Document:

Exhibit 4.5

 

AMENDMENT NO. 1 TO SECURITIES
PURCHASE AGREEMENT

 

This
AMENDMENT NO. 1 TO SECURITIES PURCHASE AGREEMENT, dated as of April 28,
2006 (the “Amendment”), by and among AGA MEDICAL CORPORATION, a
Minnesota corporation (the “Company”) and WCAS CAPITAL PARTNERS IV,
L.P., a Delaware limited partnership (the “Purchaser”).  Capitalized terms used herein and not
otherwise defined shall have the meaning assigned to such term in the
Securities Purchase Agreement (as defined below).

 

RECITALS:

 

WHEREAS,
the Company and the Purchaser entered into that certain Securities Purchase
Agreement, dated as of July 28, 2005 (the “Securities Purchase
Agreement”), pursuant to which, among other things, the Purchaser purchased
from the Company and the Company issued and sold to the Purchaser its 10%
senior subordinated notes due 2012 in an aggregate principal amount of
$50,000,000;

 

WHEREAS,
the Company proposes to enter into that certain Amended and Restated Credit
Agreement (the “Amended and Restated Credit Agreement”), among AGA
Medical Holdings, Inc., the Company, the Lenders party thereto from time
to time, Lehman Brothers Inc. and Citigroup Global Markets Inc., as Joint Lead
Arrangers and Joint Bookrunners, Citigroup Global Markets Inc., as Syndication
Agent, and Lehman Commercial Paper Inc., as Administrative Agent; and

 

WHEREAS,
the Company and the Purchaser now desire to amend certain provisions of the
Securities Purchase Agreement as set forth herein;

 

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

 

ARTICLE I.

 

AMENDMENTS TO SECURITIES
PURCHASE AGREEMENT

 

SECTION 1.01. 
Amendments.  The Securities
Purchase Agreement is hereby amended, in accordance with Section 13.02
thereof, as follows:

 

(a)            The second Recital of the Securities
Purchase Agreement is hereby amended by deleting “2015” and replacing it with “2012”.

 

(b)           Section 8.03 of the Securities
Purchase Agreement is hereby amended by deleting the table therein and
replacing it in its entirety with the following:

 

1

 

	
  Date

  	
   

  	
  Ratio

  	
   

  
	
  September 30, 2006

  	
   

  	
  1.50 to 1.00

  	
   

  
	
  December 31, 2006

  	
   

  	
  1.50 to 1.00

  	
   

  
	
  March 31, 2007

  	
   

  	
  1.50 to 1.00

  	
   

  
	
  June 30, 2007

  	
   

  	
  1.50 to 1.00

  	
   

  
	
  September 30, 2007

  	
   

  	
  1.75 to 1.00

  	
   

  
	
  December 31, 2007

  	
   

  	
  1.75 to 1.00

  	
   

  
	
  March 31, 2008

  	
   

  	
  1.75 to 1.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  1.75 to 1.00

  	
   

  
	
  September 30, 2008 and thereafter

  	
   

  	
  2.00 to 1.00

  	
   

  

 

(c)            Section 8.04 of the Securities
Purchase Agreement is hereby amended by deleting the table therein and
replacing it in its entirety with the following:

 

	
  Date

  	
   

  	
  Ratio

  	
   

  
	
  September 30, 2006

  	
   

  	
  6.75 to 1.00

  	
   

  
	
  December 31, 2006

  	
   

  	
  6.75 to 1.00

  	
   

  
	
  March 31, 2007

  	
   

  	
  6.50 to 1.00

  	
   

  
	
  June 30, 2007

  	
   

  	
  6.50 to 1.00

  	
   

  
	
  September 30, 2007

  	
   

  	
  6.25 to 1.00

  	
   

  
	
  December 31, 2007

  	
   

  	
  6.00 to 1.00

  	
   

  
	
  March 31, 2008

  	
   

  	
  5.75 to 1.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  5.75 to 1.00

  	
   

  
	
  September 30, 2008

  	
   

  	
  5.50 to 1.00

  	
   

  
	
  December 31, 2008

  	
   

  	
  5.25 to 1.00

  	
   

  
	
  March 31, 2009

  	
   

  	
  5.00 to 1.00

  	
   

  
	
  June 30, 2009

  	
   

  	
  5.00 to 1.00

  	
   

  
	
  September 30, 2009

  	
   

  	
  4.75 to 1.00

  	
   

  
	
  December 31, 2009

  	
   

  	
  4.50 to 1.00

  	
   

  
	
  March 31, 2010

  	
   

  	
  4.25 to 1.00

  	
   

  
	
  June 30, 2010

  	
   

  	
  4.25 to 1.00

  	
   

  
	
  September 30, 2010

  	
   

  	
  4.25 to 1.00

  	
   

  
	
  December 31, 2010 and thereafter

  	
   

  	
  4.00 to 1.00

  	
   

  

 

2

 

(d)           Section 8.05 of the Securities
Purchase Agreement is hereby deleted and replaced in its entirety with the
following:

 

“SECTION 8.05     Senior Leverage Ratio.  [Intentionally Omitted].”

 

SECTION 1.02. 
Continuing Effect of the Securities Purchase Agreement.  This Amendment shall not constitute an
amendment or waiver of any other provision of the Securities Purchase Agreement
not expressly referred to herein.  Except
as expressly amended hereby, the provisions of the Securities Purchase Agreement
shall remain in full force and effect and, furthermore, all references to the “Credit
Agreement” in the Securities Purchase Agreement shall mean the Amended and
Restated Credit Agreement (as the same may be amended, restated, extended,
amended and restated, refinanced, replaced or otherwise modified from time to
time).

 

ARTICLE II.

 

MISCELLANEOUS

 

SECTION 2.01.  Severability.  In the event that any one or more of the
provisions contained in this Amendment or in any other instrument referred to
herein shall, for any reason, be held to be invalid, illegal or unenforceable,
such illegality, invalidity or unenforceability shall not affect any other
provisions of this Amendment.

 

SECTION 2.02.
Counterparts.  This Amendment may
be executed in any number of counterparts, and each such counterpart hereof
shall be deemed to be an original instrument, but all such counterparts
together shall constitute but one agreement.

 

SECTION 2.03.  Governing Law.  This Amendment will be governed by and
construed and interpreted in accordance with the laws of the State of New York.

 

[Remainder
of Page Intentionally Left Blank]

 

3

 

IN WITNESS WHEREOF, each
of the undersigned has executed this Amendment as an agreement as of the date
first above written.

 

 

	
   

  	
  AGA MEDICAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Franck Gougeon

  
	
   

  	
   

  	
  Name: Franck Gougeon

  
	
   

  	
   

  	
  Title: President and
  CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WCAS CAPITAL PARTNERS
  IV, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  WCAS CP IV Associates
  LLC,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ D. Scott Mackesy

  
	
   

  	
   

  	
   Name: D. Scott
  Mackesy

  
	
   

  	
   

  	
   Title: General
  Partner

  

 

[Signature Page to Amendment No. 1 to
Securities Purchase Agreement]EXHIBIT 4.6

 

AMENDED AND RESTATED

 

STOCK PURCHASE AGREEMENT

 

This AMENDED AND RESTATED STOCK PURCHASE AGREEMENT,
dated as of July 28, 2005 (as amended or otherwise modified, the “Agreement”),
is between WELSH, CARSON, ANDERSON & STOWE IX, L.P., a Delaware limited
partnership (“WCAS IX”), the co-investors of WCAS IX listed on the
signature pages hereto (collectively with WCAS IX, the “Investors”),
Franck L. Gougeon (“Gougeon”), and AGA MEDICAL CORPORATION, a Minnesota
corporation (the “Company”).

 

RECITALS

 

WHEREAS, the Company, Gougeon, Michael Afremov (“Afremov”)
and Kurt Amplatz (“Amplatz”) are parties to civil litigation styled, Michael Afremov v. Kurt Amplatz et al., District Court File No. CT02-017734
(the “Litigation”), which is pending in the District Court for the
Fourth Judicial District, County of Hennepin, State of Minnesota (the “Court”);

 

WHEREAS, pursuant to an Order and Memorandum dated August 3,
2004, the Court ordered Afremov and Gougeon each to submit a proposal to the
Court setting forth respective terms on which each of them would purchase all
of the other’s shares of capital stock in the Company;

 

WHEREAS, on December 28, 2004, the Court entered
an Order for Judgment on Buyout Motions (the “Original Buyout Order”),
which, inter alia, ordered the buyout of all
the outstanding shares of stock of Afremov in the Company, pursuant to, and
subject to the terms of, such Order and this Agreement (the “Afremov Buyout”);

 

WHEREAS, on January 18, 2005, the Investors,
Gougeon and the Company entered into a Stock Purchase Agreement (the “Original
Agreement”) pursuant to which the Investors would purchase from the
Company, and the Company would issue and sell to the Investors shares of the
Company’s Series A Convertible Preferred Stock, par value $0.001 per share
(the “Series A Preferred Stock”), which shares are convertible into
shares of common stock of the Company, par value $0.01 per share (“Common
Stock”), and the Company would use the proceeds of such investment,
together with proceeds from other Contemplated Transactions, to consummate the
Afremov Buyout;

 

WHEREAS, on March 31, 2005, the Court entered an
Amended Order for Judgment on Buyout Motions (the “Final Order”);

 

WHEREAS, on April 20, 2005, Gougeon, Afremov and
Amplatz, entered into a Confidential Settlement and Mutual Release Agreement
(the “Settlement Agreement”), pursuant to which such parties agreed to
settle the Litigation provided, among other things, that the Afremov Buyout is
consummated on or prior to July 29, 2005; and

 

 

WHEREAS, in connection with the Settlement Agreement,
the Investors, Gougeon and the Company desire to amend and restate the Original
Agreement to provide for certain amendments necessary to consummate the
settlement contemplated thereby and otherwise to reflect certain changes in the
business of the Company since the date of the Original Agreement;

 

AGREEMENT

 

NOW THEREFORE, in consideration of the premises and
mutual promises herein made, and in consideration of the representations,
warranties and covenants herein contained, the Investors, the Company and
Gougeon hereby agree as follows:

 

1.                                      CERTAIN DEFINITIONS; CERTAIN
RULES OF CONSTRUCTION.

 

1.1           As
used herein, the following terms will have the following meanings:

 

“1933 Act” means the Securities Act of 1933.

 

“Action” means any claim, action, cause of
action or suit (whether in contract or tort or otherwise), litigation (whether
at law or in equity, whether civil or criminal), controversy, assessment,
arbitration, investigation, hearing, charge, complaint, demand, notice or
proceeding to, from, by or before any Governmental Authority.

 

“Affiliate” means, with respect to any
specified Person at any time means, (a) each Person directly or indirectly
controlling, controlled by or under direct or indirect common control with such
specified Person at such time, (b) each Person who is at such time an
officer or director of, or direct or indirect beneficial holder of at least 20%
of any class of the Equity Interests of, such specified Person, (c) each
Person that is managed by a common group of executive officers and/or directors
as such specified Person, (d) the members of the immediate family (i) of
each officer, director or holder described in clause (b) and (ii) if
such specified Person is an individual, of such specified Person and (e) each
Person of which such specified Person or an Affiliate (as defined in clauses (a)
through (d)) thereof will, directly or indirectly, beneficially own at least
20% of any class of Equity Interests at such time.

 

“Ancillary Agreements” means the Stockholders
Agreement, Registration Rights Agreement, the Gougeon Employment Agreement, the
Settlement Agreement, the Contribution and Exchange Agreement and the Releases.

 

“Business” means the businesses conducted by
the Company and proposed to be conducted by the Company.

 

“Business Day” means any weekday other than a
weekday on which banks in New York, New York are authorized or required to be
closed.

 

“Closing Cash Amount” means the cash and cash
equivalents of the Company that would be listed on the consolidated balance
sheet of the Company dated as of the Closing Date (but immediately prior to
giving effect to the consummation of the Contemplated Transactions) and
prepared in accordance with GAAP.

 

2

 

“Closing Date” means the date on which the
Closing actually occurs.

 

“Code” means the U.S. Internal Revenue Code of
1986.

 

“Company’s Knowledge” means the actual
knowledge, after reasonable investigation, of Gougeon, Mike Smithson, Mark
Cibuzar, Jodi Raus, Ken Lock, Gary Thill and such other employees and agents of
the Company (including employees of Manchester Companies, Inc. who work on
the Company’s account with such entity) who would reasonably by expected to
have knowledge of the matter in question.

 

“Company Technology” means any and all
Technology used or useful in connection with the Business and any and all
Intellectual Property in any and all such Technology.

 

“Compensation” means, with respect to any
Person, all salaries, compensation, remuneration, bonuses or benefits of any
kind or character whatever (including issuances or grants of Equity Interests),
made directly or indirectly by the Company to such Person or Affiliates of such
Person.

 

“Contemplated Transactions” means, collectively,
the transactions contemplated by this Agreement, including (a) the filing
of the Restated Articles with the Secretary of State of Minnesota, (b) the
issuance and sale of the Shares, (c) the execution of the Senior Credit
Facility and making of the loans contemplated thereby, (d) the execution
of the Subordinated Debt Agreement and issuance of the notes contemplated
thereby, (e) the execution, delivery and performance of the Ancillary
Agreements, (f) the payment of the Dividend, (g) the consummation of
the Afremov Buyout, and (h) the adoption of the Restated Bylaws by the
Company.

 

“Contractual Obligation” means, with respect to
any Person, any contract, agreement, deed, mortgage, lease, license,
commitment, promise, undertaking, arrangement or understanding, whether written
or oral and whether express or implied, or other document or instrument
(including any document or instrument evidencing or otherwise relating to any
Debt,) to which or by which such Person is
a party or otherwise subject or bound or to which or by which any property,
business, operation or right of such Person is subject or bound.

 

“Contribution and Exchange Agreement”
means that certain Contribution and Exchange Agreement, in form and substance
reasonably satisfactory to WCAS IX, to be entered into between Gougeon, WCAS IX
and the other parties thereto.

 

“Debt” means, with respect to any Person, all
obligations (including all obligations in respect of principal, accrued
interest, penalties, fees and premiums) of such Person (a) for borrowed
money (including overdraft facilities), (b) evidenced by notes, bonds,
debentures or similar Contractual Obligations, (c) for the deferred
purchase price of property, goods or services (other than trade payables or
accruals incurred in the Ordinary Course of Business), (d) under capital
leases (in accordance with GAAP), (e) in respect of letters of credit and
bankers’ acceptances, (f) for Contractual Obligations relating to interest
rate protection, swap agreements and collar agreements and (g) in the nature
of guarantees of the obligations described in clauses (a) through (f) above
of any other Person.

 

3

 

“Encumbrance” means any charge, claim,
community or other marital property interest, condition, equitable interest,
lien, license, option, pledge, security interest, mortgage, right of way,
easement, encroachment, servitude, right of first offer or first refusal,
buy/sell agreement and any other restriction or covenant with respect to, or
condition governing the use, construction, voting (in the case of any security
or equity interest), transfer, receipt of income or exercise of any other
attribute of ownership.

 

“Environmental Laws” means any Legal
Requirement relating to (a) releases or threatened releases of Hazardous
Substances, (b) pollution or protection of public health or the environment or
worker safety or health or (c) the manufacture, handling, transport, use,
treatment, storage, or disposal of Hazardous Substances.

 

“Equity Interests” means (a) any capital
stock, share, partnership or membership interest, unit of participation or
other similar interest (however designated) in any Person and (b) any
option, warrant, purchase right, conversion right, exchange rights or other
Contractual Obligation which would entitle any Person to acquire any such
interest in such Person or otherwise entitle any Person to share in the equity,
profit, earnings, losses or gains of such Person (including stock appreciation,
phantom stock, profit participation or other similar rights).

 

“ERISA” means the federal Employee Retirement
Income Security Act of 1974.

 

“Excluded Items” means those items disclosed on
the Schedules hereto which are specifically referenced as “Excluded Items” on
such Schedules.

