Document:

cwieaustinchalkrpii.htm

Exhibit 10.3

CWEI AUSTIN CHALK REWARD PLAN II

ARTICLE I

Purpose of Plan

1.1           Purpose of Plan.  The purpose of the Reward Plan (the “Plan”) is to reward eligible employees and other service providers  listed on Exhibit A of Clayton Williams Energy, Inc., and its wholly-owned affiliates (the “Employer”) for continued quality service to the Employer, and to encourage retention of those employees and service providers, by providing them the opportunity to receive bonus payments that are based on profits derived from a portion of the Employer’s working interest in certain wells drilled by Employer in the area described on Exhibit B.

ARTICLE II

Definitions and Construction

2.1           Definitions.                                Where the following words and phases appear in the Plan, each will have the respective meaning set forth below, unless the context clearly indicated to the contrary.

	
  

	
(a)

	
Acquisition Costs:

	
The portion of any costs or expenses incurred by the Employer that are attributable to acquiring the Well Interests.

	
  

	
(b)

	
Affiliate:

	
An “Affiliate” of any specified person means any other person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified person.  For the purposes of this definition, “control” when used with respect to any person means the power to direct the management and policies of such person, directly or indirectly, through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

	
  

	
( c)

	
Agreed Rate:

	
2.86% per annum, compounded quarterly.

	
  

	
(d)

	
Bonus Award:

	
The right granted to a Participant to receive payments, if any, under the terms and conditions of the Plan.

	
  

	
(e)

	
Bonus Percentage:

	
The designated percentage set forth in each Participant’s Notice of Bonus Award that is used to calculate the amount of payments, if any, that such Participant may be entitled to under the Plan.

	
  

	
(f)

	
Change of Control.

	
A “Change of Control” will be deemed to occur as of (i) the date  any “person” or “group” of related persons (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that such person or group shall be deemed to have “beneficial ownership” of all shares that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the Voting Stock of the Company (or its successor by merger, consolidation or purchase of all or substantially all of its assets) (for the purposes of this clause, such person or group shall be deemed to beneficially own any Voting Stock of the Company held by a parent entity,  if such person or group “beneficially owns” (as defined above), directly or indirectly, more than 35% of the voting power of the Voting Stock of the Company (or its successor by merger, consolidation or purchase of all or substantially all of its assets) or its parent entity and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the board of directors of the Company (or such successor) or its parent entity, or (ii) the date of death of Clayton W. Williams, Jr.

 

 

  

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(g)

	
Code:

	
The Internal Revenue Code of 1986, as amended from time to time.

	
  

	
(h)

	
Committee:

	
The Compensation Committee of the Company’s board of directors.

	
  

	
(i)

	
Company:

	
Clayton Williams Energy, Inc.

	
  

	
(j)

	
Effective Date:

	
August 9, 2010

	
  

	
(k)

	
Eligible Person:

	
Each person who is employed by Employer or who performs services for the Employer as a consultant or independent contractor.

	
  

	
(l)

	
Employer:

	
The Company and its wholly-owned Affiliates.

	
  

	
(m)

	
Exchange Act:

	
The Securities Exchange Act of 1934, as amended.

	
  

	
(n)

	
Full Vesting Date:

	
August 9, 2012

	
  

	
(o)

	
Notice of Bonus Award:

	
The notice provided to each Participant pursuant to Section 3.1, setting forth, among other things, the Participant’s Bonus Percentage under the Plan.

	
  

	
(p)

	
Participant:

	
Each Eligible Person who has been granted a Bonus Award under the Plan and participates in the Plan in accordance with the provisions of Article III.

	
  

	
(q)

	
Payment Date:

	
With respect to each Plan Quarter, the date that payment, if any, is made to eligible Participants pursuant to Article V.

 

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(r)

	
Permitted Assignee:

	
Each Participant’s spouse, parents, or natural or adoptive lineal descendants, or one or more trusts or partnerships established exclusively for the benefit of each Participant’s spouse, parents or natural or adoptive lineal descendants.

	
  

	
(s)

	
Permitted Holder:

	
Clayton W. Williams, Jr. and any Affiliate or Related Person thereof.

	
  

	
(t)

	
Plan:

	
This CWEI Austin Chalk Reward Plan II, as amended from time to time.

	
  

	
(u)

	
Plan Quarter:

	
   Each calendar quarter within a Plan Year.

	
  

	
(v)

	
Plan Year:

	
Each twelve consecutive month period beginning each January 1.

	
  

	
(w)

	
Quarterly Bonus Amount:

	
This amount, if any, for each Participant with respect to each Plan Quarter that is calculated in accordance with the provisions of Section 4.3.

	
  

	
(x)

	
Quarterly Bonus Pool:

	
The bonus pool, if any, determined as of the end of each Plan Quarter in accordance with the provisions of Article IV.

	
  

	
(y)

	
Related Person:

	
With respect to any Permitted Holder, a “Related Person” means:

(1)           any controlling stockholder or a majority (or more) owned subsidiary of such Permitted Holder or, in the case of an individual, any spouse, family member (including adopted children), heir or descendant of such Permitted Holder, any trust created for the benefit of such individual or such individual’s estate, executor, administrator, committee or beneficiaries; or

(2)           any trust, corporation, partnership or other entity, the beneficiaries, stockholders, owners or persons beneficially owning a majority (or more) controlling interest of which consist of such Permitted Holder and/or such other persons referred to in the immediately preceding clause (1).

	
  

	
(z)

	
Sale Transaction:

	
A “Sale Transaction” will be deemed to occur on (1) any sale, exchange, or other disposition to a third party (excluding any Affiliate of the Employer) of (i) the Employer’s Well Interest or of the Employer’s rights or benefits with respect to the Well Interest, or (ii) all or substantially all of the Company’s assets, or (2) a Change of Control.

	
  

	
(aa)

	
Voting Stock:

	
All classes of capital stock of a corporation then outstanding and normally entitled to vote in the election of directors.

	
  

	
(bb)

	
Well:

	
A well drilled by the Employer in the area described on Exhibit B, provided that the well has a spud date on or after the Effective Date and the primary objective of the well is the Austin Chalk, Buda, Georgetown or Eagle Ford Shale formation.

 

 

  

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(cc)

	
Well Costs:

	
The Employer’s share of costs pursuant to any operating agreement for the drilling, completing, equipping, deepening, or sidetracking the Well, including, without limitation: (i) the costs of surveying and staking the Well, the costs of any surface damages, and the costs of clearing, coring, testing, logging, and evaluating the Well; (ii) the costs of casing, cement, and cement services for the Well; (iii) the cost of plugging and abandoning the Well (including standard and customary radiation activities associated therewith), if it is determined that the Well would not produce in commercial  quantities and should be abandoned; (iv) all direct charges and overhead chargeable to the Employer with respect to the Well under any applicable operating agreement until such time as all operations are carried out as required by applicable regulations and sound engineering practices to make such Well ready for production, including such charges and overhead attributable to the installation and testing of wellhead equipment, or costs to plug and abandon a dry hole; (v) all costs incurred by the Employer in recompleting or plugging back the Well; (vi)  all costs incurred by the Employer in reworking the Well if the rework is covered by an authority for expenditure under the applicable operating agreement; (vii) all costs incurred by the Employer in locating, drilling, completing, equipping, deepening, or sidetracking any enhanced recovery producer or injector Well (including the costs of all necessary surface equipment such as steam generators, compressors, water treating facilities, injection pumps, flow lines and steam lines); and (viii) the costs of constructing production facilities, pipelines and other facilities necessary to develop property acquired pursuant to the terms  hereof and produce, collect, store, treat, deliver, market, sell or otherwise dispose of oil, gas, and other hydrocarbons and minerals therefrom; provided, that Well Costs will not include any Acquisition Costs.

	
  

	
(dd)

	
Well Interest:

	
7% of the Employer’s working interest in each Well.

