Document:

FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AND SECURITY

AGREEMENT

 

THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT (this "First Amendment") is dated as of June 27, 2005, among COMMSCOPE, INC. OF NORTH CAROLINA, COMMSCOPE SOLUTIONS, INC. and CONNECTIVITY SOLUTIONS MANUFACTURING, INC. (collectively, the "Borrowers"), WACHOVIA BANK, NATIONAL ASSOCIATION, as Agent (the "Agent") and FLEET CAPITAL CORPORATION, as Syndication Agent, GENERAL ELECTRIC CAPITAL CORPORATION, HARRIS N.A. (successor by merger to Harris Trust and Savings Bank) and PNC BANK, as Documentation Agents, and the Lenders signatory hereto (collectively, the "Lenders");

W I T N E S S E T H :

WHEREAS, the Borrower, the Agent, the Syndication Agent, the Documentation Agents and the Lenders executed and delivered that certain Amended and Restated Credit and Security Agreement, dated as of January 31, 2004 (the "Credit Agreement");

WHEREAS, the Borrower has requested and the Agent, the Syndication Agent, the Documentation Agents and the Lenders have agreed to certain amendments to the Credit Agreement, subject to the terms and conditions hereof;

NOW, THEREFORE, for and in consideration of the above premises and other good and valuable consideration, the receipt and sufficiency of which hereby is acknowledged by the parties hereto, the Borrower, the Agent, the Syndication Agent, the Documentation Agents and the Lenders hereby covenant and agree as follows:

1.          Definitions. Unless otherwise specifically defined herein, each term used herein which is defined in the Credit Agreement shall have the meaning assigned to such term in the Credit Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Credit Agreement shall from and after the date hereof refer to the Credit Agreement as amended hereby.

2.          Amendment to SECTION 1.01. SECTION 1.01 of the Credit Agreement hereby is amended by deleting the definitions of "Asset Sale Proceeds", "Consolidated Fixed Charges", "Maturity Date" and "Permitted Acquisitions" and adding the following definitions of "Asset Sale Proceeds", "Consolidated Fixed Charges", "Excess Liquidity", "First Amendment Effective Date", "Maturity Date" and "Permitted Acquisitions".

"Asset Sale Proceeds" means (i) with respect to any applicable Real Property sold by any Borrower or disposed by any Borrower to any Person that is not a Guarantor, cash proceeds therefrom in an amount equal to 65% of the appraised fair market value of such Real Property, as determined by the relevant appraisal obtained by the Agent in October, 2003, and (ii) with respect to any Equipment sold by any Borrower or disposed by any Borrower to any Person that is not a Guarantor, cash proceeds therefrom in an amount equal to 85% of the appraised net orderly liquidation value such Equipment, as determined by the relevant appraisal obtained by the Agent in September or October, 2003, in each case under (i) and (ii)  above in a transaction or series of transactions involving gross cash proceeds to the Borrowers in excess of $500,000 in the aggregate for all such
transactions during any Fiscal Year.

"Consolidated Fixed Charges" means, for any fiscal period, the sum of the following for such period, calculated on a consolidated basis in accordance with GAAP for the Parent and its Consolidated Subsidiaries: (a) cash payments of interest, including amounts expensed and capitalized; plus (b) scheduled cash payments of principal under long-term Debt (excluding payments of principal (whether optional or mandatory) of the Parent's 1% Convertible Senior Subordinated Debentures Due 2024 that are made as permitted under SECTION 5.35(i) and (ii), respectively, and voluntary and non-scheduled mandatory payments of any other Debt).

"Excess Liquidity" means at any time the sum at such time of (i) Excess Borrowing Availability and (ii) Unrestricted Domestic Cash.

"First Amendment Effective Date" means the effective date of the First Amendment to Amended and Restated Credit and Security Agreement that amended this Agreement, which is June 27, 2005.

"Maturity Date" means (i) with respect to Revolving Loan Commitments, Revolving Loans, Letters of Credit and interest and fees related thereto, and with respect to the definition of Redeemable Preferred Stock, January 31, 2010, and (ii) with respect to Term Loans and interest and fees related thereto, January 31, 2009.

"Permitted Acquisition" means (a) the acquisition of in excess of 50% of the securities or other equity interest of any Person, or (b) the acquisition of all or substantially all of the assets of such Person or of a division or particular line of business of such Person; provided that:

(i)     immediately after giving effect to such acquisition, there would be Excess Liquidity of at least $50,000,000;

(ii)    such acquired Person or line of business is in the same, similar, or complementary lines of business as the Borrowers;

(iii)   for the purposes of calculating EBITDA, such acquisition is disregarded for any period prior to the date of such acquisition, unless, after completion by the Agent of due diligence satisfactory to the Agent, the Agent has notified the Borrowers that the Agent and the Required Lenders have determined in their good faith judgment that pro forma effect can be given to such acquisition for the calculation of EBITDA (such due diligence will include, but not be limited to, review and satisfaction with audited financial statements, a third party financial review of the relevant financial information and such other information as the Agent shall reasonably request);

(iv)   the Agent shall have the right to conduct due diligence with respect to the acquisition satisfactory to the Agent, including appraisals and field examinations of the collateral to be acquired, each at the Borrowers' expense, and such collateral shall not be included in the determination of the Borrowing Base until any and all such due diligence have been completed; provided, that in the case of a domestic acquisition for a purchase price of $25,000,000 or less, the Agent may in its sole and absolute discretion elect to add Accounts and Inventory to be acquired to the Borrowing Base without an appraisal or field examination;

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(v)    if such acquisition is of a Person, or gives rise to a new Subsidiary, such Person or new Subsidiary will be subject to the provisions of SECTION 5.15, if applicable;

(vi)   the purchase price of such acquisition shall not exceed the applicable amount set forth in SECTION 5.16(ix);

(vii)  immediately after giving effect to such acquisition, no Default or Event of Default shall have occurred and be continuing; and

(viii) all transactions related to such acquisition are consummated in accordance in all material respects with applicable laws.

3.              Amendment to SECTION 2.06(a). SECTION 2.06(a) of the Credit Agreement hereby is amended by deleting it in its entirety and substituting the following therefor:

	
SECTION 2.06

	
Interest Rates.

	
 

	
 

	
(a)

	
"Applicable Margin" means:

				

(i)     for the period commencing on the First Amendment Effective Date to and including the first Performance Pricing Determination Date occurring after the First Amendment Effective Date, for any Term Loan which is a Euro-Dollar Loan, 1.75%, and for any Term Loan which is a Base Rate Loan, 0.00%;

(ii)    for the period commencing on the First Amendment Effective Date to and including the first Performance Pricing Determination Date occurring after the First Amendment Effective Date, for any Revolving Loan which is a Euro-Dollar Loan, 1.50%, and for any Revolving Loan which is a Base Rate Loan, 0.00%;

(iii)   for any Term Loan, from and after the first Performance Pricing Determination Date occurring after the First Amendment Effective Date, for each Base Rate Loan and for each Euro-Dollar Loan, the percentage determined on each Performance Pricing Determination Date by reference to the table set forth below as to such type of Loan and the Fixed Charge Coverage Ratio for the quarterly or annual period ending immediately prior to such Performance Pricing Determination Date;

	
Fixed Charge Coverage
Ratio

	
Base Rate Loan

	
Euro-Dollar Loan

	
> 3.00 to 1.00

	
0.00%

	
1.50%

	
< 3.00 to 1.00 but > 2.00 to 1.00

	
0.00%

	
1.75%

	
< 2.00 to 1.00

	
0.75%

	
2.00%

 

(iv)   for any Revolving Loan, from and after the first Performance Pricing Determination Date occurring after the First Amendment Effective Date, for each Base Rate Loan and for each Euro-Dollar Loan, the percentage determined on each Performance Pricing Determination Date by reference to the table set forth below as to such type of Loan and the Fixed Charge Coverage Ratio for the quarterly or annual period ending immediately prior to such Performance Pricing Determination Date.

 

 

	
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Fixed Charge Coverage
Ratio

	
Base Rate Loan

	
Euro-Dollar Loan

	
> 3.00 to 1.00

	
0.00%

	
1.25%

	
< 3.00 to 1.00 but > 2.00 to 1.00

	
0.00%

	
1.50%

	
< 2.00 to 1.00

	
0.50%

	
1.75%

 

In determining interest for purposes of this SECTION 2.06, the Borrowers and the Lenders shall refer to the Parent's most recent consolidated quarterly and annual (as the case may be) financial statements delivered pursuant to SECTION 5.01(a) or (b), as the case may be. The "Performance Pricing Determination Date" is the date on which such financial statements are delivered pursuant to SECTION 5.01(a) or (b), as applicable. Any such required change in interest and fees shall become effective on such Performance Pricing Determination Date, and shall be in effect until the next Performance Pricing Determination Date, provided that no fees or interest shall be decreased pursuant to this SECTION 2.06 if an Event of Default is in existence on the Performance Pricing Determination Date.

4.              Amendment to SECTION 2.07(a). SECTION 2.07(a) of the Credit Agreement hereby is amended by deleting it in its entirety and substituting the following therefor:

	
SECTION 2.07

	
Fees.

(a)    The Borrowers shall pay to the Agent, for the ratable account of each Lender, an Unused Line Fee (the "Unused Line Fee"), calculated on the average daily amount of such Lender's pro rata share of the Unused Revolving Loan Commitment (without taking into account any Settlement Loans) during each calendar quarter, at a rate per annum determined by reference to the table below, depending on the percentage of the average daily amount of Unused Revolving Loan Commitment during such calendar quarter:

	
Percentage of Average Daily
Unused Revolving Loan
Commitment

	
Unused Line Fee
Percentage

	
> 50%

	
0.375%

	
< 50%

	
0.250%

 

Such Unused Line Fee shall accrue from and including the First Amendment Effective Date to but excluding the Revolving Loan Commitment Termination Date and shall be payable on the last Business Day of each calendar quarter and on the Revolving Loan Commitment Termination Date.

5.              Amendment to SECTION 2.11(c). SECTION 2.11(c) of the Credit Agreement hereby is amended by deleting it in its entirety and substituting the following therefor:

(c)     Within 15 Business Days after the receipt of any Asset Sale Proceeds (other than pursuant to any sale or other disposition pursuant to SECTION 5.30(b)(iii) and other than proceeds from the sale of any of the Real Property located in Omaha, Nebraska), such Asset Sale Proceeds shall be paid to the Agent for ratable distribution to the Lenders for application to repay or prepay the principal amount of the outstanding Term Loans and applied in the inverse order of maturity, and if the Term Loans have been repaid in full, the Revolving Loans, if any (together with interest accrued thereon and any amount due under SECTION 8.05(a), provided that if any such payment is due or is made to the Agent on any day other than on the last day of an Interest Period, such amounts shall, at the Borrowers' election, be held by Agent
and applied on the last day of the Interest Period); provided, however, that the Borrowers shall not be required to prepay the Loans with Asset Sale Proceeds as provided herein so long as (and to the extent that) 

 

 

	
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such Asset Sale Proceeds are applied towards (or are contractually committed to be applied towards) assets of a similar type as those assets from which the Asset Sale Proceeds were derived, and which are used or useable in the business of the Borrowers and their Subsidiaries with 180 days after the Borrowers' receipt thereof, but any such Asset Sale Proceeds not so applied within such 180-day period (regardless of any contractual commitments) shall be delivered over to the Agent for application to the Loans as provided herein on the first Business Day following such 180-day period. The Borrowers shall take all actions necessary such that the Agent has a perfected lien on any such replacement assets. The Revolving Loan Commitments shall not be reduced by the amount of such prepayments which are applied to the Revolving Loans pursuant to the foregoing. Contemporaneously with the payment of any Asset Sale
Proceeds pursuant hereto, the Agent shall be provided a certificate of the Borrowers showing in reasonable detail the calculation of such Asset Sale Proceeds. Net Casualty/Insurance Proceeds shall be paid to the Agent in accordance with the terms of SECTION 5.08(b).

6.              Amendment to SECTION 5.01(c), (d) and (k). SECTIONS 5.01(c), (d) and (k) of the Credit Agreement hereby are amended by deleting them in their entirety and substituting the following therefor:

(c)     as soon as available and in any event within 30 days after the end of each of the first and second Fiscal Months of each Fiscal Quarter, but only if Excess Liquidity is below $50,000,000 on the last day of any month during such Fiscal Quarter, consolidated financial statements (including the balance sheet and statement of income) of the Parent and its Consolidated Subsidiaries as of the end of such Fiscal Month, and for the portion of the Fiscal Year ending on such date, setting forth in comparative form the figures for the corresponding Fiscal Month and the corresponding portion of the previous Fiscal Year, all certified (subject to normal quarter-end adjustments and to the absence of footnotes required by GAAP) as to fairness of presentation, GAAP and consistency by a Senior Officer of the Parent;

(d)     simultaneously with the delivery of each set of financial statements referred to in paragraphs (a) and (b) (and (c) (or, if no monthly financial statement is due pursuant to paragraph (c) because of satisfaction of the Excess Liquidity test set forth therein, by the date such financial statement would have been due), if and when SECTION 5.19 is in effect on a monthly basis) above, a certificate, substantially in the form of EXHIBIT G (a "Compliance Certificate"), of a Senior Officer of the Parent (i) setting forth in reasonable detail the calculations required to establish whether the Parent, the Borrowers and/or the Guarantors, as applicable, were in compliance with the requirements of SECTIONS 5.16, 5.17, 5.19 and 5.20, on the date of such financial statements and (ii) stating whether any Default exists on the
date of such certificate and, if any Default then exists, setting forth the details thereof and the action which the Parent, such Borrower or such Guarantor is taking or proposes to take with respect thereto;

(k)     as soon as practicable, but in any event on or before 20 days after the end of each Fiscal Month, or such more frequent intervals as required by the Agent from time to time in its commercially reasonable judgment, a duly executed Borrowing Base Certificate (and to the Agent any accompanying documentation reasonably required by the Agent), with respect to satisfaction of the requirement that the Revolving Loans shall not exceed the Borrowing Base, and also showing the amount of Excess Liquidity, as of the last day of the reporting period, in the form of EXHIBIT F or such other form as the Agent may deliver for such purpose to the Borrowers from time to time hereafter, the statements in which, in each instance, shall be certified as to truth and accuracy by a Senior Officer of the Borrower;

7.              Amendment to SECTION 5.16(ix) and (xiv). SECTIONS 5.16(ix) and (xiv) of the Credit Agreement hereby are amended by deleting them in their entirety and substituting the following therefor:

(ix)   Permitted Acquisitions up to but not in excess of $125,000,000 in the aggregate for any Fiscal Year;

 

 

	
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(xiv) (1) the repurchase by the Parent of its shares of Common Stock from Avaya Inc. issued to it as part of the purchase price for the ACS Acquisition, and (2) dividends and other Restricted Payments up to $40,000,000 in any Fiscal Year, plus, commencing in Fiscal Year 2006, 50% of Consolidated Net Income (if positive) from the immediately preceding Fiscal Year; provided, however, that (A) immediately after giving effect to the making of any Restricted Payment permitted by this clause (xiv), no Default or Event of Default shall have occurred and be continuing, and (B) immediately after giving effect to the making of any such Restricted Payment, there would be Excess Liquidity of at least $50,000,000.

8.              Amendment to SECTION 5.27. SECTION 5.27 of the Credit Agreement hereby is amended by deleting it in its entirety and substituting the following therefor:

SECTION 5.27 Reports Respecting Collateral. The Borrowers and the Guarantors shall, as soon as practicable, but in any event on or before 20 days after the end of each Fiscal Month, furnish to the Agent a status report containing the information set forth below in this SECTION 5.27, certified by a duly authorized officer of each Borrower and each of the Guarantors; provided, however, that such status report need only be furnished within 20 days after the end of each Fiscal Quarter, so long as since the last such status report furnished under this SECTION 5.27, there have been no Revolving Loans outstanding (whether or not Letters of Credit have been outstanding). Such report shall include: (a) the aggregate dollar value of the Collateral comprising the Accounts and the age of each individual item thereof comprised of trade accounts
receivable as of the last day of the preceding Fiscal Month or Fiscal Quarter, as applicable (segregating such items in such manner and to such degree as the Agent may request, including, without limitation, by Account Debtor name, address, invoice number, due date and invoice date); (b) the aggregate dollar value of the Accounts subject to "bill and hold" arrangements (segregating such items in such manner and to such degree as the Agent may request); (c) the aggregate dollar value of the items comprising the accounts payable of each Borrower and each of the Guarantors and the age of each individual item thereof as of the last day of the preceding Fiscal Month or Fiscal Quarter, as applicable (segregating such items in such manner and to such degree as the Agent may request); (d) the type, dollar value and location of the Inventory as at the end of the preceding Fiscal Month or Fiscal Quarter, as applicable, valued at the lower of its FIFO cost or market value; and (e) the aggregate dollar value of
all returns, repossessions or discounts with respect to Inventory in excess of $1,000,000. Additionally, the Agent may, at any time in its sole discretion (and upon prior notice to the Borrowers if no Event of Default has occurred and is continuing), require any Borrower or any of the Guarantors to permit the Agent in its own name or any designee of the Agent in its own name to verify the individual account balances of or any other matter relating to the individual Account Debtors promptly upon its request therefor by mail, telephone, telegraph or otherwise. Each Borrower and each of the Guarantors shall cooperate fully with the Agent in an effort to facilitate and promptly conclude any such verification process. In any event, with the above described status report for the month of December of each year and upon request from the Agent, made at any time hereafter, each Borrower and each of the Guarantors shall furnish the Agent with a then current customer and Account Debtor name and address list,
together with (if requested by the Agent) updates of Equipment lists and an appraisal or updates of the appraisal of the Equipment. Upon the Agent's request therefor, each Borrower and each of the Guarantors shall deliver to the Agent copies of proof of delivery and the original copy of all documents, including, without limitation, repayment histories and present status reports relating to all accounts listed on any Borrowing Base Certificate and such other matters and information relating to the status of the Accounts of each Borrower and each of the Guarantors as the Agent shall reasonably request.

9.              Amendment to SECTION 5.29. SECTION 5.29 of the Credit Agreement hereby is amended by deleting it in its entirety and substituting the following therefor:

SECTION 5.29           Appraisals; Field Examinations. The Agent reserves the right, exercisable from time to time hereafter in the Agent's commercially reasonable judgment, to require that the Borrowers and/or any of the Guarantors obtain, and the Borrowers and/or such Guarantors shall so obtain, at the Borrowers' expense, appraisals or updates to any existing appraisals being obtained in connection with the execution and delivery of this Agreement, reflecting then current values of the Equipment; provided, that unless an Event of Default has occurred and is continuing, not more than one such appraisal annually shall 

 

 

	
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be conducted at the Borrowers' expense. The Agent shall have the right to conduct up to 2 field exams per year (but shall be limited to only a single field exam each year, so long as Excess Liquidity is maintained at not less than $50,000,000) as to each of the Accounts and the Inventory, at the Borrowers' expense, but reserves the right to conduct a review with less frequency, or at any time at the Borrowers' expense following the occurrence and during the continuance of any Event of Default. Any Lender shall have the right to accompany the Agent on any such field exams at its own expense.

10.           Amendment to SECTION 5.30(a). SECTION 5.30(a) of the Credit Agreement hereby is amended by deleting it in its entirety and substituting the following therefor:

(a)     Except for (1) sales of inventory in the ordinary course of business, sales, leases or transfers among the Borrowers and the Guarantors, (2) so long no Default or Event of Default exists, the sale for an all cash purchase price of the Real Property located in Omaha, Nebraska, and (3) dispositions of Equipment pursuant to SECTION 5.30(b), neither the Borrowers nor any of the Guarantors will sell, lease, exchange, arrange for a sale and leaseback, or otherwise dispose of any of the Collateral without the prior written consent of the Agent, acting at the direction of (i) as to Collateral of the types described in the definition and used in the calculation of the Borrowing Base and any Real Property that is subject to a Mortgage, all of the Lenders, and (ii) as to all other Collateral, the Required Lenders, in each
case subject to the provisions of SECTION 2.11(c), if applicable. Notwithstanding anything to the contrary in this SECTION 5.30, Borrower, Agent and Lenders hereby each acknowledge and agree that (i) the real property identified in the first "TOGETHER WITH" on Exhibit A to the Mortgage for the Real Property located in Omaha, Nebraska (the "Avaya Sale Leaseback Property") and the remainder of the Real Property located in Omaha, Nebraska could not be properly subdivided in accordance with all applicable laws, ordinances and regulations (the "Avaya Subdivision") on or before the Closing Date in order to consummate the Asset Purchase Agreement, (ii) in order to consummate the Asset Purchase Agreement, the Avaya Sale Leaseback Property has been included in the real property subject to the Mortgage of the Real Property located in Omaha, Nebraska, (iii) Connectivity Solutions Manufacturing, Inc. intends to lease for nominal consideration the Avaya Sale Leaseback Property to Avaya, Inc. pursuant to a
long-term ground lease until such time that the Avaya Subdivision occurs, (iv) Borrower shall cooperate with Avaya, Inc. and take reasonable steps to cause Avaya, Inc. to cause the Avaya Subdivision to occur after the Closing Date,(v) the Avaya Sale Leaseback Property was not originally intended to be included in the Real Properties or intended to be a part of the consideration for this Agreement, (vi) due to such exclusion of the Avaya Sale Leaseback Property from the Real Properties, Agent has not performed any due diligence on the Avaya Sale Leaseback Property, (vii) upon the occurrence of the Avaya Subdivision, the Avaya Sale Leaseback Property shall be conveyed to Avaya, Inc. by Connectivity Solutions Manufacturing, Inc. for nominal consideration and released from the Mortgage for the Real Property located in Omaha, Nebraska without the requirement that any Asset Sale Proceeds be paid to the Agent or the Lenders.

11.           Amendment to SECTION 5.35. SECTION 5.35 of the Credit Agreement hereby is amended by deleting it in its entirety and substituting the following therefor:

SECTION 5.35           Subordinated Debt. The Borrowers will not: (i) make any prepayments (whether optional or mandatory) of principal of or other amounts under Parent's 1% Convertible Senior Subordinated Debentures Due 2024, except that Borrowers may (a) make such prepayments solely out of the proceeds of equity issued or Debt incurred (other than Debt incurred under this Agreement) in whole or in part for the purpose of making prepayments under or refinancing or replacing Parent's 1% Convertible Senior Subordinated Debentures Due 2024 (provided that, in the case of any such refinancing or replacement Debt, the terms thereof shall be reasonably acceptable to the Agent and the Required Lenders), and (b) make any other such prepayments up to an aggregate amount of
$25,000,000, provided that, after giving effect to any such prepayments there would be Excess Liquidity of at least $50,000,000, or (ii) amend or modify any of the documents pertaining to the Subordinated Debt to (a) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, or waive defaults thereunder, (b) increase the rate of interest, amount of fees or the amounts payable thereunder, (c) amend or supplement in any manner the covenants contained therein that would make them more restrictive, or (d) amend or supplement the subordination provisions thereof. The Borrowers shall furnish to the Agent, and Agent 

 

 

	
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shall thereafter forward to the Lenders, copies of any drafts received by it of (A) any proposed amendments to the documents pertaining to any of the Subordinated Debt, and (B) documents pertaining to any Subordinated Debt proposed to be issued after the Closing Date.

12.           Amendment to EXHIBIT F. EXHIBIT F to the Credit Agreement hereby is amended by deleting it in its entirety and substituting therefor EXHIBIT F attached hereto.

13.           Restatement of Representations and Warranties. Each Borrower hereby restates and renews each and every representation and warranty heretofore made by it in the Credit Agreement and the other Loan Documents as fully as if made on the date hereof (except where reference is made to a specific date) and with specific reference to this First Amendment and all other loan documents executed and/or delivered in connection herewith.

14.           Effect of Amendment. Except as set forth expressly hereinabove, all terms of the Credit Agreement and the other Loan Documents shall be and remain in full force and effect, and shall constitute the legal, valid, binding and enforceable obligations of the Borrowers. The amendments contained herein shall be deemed to have prospective application only, unless otherwise specifically stated herein.

15.           Ratification. Each Borrower hereby restates, ratifies and reaffirms each and every term, covenant and condition set forth in the Credit Agreement and the other Loan Documents effective as of the date hereof.