 

“Expiration Date” means the later of (i) the
sixtieth day after the Company receives the final audited balance sheet of the
Company as at December 31, 2005 and the related audited consolidated
statements of income, cash flow and changes in stockholders’ equity of the
Company for the fiscal year then ended, accompanied by any notes thereto and
the report of the Company’s independent auditors, and (ii) the one-year
anniversary of the Closing Date.

 

“Facilities” means any buildings, plants,
improvements or structures located on the Real Property.

 

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

 

“Gougeon Employment Agreement” means the
employment agreement, in form and substance reasonably satisfactory to WCAS IX,
to be entered into between the Company and Gougeon at or prior to the Closing.

 

“Government Order” means any order, writ,
judgment, injunction, decree, stipulation, ruling, determination or award
entered by or with any Governmental Authority.

 

“Governmental Authority” means any United
States federal, state or local or any foreign government, or political
subdivision thereof, or any multinational organization or authority or any
authority, agency or commission entitled to exercise any administrative,
executive, judicial, legislative, criminal, police, regulatory or taxing
authority or power, any court or tribunal (or any department, bureau or
division of any of the foregoing), or any arbitrator or arbitral body.

 

4

 

“HSR Act” means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976.

 

“Indemnity Claim” means a claim for indemnity
under Section 10.2.

 

“Indemnity Deductible Amount” means (i) $21,000,000
plus (ii) the Closing Cash Amount less (iii) the Target Cash Amount; provided,
that the Indemnity Deductible Amount shall not be less than $0.

 

“Indemnified Party” means with respect to any
Indemnity Claim, the Investor Indemnified Person asserting such claim under Section 10.2.

 

“Indemnifying Party” means, with respect to any
Indemnity Claim, the Company or Gougeon, as the case may be.

 

“Intellectual Property” means all proprietary
rights of every kind and nature, including all rights and interests pertaining
to or deriving from: (i) patents, copyrights, mask work rights,
technology, know-how, processes, trade secrets, algorithms, inventions, works,
proprietary data, databases, formulae, research and development data and
computer software or firmware; (ii) trademarks, trade names, service
marks, service names, brands, trade dress and logos, and the goodwill and
activities associated therewith; (iii) domain names, rights of privacy and
publicity, moral rights, and proprietary rights of any kind or nature, however
denominated, throughout the world in all media now known or hereafter created; (iv) any
and all registrations, applications, recordings, licenses, common-law rights
and Contractual Obligations relating to any of the foregoing; and (v) all
Actions and rights to sue at law or in equity for any past or future infringement
or other impairment of any of the foregoing, including the right to receive all
proceeds and damages therefrom, and all rights to obtain renewals,
continuations, divisions or other extensions of legal protections pertaining
thereto.

 

“Legal Requirement” means any United States
federal, state or local or foreign law, statute, standard, ordinance, code,
rule, regulation, resolution or promulgation, or any Governmental Order, or any
license, franchise, permit or similar right granted under any of the foregoing,
or any similar provision having the force or effect of law.

 

“Liability” means, with respect to any Person,
any liability or obligation of such Person whether known or unknown, whether
asserted or unasserted, whether determined, determinable or otherwise, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, whether incurred or consequential, whether due or to become due
and whether or not required under GAAP to be accrued on the financial
statements of such Person.

 

“Material Adverse Effect” means any change in,
or effect on, the Business, operations, Assets, prospects or condition
(financial or otherwise) of the Company which, when considered either
individually or in the aggregate together with all other adverse changes or
effects with respect to which such phrase is used in this Agreement, is, or is
reasonably likely to be, materially adverse to the Business, operations,
Assets, prospects or condition (financial or otherwise) of the Company, taken
as a whole.

 

“Ordinary Course of
Business” means an action taken by any Person in the course of such Person’s
business which is consistent with the past customs and practices of such Person

 

5

 

(including past practice
with respect to quantity, amount, magnitude and frequency, standard employment
and payroll policies and past practice with respect to management of working
capital).

 

“Organizational Documents” means, with respect
to any Person (other than an individual), (a) the certificate or articles
of incorporation or organization and any joint venture, limited liability
company, operating or partnership agreement and other similar documents adopted
or filed in connection with the creation, formation or organization of such
Person and (b) all by-laws, voting agreements and similar documents,
instruments or agreements relating to the organization or governance of such
Person, in each case, as amended or supplemented.

 

“Permits” means,
with respect to any Person, any license, franchise, permit, consent, approval,
right, privilege, certificate or other similar authorization issued by, or
otherwise granted by, any Governmental Authority or any other Person to which
or by which such Person is subject or bound or to which or by which any
property, business, operation or right of such Person is subject or bound.

 

“Permitted Encumbrance”
means (a) statutory liens for current Taxes, special assessments or other
governmental charges not yet due and payable or the amount or validity of which
is being contested in good faith by appropriate proceedings and for which
appropriate reserves have been established in accordance with GAAP, (b) mechanics’,
materialmen’s, carriers’, workers’, repairers’ and similar statutory liens
arising or incurred in the Ordinary Course of Business which liens have not had
and are not reasonably likely to have a Material Adverse Effect, (c) liens
securing the purchase price or lease payments for equipment obtained by the
Company in the Ordinary Course of Business which liens have not had and are not
reasonably likely to have  a Material
Adverse Effect, (d) zoning, entitlement, building and other land use
regulations imposed by governmental agencies having jurisdiction over any Owned
Real Property which are not violated in any material respect by the current use
and operation of the Owned Real Property, (e) deposits or pledges made in
connection with, or to secure payment of, worker’s compensation, unemployment
insurance, old age pension programs mandated under applicable Legal
Requirements or other social security, (f) covenants, conditions,
restrictions, easements, encumbrances and other similar matters of record
affecting title to but not adversely affecting current occupancy or use of the
Owned Real Property in any material respect and (g) restrictions on the
transfer of securities arising under federal and state securities laws.

 

“Person” means any
individual or corporation, association, partnership, limited liability company,
joint venture, joint stock or other company, business trust, trust,
organization, Governmental Authority or other entity of any kind.

 

“Registration Rights Agreement” means
that certain Registration Rights Agreement, in form and substance reasonably
satisfactory to WCAS IX, to be entered into between Gougeon, WCAS IX and the
other parties thereto.

 

“Releases” means the Mutual General
Release Agreement, dated as of January 18, 2005, the Mutual General
Release Agreement, to be dated as of the Closing Date, and the other agreements
providing for a release of claims and waiver of rights, including appeal rights
with respect to the Litigation, in the form reasonably satisfactory to WCAS IX,
executed by each of the Company,

 

6

 

Gougeon and Amplatz and, to the extent
required by WCAS IX, their respective Affiliates.

 

“Sale Transaction”
means any (i) merger, consolidation or other business combination
transaction involving the Company or any of its Affiliates, (ii) sale or
other disposition of material assets of the Company or (iii) issuance,
sale or other disposition of any Equity Interests of the Company.

 

“Senior Credit
Facility” means that certain  new
senior credit facility to be entered into by the Company on or prior to the
Closing Date, pursuant to which up to $122,000,000 will be made available to
the Company.

 

“Subordinated Debt Agreement” means
that certain  securities purchase
agreement to be entered into by the Company and WCAS Capital Partners IV, L.P.
on or prior to the Closing Date, pursuant to which up to $50,000,000 will be
made available to the Company.

 

“Stockholders Agreement” means that
certain Stockholders Agreement, in form and substance reasonably satisfactory
to WCAS IX, to be entered into between Gougeon, WCAS IX and the other parties
thereto.

 

“Subsidiary”
means, with respect to any specified person, any other Person of which such
specified Person will, at the time, directly or indirectly through one or more
Subsidiaries, (a) own at least 50% of the outstanding capital stock (or
other shares of beneficial interest) entitled to vote generally, (b) hold
at least 50% of the partnership, limited liability company, joint venture or
similar interests or (c) be a general partner, managing member or joint
venturer.

 

“Target Cash Amount”
means $53,500,000.

 

“Tax” or “Taxes”
means (a) any and all federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, accumulated earnings, environmental, customs duties,
capital stock, franchise, profits, withholding, social security (or similar,
including FICA), unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind or any charge of any kind in the nature of
(or similar to) taxes whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not and (b) any Liability for the payment of
any amounts of the type described in clause (a) of this definition as a
result of being a member of an affiliated, consolidated, combined or unitary
group for any period, as a result of any tax sharing or tax allocation
agreement, arrangement or understanding, or as a result of being liable for
another person’s taxes as a transferee or successor, by contract or otherwise.

 

“Tax Benefit”
means the sum of the amount by which the actual Tax Liability of the Company to
the applicable Governmental Authority is reduced (including, without limitation,
by or as a result of a deduction, increase in basis, entitlement to refund,
credit or otherwise, whether available in the current taxable year, as an
adjustment to the taxable income in any other taxable year or as a carryforward
or carryback, as applicable).

 

“Tax Return” means
any return, declaration, report, claim for refund or information return or
statement relating to Taxes, including any schedule or attachment thereto, and
including any

 

7

 

amendment thereof.

 

“Technology” means
all inventions, works, discoveries, innovations, know-how, information
(including ideas, research and development, know-how, formulas, compositions,
processes and techniques, data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, business and marketing plans and
proposals, documentation and manuals), computer software, firmware, computer
hardware, integrated circuits and integrated circuit masks, electronic,
electrical and mechanical equipment and all other forms of technology,
including improvements, modifications, works in process, derivatives or
changes, whether tangible or intangible, embodied in any form, whether or not
protectible or protected by patent, copyright, mask work right, trade secret
law or otherwise, and all documents and other materials recording any of the
foregoing.

 

“Treasury Regulations”
means the regulations promulgated under the Code.

 

1.2           Except as otherwise explicitly
specified to the contrary, (a) references to a Section, Article, Exhibit or
Schedule means a Section or Article of, or Schedule or Exhibit to
this Agreement, unless another agreement is specified, (b) the word “including”
will be construed as “including without limitation,” (c) references to a
particular statute or regulation include all rules and regulations
thereunder and any predecessor or successor statute, rules or regulation,
in each case as amended or otherwise modified from time to time, (d) words
in the singular or plural form include the plural and singular form,
respectively and (e) references to a particular Person include such Person’s
successors and assigns to the extent not prohibited by this Agreement.

 

2.                                    PURCHASE AND SALE OF SHARES;
DIVIDEND; RELEASE.

 

2.1           Purchase and Sale of
Shares.  At the Closing, subject to
the terms and conditions of this Agreement, each Investor agrees, severally and
not jointly, to purchase, and the Company agrees to sell and issue to each
Investor, the number of shares of Series A Preferred Stock (collectively,
the “Shares”) set forth in the column designated “Minimum Shares”
opposite such Investor’s name on Schedule 2.1 hereto, at a cash purchase
price of $1,000 per share (the “Purchase Price”); provided, that
at the Closing, in the event the Closing Cash Amount is less than the Target
Cash Amount, each Investor agrees, severally and not jointly, to purchase, and
the Company agrees to sell and issue to each Investor, up to the number of
Shares set forth in the column designated “Maximum Shares” opposite such
Investor’s name on Schedule 2.1 hereto at the Purchase Price, with the
aggregate amount of such additional shares to be (a) the lesser of (i) difference
between the Closing Cash Amount and the Target Cash Amount and (ii) $20,000,000,
divided by (b) the Purchase Price, and the specific amount of additional
Shares to be purchased by each Investor to be a 
pro rata portion of such aggregate
additional Shares based on the difference, if any, between such “Minimum Shares”
and such “Maximum Shares” set forth opposite such Investor’s name.

 

2.2           The Closing.  The purchase and sale of the Shares (the “Closing”)
will take place at the offices of Ropes & Gray LLP, 45 Rockefeller
Plaza, New York, New York 10111 on the first date the conditions set forth in
Sections 7 and 8 have been satisfied or waived by the applicable parties, or at
such other place and on such other date as the Company and WCAS IX may agree in
writing, in each case, subject to the satisfaction or waiver of the conditions
set forth

 

8

 

in Sections 7
and 8.  Except as otherwise provided in Section 9,
the failure to consummate the purchase and sale provided for in this Agreement
on the date and time and at the place specified herein will not relieve any
party to this Agreement of any obligation under this Agreement.

 

2.3           Closing
Deliveries.  At the Closing, each
Investor will deliver cash by wire transfer of immediately available federal
funds to the account designated in writing not fewer than two Business Days
prior to the scheduled Closing Date by the Company, an amount equal to the
aggregate Purchase Price to be paid by such Investor for the Shares to be
purchased hereunder, in each case, against delivery to such Investor of a
certificate or certificates evidencing such Shares.  At the Closing, the Company will deliver to
the Investors a certificate indicating its calculation of the Closing Cash
Amount, which calculation will be reasonably satisfactory to the Investors.

 

2.4           Dividend.  In connection with the Closing, the Board of
Directors of the Company shall declare a dividend on its outstanding shares of
Common Stock as of the date of execution of this Agreement in the aggregate
amount of $20,000,000 (the “Dividend”). 
The Dividend shall be payable on the Closing Date to Gougeon and
Afremov, the Company’s stockholders of record as of the date of execution of
this Agreement, in equal shares of $10,000,000, based on the pro rata ownership
of Common Stock of each such stockholder on such date; provided, that:

 

(a) of the amount of the Dividend to be paid to
Gougeon (i) an amount equal to the aggregate principal amount of any loans
made by the Company to Gougeon, including loans made in December 2003 and November 2004,
together with any accrued and unpaid interest thereon, will be retained by the
Company as payment in full satisfaction of such loans, and (ii) the
remaining portion of the Dividend payable to Gougeon shall be paid to him in
cash on the Closing Date, and

 

(b) subject to the terms of the Settlement
Agreement, the amount of the Dividend to be paid to Afremov will be retained by
the Company as partial payment for the loans, including any accrued and unpaid
interest thereon, made by the Company to Afremov that are currently outstanding
and are payable upon consummation of the Contemplated Transactions.

 

2.5           Release.  In compliance with decretal paragraph 5 of
the Final Order to include herein release language which at a minimum contains
the language set forth in that decretal paragraph 5, Schedule 2.5
attached hereto sets forth the Mutual General Release Agreement agreed to
between the parties thereto (the “Mutual General Release Agreement”).  The signatories to the Mutual General Release
Agreement are not signatories to this Agreement by reason of their execution of
such agreement.  The execution and
delivery of the Mutual General Release Agreement by all parties thereto
occurred contemporaneously with execution and delivery of the Original
Agreement.  The parties intend to execute
a new Release, substantially in the form of the Mutual General Release
Agreement, as of the Closing Date. 
Gougeon and WCAS IX acknowledge that notwithstanding the provisions of
the Mutual General Release Agreement (or any other Release), the letter
agreement, dated as of November 29, 2004 between such parties remains in
full force and effect and provisions of the Mutual General Release Agreement
(or any other Release) do not apply to such letter.

 

9

 

2.6                                 Contribution
and Exchange Agreement.  Immediately
upon consummation of the Afremov Buyout, Gougeon and the Investors shall cause
the Company to enter into the Contribution and Exchange Agreement and, subject
to the terms and conditions therein, consummate the transactions contemplated
thereby.

 

3.                                       REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND GOUGEON.

 

In order to induce the Investors to enter into and
perform this Agreement and to consummate the Contemplated Transactions, the
Company and Gougeon, jointly and severally, represent and warrant to the
Investors as follows:

 

3.1                                 Organization; Subsidiaries. The Company is (a) duly
organized, validly existing and in good standing under the laws of the State of
Minnesota and (b) is duly qualified to do business and in good standing in
each jurisdiction in which it owns or leases Real Property and in each other
jurisdiction in which the failure to so qualify has not had, and is not
reasonably likely to have, a Material Adverse Effect.  The Company has delivered to the Investors
true, accurate and complete copies of (x) the Organizational Documents of
the Company and (y) the minute books of the Company which contain records
of all meetings held of, and other corporate actions taken by, its
stockholders, Board of Directors and any committees appointed by its Board of
Directors. Except as disclosed on Schedule 3.1, the Company has no
Subsidiaries and does not own any Equity Interests of any other Person.