	
  

	
(ee)

	
Well Interest Profits:

	
As of the applicable measurement date, an amount equal to the cumulative cash proceeds earned by the Employer with respect to all Well Interests, minus the sum of (i) Well Costs and other expenses incurred by the Employer with respect to such Well Interests, plus (ii) an internal rate of return on such costs equal to the Agreed Rate.

2.2           Number and Gender. The masculine gender, when used herein, includes the feminine gender, and, unless context indicates otherwise, the singular includes the plural and the plural the singular.

2.3           Headings.  The headings of Articles and Section herein are included solely for convenience, and if there is any conflict between headings and the text of the Plan, the text will control.  All references to Sections and Articles are to this Plan unless otherwise indicated.

 

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ARTICLE III

Participation

3.1           Selection of Participants and Grant of Bonus Awards. The Committee, in its sole discretion, may select which, if any, Eligible Persons will be granted Bonus Awards and become Participants in the Plan. Each Participant's Bonus Percentage will be determined by, and in the sole discretion of, the Committee. Each Bonus Award granted to a Participant will be evidenced by a Notice of Bonus Award that will specify (a) the Participant's Bonus Percentage, (b) the Participant's effective date of Plan participation, and (c) such other terms and provisions as the Committee may determine in its sole discretion.

3.2           Commencement of Participation. Each Eligible Person will become a Participant upon the effective date of Plan participation specified in his Notice of Bonus Award, provided that such Eligible Person returns to the Company an executed Notice of Bonus Award. Once an Eligible Person becomes a Participant in the Plan, he will remain a Participant until his Plan participation terminates in accordance with Section 3.3.

3.3           Termination of Participation.                                                       A Participant's Plan participation will terminate on the earliest to occur of the following:

	
  

	
(a)

	
The date on which such Participant terminates employment or service with the Employer for any reason, but only if such termination date occurs prior to the Full Vesting Date; provided, however, that with respect to a Participant who is a consultant or independent contractor and who is not actively performing services for the Employer, such Participant will, for purposes of the Plan, be deemed to remain in the service of the Employer unless and until the Committee, in its sole discretion, determines that such service relationship has been terminated;

	
  

	
(b)

	
The date on which such Participant forfeits his Bonus Award after the Full Vesting Date pursuant to Section 6.2;

	
  

	
(c)

	
The date of death of such Participant if there is no Permitted Assignee pursuant to Article VII; or

	
  

	
(d)

	
The date of termination of the Plan or such Participant's Bonus Award pursuant to Article X.

From and after the date a person's Plan participation terminates, such person will not be entitled to receive any payment under the Plan, pursuant to a Bonus Award or otherwise.

ARTICLE IV

Quarterly Bonus Pool and Quarterly Bonus Amounts

4.1           Calculation of Quarterly Bonus Pool.    As soon as administratively practicable after the last day of each Plan Quarter, the Committee will calculate the Quarterly Bonus Pool for such Plan Quarter in the following manner:

 

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(a)

	
If Well Interest Profits, determined as of the last day of the applicable Plan Quarter, equal a negative amount or zero, the Quarterly Bonus Pool for such Plan Quarter will be deemed to be equal to zero.

	
  

	
(b)

	
If Well Interest Profits, determined as of the last day of the applicable Plan Quarter, equal an amount greater than zero, the Quarterly Bonus Pool for such Plan Quarter will be an amount equal to (i) Well Interest Profits determined as of the last day of such Plan Quarter, minus (ii) the sum of the Quarterly Bonus Pools for all preceding Plan Quarters (taking into account that a Quarterly Bonus Pool will be deemed to be equal to zero if it would otherwise be a negative amount).

4.2           Calculation of Quarterly Bonus Pool in the Event of a Sale Transaction. In the event a Sale Transaction occurs with respect to a Plan Quarter, the Quarterly Bonus Pool for such Plan Quarter will be calculated in the manner described in Section 4.1, except that Well Interest Profits will be deemed to include the amount of net sale proceeds from the Sale Transaction that the Committee, using any reasonable method it deems appropriate, determines is attributable to the Well Interest. In the event that the Sale Transaction does not result in the receipt of any net sale proceeds (for example, a Change of Control), the Committee will determine a deemed amount of net sale proceeds attributable to the Well Interest, taking into account the relevant facts and circumstances and using any reasonable method it deems appropriate.

4.3           Calculation of Participants' Quarterly Bonus Amounts. As soon as administratively practicable after the last day of each Plan Quarter, the Committee will calculate each Participant's Quarterly Bonus Amount for such Plan Quarter, which will be an amount equal to the product of the Participant's Bonus Percentage multiplied by the Quarterly Bonus Pool for such Plan Quarter (taking into account that a Quarterly Bonus Pool will be deemed to be equal to zero if it would otherwise be a negative amount).

ARTICLE V

Payment of Quarterly Bonus Amounts

5.1 Payment of Quarterly Bonus Amounts. With respect to each Plan Quarter, each Participant whose Plan participation has not terminated as of the Payment Date for such Plan Quarter will be entitled to receive a payment, if any, equal to one hundred percent (100%) of his Quarterly Bonus Amount for such Plan Quarter. Such payment will be made by the Employer in cash in a single sum as soon as administratively practicable following the last day of the applicable Plan Quarter, but in no event later than two and one-half (2 1/2) months following the last day of the Plan Year in which such Plan Quarter ends.

ARTICLE VI

Forfeiture of Bonus Awards

6.1           Forfeiture of Bonus Award Prior to Full Vesting Date. If a Participant's Plan participation terminates in accordance with Section 3.3 prior to the Full Vesting Date, such 

 

 

  

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Participant's Bonus Award will be forfeited as of the date that his Plan participation terminates. By way of example and not limitation, a Participant who terminates employment with the Employer prior to the Full Vesting Date will forfeit his Bonus Award as of the date of such termination of employment.

6.2           Forfeiture of Vested Bonus Award for Cause. Each Participant will forfeit his Bonus Award if such Participant:

	
  

	
(a)

	
with respect to time periods during which such Participant is employed by or performing (or deemed to be performing) services for the Employer, (1) materially breaches the terms of his employment agreement or other services agreement with the Employer or any of its Affiliates, (2) materially breaches the terms of any corporate policy or code of conduct established by the Employer or any of its Affiliates, or (3) the Committee, in its sole discretion, determines that such Participant has engaged in gross negligence or willful misconduct in the performance of services for the Employer or any of its Affiliates, including, without limitation, a willful refusal without proper legal reason to perform his duties and responsibilities, or

	
  

	
(b)

	
at any time, including time periods during which such Participant is not employed by or performing (or deemed to be performing) services for the Employer, (i) admits or enters a plea of no contest to or is convicted of a felony against the Employer or any of its Affiliates, (ii) materially breaches any provision of any agreement with the Employer or any of its Affiliates, or (iii) engages in dishonest or fraudulent conduct with respect to the business, reputation or affairs of the Employer or any of its Affiliates.

The forfeiture provisions of this Section 6.2 will apply regardless of whether a Participant's employment or service relationship with the Employer was terminated as a result of conduct described in subsections (a) or (b) above, and regardless of whether such Participant continued Plan participation through the Full Vesting Date.

6.3           Forfeiture of Bonus Award on Account of Participant's Death if No Permitted Assignee. A Participant will forfeit his Bonus Award upon the Participant's date of death if the Committee determines that the deceased Participant's Bonus Award was not transferred to a Permitted Assignee pursuant to Article VII or that no Permitted Assignee exists.

6.4           Consequences of Forfeiture of Bonus Award. From and after the date a Participant forfeits his Bonus Award, such person will not be entitled to receive any payment under the Plan pursuant to a Bonus Award or otherwise.

 

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ARTICLE VII

Permitted Assignees of Vested Bonus Award Upon Participant's Death

7.1           Permitted Assignees of Vested Bonus Award Upon Participant's Death.

	
  

	
(a)

	
On or after the Full Vesting Date, all or any portion of each Participant's Bonus Award may be transferred, by operation of will or applicable law, to a Permitted Assignee upon such Participant's death.

