Document:

EXHIBIT 10.3

VASCULAR SOLUTIONS, INC.

MANUFACTURING AND SUPPLY AGREEMENT

          This
Manufacturing and Supply Agreement (“Agreement”) is entered into as of April
30, 2010 (the “Effective Date”) by and between Escalon Vascular Access, Inc., a
Delaware corporation having its principal place of business at 435 Devon Park
Drive, Bldg. 100, Wayne, Pennsylvania 19087 (“Manufacturer”) and Vascular
Solutions, Inc., a Minnesota corporation having its principal place of business
at 6464 Sycamore Court, Minneapolis, Minnesota 55441 (“VSI”). 

RECITALS

          WHEREAS, VSI and Manufacturer have entered
into an asset purchase agreement on the date hereof (the “Asset Purchase
Agreement”), whereby VSI will acquire certain of the assets of Manufacturer; 

          WHEREAS, pursuant to the terms of the asset
sale, VSI desires to have certain medical devices manufactured to VSI’s
specifications, which are identical to the specifications of Manufacturer and
set forth as Exhibit A attached hereto, for an interim period after the closing
of the asset sale; 

          WHEREAS, during such interim period,
Manufacturer is willing to supply such medical devices and other raw materials
to VSI’s specifications, and provide related services to VSI as set forth in,
and pursuant to the terms and conditions of, this Agreement; 

          NOW
THEREFORE, in consideration of the mutual covenants
and agreements set forth herein, the parties hereto agree each with the other
as follows: 

ARTICLE I DEFINITIONS

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

     Section
1.1 “Applicable Regulations” means all statutes, laws and regulations
applicable to the manufacture, approval and notice for sale, quality control,
testing, sterilization, packaging, labeling, record retention, storage,
handling, transport, and reporting of medical devices in effect at a particular
time and promulgated by the United States Food and Drug Administration (“FDA”)
and any foreign agency or authority equivalent to the FDA, including without
limitation current good manufacturing practices and quality system regulations,
ISO 13485, and any successor or replacement statutes, laws and regulations. 

     Section
1.2 “Delivery Date” means the date the Products or Raw Materials are to be
delivered, as set forth in each Purchase Order.

     Section
1.3 “Equipment” means any tools, equipment, moulds and models supplied by VSI
to Manufacturer for the purpose of Manufacturer’s performance under this
Agreement. 

     Section
1.4 “Intellectual Property Rights” means on a world-wide basis, any and all
intangible (a) rights associated with works of authorship including, without
limitation, copyrights, moral rights and mask works; (b) trademark and trade
name rights and similar rights; 

1

(c) trade
secret rights; (d) patents, designs, algorithms and other industrial property
rights; (e) all other intellectual and industrial property rights of every kind
and nature and however designated, whether arising by operation of law,
contract, license or otherwise; and (f) all registrations, applications,
renewals, extensions, continuations, divisions or reissues hereof now or
hereafter in force (including any rights in any of the foregoing). 

     Section
1.5 “Manufacturing Facilities” means Manufacturer’s plant located at 2440 South
179 Street, New Berlin, WI. 53146. 

     Section
1.6 “Manufacturing/Quality System Requirements” means the requirements for the
manufacturing, testing, sterilization, packaging and labeling of the Products
and the requirements for the Raw Materials, including all quality system
requirements, outlined in the 21 CFR 820 FDA regulations and the ISO 13485
Quality System standard. 

     Section
1.7 “Product(s)” means the finished devices of the type described in Exhibit B
to be supplied under this Agreement pursuant to binding Purchase Orders, and
which are manufactured, tested, sterilized, packaged and labeled in accordance
with the Specifications, Manufacturing/Quality System Requirements, this
Agreement and all Applicable Regulations. 

     Section
1.8 “Purchase Order” means a purchase order issued by VSI specifying necessary
information as set forth in Section 2.4, with the terms and conditions attached
as Exhibit C. 

     Section
1.9 “Raw Materials” means the raw materials necessary to manufacture the Products.

     Section
1.10 “Specifications” means the raw materials, manufacturing, quality assurance
and finished device specifications and protocols for the Products as set forth
on Exhibit A attached hereto. 

ARTICLE II MANUFACTURE

     Section
2.1 Manufacture. Manufacturer agrees to manufacture and supply to VSI
those quantities of the Products, and supply to VSI those quantities of Raw
Materials, that VSI may order hereunder, all in accordance with the terms and
conditions of this Agreement. 

     Section
2.2 Manufacturing/Quality System Requirements. Manufacturer agrees that
it shall manufacture, test, sterilize (if required by VSI), package, store,
handle, transport, and label the Products and Raw Materials ordered pursuant to
binding Purchase Orders hereunder in strict conformity with the
Manufacturing/Quality System Requirements. Manufacturer agrees to manufacture
in a manufacturing environment such that the particulate and microbial levels
are within the specifications for the Product. The Manufacturing/Quality System
Requirements are specified in Section 1.6. 

     Section
2.3 Applicable Regulations. Manufacturer shall manufacture, test,
sterilize (if required by VSI), package, store, handle, transport, and label
the Products and Raw Materials in accordance with all Applicable Regulations.
Each party shall promptly notify the other of any new laws, regulations, rules
or requirements of which it becomes aware that pertain to Products or Raw
Materials, and shall confer with the other with respect to the best means to
comply with such requirements. 

     Section
2.4 Production Plan and Purchase Orders. Manufacturer shall produce
Products up to the amounts set forth on Schedule 2.4 (the “Production Plan”).
VSI may order Products and Raw Materials up to the amounts set forth on the
Production Plan by submitting a Purchase 

2

Order from
time to time to Manufacturer by means of a mailed, couriered, electronic or
facsimile communication. Manufacturer shall be deemed to have received a
Purchase Order when acknowledged by manufacturer. Each Purchase Order shall be
issued in quantities equal to the weekly production capacity pursuant to the
Production Plan and shall be issued 30 days in advance of delivery of the
Products and 7 days in advance of delivery of Raw Materials with the exception
of May and June. VSI will issue Purchase Orders for the entire months of May
and June on May 3, 2010 with weekly delivery dates in May and June. Each
Purchase Order shall include: 

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 date of
 Purchase Order;

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 description
 of the Products and/or Raw Materials ordered, including part numbers and
 quantity;

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 price
 offered per line item;

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 the Delivery
 Date(s); 

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 the delivery
 address; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (f)

 	
 terms for
 Payment;

 
	
  

 	
  

 	
  

 
	
  

 	
 (g)

 	
 terms for
 title transfer of shipment (e.g. FOB Manufacturer’s dock); and 

 
	
  

 	
  

 	
  

 
	
  

 	
 (h)

 	
 mode of
 shipment. 