16.           Counterparts. This First Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts and transmitted by facsimile to the other parties, each of which when so executed and delivered by facsimile shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument.

17.           Section References. Section titles and references used in this First Amendment shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreements among the parties hereto evidenced hereby.

18.           No Default. To induce the Agent, the Syndication Agent, the Documentation Agents and the Lenders to enter into this First Amendment and to continue to make advances pursuant to the Credit Agreement, each Borrower hereby acknowledges and agrees that, as of the date hereof, and after giving effect to the terms hereof, there exists (i) no Default or Event of Default and (ii) no right of offset, defense, counterclaim, claim or objection in favor of the Borrowers arising out of or with respect to any of the Loans or other obligations of the Borrowers owed to the Lenders under the Credit Agreement.

19.           Further Assurances. Each Borrower agrees to take such further actions as the Agent shall reasonably request in connection herewith to evidence the amendments herein contained.

20.           Governing Law. This First Amendment shall be governed by and construed and interpreted in accordance with, the laws of the State of New York.

 

 

	
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21.           Conditions Precedent. This First Amendment shall become effective only upon: (i) execution and delivery by facsimile (1) of this First Amendment by each of the parties hereto, and (2) of the Consent and Reaffirmation of Guarantors at the end hereof by each of the Guarantors; (ii) payment to the Agent, for the account of each Lender, of an amendment fee in an amount equal to 0.10% of such Lender's Revolving Loan Commitment; and (iii) payment to the Agent, for its own account, of an amendment arrangement fee in an amount set forth in a separate fee letter with the Agent.

 

 

	
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IN WITNESS WHEREOF, the Borrower, the Agent and each of the Lenders has caused this First Amendment to be duly executed, under seal, by its duly authorized officer as of the day and year first above written.

 

COMMSCOPE, INC. OF NORTH CAROLINA

 

 

	
By: /s/ Barry D. Graham

	
(SEAL)

	
 

	
Name: Barry D. Graham

	
 

	
 

	
Title: Treasurer

	
 

					

COMMSCOPE SOLUTIONS, INC.

 

 

	
By: /s/ Barry D. Graham

	
(SEAL)

	
 

	
Name: Barry D. Graham

	
 

	
 

	
Title: Treasurer

	
 

					

CONNECTIVITY SOLUTIONS MANUFACTURING, INC.

 

 

	
By: /s/ Frank B. Wyatt, II

	
(SEAL)

	
 

	
Name: Frank B. Wyatt, II

	
 

	
 

	
Title: Director

	
 

					

WACHOVIA BANK, NATIONAL ASSOCIATION as Agent and as a

	
Lender 

	
(SEAL)

 

 

	
By: /s/ John Trainor

	
 

	
Title: Director

	
 

			

 

FLEET CAPITAL CORPORATION,

as Syndication Agent and as a Lender (SEAL)

	
By: /s/ Mark Herdman

	
 

	
 

	
Title: Vice President

			

 

 

 

	
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GENERAL ELECTRIC CAPITAL CORPORATION, as a Documentation Agent and as a Lender           (SEAL)

 

 

	
By: /s/ Brian P. Schwinn

	
 

	
 

	
Title: Duly Authorized Signatory

			

HARRIS N.A. (successor by merger to Harris Trust and Savings Bank),

as a Documentation Agent and as a Lender

(SEAL)

 

 

	
By: /s/ Trevor S. Townsend

	
 

	
Title: Vice President

	
 

			

PNC BANK, as a Documentation Agent and as a Lender                                                                      (SEAL)

 

 

	
By: /s/ William P. Dyer

	
 

	
 

	
Title: Vice President

			

BRANCH BANKING AND TRUST

	
COMPANY, as a Lender 

	
(SEAL)

 

 

	
By: /s/ James C. Stallings

	
 

	
 

	
Title: Senior Vice President

			

BNP PARIBAS,

	
as a Lender 

	
(SEAL)

 

 

	
By: /s/ Matthew Harvey

	
 

	
 

	
Title: Managing Director

				

 

	
By: /s/ James McCann

Title: Credit & Portfolio Manager

 

 

 

 

CIBC INC.,

	
as a Lender 

	
(SEAL)

 

 

	
By: /s/ George Knight

	
 

	
 

	
Title: Managing Director

			

FIFTH THIRD BANK,

	
as a Lender 

	
(SEAL)

 

 

	
By: /s/ David R. Cochran

	
 

	
Title: Vice President

	
 

			

RZB FINANCE LLC,

	
as a Lender 

	
(SEAL)

 

 

	
By: /s/ Eric Salat

	
 

	
 

	
Title: Group Vice President

	
By: /s/ Astrid Wilkie

	
 

	
 

	
Title: Vice President

	
 

					

 

 

	
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CONSENT AND REAFFIRMATION OF GUARANTORS

Each of the undersigned (i) acknowledges receipt of the foregoing First Amendment to Amended and Restated Credit and Security Agreement (the "First Amendment"), (ii) consents to the execution and delivery of the First Amendment by the parties thereto and (iii) reaffirms all of its obligations and covenants under the Guaranty Agreement dated as of January 10, 2003, as amended by Global Amendment Agreement dated as of January 31, 2004, executed or joined in by it, and agrees that none of such obligations and covenants shall be affected by the execution and delivery of the First Amendment. This Consent and Reaffirmation may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument.

	
COMMSCOPE, INC.

	
(SEAL)

 

 

 

	
By: /s/ Jearld L. Leonhardt

Title: Executive Vice President and Chief Financial Officer

COMMSCOPE OPTICAL TECHNOLOGIES, INC.                                                                            (SEAL)

 

 

	
By: /s/ Frank B. Wyatt, II

	
 

	
 

	
Title: Director/Vice President and Secretary

			

COMMSCOPE INTERNATIONAL, INC. (SEAL)

 

 

	
By: /s/ Frank B. Wyatt, II

	
 

	
 

	
Title: Director/Vice President and Secretary

			

COMMSCOPE INTERNATIONAL HOLDINGS, LLC (SEAL)

 

 

	
By: /s/ Frank B. Wyatt, II

Title: Director/Senior Vice President, General Counsel and Secretary

 

 

	
- 13 -

	
COMMSCOPE PROPERTIES, LLC 

	
(SEAL)

 

 

 

	
By: /s/ Frank B. Wyatt, II

	
 

	
 

	
Title: Manager

	
 

	
VEXTRA TECHNOLOGIES, LLC 

	
(SEAL)

					

 

 

 

	
By: /s/ Frank B. Wyatt, II

	
 

	
Title: Manager

	
 

			

COMMSCOPE NETHERLANDS GP, LLC (SEAL)

 

 

	
By: /s/ Frank B. Wyatt, II

Title: Director/Senior Vice President, General Counsel and Secretary

COMMSCOPE SOLUTIONS HOLDINGS, INC.                                                                           (SEAL)

 

 

	
By: /s/ Frank B. Wyatt, II

Title: Director/Senior Vice President and Secretary

COMMSCOPE SOLUTIONS INTERNATIONAL, INC.                                                                          (SEAL)

 

 

	
By: /s/ Frank B. Wyatt, II

Title: Director/Senior Vice President and Secretary

COMMSCOPE SOLUTIONS PROPERTIES, LLC                                                                           (SEAL)

 

 

	
By: /s/ Frank B. Wyatt, II

	
 

	
Title: Manager

	
 

			

 

 

	
- 14 -Medtronic Exhibit 10.19 to Form 10-K dated April 29, 2005

Exhibit 10.13

 

EXECUTION COPY

 

ASSET PURCHASE AND SETTLEMENT AGREEMENT

 

Dated as of April 21, 2005

 

Among

 

MEDTRONIC SOFAMOR DANEK, INC.,

SDGI HOLDINGS, INC.,

MEDTRONIC, INC.,

GARY K. MICHELSON, M.D. AND

KARLIN TECHNOLOGY, INC.

TABLE OF CONTENTS

	1. 	 	DEFINITIONS	  1	 
	2. 	 	PURCHASE AND SALE OF ASSETS 	10	 
		 	2.1.	Purchased Assets	10
		 	2.2. 	Excluded Assets	11
		 	2.3.	Assumed Liabilities	11
		 	2.4. 	Excluded Liabilities 	11
		 	2.5. 	Non-Exclusive Copyright License	12
		 	2.6. 	Medtronic-Owned Patent Rights 	12
		 	2.7. 	Multi-Lock Patent Rights 	12
		 	2.8. 	Inter-Party Agreements and Three-Party Agreement 	12
		 	2.9.	Sellers’ Covenant Not To Sue	13
		 	2.10. 	Former Spine-Tech Agreements 	13
	3.	 	SIGNING DEPOSIT; CLOSING	13
		 	3.1. 	Signing Deposit 	13
		 	3.2. 	Closing Time and Place 	14
		 	3.3. 	Closing Payment; Letter of Credit 	14
		 	3.4. 	Post-Closing Payments	14
	4. 	 	SELLERS’ REPRESENTATIONS AND WARRANTIES	15
		 	4.1.	Organization; Shareholders	15
		 	4.2.	Authorization	15
		 	4.3.	Noncontravention	15
		 	4.4.	Consents	16
		 	4.5.	Litigation	16
		 	4.6.	Assumed Contracts	16
		 	4.7.	Title.	16
		 	4.8.	Intellectual Property	16
		 	4.9.	Solvency; Fair Consideration	17
		 	4.10.	U.S. Taxpayer	17
		 	4.11.	No Other Representations and Warranties	17
	5.	 	MEDTRONIC PARTIES’ REPRESENTATIONS AND WARRANTIES	17
		 	5.1.	Organization	18
		 	5.2.	Authorization	18
		 	5.3.	Noncontravention	18
		 	5.4.	Consents 	18
		 	5.5.	Litigation	18

-i-

		 	 	 	 
		 	5.6.	Solvency; Fair Consideration	18
		 	5.7.	No Other Representations and Warranties 	19
	6.	 	COVENANTS	19
		 	6.1.	Litigation.	19
		 	6.2.	HSR Act 	19
		 	6.3.	Closing 	19
		 	6.4. 	Protection of the Purchased Assets Pre-Closing	19
		 	6.5.	Covenants in Support of Assignment 	20
		 	6.6. 	Models and Prototypes	20
		 	6.7.	Disclosure of New Subject Invention and New Subject Intellectual Property	20
		 	6.8.	Further Assurances	21
		 	6.9.	Patent Prosecution	21
		 	6.10.	Third Party Actions	21
		 	6.11. 	Patent Counsel; Return of Documents; Tangible Materials	22
		 	6.12.	Taxes 	22
		 	6.13.	Name Attribution	23
		 	6.14. 	Confidentiality	26
		 	6.15. 	Restricted Activities	26
		 	6.16. 	Use of Michelson Logo	27
		 	6.17.	Notice of Developments	27
		 	6.18. 	Corporate Existence 	27
		 	6.19. 	Revival and Reinstatement of Payment Obligations 	27
		 	6.20. 	Public Statements 	28
		 	6.21. 	FDA Applications 	28
		 	6.22.	Post-Closing Reconciliation 	28
		 	6.23. 	Covenants Regarding Contractual Obligations 	28
		 	6.24.	Remedies 	28
		 	6.25. 	Third Party Confidentiality Agreements 	28
	7. 	 	CLOSING CONDITIONS	28
		 	7.1. 	Conditions to the Medtronic Parties’ Obligation to Close 	28
		 	7.2. 	Conditions to the Sellers’ Obligation to Close 	30
	8.	 	TERMINATION	31
		 	8.1.	Termination of Agreement 	31
		 	8.2. 	Effect of Termination 	32
	9.	 	INDEMNIFICATION	32
		 	9.1. 	Indemnification by the Sellers 	32
		 	9.2. 	Indemnification by the Buyer	33
		 	9.3.	Survival 	33
		 	9.4. 	Time for Claims 	34

-ii-

		 	 	 	 
		 	9.5.	Notices 	34
		 	9.6. 	Third Party Claims 	34
		 	9.7. 	LIMITATION OF DAMAGES 	35
		 	9.8. 	Exclusive Remedy 	35
		 	9.9. 	Knowledge and Investigation 	35
		 	9.10.	Letter of Credit 	35
		 	9.11. 	Duty to Mitigate 	36
	10.	 	ARBITRATION	36
		 	10.1. 	Agreement to Arbitrate 	36
		 	10.2.	Appointment and Replacement of Arbitrator 	36
		 	10.3. 	Exclusive Dispute Resolution Procedure 	36
		 	10.4. 	Demand for Arbitration 	37
		 	10.5. 	Applicable Arbitration Procedures and Powers of the Arbitrator 	37
		 	10.6. 	Service 	37
		 	10.7. 	Preliminary Meeting 	37
		 	10.8. 	Discovery 	37
		 	10.9. 	Hearing and Prior Proceedings 	38
		 	10.10. 	Evidence 	38
		 	10.11. 	Awards	38
		 	10.12. 	Arbitrator’s Fees 	39
		 	10.13. 	Impartiality and Disqualification of Arbitrator; Ex Parte Contacts	39
		 	10.14. 	Confidentiality 	39
	11.	 	RELEASES 	39
		 	11.1. 	Medtronic Release 	39
		 	11.2.	Sellers Release 	40
		 	11.3.	Waiver 	40
	12. 	 	MISCELLANEOUS	41
		 	12.1. 	Interpretation 	41
		 	12.2. 	No Third Party Beneficiaries 	41
		 	12.3. 	Entire Agreement 	41
		 	12.4. 	Assignment 	41
		 	12.5. 	Counterparts 	41
		 	12.6. 	Headings 	41
		 	12.7. 	Notices 	42
		 	12.8. 	Governing Law 	42
		 	12.9. 	Jurisdiction; Venue; Service of Process 	43
		 	12.10. 	Amendments and Waivers 	43
		 	12.11. 	Severability 	43
		 	12.12. 	Expenses 	43

-iii-

Exhibits

Exhibit A — Confirmatory Assignment
Exhibit B — Stipulated Order of Dismissal With Prejudice
Exhibit C —
Michelson Logo
Exhibit D — Patent and Invention Assignments
Exhibit E — Copies of Assumed Contracts
Exhibit
F — Bill of Sale and Assignment
Exhibit G — Assignment and Assumption Agreement

Schedules

Schedule 2.1(a) — Encumbrances
Schedule 2.1(b) — Assumed Contracts
Schedule 2.1(c) — Inter-Party Agreements
Schedule
2.1(e) — Patent Prosecution Files
Schedule 2.1(g) — Purchased Claims
Schedule 2.1(h) — Purchased Third
Party Beneficiary Rights
Schedule 2.2(b) — Karlin Instruments Exclusive License
Schedule 2.2(c) — Excluded
Indemnification Rights
Schedule 2.2(d) — Excluded Equitable Rights
Schedule 2.2(f) — Assumed Contract Amounts
Schedule
2.6 — Medtronic-Owned Patent Rights
Schedule 2.7 — Multi-Lock Patent Rights
Schedule 4.1 — Trustees
Schedule
4.3 — Sellers’ Noncontravention
Schedule 4.5 — Sellers’ Litigation
Schedule 4.6A — Assumed Contracts
Schedule
4.6B — Certain Contractual Obligations Not in Force or Effect
Schedule 4.7A — Title
Schedule 4.7B — Possession,
Custody or Control of, and Rights in and to, the Purchased Assets
Schedule 4.8(b) — Scheduled Subject Patent Rights
Schedule
4.8(c) — Scheduled Excluded Patent Rights
Schedule 4.8(d) — Exceptions to Representations Regarding Subject Patent
Rights
Schedule 5.1 — Owners of Stock — the Buyer and MSD
Schedule 5.3 — Medtronic Parties’ Noncontravention
Schedule
5.4 — Medtronic Parties’ Consents
Schedule 5.5 — Medtronic Parties’ Litigation
Schedule 6.13(a) —
Attribution Product Systems
Schedule 6.13(c) — Literature
Schedule 6.15 — Consulting Agreements
Schedule
6.24 – Specified Relief

-iv-

ASSET PURCHASE AND SETTLEMENT AGREEMENT

        This Asset Purchase and Settlement Agreement (“This
Agreement”) dated as of April 21, 2005 (the “Effective Date”) is among Medtronic Sofamor Danek,
Inc., an Indiana corporation formerly known as Sofamor Danek Group, Inc. (“MSD”), SDGI Holdings, Inc., a Delaware
corporation (the “Buyer”), Medtronic, Inc., a Minnesota corporation (“ MDT,” together with
MSD and the Buyer, the “Medtronic Parties”), Gary K. Michelson, M.D. (“Michelson”) and Karlin
Technology, Inc., a California corporation (“ KTI,” together with Michelson, the “Sellers”),
each individually a “Party” and collectively the “Parties” to This Agreement.

        WHEREAS, the Buyer desires to purchase, and the Sellers
desire to assign and sell to the Buyer, certain intellectual property and related agreements, certain license relationships
and certain goodwill of the Sellers, and in connection therewith the Parties desire to settle the Litigation;

        NOW THEREFORE, in consideration of the mutual covenants
and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:

	1.	DEFINITIONS.

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

        “Acquired Subject Intellectual Property”
is defined in Section 6.7(a).

        “Act” is defined in Section 10.5
(Applicable Arbitration Procedures and Powers of the Arbitrator).

        “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, patent interference,
opposition, Third Party requested patent re-examination, notice or proceeding, in each case, to, from, by or before any Governmental
Authority, but excluding any action or inaction in the course of the ex parte preparation or prosecution of any Patent
Right.

        “Affiliate” means, with respect to
any specified Person at any time, (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 voting stock or other voting interests of, such specified
Person and (c) each Person (other than an individual) that is managed by a common group of executive officers or directors
as such specified Person. For purposes of this definition, the terms “controlling,” “controlled by” or
“under common control with” refer to the direct or indirect possession by a Person, or with respect to a Person,
of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise, or the power to elect at least 25% of the directors, managers, general
members or individuals exercising similar authority with respect to such Person. For purposes of This Agreement, by way of
example, GKM Trust is an Affiliate of KTI, and MSD and MDT are Affiliates of the Buyer, as of the Effective Date.

        “Alternate Closing Payment” is defined
in Section 3.3 (Closing Payment; Letter of Credit).

        “Ancillary Agreements” means the
Dismissal Document, the Patent and Invention Assignments, the Assignment and Assumption Agreement, the Bill of Sale and any
other agreements, certificates, instruments and documents executed and delivered pursuant to This Agreement or in connection
herewith, other than the Confirmatory Assignments.

        “Arbitrator” is defined in Section
10.2 (Appointment and Replacement of Arbitrator).

        “Arbitration Action” is defined in
Section 12.9 (Jurisdiction; Venue; Service of Process).

        “Arbitration Parties” is defined
in Section 10.4 (Demand for Arbitration).

        “Arbitration Settlement Offer” is
defined in Section 10.7 (Preliminary Meeting).

        “Assignment and Assumption Agreement”
means the Assignment and Assumption Agreement to be entered into by the Parties at the Closing, the form of which is attached
as Exhibit G.

1

        “Assumed Contract Amounts” means
all amounts set forth on Schedule 2.2(f) (Assumed Contract Amounts).

        “Assumed Contracts” means the documents
set forth on Schedule 2.1(b) (Assumed Contracts), together with all exhibits, amendments, supplements and modifications
thereto.

        “Assumed Liabilities” is defined
in Section 2.3 (Assumed Liabilities).

        “Attribution Product Systems” means
the products and product systems and surgical techniques listed under the heading “Attribution Product Systems” in
Schedule 6.13(a), as such list is revised from time to time pursuant to Section 6.13(a) or Section 6.13(b).

        “Bankruptcy Code” means Chapter 11
of Title 11 of the United States Code.

        “Basket” is defined in Section 9.1
(Indemnification by the Sellers).

        “Bilge Drainage Subject Matter” means
what is claimed from the Patent Rights identified on Schedule 4.8(c) as “Bilge Drainage,” including any improvements
thereto.

        “Bill of Sale” means the Bill of
Sale and Assignment to be entered into by the Parties at the Closing, in the form attached as Exhibit F.

        “Bound Party” is defined in Section
6.14 (Confidentiality).

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

        “Buyer” is defined in the Preamble.

        “Buyer’s Disclosure Schedule”
is defined in Section 5 (Buyer’s Representations and Warranties).

        “Claim” means any assertion of right
whatsoever (including all debts, bonds, promises, damages, equitable claims and judgments), liquidated or unliquidated, fixed
or contingent, direct or indirect, or imputed.

        “Claimant” is defined in Section
10.4 (Demand for Arbitration).

        “Closing” is defined in Section 3.2
(Closing Time and Place).

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

        “Closing Letter of Credit” is defined
in Section 3.3 (Closing Payment; Letter of Credit).

        “Closing Payment” is defined in Section
3.3 (Closing Payment; Letter of Credit).

        “Code” is defined in Section 4.10
(U.S. Taxpayer).

        “Collateral” is defined in Section
6.7(b).

        “Commercial Launch” means the earlier
of (i) the first commercial sale of a product or product system pursuant to MSD’s customary release, executive approval
procedures and guidelines, and (ii) 90 days after the first commercial sale of a product or product system; commercial sales
do not include sales for use solely in clinical trials, preliminary user groups, customs, specials or other testing purposes.

        “Confidential Information” (i) of
each of the Parties means the non-public information in This Agreement, the Ancillary Agreements and the Termination and Release
Agreement, or the details of the discussions and drafts leading up to the execution of This Agreement, the Ancillary Agreements
or the Termination and Release Agreement, (ii) of the Medtronic Parties means any and all non-public information included in
or relating to the Purchased Assets, the Medtronic-Owned Patent Rights or the Medtronic-Zimmer Agreement and (iii) of the Sellers
means any and all non-public information included in or relating to the Excluded Assets; provided, that in each case
Confidential Information excludes any information that (a) is or becomes a matter of public knowledge through no act of any
Party or their respective Affiliates or Representatives in violation of This Agreement or (b) is disclosed to any of the Parties
on a nonconfidential basis by a Third Party who lawfully obtained such information

2

and is, to the Knowledge of the Sellers or to the Knowledge of the Medtronic Parties, whichever is
the Party receiving such information, under no obligation to maintain the confidentiality of such information.

        “Confirmatory Assignments” is defined
in Section 2.6 (Medtronic-Owned Patent Rights).

        “Consents” is defined in Section
4.4 (Consents).

        “Container Subject Matter” means
what is claimed from the Patent Rights identified on Schedule 4.8(c) as “Container,” including any improvements
thereto.

        “Contractual Obligation” means, with
respect to any Person, any legal, valid and binding contract, agreement, deed, note, debenture, warrant, option, mortgage,
lease, license, commitment, promise, undertaking, arrangement or understanding, whether written or oral, or other document
or instrument 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, in each case as amended or otherwise modified and in effect.

        “Counter-Demand” is defined in Section
10.6 (Service).

        “Demand” is defined in Section 10.4
(Demand for Arbitration).

        “Dismissal Document” means the Stipulated
Order of Dismissal With Prejudice, substantially in the form attached as Exhibit B.

        “Dispute” means any dispute, controversy,
Action, or other issue relating to or arising under or in connection with This Agreement or any of the Ancillary Agreements,
their subject matter, or their interpretation, performance or breach, including (i) the validity, scope and enforceability
of the agreement to arbitrate set forth in Section 10.1 (Agreement to Arbitrate) and (ii) whether the conditions for termination
under Section 8.1 of This Agreement have been met.

        “Document Custodian” means Special
Master Alan Balaran or a Third Party agreeable to the Parties or, if the Parties fail to so agree, a Third Party designated
by the Arbitrator to take possession and custody of the materials delivered pursuant to Section 6.11 (Patent Counsel; Return
of Documents; Tangible Materials), which Third Party shall not be, and shall not be connected with, any law firm involved in
the Litigation.

        “DOJ” means the Antitrust Division
of the United States Department of Justice.

        “Effective Date” is defined in the
Preamble.

        “ElectroStim License Agreement” means
the ElectroStim License Agreement dated as of April 21, 2005 between the Sellers and the Buyer.