	
  

	
(b)

	
Each Permitted Assignee who is entitled to receive payments from the Plan under this Section 7.1, if any, will receive and hold only those rights and interests, and be subject to the same terms and conditions that would apply if such Permitted Assignee were a Participant in the Plan, including, without limitation, the restrictions on the transfer of a Participant's Bonus Award. As a condition to receipt of any rights and interests under this Section 7.1, a Permitted Assignee may be required to provide the Committee with any information necessary for the Committee to effect a transfer of such rights and interests, and to execute and deliver a written agreement with the Company agreeing to be bound by the terms of the Plan. Notwithstanding whether a Permitted Assignee has executed and delivered such an agreement, the acceptance of distributions from the Plan by a Permitted Assignee will be deemed to be an agreement by such Permitted Assignee to be bound by the Plan's terms.

	
  

	
(c )

	
To the extent that a payment is made under the Plan to an individual who the Committee determines in good faith is a Permitted Assignee with respect to a deceased Participant's Bonus Award, any and all obligations with respect to such payment will be discharged and neither the Plan nor the Employer will have any obligation to another person claiming to be the Participant's Permitted Assignee with respect to such payment, notwithstanding any subsequent determination by the Committee, a court of law, or otherwise, that such payment was made based on a mistake of fact or a mistake of law.

	
  

	
(d)

	
In the event that there is a dispute or uncertainty regarding the identity of the Permitted Assignee(s) to whom a deceased Participant's Bonus Award may have been transferred, the Committee will be permitted to retain any payment that would otherwise be payable with respect to such Bonus Award until the identity of such Permitted Assignee(s) can be determined. The amount of any such retained payment will be credited with interest at the Agreed Rate from the time such amount would otherwise be payable until the time such amount is paid. In addition, in the case of any bona fide dispute between parties concerning the right to a payment under the Plan, the Committee may, in its discretion, file an interpleader action in a court of competent jurisdiction, naming the parties to the dispute and, if applicable, may pay the disputed amount into the court to be distributed in accordance with the court's decision or take such other action as it determines, in its sole discretion, constitutes an appropriate way to resolve or otherwise settle the dispute.

 

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ARTICLE VIII

Administration

8.1           Committee Administration. The Plan will be administered by the Committee.

8.2           Meetings.                      The Committee will hold meetings upon such notice and at such time and place as it may from time to time determine. Notice to a member will not be required if waived in writing by that member. A majority of the members of the Committee duly appointed will constitute a quorum for the transaction of business. All resolutions or other actions taken by the Committee at any meeting where a quorum is present will be by vote of a majority of those present at such meeting and entitled to vote. Resolutions may be adopted or other action taken without a meeting upon written consent signed by all of the members of the Committee. Members of the Committee may participate in meetings by means of telephone conference or similar communication whereby all persons participating in the meeting can hear and speak to each other.

8.3           Discretion to Interpret Plan. The Committee has absolute discretion to construe any and all provisions of the Plan, including, but not limited to, the discretion to resolve ambiguities, inconsistencies, or omissions conclusively. The decisions of the Committee upon all matters within the scope of its authority will be binding and conclusive upon all persons.

8.4           Powers and Duties. In addition to the powers described in Section 8.3 and all other powers specifically granted under the Plan, the Committee will have all powers necessary or proper to administer the Plan and to discharge its duties under the Plan, including, but not limited to, the following powers:

	
  

	
(a)

	
To make and enforce such rules, regulations, and procedures as it may deem necessary or proper for the orderly and efficient administration of the Plan;

	
  

	
(b)

	
To enter into an agreement with any individual or entity to perform services with respect to the Plan;

	
  

	
( c)

	
In its discretion, to interpret and decide all matters of fact in determining the amount of and authorizing payments with respect to Bonus Awards under the Plan, its interpretation and decision thereof to be final and conclusive on all persons claiming a right with respect to such Bonus Awards;

	
  

	
(d)

	
In its discretion, to determine eligibility under the terms of the Plan, its determination thereof to be final and conclusive on all persons;

	
  

	
(e)

	
To prepare and distribute information explaining the Plan;

	
  

	
(f)

	
To obtain from the Employer and Participants (or the assignee of a Participant) such information as may be necessary for the proper administration of the Plan;

	
  

	
(g)

	
To sue or cause suit to be brought in the name of the Plan; and

 

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(h)

	
To establish a claims procedure and any other procedures for implementation of the Plan.

8.5           Expenses. The Employer will pay the reasonable expenses incident to the administration of the Plan, including, but not limited to, the compensation of any legal counsel, advisors, or other technical or clerical assistance as may be required; the payment of any bond or security required by applicable law; and any other expenses incidental to the operation of the Plan that the Committee determines are proper.

8.6           Reliance on Reports, Certificates, and Participant Information. The Committee is entitled to rely conclusively upon all tables, valuations, certificates, opinions, and reports furnished by an actuary, accountant, controller, counsel, insurance company, or other person who is employed or engaged for such purposes. Moreover, the Committee will be entitled to rely upon information furnished to the Committee or the Employer by a Participant (or a Permitted Assignee), including, but not limited to, such person's current mailing address.

8.7           Right to Delegate. The Committee, in its sole discretion, may delegate to one or more employees or agents of the Employer its day-to-day ministerial duties and powers (but only its day-to-day ministerial duties and powers) under the Plan.

8.8           Indemnification. The Company will indemnify and hold harmless each member of the Committee, and each employee or agent of the Employer who is a delegate of the Committee, against any and all expenses and liabilities arising out of such individual's administrative functions or other responsibilities, including, but not limited to, any expenses and liabilities that are caused by or result from an act or omission constituting the negligence of such individual in the performance of such functions or responsibilities, but excluding expenses and liabilities arising out of such individual's own gross negligence or willful misconduct. Expenses against which such person will be indemnified hereunder include, but are not limited to, the amounts of any settlement, judgment, costs, counsel fees, and related charges reasonably incurred in connection with a claim asserted or a proceeding brought. Notwithstanding the foregoing provisions of this Section, this Section will not apply to, and the Company will not indemnify against, any expense that was incurred without the consent or approval of the Company, unless such consent or approval has been waived in writing by the Company.

ARTICLE IX

Nature of the Plan

9.1           Unfunded, Unsecured Plan. The Plan will constitute an unfunded, unsecured obligation of the Employer to make payments of incentive rewards to certain persons from its general assets in accordance with the Plan. Each Bonus Award granted under the Plan merely constitutes a mechanism for measuring such incentive compensation and does not constitute any property right or interest in the Company or any of its Affiliates, or in the Well or the Well Interest. Neither the establishment of the Plan, the granting of Bonus Awards, nor any other action taken in connection with the Plan will be deemed to create an escrow or trust fund of any kind.

 

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9.2           No Rights of Participant. No Participant will have any security or other interest in any assets of the Employer or any of its Affiliates as a result of a Bonus Award. Further, no Participant will have any right to receive a property interest in the Well or the Well Interest. Participants and all persons claiming under Participants (including Permitted Assignees) will rely solely on the unsecured promise of the Employer set forth herein, and nothing in the Plan or a Notice of Bonus Award will be construed to give a Participant or anyone claiming under a Participant (including a Permitted Assignee) any right, title, interest, or claim in or to any specific asset, fund, entity, reserve, account, or property of any kind whatsoever owned by the Employer or any of its Affiliates, or in which any such entity may have an interest now or in the future, and each Participant will have the right to enforce any claim hereunder only in the same manner as a general creditor. Neither the establishment of the Plan nor the granting of any Bonus Award will create any right in any Participant to make any decision, or provide input with respect to any decision, relating to the business of the Employer or any of its Affiliates.

ARTICLE X

Amendment and Termination

10.1           Amendment of Plan. Notwithstanding any provision of any other communication, either oral or written, made by the Employer or any of its Affiliates, the Committee, or any other individual or entity to Eligible Persons or to any other individual or entity, the Company reserves the absolute and unconditional right to amend the Plan from time to time. All amendments to the Plan will be in writing, and any oral statements or representations made by the Employer or any of its Affiliates, the Committee, or any other individual or entity that alter, modify, amend, or are inconsistent with the written terms of the Plan will be invalid and unenforceable and may not be relied upon by any Eligible Person, Permitted Assignee, service provider, or other individual or entity. All amendments will be executed by such person or persons as the Company in its discretion authorizes.