 

3.2                                 Power and Authorization.  The execution, delivery and performance by
the Company of this Agreement and each Ancillary Agreement to which it is a
party and the consummation of the Contemplated Transactions are within the
power and authority of the Company and have been duly authorized by all
necessary action on the part of the Company. 
This Agreement and each Ancillary Agreement to which it is a party (a) has
been (or, in the case of Ancillary Agreements to be entered into after the date
hereof and at or prior to the Closing, will be) duly executed and delivered by
the Company and (b) is (or, in the case of Ancillary Agreements to be
entered into after the date hereof and at or prior to the Closing, will be) a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms. 
The Company has the full power and authority necessary to own and use
its Assets and carry on the Business.

 

3.3                                 Authorization of Governmental
Authorities.  Except as disclosed on Schedule 3.3,
no action by (including any authorization, consent or approval), or in respect
of, or filing with, any Governmental Authority is required for, or in
connection with, the valid and lawful (a) authorization, execution,
delivery and performance by the Company of this Agreement and each Ancillary
Agreement to which it is a party or (b) the consummation of the
Contemplated Transactions by the Company.

 

3.4                                 Noncontravention.  Except as disclosed on Schedule 3.4,
neither the execution, delivery and performance by the Company of this
Agreement or any Ancillary Agreement nor the consummation of the Contemplated
Transactions will: (a) assuming the taking of any action by (including any
authorization, consent or approval), or in respect of, or any filing with, any
Governmental Authority, in each case, as disclosed on Schedule 3.3,
violate any Legal

 

10

 

Requirement applicable to the Company; (b) result
in a breach or violation of, or default under, any Contractual Obligation of
the Company; (c) require any action by (including any authorization,
consent or approval) or in respect of (including notice to), any Person under
any Contractual Obligation of the Company; (d) result in the creation or
imposition of an Encumbrance upon, or the forfeiture of, any Asset; or (e) result
in a breach or violation of, or default under, the Organizational Documents of
the Company.

 

3.5                                 Capitalization of the Company.

 

3.5.1                                  Outstanding Capital Stock.

 

(a)                                  As of the date of this
Agreement, the entire authorized capital stock of the Company consists of
8,000,000 shares of Common Stock, and 2,000,000 shares of undesignated
Preferred Stock, par value $0.01 per share, of which 400,000 shares of Common
Stock are outstanding and no shares of such Preferred Stock are outstanding.  All of the outstanding shares of capital
stock of the Company have been duly authorized, validly issued, and are fully
paid and non-assessable.  The Company has
not violated the 1933 Act, any state “blue sky” or securities laws, any other
similar Legal Requirement or any preemptive or other similar rights of any
Person in connection with the issuance or redemption of any of its Equity
Interests.

 

(b)                                 Upon the filing of the Restated
Articles with the Secretary of State of Minnesota, the authorized capital stock
of the Company will consist of 380,000 shares of Common Stock, and 148,524
shares of Series A Preferred Stock.

 

3.5.2                                  Ownership.

 

(a)                                  As of the date of this
Agreement, all of the outstanding Equity Interests of the Company are held of
record and beneficially owned by the Persons and in the respective amounts set
forth in Schedule 3.5.  The
Company has delivered to the Investors true, accurate and complete copies of
the stock ledger of the Company which reflects all issuances, transfers,
repurchases and cancellations of shares of its capital stock.

 

(b)                                 After giving effect to the
Contemplated Transactions, all the outstanding shares of capital stock of the
Company shall be owned as set forth on Schedule 3.5.

 

3.5.3                                  The Shares.  The Shares, when issued and delivered and
paid for in compliance with the provisions of this Agreement, will be validly
issued, fully paid and non-assessable. 
The shares of Common Stock issuable upon conversion of the Shares (the “Conversion
Shares”) have been duly and validly reserved and, when issued in compliance
with the provisions of the Restated Articles, will be validly issued, fully
paid and nonassessable.

 

3.5.4                                  Encumbrances, etc.  Except as disclosed on Schedule 3.5: (a) there
are no preemptive rights or other similar rights in respect of Shares, the
Conversion Shares or

 

11

 

any other Equity Interests in the Company, (b) except
as imposed by applicable securities laws, there are no Encumbrances on, or
other Contractual Obligations relating to, the ownership, transfer or voting of
the Shares, the Conversion Shares or any other Equity Interests in the Company,
or otherwise affecting the rights of any holder of the Equity Interests in the
Company, (c) except for the Contemplated Transactions, there is no
Contractual Obligation, or provision in the Organizational Documents of the
Company which obligates it to purchase, redeem or otherwise acquire, or make
any payment (including any dividend or distribution) in respect of, any Equity
Interests in the Company and (d) there are no existing rights with respect
to registration under the 1933 Act of any Equity Interests in the Company.

 

3.6                                 Financial Statements.

 

3.6.1                                  Financial Statements.  The Company has delivered to the Investors
copies of each of the following: (a) the audited balance sheets of the
Company as at December 31, 2004 (respectively, the “Most Recent Balance
Sheet,” and the “Most Recent Balance Sheet Date”), December 31,
2003 and December 31, 2002 and the related audited consolidated statements
of income, cash flow and changes in stockholders’ equity of the Company for the
fiscal years then ended, accompanied by any notes thereto and the report of the
Company’s independent auditors (collectively, the “Audited Financials”);
and (b) the unaudited balance sheets of the Company as at May 31,
2005 and the related unaudited  statement
of income, cash flow and changes in stockholders’ equity of the Company for the
five months then ended (the “Interim Financials” and together with the
Audited Financials, collectively the “Financials”)].

 

3.6.2                                  Compliance with GAAP, etc.  Except as disclosed on Schedule 3.6,
the Financials (including any notes thereto) (a) are complete and correct
and were prepared in accordance with the books and records of the Company, (b) have
been prepared in accordance with GAAP, consistently applied (subject, in the
case of the Interim Financials, to normal year-end audit adjustments, the
effect of which will not, individually or in the aggregate, be materially
adverse and the absence of notes that, if presented, would not differ
materially from those included in the most recent Audited Financials) and (c) fairly
present the financial position of the Company as at the respective dates
thereof and the results of the operations of the Company and changes in
financial position for the respective periods covered thereby.

 

3.7                                 Absence of Undisclosed
Liabilities.  The Company has no Liabilities except for (a) Liabilities
set forth on Schedule 3.7, (b) Liabilities set forth on the face of the
Most Recent Balance Sheet, and (c) Liabilities incurred in the Ordinary
Course of Business since the Most Recent Balance Sheet Date (none of which
results from, arises out of, or relates to any breach or violation of, or
default under, a Contractual Obligation or Legal Requirement).

 

3.8                                 Absence of Certain Developments.  Since the Most Recent Balance Sheet Date, the
Business has been conducted in the Ordinary Course of Business and, except for
matters disclosed on Schedule 3.8:

 

(a)                                  the Company has not (i) amended
its Organizational Documents,

 

12

 

(ii) amended any term of its outstanding
Equity Interests or other securities or (iii) issued, sold, granted, or
otherwise disposed of, its Equity Interests or other securities;

 

(b)                                 the Company has not become
liable in respect of any guarantee or has incurred, assumed or otherwise become
liable in respect of any Debt;

 

(c)                                  the Company has not sold any
Assets (other than sales of inventory in the Ordinary Course of Business) or
permitted any of its Assets to become subject to an Encumbrance other than a
Permitted Encumbrance;

 

(d)                                 the Company has not (i) made
any declaration, setting aside or payment of any dividend or other distribution
with respect to, or any repurchase, redemption or other acquisition of, any of
its capital stock or other Equity Interests or (ii) entered into, or
performed, any transaction with, or for the benefit of, any director or officer
(other than payments made to officers and directors in the Ordinary Course of
Business);

 

(e)                                  there has been no material loss,
destruction, damage or eminent domain taking (in each case, whether or not
insured) affecting the Business or any material Asset;

 

(f)                                    the Company has not increased
the Compensation payable or paid, whether conditionally or otherwise, to (i) any
employee, consultant or agent other than in the Ordinary Course of Business, or
(ii) any director or officer of the Company;

 

(g)                                 the Company has not entered into
any Contractual Obligation providing for the employment or consultancy of any
Person on a full-time, part-time, consulting or other basis or otherwise
providing Compensation or other benefits to any officer, director, employee or
consultant; the Company has not made any change in its methods of accounting or
accounting practices (including with respect to reserves);

 

(h)                                 the Company has not made any
capital expenditure in excess of $100,000;

 

(i)                                     the Company has not made,
changed or revoked any material Tax election, elected or changed any method of
accounting for Tax purposes, settled any Action in respect of Taxes or entered
into any Contractual Obligation in respect of Taxes with any Governmental
Authority;

 

(j)                                     the Company has not terminated
or closed any Facility, business or operation;

 

(k)                                  the Company has not adopted any
Employee Plan or, except in accordance with terms thereof as in effect on the
Most Recent Balance Sheet Date, increased any benefits under any Employee Plan;

 

(l)                                     the
Company has not written up or written down any of its material Assets or revalued its
inventory, or made any changes with respect to accounting policies,

 

13

 

procedures and practices (other than as
required by GAAP);

 

(m)                               the Company has not settled or
compromised any pending or threatened Action involving potential payments by or
to the Company of more than $50,000;

 

(n)                                 the Company has not entered into
any Contractual Obligation to do any of the things referred to elsewhere in
this Section 3.8; and

 

(o)                                 no event or circumstance has
occurred which has had, or is reasonably likely to have, a Material Adverse
Effect.

 

3.9                                 Assets.  Except as disclosed on Schedule 3.9,
the Company has sole and exclusive, good and marketable title to, or, in the
case of property held under a lease or other Contractual Obligation, a sole and
exclusive, enforceable leasehold interest in, or right to use, all of its
properties, rights and assets, whether real or personal and whether tangible or
intangible, including all assets reflected in the Most Recent Balance Sheet or
acquired after the Most Recent Balance Sheet Date (except for such assets which
have been sold or otherwise disposed of since the Most Recent Balance Sheet
Date in the Ordinary Course of Business) (collectively, the “Assets”).  Except as disclosed on Schedule 3.9,
none of the Assets is subject to any Encumbrance other than Permitted
Encumbrances.  The Assets comprise all of
the assets, properties and rights of every type and description, whether real
or personal, tangible or intangible, used or necessary to the conduct of the
Business and are adequate to conduct the Business.

 

3.10                           Accounts Receivables.  All accounts and notes receivable reflected
on the Most Recent Balance Sheet and all accounts and notes receivable arising
subsequent to the Most Recent Balance Sheet Date and on or prior to the Closing
Date, have arisen or will arise in the Ordinary Course of Business, represent
or will represent legal, valid, binding and enforceable obligations to the
Company, subject to consistently recorded reserves for bad debts established as
of a date prior to the Closing Date in accordance with GAAP and in a
commercially reasonable manner consistent with past practice, and, to the
Company’s Knowledge, will not be subject to any contests, claims, counterclaims
or setoffs.

 

3.11                           Real Property.

 

3.11.1                            Schedule 3.11 sets forth a list of all real
property owned by the Company (the “Owned Real Property”) and describes
each leasehold interest in real property leased, subleased by, licensed or with
respect to which a right to use or occupy has been granted to or by the Company
(such leased Real Property together with the Owned Real Property, the “Real
Property”), and specifies the lessor or lessors of such leased property,
and identifies each lease or any other Contractual Obligation under which such
property is leased (the “Real Property Leases”).  Except as described on Schedule 3.11
there are no written or oral subleases, licenses, concessions, occupancy
agreements or other Contractual Obligations granting to any other Person the
right of use or occupancy of the Real Property and there is no Person (other
than the Company and any lessor(s) of leased Real Property) in possession
of the leased Real Property.

 

14

 

3.11.2                            The Company is not obligated to
pay any leasing or brokerage commission as a result of the Contemplated
Transactions.  There is no pending or, to
Company’s Knowledge, threatened eminent domain taking affecting any of the Real
Property.  The Company has delivered to
the Investors true, correct and complete copies of the Real Property Leases
including all amendments, modifications, notices or memoranda of lease thereto
and all estoppel certificates or subordinations, non-disturbance and attornment
agreements related thereto.

 

3.11.3                            None of the Facilities currently
existing on the Real Property encroaches upon, and any Facilities under
construction on the Real Property will not encroach upon, the real property of
any other Person.  No facility of any
other Person encroaches upon the Real Property. 
Each Facility is supplied with utilities and other services (including
gas, electricity, water, drainage, sanitary sewer, storm sewer, fire protection
and telephone) necessary for the operation of such Facility as the same is
currently operated or currently proposed to be operated.  Each parcel of Real Property abuts on, and
has direct vehicular access to, a public road, or has access to a public road
via a permanent, irrevocable appurtenant easement benefiting the parcel of Real
Property, in each case, to the extent necessary for the conduct of the
Business.

 

3.11.4                            The Real Property and its
current use, occupancy and operation by the Company and the Facilities located
thereon do not (a) constitute a nonconforming use under any applicable
building, zoning, subdivision or other land use or similar Legal Requirements
or (b) otherwise violate or conflict with any covenants, conditions,
restrictions or other Contractual Obligations, including the requirements of
any applicable Encumbrances thereto.  The
Company (a) is not in violation of any material Legal Requirement relating
to Real Property, including setback requirements, zoning restrictions and
ordinances, building, life, access, safety, health and fire codes and
ordinances affecting the Real Property, or (b) has not received notice of
any eminent domain, condemnation or similar proceeding pending or, to the
Company’s Knowledge, threatened, or any Government Order relating thereto.

 

3.12                           Equipment.  Except as described on Schedule 3.12,
all of the fixtures and other improvements to the Real Property included in the
Assets (including any Facilities) and all of the tangible personal property
other than inventory included in the Assets (the “Equipment”) (a) are
adequate and suitable for their present and intended uses, (b) are in good
working order, operating condition and state of repair, (c) have no
defects (whether patent or latent) and (d) have been maintained in
accordance with normal industry practice.

 

3.13                           Intellectual Property.

 

3.13.1                            The Company is the sole owner of
or has the sole right to use all Company Technology, and none of the Company
Technology is in the possession, custody, or control of any Person other than
the Company.

 

3.13.2                            Except as disclosed on Schedule
3.13, the Company (a) has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of third parties or (b) has not received any written or, if

 

15

 

received by the Company within the last 90
days, oral, charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim
that a Person must license or refrain from using any Intellectual Property
rights of any third party in connection with the conduct of the Business or the
use of the Company Technology).  To the
Company’s Knowledge, no third party has interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any Company Technology.

 

3.13.3                            Schedule 3.13 identifies (a) all
registered Intellectual Property which has been issued to the Company or
relates to the Business, (b) each pending application for registration
which the Company has made with respect to any Company Technology, (c) each
Contractual Obligation which the Company has granted to any third party with
respect to any of (a) or (b) above and (d) each Contractual
Obligation which the Company has granted to any third party with respect to
Company Technology that is not included in (a) or (b) above.  True, accurate and complete copies of all
such registrations, applications and Contractual Obligations, in each case, as
amended, or otherwise modified and in effect, have been made available to the
Investors, as well as true, accurate and complete copies of all other written
documentation evidencing ownership and prosecution (if applicable) of each such
item.  Each such registration is valid
and subsisting.  Schedule 3.13
also identifies each unregistered trade name, trade dress, trademark or service
mark used by the Company or in connection with the Business or the Company
Technology.

 

3.13.4                            With respect to each item of
Company Technology: (a) the Company possesses all right, title, and
interest in and to such item, free and clear of any Encumbrance; (b) such
item is not subject to any outstanding Government Order, and no Action is
pending or, to the Company’s Knowledge, threatened, which challenges the legality,
validity, enforceability, use or ownership of such item; and (c) except as
disclosed on Schedule 3.13, the Company has not agreed and does not have
a Contractual Obligation to indemnify any Person for or against any
interference, infringement, misappropriation or other conflict with respect to
such item.