        “ElectroStim Patent Rights” means
(a) the Patent Rights identified on Schedule 4.8(c) as “ElectroStim” and any Patent Right claiming priority
thereto and having a specification that does not contain new matter (as defined under U.S. patent law) in relation to any specification
of the “ElectroStim” Patent Rights identified on Schedule 4.8(c), and (b) any other Patent Rights claiming
any electrostim improvements that Michelson conceives, develops, or reduces to practice after the Effective Date, provided
in each case ((a) and (b)) that the patent claims of such Patent Rights are (i) no broader in any respect than those existing
in “ElectroStim” Patent Rights on Schedule 4.8(c), or (ii) directed solely to an implant for promoting bone
growth using an electrostim energizer or solely to a method for using such an implant for promoting bone growth using an electrostim
energizer, regardless of whether the patent claims of such Patent Rights are In The IP Field or not In The IP Field. For the
purpose of this definition “electrostim energizer” does not include electrical or magnetic energy generated by the
body.

        “Encumbrance” means any charge, community
or other marital property interest or other interest relating to or arising out of divorce, annulment or other dissolution
of marriage, condition, equitable interest, lien, license, covenant not to sue, option, pledge, security interest, mortgage,
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, transfer, receipt of income or exercise of any other attribute of legal or equitable ownership.

3

        “Escrow Account” is defined in Section
3.3 (Closing Payment; Letter of Credit).

        “Excluded Assets” is defined in Section
2.2 (Excluded Assets).

        “Excluded Equitable Rights” means
the equitable rights set forth on Schedule 2.2(d) (Excluded Equitable Rights).

        “Excluded Indemnification Rights”
means the indemnification rights set forth on Schedule 2.2(c) (Excluded Indemnification Rights).

        “Excluded Intellectual Property”
means (a) the ElectroStim Patent Rights, the Karlin Instruments Exclusive License Patent Rights, the Meniscal Rivet Patent
Rights, the Rongeur Patent Rights, and the Surgical Gloves Patent Rights; (b) subject to Section 2.9 (Sellers’ Covenant
Not To Sue), any Intellectual Property that Michelson conceives, develops, or reduces to practice after the Effective Date
and that is not In The IP Field; (c) all Patent Rights directed to the “Bilge Drainage Subject Matter”, the “Container
Subject Matter” and the “Paper Clip Subject Matter”; (d) subject to Section 2.9 (Sellers’ Covenant
Not To Sue), any Intellectual Property not In The IP Field in which the Sellers acquire or obtain any right, title, or interest
after the Effective Date; and (e) anything conceived by Michelson after the expiration of the Term.

        “Excluded Liabilities” is defined
in Section 2.4 (Excluded Liabilities).

        “Field” means the diagnosis or treatment
of the Spine, and medical training, education, and procedures relating thereto.

        “Filings” is defined in Section 4.4
(Consents).

        “Former Spine-Tech Agreements” means
the following agreements, together with all exhibits, amendments, supplements and modifications thereto:

	 	(a)	the License Agreement dated as of May 10, 1992 among Spine-Tech, Inc., KTI and Michelson; 
	 	(b)	the Settlement Agreement dated as of June 6, 1999 among Sulzer Spine-Tech, Inc., KTI and Michelson;
	 	(c)	the Assignment Agreement dated as of June 6, 1999 among Sulzer Spine-Tech, Inc., KTI and Michelson;
	 	(d)	the Three-Party Agreement;
	 	(e)	the MultiLock Technology Purchase Agreement dated as of February 28, 2001 by and between Wright Medical Technology,
Inc. and Sulzer Spine-Tech, Inc.; and
	 	(f)	the Award dated as of June 13, 2003 in the arbitration matter between the Sellers and Sulzer Spine-Tech, Inc.

        “FRCP” is defined in Section 10.6
(Service).

        “FTC” means the United States Federal
Trade Commission.

        “Future and Meniscal Covenanted Patent Rights”
means (a) Intellectual Property conceived by Michelson during the Term that is useful in the Field and is not Subject Intellectual
Property and (b) the Meniscal Patent Rights.

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

        “Governmental Order” means any order,
writ, judgment, injunction, decree, stipulation, ruling, determination or award entered by or with any Governmental Authority,
but excluding any action or inaction in the course of the ex parte preparation or prosecution of any Patent Right and
any order, writ, judgment, injunction, decree, stipulation, ruling, determination or award of general applicability.

4

        “Hearing” is defined in Section 10.7
(Preliminary Meeting).

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

        “Indemnified Party” means a Person
to whom indemnification is provided under This Agreement.

        “Indemnifying Party” means a Person
providing indemnification under This Agreement.

        “Intellectual Property” means all
rights, title and interests in and to all proprietary rights of every kind and nature relating to or deriving from Patent Rights
or Know-How, but excluding all copyrights and trademarks.

        “Inter-Party Agreements” means the
agreements set forth on Schedule 2.1(c)(Inter-Party Agreements), together with all exhibits, amendments, supplements
and modifications thereto.

        “In The IP Field” means, (a) when
referring to Patent Rights, that one or more claims of the Patent Rights cover one or more products or methods for use in the
Field; provided, that Patent Rights are not “In The IP Field” if (i) the product(s) or method(s) covered by
one or more claims of such Patent Rights are useful in the Field solely due to their general usefulness in the human body and
(ii) the specification for such Patent Rights does not expressly disclose uses in the Field; and (b) when referring to Know-How,
that the Know-How is for products or methods for use in the Field; provided, that Know-How is not “In The IP Field”
if the Know-How is useful in the Field solely due to its general usefulness in the human body.

        “Karlin Instruments Exclusive License Agreement”
means the agreement listed on Schedule 2.2(b) (Karlin Instruments Exclusive License).

        “Karlin Instruments Exclusive License Patent
Rights” means only the existing Patent Rights identified on Schedule 4.8(c) under “Karlin Instruments
Exclusive License”.

        “Know-How” means ideas, concepts,
inventions, know-how, trade secrets, technical knowledge, discoveries, developments, innovations, improvements, processes,
methods, data, formulas, information, research and development, compositions, techniques, and designs regardless of whether
or not protected or entitled to protection under the patent, copyright or other laws of any jurisdiction.

        “Knowledge of the Medtronic Parties”
means the actual knowledge of any of Arthur Collins (Chairman and CEO of MDT), Robert Ryan (CFO of MDT), Terrance Carlson (Secretary
and General Counsel of MDT), Michael DeMane (Senior Vice President of MDT), Todd Sheldon (Vice President and Senior Legal Counsel
of MSD), Shawn McCormick (CFO of MSD and a director of the Buyer) or Michael Burrage (Vice President of the Buyer).

        “Knowledge of the Sellers” means
the actual knowledge of any of Michelson or Mary Burch (President and CFO of KTI).

        “KTI” is defined in the Preamble.

        “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 strict, 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 U.S. generally accepted accounting
principles to be accrued on the financial statements of such Person.

        “Literature” means those specific
materials of the types listed in Schedule 6.13(c) as revised from time to time, disseminated or made available by or
on behalf of any of the Medtronic Parties or their Affiliates, excluding any materials (including drafts of such materials
not disseminated or made available to any Third Party other than a Representative of any of the Medtronic Parties or their
Affiliates) that

5

are: (i) documents actually filed with the Securities and Exchange Commission or any other Governmental
Authority by any of the Medtronic Parties or their Affiliates, including any substantially complete reprints and record copies
thereof; (ii) analyst presentations where any of the Medtronic Parties or their Affiliates is invited as a participant, but
excluding analyst presentations hosted by or on the behalf of any of the Medtronic Parties or their Affiliates; (iii) materials
published by Third Parties not for or on behalf of any of the Medtronic Parties or their Affiliates, but not copies or reprints
thereof provided to a Third Party by or on behalf of any of the Medtronic Parties; (iv) useful articles (as that term is defined
in 17 U.S.C. § 101) not intended primarily to convey product or educational information, including shirts, pens, notepads,
hats, x-ray bags and similar items; (v) product packaging or labeling, including instrument and implant trays; (vi) materials
intended for internal use of the Medtronic Parties or their Affiliates, including emails, sales reports, quality control documents
and lab reports, but excluding sales training booklets and further excluding such internal materials which are disseminated
as or as part of an external mass mailing (i.e. 25 or more Third Party disseminations); (vii) clinical studies materials sent
to clinical sites pursuant to IDE clinical studies or other studies sponsored by the Medtronic Parties or their Affiliates;
(viii) price lists, pricing bids, vendor pricing proposals, shipping materials invoices and other billing, coding or accounting
documents or resources; (ix) correspondence, excluding attachments or enclosures which are otherwise Literature, and further
excluding external mass mailings (i.e. 25 or more Third Party disseminations); (x) contracts or agreements; (xi) documents
covered by the unwaived attorney-client or work product privileges; or (xii) Third Party anonymous market research questionnaires
in which the source of the communication is not identified to be any of the Medtronic Parties or their Affiliates.

        “Litigation” means the action entitled
Medtronic Sofamor Danek, Inc. v. Gary Karlin Michelson M.D. et al., Civil Action No. 01-2373 in the United States District
Court for the Western District of Tennessee, including Medtronic Sofamor Danek v. Michelson and KTI, U.S. District Court,
District of Minnesota, filed January 15, 2002, Medtronic Sofamor Danek v. Michelson and KTI , U.S. District Court,
Northern District of Georgia, filed Feb. 20, 2003 and Medtronic Sofamor Danek v. Michelson and KTI, U.S. District Court,
Northern District of Florida, filed November 26, 2003, and the action entitled Medtronic Sofamor Danek, Inc., and Medtronic,
Inc. v. GKM Trust et. al., Civil Action No. 03-2055 in the United States District Court for the Western District of Tennessee,
together with all Claims, defenses, counterclaims and causes of action arising therefrom.

        “Litigation Materials” is defined
in Section 6.11(b) (Patent Counsel; Return of Documents; Tangible Materials).

        “Losses” means all Actions, Claims,
Liabilities, damages, judgments, amounts paid in settlement, assessments, Taxes, losses, fines, penalties, expenses, costs
and fees (including reasonable attorneys’ fees).

        “MDT” is defined in the Preamble.

        “Medtronic-Owned Patent Rights” is
defined in Section 2.6 (Medtronic-Owned Patent Rights).

        “Medtronic Parties” is defined in
the Preamble.

        “Medtronic Released Parties” is defined
in Section 11.2 (Sellers Release).

        “Medtronic Releasing Parties” is
defined in Section 11.1 (Medtronic Release).

        “Medtronic-Zimmer Agreement” means
the Cross-License Agreement dated as of April 21, 2005 between Zimmer Spine, Inc., the Medtronic Parties and Sofamor Danek
Holdings, Inc.

        “Meniscal Rivet Patent Rights” means
(a) the Patent Rights identified on Schedule 4.8(c) as “Meniscal Rivet” and all Patent Rights claiming priority thereto
or having a specification that does not contain new matter (as defined under U.S. patent law) in relation to any specification
of the “Meniscal Rivet” Patent Rights identified on Schedule 4.8(c), and (b) any other Patent Rights claiming
any meniscal rivet improvements that Michelson conceives, develops, or reduces to practice after the Effective Date, provided
in each case ((a) and (b)) that the claims of such Patent Rights are (i) no broader in any respect than those existing in “Meniscal
Rivet” Patent Rights on Schedule 4.8(c), or (ii) directed to a meniscal rivet not in the Field or a method for
using such meniscal rivet not in the Field.

6

        “Michelson” is defined in the Preamble.

        “Michelson Logo” means the logo depicted
on Exhibit C, as modified from time to time in accordance with Section 6.13(j).

        “Michelson Released Parties” is defined
in Section 11.1 (Medtronic Release).

        “Michelson Releasing Parties” is
defined in Section 11.2 (Sellers Release).

        “Michelson-Zimmer Agreement” means
the Attribution and Indemnification Agreement dated as of April 21, 2005 between Zimmer Holdings, Inc. and Zimmer-Spine,
Inc. and the Sellers.

        “MSD” is defined in the Preamble.

        “Multi-Lock Patent Rights” is defined
in Section 2.7 (Multi-Lock Patent Rights).

        “New Product System” means a new
or modified product or product system useful in the Field that is not listed in the original Schedule 6.13(a) and that
has its Commercial Launch in its new or modified form after October 1, 2003 by any of the Medtronic Parties or their Affiliates.
Each modification of a New Product System is a different New Product System for purposes of this definition.

        “New Subject Invention” is defined
in Section 6.7 (Disclosure of New Subject Inventions and New Subject Intellectual Property).

        “Notices” is defined in Section 4.4
(Consents).

        “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, trust agreement and instrument 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.

        “Other Party” is defined in Section
6.14 (Confidentiality).

        “Paper Clip Subject Matter” means
what is claimed from the Patent Rights identified on Schedule 4.8(c) as “Paper Clip,” including any improvements
thereto.

        “Party” and “ Parties”
are defined in the Preamble.

        “Patent and Invention Assignments”
means the patent and invention assignments to be entered into by the Parties at the Closing, the forms of which are attached
as Exhibit D.

        “Patent Prosecution Files” means
the files identified in Schedule 2.1(e) (Patent Prosecution Files).

        “Patent Rights” means (i) any and
all U.S. and foreign: (a) patents (including utility and design patents); (b) patent applications (including utility and design
patent applications), including all provisional applications, substitutions, continuations, continuations-in-part, divisions,
renewals, and all patents granted thereon; and (c) patents-of-addition, reissues, reexaminations and extensions or restorations
by existing or future extension or restoration mechanisms, including supplementary protection certificates or the equivalent
thereof, and (ii) any other form of government-issued right substantially equivalent to any of the foregoing now or hereafter
recognized including, for example, statutory invention disclosures or the like.

        “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.

        “Post-Closing Payment” is defined
in Section 3.4 (Post-Closing Payments).

        “Post-Closing Letter of Credit” is
defined in Section 3.4 (Post-Closing Payments).

        “Pre-Hearing Meeting” is defined
in Section 10.7 (Preliminary Meeting).

        “Preliminary Meeting” is defined
in Section 10.7 (Preliminary Meeting).

7

        “Protective Order Materials” is defined
in Section 6.11(b) (Patent Counsel; Return of Documents; Tangible Materials).

        “Potential Arbitrators” is defined
in Section 10.2 (Appointment and Replacement of Arbitrator).

        “Public Statement” is defined in
Section 6.20 (Public Statements).

        “Purchased Assets” is defined in
Section 2.1 (Purchased Assets).

        “Purchased Claims” means the Claims
set forth on Schedule 2.1(g) (Purchased Claims) and all rights of recovery, rights of set off, rights of recoupment
and other rights of every type or nature relating thereto.

        “Purchased Third Party Beneficiary Rights”
means the third party beneficiary rights set forth on Schedule 2.1(h) (Purchased Third Party Beneficiary Rights).

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

        “Respondent” is defined in Section
10.4 (Demand for Arbitration).

        “Response” is defined in Section
10.6 (Service).

        “Restricted Field” is defined in
Section 6.15 (Restricted Activities).

        “Retention Period” is defined in
Section 6.11(b) (Patent Counsel; Return of Documents; Tangible Materials).

        “Revised Attribution Product System List”
is defined in Section 6.13(a) (Name Attribution).

        “Rongeur Patent Rights” means (a)
the Patent Rights identified on Schedule 4.8(c) as “Rongeur” and all Patent Rights claiming priority thereto
or having a specification that does not contain new matter (as defined under U.S. patent law) in relation to any specification
of the “Rongeur” Patent Rights identified on Schedule 4.8(c), and (b) any other Patent Rights claiming any
rongeur improvements that Michelson conceives, develops, or reduces to practice after the Effective Date, provided in each
case ((a) and (b)) that the patent claims of such Patent Rights are (i) no broader in any respect than those existing in “Rongeur”
Patent Rights on Schedule 4.8(c), (ii) directed to a rongeur or a method for making or using such a rongeur, or (iii)
not In The IP Field.

        “Scheduling Order” is defined in
Section 10.7 (Preliminary Meeting).

        “Sellers” are defined in the Preamble.

        “Sellers’ Disclosure Schedule”
is defined in Section 4 (Sellers’ Representations and Warranties).

        “Set-Off Amounts” is defined in Section
3.1 (Signing Deposit).

        “Signing Deposit” is defined in Section
3.1 (Signing Deposit).

        “Special Master Materials” is defined
in Section 6.11(b) (Patent Counsel; Return of Documents; Tangible Materials).

        “Specified Relief” means the relief
set forth in Schedule 6.24 (Specified Relief).

        “Spine” means the spine (including
all bones and nucleus materials from the base of the skull to the coccyx) and the portions of nerves, muscles, tendons, ligaments,
veins, arteries, and other vessels adjacent thereto.

        “Subject Intellectual Property” means:

	 	(a)	all Patent Rights identified on Schedule 4.8(b);
	 	(b)	all Patent Rights claiming priority to, or incorporating a substantial portion of or all of the same specification as, the
Patent Rights identified on Schedule 4.8(b), and all foreign counterpart Patent Rights thereof, but excluding the ElectroStim Patent Rights, Medtronic-Owned Patent Rights, and Multi-Lock Patent
Rights;

8

	 	 	 
	 	(c)	all Intellectual Property In The IP Field in which the Sellers have any rights, title, or interests as of the Closing, but
excluding the Excluded Intellectual Property, Medtronic-Owned Intellectual Property, the Multi-Lock Patent Rights and rights
being transferred by assignment and assumption of the Assumed Contracts;
	 	(d)	all Intellectual Property In The IP Field conceived by Michelson prior to the Closing in which the Sellers acquire or otherwise
obtain any rights, title, or interests after the Closing (including any reversion of rights), but excluding the Excluded Intellectual
Property and the Medtronic-Owned Intellectual Property;
	 	(e)	all Intellectual Property In The IP Field conceived by Michelson during the Term, but excluding the Excluded Intellectual
Property; and
	 	(f)	all other Intellectual Property In The IP Field that the Sellers otherwise acquire or obtain any rights, title, or interests
in during the Term; but excluding the Excluded Intellectual Property and the Medtronic-Owned Intellectual Property.

        “Surgical Gloves Patent Rights” means
(a) the Patent Rights identified on Schedule 4.8(c) as “Surgical Glove” and all Patent Rights claiming priority
thereto or having a specification that does not contain new matter (as defined under U.S. patent law) in relation to any specification
of the “Surgical Gloves” Patent Rights identified on Schedule 4.8(c), and (b) any other Patent Rights claiming
any surgical glove improvements that Michelson conceives, develops, or reduces to practice after the Effective Date, provided
in each case ((a) and (b)) that the claims of such Patent Rights are (i) no broader in any respect than those existing in “Surgical
Gloves” Patent Rights on Schedule 4.8(c), (ii) directed to surgical gloves or a method for making or using such
surgical gloves, or (iii) not In The IP Field.

        “Tangible Materials” means documents,
files (including electronic files), diagrams, drawings, plans, specifications, designs, schematics, records, reports, lab or
research notebooks, drawings, flow charts, specifications, written descriptions, invention disclosures, source code, data,
photographs of three-dimensional prototypes and models, or other written, graphic or tangible materials or embodiments (other
than three-dimensional prototypes and models) relating to the Subject Intellectual Property, and all correspondence relating
to the prosecution of the Subject Intellectual Property and non-privileged, non-work product correspondence relating to the
Assumed Contracts and Purchased Third Party Beneficiary Rights, in each case, within the possession, custody or control of
the Sellers or their Affiliates.

        “Tax” or “ Taxes”
means any and all federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, 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, including any interest, penalty or addition thereto, whether
disputed or not.

        “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 any amendment thereto filed with any Governmental Authority responsible for Taxes.

        “Term” means the period beginning
at the Closing and ending on the fifteenth anniversary of the Closing.

        “Termination and Release Agreement”
means the Termination and Release Agreement dated as of April 21, 2005 among Zimmer Holdings, Inc. and Zimmer Spine, Inc.,
the Sellers, the Medtronic Parties, and Sofamor Danek Holdings, Inc.

        “Termination Date” is defined in
Section 8.1 (Termination of Agreement).

        “Third Party” means any Person other
than the Parties and their Affiliates.

9

        “Third Party Attribution Transfer”
means any written license, assignment, covenant not to sue or transfer to or as to a Third Party relating to any Patent Rights
included in the Subject Intellectual Property, Excluded Intellectual Property, Multi-Lock Patent Rights, or Medtronic-Owned
Patent Rights.

        “Third Party Claim” means any Claim
by a Third Party with respect to any matter that may give rise to a Claim for indemnification under This Agreement.

        “This Agreement” is defined in the
Preamble.

        “Three-Party Agreement” means the
Agreement dated as of January 18, 2001 among Michelson, Sofamor Danek Holdings, Inc. and Wright Medical Technology, Inc.

        “Voidable Transfer” is defined in
Section 6.19 (Revival and Reinstatement of Payment Obligations).

        “Wright Design Patent Assignment”
means the Design Patent Assignment by Gary K. Michelson – Anterior Cervical Plate dated January 24, 2001 to Wright
Medical Technology, Inc.

        “Wright Multi-Lock Assignment” means
the Patent Assignment by Gary K. Michelson – Multi-Lock Anterior Cervical Plating System dated January 24, 2001 to
Wright Medical Technology, Inc.

	2.	PURCHASE AND SALE OF ASSETS.

         2.1.   Purchased Assets.    On
the terms and subject to the conditions of This Agreement, the Sellers shall, and hereby do, sell, assign, transfer and deliver
to the Buyer effective as of the Closing, and the Buyer shall, and hereby does, purchase and accept from the Sellers effective
as of the Closing, all of the rights, title and interests of the Sellers in and to the following assets, properties and rights,
free and clear of all Claims and Encumbrances, other than those Claims and Encumbrances listed on Schedule 2.1(a) and
those Claims and Encumbrances imposed or asserted by or for the benefit of the Buyer or any of its Affiliates, but excluding
the Excluded Assets as set forth in Section 2.2 (Excluded Assets), the Medtronic-Owned Patent Rights as set forth in Section
2.6 (Medtronic-Owned Patent Rights), and the Multi-Lock Patent Rights as set forth in Section 2.7 (Multi-Lock Patent Rights):

        (a)  the Subject Intellectual
Property;

        (b)  the Assumed Contracts
(subject to the equitable rights of the Sellers and their Affiliates set forth in Sections 2.2(c) and 2.2(d) and the rights
of the Sellers and their Affiliates set forth in Section 2.2(f)); provided, that if the terms of any Assumed Contract
require that the consent of a Third Party be obtained in connection with the assignment or transfer to the Buyer of such rights
under such Assumed Contract, then such rights under such Assumed Contract will be deemed not to have been assigned and transferred
to the Buyer under This Agreement until such consent has been obtained; provided, further, that if such consent
has not been obtained as of the Closing, the Sellers will hold such rights under such Assumed Contract in trust for the benefit
of the Buyer until such consent is obtained and any rights under such Assumed Contract will be subject to the Sellers’
obligations in Section 6.5 (Covenants in Support of Assignment);

        (c)  the Inter-Party Agreements;

        (d)  any Actions, rights
of recovery, rights of set off, rights of recoupment and other rights of every type or nature relating to the Purchased Assets
listed in clauses (a) and (b) above (subject to the equitable rights of the Sellers and their Affiliates set forth in Sections
2.2(c) and 2.2(d) and the rights of the Sellers and their Affiliates set forth in Section 2.2(f)), including all rights to
recovery for damages for Intellectual Property infringement arising before the Closing;

        (e)  originals of the Patent
Prosecution Files and a copy of all other Tangible Materials;

        (f)  all assignable inventor
moral rights under the Subject Intellectual Property;

        (g)  the Purchased Claims;

        (h)  the Purchased Third
Party Beneficiary Rights; and

        (i)  all goodwill relating
solely to the Assumed Contracts and the licensing of the Subject Intellectual Property.

10

        All of the assets, properties and rights described
in paragraphs (a) through (i) of this Section 2.1, together with the Sellers’ rights, title and interest therein, are
collectively referred to in This Agreement as the “Purchased Assets.”