10.2           Right to Terminate. Notwithstanding any provision of any other communication, either oral or written, made by the Employer or any of its Affiliates, the Committee, or any other individual or entity to any Eligible Person, Permitted Assignee, service provider, or other individual or entity, the Company reserves the absolute and unconditional right to terminate the Plan, in whole or in part, and to terminate the Bonus Awards of some or all Participants and each Permitted Assignee of such Participants, with such termination to be effective as of the date selected by the Company in its sole discretion.

10.3           Effect of Termination. In the event of a termination of the Plan or a termination of the Bonus Award with respect to one or more Participants pursuant to Section 10.2, each such affected Participant (or his Permitted Assignee(s)) will receive a final payment under the Plan reflecting such Participant's Bonus Award as of the date of such termination. The Committee will determine, in its sole discretion and using any reasonable method and manner which it deems appropriate, the final payment amount that each Participant (or his Permitted Assignee(s)) is entitled to upon such termination, taking into account, in the manner it deems appropriate, such information which is available to the Committee as of the date that it makes its determination. A final payment pursuant to this Section 10.3 will be distributed to a Participant (or his Permitted Assignee(s)) as soon as administratively practicable after such termination and in no event later 

 

  

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than two and one-half (2 1/2) months following the last day of the Plan Year in which such termination occurs; provided, however, that, notwithstanding the foregoing to the contrary, to the extent that such termination and final payment would be subject to section 409A of the Code, such termination and final payment will be made in accordance with the applicable requirements of section 409A of the Code and the authority thereunder.

ARTICLE XI

General Provisions

11.1           No Guarantee of Employment.                                                      Nothing contained in the Plan will grant any Eligible Person, or other individual who is an employee of the Employer or any of its Affiliates, or who otherwise performs services for the Employer or any of its Affiliates, the right to be retained in the service of the Employer or any of its Affiliates, nor will anything contained in the Plan limit in any way the right of the Employer or any of its Affiliates to discharge or terminate the service of any individual, including an Eligible Person, at any time, without regard to the effect such discharge or termination may have on any of such individual's rights under the Plan.

11.2           Withholding.                                The Employer will at all times be entitled with respect to a payment due under the Plan: (a) to withhold, or cause to be withheld, from such payment to a Participant (or Permitted Assignee), or from any other payment to such Participant (or Permitted Assignee), an amount necessary to satisfy any and all tax withholding obligations or other deductions with respect to any wages or other payments made to a Participant (or Permitted Assignee), which arise under applicable law or are authorized by the Participant (or Permitted Assignee), and (b) to take any other action as may in its opinion be necessary to satisfy all obligations for the payment of such taxes or such other deductions.

11.3           Offset of Amounts Owed to the Employer. Whenever a Participant (or Permitted Assignee) would be otherwise due any payment pursuant to the Plan, the Employer will be entitled to deduct from such payment any amounts that the Participant (or Permitted Assignee) owes the Employer or any of its Affiliates, including, without limitation, overpayments made under the Plan to either the Participant or a Permitted Assignee, before payment of such amount to such Participant (or Permitted Assignee).

11.4           Agreement to be Bound by Plan.                                                                 Through the acceptance of payments pursuant to the Plan, each Participant agrees to be bound by the terms and conditions of the Plan.

11.5           Nonalienation of Benefits.

	
  

	
(a)

	
Except as provided in Section 7.1, Section 11.3, and Section 11.5(b), or as the Committee may otherwise permit, in writing, in its sole discretion, no interest in or benefit payable under the Plan will be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any action by a Participant to anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the same will be void and of no effect; nor will any interest in or benefit payable under the Plan be in any way subject to any legal or equitable process, including, but not limited to, garnishment, attachment, levy, seizure, or the lien of any person. This provision will be construed to provide each Participant, or other person claiming any interest or benefit in the Plan through a Participant, with the maximum protection afforded such Participant's interest in the Plan (and the benefits provided thereunder) by law against alienation, encumbrance, and any legal and equitable process, including, but not limited to, attachment, garnishment, levy, seizure, or other lien.

 

 

  

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(b)

	
Notwithstanding Section 11.5(a), the Committee will comply with the terms and provisions of a "qualified domestic relations order" as defined in section 414(p) of the Code.

11.6           Unknown Whereabouts.                                           It will be the affirmative duty of each Participant (and Permitted Assignee) to inform the Committee of, and to keep on file with the Committee, his current mailing address. If a Participant (or Permitted Assignee) fails to inform the Committee of his current mailing address, neither the Committee, the Employer, or any Affiliate will be responsible for any late payment or loss of benefits or for failure of any notice to be provided or provided timely under the terms of the Plan to such Participant (or Permitted Assignee).

11.7           Code Section 409A. To the extent that the Plan is (or becomes) subject to Code section 409A, or any successor provision, as amended from time to time, the Committee may at all times interpret and construe the Plan's terms to conform and comply with the requirements of Code section 409A (or any successor provision). Further, notwithstanding any other provision of the Plan to the contrary, the Committee retains the right to amend the Plan to conform and comply with the requirements of Code section 409A (or any successor provision).

11.8           Jurisdiction. Except to the extent that any federal law applies to the Plan and preempts state law, the Plan and all actions arising out of or in connection with the Plan shall be governed by and construed, enforced, and administered according to the laws of the state of Texas, without regard to the conflict of law provisions of the State of Texas or of any other state or jurisdiction.

11.9           Severability. In case any provision of the Plan is held to be illegal, invalid, or unenforceable for any reason, such illegal, invalid, or unenforceable provision will not affect the remaining provisions of the Plan, but the Plan will be construed and enforced as if such illegal, invalid, or unenforceable provision had not been included therein.

11.10           Successors. The rights and obligations of the Company hereunder shall be binding upon and inure to the benefit of the Company and its successors and assigns.

 

Austin Chalk Reward Plan II.docx

  

13

  

EXECUTED this 19th day of October, 2010 to be effective the 9th day of August 2010.

	  	  	
CWEI:

	  	  	  
	  	  	
CLAYTON WILLIAMS ENERGY, INC.

 

	  	  	
By:

	
/s/ L. Paul Latham

	  	  	  	
L. Paul Latham

	  	  	  	
Executive Vice President

	  	  	  	  

 

Austin Chalk Reward Plan II.docx

  

14

  

EXHIBIT A

Schedule of Participants

	  	
Total %

	
Williams, Clayton W.

	
28.5714%

	
Latham, Paul

	
3.5714%

	
Riggs, Mel

	
4.2857%

	
Lyssy, Sam

	
8.9286%

	
Cox, Ross

	
2.1429%

	
Pullin, Cash

	
2.8571%

	
Welborn, Greg

	
5.3571%

	
Uzzell, Ed

	
3.9286%

	
Pollard, Clay

	
3.0357%

	
Kennedy, John

	
3.5714%

	
Wolfshohl, Jim

	
2.8571%

	
Gasser, Ron

	
3.9286%

	
Wolfshohl, Clarence

	
4.2857%

	
Grafe, David

	
8.5714%

	
Stembridge, Joe

	
2.8571%

	
Pollard, Mike

	
2.3214%

	
Schwope, Kathy

	
0.5714%

	
Thomas, Robert

	
1.1429%

	
Alford, Danny

	
1.1429%

	
Hamilton, Janet

	
0.8571%

	
Smith, Mark

	
0.5714%

	
Peacock, Ray

	
0.3571%

	
Henderson, Cris

	
0.1786%

	
Tisdale, Mark

	
0.8929%

	
Polson, Dennis

	
0.8929%

	
Pruitt, Donnie

	
0.7143%

	
Roome, Joe

	
0.7143%

	
Jones, Kim

	
0.1786%

	
Kelly, Denise

	
0.1786%

	
Biggar, McRae

	
0.1786%

	
Hardin, Kay

	
0.1786%

	
Hollums, Patti

	
0.1786%

	  	  
	
Total

	
100.0000%

 

Austin Chalk Reward Plan II.docx

  

15

  

EXHIBIT B

Area

 

 

All of Robertson, Burleson, Milam and Lee Counties of Texas

 

 

 

 

 

 

 

16EXHIBIT 10.1

ASSET PURCHASE AGREEMENT

                    This
ASSET PURCHASE AGREEMENT (this “Agreement”),
dated as of October 20, 2010, is made and entered into by and among Vascular
Solutions, Inc., a Minnesota corporation (“Buyer”),
Radius Medical Technologies, Inc., a Delaware corporation (“Radius Technologies”) and Radius Medical,
LLC, a Massachusetts limited liability company (“Radius LLC” and, together with Radius Technologies, “Seller”). 

