required for the consummation of this Agreement, or (c) the furnishing
or use of such information is required in connection with legal proceedings.


If the transactions contemplated by this Agreement are
not consummated, each party will return or destroy as much of such written
information as the other party may reasonably request.



 64
 









12.5.        Notices.


All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):


If to Seller:


CardioTech
International, Inc.


229 Andover Street


Wilmington,
MA  01887


USA


Attention:  Michael Adams, Chief Executive Officer


Facsimile No.:  [***]


With a copy to:


Seyfarth Shaw LLP


Two Seaport Lane


Boston, MA 02210


USA


Attention:  David E. Dryer


Facsimile No.:  617 946 4801



 65
 









If to Buyer:


MEDOS
Medizintechnik AG


Obere Steinfurt 8
- 10


D - 52222 Stolberg


Germany


Attention:  Joachim Pelz, Dr. med. Thomas Theisen


Facsimile No.:  [***]


With a copy to:


Dewey Ballantine
LLP


Taunusanlage 1


D-60329 Frankfurt
am Main


Germany


Attention: Dr.
Benedikt von Schorlemer LLM


Facsimile No.:  +49 69 36393333


12.6.        Jurisdiction; Service of Process


Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement shall be
brought against any of the parties in the courts of the State of New York or in
the United States District Court for the Southern District of New York, and
each of the parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein.  Process
in any action or proceeding referred to in the preceding sentence may be served
on any party anywhere in the world.


12.7.        Further Assurances.


The parties agree (a) to furnish upon request to each
other such further information, (b) to execute and deliver to each other such
other documents, and (c) to do such other acts and things, 



 66
 









all as the other party may reasonably request for the
purpose of carrying out the intent of this Agreement and the documents referred
to in this Agreement.


12.8.        Waiver.


The rights and remedies of the parties to this
Agreement are cumulative and not alternative. 
Neither the failure nor any delay by any party in exercising any right,
power, or privilege under this Agreement or the documents referred to in this
Agreement will operate as a waiver of such right, power, or privilege, and no
single or partial exercise of any such right, power, or privilege will preclude
any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege.  To the maximum extent permitted by applicable
law, (a) no claim or right arising out of this Agreement or the documents
referred to in this Agreement can be discharged by one party, in whole or in
part, by a waiver or renunciation of the claim or right unless in writing
signed by the other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.


12.9.        Entire Agreement and Modification.


This Agreement supersedes all prior agreements between
the parties with respect to its subject matter, and constitutes a complete and
exclusive statement of the terms of the agreement between the parties with
respect to its subject matter.  This
Agreement may not be amended except by a written agreement executed by the party
to be charged with the amendment.


12.10.      Disclosure Schedule.


In the event of any inconsistency between the
statements in the body of this Agreement and those in the Disclosure Schedule
(other than an exception expressly set forth as such in the Disclosure Schedule
with respect to a specifically identified representation or warranty), the
statements in the body of this Agreement will control.


12.11.      Assignments, Successors, and No Third-Party
Rights.


Neither party may assign any of its rights under this Agreement
without the prior consent of the other parties, which will not be unreasonably
withheld, except that Buyer may assign any of its rights under this Agreement
to any wholly owned Affiliate.  Subject
to the preceding sentence, this Agreement will apply to, be binding in all
respects upon, and inure to the benefit of the successors and permitted assigns
of the parties.  Nothing expressed or
referred to in this Agreement will be construed to give any Person other than
the parties to this Agreement any



 67















legal or equitable right, remedy, or claim under or
with respect to this Agreement or any provision of this Agreement.  This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties to this
Agreement and their successors and assigns.


12.12.      Severability.


If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect.  Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.


12.13.      Section Headings, Construction.


The headings of Sections in this Agreement are
provided for convenience only and will not affect its construction or
interpretation.  All references to “Section”
or “Sections” refer to the corresponding Section or Sections of this
Agreement.  All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require.  Unless otherwise expressly
provided, the word “including” does not limit the preceding words or terms.