         2.2.   Excluded Assets.    At
the Closing, the Sellers shall retain, and the Buyer shall not purchase under This Agreement, any of the Sellers’ rights,
title and interests in or to any assets of the Sellers whatsoever other than the Purchased Assets (the rights, title and interests
to such assets are collectively referred to as the “Excluded Assets”). By way of example and without limiting
the foregoing, the Purchased Assets shall not include any of the Sellers’ rights, title and interests in or to any of
the following (each of which is included in the definition of “Excluded Assets”):

        (a)  the Excluded Intellectual
Property;

        (b)  the Karlin Instruments
Exclusive License Agreement;

        (c)  the Excluded Indemnification
Rights;

        (d)  the Excluded Equitable
Rights;

        (e)  all three-dimensional
models and prototypes of the Sellers;

        (f)  the Assumed Contract
Amounts;

        (g)  all materials protected
by the attorney-client privilege, the work product doctrine, or other applicable privileges (in each case, other than all correspondence
relating to the prosecution of the Subject Intellectual Property);

        (h)  This Agreement and
any of the Ancillary Agreement;

        (i)  the Michelson-Zimmer
Agreement;

        (a)  the Termination and
Release Agreement; or

        (b)  the ElectroStim License
Agreement.

         2.3.   Assumed Liabilities.
   From and after the Closing, on the terms and subject to the conditions of This Agreement, the Buyer shall
assume and satisfy or perform when due only the following Liabilities of the Sellers:

        (a)  all Liabilities of
the Sellers under any of the Assumed Contracts to the extent arising out of or relating to facts or circumstances existing
or occurring after the Closing; and

        (b)  all Liabilities of
the Sellers under any of the Inter-Party Agreements arising out of or relating to facts or circumstances existing or occurring
before, at or after the Closing

        (collectively, the “Assumed Liabilities”).

         2.4.   Excluded Liabilities.
   The Buyer does not hereby assume or covenant to satisfy any Liability of the Sellers whatsoever other than
the Assumed Liabilities (collectively, the “Excluded Liabilities”). By way of example and without limiting
the foregoing, the Buyer does not assume any of the following (each of which is included within the definition of “Excluded
Liabilities”):

        (a)  any Liability of any
Seller arising out of or relating to facts or circumstances existing or occurring before, at or after the Closing to the extent
relating to the Excluded Assets;

        (b)  except as otherwise
provided in Section 6.12 (Taxes), any Liability of any Seller for any Taxes whether or not relating to the Purchased Assets
and whether or not incurred before the Closing;

        (c)  any Liability of any
Seller for making payments or providing benefits of any kind to his or its employees or former employees, including as a result
of the sale of the Purchased Assets;

        (d)  any Liability of any
Seller for fees, costs and expenses incurred in connection with the Litigation;

11

        (e)  except as otherwise
expressly provided in This Agreement, any Liability of any Seller for fees, costs and expenses incurred in connection with
This Agreement or any of the Ancillary Agreements, the making or performance of This Agreement or any of the Ancillary Agreements
and the transactions contemplated hereby and thereby;

        (f)  any Liability expressly
imposed upon any Seller by the terms of This Agreement; or

        (g)  any Liability of any
Seller for fees, costs and expenses incurred prior to Closing in connection with the prosecution of the Patent Rights included
within the Purchased Assets or any other Liability of Sellers to Martin & Ferraro LLP incurred prior to Closing.

         2.5.   Non-Exclusive Copyright
License.    Effective as of the Closing, the Sellers hereby grant the Buyer and its Affiliates an irrevocable,
perpetual, worldwide, fully-paid, royalty-free, unconditional, transferable, non-exclusive license, with the unlimited right
to grant sublicenses through multiple tiers, under any Seller’s copyrights and licensable copyright moral rights in any
works included in the Purchased Assets to reproduce, make derivative works of (and register such derivative works), distribute,
publicly perform, publicly display, transmit, and otherwise exploit such works in any manner and in any medium. Effective as
of the Closing, the Sellers hereby irrevocably waive all moral rights in the Purchased Assets that are not assigned or licensed
to the Buyer at the Closing.

         2.6.   Medtronic-Owned Patent Rights.
   Effective as of the Closing, the Sellers acknowledge and agree that the Patent Rights listed on Schedule
2.6, and all future U.S. and foreign patent applications, including any continuation, division, reissue or reexamination
thereof (the “Medtronic-Owned Patent Rights”), are already owned by the Buyer or its Affiliates, and accordingly
are not Subject Intellectual Property. The Buyer’s assumption of the Inter-Party Agreements will not affect the ownership
of the Medtronic-Owned Patent Rights in any way. To the extent the assignment of any Medtronic-Owned Patent Right has not been
recorded with the appropriate patent office, the Sellers will execute at the Closing confirmatory assignments, the form of
which is attached as Exhibit A (with such changes as may be necessary for the assignment to be suitable for recording
in each jurisdiction and each recordable right or interest relating to such Medtronic-Owned Patent Rights), relating to such
Medtronic-Owned Patent Rights (the “Confirmatory Assignments”), nd following the Closing, at the Buyer’s
expense, such further confirmatory assignments as may be reasonably necessary.

        2.7.   Multi-Lock Patent Rights. Effective
as of the Closing, the Buyer and the Sellers acknowledge and agree that the Patent Rights listed on Schedule 2.7, and
all other rights granted under the Wright Multi-Lock Assignment and the Wright Design Patent Assignment (such Patent Rights
and other rights collectively, the “Multi-Lock Patent Rights”), as subject to the Medtronic-Zimmer Agreement
and the rights of Michelson set forth on Schedule 2.1(h), are already owned by a Third Party as of the Effective Date,
and accordingly are not Subject Intellectual Property or Purchased Assets.

        2.8.   Inter-Party Agreements and Three-Party
Agreement.

        (a)  Beginning on the Effective
Date and so long as this Agreement has not been terminated prior to Closing pursuant to Section 8.1 (Termination of Agreement),
(i) the Medtronic Parties and their Affiliates shall have no obligation to pay any amounts or provide any reports to the Sellers
pursuant to the Inter-Party Agreements or the Three-Party Agreement (other than amounts previously paid and reports previously
provided prior to the Effective Date), and (ii) no Party shall seek to terminate or allege any breach by another Party or its
Affiliates under any of the Inter-Party Agreements or the Three-Party Agreement. If this Agreement is terminated prior to the
Closing pursuant to Section 8.1 (Termination of Agreement), then (A) any royalties and reports otherwise due pursuant
to the Inter-Party Agreements or the Three-Party Agreement for the period from and including January 1, 2005 through the
date of such termination shall become due, and (B) the Sellers shall set off against the Signing Deposit any amounts that are
or become due and payable by the Medtronic Parties or their Affiliates for the periods from and including January 1, 2005
in accordance with Section 3.1 (Signing Deposit). If the amount of the Signing Deposit is not sufficient to cover the amounts
otherwise due pursuant to the Inter-Party Agreements and the Three-Party Agreement for the period from and including January 1,
2005 through the date of such termination, the Medtronic Parties and their Affiliates may pay the difference at any time within
five Business

12

Days of such termination notwithstanding anything in the Inter-Party Agreements or the Three-Party
Agreement that would require earlier payment. Nothing in this Section 2.8(a) affects timing of payments or reports due
pursuant to the Inter-Party Agreements or the Three-Party Agreement for periods other than the period from and including January 1,
2005 through the date of such termination.

        (b)  If This Agreement is
not terminated prior to the Closing pursuant to Section 8.1 (Termination of Agreement), and the Closing occurs, each of the
Parties, on behalf of itself and its Affiliates, acknowledges and agrees that from and after the Closing, none of the Sellers
or the Buyer, or any of their Affiliates, shall have any Liability to the other Parties with respect to the Inter-Party Agreements
or the Three-Party Agreement, including any Liability for any royalties for any time period.

         2.9.    Sellers’ Covenant
Not To Sue.    

        (a)  Covenant. Effective
as of the Closing, the Sellers hereby irrevocably and perpetually covenant and warrant that the Sellers shall not, and shall
cause their Affiliates, successors, and assigns not to, sue or commence any Action against the Buyer or its Affiliates or their
customers for past or future infringement or misappropriation of any Future and Meniscal Covenanted Patent Rights anywhere
in the world for making, having made, using, selling, offering to sell, importing, or exporting of products or services or
practicing methods in the Field.

        (b)  Limited Right to
Extend Covenant to Third Parties. The covenant not to sue in Section 2.9(a) shall inure to the benefit of the respective
successors and permitted assigns of the Buyer and its Affiliates, and may be extended by the Buyer and its Affiliates (i) with
respect to any product line in the Field, to any Third Party that acquires substantially all the assets relating to such product
line, and (ii) to any Third Party to whom the Buyer grants a license under the Subject Intellectual Property, but extended
solely with respect to the Third Party’s products and methods licensed under the Subject Intellectual Property.

        (c)  Springing Non-Exclusive
License. The covenant not to sue in Section 2.9(a) shall run with the Future and Meniscal Covenanted Patent Rights and
shall be binding on any Third Party acquiring or licensing any of the Future and Meniscal Covenanted Patent Rights. In the
event that the Sellers assign, sell, exclusively license, or otherwise transfer any of the Future and Meniscal Covenanted Patent
Rights, then the covenant not to sue granted in Section 2.9(a) (Covenant) shall automatically be converted as of such transaction
into an irrevocable, perpetual, fully paid-up, royalty-free, worldwide, non-exclusive license under the Future and Meniscal
Covenanted Patent Rights, to make, have made, use, sell, offer to sell, import and export products and services, and practice
methods in the Field and such assignment, sale, exclusive license or other transfer shall be granted subject to such non-exclusive
license. In such event, the Buyer may sublicense this license (i) with respect to any product line in the Field, to any Third
Party that acquires substantially all the assets relating to such product line, and (ii) to any Third Party to whom the Buyer
grants a license in the Field under the Subject Intellectual Property, but sublicensed solely with respect to the Third Party’s
products and methods licensed in the Field under the Subject Intellectual Property.

         2.10.   Former Spine-Tech Agreements.
   Pursuant to the terms of the Termination and Release Agreement, effective immediately prior to the Closing
the Parties shall terminate, with respect to any other party to the Termination and Release Agreement, all of their respective
rights, obligations and liabilities under each of the Former Spine-Tech Agreements.

	3.	SIGNING DEPOSIT; CLOSING.

         3.1.   Signing Deposit.    Within
one Business Day of the Effective Date, the Buyer shall pay to the Sellers an aggregate amount equal to $10 million (the “
Signing Deposit”) by wire transfers of immediately available funds to accounts and in accordance with allocations
as notified by the Sellers to the Buyer, as a deposit for the purchase of the Purchased Assets that shall be refundable to
the Buyer subject to the Sellers’ right of set off set forth in the following sentence. If This Agreement is terminated
in accordance with Section 8.1 (Termination of Agreement) prior to the Closing, then the Sellers shall set off against the
Signing Deposit any amounts that are or become due and payable by the Medtronic

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Parties or their Affiliates to the Sellers pursuant to the Inter-Party Agreements or the Three-Party
Agreement at any time from and including January 1, 2005 through and including the date that is 180 days after the date
of such termination. In such event, to the extent that the amount of the Signing Deposit exceeds the amounts that may be set
off against it pursuant to the previous sentence (the “Set-Off Amounts”), then within five Business Days after
the date that is 180 days after the date of such termination the Sellers shall refund to the Buyer an amount equal to the difference
between the Signing Deposit and the Set-Off Amounts. Upon receipt of the Signing Deposit the Sellers shall execute and deliver
to the Buyer a receipt for such Signing Deposit. Upon the occurrence of the Closing, the Signing Deposit shall become non-refundable.

         3.2.   Closing Time and Place.
   Subject to the satisfaction (or written waiver by the appropriate Party) of each of the closing conditions
set forth in Sections 7.1 (Conditions to the Medtronic Parties’ Obligation to Close) and 7.2 (Conditions to the Sellers’
Obligation to Close), the closing of the purchase and sale of the Purchased Assets (the “Closing”) shall take
place at the offices of Kirkland & Ellis LLP at 777 South Figueroa Street, Los Angeles, California 90017 commencing at
10:00 a.m. Pacific Time on the fifth Business Day following satisfaction or waiver by the appropriate Party of all of the conditions
set forth in Sections 7.1 and 7.2 (except for, but nevertheless subject to the satisfaction or waiver of conditions that, by
their nature, are to be satisfied at the Closing), or at such other date as the Buyer and the Sellers may agree in writing.

         3.3.   Closing Payment; Letter
of Credit.    At the Closing, (a) the Buyer shall pay to the Sellers an aggregate amount equal to $1.31
billion (the “Closing Payment”) by wire transfers of immediately available funds to accounts and in accordance
with allocations as notified by the Sellers to the Buyer no later than the second Business Day before the Closing and (b) the
Sellers shall deliver to and for the benefit of the Buyer a straight, irrevocable documentary letter of credit in the aggregate
principal amount of $100 million issued by any money center bank reasonably acceptable to the Buyer, in form and substance
reasonably acceptable to the Buyer (the “Closing Letter of Credit”). In lieu of the foregoing, at the reasonable
request of the Sellers provided to the Buyer no later than the second Business Day before the Closing, the Buyer shall (i)
pay to the Sellers an aggregate amount equal to $1.21 billion (the “Alternate Closing Payment”) by wire transfers
of immediately available funds to accounts and in accordance with allocations as notified by the Sellers to the Buyer no later
than the second Business Day before the Closing and (ii) pay $100 million to the escrow agent by wire transfer of immediately
available funds to a commercial escrow account established pursuant to an escrow agreement between the Parties in form and
substance reasonably acceptable to the Parties (the “Escrow Account”). The Sellers shall have the right to
substitute an Escrow Account or a Closing Letter of Credit (in each case consistent with the foregoing provisions of this Section
3.3), as applicable, from time to time, during the period that the Sellers are required to provide such security pursuant to
Section 9.10 (Letter of Credit), upon reasonable notice to the Buyer. The Closing Letter of Credit or the Escrow Account,
as applicable, shall be maintained for the period required pursuant to Section 9.10 (Letter of Credit) and thereafter the funds
in the Escrow Account shall be released to the Sellers or the Closing Letter of Credit shall be terminated, as the case may
be. Upon receipt of the Closing Payment or the Alternate Closing Payment, as applicable, the Sellers shall execute and deliver
to the Buyer a receipt for the Closing Payment or the Alternate Closing Payment, as applicable.

         3.4.   Post-Closing Payments.
   (a) On each of the first three anniversaries of the Closing, the Buyer shall pay to Michelson an amount equal
to $10 million (each, a “ Post-Closing Payment”), for an aggregate amount equal to $30 million, by wire transfer
of immediately available funds to accounts and in accordance with allocations as notified by the Sellers to the Buyer no later
than the second Business Day before the applicable payment date and (b) on each of the first five anniversaries of the Closing,
the Sellers shall deliver to and for the benefit of the Buyer a straight, irrevocable documentary letter of credit in the principal
amount of $10 million issued by any money center bank reasonably acceptable to the Buyer, in form and substance reasonably
acceptable to the Buyer (each, a “ Post-Closing Letter of Credit”), for an aggregate principal amount equal
to $50 million. In lieu of the foregoing, at the reasonable request of the Sellers, on each of the first, second, and third
anniversaries of the Closing the Buyer shall deliver a Post-Closing Payment to the Escrow Account, and on each of the fourth
and fifth anniversary of Closing the Sellers shall pay $10 million to the Escrow Account. Notwithstanding the

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foregoing, a Post-Closing Letter of Credit or the Sellers’ obligation to pay $10 million to the
Escrow Account will be required on the fifth anniversary of the Closing only if there are any outstanding Claims seeking indemnification
on such date and the principal amount of such Post-Closing Letter of Credit or the amount of such payment by the Sellers to
be delivered to the Escrow Account will be determined in accordance with the proviso in Section 9.10(b) (Letter of Credit).
Upon receipt of each Post-Closing Payment, Michelson shall execute and deliver to the Buyer a receipt for such Post-Closing
Payment. If any Post-Closing Payment is not paid when due and the corresponding Post-Closing Letter of Credit has been delivered
to the Buyer when due, such overdue Post-Closing Payment shall accrue interest annually at the Prime Rate (as listed in the
Money Rates Table in The Wall Street Journal as of such due date) plus 2%, compounded quarterly, from such due date
until paid.

	4.	SELLERS’ REPRESENTATIONS AND WARRANTIES.

        The Sellers jointly and severally represent and warrant
to the Medtronic Parties that the statements contained in this Section 4 are correct and complete as of the Effective
Date and, unless a date is specified in such representation and warranty, will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the Effective Date throughout this Section 4),
except as set forth in the Sellers’ disclosure schedule accompanying This Agreement (the “Sellers’ Disclosure
Schedule”). The Sellers’ Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 4.

         4.1.   Organization; Shareholders.
   KTI is a California corporation duly organized, validly existing and in good standing under the laws of the
State of California. GKM Trust, a Cook Island trust (“GKM Trust”), is the sole record owner of any outstanding
capital stock of, other equity interests in, and rights to acquire any interest in the capital stock of or other equity interest
in KTI (the “KTI Shares”). All of the trustees of GKM Trust are listed on Schedule 4.1 and such trustees
are the only Persons that have the right or power to vote or dispose of any of the KTI Shares.

         4.2.   Authorization.    Each
of the Sellers has the power and authority (including, with respect to KTI, full corporate power and authority) to execute
and deliver This Agreement and each Ancillary Agreement to which he or it is a party and to perform his or its respective obligations
under This Agreement and under each such Ancillary Agreement. All corporate actions or proceedings to be taken by or on the
part of KTI, including approval of the sole shareholder of KTI, to authorize and permit the execution and delivery by KTI of
This Agreement and each of the Ancillary Agreements to which it is a party and to perform its respective obligations under
This Agreement and under such Ancillary Agreements have been duly taken. This Agreement has been duly executed and delivered
by each of the Sellers and constitutes the legal, valid and binding obligation of each of the Sellers, enforceable in accordance
with its terms and conditions subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws of general
application affecting the rights and remedies of creditors and to general principles of equity. Each of the Ancillary Agreements
to which any of the Sellers is a party will be, as of the Closing, duly executed and delivered by such Seller and will constitute,
as of the Closing, the legal, valid and binding obligation of such Seller, enforceable in accordance with its terms and conditions
subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws of general application affecting the rights
and remedies of creditors and to general principles of equity.

         4.3.   Noncontravention.    Except
as set forth on Schedule 4.3, neither the execution and delivery of This Agreement and the Ancillary Agreements nor
the consummation of the transactions contemplated hereby and thereby by the Sellers will (i) conflict with or result in a breach
of or default under the Organizational Documents of KTI, (ii) violate any material Legal Requirement to which any of the Sellers
or any of their assets or property is subject, (iii) conflict with or result in a breach of, default under, right to accelerate
payment under or obligation to make any payment pursuant to or loss of material rights under, or modify or terminate any of
the Assumed Contracts or any other material Contractual Obligation (other than the Inter-Party Agreements) by which any of
the Sellers or any of their assets or property is bound or subject, (iv) result in the creation or imposition of any Encumbrance
upon or forfeiture of any of the Purchased Assets (other than any Encumbrances imposed by This Agreement), or (v) to the Knowledge
of the Sellers, result in the creation of any Claim that could result in the creation or imposition of any Encumbrance upon or forfeiture of any of the Purchased Assets
(other than any Encumbrances imposed by This Agreement).

15

         4.4.   Consents.    Except
for filings required under the HSR Act, no approval, authorization, permit, license, waiver or consent is required from any
Third Party (including any Governmental Authority) (collectively, the “Consents”) and no filing or notice
is required to be made with or given to any Third Party (including any Governmental Authority) (respectively, the “Filings”
and the “Notices”) for the Sellers to accomplish the transactions contemplated by This Agreement and the Ancillary
Agreements.

         4.5.   Litigation.    Except
for the Litigation or as set forth on Schedule 4.5, there is no Action (including any Action relating to or arising
out of divorce, annulment or other dissolution of marriage) pending or, to the Knowledge of the Sellers, threatened in writing
against or involving any of the Sellers or their Affiliates or in rem Action that could reasonably be expected to adversely
affect (i) the Purchased Assets or (ii) the ability of the Sellers to consummate the Closing or perform any material obligations
under This Agreement or the Ancillary Agreements. For purposes of this Section 4.5, threatened Actions shall include requests
for interference, Third Party requests for re-examination and requests for oppositions. Except in connection with the Litigation
or as set forth on Schedule 4.5, there is no Governmental Order (including any Governmental Order relating to or arising
out of divorce, annulment or other dissolution of marriage) issued or, to the Knowledge of the Sellers, threatened in writing
that could reasonably be expected to affect the ability of the Sellers to consummate the Closing or perform any material obligations
under This Agreement or the Ancillary Agreements.

         4.6.   Assumed Contracts.    Copies
of the Assumed Contracts to which the Medtronic Parties are not a party are attached hereto as part of Exhibit E, and
such copies are correct and complete. Except as set forth on Schedule 4.6A: (i) the Sellers are not, and to the Knowledge
of the Sellers no Third Party to any Assumed Contract is, in violation of or in default, in any material respect, under any
Assumed Contract and (ii) no event or circumstance has occurred that constitutes or, after notice or lapse of time or both,
would constitute a material violation or default thereunder on the part of the Sellers or, to the Knowledge of the Sellers,
any Third Party thereto, or which would result in a right to accelerate payment under or a loss of material rights under or
modify or terminate any such Assumed Contract that has not been duly cured or waived None of the agreements listed on Schedule
4.6B is in force or effect.

         4.7.    Title.    

        (a)  Except as set forth
on Schedule 4.7A, the Sellers own all rights, title and interests in and to the Purchased Assets and have the full right
and power to sell, transfer and assign good and marketable title to all the Purchased Assets, free and clear of all Encumbrances
and, to the Knowledge of the Sellers, all Claims. The Sellers have delivered to the Buyer correct and complete copies of all
items identified on Schedule 4.7A (together with all amendments, addendums, supplements, and other modifications) to
which any of the Sellers is a party and to which none of the Medtronic Parties or any Affiliate of the Medtronic Parties is
a party. Except as set forth on Schedule 4.7B, none of the Purchased Assets is in the possession, custody or control
of any Person other than the Sellers, the Medtronic Parties or any Affiliate of the Medtronic Parties.

        (b)  Except (i) as set forth
on Schedule 4.7B or (ii) pursuant to the Assumed Contracts, no Person other than the Sellers, the Medtronic Parties
or any Affiliate of the Medtronic Parties has any rights, title or interests in any Purchased Asset.

         4.8.    Intellectual Property.
   

        (a)  Completeness.
The Patent Rights of the Subject Intellectual Property identified on Schedule 4.8(b), the Patent Rights of the Excluded
Intellectual Property identified on Schedule 4.8(c), the Medtronic-Owned Patent Rights identified on Schedule 2.6,
and the Multi-Lock Patent Rights identified on Schedule 2.7 are the only Patent Rights for which Michelson is listed
as an inventor. The Purchased Assets and the Patent Rights of the Excluded Intellectual Property identified on Schedule
4.8(c) constitute the only Patent Rights in which the Sellers or their Affiliates have any rights, title or interests,
including any rights under licenses or covenants not to sue, other than the use rights a retail consumer has by the purchase
of consumer goods and services.

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        (b)  Scheduled Subject Patent
Rights. Schedule 4.8(b) identifies each Patent Right in which the Sellers have any rights, title, or interests included
within the definition of Subject Intellectual Property as existing as of March 15, 2005. The Sellers have provided the
Buyer with access to correct and complete copies of all such Patent Rights.

        (c)  Scheduled Excluded
Patent Rights. Schedule 4.8(c) identifies each Patent Right in which the Sellers have any rights, title, or interests
included within the definition of Excluded Intellectual Property as existing as of March 7, 2005. The Sellers have provided
the Buyer with access to correct and complete copies of all such Patent Rights.

        (d)  Representations
Regarding Subject Patent Rights. Except as disclosed in Schedule 4.8(d), with respect to each patent and patent
application required to be identified on Schedule 4.8(b) (Scheduled Subject Patent Rights), to the Knowledge of the
Sellers:

        (i)  each issued, unexpired
patent is valid and enforceable and has been properly obtained in accordance with all applicable rules and regulations governing
the prosecution of applications for such patent, and the Sellers and their Representatives have not engaged in any fraud or
other misconduct with regard to the prosecution or procurement of such patent;

        (ii)  for each issued, unexpired
patent or pending patent application, in all material respects, (A) all necessary application, annuity, maintenance and renewal
fees in connection with all patent and patent applications have been paid and (B) all necessary documents and certificates
in connection therewith have been filed with the relevant authority for the purpose of maintaining the patent registrations
or applications; and

        (iii)  no issued, unexpired
patent is undergoing cancellation, re-examination, termination or withdrawal proceedings.