                    WHEREAS,
Seller has designed and developed and is engaged in the business of
manufacturing and marketing a product line of minimally invasive retrieval
devices for treating cardiovascular disease which consists of the MICROTM Elite
Snare, EXPROTM Elite Snare, QUATTRO Elite Snare, SYMPRO Elite Snare and ORACLE Retrieval
System (the “Product Line”); and 

                    WHEREAS,
Seller desires to sell and assign to Buyer, and Buyer desires to purchase and
assume from Seller, substantially all of the assets of Seller that relate to or
are used in connection with Seller’s ownership or operation of the Product
Line, on the terms and subject to the conditions set forth in this Agreement. 

                    NOW,
THEREFORE, in consideration of the mutual representations, warranties, and
agreements contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows: 

ARTICLE I

PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES

                    1.01     Transfer
of Assets. On the terms and conditions set forth in this Agreement, Seller
shall, at the applicable Closing (as defined in Section 3.01 hereof), sell,
transfer and assign to Buyer, free and clear of all liens and encumbrances, and
Buyer shall purchase and acquire from Seller, all of Seller’s right, title and
interest in and to the following assets except to the extent such assets
constitute Excluded Assets (collectively, the “Assets”): 

	
  

 	
  

 	
  

 
	
  

 	
                       (a)    all
 of Seller’s intellectual property and intellectual property rights relating
 to or used in connection with the Product Line, including that which is
 listed and designated in Schedule 1.01(a), including: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
                     (i)     all
 issued patents and filed patent applications used in connection with or
 relating to the Product Line, and all rights Seller may have to institute or
 maintain any action or investigation for and to recover damages for any
 infringement thereof or any actions of unfair competition relating thereto; 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
                     (ii)     all
 trademarks, service marks, trade names, trade dress and other designators of
 origin, registered or unregistered, and registrations and applications for
 registration thereof, used in connection with the Product Line (excluding the
 name “Radius”), and all rights Seller may have to institute or 

 

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 maintain any
 action or investigation for and to recover damages for any infringement
 thereof or any actions of unfair competition relating thereto;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
                     (iii)     all
 goodwill associated with and symbolized by the names identified in subsection
 (ii) above, all related intangibles relating to the Intellectual Property and
 all rights to continue to use the Assets, and all rights Seller may have to
 institute or maintain any action to protect the same and recover damages for
 misappropriation or misuse thereof; 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
                     (iv)     all
 tangibles and intangibles relating to the Product Line and all rights to
 continue to use the Assets, and all rights Seller may have to institute or
 maintain any action to protect the same and recover damages for
 misappropriation or misuse thereof; 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
                     (v)     all
 internet domain names, uniform resource locators, and registrations and
 applications for registration thereof, relating to the Product Line, but only
 to the extent listed on Schedule 1.01(a), and all rights Seller may
 have to institute or maintain any action to protect the same and recover
 damages for misappropriation or misuse thereof; 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
                     (vi)     all
 trade secrets, know-how, and confidential information used in connection with
 the manufacturing, sale, distribution, advertising and marketing of the
 Product Line (including, if any, computer programs and software (in source code
 and object code formats) and related data and documentation, copyrightable
 subject matter, or protectable designs, registered or unregistered, and
 registrations and applications for registration thereof), and all rights
 Seller may have to institute or maintain any action to protect the same and
 recover damages for infringement, misappropriation or misuse thereof; 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
                     (vii)     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, relating to the Product Line, and all rights Seller
 may have to institute or maintain any action to protect the same and recover
 damages for infringement, misappropriation or misuse thereof; 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
                     (viii)     all
 documents or other tangible materials embodying or relating to: (x) the
 intellectual property described in (i) through (vii) (including trade
 secrets, know-how, data, access rights, data links, concepts, specifications,
 user manuals, training materials, documentation, working notes, technical
 writings, reports, correspondence, photographs, pictorial reproductions,
 drawings and other graphic representations, labeling and packaging
 specifications and work-in-progress) and all copyright therein; and (y) the
 other Assets (including presentations, correspondence, regulatory and
 clinical trial information, data, and records, including patient case files,
 case report forms and case summaries with respect to patients who have
 utilized the products of the Product Line and other business records) and all
 copyright therein; 

 

2

	
  

 	
  

 	
  

 
	
  

 	
  

 	
                     (ix)     supplier
 lists; and 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
                     (x)     a
distributor and customer list, which such list includes a list of all direct
customers of Seller with respect to the Product Line, the current sales
prices for all products sold to such customers and the key contacts at each
customer (the “Customer List”);  

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 ((i) through
 (x) collectively, the “Intellectual
 Property”). Notwithstanding the foregoing, the parties acknowledge
 and agree that on and after the Initial Closing Date, Seller shall have a
 right to use the know-how transferred for all other purposes in its business
 outside the field of retrieval devices and solely for that purpose to make
 and possess copies of documents to be transferred that embody such know-how;
 notwithstanding the foregoing, Seller shall not have the right to utilize
 such know-how in designing, developing, manufacturing, marketing or otherwise
 commercializing, directly or indirectly, or assisting any other individual,
 corporation, partnership, association, limited liability company, trust,
 unincorporated organization, Governmental Entity, or other entity or group
 (each, a “Person”) in designing,
 developing, manufacturing, marketing or otherwise commercializing in any
 manner, directly or indirectly, in the field of retrieval devices; shall not
 have the right to transfer this right relating to know-how except to a
 purchaser of (1) a product line developed by Seller, as part of a sale of
 that product line; and (2) all or substantially all of Seller’s business, in
 each of case (1) or (2), where such purchaser agrees in writing to this
 provision and is identified to Buyer by written notice; and shall not by this
 right be relieved of any of its obligations under Section 6.08 with respect
 to trade secrets. 

 
	
  

 	
  

 	
  

 
	
  

 	
                     (b)     all
 of Seller’s rights to data and records relating to the Product Line,
 including data and records relating to clinical trials, patient case files,
 case report forms, case summaries and government submissions and
 correspondence, including that which is summarily described and listed in Schedule
 1.01(b), but excluding Seller’s corporate records relating to the
 organization, existence and good standing of each Seller as a corporation or
 limited liability company, including Seller’s certificate of incorporation or
 formation, bylaws or operating agreement and any other similar governing
 document, qualifications to conduct business as a foreign entity, taxpayer
 and other identification numbers, minute and stock record books, tax records,
 financial statements and corporate seals; 

 
	
  

 	
  

 	
  

 
	
  

 	
                     (c)     the
 equipment and machinery used in connection with the manufacture of the
 Product Line (the “Equipment”),
 all of which is listed in Schedule 1.01(c); 

 
	
  

 	
  

 	
  

 
	
  

 	
                     (d)     the
 raw materials, work in process, supplies, parts, product labels and packaging
 materials inventory relating to the Product Line, wherever located, together
 with any express or implied warranty by the manufacturers or sellers of any
 item or component part thereof, rights of return, rebate rights, over-payment
 recovery rights and Seller’s rights related to any of the foregoing (the “Raw Materials Inventory”), all of which
 are listed in Schedule 1.01(d); 

 

3

	
  

 	
  

 	
  

 
	
  