 

     Section
2.5 Acceptance of Purchase Orders. Manufacturer shall notify VSI within
five business days of receipt of any Purchase Order setting forth either (a)
its acceptance of the Purchase Order; or (b) any proposed amendments to the
Delivery Date(s), quantities and Specifications for the Products ordered. If
Manufacturer responds pursuant to (b) above, VSI and Manufacturer shall
negotiate in good faith and in a timely manner such Delivery Dates, quantities
and Specifications. Upon agreement of the parties, an authorized representative
of each party shall execute the Purchase Order and upon the date of
Manufacturer’s execution the Purchase Order shall be deemed accepted. Each
Purchase Order shall become binding upon the parties upon acceptance. 

     Section
2.6 Purchase Order Adjustments. VSI may at any time request a change in
a Purchase Order, by submitting written notice to Manufacturer detailing the
nature, extent and proposed manner of performance of the proposed change, and
estimated scheduling, pricing and cost information relating thereto.
Manufacturer shall evaluate each such request, and submit to VSI a written
response, unless otherwise agreed by the parties, to each such request within
seven business days following receipt thereof. Manufacturer’s written response
shall address any impact the proposed changes will have on the Purchase Order.
The parties shall negotiate the desired changes in good faith. If the parties
agree to the changes, VSI shall prepare a written description of the agreed
changes (a “Change Authorization”), which will become effective when both
parties sign it. The Change Authorization will be incorporated as part of the
relevant Purchase Order and will prevail over any inconsistent terms of the
Purchase Order. Manufacturer agrees to implement such agreed changes in an
expeditious and commercially prudent manner. If the parties do not agree to the
changes within fifteen days of first receipt by Manufacturer of written notice
of the changes, VSI may terminate the Purchase Order to which the changes
relate, in whole or in part, with written notice to Manufacturer, without
penalty to VSI. 

3

     Section
2.7 INTENTIONALLY OMITTED. 

     Section
2.8 Conflicting Terms. This
Agreement shall govern each Purchase Order and any conflict or inconsistency
between the terms of this Agreement and a Purchase Order shall be resolved in
favor of this Agreement, unless VSI expressly states its acceptance to such
conflicting term(s). No additional or conflicting terms in any acknowledgement
or acceptance from Manufacturer shall govern.

     Section 2.9 Purchase Order. All
sales of Product and Raw Materials shall be subject to the terms and conditions
of this Agreement and the terms and conditions of each Purchase Order. VSI may
procure the Products from any third party as it deems appropriate. In no event
shall VSI be liable for any direct, incidental, special, consequential or
punitive damages for any failure to submit additional Purchase Orders under
this Agreement or for cancellation of any Purchase Orders submitted hereunder,
in whole or in part. 

ARTICLE III PURCHASER PROPERTY

     Section
3.1 VSI Property. VSI shall deliver to Manufacturer such Equipment
agreed upon by the parties for use by Manufacturer only in the performance of
its obligations under this Agreement. Manufacturer shall (a) identify all
Equipment as the property of VSI (“VSI Property”); (b) safely store the VSI
Property at all times when not in use; (c) maintain and deliver (as set forth
herein) the VSI Property in good working condition (where applicable),
reasonable wear and tear excepted; (d) insure the VSI Property and keep it
insured until delivered to VSI in an amount equal to the replacement cost with
loss payable to VSI; and (e) keep the VSI Property free of all liens, claims,
encumbrances and interests of third parties, all at Manufacturer’s sole
expense. Manufacturer is responsible for ensuring that Equipment is routinely
calibrated, inspected, maintained and qualified for use. Calibration must be
traceable to national or international standards and the calibration status
must be clearly identified on the Equipment. Risk of loss to the VSI Property
shall transfer to and remain with Manufacturer from receipt of the Equipment
until delivery to VSI. All VSI Property is subject to inspection by VSI at any
time at Manufacturer’s premises upon reasonable notice. Except as set forth
herein, no use of VSI Property shall be permitted without prior written consent
of VSI. 

     Section
3.2 Rights. Manufacturer shall have the limited right to use the VSI
Property, Specifications and Manufacturing/Quality System Requirements as
necessary to perform hereunder. VSI owns and shall retain all right title and
interest, including all Intellectual Property Rights, in and to the VSI
Property, Specifications, Manufacturing/Quality System Requirements and
Products, subject to the limited rights granted to Manufacturer herein and
Manufacturer hereby assigns to VSI all right, title and interest, including all
Intellectual Property Rights, it has and may have in and to the VSI Property,
Specifications, Manufacturing/Quality System Requirements and Products. 

ARTICLE IV MANUFACTURING PROCESS

     Section
4.1 License Grant. VSI hereby grants Manufacturer a nonexclusive,
nontransferable, worldwide, royalty-free right to the Intellectual Property
comprised of the applicable Products for the Term of this Agreement. VSI hereby
grants Manufacturer a nonexclusive, nontransferable, worldwide, royalty-free
right to use those of VSI’s trademarks, tradenames or logos set forth in each
binding Purchase Order to private label the applicable Products for the 

4

Term of this
Agreement. VSI agrees that Manufacturer may leave on the Products any
Manufacturer code required by any Applicable Regulation. 

     Section
4.2 No Changes. Manufacturer shall perform the obligations set forth in
this Agreement only at the approved Manufacturing Facilities, unless otherwise
agreed by VSI. Manufacturer may not change or deviate from the Specifications
and Manufacturing/Quality System Requirements without the prior written consent
of VSI. Materials, processes, equipment and facilities approved for
manufacturing Products through the validation and verification activities
carried out by VSI may only be changed with the prior written consent of VSI. 

     Section
4.3 Packaging Materials. Manufacturer shall be responsible for and shall
provide all packaging materials and printed materials associated with the
Product consistent with Manufacturer’s procedure. This includes, but is not
limited to, container labels, container cartons and packaging material.
Manufacturer shall be responsible for compliance with all Applicable
Regulations concerning packaging and labeling materials, and for obtaining any
necessary regulatory approvals of printed materials, artwork and copy.
Manufacturer shall obtain prior approval from VSI before revising any printed
packaging components, primary container components and any VSI-supplied
packaging components used in the Product. 

     Section
4.4 Raw Materials. All Raw Materials are defined by engineering drawings
or specifications. Approved vendors must be designated on the drawings/specs.
Manufacturer will use standard operating procedures which define the sampling
methodology and the analytical methods used to assure that the Raw Materials
meet the defined specifications. VSI will notify Manufacturer in writing of any
changes to the specifications, sampling or test methods of Raw Materials or any
changes in approved vendors. 

     Section
4.5 Sampling, Testing and Release of Product. All in-process and
completed Product testing shall be conducted by Manufacturer using approved
test methods. Upon reasonable request, Manufacturer shall provide VSI with a
certificate of analysis indicating each test parameter, test method, test
result and the corresponding acceptance criteria for each batch/lot of Product
manufactured or packaged, as well as a statement indicating that all associated
documentation has been reviewed and approved by the appropriate quality control
unit. Manufacturer shall release the Product to VSI as meeting the
Specifications. 