        (e)  Michelson Logo.
To the Knowledge of the Sellers, the Buyer’s use of the Michelson Logo as required by This Agreement does not and will
not infringe the trademark or copyright rights of any Third Party.

         4.9.   Solvency; Fair Consideration.
   Each of the Sellers is solvent. For each of the Sellers, the sum of his or its assets, at a fair valuation,
is greater than the sum of his or its debts, and each of the Sellers is able, and will be able immediately following the consummation
of the transactions contemplated by This Agreement, generally to pay his or its debts as they become due. The obligations of
each Seller under This Agreement will not render such Seller insolvent. Each Seller is receiving fair consideration and reasonably
equivalent value in exchange for the assets transferred by such Seller to the Buyer and the obligations incurred by such Seller
and its Affiliates pursuant to This Agreement. Neither the transactions contemplated by This Agreement nor the obligations
of KTI shall cause KTI to be left with unreasonably small capital.

         4.10.   U.S. Taxpayer.    Each
Seller is a United States person within the meaning of Section 7701(a)(3) of the Internal Revenue Code of 1986, as amended
(the “ Code”).

         4.11.   No Other Representations
and Warranties.    Except as expressly set forth in Section 4 of This Agreement or in the Sellers’
Closing Certificate, none of the Sellers makes any representation or warranty, express or implied, at law or in equity, with
respect to the Purchased Assets, This Agreement or otherwise.

	5.	MEDTRONIC PARTIES’ REPRESENTATIONS AND WARRANTIES.

        The Medtronic Parties jointly and severally represent
and warrant to the Sellers that the statements contained in this Section 5 are correct and complete as of the Effective
Date and, unless a date is specified in such representation and warranty, will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the Effective Date throughout this Section 5),
except as set forth in the Buyer’s disclosure schedule accompanying This Agreement (the “Buyer’s Disclosure
Schedule”). The Buyer’s Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 5.

        

17

        5.1.   Organization.    The Buyer is a Delaware corporation duly
organized, validly existing and in good standing under the laws of the State of Delaware. MDT is a Minnesota corporation duly
organized, validly existing and in good standing under the laws of the State of Minnesota. MSD is an Indiana corporation duly
organized, validly existing and in good standing under the laws of the State of Indiana. Schedule 5.1 lists all of the
record owners of any outstanding capital stock of, other equity interests in, and rights to acquire any interest in the capital
stock of, or other equity interest in, the Buyer and MSD. 

        5.2.   Authorization.    Each
Medtronic Party has the full corporate power and authority to execute and deliver This Agreement and each Ancillary Agreement
to which it is a party and to perform its respective obligations under This Agreement and under each such Ancillary Agreement.
All corporate actions or proceedings to be taken by or on the part of each Medtronic Party to authorize and permit the execution
and delivery by such Medtronic Party of This Agreement and each of the Ancillary Agreements to which it is a party and to perform
its respective obligations under This Agreement and under such Ancillary Agreements have been duly taken. This Agreement has
been duly executed and delivered by each Medtronic Party and constitutes the legal, valid and binding obligation of such Medtronic
Party, enforceable in accordance with its terms and conditions subject to bankruptcy, insolvency, reorganization, moratorium
and other similar laws of general application affecting the rights and remedies of creditors and to general principles of equity.
Each of the Ancillary Agreements to which each Medtronic Party is a party will be, as of the Closing, duly executed and delivered
by such Medtronic Party and will constitute, as of the Closing, the legal, valid and binding obligation of such Medtronic Party,
enforceable in accordance with its terms and conditions subject to bankruptcy, insolvency, reorganization, moratorium and other
similar laws of general application affecting the rights and remedies of creditors and to general principles of equity.

         5.3.   Noncontravention.    Except
as set forth on Schedule 5.3, neither the execution and delivery of This Agreement and the Ancillary Agreements nor
the consummation of the transactions contemplated hereby and thereby by any Medtronic Party will (i) conflict with or result
in a breach of or default under the Organizational Documents of such Medtronic Party, (ii) violate any material Legal Requirement
to which such Medtronic Party or any of its assets or property is subject or (iii) conflict with or result in a breach of,
default under, right to accelerate payment under or obligation to make any payment pursuant to or loss of material rights under,
or modify or terminate any material Contractual Obligation (other than the Inter-Party Agreements and the Assumed Contracts
to which any Medtronic Party is a party) by which any of the Medtronic Parties or any of their assets or property is bound
or subject.

         5.4.   Consents.    Except
for filings required under the HSR Act and as set forth on Schedule 5.4, no Consents, Filings or Notices are required
for the Medtronic Parties to accomplish the transactions contemplated by This Agreement and the Ancillary Agreements.

         5.5.   Litigation.    Except
for the Litigation or as set forth on Schedule 5.5, there is no Action or Governmental Order pending or issued or, to
the Knowledge of the Medtronic Parties, threatened in writing against or involving any of the Medtronic Parties or their Affiliates
that could reasonably be expected to adversely affect the ability of the Buyer to consummate the Closing or the Medtronic Parties
to perform any material obligations under This Agreement or the Ancillary Agreements.

         5.6.   Solvency; Fair Consideration.
   Each of the Medtronic Parties is solvent. For each of the Medtronic Parties, the sum of such Medtronic Party’s
assets, at a fair valuation, is greater than the sum of such Medtronic Party’s debts, and such Medtronic Party is able,
and will be able immediately following the consummation of the transactions contemplated by This Agreement, generally to pay
its debts as they become due. The obligations of each of the Medtronic Parties under This Agreement will not render such Medtronic
Party insolvent. To the Knowledge of the Medtronic Parties, each Medtronic Party is receiving fair consideration and reasonably
equivalent value in exchange for the funds transferred to the Sellers and the obligations incurred by such Medtronic Party,
as applicable, and its Affiliates pursuant to This Agreement. Neither the transactions contemplated by This Agreement nor the
payment or other obligations of each of the Medtronic Parties pursuant to This Agreement shall cause such Medtronic Party to
be left with unreasonably small capital. The transfer of funds from the Buyer to the Sellers under This Agreement is not on
account of any antecedent debt of the Buyer to the Sellers.

        

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        5.7.   No Other Representations and Warranties.    Except as
expressly set forth in Section 5 of This Agreement or in the Medtronic Parties’ Closing Certificate, none of the
Medtronic Parties makes any representation or warranty, express or implied, at law or in equity with respect to This Agreement,
or otherwise.

	6.	COVENANTS.

         6.1.   Litigation.    

        (a)  At or immediately after
the Sellers’ receipt of the Closing Payment or the Alternate Closing Payment, as applicable, each of the Parties shall
execute and file the Dismissal Document. 

        (b)  The Parties agree that
upon the Closing all matters involved in the Litigation will have been fully and finally resolved and that all Claims in the
Litigation will be dismissed with prejudice. In particular, the Sellers agree that from and after the Closing, they will not
oppose a request made by the Medtronic Parties to the District Court Judge or Magistrate Judge in the Litigation to withdraw
the “Order for Plaintiff to Show Cause” issued by the Magistrate Judge dated September 30, 2003 and the “Report
and Recommendation on Defendant’s Motion for Contempt Sanctions for Violation of Preliminary Injunction Order” issued
by the Magistrate Judge dated July 26, 2004. Upon the Closing, the Sellers shall not seek attorneys’ fees or other
compensation or remedy in regard to any Claim of contempt associated with the Litigation.

         6.2.   HSR Act.    Each
of the Parties will use commercially reasonable efforts to, and will cause their respective Affiliates to use commercially
reasonable efforts to, (i) file within 5 Business Days after the Effective Date any Notification and Report Form and related
material that he or it may be required to file with the FTC and the DOJ under the HSR Act in connection with the transactions
contemplated by This Agreement and the Ancillary Agreements, (ii) supply the other Parties with any information that may be
reasonably required in order to make such filings, (iii) respond as promptly as practicable to any inquiries received from
the FTC or the DOJ for additional information or documentation related thereto and (iv) obtain early termination of the applicable
waiting period under the HSR Act for the transactions contemplated by This Agreement and the Ancillary Agreements. The filing
fees required by the HSR Act shall be borne by the Buyer. Notwithstanding anything to the contrary in This Agreement, none
of the Medtronic Parties or any of their Affiliates shall be required to sell, hold separate, license or otherwise dispose
of any of their assets or properties or any of the Purchased Assets or rights thereunder, or conduct their business in a specified
manner or to agree to do any of the foregoing, whether as a condition to obtaining any Consents from any Governmental Authority
or any other Person or for any other reason, and the failure of the Medtronic Parties or any of their Affiliates to do or to
agree to do any of the foregoing shall not constitute a breach of any provision of This Agreement or any of the Ancillary Agreements.

         6.3.   Closing.    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 transactions contemplated by This Agreement, including satisfaction, but not waiver, of the closing
conditions set forth in Sections 7.1 (Conditions to the Medtronic Parties’ Obligation to Close) and 7.2 (Conditions to
the Sellers’ Obligation to Close).

         6.4.   Protection of the Purchased
Assets Pre-Closing.    

        (a)  From the Effective
Date until the Closing, the Sellers shall, and shall cause their Affiliates and Representatives to:

        (i)  use commercially reasonable
efforts consistent with past practice to preserve and to maintain and protect their rights, title and interests in and to any
confidentiality of the Purchased Assets and the confidentiality of New Subject Inventions; provided, that the Sellers
shall not, and shall cause their Affiliates and Representatives not to, initiate any Action relating to the Purchased
Assets without the prior written consent of the Buyer;

        (ii)  use commercially reasonable
efforts consistent with past practice to pay or otherwise satisfy all of its and their respective Liabilities in respect of
the Purchased Assets; and

        (iii)  comply with all material
Legal Requirements applicable to the Purchased Assets.

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        (b)  From the Effective
Date until the Closing, the Sellers shall not, and shall cause their Affiliates not to, sell, assign, transfer, license, or
create or in any way encourage the imposition of any Claim or Encumbrance not disclosed in This Agreement upon any Purchased
Assets, or agree to do any of the foregoing, except pursuant to This Agreement.

        (c)  From the Effective
Date until the Closing, if an interference is declared involving any Patent Right included in the Subject Intellectual Property,
and notice of such declaration shall have been received by Martin & Ferraro LLP at least six weeks prior to the Closing,
the Sellers shall deliver to the Buyer available documents in support of the factual statements necessary to support a preliminary
statement as required by 37 C.F.R. §1.622 et seq.

         6.5.   Covenants in Support of
Assignment.    To the extent the Sellers cannot transfer and assign any of the Purchased Assets to the Buyer
at the Closing for any reason, then the Sellers will, and will cause their Affiliates to, assign and transfer such Purchased
Assets to the Buyer at the first opportunity to do so. To the extent that any of the Sellers’ rights, title or interests
in any Subject Intellectual Property (including Subject Intellectual Property that the Sellers have rights to under any Assumed
Contract) cannot be assigned and transferred by the Sellers to the Buyer, then the Sellers hereby grant to the Buyer and its
Affiliates, effective as of the Closing, an irrevocable, perpetual, worldwide, exclusive (even as to the Sellers and subject
to the Claims and Encumbrances set forth on Schedule 2.1(a)) license under such rights, title and interests in any Subject
Intellectual Property, with the right to sublicense through multiple tiers, to make, have made, use, sell, offer to sell, import
and export products, product systems and processes and to reproduce, distribute, modify, enforce and otherwise exploit such
rights, title and interests in any Subject Intellectual Property in any manner for any purpose.

         6.6.   Models and Prototypes.
   At the Closing, the Sellers will provide the Buyer with electronic copies of digital photographs of all existing
models and prototypes relating to the Subject Intellectual Property, together with whatever indices exist from the Litigation
organizing such photographs. The Sellers will not be obligated, however, to deliver the actual three-dimensional models and
prototypes to the Buyer. For a period of 25 years following the Effective Date, (i) at the Buyer’s reasonable request,
the Sellers shall give the Buyer temporary access upon reasonable notice to such models or prototypes if needed for prosecution
of or defense or enforcement of any Subject Intellectual Property and (ii) prior to any of the Sellers destroying or disposing
of any such models and prototypes, such Seller will notify the Buyer of his or its intent to destroy or dispose of such prototypes,
and if requested by the Buyer, shall either deliver such model or prototype to the Buyer or ensure the Buyer of continued access
to such model or prototype.

         6.7.   Disclosure of New Subject
Invention and New Subject Intellectual Property.    Following the Closing:

        (a)  Within 30 days after
the creation of any written description or model or prototype of an invention conceived by Michelson included within the definition
of Subject Intellectual Property (a “New Subject Invention”) and at least 30 days before disclosing the New
Subject Invention to any Third Party other than a Representative under an obligation to maintain the confidentiality of such
New Subject Invention, the Sellers shall deliver to the Buyer a written description or a model or prototype of the New Subject
Invention in sufficient detail to enable a reasonable person of ordinary skill in the Field to understand the nature of the
New Subject Invention being disclosed and (if appropriate) to prepare and prosecute one or more patent application(s) (or pursue
other protection) with respect to such New Subject Invention. Within 30 days after obtaining or acquiring any new Subject Intellectual
Property not conceived by Michelson (“ Acquired Subject Intellectual Property”), the Sellers shall deliver
to the Buyer such Acquired Subject Intellectual Property. The Buyer shall return the originals of any models or prototypes
that the Sellers provide to the Buyer as soon as practicable after examining or reproducing such models and prototypes as the
Buyer reasonably deems necessary to fully understand the disclosed New Subject Invention or Acquired Subject Intellectual Property,
as applicable. In any event, the Buyer shall return such models and prototypes to the Sellers within 30 days after receiving
them. Thereafter, at the Buyer’s request, the Sellers will give the Buyer temporary access to such models or prototypes
if needed for prosecution

20

of or defense or enforcement of any New Subject Invention or Acquired Subject Intellectual Property.
All reasonable out-of-pocket expenses incurred by the Sellers relating to the disclosure of a New Subject Invention or Acquired
Subject Intellectual Property, including all conception and reduction to practice of a New Subject Invention or Acquired Subject
Intellectual Property will be promptly reimbursed by the Buyer, and in any event within 30 days of receipt of reasonable documentation
thereof. No Party shall have any obligation to conceive, acquire, or commercialize Intellectual Property of any kind. Nothing
in this Section 6.7 shall limit the obligations of any Party under Section 6.14 (Confidentiality).

        (b)  As security for the
performance of the Sellers’ obligation to assign to the Buyer Subject Intellectual Property conceived, acquired or otherwise
obtained by Michelson after the Closing during the Term (the “ Secured Obligations”), the Sellers hereby create
a security interest in favor of the Buyer in all of the Sellers’ rights, title and interests in and to Subject Intellectual
Property conceived, acquired or otherwise obtained by Michelson after the Closing during the Term (the “Collateral”).
The Sellers hereby authorize the Buyer, on the Sellers’ behalf, to execute and deliver and file and record in the proper
filing and recording places, all such instruments, including Uniform Commercial Code financing statements covering the Collateral,
and take all such other actions as the Buyer deems reasonably necessary for perfecting or otherwise confirming its security
interest in the Collateral under any applicable Legal Requirement. At the Sellers’ request, the Buyer shall execute and
deliver and file and record in the proper filing and recording places, all such instruments, including Uniform Commercial Code
termination statements covering any of the Sellers’ assets or properties that is not Collateral, and take all such other
actions as the Sellers deem reasonably necessary for terminating or otherwise releasing the Buyer’s security interest
in any of the Sellers’ assets or properties that is not Collateral under any applicable Legal Requirement.

         6.8.   Further Assurances.
   Following the Closing at the Buyer’s expense, the Sellers shall take such further actions that are reasonably
necessary to accomplish the complete transfer and assignment of the Sellers’ rights, title and interests in and to the
Purchased Assets to the Buyer, and to assist the Buyer as reasonably necessary with the lawful filing and prosecution of Patent
Rights, interferences, and oppositions, and with the Buyer’s determination of whether to continue requests for
interferences with respect to the Subject Intellectual Property conceived by Michelson. During the period between the Effective
Date and the Closing, the Sellers will notify the Buyer in writing within 10 Business Days after any Seller becomes aware that
any interference is declared involving any of the Patent Rights included within the Subject Intellectual Property. Subject
to any of the Sellers’ post-Closing obligations under the Assumed Contracts, the Sellers shall not, and shall cause their
Affiliates not to, assist any Third Party in the assertion of any Patent Rights In The IP Field (other than the Excluded Intellectual
Property) against the Medtronic Parties or their Affiliates, other than under subpoena or other legal process.

         6.9.   Patent Prosecution.
   Following the Closing, the Sellers will have no right or obligation to file, prosecute or maintain any Patent
Rights included in the Purchased Assets.

         6.10.   Third Party Actions.
   Following the Closing and subject to Third Party rights under the Assumed Contracts, the Buyer will have
the sole and exclusive right and discretion to enforce the rights, title and interests in and to the Purchased Assets against
Third Parties. Following the Closing and subject to Third Party rights under the Assumed Contracts, the Buyer will decide whether
or not to institute any proceeding against any Third Party with respect to any alleged infringement or misappropriation of
the rights, title and interests in and to the Purchased Assets in its sole and absolute discretion and will keep all proceeds
of any such proceedings. If a Medtronic Party is unable to enforce any obligation or other right under an Assumed Contract
without a Seller being party to an Action, then Michelson or KTI shall voluntarily join as a party in such Action as necessary
to enforce any obligation or other right under an Assumed Contract; provided, that the Buyer agrees in advance to reimburse
the Sellers for their reasonable fees, costs and expenses relating thereto. Following the Closing, Michelson shall not testify
(whether by declaration, affidavit, or in person) and the Sellers shall not assist any Third Party in challenging the validity,
enforceability or value (other than for Tax matters) of the Purchased Assets, in each case other than under subpoena or similar
legal order. The Medtronic Parties and their Affiliates shall not assist any Third Party in asserting any Claim or Action
relating to the Field (other than for Tax matters) against the Sellers or their Affiliates, other than under subpoena or similar
order.

        

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6.11.   Patent Counsel; Return of Documents; Tangible Materials.    

        (a)  Based on the facts
and circumstances existing as of the Effective Date, each of the Parties consents to any other Party’s engagement of Martin
& Ferraro LLP and agree that no conflict of interest exists with respect to Martin & Ferraro LLP’s simultaneous
patent prosecution representation of (i) the Medtronic Parties with respect to the Purchased Assets and the Medtronic-Owned
Patent Rights and (ii) the Sellers with respect to the Patent Rights in the Excluded Intellectual Property. The Sellers agree
that they will have no right to monitor the prosecution of Subject Intellectual Property after the Closing nor any right to
have access to any non-public document or file pertaining to such prosecution without the prior consent of the Buyer. Following
the Closing, the Sellers shall not initiate consultation with Martin & Ferraro LLP, directly or indirectly, on any prosecution,
maintenance or enforcement matter related to the Subject Intellectual Property without the prior consent of the Buyer.

        (b)  The Sellers shall cause
Kirkland & Ellis LLP and Jeffer, Mangels, Butler & Marmaro LLP to deliver to the Document Custodian, within 90 days
after the Closing, materials received or maintained in their files falling within Paragraph 36 of the Amended Protective Order
in the Litigation other than (i) any Litigation materials that are protected by the attorney-client privilege, the work product
doctrine or other applicable privileges, or (ii) materials falling within Paragraph 37 of the Amended Protective Order in the
Litigation (the “Protective Order Materials”). The Parties shall, within 90 days after the Closing, instruct
Special Master Balaran to deliver to the Document Custodian the USB 2.0 hard drives and any other media containing the electronic
files produced for inspection by the Medtronic Parties during the course of the Litigation (the “ Special Master Materials”)
(the Special Master Materials and the Protective Order Materials are jointly referred to as the “Litigation Materials”).
The Parties shall instruct the Document Custodian to hold the Litigation Materials until the applicable statute of limitations
expires relating to any Claim any of the Medtronic Parties or their respective Affiliates could assert for fraud in the inducement
relating to This Agreement, to rescind This Agreement, or for material breach of This Agreement (the “ Retention Period”),
at which time the Document Custodian shall, at the Buyer’s election, either destroy the Litigation Materials or deliver
the Litigation Materials to the Buyer. During the Retention Period, the Document Custodian shall grant the Sellers and their
Representatives access to such Litigation Materials that the Arbitrator determines is necessary for the Sellers and their Representatives
to defend against any Action or Claim initiated by the Buyer or any of its Affiliates against any Seller for fraud in the inducement
relating to This Agreement, to rescind This Agreement or for material breach of This Agreement, in which case the Retention
Period shall be extended until final resolution of any such Action(s) or Claim(s). Prior to the expiration of the Retention
Period, the Buyer may instruct the Document Custodian to either destroy the Litigation Materials or deliver the Litigation
Materials to the Buyer if the Buyer delivers to the Sellers an acknowledgement by the Medtronic Parties on behalf of themselves
and their respective Affiliates that all applicable statutes of limitation have expired and an unconditional release from the
Medtronic Parties and their respective Affiliates of any and all Actions and Claims for fraud in the inducement relating to
This Agreement, to rescind This Agreement, and for material breach of This Agreement. Notwithstanding any other provision in
This Agreement, the United States District Court for the Western District of Tennessee shall retain exclusive jurisdiction
to interpret, modify, or enforce the terms of the Amended Protective Order in the Litigation.

        (c)  Upon reasonable request
by the Buyer, the Sellers shall, at the Buyer’s cost and expense, as soon as reasonably practicable deliver an additional
copy of any Tangible Materials that are in the possession of any of the Sellers or their Affiliates or Representatives.

         6.12.   Taxes.    The
Buyer shall promptly pay all stamp Taxes, conveyance Taxes, transfer Taxes, use Taxes, sales Taxes, filing fees, recording
fees, reporting fees and other similar taxes and fees, if any, imposed upon, or resulting from, the transfer of the Purchased
Assets under This Agreement and the filing of any instruments relating to such transfer and all filing and recording fees payable
to the U.S. Patent and Trademark Office (and similar foreign agencies) in connection with the transfer of the Purchased Assets.
In no event shall this Section 6.12 or any other section of This Agreement be construed to impose upon the Buyer or any
of its Affiliates the obligation to pay any income Taxes or

22

Taxes other than those transfer Taxes and filing and recording fees specifically described in the
preceding sentence of any of the Sellers or any of their Affiliates relating to the transactions contemplated by This Agreement.

         6.13.   Name Attribution.    

        (a)  Beginning 60 days after
the Closing and ending upon the expiration of the Term, the Medtronic Parties shall include, or cause to be included, the Michelson
Logo (or such other attribution agreed to in writing by the Parties) in all Literature for or referencing an Attribution Product
System. During each October and each April during the Term, the Medtronic Parties shall provide Michelson with one original
copy of each different item of Literature relating to the Field that any of the Medtronic Parties or their Affiliates, or any
Person acting on behalf of any of them, disseminated or made available to a Third Party, or to any member of the sales, marketing,
or advertising forces of any of the Medtronic Parties or their Affiliates, during the six previous calendar months (April –
September for the October disclosure and October – March for the April disclosure, but the initial period will commence
60 days after the Closing). During the Term, Michelson may from time to time (but no more frequently than twice in any calendar
year) provide to the Medtronic Parties a revised list of Attribution Product Systems (a “Revised Attribution Product
System List”); provided, however, that each of the items on a Revised Attribution Product System List
is a product or product system of any of the Medtronic Parties or their Affiliates that practices or includes a feature that
is covered by any patent claim of a Patent Right in any of the Purchased Assets, Multi-Lock Patent Rights or Medtronic-Owned
Patent Rights. The Medtronic Parties may contest a new item in a Revised Attribution Product System List by providing notice
of such contest to Michelson within 30 days after notice of the Revised Attribution Product System List. If Michelson and the
Medtronic Parties cannot resolve this issue within 30 days after the Medtronic Parties’ notice that they are contesting
the Revised Attribution Product System List, the Parties shall submit the Dispute to arbitration pursuant to Section 10
(Arbitration). A Revised Attribution Product System List becomes controlling as to Attribution Product Systems (A) 60 days
after notice of it by Michelson, with respect to items not contested as in the immediately preceding sentence, and (B) within
60 days after resolution of the Parties’ Dispute over an item by arbitration pursuant to Section 10 (Arbitration)
or otherwise, with respect to items contested as in the immediately preceding sentence. Notwithstanding anything else in This
Agreement, the Medtronic Parties cannot and shall not contest any item in a Revised Attribution Product System List that has
previously appeared in Schedule 6.13(a), as such list is revised from time to time pursuant to Section 6.13(a)
or Section 6.13(b).