12.14.      Time Of Essence.


With regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.


12.15.      Governing Law.


This Agreement will be governed by the laws of the
Sate of New York without regard to conflicts of laws principles.


12.16.      Counterparts.


This Agreement may be
executed in one or more counterparts, each of which will be deemed to be an
original copy of this Agreement and all of which, when taken together, will be
deemed to constitute one and the same agreement.



 68
 









IN WITNESS WHEREOF, the
parties have executed and delivered this Agreement as of the date first written
above.


	
  MEDOS MEDIZINTECHNIK AG

  	
   

  	
  CARDIOTECH INTERNATIONAL,

  INC.

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Joachim Pelz

  	
   

  	
   

  	
  By:

  	
  /s/ Michael F. Adams

  	
   

  
	
        Joachim Pelz

        Chief Financial Officer

  	
   

  	
         Michael F.
  Adams 

         President

  
	
   

  	
   

  	
  GISH BIOMEDICAL, INC.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Thomas Theisen

  	
   

  	
   

  	
  By:

  	
  /s/ Eric G. Walters

  	
   

  
	
        Thomas Theisen

  	
   

  	
         Eric G.
  Walters 

  
	
        Chief Sales
  Officer

  	
   

  	
         Secretary

  
										



 



 69
 









Exhibit
2.4(a)


License Agreement


(See Attached)



 70
 









Exhibit
2.4(b)


Wire Instructions


[***]



 71
 









Exhibit
2.7


Escrow Agreement



 72
 









ESCROW AGREEMENT


THIS ESCROW AGREEMENT, dated as of June 30,
2007, is by and among CardioTech International Inc., a Massachusetts
corporation (“Seller”), MEDOS Medizintechnik AG, a company organized under the
laws of the Federal Republic of Germany (“Buyer”), Citizens Bank of
Massachusetts, a bank organized under the laws of the Commonwealth of
Massachusetts acting by an through its Institutional Services Group with an
office at 870 Westminster Street, Providence, Rhode Island 02903, in its
capacity as escrow agent only (the “Escrow Agent”). Capitalized terms used
herein without definition and defined in that certain Stock Purchase Agreement
by and among Seller, Gish Biomedical, Inc. (“Gish”) and Buyer dated as of the
date of this Agreement (the “Purchase Agreement”), shall have the same
respective meanings herein as therein, unless the context otherwise requires.


BACKGROUND


A.            Buyer, Seller and Gish
have entered into the Purchase Agreement pursuant to which Buyer is purchasing
100% of the capital stock of Gish held beneficially and of record by Seller.
The Purchase Agreement provides for the deposit of $1,000,000.00 into escrow to
fund indemnification obligations of Seller set forth in the Purchase Agreement.
..


B.            Escrow Agent has
agreed to accept, hold, and disburse the funds deposited with it and the
earnings thereon in accordance with the terms of this Escrow Agreement.


C.            Pursuant to the
Purchase Agreement, Seller and Buyer have each appointed the Representatives
(as defined below) to represent them for all purposes in connection with the
funds to be deposited with Escrow Agent, the indemnification provisions of the
Purchase Agreement and this Escrow Agreement.


D.            In order to establish
the escrow of funds and to effect the indemnification provisions of the
Purchase Agreement, the parties hereto have entered into this Escrow Agreement.


STATEMENT
OF AGREEMENT


NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, for themselves, their successors and assigns, hereby agree
as follows:


1.             Definitions.           The following terms
shall have the following meanings when used herein:


“Buyer
Representative” shall mean Joachim Pelz or any other person designated in a
writing signed by Buyer and delivered to Escrow Agent and the Seller
Representative in accordance with the notice provisions of this Escrow
Agreement, to act as its representative under this Escrow Agreement



 73
 









“Claim”
shall mean a claim for indemnification by Buyer pursuant to the Purchase
Agreement.