     Section
4.6 Storage, Validation and Environmental Monitoring. Process/Product
and cleaning validation shall be performed by Manufacturer using protocols
developed according to industry standards. Manufacturer shall be responsible
for conducting the validation studies and maintaining validation reports.
Manufacturer is responsible for operating within validated parameters. Where
particulate and microbial levels are required for the Product, then the
facilities and raw materials used during the manufacturing and packaging
process shall be monitored for these factors. Manufacturer shall be responsible
for the establishment and institution of a monitoring program to assure that
the Product will meet the required particulate and microbial levels and shall
maintain the records obtained from this monitoring program. 

ARTICLE V SHIPMENT AND ACCEPTANCE TESTING

     Section
5.1 Shipment. Manufacturer shall ship Products and Raw Materials in
accordance with each binding Purchase Order to arrive no later than each
specified Delivery Date. Products and Raw Materials shall be marked for
shipment to VSI, and delivered to a carrier designated by VSI or, if not so
designated by VSI, to a carrier chosen by Manufacturer, F.O.B. Manufacturer’s 

5

facilities.
VSI shall insure each shipment against loss or damage for their full
replacement value and shall pay freight and insurance costs for such Products
and Raw Materials until delivery to VSI. Manufacturer shall include with each
shipment of Products and Raw Materials written confirmation of conformance of
such Products and Raw Materials to the Manufacturing/Quality System
Requirements, Specifications and all Applicable Regulations. Such written
confirmation shall in no way limit VSI’s rights to inspect and test the
Products or VSI’s rights under any warranty (including implied warranty) or of
indemnification hereunder.

     Section
5.2 Risk of Loss and Title. Risk of loss and title shall pass to VSI
upon shipment to VSI, provided that risk of loss shall revert back to
Manufacturer during any periods of return or reshipment hereunder. 

     Section
5.3 Acceptance Testing. Notwithstanding any written confirmation from
Manufacturer, any Products manufactured and Raw Materials supplied hereunder
shall be received by VSI subject to inspection and performance testing in
accordance with the testing protocol set forth in the Manufacturing/Quality
System Requirements. VSI shall have 20 days from the date of receipt of each
shipment of Products and Raw Materials to determine to its reasonable
satisfaction whether the Products and Raw Materials strictly conform to the
applicable Specifications and have been manufactured in strict conformity with
the Manufacturing/Quality System Requirements and all Applicable Regulations
(the “Testing Period”). If and when VSI notifies Manufacturer in writing that
the Products and Raw Materials strictly conform to the applicable
Specifications and have been manufactured in strict conformity with the
Manufacturing/Quality System Requirements and all Applicable Regulations,
“Acceptance” shall be deemed to have occurred; provided, however, that VSI’s failure
to provide notice of Acceptance or Rejection (defined below) to Manufacturer
prior to the end of the applicable Testing Period shall be deemed Acceptance.
The Acceptance of any Product shall in no way limit VSI’s rights under any
warranty (including implied warranty) or for indemnification hereunder. 

     Section
5.4 Rejection. If VSI reasonably determines that the Products or the Raw
Materials (or any of them) do not strictly conform to the applicable
Specifications or have not been manufactured in strict conformity with the
Manufacturing/Quality System Requirements or any of the Applicable Regulations,
or any of the foregoing, VSI may, at its option, reject the same by giving
Manufacturer written notice thereof by no later than the close of business on
the last day of the applicable Testing Period (“Rejection”). VSI shall return
any rejected Products and Raw Materials to Manufacturer for credit for the full
price of the rejected Products and Raw Materials. Any exceptions to the
foregoing sentence, in the form of replacement of rejected Products or Raw
Materials with reworked or new Products or Raw Materials, as applicable, will
be negotiated by both parties. In the event that a rework procedure is
recommended by Manufacturer to remedy rejected Products or Raw Materials and
VSI approves the rework procedure, all records documenting the rework must be
maintained by Manufacturer with the Product or Raw Materials lot’s original
device history record, and all identification must relate to the original lot number
identification on Product and Raw Materials and packaging. 

     Section
5.5 All returns and reshipments shall be F.O.B. VSI’s facilities. Manufacturer
shall insure all returns and reshipments against loss or damage for the full
replacement value of the Products and Raw Materials returned or reshipped, and
shall pay all freight and insurance costs for such Products and Raw Materials.
Manufacturer shall reimburse VSI for any costs of shipping due pursuant to this
Section 5.5 immediately upon demand. In the event of any 

6

destruction of
nonconforming Products, VSI shall, if requested by Manufacturer, deliver to
Manufacturer an appropriate written confirmation of destruction. 

     Section
5.6 Timely Delivery. VSI may, by notice to Manufacturer, cancel a
Purchase Order, in whole or in part, for any Products or Raw Materials which
are not timely delivered; provided, however, that Manufacturer shall have a 7
calendar day period to cure such untimely delivery (such cure to be VSI’s
receipt of shipment within such 7 calendar day cure period). VSI shall return
Products or Raw Materials pursuant to such cancelled Purchase Order(s) to
Manufacturer, F.O.B. VSI’s facilities. Manufacturer shall insure all such
returns against loss or damage for their full replacement value and shall pay
all freight and insurance costs for such Products and Raw Materials.
Manufacturer shall reimburse VSI for expenses due pursuant to this Section 5.6
immediately upon demand. 

ARTICLE VI PRICE; PAYMENT

     Section
6.1 Price. During the term of this Agreement, VSI shall pay to
Manufacturer the price for each Product and Raw Materials as described in
Exhibit B. Manufacturer agrees that the prices for Raw Materials shall be equal
to Manufacturer’s standard cost. 

     Section
6.2 INTENTIONALLY OMITTED

     Section
6.3 Invoices. Manufacturer shall invoice VSI for the Product and Raw
Materials upon shipment of Products and Raw Materials under each Purchase
Order. Manufacturer shall invoice VSI for any other amounts due hereunder
within seven days of the end of the month in which such amounts arose. 

     Section 6.4 Payment Terms.
Undisputed payment for Products and Raw Materials shall be
due 30 days from the date of invoicing. Any other undisputed amounts due under
this Agreement shall be payable 30 days from date of receipt by VSI of invoice.
All amounts shall be due and paid in U.S. Dollars.   

     Section 6.5 Taxes. All
amounts due hereunder are exclusive of all taxes, duties, sales taxes, value
added taxes, assessments, and similar taxes and duties relating to the
Products.  

ARTICLE VII RECORD KEEPING; AUDITS

     Section
7.1 Reconciliation and Traceability System; Recordkeeping; Retention.
Manufacturer shall maintain its existing manufacturing system and processes
capable of reconciliation (inputs and outputs) and traceability, and, upon
request, shall provide VSI with access to such system and processes for the
purposes of conducting audits and implementing recalls, product withdrawals and
field corrections and for other purposes consistent with this Agreement.
Manufacturer shall provide VSI with an accurate monthly listing of all
inventory owned by VSI and located at any of Manufacturer’s locations. In
addition, Manufacturer shall maintain adequate records of the device history,
engineering change, quality systems, receiving and inspection, corrective and
preventative action, supplier, distribution, purchasing, complaint files,
testing, training, service (if applicable), sterilization, packaging and
labeling of Products, processes and Specifications for the Products and Raw
Materials to establish compliance with all Applicable Regulations. Manufacturer
agrees that VSI may review and obtain copies of such records upon reasonable
notice in order to confirm such compliance. 