 

3.13.5                            Schedule 3.13 identifies each item of Company
Technology that any Person besides the Company owns and that is used by the
Company or in connection with the Business pursuant to any license (other than
commercial off-the-shelf or shrink-wrap computer software licenses), sublicense
or other Contractual Obligation (the “Licenses”).  Except as disclosed on Schedule 3.13,
there are no royalties for the use of any such Company Technology.  The Company has made available to the
Investors true, accurate and complete copies of all of the Licenses, in each
case, as amended or otherwise modified and in effect.  With respect to each such item identified on Schedule
3.13:  (a) such item is not
subject to any outstanding Government Order, and no Action is pending or, to
the Company’s Knowledge, threatened which challenges the legality, validity or
enforceability of such item and (b) the Company has not granted any
sublicense or similar right with respect to any License covering such item.

 

3.13.6                            All Products made, used, or
licensed under any registered patents that are part of the Company Technology
are properly marked with patent notices, except

 

16

 

where the failure to do has not had, and is
not reasonably likely to have, a Material Adverse Effect.  All Products and other materials that use any
trademark or service mark that is part of the Company Technology or otherwise
used in the Business bear proper trademark notices, except where the failure to
do has not had, and is not reasonably likely to have, a Material Adverse
Effect.  All works that are part of the
Company Technology and provided or published to third parties are marked with
proper copyright notices, except where the failure to do has not had, and is
not reasonably likely to have, a Material Adverse Effect.

 

3.13.7                            Except as described on Schedule
3.13, all current and former employees and contractors of the Company who
contributed to the Company Technology have executed enforceable Contractual
Obligations that assign to the Company all Intellectual Property rights to any
inventions, improvements, discoveries or information relating to the Business.

 

3.13.8                            Except as described on Schedule
3.13, none of the Company Technology constitutes or is dependent on any
open source computer code, and none of the Company Technology is subject to any
License or other Contractual Obligation that would require the Company to
divulge to any Person any source code or trade secret that is part of the
Company Technology.

 

3.13.9                            The Company use and
dissemination of any and all data and information concerning consumers of its
products or users of any web sites operated by the Company is in compliance
with all material applicable privacy policies, terms of use, and laws.  The Contemplated Transactions as of the
Closing will not violate any privacy policy, terms of use, or Laws relating to
the use, dissemination, or transfer of such data or information.

 

3.14                           Legal Compliance; Permits.

 

3.14.1                            Compliance.  The Company is not in breach or violation of,
or default under: (a) its Organizational Documents nor, to the Company’s
Knowledge, is there a basis which could constitute such a breach, violation or
default; or (b) any Legal Requirement nor, to Company’s Knowledge, is
there a basis which could constitute such a breach, violation or default,
except for breaches, violation or defaults (i) disclosed on Schedule 3.14
and (ii) which have not had, and are not reasonably likely to have, a
Material Adverse Effect.

 

3.14.2                            Permits.  The Company has been duly granted all Permits
under all Legal Requirements necessary for the conduct of the Business.  Except as disclosed on Schedule 3.14,
(a) such Permits are valid and in full force and effect, (b) the
Company is not in breach or violation of, or default under, any such Permit,
and, to the Company’s Knowledge, no basis exists which, with notice or lapse of
time or both, would constitute any such breach, violation nor default and (c) such
Permits will continue to be valid and in full force and effect, on identical
terms immediately following the consummation of the Contemplated Transactions.

 

17

 

3.15                         Tax Matters.

 

3.15.1                            The Company has timely filed, or
has caused to be timely filed on its behalf, all Tax Returns required to be
filed by it in accordance with all Legal Requirements.  All such Tax Returns were true, correct and
complete in all respects.  Except as
described on Schedule 3.15, (i) all Taxes owed by the Company
(whether or not shown on any Tax Return) have been timely paid in full, (ii) the
Company has not received notice from an authority in a jurisdiction where the
Company does not file Tax Returns that the Company is or may be subject to
taxation by that jurisdiction, and (iii) to the Company’s Knowledge, there
is no basis for any such claim to be made. 
There are no Encumbrances with respect to Taxes upon any Asset other
than Permitted Encumbrances for current Taxes not yet due and payable.

 

3.15.2                            The Company has deducted,
withheld and timely paid to the appropriate Governmental Authority all Taxes
required to be deducted, withheld or paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party, and the  Company has
complied with all reporting and recordkeeping requirements.

 

3.15.3                            Except as disclosed on Schedule
3.15, to the Company’s Knowledge, there is no dispute, audit,
investigation, proceeding or claim concerning any Tax Liability of the Company
pending, being conducted, claimed, raised by a Governmental Authority in
writing.  The Company has provided or
made available to the Investors true, correct and complete copies of all Tax
Returns, examination reports, and statements of deficiencies filed, assessed
against, or agreed to by the Company for the last three years.

 

3.15.4                            The Company has not waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency. 
The Company has not executed any power of attorney with respect to any
Tax, other than powers of attorney that are no longer in force.  No closing agreements, private letter
rulings, technical advice memoranda or similar agreements or rulings relating
to Taxes have been entered into or issued by any Governmental Authority with or
in respect of the Company.

 

3.15.5                            The Company has not made any
payments, or has been or is a party to any agreement, contract, arrangement or
plan that could result in it making payments, that have resulted or would
result, separately or in the aggregate, in the payment of any “excess parachute
payment” within the meaning of Code Section 280G or in the imposition of
an excise Tax under Code Section 4999 (or any corresponding provisions of
state, local or foreign Tax law) or that were or would not be deductible under
Code Sections 162 or 404.

 

3.15.6                            The Company has never been a
member of an “affiliated group” within the meaning of Code Section 1504(a) filing
a consolidated federal income Tax Return (other than the “affiliated group” the
common parent of which is the Company). 
The Company is not a party to any Contractual Obligation relating to Tax
sharing or Tax allocation.  The Company
has no Liability for the Taxes of any Person (other than the

 

18

 

Company) under Treasury Regulation 1.1502-6
(or any similar provision of state, local or foreign law), as a transferee or
successor, by contract or otherwise.

 

3.15.7                            The Company has not filed a
consent under Code Section 341(f).

 

3.15.8                            The Company is not and has not
been required to make any adjustment pursuant to Code Section 481(a) (or any
predecessor provision) or any similar provision of state, local or foreign tax
law by reason of any change in any accounting methods, will not be required to
make such an adjustment as a result of the Contemplated Transactions, and there
is no application pending with any Governmental Authority requesting permission
for any changes in any of its accounting methods for Tax purposes.  To the Company’s Knowledge, no Governmental
Authority has proposed any such adjustment or change in accounting method.

 

3.15.9                            The Company will not be required
to include any amount in taxable income or exclude any item of deduction or
loss from taxable income for any taxable period (or portion thereof) ending
after the Closing Date as a result of (a) any “closing agreement” as
described in Code Section 7121 (or any corresponding or similar provision
of state, local or foreign Income Tax law) executed on or prior to the Closing
Date, (b) any deferred intercompany gain or excess loss account described
in Treasury Regulations under Code Section 1502 (or any corresponding or
similar provision or administrative rule of federal, state, local or
foreign Income Tax law), (c) installment sale or open transaction
disposition made on or prior to the Closing Date, (d) any prepaid amount
received on or prior to the Closing Date or (e) any change in Legal
Requirements.

 

3.15.10                      The Company does not own any
property of a character, the indirect transfer of which, pursuant to this
Agreement, would give rise to any documentary, stamp, or other transfer Tax.

 

3.16                         Employee Benefit Plans.

 

3.16.1                            For purposes of this Agreement, “Employee
Plan” means any plan, program, agreement, policy or arrangement, whether or
not reduced to writing, and whether covering a single individual or a group of
individuals, that is (a) a welfare plan within the meaning of Section 3(1) of
ERISA, (b) a pension benefit plan within the meaning of Section 3(2) of
ERISA, (c) a stock bonus, stock purchase, stock option, restricted stock,
stock appreciation right or similar equity-based plan or (d) any other
deferred-compensation, retirement, welfare-benefit, bonus, incentive or
fringe-benefit plan, program or arrangement.

 

3.16.2                            Schedule 3.16 lists all Employee Plans as to
which the Company sponsors, maintains, contributes or is obligated to
contribute, or under which the Company has or may have any Liability, or which
benefits any current or former employee, director, consultant or independent
contractor of the Company or the beneficiaries or dependents of any such Person
(each a “Company Plan”).  With respect
to each Company Plan, the Company has delivered to the Investors true, accurate
and complete copies of each of the following: 
(a) if the plan has been reduced to writing, the

 

19

 

plan document together with all amendments
thereto, (b) if the plan has not been reduced to writing, a written
summary of all material plan terms, (c) if applicable, copies of any trust
agreements, custodial agreements, insurance policies, administrative agreements
and similar agreements, and investment management or investment advisory
agreements, (d) copies of any summary plan descriptions, employee
handbooks or similar employee communications, (e) in the case of any plan
that is intended to be qualified under Code Section 401(a), a copy of the
most recent determination letter from the IRS and any related correspondence,
and a copy of any pending request for such determination, (f) in the case
of any funding arrangement intended to qualify as a VEBA under Code Section 501(c)(9),
a copy of the IRS letter determining that it so qualifies and (g) in the case
of any plan for which Forms 5500 are required to be filed, a copy of the two
most recently filed Forms 5500, with schedules attached.

 

3.16.3                            The Company or any other Person
that would be considered a single employer with the Company under the Code or
ERISA has never maintained a plan subject to Title IV of ERISA or Code Section 412,
including any “multiemployer plan” as defined in Section 4001(a)(8) of
ERISA.

 

3.16.4                            Each Company Plan that is
intended to be qualified under Code Section 401(a) is so
qualified.  Each Company Plan, including
any associated trust or fund, has been administered in accordance with its
terms and with applicable Legal Requirements, except where any noncompliance
has not had a Material Adverse Effect, and, to the Company’s Knowledge, nothing
has occurred with respect to any Company Plan that has subjected or could
subject the Company to a penalty under Section 502 of ERISA or to an
excise tax under the Code, or that has subjected or could subject any
participant in, or beneficiary of, a Company Plan to a tax under Code Section 4973.  Each Company Plan that is a qualified
contribution plan is, to the Company’s Knowledge, an “ERISA Section 404(c) Plan”
within the meaning of the applicable Department of Labor regulations.

 

3.16.5                            All required contributions to,
and premium payments on account of, each Company Plan have been made on a
timely basis.

 

3.16.6                            There is no pending or, to the
Company’s Knowledge, threatened Action relating to a Company Plan, other than
routine claims in the Ordinary Course of Business for benefits provided for by
the Company Plans.  No Company Plan is
or, within the last six years, has been the subject of an examination or audit
by a Governmental Authority, is the subject of an application or filing under,
or is a participant in, a government-sponsored amnesty, voluntary compliance,
self-correction or similar program.

 

3.16.7                            Except as required under Section 601
et seq. of ERISA, no Company Plan
provides benefits or coverage in the nature of health, life or disability
insurance following retirement or other termination of employment.

 

3.17                           Environmental Matters.  Except as disclosed on Schedule 3.17, (a) the
Company is, and has been, in compliance with all material Environmental Laws, (b) there
has been no release or, to the Company’s Knowledge, threatened release of any
pollutant, petroleum or any

 

20

 

fraction thereof, contaminant or toxic or
hazardous material (including toxic mold), substance or waste (each a “Hazardous
Substance”) on, upon, into or from any site currently or heretofore owned,
leased or otherwise used by the Company, (c) there have been no Hazardous
Substances generated by the Company that have been disposed of or come to rest
at any site that has been included in any published U.S. federal, state or
local “superfund” site list or any other similar list of hazardous or toxic
waste sites published by any Governmental Authority in the United States, (d) there
are no underground storage tanks located on, no PCBs (polychlorinated
biphenyls) or PCB-containing Equipment used or stored on, and no hazardous
waste as defined by the Resource Conservation and Recovery Act stored on, any
site owned or operated by the Company, except for the storage of hazardous
waste in compliance with Environmental Laws and (e) the Company has made
available to the Investors true, accurate and complete copies of all material
environmental records, reports, notifications, certificates of need, permits,
pending permit applications, correspondence, engineering studies, and
environmental studies or assessments, in each case as amended and in effect.

 

3.18                           Contracts.

 

3.18.1                            Contracts. Except as disclosed on Schedule
3.18, the Company is not bound by or a party to:

 

(a)                                  any Contractual Obligation (or
group of related Contractual Obligations) for the purchase or sale of
inventory, raw materials, commodities, supplies, goods, products, equipment or
other personal property, or for the furnishing or receipt of services, in each
case, the performance of which will extend over a period of more than one year
or which provides for actual or anticipated annual payments to or by the
Company in excess of $50,000 or aggregate payments to or by the Company in
excess of $100,000;

 

(b)                                 (i) any capital lease or (ii) any
other lease or other Contractual Obligation relating to the Equipment providing
for aggregate rental payments in excess of  $100,000,
under which any Equipment is held or used by the Company;

 

(c)                                  any Contractual Obligation,
other than Real Property Leases or leases relating to the Equipment, relating
to the lease or license of any Asset, including Technology and Intellectual
Property (and including all customer license and maintenance agreements, but
excluding all commercial off-the-shelf or shrink-wrap computer software
licenses) that is not included on Schedule 3.13;

 

(d)                                 any Contractual Obligation
relating to the acquisition or disposition of (i) any business of the
Company (whether by merger, consolidation or other business combination, sale
of securities, sale of assets or otherwise) or (ii) any asset other than
in the Ordinary Course of Business;

 

(e)                                  any Contractual Obligation under
which the Company is, or may become, obligated to pay any amount in respect of
indemnification obligations, purchase price adjustment or otherwise in
connection with any (i) acquisition or disposition of assets or securities
(other than the sale of inventory in the Ordinary

 

21

 

Course of Business), (ii) merger,
consolidation or other business combination or (iii) series or group of
related transactions or events of the type specified in clauses (i) and (ii) above;

 

(f)                                    any Contractual Obligation
concerning or consisting of a partnership, limited liability company or joint
venture agreement;

 

(g)                                 any Contractual Obligation (or
group of related Contractual Obligations) (i) under which the Company has
created, incurred, assumed or guaranteed any Debt in excess of $100,000 or (ii) under
which the Company has permitted any Asset to become Encumbered (other than a
Permitted Encumbrance);

 

(h)                                 any Contractual Obligation under
which any other Person has guaranteed any Debt of the Company;

 

(i)                                     any Contractual Obligation
relating to confidentiality or non-competition (whether the Company is subject
to or the beneficiary of such obligations);

 

(j)                                     any Contractual Obligation under
which the Company is, or may become, obligated to incur any severance pay or
special Compensation obligations which would become payable by reason of, this
Agreement or the Contemplated Transactions;

 

(k)                                  any Contractual Obligation under
which the Company is, or may, have any Liability to any investment bank,
broker, financial advisor, finder’s agreement or other similar Person
(including an obligation to pay any legal, accounting, brokerage, finder’s, or
similar fees or expenses in connection with this agreement or the Contemplated
Transactions);

 

(l)                                     any profit sharing, stock
option, stock purchase, stock appreciation, deferred compensation, severance,
or other plan or arrangement for the benefit of the Company’s current or former
directors, officers, and employees;

 

(m)                               any Contractual Obligation
providing for the employment or consultancy with an individual on a full-time,
part-time, consulting or other basis or otherwise providing Compensation or
other benefits to any officer, director, employee or consultant (other than an
Employee Plan);

 

(n)                                 any agency, dealer, distributor,
sales representative, marketing or other similar agreement; or

 

(o)                                 any other Contractual Obligation
(or group of related Contractual Obligations) the performance of which involves
consideration in excess of $100,000  over
the life of such Contractual Obligation

 

The Company has delivered to the Investors
true, accurate and complete copies of

 

22

 

each
written Contractual Obligation listed on Schedule 3.18, in each case, as
amended or otherwise modified and in effect. 
The Company has delivered to the Investors a written summary setting
forth the terms and conditions of each oral Contractual Obligation listed on Schedule
3.18.