        (b)  Except for New Product
Systems whose Commercial Launch occurred during the period from October 1, 2003 and ending 60 days prior to the Closing,
at least 60 days prior to the Commercial Launch of a prospective New Product System the Medtronic Parties shall provide to
Michelson a description of each prospective New Product System along with any draft or non-draft Literature to date and reasonably
sufficient information, and at the request of Michelson a sample product or product system to examine for a reasonable period,
to allow Michelson to review the New Product System and make a determination that it is an Attribution Product System. Upon
a determination by the Medtronic Parties or an agreement of the Parties that it is an Attribution Product System, the Medtronic
Parties shall, within 10 Business Days thereafter, deliver to Michelson a Revised Attribution Product List reflecting the determination
or agreement. The Parties are considering use of Martin & Ferraro LLP as a neutral initial reviewing party. If Michelson
provides notice within 30 days after receipt of the description and Literature referred to in the first sentence of this Section
6.13(b), that the New Product System is an Attribution Product System and if the Medtronic Parties disagree and this Dispute
is not resolved within 30 days after Michelson’s notice, or such other time frame that the Parties may agree in writing,
the Parties shall submit the Dispute to arbitration pursuant to Section 10 (Arbitration) and the Medtronic Parties shall
not be required to provide attribution on Literature relating to such New Product System unless and until a final determination
by the Arbitrator with regard to that Dispute. The Parties acknowledge and agree that a New Product System will not require
attribution under This Agreement until the Commercial Launch of such new or modified product or product system.

23

        (c)  The Medtronic Parties
shall ensure that the Michelson Logo (or such other attribution agreed to in writing by the Parties) appears, in the expression
specified opposite the applicable category of Literature in Schedule 6.13(c),on each item of Literature for or referencing
an Attribution Product System. The Medtronic Parties or their Affiliates may also use a symbol, logo or trademark of the Medtronic
Parties or their Affiliates or any other lawful means as an indication of origin for any Attribution Product System. The Medtronic
Parties acknowledge that the damages from a failure of any of them or their Affiliates to comply with the provisions of Section 6.13
are difficult to calculate. Therefore, to avoid the difficulty and inconvenience of gathering the information necessary to
calculate the damages resulting from such a failure to comply, and to avoid future disputes about the amount of such damages,
the Parties agree that (except with respect to the power to issue an order with respect to any New Product System set forth
in Section 6.13(b)), Michelson’s sole and exclusive remedy for any such failure to comply with the provisions of
Section 6.13 will be liquidated damages (which are not, will not be characterized by the Parties as, and will not be deemed
to be a penalty) in the amount and nature specified opposite the applicable category of Literature in Schedule 6.13(c).
No liquidated damages will be due with respect to any Literature where (i) an identical copy of it was sent to Michelson before
its dissemination with a request for a decision from Michelson as to whether the attribution or lack thereof is appropriate
and to which Michelson did not raise an objection within 15 days or (ii) such Literature did not include a trade, product,
product system or company name used by any of the Medtronic Parties or their Affiliates or any Person claiming rights as a
result of a Third Party Attribution Transfer. In all instances, the Medtronic Parties shall use commercially reasonable efforts
to make sure that the Michelson Logo is visible, unobstructed, not obscured, and fairly rendered.

        (d)  Notwithstanding the
exception in (iii) of the definition of Literature, neither the Medtronic Parties nor their Affiliates shall publish materials
through a Third Party in order to attempt to avoid the obligations of Section 6.13. If any of the Medtronic Parties or their
Affiliates provides materials or consideration to a Third Party publisher for use in a Third Party publication pursuant to
a written agreement or understanding regarding the use of such materials, then the Medtronic Parties shall (i) ensure that
any materials provided to such Third Party by Medtronic have the appropriate attribution as required by This Agreement and
(ii) request in any such agreement or understanding that the Third Party include the attribution as appropriate under This
Agreement. Medtronic shall use commercially reasonable efforts to ensure that Third Party publishers who acknowledge contributions
from Medtronic also provide appropriate attribution as required by This Agreement in published articles and papers. Medtronic
shall have no affirmative obligation to enforce or ensure that such Third Party actually includes the Michelson Logo pursuant
to Section 6.13(d)(ii) hereof and shall have no liability to Michelson under Section 6.13(d)(ii) for any act or omission
of a Third Party.

        (e)  The definition of “Literature”
and the exclusions included in such definition are intended to encompass all currently known forms of promotional or educational
materials disseminated or made available to Third Parties by any of the Medtronic Parties or their Affiliates. In the event
a new form of dissemination of promotional or educational materials is developed during the Term upon notice by any of the
Parties, the Parties shall meet and confer within 30 days thereafter as to (i) whether such materials are of such a nature
that they should be excluded based on similar rationale to the exclusions in the definition of Literature, and (ii) if not,
the appropriate expression and mode of liquidated damages to be assessed in the future. If the Parties are not able to come
to terms during such 30-day period, then the Parties shall submit the Dispute to arbitration pursuant to Section 10 (Arbitration).
In the event that the Arbitrator makes a final determination that the type of dissemination is to be treated as Literature
in the future, the Arbitrator shall decide upon an appropriate expression of name attribution and liquidated damages and injunctive
relief associated therewith.

        (f)  Any materials distributed
by the Medtronic Parties or their Affiliates prior to 60 days after the Closing will not be subject to liquidated damages or
injunctive relief pursuant to This Agreement or otherwise. Notwithstanding the immediately preceding sentence, the Medtronic
Parties shall use good faith and reasonable commercial efforts to (i) cease dissemination of non-conforming

24

Literature after the Closing, and (ii) conform existing materials in Medtronic’s central inventory
in Memphis between the Effective Date and 60 days after the Closing. Notwithstanding anything else in This Agreement, the Medtronic
Parties shall not be liable for liquidated damages for errors in conforming existing materials in Medtronic’s central
inventory in Memphis at the Closing that had appropriate attribution pursuant to the court’s order in the Litigation and
are distributed within 180 days after the Closing.

        (g)  The Medtronic Parties
shall conspicuously display, or cause to be conspicuously displayed, the Michelson Logo (or such other attribution agreed to
in writing by the Parties) in connection with any displays to Third Parties of the Tangible Materials that are part of the
Purchased Assets identified in Section 2.1(e).

        (h)  In any Third Party
Attribution Transfer, the Person granting the Third Party Attribution Transfer shall require any Third Party receiving the
benefit of the Third Party Attribution Transfer to agree, in a written Contractual Obligation against the Third Party, to provide
name attribution on a basis no less stringent, including at least all rights, obligations, and liquidated damages under Section
6.13, than if a Medtronic Party was providing any product, service, or Literature provided by or on behalf of the Third Party
or on behalf of any Person with rights through the Third Party, with the writing memorializing the Contractual Obligation expressly
identifying Michelson as a third-party beneficiary of the name attribution obligations with an independent right of enforcement
without the need to join any other Person. The immediately preceding sentence does not apply to the current term of any Assumed
Contract that is not amended after the Effective Date. If Michelson is unable to enforce any name attribution obligations under
an Assumed Contract without a Medtronic Party being part of an Action, then such Medtronic Party or an Affiliate of such Medtronic
Party shall voluntarily join or otherwise participate in an Action as necessary to enforce the name attribution obligations
of Third Parties; provided, that Michelson agrees in advance to reimburse such Medtronic Party for its reasonable fees,
costs and expenses relating thereto. None of the Medtronic Parties shall have any affirmative obligation to enforce or ensure
that such Third Party actually includes the Michelson Logo pursuant to any Contractual Obligation or otherwise, and none of
the Medtronic Parties shall have any liability to Michelson for any act or omission of a Third Party. Notwithstanding anything
else in This Agreement, the Person granting the Third Party Attribution Transfer shall have (i) the right to agree with the
Third Party in good faith to determine which products and product systems require attribution under any Third Party Attribution
Transfer, which will be at least the products and product systems that practice or include a feature that is covered by an
issued and unexpired patent claim of a Patent Right in the Purchased Assets, Multi-Lock Patent Rights or Medtronic-Owned Patent
Rights and (ii) the right to grant one Third Party Attribution Transfer as part of a transaction that involves multiple business
segments of MDT without requiring any attribution as provided in This Agreement.

        (i)  The Medtronic Parties
and their Affiliates shall use commercially reasonable efforts to ensure that all product systems with which they use the Michelson
Logo (i) meet or exceed the Medtronic Parties’ current standards of quality and performance relating to similar products,
with which the Sellers are generally familiar, and standards of quality and performance generally accepted in the industry,
(ii) meet or exceed standards of quality and performance of any applicable governmental agency, and (iii) comply with all applicable
laws, rules, and regulations. The Sellers’ sole and exclusive remedy for any failure of the Medtronic Parties and their
Affiliates to comply with the immediately preceding sentence is that Michelson may require that the name attribution under
this Section 6.13 not be made on any product system (and such product system is deemed removed from the then-current list of
Attribution Product Systems), and in response the Medtronic Parties and their Affiliates shall comply with the requirement
within 60 days on a rolling basis. Once a product or product system is removed from the list of Attribution Product Systems,
it cannot be replaced without the express, written consent of the Medtronic Parties.

        (j)  Michelson may revise
the Michelson Logo, temporarily or permanently, and with respect to some or all uses required or permitted under This Agreement,
in response to any Claim that a use

25

of the Michelson Logo as required or permitted under This Agreement violates a Legal Requirement.
If Michelson so revises the Michelson Logo, or requests that the Michelson Logo or other attribution not be used in a way required
or permitted by This Agreement, the Medtronic Parties shall use the new Michelson Logo or comply with the request as promptly
as commercially practicable. The cessation of attribution or change of Michelson Logo may, for 30 days, be accomplished through
the use of stickers where possible, unless Michelson determines in his reasonable discretion that such use of stickers would
not avoid liability based upon the asserted Legal Requirement.

        (k)  Any disclosures by
any of the Medtronic Parties or their Affiliates pursuant to this Section 6.13 shall be deemed to be Confidential Information
of the Medtronic Parties.

        (l)  In the event any of
the Medtronic Parties or their Affiliates conduct or sponsor an IDE clinical study or other study that involves Subject Intellectual
Property or Medtronic-Owned Patent Rights or MultiLock Patent Rights, such Medtronic Party or Medtronic Party Affiliate shall
include within the materials sent to clinical sites a stand-alone notification describing Michelson’s intellectual property
contributions with a request that such clinical sites include a reference to Michelson’s intellectual property contributions
in any press releases, articles or other public information when referring to such studies.

        (m)  The rights and obligations
of the Parties pursuant to this Section 6.13 shall terminate upon expiration of the Term; provided, that (i) the rights
and obligations of the Parties pursuant to Section 6.13(k) shall survive the expiration of the Term and (ii) the Sellers’
rights to pursue Third Parties or to pursue liquidated damages remedies set forth in this Section 6.13 for any breach by the
Medtronic Parties or their Affiliates occurring during the Term shall survive the expiration of the Term.

         6.14.   Confidentiality.    Each
of the Parties acknowledges that the preservation of the confidentiality of the Confidential Information of the other Parties
is an essential premise of the bargain between the Parties and that the Parties would be unwilling to enter into This Agreement
in the absence of this Section 6.14. Accordingly, from and after the Closing, except as otherwise contemplated by This Agreement,
each Party (the “Bound Party”) shall not, and shall cause its Affiliates and Representatives not to, without
the prior written consent of the other Parties to whom the Confidential Information belongs (the “Other Parties”),
disclose the Confidential Information of the Other Parties to any Person other than the Bound Party’s Representatives
who are informed of and bound by this confidentiality obligation or use the Confidential Information; provided, that
this Section 6.14 does not prohibit any disclosure (a) reasonably believed by the Bound Party to be required by any applicable
Legal Requirement, provided that the Bound Party provides reasonable prior notice of the disclosure to the Other Parties to
allow such Other Parties, if they desire, to contest the disclosure before it is made, (b) to Third Parties who are parties
to any of the Assumed Contracts, to the extent reasonably necessary with respect to the Bound Party’s rights or obligations
under the Assumed Contracts, including informing the Third Parties that the Assumed Contracts have been assigned and assumed,
or (c) made in furtherance of the enforcement or interpretation of any rights, remedy, or provision in, relating to or arising
under This Agreement, the Ancillary Agreements or the transactions contemplated in This Agreement or the Ancillary Agreements.

         6.15.   Restricted Activities.
   As a material inducement to the Buyer’s purchase of the Purchased Assets under This Agreement, including
goodwill, each of the Sellers hereby covenants and agrees that from and after the Closing until the expiration of the Term,
none of the Sellers will, either directly or indirectly, (a) engage in, or (b) own, manage, operate, control, be employed by,
consult with, or assist, any Third Party or any Affiliate of any Seller engaged in, the practice, development, production,
manufacture, sale, licensing, sublicensing or servicing of products, techniques or procedures in the Field in any geographic
area in which the Buyer or any of its Affiliates conducts any business in the Field (collectively, the “Restricted
Field”); provided, that this Section 6.15 does not prohibit (i) ownership of less than 10% of the outstanding
stock of any publicly traded corporation or less than 20% of the equity interest of any hospital, medical clinic or center,
or other provider of medical services, (ii) participating

26

in speaking engagements at, writing textbooks, treatises or articles for, or teaching at colleges,
universities, hospitals, charitable organizations or trade or industry conferences, or the like, including with respect to
devices or methods that are the subject of the Restricted Field, (iii) practicing medicine as a licensed physician or surgeon,
including the use of devices or methods that are the subject of the Restricted Field as part of such practice, (iv) performance
under consulting agreements set forth on Schedule 6.15, as such agreements are in effect on the Effective Date, (v)
licensing or assigning the Excluded Intellectual Property, (vi) other commercial exploitation of the Excluded Intellectual
Property so long as such other commercial exploitation does not infringe or misappropriate any Purchased Assets, (vii) serving
on any boards of directors of any not-for-profit organizations or any other similar charitable foundations, (viii) serving
as an officer of any not-for-profit organizations or any other similar charitable foundations so long as the activities or
the results of the activities of such organizations or foundations are not directed to the Field other than solely due to their
general application to the human body, (ix) making unrestricted gifts of cash, securities or other property to not-for-profit
organizations or any other similar charitable foundations that are not Affiliates of Michelson, including those engaged in
research in the Field, (x) making gifts of cash, securities or other property to not-for-profit organizations or any other
similar charitable foundations so long as the activities or the results of the activities of such organizations or foundations
are not directed to the Field other than solely due to their general application to the human body or (xi) consulting with
or assisting any Third Party or any Affiliate of any Seller in the Field solely with respect to the Excluded Intellectual Property
or consulting with or assisting any Third Party or any Affiliate of any Seller outside the Field. The Sellers agree that the
covenants of this Section 6.15 are reasonable and valid. If the final judgment of a court of competent jurisdiction declares
that any term or provision of this Section 6.15 is invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability will have the power to reduce the scope, duration or area of the term or provision,
to delete specific words or phrases or to replace any invalid or unenforceable term or provision with a term or provision that
is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision,
and This Agreement will be enforceable as so modified after the expiration of the time within which the judgment may be appealed.

         6.16.   Use of Michelson Logo.
   The Sellers shall not, and shall not permit any Affiliate or Third Party to, use the Michelson Logo (or any
other logo confusingly similar thereto) in connection with any products other than products in the medical field that use or
incorporate ideas conceived or developed by Michelson. All goodwill associated with use of the Michelson Logo shall inure to
the benefit of Michelson.

         6.17.   Notice of Developments.
   From the Effective Date until the Closing, the Sellers will give the Buyer prompt written notice upon becoming
aware of any material development affecting the Purchased Assets and Excluded Intellectual Property (including claim amendments
since March 7, 2005) or any event or circumstance that could reasonably be expected to result in a material breach of,
or inaccuracy in, any of the Sellers’ representations and warranties; provided, 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, unless, notwithstanding such disclosure,
the Buyer consummates the Closing, in which case each such disclosed breach of, or inaccuracy in, the Sellers’ representations
and warranties shall be deemed waived by the Buyer and shall not be a source of Losses for which the Sellers provide indemnification
pursuant to Section 9 (Indemnification).

         6.18.   Corporate Existence.
   For a period of two years following the Closing, KTI shall not dissolve or liquidate.

         6.19.   Revival and Reinstatement
of Payment Obligations.    If any payment by the Buyer to the Sellers under This Agreement, in whole or
in part, should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors’
rights, including provisions of the Bankruptcy Code relating to fraudulent transfers, preferences, or other voidable or recoverable
payments of money or transfers of property (collectively, a “Voidable Transfer”), and if the Sellers are required
to repay or restore, in whole or in part, any such Voidable Transfer, or elect to do so upon the reasonable advice of their
counsel, then, to the extent of the amount of such Voidable Transfer that the

27

Sellers are required or elect to repay or restore, and as to reasonable costs, expenses, and attorneys’
fees of the Sellers incurred with respect thereto, the liability of the Buyer to the Sellers automatically shall be revived,
reinstated, and restored and shall exist as though such Voidable Transfer had never been made.

         6.20.   Public Statements.
   None of the Parties shall make any public statement, whether in a press release, interview, article, book,
press conference, speaking engagement, or otherwise, relating to the terms of This Agreement or the Ancillary Agreements or
the details of the discussions and drafts leading up to the execution of This Agreement and the Ancillary Agreements (each,
a “Public Statement”) without the prior consent of the other Parties, which consent shall not be unreasonably
withheld; provided, that any Party may make such Public Statement it believes in good faith is required by applicable
Legal Requirements or the requirements of any national securities exchange or quotation system on which such Party’s securities
are listed or quoted for trading, in which case the disclosing Party will provide the other Parties with the reasonable opportunity
to review in advance such Public Statement, where practicable; provided, further, in the event that any Party
makes a Public Statement in accordance with this Section 6.20, any Party may repeat any of the information set forth in such
Public Statement. In addition, if any Party makes a Public Statement not in accordance with this Section 6.20, then any
Party not Affiliated with the Party making such Public Statement may repeat any of the information set forth in such Public
Statement.

         6.21.   FDA Applications.    Effective
as of the Closing, the Sellers hereby assign any rights that they may have in any Food and Drug Administration or any similar
U.S. or foreign regulatory agency application for or approval of the use or sale of products (e.g., FDA 510(k) applications)
covered by one or more patent claims of the Subject Intellectual Property.

         6.22.   Post-Closing Reconciliation.
   If, from time to time after the Closing, any of the Medtronic Parties or any of their Affiliates receives
or collects any Assumed Contract Amounts, it shall promptly pay such Assumed Contract Amounts to the Sellers. If, from time
to time after the Closing, any of the Sellers or any of their Affiliates receives or collects any amounts due under the Assumed
Contracts that are attributable to the period from and after the Closing, he or it shall promptly pay such amounts to the Medtronic
Parties.

         6.23.   Covenants Regarding Contractual
Obligations.    After Closing, the Sellers shall continue honoring any remaining non-delegable obligations
under the Assumed Contracts, including confidentiality obligations thereunder. The Medtronic Parties shall not interfere with
the Sellers’ performance of such obligations.

         6.24.   Remedies.    Effective
as of the Closing, the Sellers agree that the only remedy they may seek or obtain pursuant to the Excluded Equitable Rights
and to the Excluded Indemnification Rights shall be the Specified Relief. Effective as of the Closing, the Sellers have no
right to terminate any of the underlying agreements, alter any of the licenses thereunder, seek enjoinment or alteration of
any other provision or otherwise disturb the Buyer’s benefit of the bargain of having been assigned the Sellers’
contracts identified in Schedule 2.2(c) and Schedule 2.2(d), other than seeking the Specified Relief.

         6.25.   Third Party Confidentiality
Agreements.    In the event there are any confidentiality agreements among any of the Parties and their
Affiliates and any Third Party, the Parties agree that, to the extent permitted by law, any confidentiality obligations between
the Parties and their Affiliates shall be superseded and replaced by This Agreement, effective at the Closing.

	(7)	CLOSING CONDITIONS.

         7.1.   Conditions to the Medtronic
Parties’ Obligation to Close.    The obligation of the Medtronic Parties to consummate the Closing
is subject to satisfaction of the following conditions:

        (a)  Representations
and Warranties. The representations and warranties of the Sellers contained in Section 4 of This Agreement 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,
other than representations and warranties that expressly speak only as of a specific date or time, which will be true and correct
in all material respects as of such specified date and time;

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        (b)  No Injunctions.
No Governmental Order shall be issued and outstanding that would (i) prevent consummation of the transactions contemplated
by This Agreement and the Ancillary Agreements or (ii) cause the transactions contemplated by This Agreement and the Ancillary
Agreements to be rescinded following consummation;

        (c)  Performance.
The Sellers shall have performed and complied in all material respects with all of their covenants, agreements and obligations
contained in This Agreement and the Ancillary Agreements that are required to be performed or complied with by them at or before
the Closing; 

        (d)  Antitrust Matters.
All applicable waiting periods (and any extensions thereof) under the HSR Act and any applicable foreign antitrust laws and
regulations shall have expired or otherwise been terminated;

        (e)  Closing Documents
and Certificates. The Buyer shall have received each of the following agreements, documents, certificates and instruments:

        (i)  a certificate dated
the Closing Date and executed by the Sellers certifying that each of the conditions specified in paragraphs (a) and (c) of
this Section 7.1 is satisfied in all respects as of the Closing;

        (ii)  the Assignment and
Assumption Agreement duly executed by the Sellers as of the Closing Date;

        (iii)  the Bill of Sale
duly executed by the Sellers as of the Closing Date;

        (iv)  separate Patent and
Invention Assignments, substantially in the form of Exhibit D, with such changes as may be necessary for the assignment
to be suitable for recording in each jurisdiction and each recordable right or interest relating to the patents included in
the Purchased Assets, duly executed by the appropriate Sellers as of the Closing Date;

        (v)  written certification
from the Secretary or an Assistant Secretary of KTI dated as of the Closing Date as to (i) the incumbency and specimen signature
of each officer of KTI executing This Agreement or any of the Ancillary Agreements, (ii) the certificate of incorporation and
by-laws of KTI, each as amended, restated and in effect as of the Closing Date and (iii) the resolutions adopted by the Board
of Directors and the shareholders of KTI authorizing the execution, delivery and performance of This Agreement and the consummation
of the transactions contemplated hereby, each as amended, modified and in effect as of the Closing Date;

        (vi)  a certificate of good
standing of KTI issued by the California Secretary of State as of a date recent to the Closing Date;

        (vii)  the Dismissal Document,
duly executed by the Sellers as of the Closing Date;

        (viii)  the Confirmatory
Assignments, duly executed by the appropriate Sellers as of the Closing Date

        (ix)  a letter from the
Sellers instructing the law firm of Martin & Ferraro LLP to deliver the originals of the Patent Prosecution Files to the
Buyer and to instruct, as agent of the Sellers, any patent counsel or agents to do the same;

        (x)  a completed and executed
original U.S. Internal Revenue Service Form W-9 (or successor thereto) from each Seller certifying therein that such Seller
is a United States person within the meaning of the Code;

        (xi)  such other documents
that the Buyer may reasonably request to transfer the Purchased Assets to the Buyer and otherwise effect the transactions contemplated
by This Agreement and the Ancillary Agreements;

        (xii)  executed stipulations
of dismissal for the Purchased Claims; and

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        (f)  Letter of Credit.
Unless the Parties shall have established an escrow arrangement pursuant to Section 3.3 (Closing Payment; Letter of Credit),
the Buyer shall have received the Closing Letter of Credit.

The Buyer may waive any condition specified in this Section 7.1 if it executes a writing so stating
at or before the Closing, and such waiver shall not be considered a waiver of any other provision in This Agreement unless
the writing specifically so states.