7

     Section
7.2 Inspection. VSI may, upon reasonable notice, inspect and audit the
Manufacturing Facilities to assure compliance by Manufacturer with (a) all
Applicable Regulations, (b) any quality system requirements and regulations set
forth in the Manufacturing/Quality System Requirements, and (c) the terms and
provisions of this Agreement. If VSI discovers any deficiencies during such
audits, VSI shall provide Manufacturer with a written report of such
deficiencies. Manufacturer shall, within 10 days of receipt of such report, remedy
or cause the remedy of any deficiencies described on such report or, if any
such deficiencies cannot reasonably be remedied within such 10 day period,
present to VSI a written plan to remedy such deficiencies as soon as possible,
and implement such plan in a timely manner. If Manufacturer fails to remedy
such deficiencies within 30 days of first receipt by Manufacturer of VSI’s
report hereunder, VSI may terminate this Agreement (and all Purchase Orders)
upon written notice to Manufacturer. Manufacturer acknowledges that the
provisions of this Section 7.2 shall in no way relieve Manufacturer of any of
its obligations under this Agreement. 

     Section
7.3 Record Retention. Manufacturer shall retain the records described in
Section 7.1 for a period expiring on the later of five years from the date of
manufacture of each Product to which the records relate and two years beyond
the expiry date of such Product. At or prior to the Final Closing Date (as
defined in the Asset Purchase Agreement), Manufacturer shall deliver to VSI and
VSI will pay for transportation expenses of records, all such records,
including all copies thereof. At no time shall Manufacturer destroy any such
records. 

     Section
7.4 VSI Representative. VSI may, at VSI’s expense, place a representative
on-site at the Manufacturing Facilities during the term of this Agreement.
Manufacturer agrees that such representative shall have full access to all
operations, documents, and records that pertain to the manufacture, testing,
sterilization, packaging and labeling of the Products and Raw Materials so long
as Manufacturer’s operations are not materially disrupted. 

ARTICLE VIII REGULATORY MATTERS

     Section
8.1 Recalls. In the event VSI is required to initiate a recall, product
withdrawal or field correction of any Products, whether or not such recall has
been requested or ordered by any federal, state or foreign agency, VSI shall
notify Manufacturer and Manufacturer shall fully cooperate with VSI, including,
where requested, initiating the recall, product withdrawal or field correction
itself. If any recall, product withdrawal, or field correction is initiated
because of a defect in any Product (then Manufacturer shall (a) reimburse VSI
the price paid by VSI with respect to such Products; and (b) reimburse VSI for
out-of-pocket costs actually paid by VSI to third parties for transportation
and destruction of the recalled Product and for out-of-pocket communications
expenses associated with such recall. If there are multiple causes of a recall,
product withdrawal or field correction, including those set forth in the
preceding sentence, the parties shall agree in good faith on an appropriate
allocation of the costs of the foregoing in a manner consistent this Section
8.1. 

     Section
8.2 Adverse Event Reporting; Product Complaints. VSI shall be
responsible for all reporting to regulatory authorities of adverse device
experiences associated with the use of Products. VSI shall forward to
Manufacturer copies of all customer complaints, user reports, Manufacturing
Device Reports (“MDRs”) and service reports relating to the manufacture and
operation of the Products, and Manufacturer will cooperate fully with VSI in
investigating such 

8

complaints. If
Manufacturer receives customer complaints or user reports, Manufacturer shall
immediately forward copies of such complaints and reports to VSI. Upon the
request of VSI, and at a charge mutually agreed upon by the parties,
Manufacturer shall investigate any Product subject to a complaint and shall
promptly provide VSI with a written report on such investigation. The parties
shall agree to the procedures to be adopted for the reporting of MDRs within 30
days of the Effective Date. 

     Section
8.3 Compliance With Laws and Regulations. 

          (a)
Compliance with Laws and Regulations. Manufacturer hereby represents and
warrants to VSI that it shall, at its sole cost and expense, timely register
with the FDA as a “Contract Medical Device Manufacturer,” or cause to be timely
registered with the FDA as such, in accordance with the Federal Food, Drug and
Cosmetic Act 21 CFR Part 807 and Part 11 as amended. Additionally, Manufacturer
represents and warrants to VSI that it has, and will retain, its IS0 13485
certification, and will maintain a quality system in compliance with ISO 13485
for the duration of this Agreement. With respect to its performance hereunder,
Manufacturer shall obtain and comply in all material respects with all
applicable permits and registrations, and all applicable present and future orders,
regulations, requirements and laws of any governmental authority in addition to
the Applicable Regulations, including without limitation all maintenance and
updating obligations relating to such permits and registrations. 

          (b)
Regulatory Audits. Manufacturer agrees to promptly notify VSI of any FDA
inspection, or audit by the body that is authorized to give “CE” certification
for products and quality system requirements for European distribution (the
“Notified Body”) of the Manufacturing Facilities, or any request for
information from the FDA, or other regulatory body, related to the manufacture,
testing, sterilization, packaging, and labeling of Products, as soon as
practicable after it received notice of such audit or request. Manufacturer shall
provide VSI with copies of any FDA Form 483 observations, follow-up warning
letters and/or close-out reports for those portions of FDA CGMP/QSR compliance
inspection reports relating specifically to the manufacture of the Products for
any facility where the Products are manufactured. Manufacturer shall also
promptly provide VSI with a written report on the results of such audit or
request for information, including without limitation, a copy of any request or
demand issued by the FDA or other regulatory body. Failure to remedy any such
deficiencies as required by the applicable regulatory body or a repeated
pattern of such deficiencies shall constitute a material breach of this
Agreement. 

     Section
8.4 Contacts. Each party shall designate an individual within their
organization to be the primary contact regarding regulatory issues. Such
individual can be changed by giving written notice thereof to the other party. 

ARTICLE IX WARRANTIES

     Section
9.1 Product Warranty. 

          (a)
Manufacturer warrants to VSI that the Products and Raw Materials shall (i)
strictly conform to the applicable Specifications; (ii) meet and be
manufactured in strict conformity with the Manufacturing/Quality System
Requirements and all Applicable Regulations; (iii) not be adulterated or
misbranded within the meaning of the Federal Food, Drug and Cosmetic Act of
1938, as amended, or constitute an article that may not be introduced into
interstate commerce 

9

under the
provisions of said Act; (iv) be free and clear of any lien or encumbrance; (v)
be merchantable; (vi) be safe and effective for their intended use; and (vii)
be new. 