 

3.18.2                            Enforceability, etc.  To the Company’s Knowledge, each Contractual
Obligation required to be disclosed on Schedule 3.11 (Real Property Leases),
3.12 (Intellectual Property), 3.15 (Employee Plans), 3.18 (Contracts), 3.19
(Affiliate Transactions), 3.20 (Customers and Suppliers) or 3.23 (Insurance)
(each, a “Disclosed Contract”) is enforceable against each party to such
Contractual Obligation, and is in full force and effect, and, subject to
obtaining any necessary consents disclosed in Schedule 3.4, will
continue to be so enforceable and in full force and effect on identical terms
immediately following the consummation of the Contemplated Transactions.

 

3.18.3                            Breach, etc.  Neither the Company nor, to the Company’s
Knowledge, any other party to any Disclosed Contract is in breach or violation
of, default under, or has repudiated any provision of, any Disclosed Contract.

 

3.19                           Affiliate Transactions.  Except as disclosed on Schedule 3.19,
no Affiliate of the Company, Afremov, Gougeon or Amplatz is an officer,
director, employee, consultant, competitor, creditor, debtor, customer,
distributor, supplier or vendor of, or is a party to any Contractual Obligation
with, the Company.  Except as disclosed
on Schedule3.19, no such Affiliate owns any Asset used in, or necessary
to, the Business.

 

3.20                           Customer and Supplier.  Schedule 3.20 sets forth a complete
and accurate list of (a) the 20 largest customers of the Company (measured
by aggregate billings) during the two fiscal years ended December 31,
2003, indicating the existing Contractual Obligations, if any, with each such
Customer by product or service provided and (b) the 20 largest suppliers
of materials, products or services to the Company (measured by the aggregate
amount purchased by the Company) during the two fiscal years ended December 31,
2003, indicating the Contractual Obligations, if any, for continued supply from
each such supplier.  The
relationships of the Company with the customers and the suppliers required to
be listed on Schedule 3.20 are good commercial working relationships and
none of such customers or the suppliers has since the Most Recent Balance Sheet
Date canceled, terminated or otherwise materially altered (including any
material reduction in the rate or amount of sales or purchases or material
increase in the prices charged or paid, as the case may be), or, since the Most
Recent Balance Sheet Date, notified the Company of any intention to do any of
the foregoing or otherwise threatened in writing to cancel, terminate or
materially alter (including any material reduction in the rate or amount of
sales or purchases, as the case may be) its relationship with the Company.  Except as described on Schedule 3.20,
as of the date hereof, to the Company’s Knowledge, there is no reason to
believe that there will be any change in the relationship of the Company with
the customers and suppliers required to be listed on Schedule 3.20 as a
result of the Contemplated Transactions.

 

3.21                           Employees.  There are no labor troubles (including any
work slowdown, lockout, stoppage, picketing or strike) pending, or to the
Company’s Knowledge, threatened between the Company, on the one hand, and its
employees, on the other hand.  No
employee of the Company

 

23

 

is represented by a labor union and the
Company is not a party to, or otherwise subject to, any collective bargaining
agreement or other labor union contract. 
No petition has been filed or proceedings instituted by an employee or
group of employees of the Company with any labor relations board seeking
recognition of a bargaining representative, and, to the Company’s Knowledge,
there is no organizational effort currently being made or threatened by, or on
behalf of, any labor union to organize employees of the Company and no demand
for recognition of employees of the Company has been made by, or on behalf of,
any labor union.  Except as disclosed on Schedule
3.21, no executive officer’s or other key employee’s employment with the
Company has been terminated for any reason nor has any such officer or employee
notified the Company of his or her intention to resign or retire in the last
year.

 

3.22                           Litigation; Governmental Orders.

 

3.22.1                            Litigation.  Except as disclosed on Schedule 3.22
(which matters, other than the NMT Dispute (as defined below), have not had,
and are not reasonably likely to have, a Material Adverse Effect), there is no
Action to which the Company is a party (either as plaintiff or defendant) or to
which its Assets are subject pending, or to the Company’s Knowledge,
threatened, which may affect the Company or its ownership of, or interest in,
any Asset or the use or exercise by the Company of any Asset.  Except as described on Schedule 3.22,
there is no Action to which the Company is a party (either as plaintiff or
defendant) or to which its Assets are subject pending, or to the Company’s
Knowledge, threatened, which (a) in any manner challenges or seeks the
rescission of, or seeks to prevent, enjoin, alter or materially delay the
consummation of, or otherwise relates to, this Agreement and the Contemplated
Transactions, or (b) may result in any change in the current equity
ownership of the Company, nor, to the Company’s Knowledge, is there any basis
for any of the foregoing.  Except as
disclosed on Schedule 3.22, there is no Action which the Company
presently intends to initiate.

 

3.22.2                            Governmental Orders.  Except as disclosed on Schedule 3.22,
no Governmental Order has been issued which is applicable to, or otherwise
affects, the Company or its Assets or the Business.

 

3.23                           Product Warranties; Defects;
Liability.

 

3.23.1                            Except as disclosed in Schedule
3.23 (and except for other Liabilities for which there is a reserve which
meets the standards described in the following sentence), each product
designed, manufactured, marketed, sold, leased, licensed, delivered or installed
by the Company (collectively, the “Products”) is, and at all times has
been, (a) in compliance with all applicable Legal Requirements, (b) fit
for the ordinary purposes for which it is intended to be used and (c) in
conformity with any and all Contractual Obligations, express and implied
warranties, promises and affirmations of fact made by the Company.  The Company does not have any Liability (and,
to the Company’s Knowledge, there is no basis for any present or future Action
giving rise to any Liability) for replacement or repair of any Products or
other damages in connection with any Products, subject only to the reserve for
product warranty claims set forth on the face of the Most Recent Balance Sheet,
as adjusted for the passage of time in accordance with GAAP, applied on a basis
consistent with the principles applied in the preparation of the

 

24

 

Most Recent Balance Sheet, which reserve is
adequate to address all such Liabilities. 
Each Product contains adequate warnings, the content and display of
which conform with applicable Legal Requirements and current industry
practice.  There is no design or other
defect with respect to any Product.

 

3.23.2                            Except as disclosed in Schedule
3.23, no Product is subject to any guaranty, warranty, or other indemnity
beyond the applicable standard terms and conditions of sale, lease or
license.  Schedule 3.23 includes a
summary of the standard terms and conditions of sale, lease or license for the
Company (including applicable guaranty, warranty, and indemnity provisions).

 

3.23.3                            Except as disclosed on Schedule
3.23, there is no Action to which the Company is a party pending, or to the
Company’s Knowledge, threatened relating to, or otherwise involving, alleged
defects in the Products or services provided by the Company, the failure of any
such Products or services to meet certain specifications, or the failure of any
such Products or services to have adequate warnings, and, to the Company’s
Knowledge, there is no basis for any of the foregoing.  Schedule 3.23 sets forth all concluded
Actions (including the disposition thereof) against the Company during the last
three years relating to, or otherwise involving, alleged defects in the
Products or services provided by the Company, the alleged failure of any such
services or Products to meet certain specifications, or the failure of any
Products or services to have adequate warnings. 
Except as described on Schedule 3.23, the Company does not have
any Liability, and, to the Company’s Knowledge, there is no basis for any
present or future Action giving rise to any Liability, arising out of any
injury to any Person or property as a result of any services provided by the
Company, or the ownership, possession, or use of the Products.

 

3.24                           Insurance.  Schedule 3.24 sets forth a list of
current insurance policies, including policies by which the Company, or any of
its Assets, employees, officers or directors or the Business is insured (the “Liability
Policies”) and, their respective expiration dates.  The list includes for each Liability Policy
the type of policy, form of coverage, policy number and name of insurer.  The Company has made available to the
Investors true, accurate and complete copies of all Liability Policies, in each
case, as amended or otherwise modified and in effect.  Schedule 3.24 describes any
self-insurance arrangements affecting the Company.  The Company maintains, in full force and
effect with financially sound and reputable insurers, insurance with respect to
its Assets and the Business, in such amounts and against such losses and risks
as is customarily carried by Persons engaged in the same or similar business
and as is required under the terms of any applicable Real Property Leases or
other Contractual Obligations.  Except as
disclosed on Schedule 3.24, to the Company’s Knowledge, no insurer plans
to raise the premiums for, or materially alter the coverage under, any
Liability Policy.  Except as disclosed on
Schedule 3.24, the Company will after the Closing continue to have
coverage under all of the Liability Policies with respect to events occurring
prior to the Closing.

 

3.25                           No
Brokers.  Except as disclosed on Schedule
3.25, the Company has no Liability of any kind to, and is not subject to
any claim of, any broker, finder or agent in connection with the Contemplated
Transactions.

 

25

 

3.26                           Disclosure.  The representations and warranties contained
in this Section 3 and in the documents, instruments and certificates and
all diligence material and information, furnished by the Company to the
Investors, prospective lenders under the Senior Credit Facility and the
Subordinated Debt Agreement and their representatives do not contain and will
not contain any untrue statement of fact or omit to state any material fact
necessary in order to make the statements and information contained therein not
misleading.

 

4                                          REPRESENTATIONS
AND WARRANTIES OF GOUGEON.

 

Gougeon
represents and warrants to the Investors that:

 

4.1                                 Power and Authorization.  This Agreement and each Ancillary Agreement
to which Gougeon is (or will be) a party (a) has been (or, in the case of
Ancillary Agreements to be entered into at or prior to the Closing, will be)
duly executed and delivered by Gougeon and (b) is (or in the case of
Ancillary Agreements to be entered into at or prior to the Closing, will be) a
legal, valid and binding obligation of Gougeon, enforceable against him in
accordance with its terms.

 

4.2                                 Authorization of Governmental
Authorities.  Except as disclosed on Schedule 4.2,
no action by (including any authorization, consent or approval), or in respect
of, or filing with, any Governmental Authority is required for, or in
connection with, the valid and lawful (a) authorization, execution,
delivery and performance by Gougeon of this Agreement and each Ancillary
Agreement to which it is (or will be) a party or (b) the consummation of
the Contemplated Transactions by Gougeon.

 

4.3                                 Noncontravention.  Except as disclosed on Schedule 4.3,
neither the execution, delivery and performance by Gougeon of this Agreement or
any Ancillary Agreement to which he is (or will be) a party nor the
consummation of the Contemplated Transactions will: (a) assuming the
taking of any action by (including any authorization, consent or approval), or
in respect of, or any filing with, any Governmental Authority, in each case, as
disclosed on Schedule 4.2, violate any provision of any Legal
Requirement applicable to Gougeon; (b) result in a breach or violation of,
or default under, any Contractual Obligation of Gougeon; or (c) require
any action by (including any authorization, consent or approval) or in respect
of (including notice to), any Person under any Contractual Obligation.

 

4.4                                 No Brokers.  Except as disclosed on Schedule 4.4,
Gougeon has no Liability of any kind to any broker, finder or agent with
respect to the Contemplated Transactions for which the Investors or the Company
could be Liable.

 

5                                          REPRESENTATIONS
AND WARRANTIES OF THE INVESTORS.

 

Each
Investor, severally and not jointly with the other Investors, represents and
warrants to the Company and Gougeon that:

 

5.1                                 Organization.  Such Investor (if not an individual) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization.

 

5.2                                 Power
and Authorization.  The execution,
delivery and performance by such

 

26

 

Investor (if not an individual) of this
Agreement and each Ancillary Agreement to which it is (or will be) a party and
the consummation of the Contemplated Transactions are within the power and
authority of such Investor and have been duly authorized by all necessary
action on the part of such Investor. 
This Agreement and each Ancillary Agreement to which such Investor is
(or will be) a party (a) has been (or, in the case of Ancillary Agreements
to be entered into at or prior to the Closing, will be) duly executed and
delivered by such Investor and (b) is (or in the case of Ancillary
Agreements to be entered into at or prior to the Closing, will be) a legal,
valid and binding obligation of such Investor, enforceable against such Investor
in accordance with its terms.

 

5.3                                 Authorization of Governmental
Authorities.  Except as disclosed on Schedule 5.3,
no action by (including any authorization, consent or approval), or in respect
of, or filing with, any Governmental Authority (including any state securities
filing in New York) is required for, or in connection with, the valid and
lawful (a) authorization, execution, delivery and performance by such
Investor of this Agreement and each Ancillary Agreement to which it is (or will
be) a party or (b) the consummation of the Contemplated Transactions by
such Investor.

 

5.4                                 Noncontravention.  Neither the execution, delivery and
performance by such Investor of this Agreement or any Ancillary Agreement to
which it is (or will be) a party nor the consummation of the Contemplated
Transactions will: (a) assuming the taking of any action by (including any
authorization, consent or approval) or in respect of, or any filing with, any
Governmental Authority, in each case, as disclosed on Schedule 5.3,
violate any provision of any Legal Requirement applicable to such Investor; (b)
result in a breach or violation of, or default under, any Contractual
Obligation of such Investor; (c) require any action by (including any
authorization, consent or approval) or in respect of (including notice to), any
Person under any Contractual Obligation; or (d) result in a breach or violation
of, or default under, such Investor’s Organizational Documents (if not an
individual).

 

5.5                                 Purchase for Investment.  Such Investor is purchasing the Shares being
purchased by such Investor hereunder for investment for such Investor’s own
account and not with a view to, or for sale in connection with, any
distribution thereof.

 

5.6                                 Private Placement.

 

5.6.1                                  Such Investor’s financial situation
is such that such Investor can afford to bear the economic risk of holding the
Shares being purchased by such Investor hereunder for an indefinite period of
time, and such Investor can afford to suffer the complete loss of such Investor’s
investment in the Shares.

 

5.6.2                                  Such Investor’s knowledge and
experience in financial and business matters are such that such Investor is
capable of evaluating the merits and risks of such Investor’s investment in the
Shares or such Investor has been advised by a representative possessing such
knowledge and experience.

 

5.6.3                                  Such
Investor understands that the Shares acquired hereunder are a speculative
investment which involves a high degree of risk of loss of the entire
investment therein, that there will be substantial restrictions on the
transferability of the

 

27

 

Shares and that following the date hereof
there will be no public market for the Shares and that, accordingly, it may not
be possible for such Investor to sell or pledge the Shares, or any interest in
the Shares, in case of emergency or otherwise.

 

5.6.4                                  Such Investor and such Investor’s
representatives, including, to the extent such Investor deems appropriate, such
Investor’s legal, professional, financial, tax and other advisors, have
reviewed all documents provided to them in connection with such Investor’s
investment in the Shares, and such Investor understands and is aware of the
risks related to such investment.

 

5.6.5                                  Such Investor is an “accredited
investor” as such term is defined in Regulation D promulgated under the 1933
Act.

 

5.6.6                                  No Investor has any plan or
intention to sell, exchange, transfer or otherwise dispose of (including by way
of gift) any of its shares of Series A Preferred Stock immediately after
the purchase of any such Shares.

 

5.7                                 No Brokers.  Such Investor has no Liability of any kind to
any broker, finder or agent with respect to the Contemplated Transactions for
which the Company or Gougeon could be Liable.

 

6                                         COVENANTS.

 

6.1                                 Closing; Further Assurances.  Subject to the terms and conditions of this
Agreement, each of the parties will use its commercially reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper, or advisable in order to consummate and make
effective the Contemplated Transactions (including satisfaction, but not
waiver, of the closing conditions set forth in Sections 7 and 8).  From time to time after the Closing, each of
the parties hereto, at the request of any other party hereto and without
further consideration, shall execute and deliver such further instruments of
transfer and assignment and take such other actions as a party may reasonably
require to more effectively transfer and assign to, and vest in, the Investors,
the Shares and all rights thereto and to fully implement the provisions of this
Agreement.

 

6.2                                 Operation of Business.

 

6.2.1                                  Conduct of Business.  The Company will:

 

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

 

(b)                                 maintain the value of the
Business as a going concern;

 

(c)                                  preserve intact its business
organization and relationships with third parties (including lessors,
licensors, suppliers, distributors and customers) and employees; and

 

(d)                                 consult with WCAS IX prior to
taking any action or entering into

 

28

 

any transaction that may be of strategic
importance to the Company.