“Claim
Notice” shall mean a written notification, signed by the Buyer Representative,
which shall specify the obligation, representation or agreement in the Purchase
Agreement with respect to which a Claim is being made, the facts giving rise to
and the alleged basis for such Claim, the Estimated Claim Amount of such Claim,
and the date of such Claim Notice.  Each
Claim Notice also shall include a certification by the Buyer Representative
that the Claim is being made pursuant to the Purchase Agreement and this Escrow
Agreement.


“Claim
Response” shall mean a written notification, signed by the Seller
Representative, which shall set forth whether or not Seller disputes any matter
with respect to a Claim Notice or the Claim described therein.


“Escrow
Funds” shall mean the funds deposited with Escrow Agent pursuant to Section
3 of this Agreement, together with any interest and other income thereon.


“Escrow
Period” shall mean the period commencing on the date hereof and ending on the
first anniversary of this Escrow Agreement.


“Estimated
Claim Amount” shall mean the amount designated by the Buyer Representative to
be the amount of any Claim for which a Claim Notice has been delivered.


“Joint
Written Direction” shall mean a written direction executed by the
Representatives and directing Escrow Agent to disburse all or a portion of the
Escrow Funds or to take or refrain from taking an action pursuant to this
Escrow Agreement.


“Representatives”
shall mean the Seller Representative and the Buyer Representative.


“Seller
Representative” shall mean Eric Walters, the Chief Financial Officer of Seller,
or any other person designated in a writing signed by Seller and delivered to
Escrow Agent and the Buyer Representative in accordance with the notice provisions
of this Escrow Agreement, to act as its representative under this Escrow
Agreement.


2.             Appointment of and
Acceptance by Escrow Agent.  Buyer
and Seller hereby appoint Escrow Agent to serve as escrow agent hereunder.  Escrow Agent hereby accepts such appointment
and, upon receipt by wire transfer of the Escrow Funds in accordance with Section
3 below, agrees to hold, invest and disburse the Escrow Funds in accordance
with this Escrow Agreement.


3.             Deposit
of Escrow Funds.  Simultaneously with
the execution and delivery of this Escrow Agreement, Buyer will transfer and
deposit $1,000,000 (such amount, and all income earned from investment of such
amount, and additions thereto, if any, the “Escrow Fund”) with the Escrow Agent
in a separate account in the name of “Gish Escrow” (the “Escrow Account”).



 74
 









The
Escrow shall be invested, administered and distributed in accordance with the
terms set forth below.


4.             Investment
of Funds.  Escrow Agent is herein
directed and instructed to initially invest and reinvest the Escrow Fund in any
institutional money market fund offered by Escrow Agent, including any
institutional money market fund managed by Escrow Agent or any of its
affiliates.  All investment earnings
shall become part of the Escrow Fund and investment losses shall be charged
against the Escrow Fund.  Escrow Agent
shall not be liable or responsible for loss in the value of any investment made
pursuant to this Escrow Agreement, or for any loss, cost or penalty resulting
from any sale or liquidation of the Escrow Fund.


5.             Disbursements
of Escrow Funds.


(a)           Joint Written
Direction.  Escrow Agent shall
disburse Escrow Funds at any time and from time to time, upon receipt of, and
in accordance with, a Joint Written Direction. 
Such Joint Written Direction shall contain wiring instructions or an
address to which a check shall be sent.


(b)           Expiration of Escrow
Period.  Upon the expiration of the
Escrow Period, Escrow Agent shall:  (i)
retain in the Escrow Account sufficient funds to pay in full all Estimated
Claim Amounts, if any, that have not been resolved at such time by the delivery
to Escrow Agent of a Joint Written Direction; and (ii) distribute, as promptly
as practicable, the balance of the Escrow Fund to Seller.


If
upon the expiration of the Escrow Period, Escrow Agent has retained any Escrow
Funds with respect to Estimated Claim Amounts pursuant to this Section 5,
then the Escrow Agent may, in its sole discretion, either (i) retain all such
remaining Escrow Funds, to be held and invested in accordance with the
provisions of this Escrow Agreement, until receipt by Escrow Agent of a Joint
Written Direction with respect to the disposition of such amounts, or (ii) pay
over all remaining Escrow Funds to a court of competent jurisdiction in the
manner described in Section  7
below.