          (b)
Without limiting any of VSI’s remedies at law or in equity, VSI may return or
destroy any defective or nonconforming Product or Raw Materials with written
notice to Manufacturer and Manufacturer shall promptly replace the same free of
any additional charge upon agreement. 

     Section
9.2 Compliance with Laws. Manufacturer warrants to VSI that Manufacturer
shall perform its obligations hereunder in accordance with all Applicable
Regulations and in compliance with any other applicable law or regulation. 

     Section
9.3 Intellectual Property. Manufacturer warrants to VSI that (a) neither
the manufacture, use or sale of the Products or the Raw Materials (except to
the extent specified in the Specifications); and (b) none of the applications,
processes or systems employed by Manufacturer in the performance of
Manufacturer’s obligations hereunder, shall infringe upon or violate the rights
of any third parties, including, but not limited to, any Intellectual Property
Rights. 

     Section
9.4 Other Warranties. Manufacturer warrants to VSI that Manufacturer has
the full power to enter into this Agreement and perform the obligations set
forth herein, and such ability is not limited or restricted by any agreements
or understandings between Manufacturer and other persons or companies. 

     Section
9.5 Application. The warranties set forth in this Agreement shall remain
in effect as to each Product and all Raw Materials furnished, serviced,
repaired or replaced hereunder. In addition, any replacement Products or Raw
Materials shall be subject to the acceptance testing requirements set forth
herein. VSI may warrant the Products to its customers in any way VSI deems
appropriate. 

ARTICLE X INDEMNIFICATION

     Section
10.1 Manufacturer Indemnification. Manufacturer shall indemnify, defend
and hold harmless VSI, its directors, officers, employees, agents and their
respective successors and assigns (the “VSI Indemnitees”), from and against any
and all liabilities, damages, losses, settlements, claims, allegations,
actions, suits, penalties, fines, costs or expenses (including, without
limitation, reasonable attorneys’ fees) incurred by or asserted against any VSI
Indemnitee of whatever kind or nature, to the extent arising from or occurring
as a result of a claim or demand made by a third party against any VSI
Indemnitee because of or arising out of any (a) breach of any representation or
warranty made by Manufacturer hereunder; (b) failure of Manufacturer to
manufacture, test, sterilize, package, store, handle, transport, or label the
Products and Raw Materials in accordance with the terms of this Agreement,
including without limitation, the Specifications, and Manufacturing/Quality
System Requirements, and Applicable Regulations; (c) material breach of this
Agreement by Manufacturer; or (d) death, personal injury or property damage
caused by the negligence or willful misconduct of Manufacturer or any of its
subcontractors, agents, employees, director or officers. 

     Section
10.2 VSI Indemnification. VSI shall indemnify, defend and hold harmless
Manufacturer, its directors, officers, employees, agents and their respective
successors and assigns (the “Manufacturer Indemnitees”), from and against any
and all liabilities, damages, losses, settlements, claims, allegations,
actions, suits, penalties, fines, costs or expenses 

10

(including, without limitation, reasonable attorneys’ fees) incurred by
or asserted against any Manufacturer Indemnitee of whatever kind or nature, to
the extent arising from or occurring as a result of a claim or demand made by a
third party against any Manufacturer Indemnitee because of or arising out of
any (a) breach of any representation or warranty made by VSI hereunder;
(b) storing, handling, transporting and labeling of the Products and Raw
Materials by VSI after such Products and Raw Materials have been received by
VSI from Manufacturer and accepted by VSI pursuant to Article V of this
Agreement; (c) material breach of this Agreement by VSI; or (d) death,
personal injury or property damage caused by the negligence or willful
misconduct of VSI or any of its subcontractors, agents, employees,
director or officers.

ARTICLE XI INSURANCE

     Section
11.1 Insurance Coverage. From and after the Effective Date and
throughout the term of this Agreement and for five years thereafter,
Manufacturer shall have and maintain in effect, at Manufacturer’s sole cost,
the following insurance relating to Manufacturer’s performance hereunder: 

          (a)
Commercial General Liability Insurance and Products Liability Insurance for
each occurrence of bodily injury and property damage, in an amount of not less
than $5,000,000.00; and

          (b)
Worker’s Compensation Insurance in accordance with applicable statutory
requirements. 

     Section
11.2 Scope. The insurance required by this Article XI shall cover all
performance under this Agreement by Manufacturer and all of its agents,
directors, officers, employees, representatives, and subcontractors.

     Section
11.3 Additional Insured. Manufacturer shall have VSI, its directors,
officers and employees named as additional insureds under each insurance policy
obtained by Manufacturer. Such additional insured status shall be procured and
evidenced by an additional insured endorsement on the policy and certificate of
insurance. Manufacturer’s insurance shall be primary to any valid collectible
insurance carried by the additional insureds.

     Section
11.4 Waiver of Subrogation. Manufacturer waives and will require its
insurers to waive all rights of subrogation and recovery against VSI and its
directors, officers and employees whether sounding in contract, tort (including
negligence and strict liability) or otherwise.

     Section
11.5 Certificates and Endorsements. Manufacturer shall furnish valid
certificates of insurance and endorsements to VSI evidencing that Manufacturer
has obtained insurance coverage required under this Article XI.

ARTICLE XII CONFIDENTIALITY

     Section 12.1 Obligation.
Each party agrees to hold in confidence and not disclose to any third party
(other than its agents), or use for its own benefit, except as permitted under
this Agreement, any of the following information which is disclosed to it by
the other party (“Confidential Information”): (a) any information provided to
one party by the other party or its employees, agents, customers, suppliers or
subcontractors that is marked with a proprietary, 

11

confidential or other similar notice or
orally disclosed to one party by the other party and followed by written notice
within thirty days of such oral disclosure indicating said information was confidential;
and (b) if not so marked, information that is reasonably understood by one
party to be the confidential information of the disclosing party. For purposes
of this Article XII, without limiting the rights of VSI hereunder, the
Specifications, Manufacturing/Quality System Requirements, Purchase Orders, and
any information relating to VSI’s customers, products, business and finances
shall be deemed to be Confidential Information of VSI. The term Confidential
Information shall not include any item of information which: (i) the receiving
party can prove was in its possession prior to disclosure thereof by the
disclosing party without requirements of confidential treatment; (ii) is or
becomes generally available to the public other than as a result of any action
by the receiving party; (iii) is rightfully disclosed to the receiving party by
a third party without the imposition on the receiving party of any
confidentiality obligation or restrictions on use; or (iv) the disclosing party
states in writing should not be considered to be confidential.

     Section
12.2 Use of Confidential Information.
Each party shall, except as otherwise set forth herein, (a) hold all
Confidential Information of the other party in confidence and not disclose such
Confidential Information to anyone except its employees, agents, subcontractors
or suppliers who have a need to know and who are at all times informed of, and
understand that they are bound to observe, the same confidentiality and
nondisclosure restrictions and obligations as are set forth in this Agreement;
(b) protect the confidentiality of and take all steps necessary to prevent
disclosure or unauthorized use of the other party’s Confidential Information to
prevent it from falling into the public domain or the possession of persons not
legally bound to maintain its confidentiality; and (c) advise the disclosing
party in writing if it becomes aware of any misappropriation or misuse of the
disclosing party’s Confidential Information by any person, and provide reasonable
assistance to the disclosing party in any proceeding or lawsuit related
thereto.