 

6.2.2                                  Investors’ Consent.  Without limiting the generality of Section 6.2.1,
without the written consent of WCAS IX, the Company will not:

 

(a)                                  take or omit to take any action
that would cause the representations and warranties in Section 3 to be
untrue at, or as of any time prior to, the Closing Date;

 

(b)                                 settle its outstanding patent infringement
dispute with NMT Medical, Inc. (the “NMT Dispute”); and

 

(c)                                  take or omit to take any action
which, if taken or omitted to be taken between the Most Recent Balance Sheet
Date and the date of this Agreement would have been required to be disclosed on
Schedule 3.8.

 

6.3                                 Notices and Consents.  The Company will give all notices to, make
all filings with and use their commercially reasonable efforts to obtain all
authorizations, consents or approvals from, any Governmental Authority or other
Person that are set forth on Schedule 3.3 and Schedule 3.4 or as
otherwise reasonably requested by the Investors. Gougeon will give all notices
to, make all filings with and use his commercially reasonable efforts to obtain
all authorizations, consents or approvals from, any Governmental Authority or
other Person that are set forth on Schedule 4.2 and Schedule 4.3
or as otherwise reasonably requested by the Investors.  Each Investor will give all notices to, make
all filings with and use its commercially reasonable efforts to obtain all
authorizations, consents or approvals from, any Governmental Authority or other
Person that are set forth on Schedule 5.3 or as otherwise reasonably
requested by the Company or Gougeon.

 

6.4                                 Access to Premises.  Until the Closing Date, the Company will
permit the Investors, prospective lenders under the Senior Credit Facility and
their respective representatives to have full access (at reasonable times and
upon reasonable notice) to all officers of the Company and to all premises, properties,
books, records (including Tax records), contracts, financial and operating data
and information and documents pertaining to the Company and make copies of such
books, records, contracts, data, information and documents as the Investors,
such prospective lenders or their respective representatives may reasonably
request.

 

6.5                                 Notice of Developments.  Until the Closing Date, the Company will give
WCAS IX prompt written notice upon becoming aware of any material development
affecting the Assets, Liabilities, Business, financial condition, operations or
prospects of the Company, or any event or circumstance that could reasonably be
expected to result in a breach of, or inaccuracy in, any of the Company’s
representations and warranties; provided, however, that no such
disclosure will be deemed to prevent or cure any such breach of, or inaccuracy
in, amend or supplement any Schedule to, or otherwise disclose any exception
to, any of the representations and warranties set forth in this Agreement.

 

6.6                                 Publicity.  No public announcement or disclosure will be
made by any party with respect to the subject matter of this Agreement or the
Contemplated Transactions without the

 

29

 

prior written consent of WCAS IX, the Company
and Gougeon; provided, however, that the provisions of this Section 6.6
will not prohibit (a) any private disclosure by any prospective lender
under the Senior Credit Facility in the ordinary course to any such Person’s
representatives, potential investors or participants, so long as each such
recipient is under an obligation to keep such disclosed information
confidential, (b) any disclosure required by any applicable Legal
Requirements (in which case the disclosing party will provide the other parties
with the opportunity to review in advance the disclosure) or (c) any
disclosure made in connection with the enforcement of any right or remedy
relating to this Agreement or the Contemplated Transactions.

 

6.7                                 Transfer Taxes.  All transfer taxes, fees and duties under
applicable law incurred in connection with the sale and transfer of the Shares
under this Agreement will be borne and paid by the Company and it shall
promptly reimburse the Investors for any such tax, fee or duty which any of
them is required to pay under applicable law.

 

6.8                                 Non-Solicitation.  Gougeon and the Company shall, and shall
cause their respective Affiliates and their and such Affiliates’ respective
officers, directors, shareholders, employees or agents to, immediately terminate
all discussions or negotiations existing on the date hereof, if any, with any
Person with respect to, or any that could reasonably be expected to lead to, or
that contemplate the possibility of a Sale Transaction.  Until the Closing or earlier termination of
this Agreement in accordance with Section 9, Gougeon and, from the date
the Company executes this Agreement, the Company shall not, and shall instruct
their respective Affiliates and their and such Affiliates’ respective officers,
directors, shareholders, employees or agents not to, (i) solicit,
facilitate or encourage any proposal with respect to a Sale Transaction; (ii) solicit
the employment of, or offer to employ, any employee of the Company or any
related entity with any other entity; (iii) enter into any discussions
with any Person or provide to any Person any information with respect to any
proposal with respect to a Sale Transaction; or (iv) discuss or negotiate,
or enter into any sale or other agreement with respect to a Sale
Transaction.  Any failure by the
respective officers, directors, shareholders and agents of the Company or
Gougeon or their respective Affiliates to comply with the terms of this Section 6.8
shall be deemed to constitute a breach by the Company and Gougeon of this Section 6.8.

 

6.9                                 Use of Proceeds.  The Company shall apply the proceeds from the
sale of the Shares to the Investors, the loans under the Senior Credit Facility
and Subordinated Debt Agreement and certain existing cash of the Company to (a) fund
the Afremov Buyout, (b) repay all Debt under Disclosed Contracts, if any, (c) pay
the Dividend, (d) pay fees and expenses relating to the Contemplated
Transactions, and (e) general working capital purposes.

 

7                                         CONDITIONS TO
THE INVESTORS’ OBLIGATIONS AT THE CLOSING.

 

The obligations of each Investor to
consummate the Closing is subject to the prior fulfillment of each of the
following conditions:

 

7.1                                 Representations and Warranties.  The representations and warranties of the
Company and Gougeon contained in this Agreement and in any document, instrument
or certificate delivered hereunder (a) that are not qualified by materiality
or Material Adverse Effect

 

30

 

will be true and correct in all material respects at and as of the Closing
with the same force and effect as if made as of the Closing and (b) that are
qualified by materiality or Material Adverse Effect will be true and correct in
all respects at and as of the Closing with the same force and effect as if made
as of the Closing, in each case, other than representations and warranties that
expressly speak only as of a specific date or time, which will be true and
correct as of such specified date or time.

 

7.2                                 Performance.  Each of the Company and Gougeon will have
performed and complied in all material respects, with all agreements,
obligations and covenants contained in this Agreement that are required to be
performed or complied with by it at or prior to the Closing.

 

7.3                                 Compliance Certificate.  The Company will have delivered to WCAS IX a
certificate certifying its compliance with the conditions set forth in Sections
7.1, 7.2, 7.10 and 7.12.

 

7.4                                 Qualifications.  Any applicable waiting periods (and any
extensions thereof) under the HSR Act will have expired or otherwise been
terminated.  No provision of any
applicable Legal Requirement and no Government Order will prohibit the
consummation of any of the Contemplated Transactions.

 

7.5                                 Absence of Litigation.

 

7.5.1                                  The Final Order and the
Settlement Agreement shall each continue to be in full force and effect.

 

7.5.2                                  No Action will be pending or
threatened in writing which may result in a Governmental Order (nor will there
be any Governmental Order in effect) (a) which would prevent consummation
of any of the Contemplated Transactions, (b) which would result in any of
the Contemplated Transactions being rescinded following consummation, (c) which
would limit or otherwise adversely affect the right of any Investor to own the
Shares (including the right to vote the Shares) or (d) would compel any
Investor or any of Affiliate of any Investor to dispose of all or any material
portion of the business or assets of such Investor or Affiliate.

 

7.6                                 Legal Opinion.  WCAS IX will have received from Parsinen
Kaplan Rosberg & Gotlieb P.A., counsel to Gougeon (or other counsel
reasonably acceptable to WCAS IX), its opinion with respect to the Contemplated
Transactions, which opinion will be in form and substance satisfactory to
it.  Such opinion will, at the request of
WCAS IX, be confirmed to any lender under the Subordinated Debt Agreement or
the Senior Credit Facility.

 

7.7                                 Consents, etc. 
All actions by (including any authorization, consent or approval) or in
respect of (including notice to), or filings with, any Governmental Authority
or other Person that are required to consummate the Contemplated Transactions,
as disclosed in Schedule 3.3,  Schedule 3.4, Schedule 4.2
or Schedule 4.3, or as otherwise reasonably requested by the Investors,
will have been obtained or made, in a manner reasonably satisfactory in form
and substance to the Investors, and no such authorization, consent or approval
will have been revoked.

 

31

 

7.8                                 Proceedings and Documents.  All corporate and other proceedings in connection
with the Contemplated Transactions and all documents incident thereto will be
reasonably satisfactory in form and substance to WCAS IX and its counsel, and
they will have received all such counterpart original and certified or other
copies of such documents as they may reasonably request.

 

7.9                                 Restated Articles; Ancillary
Agreements.  The Company will have filed with the
Secretary of State of Minnesota an Amended and Restated Articles of
Incorporation, in form and substance reasonably satisfactory to WCAS IX (the “Restated
Articles”), and such Restated Articles shall have been accepted by such
Secretary of State.  Each of the
Ancillary Agreements will have been executed and delivered to WCAS IX by each
of the other parties thereto (other than the Investors and, in the case of the
Contribution and Exchange Agreement only, the Company).

 

7.10                         Certain Legal Matters.

 

7.10.1                            The delivery sheath recall
initiated by the Company during the week of November 22, 2004 (the “Recall”),
or the facts and circumstances arising out of or relating to the Recall, shall
not have had, and shall not reasonably be expected to have, any adverse effect
on the Business, operations, Assets, prospects or condition (financial or
otherwise) of the Company, including without limitation (i) a
deterioration in the relationship of the Company with, or increase in the level
of oversight by, the U.S. Food and Drug Administration (“FDA”), or any
Governmental Authority exercising comparable regulatory authority in any
jurisdiction, (ii) an increased risk of Actions against the Company by or
on behalf of end-users of the Products or by any Person involved in the design,
manufacture, testing, marketing or implantation of any Product, (iii) a
deterioration in the Company’s reputation or reduction in demand for the
Products, in any market in which the Company now operates the Business or
proposes to conduct the Business following consummation of the Contemplated
Transactions, (iv) an increase in the Company’s operating expenses, or (v) an
adverse effect on the Company’s ability to supply, design, manufacture, market
or implant any Product.

 

7.10.2                            The facts and circumstances
arising out of or relating to any actual or threatened Actions by any
Governmental Authority, other than pursuant to Section 7.10.1, against the
Company, Afremov, Gougeon or Amplatz shall not have had, and shall not
reasonably be expected to have, any adverse effect on the Business, operations,
Assets, prospects or condition (financial or otherwise) of the Company (it
being understood that for purposes of this Section 7.10.2 only, the
incurrence by the Company of reasonable legal fees and expenses and the
reasonable deployment of resources of the Company (including time spent by
management), in each case, in response to any such actual or threatened
Actions, will not by themselves constitute such an adverse effect).

 

7.11                           Financing.  The Company shall have entered into a Senior
Credit Facility in form and substance reasonably satisfactory to WCAS IX, and
received at least $107,000,000 pursuant to such Senior Credit Facility.  The Company shall have entered into a
Subordinated Debt Agreement in form and substance reasonably satisfactory to
WCAS IX, and received at least $50,000,000 pursuant to such Subordinated Debt
Agreement.

 

32

 

7.12                           No Material Adverse Change.  Since the Most Recent Balance Sheet Date,
there shall not have occurred any event, change, condition, circumstance or
state of facts that has had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

 

8                                         CONDITIONS TO
GOUGEON’S AND THE COMPANY’S OBLIGATIONS AT THE CLOSING.

 

The
obligations of Gougeon to consummate the Closing is subject to the prior
fulfillment of each of the following conditions and the obligations of the
Company to consummate the Closing is subject to the prior fulfillment of each
of the conditions set forth in Sections 8.1 through 8.8:

 

8.1                                 Representations and Warranties.  The representations and warranties of each
Investor contained in this Agreement and in any document, instrument or
certificate delivered hereunder (a) that are not qualified by materiality
or Material Adverse Effect will be true and correct in all material respects at
and as of the Closing with the same force and effect as if made as of the
Closing and (b) that are qualified by materiality or Material Adverse
Effect will be true and correct in all respects at and as of the Closing with
the same force and effect as if made as of the Closing, in each case, other
than representations and warranties that expressly speak only as of a specific
date or time, which will be true and correct as of such specified date or time.

 

8.2                                 Performance.  The Investors will have performed and
complied with, in all material respects, all agreements, obligations and
covenants contained in this Agreement that are required to be performed or
complied with by the Investors at or prior to the Closing.

 

8.3                                 Compliance Certificate.  The Investors will have delivered to the
Company a certificate certifying their compliance with conditions set forth in Section 8.1
and 8.2.

 

8.4                                 Qualifications.  Any applicable waiting periods (and any
extensions thereof) under the HSR Act will have expired or otherwise been
terminated.  No provision of any
applicable Legal Requirement and no Government Order will prohibit the
consummation of any of the Contemplated Transactions.

 

8.5                                 Absence of Litigation.

 

8.5.1                                  The Final Order and the
Settlement Agreement shall each continue to be in full force and effect.

 

8.5.2                                  No Action will be pending or
threatened in writing which may result in Governmental Order, nor will there be
any Governmental Order in effect, (a) which would prevent consummation of
any of the Contemplated Transactions or (b) which would result in any of
the Contemplated Transactions being rescinded following consummation (and no
such Governmental Order will be in effect).

 

8.6                                 Consents, etc. 
All actions by (including any authorization, consent or approval) or in
respect of (including notice to), or filings with, any Governmental Authority
or other

 

33

 

Person that are required to consummate the
Contemplated Transactions, as disclosed in Schedule 5.3, will have been
obtained or made, in a manner reasonably satisfactory in form and substance to
the Company, and no such authorization, consent or approval will have been
revoked.

 

8.7                                 Proceedings and Documents.  All corporate and other proceedings in
connection with the Contemplated Transactions and all documents incident
thereto will be reasonably satisfactory in form and substance to the Company
and to its counsel, and the Company will have received all such counterpart
original and certified or other copies of such documents as it may reasonably
request.

 

8.8                                 Ancillary Agreements.  Each of the Ancillary Agreements to which any
Investor is a  party will have been
executed and delivered to the Company by each of the other parties thereto
(other than the Company and Gougeon).

 

8.9                                 No Material Adverse Change.  Since the Most Recent Balance Sheet Date,
there shall not have occurred any event, change, condition, circumstance or
state of facts that has had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

 

9                                         TERMINATION.

 

9.1                                 Termination of Agreement.  This Agreement may be terminated (the date on
which the Agreement is terminated, the “Termination Date”) at any time
prior to the Closing:

 

(a)                                  by mutual written consent of
WCAS IX, Gougeon and the Company;

 

(b)                                 by either WCAS IX, the Company
or Gougeon by providing written notice to the other at any time after July 29,
2005; provided that the party seeking to exercise such right is not then
in breach in any material respect of any of its obligations under this
Agreement;

 

(c)                                  by either WCAS IX, the Company
or Gougeon if a final nonappealable Governmental Order permanently enjoining or
otherwise prohibiting the Closing will have been issued by a Governmental
Authority of competent jurisdiction;

 

(d)                                 by WCAS IX if either (i) there
will be a breach of, or inaccuracy in, any representation or warranty of the
Company or Gougeon contained in this Agreement as of the date of this Agreement
or as of any subsequent date (other than representations or warranties that
expressly speak only as of a specific date or time, with respect to which such
Investor’s right to terminate will arise only in the event of a breach of, or
inaccuracy in, such representation or warranty as of such specified date or
time), or (ii) the Company or Gougeon will have breached, not satisfied or
violated in any material respect any of their respective covenants and
agreements contained in this Agreement, which breach, inaccuracy,
non-satisfaction or violation described in clauses (i) or (ii) above,
would give rise, or could reasonably be expected to give rise, to a failure of
a condition set forth in

 

34

 

Section 7 and cannot be or has not been
cured on or before ten Business Days after WCAS IX notifies the Company of such
breach, inaccuracy, non-satisfaction or violation; or

 

(e)                                  by either the Company or Gougeon
if either (i) there will be a breach of, or inaccuracy in, any
representation or warranty of any Investor contained in this Agreement as of
the date of this Agreement or as of any subsequent date (other than
representations or warranties that expressly speak only as of a specific date
or time, with respect to which the Company’s right to terminate will arise only
in the event of a breach of, or inaccuracy in, such representation or warranty
as of such specified date or time), or (ii) any Investor will have
breached, not satisfied or violated in any material respect any of its
covenants and agreements contained in this Agreement, which breach, inaccuracy,
non-satisfaction or violation described in clauses (i) or (ii) above
would give rise, or could reasonably be expected to give rise, to a failure of
the condition set forth in Section 8 and cannot be or has not been cured
on or before ten Business Days after the Company notifies WCAS IX of such
breach, inaccuracy, non-satisfaction or violation.