         7.2.   Conditions to the Sellers’
Obligation to Close.    The obligation of the Sellers to consummate the Closing is subject to satisfaction
of the following conditions:

        (a)  Closing Payment;
Alternate Closing Payment. The Sellers shall have received either the Closing Payment or the Alternate Closing Payment,
as applicable;

        (b)  Representations
and Warranties. The representations and warranties of the Buyer contained in Section 5 of This Agreement 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,
other than representations and warranties that expressly speak only as of a specific date or time, which will be true and correct
in all material respects as of such specified date and time;

        (c)  No Injunctions.
No Governmental Order shall be issued and outstanding that would (i) prevent consummation of the transactions contemplated
by This Agreement and the Ancillary Agreements or (ii) cause the transactions contemplated by This Agreement and the Ancillary
Agreements to be rescinded following consummation;

        (d)  Performance.
The Medtronic Parties shall have performed and complied in all material respects with all of their respective covenants, agreements
and obligations contained in This Agreement and the Ancillary Agreements that are required to be performed or complied with
by them at or before the Closing;

        (e)  Antitrust Matters.
All applicable waiting periods (and any extensions thereof) under the HSR Act and any applicable foreign antitrust laws and
regulations shall have expired or otherwise been terminated; and

        (f)  Closing Documents
and Certificates. The Sellers shall have received each of the following agreements, documents, certificates and instruments:

        (i)  a certificate dated
the Closing Date and executed by the Buyer certifying that each of the conditions specified in paragraphs (b) and (d) of this
Section 7.2 is satisfied in all respects as of the Closing;

        (ii)  the Ancillary Agreements
to which any Medtronic Party is a party duly executed by the Medtronic Parties, where applicable;

        (iii)  written certification
from the Secretary or an Assistant Secretary of each Medtronic Party dated as of the Closing Date as to (i) the incumbency
and specimen signature of each officer of such Medtronic Party executing This Agreement or any of the Ancillary Agreements,
(ii) the certificate of incorporation and by-laws of such Medtronic Party, each as amended, restated and in effect as of the
Closing Date and (iii) the resolutions adopted by the Board of Directors and, if applicable, the shareholders of such Medtronic
Party authorizing the execution, delivery and performance of This Agreement and the consummation of the transactions contemplated
hereby, each as amended, modified and in effect as of the Closing Date;

        (iv)  a certificate of good
standing of MSD issued by the Indiana Secretary of State as of a date recent to the Closing Date;

        (v)  a certificate of good
standing of the Buyer issued by the Delaware Secretary of State as of a date recent to the Closing Date;

        (vi)  a certificate of good
standing of MDT issued by the Minnesota Secretary of State as of a date recent to the Closing Date;

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        (vii)  the Dismissal Document,
duly executed by the Medtronic Parties as of the Closing Date; and

        (viii)  such other documents
that the Sellers may reasonably request to effect the transactions contemplated by This Agreement and the Ancillary Agreements.

The Sellers may waive any condition specified in this Section 7.2 if they execute a writing so stating
at or before the Closing, and such waiver shall not be considered a waiver of any other provision in This Agreement unless
the writing specifically so states.

	8.	TERMINATION.

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

        (a)  by mutual written consent
of the Buyer and the Sellers;

        (b)  by either the Buyer
or the Sellers by providing written notice to the other at any time after June 30, 2005 if the Closing shall not have
occurred by reason of the failure of any condition set forth in Section 7.1 (Conditions to the Medtronic Parties’
Obligation to Close), in the case of the Buyer, or Section 7.2 (Conditions to the Sellers’ Obligation to Close),
in the case of the Sellers, to be satisfied (unless such failure is the result of one or more breaches or violations of, or
inaccuracy in, any covenant, agreement, representation or warranty of This Agreement by the terminating Party);

        (c)  by either the Buyer
or the Sellers 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 the Buyer if either
(i) there will have been a material breach of, or inaccuracy in, any representation or warranty of any of the Sellers
contained in Section 4 of This Agreement as of the Effective Date 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 Buyer’ right to terminate
will arise only in the event of a material breach of, or inaccuracy in, such representation or warranty as of such specified
date or time) or (ii) any of the Sellers will have breached or violated in any material respect any of their respective
covenants and agreements contained in This Agreement, which breach or violation would give rise, or could reasonably be expected
to give rise, to a failure of a condition set forth in Section 7.1 (Conditions to the Medtronic Parties’ Obligation
to Close) and cannot be or has not been cured on or before the later of (i) five Business Days following satisfaction of the
closing conditions set forth in Sections 7.1(d) and 7.2(e) and (ii) 10 days after the Buyer notifies the Sellers of such breach
or violation;

        (e)  by the Sellers if either
(i) there will have been a material breach of, or inaccuracy in, any representation or warranty of the Buyer contained
in Section 5 of This Agreement as of the Effective Date 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 Sellers’ right to terminate will arise
only in the event of a material breach of, or inaccuracy in, such representation or warranty as of such specified date or time)
or (ii) the Buyer will have breached or violated in any material respect any of its covenants and agreements contained
in This Agreement, which breach or violation would give rise, or could reasonably be expected to give rise, to a failure of
a condition set forth in Section 7.2 (Conditions to the Sellers’ Obligation to Close) and cannot be or has not been
cured on or before the later of (i) five Business Days following satisfaction of the closing conditions set forth in Sections
7.1(d) and 7.2(e) and (ii) 10 days after the Sellers notify the Buyer of such breach or violation; or

        (f)  by determination of
the Arbitrator if there is a Dispute between the Parties as to whether the conditions for termination under this Section 8.1
have been met.

        

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         8.2.   Effect of Termination.    In the event of the termination
of This Agreement pursuant to Section 8.1 (Termination of Agreement), This Agreement (other than Section 2.8(a) (Inter-Party
Agreements and Three-Party Agreement), Section 3.1 (Signing Deposit), Section 6.20 (Public Statements) and Section
12.8 (Governing Law) and, in each case, related definitions) will then be null and void and have no further force and effect
and all other rights and Liabilities of the Parties will terminate without any Liability of any Party to any other Party, except
for Liabilities arising with respect to willful breaches under This Agreement by any Party on or before the Termination Date.

	9.	INDEMNIFICATION.

         9.1.   Indemnification by the Sellers.
   From and after the Closing, the Sellers shall jointly and severally indemnify, defend and hold harmless the
Medtronic Parties and their respective Affiliates and Representatives against all Losses relating to or arising out of:

        (a)  (i) the breach of any
representation or warranty of the Sellers under Section 4 of This Agreement or in the closing certificate referenced in
Section 7.1(e)(i) (the “Sellers’ Closing Certificate”) (except as otherwise provided in the proviso
of Section 6.17 (Notice of Developments) or (ii) the breach of any covenant or obligation of the Sellers in This Agreement
or any of the Ancillary Agreements;

        (b)  the Medtronic Parties’
use of the Michelson Logo in material conformity with This Agreement;

        (c)  any Liability of any
Seller that may be imposed on any Medtronic Party under any doctrine of de facto merger or successor liability or similar legal
doctrine, but excluding any Assumed Liability;

        (d)  any Third Party Claim
arising under or relating to a right of first refusal to acquire any of the Purchased Assets other than any such Third Party
Claim that is intentionally precipitated by any Medtronic Party; provided  ̧ that a Third Party Claim asserted
in response to an Action (other than a declaratory judgment Action pertaining to such right of first refusal) initiated by
any Medtronic Party shall be deemed not to be “intentionally precipitated by” any Medtronic Party; or

        (e)  any Contractual Obligation
of the Sellers to make any payments to any Third Party arising out of or relating to the payment to the Sellers of the Closing
Payment or the Alternate Closing Payment, as applicable, or any of the Post-Closing Payments;

provided, however, that (A) the Sellers shall not have any obligation to indemnify, defend or hold harmless the
Medtronic Parties or their Affiliates and Representatives against any Losses relating to or arising out of the breach of any
representation or warranty of the Sellers set forth in Sections 4.4 (Consents), 4.5 (Litigation), 4.6 (Assumed Contracts),
4.7(a) (Title), 4.8(a) (Intellectual Property), 4.8(b) (Intellectual Property), 4.8(c) (Intellectual Property), 4.8(d)(ii)
(Intellectual Property), 4.8(d)(iii) (Intellectual Property), 4.8(e) (Intellectual Property) and 4.9 (Solvency; Fair Consideration)
of This Agreement or in the corresponding representations and warranties set forth in the Sellers’ Closing Certificate
until the Medtronic Parties and their respective Affiliates and Representatives, collectively, have suffered Losses by reason
of all such breaches of at least $25,000,000 (the “Basket”) (after which point the Sellers will be obligated
to indemnify the Medtronic Parties and their Affiliates and Representatives against all such Losses, including the amount of
the Basket and not only to the extent such Losses exceed the Basket), and (B) there will be a $300,000,000 aggregate ceiling
on the obligation of the Sellers to indemnify the Medtronic Parties and their respective Affiliates and Representatives against
Losses relating to or arising out of breaches of the Sellers’ representations and warranties set forth in Section 4
of This Agreement or the Sellers’ Closing Certificate. No Claim for indemnification for breach by any Seller of any representation
or warranty set forth in Section 4.8(d)(i) may be brought unless such Claim arises from, and only to the extent such Claim
arises from, (i) a Third Party Claim (including a defense to a Claim of infringement brought by any of the Medtronic Parties
or their Affiliates) or (ii) the failure by any Medtronic Party to bring an Action for patent infringement against a Third
Party due to an assessment by such Medtronic Party that such Action cannot be brought because of a breach of a representation
or warranty by any of the Sellers set forth in Section 4.8(d)(i).

        

32

         9.2.   Indemnification by the Buyer.    From and after the Closing,
the Medtronic Parties shall jointly and severally indemnify, defend and hold harmless the Sellers and their respective Affiliates
and Representatives against all Losses relating to or arising out of:

        (a)  the breach of any representation
or warranty of the Medtronic Parties in Section 5 of This Agreement or in the closing certificate referenced in Section 7.2(f)(i)
(the “Medtronic Parties’ Closing Certificate”) or the breach of any covenant or obligation of the Medtronic
Parties in This Agreement or any of the Ancillary Agreements;

        (b)  any and all Assumed
Liabilities;

        (c)  any Claims or Actions
by any Third Party arising out of or relating to the design, manufacture, distribution, sale, promotion, advertising, import,
export, lease, commercialization or use by the Medtronic Parties of or relating to products, product systems or procedures
in the Field or other products, product systems or procedures derived from or based on the Purchased Assets, the Medtronic-Owned
Patent Rights or the Multi-Lock Patent Rights, except to the extent the circumstances giving rise to such Claims or Actions
constitute a breach of any representation, warranty or covenant of any of the Sellers under This Agreement or the Sellers’
Closing Certificate (without regard to the expiration of the applicable survival period for such representations or warranties)
or relate to alleged medical malpractice by Michelson;

        (d)  any Claims or Actions
by any Third Party under any Assumed Contracts initiated after the Closing based on any acts or omissions of the Sellers occurring
or existing before the Closing, except to the extent the circumstances giving rise to such Claims or Actions constitute a breach
of any representation, warranty or covenant of any of the Sellers under This Agreement or the Sellers’ Closing Certificate
(without regard to the expiration of the applicable survival period for such representations or warranties); or

        (e)  any Claims or Actions
by any Third Party for product liability, product warranty or similar Claim or Action arising out of or relating to the licensing
or sublicensing by the Medtronic Parties of products, product systems or procedures in the Field or other products, product
systems or procedures derived from or based on the Purchased Assets, the Medtronic-Owned Patent Rights or the Multi-Lock Patent
Rights, except to the extent the circumstances giving rise to such Claims or Actions constitute a breach of any representation,
warranty or covenant of any of the Sellers under This Agreement or the Sellers’ Closing Certificate (without regard to
the expiration of the applicable survival period for such representations or warranties) or relate to alleged medical malpractice
by Michelson;

provided, however, that (A) the Medtronic Parties have no obligation to indemnify, defend, or hold harmless the
Sellers or their respective Affiliates or Representatives against any Losses relating to or arising out of the breach of any
representation or warranty of the Medtronic Parties in This Agreement or in the corresponding representations and warranties
set forth in the Medtronic Parties’ Closing Certificate unless and until the Sellers and their respective Affiliates and
Representatives, collectively, have suffered Losses by reason of all such breaches of at least the Basket (after which point
the Medtronic Parties will be obligated to indemnify the Sellers and their Affiliates and Representatives against all such
Losses, including the amount of the Basket and not only to the extent such Losses exceed the Basket), and (B) there will be
a $300,000,000 aggregate ceiling on the obligation of the Medtronic Parties to indemnify the Sellers and their respective Affiliates
and Representatives against Losses relating to or arising out of breaches of the Medtronic Parties’ representations and
warranties set forth in Section 5 of This Agreement or in the Medtronic Parties’ Closing Certificate.

         9.3.   Survival.    The
terms of This Agreement and all provisions hereof, including all representations, warranties, promises, agreements and covenants,
are contractual and not mere recitals and shall survive the execution and delivery of This Agreement and the Closing under
This Agreement and, except as expressly stated herein, shall continue in full force and effect thereafter; provided,
that (i) the representations and warranties set forth in Sections 4.1 (Organization; Shareholders), 4.2 (Authorization), 4.3
(Noncontravention), 4.7 (Title), 4.8(d)(i) (Intellectual Property) and 4.10 (U.S. Taxpayer) (including, in each case, the corresponding
representations and warranties set forth in the Sellers’

33

Closing Certificate), and Sections 5.1 (Organization), 5.2 (Authorization) and 5.3 (Noncontravention)
(including, in each case, the corresponding representations and warranties set forth in the Medtronic Parties’ Closing
Certificate) shall only survive until the fifth anniversary of the Closing and (ii) the other representations and warranties
set forth in This Agreement shall only survive until the third anniversary of the Closing; provided, further,
that if any Claim seeking indemnification has been timely made in accordance with Section 9.4 (Time for Claims) but has not
been finally determined by the end of the applicable survival period set forth above, the representations and warranties set
forth in This Agreement shall, for purposes of such Claim (and only such Claim), survive until final determination of such
Claim.

         9.4.   Time for Claims.    No
Claim may be made seeking indemnification pursuant to This Agreement unless a written notice thereof is provided to the Indemnifying
Party (i) at any time before the expiration of the applicable survival period set forth in Section 9.3 (Survival), in the case
of any breach of any of the representations or warranties in This Agreement, and (ii) at any time, in the case of any other
Claim seeking indemnification pursuant to This Agreement.

         9.5.   Notices.    If
an Indemnified Party intends to seek indemnification pursuant to This Agreement, such Indemnified Party shall promptly notify
the Indemnifying Party in writing of the Claim for which indemnification is sought, including any Third Party Claims in respect
of which indemnification is sought under This Agreement, in each case within the applicable time periods specified in Section
9.4 (Time for Claims). Any such notice shall set forth in reasonable detail, in light of the circumstances then known to the
Indemnified Party, the facts, circumstances and basis of the Claim and, if the Claim relates to a Third Party Claim, shall
include copies of all papers served upon or received by the Indemnified Party relating thereto. Any delay in the provision
of such notice and accompanying materials shall not affect any rights under This Agreement except to the extent that the Indemnifying
Party is actually and materially prejudiced thereby.

         9.6.   Third Party Claims.
   The Indemnifying Party will be entitled to participate in the defense of any Third Party Claim that is the
subject of a notice given by the Indemnified Party pursuant to Section 9.5 (Notices). In addition, the Indemnifying Party will
have the right to defend the Indemnified Party against the Third Party Claim with counsel of the Indemnifying Party’s
choice reasonably satisfactory to the Indemnified Party so long as:

        (a)  the Indemnifying Party
gives written notice to the Indemnified Party within 10 Business Days after the Indemnified Party has given notice of the Third
Party Claim that the Indemnifying Party will indemnify the Indemnified Party 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;

        (b)  the Third Party Claim
involves only money damages and does not seek an injunction or other equitable relief against the Indemnified Party;

        (c)  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;

        (d)  the Third Party Claim
does not relate to or otherwise arise in connection with any criminal or regulatory enforcement Action; and

        (e)  the Indemnifying Party
conducts the defense of the Third Party Claim actively and diligently.

        If any of the foregoing conditions
is not satisfied, the Indemnified Party may assume control of the defense of the Third Party Claim with counsel of its choice
and the Indemnified Party’s reasonable legal fees and expenses shall constitute part of the Losses indemnified under This
Agreement, provided, that such Claim for indemnification is agreed by the Indemnifying Party or otherwise determined in the
Indemnified Party’s favor by the Arbitrator. The Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim; provided, that the Indemnifying Party will pay the
fees and expenses of separate

34

co-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. 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 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 no effect on any other Claims that may be made against the Indemnified
Party. If the Indemnifying Party does not deliver the notice contemplated hereby within 10 Business 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 the Indemnifying Party is
entitled to assume control of the defense of the Third Party Claim hereunder, and conducts the defense of the Third Party Claim
actively and diligently but any of the other conditions set forth in clauses (a) through (e) of this Section 9.6 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, that the Indemnifying Party will not be bound by the entry
of any such judgment consented to, or any such compromise or settlement effected, without its prior written consent (which
consent will not be unreasonably withheld or delayed). Notwithstanding anything to the contrary in This Agreement, in the event
that a Third Party Claim is asserted against one or more Medtronic Indemnified Parties and the potential for indemnification
arises from or relates to an actual or alleged breach of the Sellers’ representations and warranties set forth in Section
4.8(d)(i) of This Agreement, then the response to and defense of such Claim shall be managed as follows. The Medtronic Indemnified
Parties will have the sole and exclusive right to defend, settle or agree to entry of judgment of such Third Party Claim with
counsel of its choice. However, any such judgment, settlement or finding by any court or arbitral body shall not be dispositive
or admissible evidence with respect to determining whether the Sellers have breached any of their representations or
warranties in Section 4.8(d)(i) of This Agreement.

         9.7.   LIMITATION OF DAMAGES.
   THE PARTIES SHALL ONLY BE LIABLE FOR ACTUAL DAMAGES (INCLUDING DIMINUTION OF VALUE OF THE PURCHASED ASSETS)
AND SHALL NOT BE LIABLE FOR INDIRECT, SPECIAL, INCIDENTAL OR PUNITIVE DAMAGES OF ANY KIND RELATING TO OR ARISING OUT
OF THIS AGREEMENT OR THE ANCILLARY AGREEMENTS, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
THE LIMITATION SET FORTH IN THIS SECTION SHALL NOT APPLY TO CLAIMS FOR AMOUNTS PAID WITH RESPECT TO INDEMNIFICATION FOR LOSSES
ARISING FROM THIRD PARTY CLAIMS.

         9.8.   Exclusive Remedy.    Except
as expressly stated otherwise in This Agreement, the indemnities set forth in this Section 9 shall be the exclusive remedy
for any Claims, whether Third Party Claims or direct Claims between the Parties, relating to or arising out of This Agreement,
the Ancillary Agreements or the transactions contemplated hereby or thereby.

         9.9.   Knowledge and Investigation.
   Except as expressly set forth in the proviso to Section 6.17 (Notice of Developments), the right of any Indemnified
Party to indemnification pursuant to this Section 9 will not be affected by any investigation conducted or knowledge acquired
(or capable of being acquired) at any time, whether before or after the execution and delivery of This Agreement or the Closing,
with respect to the accuracy of any representation or warranty, or performance of or compliance with any covenant or agreement
under This Agreement.

         9.10.   Letter of Credit.    For
as long as any amounts are outstanding under the Closing Letter of Credit or any Post-Closing Letter of Credit (collectively,
the “ LOCs”), or Escrow Account, as applicable, any and all amounts payable by the Sellers as Indemnifying
Parties to a Medtronic Indemnified

35

Party shall be paid in cash first out of the LOCs or the Escrow Account, as applicable, and thereafter
by the Sellers in accordance with payment instructions provided by the Buyer. The existence of the LOCs or the Escrow Account,
as applicable, shall not be deemed to limit the amount of any allowable Claims by any Medtronic Indemnified Party pursuant
to This Agreement for Losses in excess of the outstanding amounts under the LOCs or the Escrow Account, as applicable. The
Sellers shall cause the principal amounts under each of the LOCs or the Escrow Account, as applicable, to remain outstanding
until the earlier of (a) such time as the entire principal amount of such LOC or the Escrow Account, as applicable, has been
used to pay the Medtronic Indemnified Parties in accordance with a decision of the Arbitrator and (b) the fifth anniversary
of the Closing and thereafter the funds in the Escrow Account shall be released to the Sellers or the LOCs shall be terminated,
as the case may be; provided, that if any Claim seeking indemnification has been timely made in accordance with
Section 9.4 (Time for Claims) but has not been finally determined by the Arbitrator by the fifth anniversary of the Closing,
then the Sellers shall cause the principal amounts under each of the LOCs or the Escrow Account, as applicable, to remain outstanding
until such final determination of each such Claim in an aggregate principal amount sufficient to satisfy the aggregate amount
of Losses to which the Medtronic Indemnified Parties reasonably estimate (and provide the Sellers prior notice of) they may
be entitled to recover from the Sellers in respect of all such Claims.

         9.11.   Duty to Mitigate.    The
Parties acknowledge that in determining the amount of any Loss to which any Indemnified Party is entitled to indemnification
under this Section 9, the Arbitrator shall take into account the degree to which such Indemnified Party took or failed to take
action to mitigate such Loss.

	10.	ARBITRATION.

         10.1.   Agreement to Arbitrate.
   To expedite the resolution of Disputes that may arise between the Parties, the Parties, on behalf of themselves
and their respective Affiliates, agree that any and all Disputes shall be submitted to final and binding arbitration pursuant
to the procedures set forth in this Section 10. The Parties consent to the exclusive jurisdiction of the Arbitrator to finally
resolve any and all Disputes, including a Dispute under Section 8.1(f), and waive any and all resort to any court in connection
with any and all Disputes, regardless of the legal or equitable theory upon which such Disputes may be based, except for the
enforcement, vacation or remand of any arbitration award or arbitration order. Any dispute concerning whether any Dispute is
arbitrable pursuant to This Agreement shall be resolved by the Arbitrator and not by any court.

         10.2.   Appointment and Replacement
of Arbitrator.    MSD, on behalf of the Medtronic Parties, and the Sellers shall appoint an arbitrator pursuant
to the provisions of this Section 10.2 promptly after the execution of This Agreement. That arbitrator or a replacement selected
pursuant to this Section 10.2 (in either case, the “Arbitrator”) shall be retained by the Medtronic Parties
and the Sellers as the Arbitrator for the Term. The Arbitrator shall be appointed according to the following procedure: the
Sellers shall provide to the Medtronic Parties a list of ten individuals (“Potential Arbitrators”) who are
all able and willing to fulfill the duties of the Arbitrator under this Section 10, who have not previously represented any
of the Parties or their Affiliates, and who are either (i) former judges of a United States District Court or a United States
Court of Appeals, or (ii) intellectual property attorneys with at least 20 years of experience in intellectual property litigation.
Of the Potential Arbitrators, the Sellers will provide at least four suggestions from each category. MSD, on behalf of the
Medtronic Parties, shall then have 30 days to select one name from the list of Potential Arbitrators and inform the Sellers
of the selection. If the Medtronic Parties fail or refuse to select one name from the list of Potential Arbitrators, the Sellers
shall have the power to select the Arbitrator from the list of Potential Arbitrators. Should the Arbitrator (including any
replacement) at any time be unable or unwilling to fulfill his or her duties, or be disqualified pursuant to Section 10.13,
the Parties will appoint a replacement (who will then be the “Arbitrator”) following this same procedure.

         10.3.   Exclusive Dispute Resolution
Procedure.    The arbitration procedure contained in this Section 10 shall be the exclusive dispute
resolution procedure available to the Parties with respect to any and all Disputes.

        

36

         10.4.   Demand for Arbitration.    Any arbitration proceeding
shall commence with the service by a Party or Parties (the “Claimant”) of a demand for arbitration (the “Demand”).
The Demand shall be served on the Party or Parties against whom arbitration is sought (the “Respondent”) and
on the Arbitrator and shall specify in reasonable detail the nature of the claim or claims and the relief requested for each
claim. The service of the Demand shall conform with the notice provisions of Section 12.7 (Notices). As used herein, “Arbitration
Parties” means the Claimant and Respondent.