 	
                     (e)     all
 finished goods inventory in existence on the date hereof relating to the
 Product Line, together with any express or implied warranty by the
 manufacturers or sellers of any item or component part thereof, rights of
 return, rebate rights, over-payment recovery rights and Seller’s rights
 related to any of the foregoing, all of which are listed in Schedule 1.01(e)
 (the “Finished Goods Inventory”
 and referred to collectively with the Raw Materials Inventory, the “Inventory”); 

 
	
  

 	
  

 	
  

 
	
  

 	
                     (f)     the
 Master License Agreement between SurModics, Inc. and Radius Technologies,
 dated as of October 23, 2001 (the “Assigned
 Contract”), and all rights of the Seller related to such Assigned
 Contract; 

 
	
  

 	
  

 	
  

 
	
  

 	
                     (g)     all
 permits, licenses, certificates and governmental authorizations and approvals
 from any federal, state or local entity or authority exercising executive,
 legislative, judicial, regulatory, administrative or taxing functions of or
 pertaining to government (each, a “Governmental
 Entity”) relating to or necessary for the manufacture of the
 Product Line, including all reports, documents, claims, permits and notices
 required to be filed with, maintained for or furnished to the FDA by Seller
 with respect to the Product Line or any Person that manufactures, develops,
 packages, processes, labels, tests or distributes Medical Devices in the
 Product Line pursuant to a development, distribution, commercialization,
 manufacturing, supply, testing or other arrangements with Seller regarding
 the Product Line (each, a “Product Line
 Partner”) (collectively, the “Permits”)
 held by Seller, and all pending applications for or renewals of the
 foregoing, all of which are listed in Schedule 1.01(g), to the extent
 that they are assignable; 

 
	
  

 	
  

 	
  

 
	
  

 	
                     (h)     regulatory
 data, clinical data and other technical information, including, without
 limitation, any design history files and any data bases incorporating any
 such data and information, directly related to products of the Product Line,
 including the 510k registrations listed on Schedule 1.01(h) (“Regulatory Data”); provided that, to the
 extent required by applicable law, Seller may retain and utilize a copy of
 such Regulatory Data; and 

 
	
  

 	
  

 	
  

 
	
  

 	
                     (i)     all
 of Seller’s claims against third parties related to the Assets and the
 Product Line, whether choate or inchoate, known or unknown, contingent or
 noncontingent, except to the extent pertaining to Excluded Liabilities. 

 

                    The
parties hereto expressly agree that Buyer is not assuming any of the
liabilities, obligations or undertakings relating to the foregoing Assets,
except for those liabilities and obligations specifically assumed by Buyer in
Section 1.03. 

                    1.02     Excluded
Assets. All assets of Seller other than (a) the Assets specified in Section
1.01, and (b) the assets listed on Schedule 1.02, shall be retained by
Seller and remain the property of Seller following the applicable Closing Date,
and shall not be sold, transferred or assigned to Buyer in connection with the
purchase of the Assets (collectively, the “Excluded
Assets”). 

4

                    1.03     Assumption
of Liabilities. Buyer shall assume, pay, perform in accordance with their
terms or otherwise satisfy, as of the Initial Closing Date and on the terms and
subject to the conditions set forth in this Agreement, only those liabilities
of Seller to the extent such liabilities arise out of or relate to the Product
Line or the Assets after the Initial Closing Date (the “Assumed Liabilities”), including
liabilities with respect to the Product Line or the Assets arising or to be
performed after the Initial Closing Date under the Assigned Contract and which
relate to periods after the Initial Closing Date. 

                    1.04     Excluded
Liabilities. Other than the Assumed Liabilities, Seller shall retain, and
Buyer shall not assume, and nothing contained in this Agreement shall be
construed as an assumption by Buyer of, any Liabilities, employees or
undertakings of Seller of any nature whatsoever, including, without limitation,
all accounts payable, litigation, debt and Taxes (as defined in Section 4.11)
relating to the Product Line or the Assets that are attributable to periods
prior to the Initial Closing or Final Closing, as applicable (the “Excluded Liabilities”). For purpose of this
Agreement, “Liability” means any
liability or obligation, whether accrued, absolute, contingent, unliquidated or
otherwise, whether due or to become due, whether known or unknown, and
regardless of when asserted. 

ARTICLE II

PURCHASE PRICE

                    2.01     Amount.
The purchase price (the “Purchase Price”)
for the Assets shall be equal to (a) $5,000,000 (the “Initial Closing Payment”), plus (b) the
Holdback Amount, plus (c) the Earn-Out Amount, plus (d) the value of the
Assumed Liabilities to be assumed by Buyer pursuant to Section 1.03.

                    2.02     Holdback
Amount. 

          (a)      The
“Holdback Amount” shall be equal
to $1,500,000, plus or minus the Final Inventory Adjustment. 

          (b)      Within
30 days after the Final Closing Date, Buyer will deliver to Seller an inventory
valuation statement (the “Inventory Valuation
Statement”) based on a physical counting and reconciliation of the
Finished Goods Inventory as of the close of business on the Initial Closing
Date and the Raw Materials Inventory as of the close of business on the Final
Closing Date, which shall include a determination of (i) the dollar value of
the Finished Goods Inventory transferred to Buyer (the “Finished Goods Inventory Value”) and (ii)
the dollar value of the Raw Materials Inventory transferred to Buyer (the “Raw Materials Inventory Value”). All
Inventory shall be valued at standard cost and physical counting shall take
place at Seller’s facility prior to the packaging and shipping of the Inventory
to Buyer. 

          (c)      Each
of the Inventory Valuation Statement and the calculations of the Finished Goods
Inventory Value and the Raw Materials Inventory Value will be subject to review
by Seller and its representatives at Seller’s expense. Buyer will make a copy
of the workpapers and back-up materials used in preparing the Inventory
Valuation Statement available to Seller and its accountants and other
representatives at reasonable times and upon reasonable notice during (i) the
review by Seller of the Inventory Valuation Statement and (ii) the resolution
by Seller and 

5

Buyer of any
objections to the Inventory Valuation Statement and calculations of the
Finished Goods Inventory Value and the Raw Materials Inventory Value. Seller
will be deemed to have accepted the Inventory Valuation Statement and the
calculations of the Finished Goods Inventory Value and the Raw Materials
Inventory Value unless, within 30 days after the date of delivery of such
Inventory Valuation Statement, Seller gives written notice (the “Objection Notice”) to Buyer of objection to
any item thereon, which notice shall specify in reasonable detail the basis for
such objection. If Seller gives an Objection Notice, Buyer and Seller shall
attempt in good faith to resolve the dispute as promptly as possible, subject
to the terms of Section 2.02(d). 

          (d)      If
Buyer and Seller do not reach a resolution of all objections raised in an
Objection Notice within 30 days after Buyer has received the Objection Notice,
a nationally or regionally recognized independent accounting firm with
experience in the medical device industry shall be selected to serve as an
independent arbitrator by mutual agreement of Buyer and Seller to resolve any
remaining objections, provided that such firm shall not be an accounting firm
used by Buyer or Seller within the preceding three years. The accounting firm
will resolve any objections set forth in the Objection Notice and determine,
but only to the extent any such amounts are in dispute, the amounts to be
included in the Inventory Valuation Statement and the calculations of the
Finished Goods Inventory Value and the Raw Materials Inventory Value. The
parties will provide the accounting firm, within ten days of its selection,
with a definitive statement of the position of each party with respect to each
unresolved objection and will advise the accounting firm that the parties
accept the accounting firm as the appropriate person to interpret this
Agreement for all purposes relevant to the resolution of the unresolved
objections. Buyer and Seller will provide the accounting firm with access to
books and records of Seller relating to the Product Line that are related to
the objections. The accounting firm will have 30 days to carry out a review of
the unresolved objections and prepare a written statement of its determination
regarding each unresolved objection. The determination of any accounting firm
so selected will be set forth in writing and will be conclusive and binding
upon the parties. Buyer will revise the Inventory Valuation Statement and the
calculations of the Finished Goods Inventory Value and the Raw Materials
Inventory Value as appropriate to reflect the resolution of any objections to
the Inventory Valuation Statement pursuant to this Section 2.02(d). 