 

9.2                                 Effect of Termination.  In the event of the termination of this
Agreement pursuant to Section 9.1, this Agreement – other than the
provisions of Section 3.25, 4.4, 5.5 (No Brokers), 6.6 (Publicity),
9.2 (Effect of Termination), 10 (Survival; Indemnification),11.1
(Expenses), 11.10 (Governing Law), 11.11 (Jurisdiction), and
11.13 (Waiver of Jury Trial) – will then be null and void and have no
further force and effect and all other rights and Liabilities of the parties
hereunder will terminate without any Liability of any party to any other party,
except for Liabilities arising in respect of breaches under this Agreement by
any party on or prior to the Termination Date.

 

10                                    SURVIVAL;
INDEMNIFICATION.

 

10.1                           Survival.  All representations and warranties contained
in or made pursuant to this Agreement or any Ancillary Agreement shall survive
execution and delivery of this Agreement and the Ancillary Agreements for a
period beginning on the date hereof and ending on the Expiration Date; provided,
that (a) the representations and warranties set forth in Sections 3.1
(Organization), 3.2 (Power and Authorization), 3.4(d) (Noncontravention),
3.5 (Capitalization), 3.25 (No Brokers), 4.1 (Power and
Authorization) or 4.4 (No Brokers) shall survive indefinitely; and (b) the
representations and warranties set forth in Sections 3.14.1(Compliance with
Legal Requirements), 3.15 (Tax Matters), 3.16 (Employee Benefit Plans) or 3.17
(Environmental Regulation) shall survive until the thirtieth day after the
expiration of the applicable statute of limitations (taking into account any
tolling periods and other extensions). All covenants and agreements contained
in or made pursuant to this Agreement or any Ancillary Agreement shall survive
execution and delivery of this Agreement and the Ancillary Agreements and the
Closing.

 

10.2                           Indemnification.

 

10.2.1                            Indemnification.  Subject to the limitations set forth in Section 10.2.2,
the Company and Gougeon will, on a joint and several basis, indemnify and hold

 

35

 

harmless the Investors and each of their
Affiliates, and the representatives (including legal, professional, financial,
tax and other advisors) and Affiliates of each of the foregoing Persons (each,
an “Investor Indemnified Person”), from, against and in respect of any
and all Actions, Liabilities, Governmental Orders, Encumbrances, losses
(including without limitation any diminution in value of the Shares, the
Conversion Shares or other Equity Interests hereafter acquired by the Investors
as a result of or arising in connection with (a) and (b) below, and,
for the avoidance of doubt, including any such diminution in value resulting
from the application of this Section 10.2.1 and the payment of any amounts
by the Company hereunder including to the Investors), damages, bonds, dues,
assessments, fines, penalties, Taxes, fees, costs (including costs of
investigation, defense and enforcement of this Agreement as incurred), expenses
or amounts paid in settlement (in each case, including reasonable attorneys’
and experts fees and expenses as incurred), whether or not involving a Third
Party Claim (collectively, “Losses”), incurred or suffered by the
Investor Indemnified Persons or any of them as a result of, arising out of or
directly or indirectly relating to:

 

(a)                                  any fraud of the Company or
Gougeon, the federal grand jury subpoenas received by the Company and Afremov
from U.S. Department of Justice on or about November 17, 2004, the
Excluded Items (including, without limitation, any amounts invested in the
Company (or, following the contribution and exchange contemplated by the
Contribution and Exchange Agreement, any parent thereof) by any Investor
Indemnified Person as a result of the facts and circumstances discussed
in the Fredrikson & Byron P.A. Report of Investigation for AGA Medical
Corporation, dated July 13, 2005) or any breach of, or inaccuracy in, any representation or
warranty made by the Company or Gougeon in this Agreement, any Ancillary
Agreement or in any document, Schedule, instrument or certificate delivered
pursuant to this Agreement (in each case, as such representation or warranty
would read if all qualifications as to “the Company’s Knowledge” and
materiality, including each reference to the defined term “Material Adverse
Effect,” were deleted therefrom); or

 

(b)                                 any breach or violation of any
covenant or agreement of the Company or Gougeon (including this Section 10.2.1)
to the extent required to be performed or complied with by the Company or
Gougeon prior to the Closing in or pursuant to this Agreement or any Ancillary
Agreement.

 

10.2.2                            Limitations.

 

(a)                                  The Company will have no
obligation to indemnify the Investor Indemnified Persons pursuant to Section 10.2.1(a) solely
in respect of Losses arising from the breach of, or inaccuracy in, any
representation or warranty made by the Company or Gougeon described therein
unless the aggregate amount of all such Losses incurred or suffered by the
Investor Indemnified Persons exceeds the Indemnity Deductible Amount (at which
point the Investor Indemnified Persons will be indemnified for all such Losses
in excess of the Indemnity Deductible Amount); provided, that the
foregoing limitations will not apply to claims for indemnification pursuant to Section 10.2.1(a) solely
in respect of breaches of, or

 

36

 

inaccuracies in, representations and
warranties set forth in Section 3.15 (Tax Matters).

 

(b)                                 Gougeon will have no obligation
to indemnify the Investor Indemnified Persons pursuant to Section 10.2.1(a) solely
in respect of Losses arising from the breach of, or inaccuracy in, any
representation or warranty made by the Company or Gougeon described therein
unless the aggregate amount of all such Losses incurred or suffered by the
Investor Indemnified Persons exceeds the Indemnity Deductible Amount (at which
point, the Investor Indemnified Persons will be indemnified for all such Losses
in excess of the Indemnity Deductible Amount) and Gougeon’s aggregate liability
in respect of any such claims will not exceed $95,000,000 plus an amount equal
to the additional aggregate Purchase Price, if any, paid by the Investors
pursuant to the proviso in Section 2.1 (the “Cap”); provided,
that the foregoing limitations will not apply to claims for indemnification
pursuant to Section 10.2.1(a) solely in respect of breaches of, or
inaccuracies in, representations and warranties set forth in Section 3.15
(Tax Matters); and provided  further, that the Cap will also not
apply to claims for indemnification pursuant to Section 10.2.1(a) solely
in respect of breaches of, or inaccuracies in, representations and warranties
set forth in Sections 3.1 (Organization), 3.2 (Power and Authorization), 3.4(d) (Noncontravention),
3.5 (Capitalization), 3.14.1 (Legal Compliance), 3.16 (Employee Benefit Plans),
3.17 (Environmental), 3.25 (No Brokers), 4.1 (Power and Authorization) and 4.4
(No Brokers).

 

(c)                                  All payments to be made by the
Company pursuant to this Section 10 will be made in cash.  All payments to be made by Gougeon pursuant
to this Section 10 will be made, at Gougeon’s option, in cash or through
the transfer of capital stock of the Company (or, following the contribution
and exchange contemplated by the Contribution and Exchange Agreement, any
parent thereof) held by Gougeon (including any of his successors, assigns and
transferees) on such date with a fair value equal to such payment obligation,
determined as of the Closing Date, as adjusted to reflect the diminution in
value of such capital stock resulting from any Losses, to the applicable
Investor Indemnified Persons.  At any
time when shares of capital stock will be used to satisfy his indemnification
obligations hereunder, any such shares which have an automatic accruing
dividend or other preferential rights will first be used to satisfy such
obligations, and then, after all such shares have been so transferred, any
other shares of such capital stock then held by Gougeon (including his
successors, assigns and transferees) will be used to satisfy such obligations.
The fair value of any shares of capital stock to be used to satisfy any
indemnification obligations hereunder shall be determined, as of the Closing
Date, jointly by the Gougeon and WCAS IX at the time such payment is to be
made; provided, that the value of shares of capital stock which have an
accruing dividend shall be the accrued value of such shares.  If such parties are unable to reach agreement
within a reasonable period of time, the fair value of such shares shall be
determined, as of the Closing Date, by an independent appraiser experienced in
valuing such type of securities jointly selected by Gougeon and WCAS IX.  The determination of such appraiser shall

 

37

 

be final and binding upon the parties, and
the fees and expenses of such appraiser shall be borne by Gougeon.

 

(d)                                 All payments to be made by the
Company or Gougeon pursuant to claims for indemnification pursuant to Section 10.2.1(a) solely
in respect of breaches of, or inaccuracies in, representations and warranties
set forth in Section 3.15 (Tax Matters) shall be reduced, if and to the
extent there have been any (i) actual Tax Benefits to the Company prior to
the time such payment is to be made, which Tax Benefits result from items 1 or
2 disclosed on Schedule 10.2.2(d), or (ii) actual cash received by
the Company prior to the time such payment is to be made, which cash is
received as a result of items 3 or 4 disclosed on Schedule 10.2.2(d),
and, in the case of (i) and (ii) of this Section 10.2.2(d), if
requested by WCAS IX, such Tax Benefits or cash are verified in writing by the
Company’s independent accountants.

 

(e)                                  The Investors acknowledge that
Gougeon will contribute up to $15,000,000 of the proceeds he receives from the
Contemplated Transactions to a newly formed limited partnership to be known as
the Gougeon Family Limited Partnership (the “Family Partnership”).  Prior to the contribution of such proceeds,
no other contributions will have been made to the Family Partnership.  Thereafter, Gougeon may contribute additional
assets (other than shares of capital stock of the Company (or, following the
contribution and exchange contemplated by the Contribution and Exchange
Agreement, any parent thereof)) to the Family Partnership, if and to the extent
Gougeon has received distributions from the Family Partnership equal to or
greater than the fair market value of such additional contributed assets.  Except for contributions of assets
contemplated by the immediately preceding sentence, no additional contributions
will be made to the Family Partnership. 
Provided that there has not been any breach or violation of this
paragraph (e), if any claim becomes due from Gougeon pursuant to Section 10.2.1(a) solely
in respect of Losses arising from the breach of, or inaccuracy in, any
representation or warranty made by the Company or Gougeon described therein,
the Investors shall have no rights against Gougeon’s interest in, or the assets
held in, the Family Partnership.  Upon
receiving any notice of any such claim, Gougeon will, if requested, provide
WCAS IX with reasonable documentation evidencing all contributions made and
distributions from the Family Partnership, including reasonable documentation
evidencing the fair market value of any non-cash contributions or
distributions.

 

(f)                                    Claims for indemnification
pursuant to any other provision of Section 10.2.1 are not subject to the
limitations set forth in this Section 10.2.2.

 

(g)                                 If, following the Closing, any
claim becomes due from Gougeon pursuant to Section 10 in respect of any
Losses, Gougeon shall have no rights against the Company, or any director,
officers, employee or stockholder thereof (in their capacity as such), whether
by reason of contribution, indemnification, subrogation or otherwise, in
respect of any such claim, and shall not take any action against the Company or
any person or entity in respect thereof.

 

38

 

Notwithstanding
anything to the contrary contained herein, none of Gougeon, the Company, the
Investors nor any Investor Indemnified Person shall assert any claims against
any officers, directors, attorneys, employees, or agents of the Company (other
than Gougeon), arising out of or with respect to this Agreement or the
Contemplated Transactions, including any Ancillary Agreement or any other
document, Schedule, instrument or certificate delivered pursuant to or in
connection therewith, or any action, inaction, statement or omission pertaining
thereto (whether such right sounds in contract or tort, or by reason of
contribution, indemnification, subrogation, or otherwise), including without
limitation any right arising with respect to Section 10 in respect of any
Losses suffered by reason of any breach of, or inaccuracy in, any
representation or warranty made by the Company or Gougeon.

 

10.2.3         Time
for Claims.  No claim may be made or
suit instituted seeking indemnification pursuant to Section 10.2.1(a) for
any breach of, or inaccuracy in, any representation or warranty unless a
written notice describing such breach or inaccuracy in reasonable detail in
light of the circumstances then known to the Indemnified Party, is provided to
the Indemnifying Party prior to the expiration of such representation or
warranty set forth in Section 10.1 (unless the time of expiration of such
representation or warranty shall be extended pursuant to equitable tolling,
fraudulent concealment or similar doctrines).

 

10.2.4         Third
Party Claims.

 

(a)           Notice
of Claim.  If any third party
notifies an Indemnified Party with respect to any matter (a “Third Party
Claim”) which may give rise to an Indemnity Claim against an Indemnifying
Party under this Section 10, then the Indemnified Party will promptly give
written notice to the Indemnifying Party; provided, however, that
no delay on the part of the Indemnified Party in notifying the Indemnifying
Party will relieve the Indemnifying Party from any obligation under this Section 10,
except to the extent such delay actually and materially prejudices the
Indemnifying Party.

 

(b)           Assumption
of Defense, etc.  The Indemnifying
Party will be entitled to participate in the defense (although not to appear as
though counsel of record) of any Third Party Claim that is the subject of a
notice given by the Indemnified Party pursuant to Section 10.2.4.  In addition, the Indemnifying Party will have
the right to defend the Indemnified Party against the Third Party Claim with
counsel of its choice reasonably satisfactory to the Indemnified Party so long
as (i) the Indemnifying Party gives written notice to the Indemnified
Party within fifteen days after the Indemnified Party has given notice of the
Third Party Claim that the Indemnifying Party will indemnify the Indemnified
Party from and against the entirety of any and all Losses the Indemnified Party
may suffer resulting from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim, (ii) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the Indemnified Party
that the Indemnifying Party will have adequate financial resources to defend
against the Third Party 

 

39

 

Claim and fulfill
its indemnification obligations hereunder, (iii) the Third Party Claim
involves only money damages and does not seek an injunction or other equitable
relief against the Indemnified Party, (iv) the Indemnified Party has not
been advised by counsel that an actual or potential conflict exists between the
Indemnified Party and the Indemnifying Party in connection with the defense of
the Third Party Claim, (v) the Third Party Claim does not relate to or
otherwise arise in connection with Taxes or any criminal or regulatory
enforcement Action, (vi) settlement of, an adverse judgment with respect to or
the Indemnifying Party’s conduct of the defense of the Third Party Claim is
not, in the good faith judgment of the Indemnified Party, likely to be adverse
to the Indemnified Party’s reputation or continuing business interests
(including its relationships with current or potential customers, suppliers or
other parties material to the conduct of its business) and (vii) the
Indemnifying Party conducts the defense of the Third Party Claim actively and
diligently.  The Indemnified Party may
retain separate co-counsel at its sole cost and expense and participate
(although not to appear as though counsel of record) in the defense of the
Third Party Claim; provided, however, that the Indemnifying Party
will pay the fees and expenses of counsel retained by the Indemnified Party
that are incurred prior to Indemnifying Party’s assumption of control of the
defense of the Third Party Claim.

 

(c)           Limitations
on Indemnifying Party.  The Indemnifying
Party will not consent to the entry of any judgment or enter into any
compromise or settlement with respect to the Third Party Claim without the
prior written consent of the Indemnified Party, not to be unreasonably
withheld, conditioned or delayed, unless such judgment, compromise or
settlement (i) provides for the payment by the Indemnifying Party of money
as sole relief for the claimant, (ii) results in the full and general
release of the Indemnified Party from all liabilities arising or relating to,
or in connection with, the Third Party Claim and (iii) involves no finding
or admission of any violation of Legal Requirements or the rights of any Person
and has no effect on any other claims that may be made against the Indemnified
Party.