6.             Indemnification
Claims.  The Buyer Representative
shall deliver each Claim Notice to the Seller Representative and Escrow Agent,
such delivery to be in accordance with the notice provisions of this Escrow
Agreement.


Upon
receipt of any Claim Notice, Escrow Agent shall promptly make entries or
notations in the account records relating to the Escrow Fund, indicating that
funds in the amount of the Estimated Claim Amount are reserved to satisfy such
Claim, and identifying the date and number of such Claim Notice.


Within
thirty (30) days of receipt by the Seller Representative of any Claim Notice,
the Seller Representative shall deliver a Claim Response to the Buyer
Representative and Escrow Agent, such delivery to be in accordance with the
notice provisions of this Escrow Agreement. 
If the Seller Representative fails to provide a Claim Response within 30
days of receipt of any Claim Notice, the Escrow Agent shall disperse funds in
accordance with the Claim Notice.  Escrow
Agent shall have no responsibility to determine whether any Claim Notice or
Claim



 75
 









Response has been
received by Buyer or Seller, as applicable, or to provide any Claim Notice or
Claim Response to Buyer or Seller.


7.             Resignation of
Escrow Agent.  The Escrow Agent in
its sole discretion may resign at any time and be discharged of its duties
hereunder by giving thirty (30) days prior written notice to the Seller and
Buyer, and which notice shall specify the date of such resignation.  In the event the Seller and Buyer fail to
appoint a successor escrow agent and notify the Escrow Agent in writing of such
appointment within such thirty (30) day period, the Escrow Agent shall be
deemed to be solely a custodian of the Escrow Account without further duties
hereunder, and shall be entitled to petition a court of competent jurisdiction
to appoint a successor escrow agent. 
Upon the appointment of a successor escrow agent by the parties
hereunder or by such court, the Escrow Agent’s duties and liabilities under
this Escrow Agreement shall terminate.


8.             Tax Reporting  The parties agree that, for tax reporting
purposes, all interest or other income earned from the investment of the Escrow
Fund in any tax year shall to the extent such interest or other income is
distributed by the Escrow Agent to any person or entity pursuant to the terms
of this Agreement during such tax year, be allocated to such person or entity.


9.             Compensation
of Escrow Agent.  In consideration of
the services provided by the Escrow Agent in the performance of its duties
hereunder, Buyer and Seller agree to reimburse the Escrow Agent for all costs
and expenses incurred by it with respect to this Escrow Agreement, including
reasonable fees of legal counsel and other consultants, and to further
compensate the Escrow Agent in accordance with the fee arrangement described in
Exhibit A attached hereto.  Buyer
and Seller agree that the Escrow Agent shall have and the Buyer and Seller
hereby grant to the Escrow Agent, a first lien for the payment of such costs
and expenses upon the Escrow Fund in the Escrow Account.


10.           Limitation
of Escrow Agent’s Duties.


(a)           Buyer and Seller
acknowledge that the duties of the Escrow Agent hereunder are solely
ministerial in nature, and have been requested for their convenience.  The Escrow Agent shall not be deemed to be
the agent of either Buyer or Seller, or to have any legal or beneficial
interest in any of funds in the Escrow Account. 
The Buyer and Seller agree that the Escrow Agent is a party to the
Escrow Agreement only and has no duties or responsibilities in connection with
any agreements related hereto, and that the Escrow Agent shall not be liable
for any act or omission taken or suffered in good faith with respect to this
Escrow Agreement unless such act or omission is the result of the gross
negligence or willful misconduct of the Escrow Agent.