     Section
12.3 Ownership of Confidential Information. Each party shall be deemed
the owner of all right, title and interest, including all Intellectual Property
Rights, in and to their own Confidential Information.

     Section
12.4 Legal Disclosure. This Agreement will not prevent the receiving
party from disclosing Confidential Information of the disclosing party to the
extent it is required to be revealed pursuant to law, provided, however, the
receiving party which is under any such requirement of law shall give
reasonable notice to the disclosing party of such requirement and shall
cooperate with the disclosing party (at the cost and expense of the disclosing
party) in reasonable legal efforts to limit or mitigate any such disclosure so
as to preserve the proprietary nature of any Confidential Information contained
therein. 

     Section
12.5 Injunctive Relief. The parties acknowledge and agree that any
breach or threatened breach of this Article XII will result in irreparable harm
to the party whose Confidential Information is subject to such breach or
threatened breach, for which remedies at law will not be adequate. Each party,
as a disclosing party, shall therefore be entitled to seek injunctive relief in
any court of competent jurisdiction in addition to any other remedy at law or
in equity in the event of a material breach of this Article XII. 

12

ARTICLE XIII TERM AND TERMINATION

     Section
13.1 Term. This Agreement shall commence on the Effective Date and shall
remain in full force and effect until the Final Closing of the Asset Purchase
Agreement, unless terminated earlier as set forth herein.

     Section
13.2 Early Termination. 

          (a)
This Agreement (and all outstanding Purchase Orders) may be terminated early as
follows:

	
  

 	
  

 
	
  

 	
           (i)     if
 either party is in breach of any of its material obligations under this
 Agreement and fails to remedy that breach within 30 days after receipt of
 written notice of such breach from the nonbreaching party, the nonbreaching
 party may terminate this Agreement immediately by giving written notice of
 such termination;

 
	
  

 	
  

 
	
  

 	
           (ii)     Intentionally
 omitted;

 
	
  

 	
  

 
	
  

 	
           (iii)     if
 a party files a petition of any type as to its bankruptcy, is declared
 bankrupt, becomes insolvent, makes an assignment for the benefit of
 creditors, goes into liquidation or receivership, or otherwise loses legal
 control of its business, the other party may terminate this Agreement (and
 all outstanding Purchase Orders) upon written notice to the first party; and

 
	
  

 	
  

 
	
  

 	
           (iv)     by
 VSI pursuant to Section 7.2.

 

          (b)
A Purchase Order may be terminated early by a non-breaching party with notice
to the other party if the other party is in breach of any of its material
obligations under a Purchase Order and fails to remedy that breach within 30
days after receipt of written notice of such breach from the non-breaching
party.

     Section
13.3 Effect of Termination. 

          (a)
Upon any expiration or termination of this Agreement, in addition to the
parties other rights and remedies at law and in equity, the parties shall have
the following rights and obligations:

	
  

 	
  

 	
  

 
	
  

 	
           (i)     the
 parties shall negotiate in good faith the delivery of any Products under any
 outstanding binding Purchase Orders and VSI shall pay for Products accepted
 in accordance with the terms of this Agreement, provided that if VSI
 terminates this Agreement, then VSI may determine in its sole discretion
 whether and to what extent it desires to receive, accept and return Products
 under outstanding binding Purchase Orders;

 
	
  

 	
  

 
	
  

 	
           (ii)     except
 to the extent necessary to complete performance pursuant to subsection (i):

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (A)
 VSI can collect all VSI Property, Specifications and Manufacturing/Quality
 System Requirements (and all copies thereof) F.O.B. Manufacturer’s
 facilities. All freight and insurance costs of delivering the VSI Property,
 Specifications and Manufacturing/Quality System Requirements (and all copies
 thereof) shall be borne by VSI;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (B) all
 licenses granted hereunder shall immediately terminate; and

 

13

	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (C) each
 party as a receiving party shall deliver to the disclosing party such
 disclosing party’s Confidential Information in the receiving party’s
 possession or control; and

 
	
  

 	
  

 
	
  

 	
           (iii)     the
 parties shall each perform their respective post-termination obligations
 described in the Manufacturing/Quality System Requirements.

 

          (b)
Upon any cancellation of a Purchase Order, in whole or in part, as set forth
herein (excluding termination as set forth in Section 13.2(b)), VSI shall
return to Manufacturer the Products cancelled, F.O.B. VSI’s facilities. All
freight and insurance costs of delivering the Products shall be borne by
Manufacturer. Upon shipment of such Products, VSI shall have no further
liability to Manufacturer for the Products shipped, and Manufacturer shall
reimburse to VSI any amounts paid by VSI for the Products so shipped.

Upon any
termination of a Purchase Order pursuant to Section 13.2(b), VSI may return any
Products purchased under such Purchase Order in return for reimbursement by
Manufacturer for all amounts paid for such Products, Manufacturer shall refund
any amounts paid by VSI for which no Products have been received by VSI, VSI
shall have no further obligations under the terminated Purchase Order, and
Manufacturer shall deliver to VSI all VSI Property, Specifications and
Manufacturing/Quality System Requirements (and all copies thereof) relating
solely to such terminated Purchase Order F.O.B. VSI’s facilities. All freight
and insurance costs of delivering such VSI Property, Specifications and
Manufacturing/Quality System Requirements (and all copies thereof) shall be
borne by Manufacturer.

     Section
13.4 Survival of Certain Obligations. Notwithstanding the expiration or
termination of this Agreement, the obligations of the parties required to
perform their respective obligations under Section 13.3(a) shall survive until
performance by each party is fulfilled, and, in addition, Sections 2.8, 5.2,
5.3, 7.1, 7.2, 7.3, 8.2, 8.3, 8.413.3 and 13.4 and Articles I, IX, X, XI, XII
and XIV shall continue in perpetuity.

ARTICLE XIV MISCELLANEOUS

     Section
14.1 Independent Contractors. Notwithstanding anything else set forth
herein to the contrary, the relationship of the parties is that of independent
contractor, and nothing herein shall be construed to create a partnership,
joint venture, franchise, employment, or agency relationship between the
parties. Neither party shall have authority to enter into agreements of any
kind on behalf of the other party, nor shall either party have the power or
authority to bind or obligate the other party in any manner to any third party.

     Section
14.2 Assignment. Manufacturer shall not assign this Agreement or any
right or interest under this Agreement, nor delegate any work or obligation to
be performed under this Agreement except as expressly permitted herein, without
the prior written consent of VSI. Any attempted assignment of or delegation by
Manufacturer in contravention of this provision shall be void and ineffective
and shall be deemed to be a material breach hereof. VSI may freely transfer or
assign this Agreement. Notwithstanding the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto, and their
respective successors and permitted assigns.