          (e)      If
Buyer and Seller submit any unresolved objections to an accounting firm for
resolution as provided in Section 2.02(d), Buyer and Seller will each bear
their respective costs and expenses and will share equally in the fees and
expenses of the accounting firm, provided that such accounting firm may, in its
discretion, award the prevailing party its costs, fees and expenses, including
attorneys’ fees incurred in connection with the resolution of such unresolved
objection(s). 

          (f)      Judgment
upon the award rendered by the accounting firm may be entered in and enforced
by any court of competent jurisdiction. 

          (g)      After
the calculations of the Finished Goods Inventory Value and the Raw Materials
Inventory Value are finally determined pursuant to this Section 2.02: 

                    (i)     If
the sum (the “Final Inventory Value”)
of the calculations of the Finished Goods Inventory Value and the Raw Materials
Inventory Value is:

6

	
  

 	
  

 
	
  

 	
 (A)      less
 than $50,000, then the “Final Inventory Adjustment” shall be equal to $50,000
 minus the Final Inventory Value and the Holdback Amount shall be determined
 by subtracting this amount from $1,500,000; or 

 
	
  

 	
  

 
	
  

 	
 (B)      more
 than $50,000, then the “Final Inventory Adjustment” shall be equal to the
 Final Inventory Value minus $50,000 and the Holdback Amount shall be
 determined by adding this amount to $1,500,000; or 

 
	
  

 	
  

 
	
  

 	
 (C)      equal to
 $50,000, then the “Final Inventory Adjustment” shall be equal to zero and the
 Holdback Amount shall be $1,500,000. 

 

          (h)      The
Holdback Amount shall not be paid by Buyer to Seller until the Manufacturing
Transfer has occurred. Provided that the Manufacturing Transfer has
occurred, any remaining Holdback Amount, less $55,284 (which the parties agree
is the aggregate value of the large coil winder and small coil winder
referenced on Schedule 2.02(h)(i) (the “Coil
Winders”)) shall be paid by Buyer to Seller by wire transfer of
immediately available funds to the account designated by Seller no later than
three business days after the date on which the Final Inventory Adjustment is
finally determined. If the Manufacturing Transfer has not occurred prior to the
date on which the Final Inventory Adjustment is finally determined, then the
Holdback Amount shall not be paid by Buyer to Seller until the successful
occurrence of the Manufacturing Transfer. For purposes of this agreement, the “Manufacturing Transfer” means (i) the
transfer of production of the Product Line from Seller to Buyer, within six
months of the Initial Closing Date, as measured by Buyer’s ability to produce
at least one lot of each product, including MICRO Elite, EXPRO Elite, QUATTRO
Elite and SYMPRO Elite Snares, at Buyer’s facility; it being understood and
agreed that Buyer shall use commercially reasonable efforts to complete the
steps for which it is responsible as set forth on Schedule 2.02(h), (ii)
the transfer from Seller to Buyer of all trade secrets and know-how in Seller’s
possession that relates to the Assets (including, without limitation, all
algorithms, schematics, methods, plans, confidential business information,
ideas, research and development, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications and notes relating to the Assets), and (iii) the delivery of the
manufacturing Assets listed on Schedule 2.02(h)(i) (the “Manufacturing Assets”) by Seller to Buyer
within three months of the Initial Closing Date pursuant to a Bill of Sale (as
defined in Section 3.02); it being understood and agreed that (x) if Seller
opts to deliver to Buyer a replacement for one or more of the Manufacturing
Assets, Seller may do so provided the replacement is delivered free and clear
of all liens and encumbrances, and its condition is at least as good as, and
its value no lower than, the original Manufacturing Asset and (y) Seller shall
retain ownership and possession of the Coil Winders, and Buyer shall be
entitled to offset the $55,284 agreed value of such Coil Winders against the
Holdback Amount delivered by Buyer to Seller as described above. Seller and
Buyer have agreed on the plan and timeline related to the Manufacturing
Transfer attached hereto as Schedule 2.02(h).

                    2.03     Allocation
of Purchase Price. Prior to the Initial Closing Date, Buyer and Seller
shall prepare and attempt in good faith to agree upon a preliminary allocation
of the Purchase Price and any Assumed Liabilities thereto as amounts recognized
for Tax purposes among the Assets. Within 90 days after the Initial Closing
Date, Buyer and Seller shall finalize and agree upon such final allocation of
the Purchase Price (and all other capitalized costs) among 

7

the Assets in
accordance with Section 1060 of the Internal Revenue Code of 1986, as amended
(the “Code”) and the Treasury
regulations thereunder (and any similar provision of state, local or foreign
law, as appropriate), which allocation shall be binding upon Buyer and Seller.
Such allocation will be set forth on Exhibit 2.03 hereto, which shall be
incorporated by reference in, and become a part of, this Agreement. Buyer and
Seller will timely and properly prepare, execute, file and deliver all such
documents, forms and other information as the other party may reasonably
request to prepare such allocation. After the Initial Closing Date, the parties
will make consistent use of the allocation specified in Exhibit 2.03 for
all Tax purposes and in all filings, declarations and reports with the IRS or
other Tax authorities in respect thereof, including the reports required to be
filed under Section 1060 of the Code unless otherwise required by law. In any
proceeding related to the determination of any Tax, neither Buyer nor Seller
shall contest or represent that such allocation was not a correct allocation.
Any indemnification payment pursuant to Article X shall be allocated in a
manner consistent with Exhibit 2.03.

                    2.04     Earn-Out
Amount. 

          (a)      Seller
acknowledges that Buyer will utilize the Assets and the Product Line in its
business in any way that it deems appropriate and that it will operate its
business utilizing the Assets and the Product Line in its sole discretion, that
nothing contained in this Agreement shall require that Buyer market or sell any
product, that there can be no assurance that any Earn-Out Amount will be
received and that Buyer owes no fiduciary duty or express or implied duty to
Seller, but instead the express provisions of this Agreement govern their
contractual relationship. Notwithstanding the foregoing, during calendar years
2011, 2012 and 2013, Buyer will make one or more of its product managers
available by telephone for a quarterly meeting with representatives of Seller
regarding Buyer’s marketing and sales efforts with respect to Product Line
sales. 

          (b)      For
purposes of this section, the following terms have the following meanings: 

	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 “Net Sales” for a given calendar year
 shall mean:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A) Invoiced
 Sales by Buyer and its direct and indirect majority-owned subsidiaries of the
 products of the Product Line for such calendar year, (x) less any discounts,
 returns, rebates or give-backs with respect to such sales, and (y) for any
 products that have been returned during such calendar year, less revenue
 previously recognized in such calendar year or in any prior calendar year
 (net of the proceeds from any resale of such returned products), and (z) less
 any amounts written-off as uncollectible in accordance with Buyer’s normal
 procedures, consistent with past practices, minus

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B) shipping
 costs and taxes, unless such shipping costs and taxes are paid by the
 applicable customer; 

 
	
  

 	
  

 	
  

 
	
  

 	
 provided, however that (x) “Net Sales” for a
 given calendar year shall be deemed to be zero if Net Sales for such calendar
 year determined as set forth above are

 

8

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 equal to or
 less than the Net Sales Threshold for such calendar year; and (y) “products
 of the Product Line” as used in Section 2.04(b)(i)(A) above shall include (1)
 retrieval products substantially related to products of the Product Line as
 of the date of this Agreement, (2) retrieval products which are based on
 products included in the Product Line as of the date of this Agreement but
 which are new revisions and/or modifications to such products (whether or not
 marketed under a new name), and (3) any product the development of which
 results from a collaboration between Buyer and Seller, provided that prior to
 any such collaboration, Buyer and Seller have agreed in writing to treat such
 product as a “product of the Product Line” for purposes of Section
 2.04(b)(i)(A) above. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
       (ii)     “Invoiced Sales” means sales upon invoice
 and shipment to a customer or distributor; provided, however, that with respect to any sale
 of a product with which a product of the Product Line is integrated or
 bundled, only that portion of such sale which is allocable to the product of
 the Product Line (based upon the list price of each product so integrated or
 bundled) shall be counted as an “Invoiced Sale” for purposes of Section
 2.04(b). 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
       (iii)     “Net Sales Threshold” shall mean
 $2,000,000 for calendar year 2011, $2,500,000 for calendar year 2012, and
 $3,000,000 for calendar year 2013, respectively. 