(b)           The Escrow Agent may
consult with legal counsel and shall be fully protected and incur no liability
relative to any action or inaction taken in good faith in accordance with the
advice of such counsel.  The Escrow Agent
shall have no responsibility for determining the genuineness or validity of any
certificate, document, notice or other instrument or item presented to or
deposited with it, and shall be fully protected in acting in accordance with
any written



 76
 









instruction given to it by the Representatives in
accordance with and pursuant to the terms of this Escrow Agreement and
reasonably believed by the Escrow Agent to have been signed by such
Representatives.


(c)           The Escrow Agent shall
not be responsible for any losses relative to the investment or liquidation of
the Escrow Fund, provided such Escrow Fund is invested and held in accordance
with Section 2 hereof.  The Escrow
Agent further shall not be responsible for assuring that funds in the Escrow
Account are sufficient for the disbursements contemplated under Section 5
and Section 6 hereof.


(d)           The Escrow Agent shall
not be required to institute legal proceedings of any kind.  The Escrow Agent shall not be required to
defend any legal proceedings which may be instituted against it with respect to
this Agreement unless requested to do so in writing by Representatives, and
unless and until it is indemnified by the Buyer and Seller to the satisfaction
of the Escrow Agent, in its sole discretion, against the cost and expense of
such defense, including without limitation the reasonable fees and expenses of
its legal counsel.  If any conflicting
demand shall be made upon the Escrow Agent, it shall not be required to
determine the same or take any action thereon and may await settlement of the
controversy by appropriate and nonappealable legal proceedings.  Upon the commencement of any action against
or otherwise involving the Escrow Agent with respect to this Agreement, or upon
advice of counsel under paragraph (b) hereunder, the Escrow Agent shall be
entitled to interplead the matter of this escrow into a court of competent
jurisdiction in the Commonwealth of Massachusetts and, in such event, the
Escrow Agent shall be relieved of and discharged from any and all obligations
and liabilities under this Agreement.  In
any such action, the Escrow Agent shall be entitled to the indemnities provided
in Section 11 hereof.


11.           Indemnification
of Escrow Agent.  Buyer and Seller
hold harmless and indemnify the Escrow Agent, its directors, officers,
employees and agents from and against all obligations, liabilities, claims,
suits, judgments, losses, damages, costs or expenses of any kind or nature,
including without limitation reasonable attorneys’ fees, which may be imposed
on, incurred by, or asserted against the Escrow Agent or the Escrow Agent’s
duties hereunder.  The foregoing
indemnities shall survive the resignation of the Escrow Agent or the
termination of this Escrow Agreement. 
The parties agree that the Escrow Agent shall have and hereby grant the
Escrow Agent a first lien for the payment of such expenses upon the Escrow
Assets in the Escrow Account.


12.           Notices.  All demands, notices and communications
hereunder shall be in writing and shall be given prepaid, by hand-delivery,
courier service or certified or registered United States mail, return receipt
requested, and addressed to the party for whom intended, at the following
addresses:



 77
 









(a)           If to Seller:


CardioTech
International, Inc.


229 Andover Street


Wilmington,
MA  01887 USA


Attention:  Michael Adams, Chief Executive Officer


Facsimile No.:


With a copy to:


Seyfarth Shaw LLP


Two Seaport Lane


Boston, MA 02210
USA


Attention:  David E. Dryer


Facsimile No.:  617 946 4801


(b)           If to Buyer:


MEDOS Medizintechnik
AG


Obere Steinfurt 8
- 10


D - 52222 Stolberg


Germany


Attention:  Joachim Pelz, Dr. med. Thomas Theisen


Facsimile No.:



 78
 









With a copy to:


Dewey Ballantine
LLP


Taunusanlage 1


D-60329 Frankfurt
am Main


Germany


Attention: Dr.
Benedikt von Schorlemer LLM


Facsimile No.:  +49 69 36393333


(c)           If to Escrow Agent


Citizens Bank of
Massachusetts


870 Westminster Street


Providence, Rhode
Island  02903


Attn:  Institutional Services Group


Facsimile
No:


13.           Governing
Law and Severability.  This agreement
shall be construed, and the obligations, rights and remedies of the parties
hereunder shall be determined, in accordance with the laws of the Commonwealth
of Massachusetts. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
the Agreement shall be construed in all respects as if such invalid or
unenforceable provision was omitted.