     Section 14.3 Force
Majeure. Not withstanding any other provision of this Agreement
neither VSI nor Manufacturer shall be in default by reason of any
delay or failure in its

14

performance under this Agreement (other than
performance of payment obligations) resulting, directly or indirectly, from
fire, explosion, strike, freight embargo, Act of God or of a public enemy, war,
civil disturbance, act of government, unusually severe weather, quarantine,
epidemic, or catastrophe. 

     Section
14.4 Notices. Notices permitted or required to be given hereunder shall
be deemed sufficient if given by (a) registered or certified mail, postage
prepaid, return receipt requested, (b) private courier service, or
(c) facsimile addressed to the respective addresses of the parties as
first above written, fax number listed below or at such other fax number or
addresses as the respective parties may designate by like notice from time to
time. Notices so given shall be effective upon (1) receipt by the party to
which notice is given, or (2) on the day of faxing as evidenced by the facsimile
transmission page, the fifth day following domestic mailing or the
tenth day following international mailing, as may be the case, whichever
occurs first.

	
  

 	
  

 
	
  

 	
 If to VSI: 

 
	
  

 	
  

 
	
 Vascular
 Solutions, Inc.

 
	
 6464 Sycamore Court

 
	
 Minneapolis,
 Minnesota 55441

 
	
 Attention:
 Chief Executive Officer

 
	
 Facsimile
 No: (763) 656-4250

 
	
  

 	
  

 
	
  

 	
 If to
 Manufacturer

 
	
  

 	
  

 
	
 Escalon
 Medical Corp.

 
	
 435 Devon Park Drive, Bldg. 100

 
	
 Wayne,
 Pennsylvania 19087

 
	
 Attention:
 Chief Executive Officer

 
	
 Facsimile
 No: (610) 688-3641

 

     Section
14.5 Governing Law. The parties invoke the laws of Delaware regarding
the protection of their rights and enforcement of their obligations hereunder
and they mutually stipulate and agree that this Agreement is in all respects
(including, but not limited to, all matters of interpretation, validity,
performance and the consequences of breach) to be exclusively construed,
governed and enforced in accordance with the internal laws (excluding all
conflict of laws rules) of Delaware and any applicable federal laws of the
United States of America, as from time to time amended and in effect.

     Section
14.6 Venue. Any action at law, suit in equity, or judicial proceeding of
any kind arising directly, indirectly, or otherwise in connection with, out of,
related to or from this Agreement or the relationship between the parties shall
be litigated only in the courts of the State of Delaware, County of Wilmington
and the parties waive any right they may have to challenge the jurisdiction of
this court or seek to bring any action in any other forum, whether originally
or by transfer, removal, or change of venue.

     Section
14.7 Entire Agreement; Amendments. This Agreement, including the
Exhibits attached hereto and any binding Purchase Orders, and the Asset
Purchase Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof, and supersedes

15

and replaces
all prior or contemporaneous understandings or agreements, written or oral,
regarding such subject matter. No amendment to or modification of this
Agreement will be binding unless in writing and signed by a duly authorized
representative of both parties. 

     Section
14.8 Headings. The section and subsection headings in this Agreement are
inserted solely as a matter of convenience and for reference, and shall not be
considered in the construction or interpretation of any provision hereof. 

     Section
14.9 Severability. If any provision or provisions of this Agreement
shall be determined to be unenforceable, then the parties shall in good faith
negotiate for a substitute provision addressing the same subject matter as the
unenforceable provision(s) as may then be considered to be enforceable,
provided, however, if no substitute provision can be formulated which shall be
accepted by the parties as enforceable, this Agreement shall nonetheless
continue in full force and effect with the unenforceable provision(s) stricken
here from.

     Section
14.10 Waiver. The failure or delay of either party to enforce at any
time any provision hereof shall not be construed to be a waiver of such
provision or of the right thereafter to enforce each and every provision. No
waiver by either party to this Agreement, either express or implied, of any
breach of any term, condition, or obligation of this Agreement, shall be
construed as a waiver of any subsequent term, condition, or obligation of this
Agreement. 

     Section
14.11 Execution. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original hereunder. Each party
agrees to be bound by its own facsimile or telecopy signature, and accepts the
facsimile or telecopy signature of the other party hereto.

     Section
14.12 Remedies. All remedies set forth in this Agreement are cumulative
and in addition to any other or further remedies provided in law or in equity.

     Section
14.13 Setoff. Any amount owed to Manufacturer by VSI shall be subject to
deduction for any setoff counterclaim or indemnification right arising out of
this Agreement.

          IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized and empowered officer and representatives as of the
Effective Date.

	
  

 	
  

 	
  

 	
  

 	
  

 
	
 VASCULAR
 SOLUTIONS, INC.

 	
  

 	
 ESCALON
 VASCULAR ACCESS, INC.

 
	
  

 	
  

 	
  

 
	
 By:

 	
 /s/ James
 Hennen

 	
  

 	
 By:

 	
 /s/ Richard
 J. DePiano, Jr.

 
	
  

 	
 James Hennen

 	
  

 	
  

 	
 Richard J.
 DePiano, Jr., Esquire

 
	
  

 	
 Chief
 Financial Officer

 	
  

 	
  

 	
 VP &
 General Counsel

 

16EXHIBIT 10.4

GUARANTEE

          This
Guarantee (this “Guarantee”) is delivered by Escalon Medical Corp., a
Pennsylvania corporation (“Parent”) for the benefit of Vascular
Solutions, Inc., a Minnesota corporation (“Vascular”) and its respective officers,
directors, employees, agents and shareholders. 

          WHEREAS,
Vascular is entering into that certain Asset Purchase Agreement, dated as of
the date hereof, with Escalon Vascular Access, Inc., a Delaware corporation and
wholly-owned subsidiary of Parent (“Escalon Vascular Access”), pursuant to
which Vascular is purchasing certain assets of Escalon Vascular Access (the “Assets APA”);

          WHEREAS,
Vascular is entering into that certain Asset Purchase Agreement, dated as of
the date hereof, with Escalon Vascular IP Holdings, Inc., a Delaware
corporation and wholly-owned subsidiary of Parent (“Escalon Vascular IP Holdings”),
pursuant to which Vascular is purchasing certain intellectual property of
Escalon Vascular IP Holdings (the “IP APA”);

          WHEREAS,
it is a condition to the obligation of Vascular to consummate the transactions
contemplated by the Assets APA and IP APA that Parent deliver this Guarantee. 