 

(d)           Indemnified
Party’s Control.  If the Indemnifying
Party does not deliver the notice contemplated by Section 10.2.4(b) within
15 days after the Indemnified Party has given notice of the Third Party Claim,
or otherwise at any time fails to conduct the defense of the Third Party Claim
actively and diligently, the Indemnified Party may defend, and may consent to
the entry of any judgment or enter into any compromise or settlement with
respect to, the Third Party Claim in any manner it may deem appropriate (and
the Indemnified Party need not consult with, or obtain any consent from, the
Indemnifying Party in connection therewith). 
If such notice is given on a timely basis and the Indemnifying Party
conducts the defense of the Third Party Claim actively and diligently but any
of the other conditions in Section 10.2.4(b) is or becomes
unsatisfied, the Indemnified Party may defend, and may consent to the entry of
any judgment or enter into any compromise or settlement with respect to, the
Third Party Claim; provided, however, that the Indemnifying Party
will not be bound by the entry of any such judgment consented to, or any such
compromise or settlement effected, 

 

40

 

without its prior
written consent (which consent will not be unreasonably withheld, conditioned
or delayed).  In the event that the
Indemnified Party conducts the defense of the Third Party Claim pursuant to
this Section 10.2.4, the Indemnifying Party will (i) advance the
Indemnified Party promptly and periodically for the costs of defending against
the Third Party Claim (including reasonable attorneys’ fees and expenses) and (ii) remain
responsible for any and all other Losses that the Indemnified Party may incur
or suffer resulting from, arising out of, relating to, in the nature of or
caused by the Third Party Claim to the fullest extent provided in this Section 10.

 

(e)           Consent
to Jurisdiction Regarding Third Party Claim.  The Company and Gougeon, each in its and his
capacity as an Indemnifying Party, hereby consents to the non-exclusive
jurisdiction of any court in which any Third Party Claim may brought against
any Indemnified Party for purposes of any claim which such Indemnified Party
may have against such Indemnifying Party pursuant to this Agreement in connection
with such Third Party Claim, and in furtherance thereof, the provisions of Section 11.11
are incorporated herein by reference, mutatis mutandis.

 

10.2.5         Exclusive
Remedy.  Except for remedies that
cannot be waived as a matter of law or as provided in Section 11.12, if
the Closing occurs, indemnification pursuant to this Section 10 shall be
the exclusive remedy for any breach of this Agreement (including any
representation, warranty, covenant and agreement contained in this Agreement),
other than in respect of claims based on conduct constituting fraud,
intentional misrepresentation or the violation of law.

 

11                                  MISCELLANEOUS

 

11.1         Expenses.  Each of the parties hereto will be
responsible for their own costs and expenses in connection with the negotiation,
execution and consummation of the Contemplated Transactions; provided,
that if and to the extent of the consummation of the Contemplated Transactions,
the Company will pay all such costs and expenses of Gougeon and the Investors; provided,
further, that if this Agreement is terminated in accordance with Section 9.1
(other than a termination pursuant to Section 9.1(e)), Gougeon will pay
the out-of-pocket costs and expenses of the Investors, including any fees and
expenses payable to any advisors of the Investors, up to an aggregate
$2,500,000.  At the time of, and subject
to, the consummation of the Afremov Buyout, the Company shall pay to WCAS
Management Corporation, or another designee of WCAS IX, a financing fee equal
to $2,440,000 payable in immediately available funds at the Closing.

 

11.2         Notices.  All notices, requests, demands, claims and
other communications required or permitted to be delivered, given or otherwise
provided under this Agreement must be in writing and must be delivered, given
or otherwise provided: (a) by hand (in which case, it will be effective
upon delivery); (b) by facsimile (in which case, it will be effective upon
receipt of confirmation of good transmission); or (c) by overnight
delivery by a nationally recognized courier service (in which case, it will be
effective on the Business Day after being deposited with such courier service);
in each case, to the address (or facsimile number) listed below:

 

41

 

If to the Company, to it at:

 

AGA Medical Corporation

682 Mendelssohn Avenue

Golden Valley, Minnesota 55427

Telephone number: (763) 513-9227

Facsimile number: (763) 513-9226

Attention: Chief Executive Officer

 

If to Investor, to it at:

 

c/o Welsh, Carson, Anderson & Stowe

320 Park Avenue, Suite 2500

New York, New York 10022

Telephone number: (212) 893-9500

Facsimile number: (212) 893-9583

Attention: Paul B. Queally and Sean M. Traynor

 

with a copy to:

 

Ropes & Gray LLP

45 Rockefeller Plaza

New York, New York 10111

Telephone number:  (212) 841-5785

Facsimile number: (212) 841-5725

Attention: Othon A. Prounis, Esq.

 

If to Gougeon, to him at:

 

4930 St. Croix Avenue North

Golden Valley, Minnesota 55422

Telephone number: (763) 521-7143

Facsimile number: (763) 521-7143

 

with a copy to:

 

Parsinen Kaplan Rosberg & Gotlieb P.A.

100 South Fifth Street, Suite 110

Minneapolis, Minnesota 55402

Facsimile number: (612) 333-6798

Attention: Jude Anne Carluccio, Esq.

 

Each of the parties to this Agreement may specify a
different address or facsimile number by giving notice in accordance with this Section 11.2
to each of the other parties hereto.

 

11.3         Succession
and Assignment; No Third-Party Beneficiary. 
Subject to the immediately following sentence, this Agreement will be
binding upon and inure to the benefit of 

 

42

 

the parties hereto and their respective
successors and permitted assigns, each of which such successors and permitted
assigns will be deemed to be a party hereto for all purposes hereof.  No party may assign, delegate or otherwise
transfer either this Agreement or any of its rights, interests, or obligations
hereunder without the prior written approval of the other parties; provided,
however, that any Investor may assign any or all of its rights and
interests hereunder to one or more of its Affiliates.  Any purported assignment, delegation or
transfer other than pursuant to the preceding sentence shall be null and void ab initio. 
Except as expressly provided herein, this Agreement is for the sole
benefit of the parties and their permitted successors and assignees and nothing
herein expressed or implied will give or be construed to give any Person, other
than the parties and such successors and assignees, any legal or equitable
rights hereunder.

 

11.4         Amendments
and Waivers.  No amendment or waiver
of any provision of this Agreement will be valid and binding unless it is in
writing and signed, in the case of an amendment, by WCAS IX, Gougeon and the
Company, or in the case of a waiver, by the party against whom the waiver is to
be effective.  No waiver by any party of
any breach or violation or, default under or inaccuracy in any representation,
warranty or covenant hereunder, whether intentional or not, will be deemed to
extend to any prior or subsequent breach, violation, default of, or inaccuracy
in, any such representation, warranty or covenant hereunder or affect in any
way any rights arising by virtue of any prior or subsequent such
occurrence.  No delay or omission on the
part of any party in exercising any right, power or remedy under this Agreement
will operate as a waiver thereof.

 

11.5         Entire
Agreement.  This Agreement, together
with the other Ancillary Agreements and any documents, instruments and
certificates explicitly referred to herein or therein, constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof
and supersedes any and all prior discussions, negotiations, proposals,
undertakings, understandings and agreements, whether written or oral, with
respect thereto.

 

11.6         Counterparts.  This Agreement may be executed in any number
of counterparts, each of which will be deemed an original, but all of which
together will constitute but one and the same instrument.  Facsimile signatures hereon shall be deemed
original signatures hereon.

 

11.7         Severability.  Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction will not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.  In the event that any provision hereof would,
under applicable law, be invalid or unenforceable in any respect, each party hereto
intends that such provision will be construed by modifying or limiting it so as
to be valid and enforceable to the maximum extent compatible with, and possible
under, applicable law.

 

11.8         Headings.  The headings contained in this Agreement are
for convenience purposes only and will not in any way affect the meaning or
interpretation hereof.

 

11.9         Construction.  The parties have participated jointly in the
negotiation and drafting of this Agreement. 
In the event an ambiguity or question of intent or interpretation
arises, this Agreement will be construed as if drafted jointly by the parties
and no presumption or burden of proof will arise favoring or disfavoring any
party by virtue of the authorship of any of the 

 

43

 

provisions of this Agreement.  The parties intend that each representation,
warranty and covenant contained herein will have independent significance.  If any party has breached or violated, or if
there is an inaccuracy in, any representation, warranty or covenant contained
herein in any respect, the fact that there exists another representation,
warranty or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the party has not breached or violated,
or in respect of which there is not an inaccuracy, will not detract from or
mitigate the fact that the party has breached or violated, or there is an
inaccuracy in, the first representation, warranty or covenant.  Any references to the Company throughout the
representations or warranties shall include references to each of the
subsidiaries of the Company.  Any
affirmative covenant made by the Company hereunder shall include a covenant to
cause each of its subsidiaries to engage in the required activity, if
applicable.  Any negative covenant made
by the Company hereunder shall include a covenant not to cause any of its
subsidiaries to engage in the applicable activity.

 

11.10       Governing
Law.  This Agreement, the rights of
the parties and all Actions arising in whole or in part under or in connection
herewith, will be governed by and construed in accordance with the domestic
substantive laws of the State of New York, without giving effect to any choice
or conflict of law provision or rule that would cause the application of
the laws of any other jurisdiction.

 

11.11      Jurisdiction;
Venue; Service of Process.

 

11.11.1       Jurisdiction.  Subject to the provisions of Section 10.4.5,
each party to this Agreement, by its execution hereof, (a) hereby
irrevocably submits to the exclusive jurisdiction of the state courts of the
State of New York or the United States District Court located in New York
County in the State of New York for the purpose of any Action between the
parties arising in whole or in part under or in connection with this Agreement,
the Ancillary Agreements or the Contemplated Transactions, (b) hereby
waives to the extent not prohibited by applicable law, and agrees not to
assert, by way of motion, as a defense or otherwise, in any such Action, any
claim that it is not subject personally to the jurisdiction of the above-named
courts, that its property is exempt or immune from attachment or execution,
that any such Action brought in one of the above-named courts should be
dismissed on grounds of forum non conveniens,
should be transferred or removed to any court other than one of the above-named
courts, or should be stayed by reason of the pendency of some other proceeding
in any other court other than one of the above-named courts, or that this
Agreement or the subject matter hereof may not be enforced in or by such court
and (c) hereby agrees not to commence any such Action other than before
one of the above-named courts. 
Notwithstanding the previous sentence a party may commence any Action in
a court other than the above-named courts solely for the purpose of enforcing
an order or judgment issued by one of the above-named courts.

 

11.11.2       Venue.  Each party agrees that for any Action between
the parties arising in whole or in part under or in connection with this
Agreement, such party bring Actions only in courts located in New York County
in the State of New York.  Each party
further waives any claim and will not assert that venue should properly lie in
any other location within the selected jurisdiction.

 

44

 

11.11.3       Service
of Process.  Each party hereby (a) consents
to service of process in any Action between the parties arising in whole or in
part under or in connection with this Agreement in any manner permitted by New
York law, (b) agrees that service of process made in accordance with
clause (a) or made by registered or certified mail, return receipt
requested, at its address specified pursuant to Section 11.2, will
constitute good and valid service of process in any such Action and (c) waives
and agrees not to assert (by way of motion, as a defense, or otherwise) in any
such Action any claim that service of process made in accordance with clause (a) or
(b) does not constitute good and valid service of process.

 

11.12       Specific
Performance.  Each of the parties
acknowledges and agrees that the other parties would be damaged irreparably in
the event any of the provisions of this Agreement are not performed in
accordance with their specific terms or otherwise are breached or
violated.  Accordingly, each of the
parties agrees that, without posting bond or other undertaking, the other
parties will be entitled to an injunction or injunctions to prevent breaches or
violations of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any Action instituted in any
court of the United States or any state thereof having jurisdiction over the
parties and the matter in addition to any other remedy to which it may be
entitled, at law or in equity.  Each
party further agrees that, in the event of any action for specific performance
in respect of such breach or violation, it will not assert that the defense
that a remedy at law would be adequate.

 

11.13       Waiver of Jury Trial.  TO THE EXTENT NOT
PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, THE PARTIES HEREBY WAIVE,
AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS,
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE.  THE PARTIES AGREE
THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS
WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG
THE PARTIES IRREVOCABLY TO WAIVE ITS RIGHT TO TRIAL BY JURY IN ANY PROCEEDING
WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT, THE ANCILLARY AGREEMENTS OR
ANY OF THE CONTEMPLATED TRANSACTIONS WILL INSTEAD BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

 

45

 

IN
WITNESS WHEREOF, each of the undersigned has executed this Agreement as an
agreement as of the date first above written.

 

 

	
  THE INVESTORS:

  	
  WELSH, CARSON, ANDERSON

  
	
   

  	
   

  	
  & STOWE IX, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By: WCAS IX Associates,
  L.L.C.,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jonathan Rather

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  Russell
  L. Carson

  
	
   

  	
  Thomas
  E. McInerney

  
	
   

  	
  Robert A. Minicucci

  
	
   

  	
  Anthony J. de Nicola

  
	
   

  	
  Paul
  B. Queally

  
	
   

  	
  Jonathan
  M. Rather - IRA

  
	
   

  	
  Sanjay
  Swani

  
	
   

  	
  D.
  Scott Mackesy

  
	
   

  	
  John
  D. Clark

  
	
   

  	
  James
  R. Matthews

  
	
   

  	
  John
  Almedia, Jr.

  
	
   

  	
  Sean
  M. Traynor

  
	
   

  	
  WCAS
  Profit Sharing Plan

  
	
   

  	
  Michael
  E. Donovan

  
	
   

  	
  Eric
  J. Lee

  
	
   

  	
  Brian
  T. Regan

  
	
   

  	
  Lucas
  Garman

  
	
   

  	
  David
  Mintz

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jonathan Rather

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  WCAS MANAGEMENT
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jonathan Rather

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				

 

 

	
   

  	
  THE BRUCE K. ANDERSON

  
	
   

  	
  2004 IRREVOCABLE TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mary R. Anderson

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  THE PATRICK WELSH

  
	
   

  	
  2004 IRREVOCABLE TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carol Welsh

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  /s/ Lauren Melkus

  
	
   

  	
  Lauren Melkus

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ROUNDTABLE
  ASSOCIATES LLP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David F. Bellet

  
	
   

  	
   

  	
  Name: David F. Bellet

  
	
   

  	
   

  	
  Title: Managing Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SELECT
  GLOBAL INVESTORS, L.P.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rocco A. Ortenzio

  
	
   

  	
   

  	
  Name: Rocco A. Ortenzio

  
	
   

  	
   

  	
  Title: General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Jeffrey Jay

  
	
   

  	
  Jeffery Jay

  

 

 

	
  GOUGEON:

  	
   

  	
  /s/ Franck Gougeon

  
	
   

  	
   

  	
  Franck Gougeon

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE COMPANY:

  	
   

  	
  AGA MEDICAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John Borg

  
	
   

  	
   

  	
   

  	
  John Borg,
  Receiver-Interim CEO*

  

 

 

	
   

  	
   

  	
  *Notwithstanding
  anything contained elsewhere to the contrary, it is understood and agreed
  that John Borg, whose signature appears on behalf of the Company, has, by
  direction of the Hennepin County District Court, State of Minnesota, in its
  Order for Judgment On Buyout Motions, dated December 28, 2004, executed
  this agreement solely in his representative and court-appointed capacity as
  Receiver-Interim CEO (as defined and set forth in the May 22, 2003 Order
  of Judge Karasov, as later modified and amended). Mr. Borg has made no
  substantive review of the terms and conditions of this agreement nor has he
  conducted any inquiry regarding the accuracy of such matters (the due
  diligence having been conducted through Mr. Gougeon and the managers,
  employees, distributors, customers and vendors of the Company).
  Mr. Borg’s signature is intended to bind the Company to the Agreement,
  but he joins individually in none of the covenants, representations,
  warranties, or other undertakings contained herein.

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