14.           General
Provisions.  This Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original, and all of which shall constitute one and the same instrument.  This Agreement shall bind and inure to the
benefit of the parties hereto, and their respective successors and assigns, and
shall not be modified or amended except by a written instrument executed by the
parties hereto.


EXECUTED by the duly-authorized officers of the
parties as of the date first above written.



 79
 









 


	
  BUYER:

  	
   

  	
  SELLER:

  
	
  MEDOS        MEDIZINTECHNIK        AG

  	
   

  	
  CARDIOTECH INTERNATIONAL, INC..

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
							



 


CITIZENS BANK of
Massachusetts,


as Escrow Agent


	
  By:

  	
   

  	
   

  
	
   

  
	
  Title:

  	
   

  	
   

  
				



 



 80
 









Exhibit
3.10(1)


Pages 60 - 63 of
Form 1120 of Seller


(Intentionally
omitted)



 81
 









Exhibit
7.4(a) 


Opinion by
Seyfarth Shaw LLP


(Intentionally
omitted)



 82
 









Exhibit
10.2(g)


List of employees


[***]



 83















DISCLOSURE
SCHEDULES


The information disclosed herein is arranged by separate sections
corresponding to the equivalent sections referenced in the Stock Purchase
Agreement effective as of June 30, 2007 by and among CardioTech International
Inc. (the “Seller” or “CardioTech”), Gish Biomedical, Inc. (“Gish”) and Medos
Medizintechnik AG (“Buyer”) (the “Agreement”). 
Capitalized terms used herein without definition shall, unless the
context requires otherwise, have the respective meanings ascribed to them in
such Agreement.  Disclosure under one
section shall be deemed disclosure under each other section of the Agreement,
as applicable, where it is readily apparent on the face of the information
disclosed that it should be an exception to such section of the Agreement.  If a section is not listed below, it is
because additional disclosure under such section is not required.  Where the terms of a contract or other
disclosure item have been summarized or described in this Disclosure Schedule,
such summary or description does not purport to be a complete statement of the
material terms of such lease, contract or other item.  Copies of all written contracts and other
items listed in this Disclosure Schedule have been provided to Buyer.  The disclosure of any matter in the
Disclosure Schedules shall not be construed as indicating that such matter is
material to the business, operation, financial condition, prospects or capital
structure of the Company or is necessarily required to be disclosed in order
for any representation or warranty in the Agreement to be true and correct in
any respect.  Headings in the Disclosure
Schedules are for convenience only and shall not affect in any way the meaning
of the Disclosure Schedules. References herein to “the Company” are deemed to
refer to the Company’s predecessor entity where the context requires.



 84
 









Part 3.2


Authority; No Conflict


[***]



 85
 









Part 3.5


Books and Records


[***]



 86
 









Part 3.6


Title to Properties;
Encumbrances


[***]



 87
 









Part 3.7


Condition and Sufficiency
of Assets


[***]



 88















Part 3.8


Accounts Receivable


[***]



 89
 









Part 3.9


Inventory


[***]



 90















Part 3.10


Taxes


[***]



 91
 









Part 3.11


No Material Adverse
Change


[***]



 92















Part 3.12


Labor and Employment
Matters


[***]



 1
 









Part 3.13


Compliance with Legal
Requirements; Governmental Authorizations


[***]



 2
 









Part 3.14


Legal Proceedings; Orders


[***]



 3
 









Part 3.16


Absence of Certain
Changes and Events


[***]



 4
 









Part.
3.17


Contracts; No Defaults


[***]



 5
 









Part 3.18


Insurance


[***]



 6
 









Part 3.19


Environmental Matters


[***]



 7
 









Part 3.20


Employees


[***]



 8
 









Part 3.22


Intellectual Property


[***]



 9