          NOW,
THEREFORE, in consideration of the foregoing and as a material inducement to
Vascular entering into the Assets APA and the IP APA, and intending to be
legally bound hereby, Parent hereby agrees as follows:

1.       Parent
unconditionally guarantees to Vascular the full and complete performance by
Escalon Vascular Access of Escalon Vascular Access’ obligations under Article
IX of the Assets APA and Parent shall be liable to the same extent as Escalon
Vascular Access, or any permitted transferee of Escalon Vascular Access under
the Assets APA for any breach of any such obligation. Parent hereby waives
diligence, presentment, demand of performance, filing of any claim, protest, or
notice in connection with the performance of its obligations set forth herein.

2.       Parent
unconditionally guarantees to Vascular the full and complete performance by
Escalon Vascular IP Holdings of Escalon Vascular IP Holdings’ obligations under
Article IX of the IP APA and Parent shall be liable to the same extent as
Escalon Vascular IP Holdings, or any permitted transferee of Escalon Vascular
IP Holdings under the IP APA for any breach of any such obligation. Parent
hereby waives diligence, presentment, demand of performance, filing of any
claim, protest, or notice in connection with the performance of its obligations
set forth herein.

3.       Parent’s
maximum liability under Sections 1 and 2 hereof will not exceed $5,750,000; provided, however,
that the limitations set forth in this Section 3 shall not apply to claims by
Vascular brought on the basis of fraud or willful misconduct (it being
understand, that Parent shall be liable to the full extent of Escalon Vascular
Access’ and Escalon Vascular IP Holdings’ liability with respect to any such
claims).

4.       Parent
hereby represents and warrants that the intellectual property delivered to
Vascular pursuant to the Assets APA and the IP APA includes all processes,
methods, techniques, procedures, trade secrets and know-how used or necessary
to manufacture the products of the Business (as defined in the Assets APA).
Parent indemnifies Vascular for all Losses (as defined in the Assets APA) with
respect to any breach of the foregoing representation and warranty.

5.       Noncompetition.

	
  

 	
  

 
	
  

 	
                          (a)
 For three (3) years after the date hereof (the “Restricted Period”), Parent
 shall not and shall cause Parent’s affiliates not to, directly or indirectly,
 engage in, and shall use its best efforts to ensure that none of its
 officers, employees or directors directly or indirectly engage in, any
 Competitive Business (as defined below), whether in existence now or at any
 time in the future, in any manner or capacity (e.g., as an advisor,
 principal, agent, partner, officer, director, stockholder, consultant, member
 of any association or otherwise). A “Competitive
 Business” shall mean any business or venture that researches,
 designs, develops, creates, markets, distributes, or licenses or sells
 accessories, devices, systems, software, products, or services that compete,
 directly or indirectly, with either the Business as defined in the Assets APA
 or the Business as defined in the IP APA. 

 
	
  

 	
  

 
	
  

 	
                          (b)
 Parent will not, directly or indirectly, assist or encourage any other person
 or entity in carrying out, directly or indirectly, any activity that would be
 prohibited by the above provisions of Sections 5 or 6 if such activity
 were carried out by Parent, either directly or indirectly. In particular, Parent
 agrees that it will not, directly or indirectly, induce any employee of
 Parent or Vascular to carry out, directly or indirectly, any such activity.

 
	
  

 	
  

 
	
  

 	
                          (c)
 Parent agrees that the restrictions and agreements contained in
 Sections 5 and 6 are reasonable and necessary to protect the legitimate
 interests of Vascular and that any violation of Sections 5 or 6 will
 cause substantial and irreparable harm to Vascular that would not be
 quantifiable and for which no adequate remedy would exist at law and
 accordingly injunctive relief shall be available for any violation of
 Sections 5 or 6.

 
	
  

 	
  

 
	
  

 	
                          (d)
 If the duration or extent of business activities covered by Sections 5
 or 6 are in excess of what is valid and enforceable under applicable law,
 then such provisions shall be construed to cover only the greatest duration
 or activities that are valid and enforceable. Parent acknowledges the
 uncertainty of the law in this respect and expressly stipulates that this
 Guarantee be given the construction which renders its provisions valid and
 enforceable to the maximum extent (not exceeding its express terms) possible
 under applicable law. The parties intend these provisions to be deemed to be
 a series of separate covenants, one for each and every state of the United
 States of America, and each and every political subdivision of each and every
 country outside the United States of America where these provisions is
 intended to be in effect.

 
	
  

 	
  

 
	
  

 	
                          (e)
 Ownership, as a passive investment, in the aggregate of less than 1% of the
 outstanding shares of capital stock of any corporation listed on a national
 securities exchange or publicly traded on any nationally recognized
 over-the-counter market shall not constitute a breach of Section 5(a).

 

6.       Agreement
Not to Solicit. Excepting Roger Edens, during the Restricted Period, Parent
shall not (i) directly or indirectly attempt to hire away any then-current
employee of Vascular or any of its affiliates or to persuade any such employee
to leave employment with Vascular or any of its affiliates or
(ii) directly or indirectly solicit, divert, or take away, or attempt to
solicit, divert or take away, the business of any person with whom Vascular or
the Business has established or is actively seeking to establish a business or
customer relationship.

7.       Parent
acknowledges and agrees that the covenants and agreements of Parent contained
in this Guarantee are an integral and essential part of the transactions
contemplated by the Assets APA and the IP APA and Vascular would not have
entered into the Assets APA and the IP APA without the benefit of such
covenants and agreements.

2

8.       This
Guarantee, the Assets APA and the IP APA and the other documents referred to
herein contain the complete agreement between the parties and supersede any
prior understandings, agreements or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any
way.

9.       The
internal law, without regard to conflicts of laws principles, of the State of
Delaware shall govern all questions concerning the construction, validity and
interpretation of this Guarantee and the performance of the obligations imposed
by this Guarantee.

10.       Parent
submits to the exclusive jurisdiction of any state or federal court sitting in
Wilmington, Delaware, in any action or proceeding arising out of or relating to
this Guarantee and agrees that all claims in respect of the action or
proceeding may be heard and determined in any such court. Parent agrees not to
bring any action or proceeding arising out of or relating to this Guarantee in
any other court. Parent waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety
or other security that might be required of any other party with respect to any
such action or proceeding. Parent agrees that any party may file a
copy of this paragraph with any court as written evidence of the knowing,
voluntary and bargained agreement of Parent irrevocably to waive any objections
to venue or to convenience of forum.

11.       PARENT
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS
GUARANTEE IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
IT IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS GUARANTEE. PARENT CERTIFIES AND ACKNOWLEDGES THAT (I) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, (II) IT UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF SUCH WAIVER AND (III) IT MAKES SUCH WAIVER VOLUNTARILY.

          IN
WITNESS WHEREOF, Parent has executed this Guarantee as of April 30, 2010.

	
  

 	
  

 	
  

 
	
  

 	
 PARENT:

 
	
  

 	
  

 	
  

 
	
  

 	
 ESCALON MEDICAL CORP.

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
      /s/
 Richard J. DePiano, Jr.

 
	
  

 	
 Richard J. DePiano, Jr.,
 Esquire

 
	
  

 	
 President &
 General Counsel

 

3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}]]