         10.5.   Applicable Arbitration
Procedures and Powers of the Arbitrator.    The Arbitrator shall conduct the arbitration proceeding in accordance
with the provisions of This Agreement and the provisions of the Federal Arbitration Act (the “Act”). Any procedure,
rule or standard specified in This Agreement will control over any conflicting procedure, rule or standard in the Act. The
Arbitrator shall have full power to make such orders, rules and regulations relating to the arbitration proceeding as he or
she deems just and expedient, including the power to order any of the Parties to perform or refrain from any act within the
scope of the Dispute, the power to enter and modify protective orders, the power to retain experts, and the power to appoint
referees and special masters.

         10.6.   Service.    Unless
otherwise agreed, the Respondent shall have 20 days from the date of service of the Demand to serve a response to the Demand
(the “Response”) and any counter-demand for arbitration (the “Counter-Demand”), and the
Claimant shall have 20 days from the date of service of the Counter-Demand to serve a response to the Counter-Demand. Federal
Rule of Civil Procedure (“FRCP”) 6(a) shall govern the computation of any period of time prescribed or allowed
by this Section 10 or by the Arbitrator. Service of all papers in the arbitration proceeding shall be made on the Arbitration
Parties and the Arbitrator by hand delivery, facsimile, electronic mail or overnight courier. Service by overnight courier
shall add one day to the time for any required response.

         10.7.   Preliminary Meeting.
   Counsel for Claimant and Respondent shall meet in person or by telephone with the Arbitrator within 10 days
of the service of the Response or, if a Counter-Demand is served, within 10 days of the Claimant’s service of a response
to the Counter-Demand (the “Preliminary Meeting”). At the Preliminary Meeting, the Arbitrator shall consider
and enter a scheduling order (the “Scheduling Order”) containing (i) a schedule for discovery pursuant to
Section 10.8, (ii) a schedule for the Arbitration Parties’ submission of proposed protective orders that the Arbitrator
may enter as he or she deems appropriate, to apply to the arbitration proceeding consistent with Section 10.14 hereof,
(iii) a schedule for the briefing of dispositive motions, (iv) a schedule for the exchange of lists of witnesses, including
experts, that each Party intends to call at the arbitration hearing (the “Hearing”) and the subjects of their
testimony, and copies of all documents that the Arbitration Party intends to introduce at the Hearing to support its claims
or defenses, (v) a date for a pre-Hearing meeting (the “Pre-Hearing Meeting”) to discuss and define the order
of proof and issues to be presented at the Hearing, and any related briefing, and (vi) a date for the commencement of the Hearing.
At the Pre-Hearing Meeting, the Claimant and Respondent shall exchange offers to resolve the matters at issue in the Demand
and Counter-Demand (each, an “Arbitration Settlement Offer”). After a final arbitration award has been rendered,
the Parties shall provide the Arbitrator with their respective Arbitration Settlement Offers.

         10.8.   Discovery.    The
Arbitration Parties shall be entitled to discovery during the arbitration proceeding pursuant to (i) FRCP 34 (requests for
the inspection and production of documents), (ii) FRCP 30 (depositions), (iii) FRCP 26(a)(2) (disclosure of expert reports),
and (iv) FRCP 26(b)(4) (depositions of expert witnesses). Each side in the arbitration shall prepare and produce a privilege
log. Each side in the arbitration proceeding shall be entitled to depose ten non-expert witnesses, for a maximum of eight hours
each. Additional depositions may be permitted by the Arbitrator, in his or her discretion. In addition, the Arbitration Parties
shall only be entitled to use the Litigation Materials in the arbitration to the extent permitted by Section 6.11(b). Every
discovery dispute the Arbitration Parties are unable to resolve informally shall be submitted to the Arbitrator for decision,
by the service of a written brief. Any response shall be served within five days thereafter and any reply shall be served within
three days after service of the response. The Arbitrator shall rule promptly thereafter and may make such orders with respect
to discovery disputes as he or she deems just and expedient. Any and all materials disclosed pursuant to any Dispute shall
be returned to the producing Party or destroyed within thirty days of any final award with respect to a Dispute, provided,
however, if either Party provides

37

notice to the Arbitrator during such thirty day period, then the Arbitrator may issue an order providing
for retention of such materials by a Third Party with access to such materials to be determined by the Arbitrator.

         10.9.   Hearing and Prior Proceedings.
   The Hearing shall take place in Los Angeles, California, commencing as expeditiously as possible but in no
event, without good cause shown to the satisfaction of the Arbitrator, later than 120 days after the Preliminary Meeting. The
Hearing shall be held, to the extent possible, on consecutive days (excluding weekends). The Arbitrator may permit deposition
testimony to be presented in lieu of oral testimony. The Hearing shall be recorded stenographically. Proceedings prior to the
Hearing shall be held in person or by telephone.

         10.10.   Evidence.    The
Arbitrator shall be the sole judge of the admissibility, relevance and materiality of the evidence offered, and conformity
with the legal rules of evidence shall not be necessary.

         10.11.   Awards.    

        (a)  The Arbitrator shall
have the power to award only the remedies or relief set forth in This Agreement, i.e., monetary damages, liquidated damages,
injunctive relief and specific performance (including the power to exercise a power-of-attorney to execute confirmatory assignments
on behalf of the Sellers in the event that the Arbitrator determines that it is appropriate to do so due to a failure of the
Sellers to provide further assurances as required by Section 6.8 (Further Assurances)). In addition, the Arbitrator shall have
the power to execute and deliver and file and record in the proper filing and recording places, all such instruments, including
Uniform Commercial Code termination statements covering or purporting to cover any of the Sellers’ assets or properties
that is not Collateral, and take all such other actions as the Arbitrator shall determine to be appropriate to terminate or
otherwise release the Buyer’s security interest in any of the Sellers’ assets or properties that the Arbitrator determines
is not Collateral under any applicable Legal Requirement. The Arbitrator shall award to the prevailing Arbitration Party or
Arbitration Parties its or their reasonable attorneys’ fees and costs. For purposes of determining which Arbitration Party
is the prevailing party and thus entitled to recover attorneys’ fees and costs, the Arbitrator must do so in the following
manner. The Arbitrator shall determine which Arbitration Party’s Arbitration Settlement Offer is closer to the Arbitrator’s
final award and shall determine that such Arbitration Party is the prevailing party for purposes of awarding reasonable attorneys’
fees and costs.

        (b)  The Arbitrator’s
awards shall be accompanied by detailed findings of fact and conclusions of law, final and binding upon, and enforceable as
to, the Parties. The Arbitrator’s final award shall be rendered no later than 30 days after the close of the Hearing.
The Arbitrator’s rendered award shall be confidential and filed under seal in any recourse to the courts taken to enforce
the award. 

        (c)  The award rendered
by the Arbitrator shall be collateral estoppel as to any issue found against a Party in any later arbitration.

        (d)  Each of the Parties
acknowledge and agree that the other Parties would be damaged irreparably in the event of any breach of or failure to perform
the obligations of certain Sections of This Agreement in accordance with their specific terms, including Sections 2.9 (Sellers’
Covenant Not To Sue), 6.1 (Litigation), 6.2 (HSR Act), 6.3 (Closing), 6.5 (Covenants in Support of Assignment), 6.6 (Models
and Prototypes), 6.7 (Disclosure of New Subject Invention and New Subject Intellectual Property), 6.8 (Further Assurances),
6.10 (Third Party Actions), 6.11 (Patent Counsel; Return of Documents; Tangible Materials), 6.13 (Name Attribution) with respect
to New Product System designation, 6.14 (Confidentiality), 6.15 (Restricted Activities), 6.16 (Use of Michelson Logo), 6.18
(Corporate Existence), 6.20 (Public Statements), 6.23 (Covenants Regarding Contractual Obligations) and 6.24 (Remedies). Accordingly,
each of the Parties agrees that, without posting bond or other undertaking, the other Parties will be entitled to seek an interim
award from the Arbitrator seeking an injunction or injunctions to prevent breaches or violation of This Agreement and to enforce
specifically the terms and provisions of certain Sections of This Agreement and that the prevailing Party may seek to have
such interim award immediately entered in any court of the United States or any state thereof having jurisdiction over the
Parties and the matter. Each Party

38

further agrees that, in the event of any such entry of an interim award in any court of the United
States or any state thereof having jurisdiction over the Parties and the matters, no Party will assert that a remedy at law
would be adequate as a defense to enforcement of the Arbitrator’s previously issued interim award for specific performance.

         10.12.   Arbitrator’s Fees.
   The Arbitrator shall be paid an annual retainer of $50,000. The Arbitrator shall be entitled to additional
compensation for services rendered and costs incurred in connection with any arbitration proceeding, as specified by the Arbitrator.
The Arbitrator’s annual retainers shall be borne one half by the Medtronic Parties and one half by the Sellers. The Arbitrator’s
additional compensation for services rendered and costs incurred in connection with any arbitration proceeding, and any administrative
fees associated with the arbitration proceeding, shall initially be borne one half by the Medtronic Parties and one half by
the Sellers, but the prevailing Party or Parties in the arbitration proceeding shall be entitled to recover its or their share
of those amounts from the losing Party or Parties in accordance with Section 10.11 hereof.

         10.13.   Impartiality and Disqualification
of Arbitrator; Ex Parte Contacts.    

        (a)  The Arbitrator shall
be subject to disqualification if his or her impartiality or independence can reasonably be questioned, and shall be obligated
to disclose to the Parties any circumstance likely to give rise to a reasonable doubt as to his or her impartiality or independence,
including the acquisition of any financial interest in any of the Parties or their Affiliates. Any request for disqualification
of the Arbitrator shall be made to the Arbitrator, who shall consider the request from the perspective of a reasonable observer
who is informed of all the surrounding facts and circumstances, and if the Arbitrator determines that the impartiality or independence
of the Arbitrator can reasonably be questioned, then (i) the Arbitrator shall no longer serve as Arbitrator of any Dispute
that may arise between the Parties, including any pending Dispute and (ii) the Parties will select a new Arbitrator, as necessary,
pursuant to Section 10.2 (Appointment and Replacement of Arbitrator). Upon the request of either party, the determination contemplated
by this Section 10.13(a) can be submitted to a second arbitrator chosen in accordance with Section 10.2 (Appointment and
Replacement of Arbitrator). In the event the second arbitrator determines that the impartiality or independence of the Arbitrator
can reasonably be questioned, then the Parties will select a new Arbitrator, as necessary, pursuant to Section 10.2 (Appointment
and Replacement of Arbitrator) from a list that shall not include the second arbitrator who made the determination. If the
Arbitrator makes a determination that the impartiality or independence of the Arbitrator cannot reasonably be questioned, then
the Arbitrator shall remain engaged as provided in This Agreement.

        (b)  No Party or its Representative
shall, unless the Parties agree, or if there is an arbitration proceeding pending, unless all of the parties to the
arbitration proceeding agree, communicate ex parte with the Arbitrator, except that the Arbitrator may conduct any communication
or proceeding on an ex parte basis if the Arbitrator determines that the non-appearing Party or Parties received reasonable
advance notice thereof and did not provide reasonable justification for their failure to appear, or if the Arbitrator, upon
notice to all Parties, deems such communication necessary.

         10.14.   Confidentiality.    All
aspects of the arbitration shall be private and confidential. The Parties agree that all consultants and witnesses shall agree
to treat their work and the proceedings as confidential. The Parties and the Arbitrator shall maintain the substance of any
proceedings in confidence and make disclosures to others only as required by law.

	11.	RELEASES

         11.1.   Medtronic Release.
   As of the Closing, and to the fullest extent allowed by law, each of the Medtronic Parties, on its own behalf
and on behalf of each of its Affiliates, and, to the extent permitted by law, on behalf of each of their respective predecessors,
heirs, beneficiaries, trustees, principals, agents, employees, representatives, contractors, successors, assigns, servants,
attorneys and other professionals, officers, directors, members, partners, subsidiaries, stockholders (collectively, the “Medtronic
Releasing Parties”) hereby jointly and severally irrevocably, perpetually and forever releases and discharges each
of the Sellers and each of his or its Affiliates and their respective predecessors, heirs, beneficiaries,

39

trustees, principals, agents, employees, representatives, contractors, successors, assigns, servants,
attorneys and other professionals, officers, directors, members, partners, subsidiaries, stockholders (collectively, the “
Michelson Released Parties”) from any and all Encumbrances in favor of any of the Medtronic Releasing Parties on
the assets of the Michelson Released Parties and from any and all Actions and Liabilities of any nature, in each case whether
known or unknown, against them that any of the Medtronic Releasing Parties, or anyone claiming through or under them, ever
had, now has or hereafter can or may ever have for, based upon, arising out of, or in connection with, any matter, act, fact,
cause, or thing before the Closing, including anything that was or could have been alleged or asserted in the Litigation or
any malicious prosecution or similar claim arising out of the Litigation, except in all cases for Encumbrances, Actions
and Liabilities based upon, arising out of, or in connection with This Agreement, including any Losses. Each of the Medtronic
Releasing Parties hereby jointly and severally irrevocably, perpetually and forever releases and discharges each of the Michelson
Released Parties’ insurers with respect to any Encumbrances, Actions and Liabilities to which the Medtronic Releasing
Parties release the Michelson Released Parties in this Section 11.1. This Agreement is not an acknowledgement of liability
of any Party but is entered into to resolve all issues between the Medtronic Releasing Parties and the Michelson Released Parties.

         11.2.   Sellers Release.    As
of the Closing, and to the fullest extent allowed by law, each of the Sellers, on its own behalf and on behalf of each of its
Affiliates, and, to the extent permitted by law, on behalf of each of their respective predecessors, heirs, beneficiaries,
trustees, principals, agents, employees, representatives, contractors, successors, assigns, servants, attorneys and other professionals,
officers, directors, members, partners, subsidiaries, stockholders (collectively, the “Michelson Releasing Parties”)
hereby jointly and severally irrevocably, perpetually and forever releases and discharges each of the Medtronic Parties and
each of its Affiliates and their respective predecessors, principals, agents, employees, representatives, contractors, successors,
assigns, servants, attorneys and other professionals, officers, directors, members, partners, subsidiaries, stockholders (collectively,
the “Medtronic Released Parties”) from any and all Encumbrances in favor of any of the Michelson Releasing
Parties on the assets of the Medtronic Released Parties and from any and all Actions and Liabilities of any nature, in each
case whether known or unknown, against them that any of the Michelson Releasing Parties, or anyone claiming through or under
them, ever had, now has or hereafter can or may ever have for, based upon, arising out of, or in connection with, any matter,
act, fact, cause, or thing before the Closing, including anything that was or could have been alleged or asserted in the Litigation
or any malicious prosecution or similar claim arising out of the Litigation, except in all cases for Encumbrances, Actions
and Liabilities based upon, arising out of, or in connection with This Agreement, including any Losses. Each of the Michelson
Releasing Parties hereby jointly and severally irrevocably, perpetually and forever releases and discharges each of the Medtronic
Released Parties’ insurers with respect to any Encumbrances, Actions and Liabilities to which the Michelson Releasing
Parties release the Medtronic Released Parties in this Section 11.2. This Agreement is not an acknowledgement of liability
of any Party but is entered into to resolve all issues between the Michelson Releasing Parties and the Medtronic Released Parties.

         11.3.   Waiver.    As
part of the consideration and as inducement for the execution of This Agreement, as of the Closing, the Parties and each of
them, with full knowledge and with the specific intent to release Actions and Liabilities as set forth in Sections 11.1 and
11.2, hereby waive the provisions of Section 1542 of the California Civil Code (and any state statute or legal doctrine similar
to California Civil Code § 1542). Section 1542 reads as follows: 

	 	GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR. 	 

Notwithstanding the provisions of Section 1542 (or any state statute or legal doctrine similar to
California Civil Code §1542) and for the purpose of implementing a full and complete release of Actions and Liabilities
as set forth in Sections 11.1 and 11.2, the Parties, and each of them, expressly acknowledge that This Agreement is intended
to include in its effect, without limitation, all Actions and Liabilities as set forth in Sections 11.1 and 11.2 and that This
Agreement further contemplates the

40

extinction of all such Actions and Liabilities, except as otherwise specified in such Sections. Each
Party waives any right to assert that any such Action or Liability has, through ignorance, oversight or otherwise, been omitted
from This Agreement, and further assumes full responsibility for any injury, damages, losses or liability of any kind, that
it has or may hereafter incur from such waiver.

	12.	MISCELLANEOUS.

         12.1.   Interpretation.    Except
as otherwise explicitly specified to the contrary, (a) references to a Section, Exhibit or Schedule means a Section of
or Schedule or Exhibit to This Agreement, unless another agreement is specified, (b) the word “including” will be
construed as “including but not limited to,” and will not be construed as limiting the general language to which
it relates, and the items or matters that follow the word “including” or the words “including but not limited
to” or “including without limitation” or similar words in This Agreement shall be construed as illustrative,
but not exclusive or complete, examples of what is intended to be so included, (c) the term “or” is not limiting
and means “and/or,” (d) 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,
(e) words in the singular or plural form include the plural and singular form, respectively, (f) references to a particular
Person include such Person’s successors and assigns to the extent not prohibited by This Agreement and (g) references
to “Dollars” or “$” shall be to U.S. Dollars. 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 shall
be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring
any Party by virtue of the authorship of any of the provisions of This Agreement.

         12.2.   No Third Party Beneficiaries.
   Except as specifically provided in This Agreement, This Agreement shall not confer any rights or remedies
upon any Person other than the Parties and their respective successors and permitted assigns.

         12.3.   Entire Agreement.    This
Agreement, the Schedules and Exhibits hereto, and the Ancillary Agreements constitute the entire agreement among the Parties
and supersedes any prior understandings, agreements or representations by or among the Parties, whether written or oral, with
respect to the subject matter hereof; provided, that except as set forth in Section 2.8(a) (Inter-Party Agreements and
Three-Party Agreement), nothing in This Agreement shall affect the terms of the Inter-Party Agreements, the First Assumed Contract
or the Second Assumed Contract (set forth on Schedule 2.1(b)) prior to the Closing. For clarity, this Agreement shall
not supersede or affect any terms of the Termination and Release Agreement or the ElectroStim License Agreement.

         12.4.   Assignment.    No
Party may assign either This Agreement or any of its rights, interests or obligations under This Agreement without the prior
written approval of the other Parties; provided, that any Medtronic Party may (i) assign all of its rights and interests
and delegate all of its obligations under This Agreement to a Third Party in connection with the sale of all or substantially
all of the assets or capital stock of such Medtronic Party (whether by merger, consolidation or otherwise), provided, that
such Third Party executes a counterpart to This Agreement acknowledging and agreeing to assume all such obligations of the
Medtronic Parties and their Affiliates under This Agreement, (ii) assign all of its rights and interests to one or more of
its Affiliates, (iii) designate one or more of its Affiliates to perform its obligations under This Agreement provided that
such designation shall not relieve such Medtronic Party from its obligations under This Agreement and (iv) at the Closing,
designate one or more Purchased Assets to be conveyed by the Sellers to an Affiliate of the Buyer. Subject to the foregoing,
This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and
permitted assigns.

         12.5.   Counterparts.    This
Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument.

         12.6.   Headings.    The
Section headings contained in This Agreement are inserted for convenience only and shall not affect in any way the meaning
or interpretation of This Agreement.

        

41

         12.7.   Notices.    All communications between the Sellers and
any of the Medtronic Parties relating to This Agreement and the subject matter hereof shall be directed to the persons designated
to receive notices set forth in this Section 12.7 or such other individuals as they may designate. All notices, requests, demands,
Claims and other communications under This Agreement shall be in writing. Any notice, request, demand, Claim or other communication
under This Agreement shall be deemed duly given (i) when delivered personally to the recipient, (ii) upon confirmation of facsimile
(with a confirmation copy to be sent by overnight delivery) or (iii) one Business Day following the date sent when sent by
overnight delivery, at the following address:

If to the Sellers: 

Karlin Technology, Inc.
24325 North San Fernando Road
Suite 102
Santa Clarita,
CA 91321-2932
Fax: (818) 951-4343
Attention: Mary Burch

with copies to:

Kirkland & Ellis LLP
777 South Figueroa Street, Suite 3700
Los Angeles,
CA 90017
Fax: (213) 680-8500
Attention: Robert G. Krupka, Esq.

and

Jeffer, Mangels, Butler & Marmaro LLP
1900 Avenue of the Stars, 7th
Floor
Los Angeles, CA 90067
Fax: (310) 712-8562
Attention: Burton A. Mitchell, Esq.

If to any of the Medtronic Parties:

Medtronic Sofamor Danek, Inc.
1800 Pyramid Place
Memphis, TN 38132
Attention:
General Counsel

with copies to:

Medtronic, Inc.
710 Medtronic Parkway
Minneapolis, MN 55432-5604
Attention:
General Counsel

and

Ropes & Gray LLP
One International Place
Boston, MA 02110-2624
Fax:
(617) 951-7050
Attention: Steven A. Wilcox, Esq.

Any Party may change the address to which notices, requests, demands, Claims and other communications
under This Agreement are to be delivered by giving the other Party notice in the manner herein set forth.

         12.8.   Governing Law    This
Agreement shall be governed by and construed in accordance with the domestic laws of the State of New York without giving effect
to any choice or conflict of law

42

provision or rule (whether of the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York. Notwithstanding the foregoing, any Dispute relating
to the provisions of Section 10 (Arbitration) shall be governed by the Act as then in force.

         12.9.   Jurisdiction; Venue; Service
of Process.    Any Action to enforce, vacate or remand any arbitration award or arbitration order pursuant
to Section 10 (Arbitration) (each, an “ Arbitration Action”) shall be brought in the state courts of
the State of New York or the United States District Court located in the Southern District of the State of New York. Each Party
to This Agreement, by its execution hereof, (a) hereby irrevocably submits to the exclusive jurisdiction of the above-named
courts for the purpose of any Arbitration Action, (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 Arbitration 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 Arbitration 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 Arbitration 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.

         12.10.   Amendments and Waivers.
   No amendment of any provision of This Agreement shall be valid unless the same shall be in writing and signed
by the Buyer and the Sellers. No waiver by any Party of any provision of This Agreement or any default, misrepresentation or
breach of warranty or covenant under This Agreement, whether intentional or not, shall be valid unless the same shall be in
writing and signed by the Party making such waiver nor shall such wavier be deemed to extend to any prior or subsequent default,
misrepresentation or breach of warranty or covenant under This Agreement or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.

         12.11.   Severability.    Any
term or provision of This Agreement that is invalid or unenforceable in any situation in any jurisdiction shall 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 term or provision of This Agreement
would, under applicable law, be invalid or unenforceable in any respect, each Party 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. For any such invalid or unenforceable provision, the Parties shall use commercially reasonable efforts to negotiate a
substitute valid and enforceable provision while preserving to the fullest extent possible the intent and agreements of the
Parties set forth herein.

         12.12.   Expenses.    Except
as expressly stated otherwise, each of the Parties will bear his or its own costs and expenses (including legal and accounting
fees and expenses) incurred in connection with This Agreement, the Ancillary Agreements and the transactions contemplated hereby
and thereby.

[Signature Page Follows]

43

        IN WITNESS WHEREOF, each of the undersigned has executed
this Asset Purchase and Settlement Agreement as an agreement under seal as of the date first above written.

		 	MEDTRONIC, INC.
	 	 		 	
		 	By:	 	/s/ Arthur D. Collins, Jr.
		

		Name: Arthur D. Collins, Jr.
Title: Chairman and CEO

		 	MEDTRONIC SOFAMOR DANEK, INC.
	 	 		 	
		 	By:	 	/s/ Gary L. Ellis
		

		Name: Gary L. Ellis
Title: Vice President

		 	SDGI HOLDINGS, INC.
	 	 		 	
		 	By:	 	/s/ Michael Burrage
		

		Name: Michael Burrage
Title: Vice President

		 	GARY K. MICHELSON, M.D.
	 	 		 	
		 	By:	 	/s/ Gary K. Michelson, M.D.
		

		 	KARLIN TECHNOLOGY, INC.
	 	 		 	
		 	By:	 	/s/ Mary L. Burch
		

		Name: Mary L. Burch
Title: President

44

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