 

          (c)      For
each of calendar years 2011, 2012 and 2013, Buyer shall pay Seller an amount equal
to 25% of the Net Sales during such calendar year (the amount for a given year,
the “Earn-Out Amount” for such
year). 

          (d)      The
Earn-Out Amount for each applicable calendar year shall be paid by Buyer to
Seller in cash by wire transfer of immediately available funds to Seller within
45 days of the last day of such calendar year. 

          (e)      The
Earn-Out Amount for each applicable calendar year shall represent only a
contingent right to receive a cash payment, and shall not possess any
attributes of a security or entitle Seller to any rights of any kind other than
as specifically set forth herein. 

          (f)      The
Earn-Out Amount for each applicable calendar year is and shall remain
nontransferable for any reason other than by operation of law. Any attempted
assignment, pledge, hypothecation, transfer or other disposition of any portion
of any such Earn-Out Amount (other than as set forth in the preceding sentence)
shall be null and void. 

          (g)      Within
30 days after the last day of each calendar quarter during calendar year 2011,
calendar year 2012 and calendar year 2013, Buyer will deliver to Seller a
report regarding sales of products of the Product Line during such calendar
quarter. In addition, within 45 days after the last day of each of calendar
year 2011, calendar year 2012 and calendar year 2013, Buyer will deliver to
Seller a schedule and accounting of the Earn-Out Amount for the preceding
calendar year (each, an “Earn-Out Statement”).

          (h)      The
Earn-Out Statement for a given calendar year will be subject to review by
Seller and its representatives at Seller’s expense. Buyer will make a copy of
the materials and 

9

invoices used
in preparing the Earn-Out Statement available to Seller and its accountants and
other representatives at reasonable times and upon reasonable notice during (i)
the review by Seller of the applicable Earn-Out Statement and (ii) the
resolution by Seller and Buyer of any objections to such Earn-Out Statement and
calculations of the Finished Goods Inventory Value and the Raw Materials
Inventory Value. Seller will be deemed to have accepted the calculations of the
Earn-Out Amount unless, within 30 days after the date of delivery of such
Earn-Out Statement, Seller gives written notice (the “Earn-Out Objection Notice”) to Buyer of
objection to any item thereon, which notice shall specify in reasonable detail
the basis for such objection. If Seller gives an Earn-Out Objection Notice,
Buyer and Seller shall attempt in good faith to resolve the dispute as promptly
as possible, subject to the terms of Section 2.04(i). 

          (i)      If
Buyer and Seller do not reach a resolution of all objections raised in an
Earn-Out Objection Notice within 30 days after Buyer has received the related
Earn-Out Objection Notice, a nationally or regionally recognized independent
accounting firm with experience in the medical device industry shall be
selected to serve as an independent arbitrator by mutual agreement of Buyer and
Seller to resolve any remaining objections, provided that such firm shall not
be an accounting firm used by Buyer or Seller within the preceding three years.
The accounting firm will resolve any objections set forth in the Earn-Out
Objection Notice and determine, but only to the extent any such amounts are in
dispute, the amounts to be included in the Earn-Out Statement. The parties will
provide the accounting firm, within ten days of its selection, with a
definitive statement of the position of each party with respect to each
unresolved objection and will advise the accounting firm that the parties
accept the accounting firm as the appropriate person to interpret this
Agreement for all purposes relevant to the resolution of the unresolved
objections. Buyer and Seller will provide the accounting firm with access to
books and records of Seller relating to the Product Line that are related to
the objections. The accounting firm will have 30 days to carry out a review of
the unresolved objections and prepare a written statement of its determination
regarding each unresolved objection. The determination of any accounting firm
so selected will be set forth in writing and will be conclusive and binding
upon the parties. Buyer will revise the Earn-Out Statement and the calculation
of the Earn-Out Amount as appropriate to reflect the resolution of any
objections to the Earn-Out Statement pursuant to this Section 2.04(i). 

          (j)      If
Buyer and Seller submit any unresolved objections to an accounting firm for
resolution as provided in Section 2.04(i), Buyer and Seller will each bear
their respective costs and expenses and will share equally in the fees and
expenses of the accounting firm; provided that such accounting firm may, in its
discretion, award the prevailing party its costs, fees and expenses, including
attorneys’ fees incurred in connection with the resolution of such unresolved
objection(s). 

          (k)      Judgment
upon the award rendered by the accounting firm may be entered in and enforced
by any court of competent jurisdiction. 

          (l)      After
the calculation of the Earn-Out Amount for each of the 2011, 2012 and 2013
calendar years has been finally determined pursuant to this Section 2.04, Buyer
shall pay to Seller any underpayment for such calendar year by wire transfer of
immediately available funds to the account designated by Seller no later than
three business days after the date on which the Earn-Out Amount for such
calendar year is finally determined and Seller shall pay to Buyer any 

10

overpayment
for such calendar year by wire transfer of immediately available funds to the
account designated by Buyer no later than three business days after the date on
which the Earn-Out Amount for such calendar year is finally determined. 

ARTICLE III

CLOSING

                    3.01     Closing

	
  

 	
  

 
	
  

 	
                     (a)     Initial
 Closing. The initial closing of the transactions contemplated by this
 Agreement (the “Initial Closing”)
 will take place at such place as is mutually agreeable to Buyer and Seller,
 at 12:00 p.m. Central Daylight Time on October 20, 2010 or on such other date
 as is mutually agreeable to Buyer and Seller after all of the conditions to
 the parties’ obligations set forth in Article VIII hereof have been satisfied
 (or waived by the party entitled to the benefit of such conditions). The date
 on which the Initial Closing occurs is referred to herein as the “Initial Closing Date,” and the Initial
 Closing shall be deemed effective as of 12:00 p.m. Central Daylight Time on
 the Initial Closing Date. At the Initial Closing, Seller shall sell, transfer
 and assign to Buyer, free and clear of all liens and encumbrances, and Buyer
 shall purchase and acquire from Seller, all right, title and interest in and
 to the Assets other than the Raw Materials Inventory; it being understood
 that Seller shall be entitled to retain possession of and utilize the
 Manufacturing Assets and related know-how to the extent required in
 connection with the performance of its obligations under the Supply
 Agreement, during the term of the Supply Agreement; provided, however, that Seller shall repair or replace, as
 appropriate, any Manufacturing Asset that is lost or damaged after the
 Initial Closing Date and prior to the Manufacturing Transfer while in
 Seller’s possession. 

 
	
  

 	
  

 
	
  

 	
                     (b)     Final
 Closing. The Final Closing of the transactions contemplated by this
 Agreement (the “Final Closing”)
 will take place at such place as is mutually agreeable to Buyer and Seller,
 on the earlier of (i) seven days’ notice by Buyer or (ii) the six-month
 anniversary of the Initial Closing Date. The date on which the Final Closing
 occurs is referred to herein as the “Final
 Closing Date,” and the Final Closing shall be deemed effective as
 of the close of business on the Final Closing Date. The Initial Closing Date
 and Final Closing Date are each referred to as a “Closing Date” in this Agreement. At the Final Closing,
 Seller shall sell, transfer and assign to Buyer, free and clear of all liens
 and encumbrances, and Buyer shall purchase and acquire from Seller, all
 right, title and interest in and to the Raw Materials Inventory. 

 

                    3.02    General
Procedure. At each Closing, each party shall deliver to the party entitled
to receipt thereof the documents required to be delivered pursuant to Article
VIII hereof and such other documents, instruments and materials (or complete
and accurate copies thereof, where appropriate) as may be reasonably required
to effectuate the intent and provisions of this Agreement, and all such
documents, instruments and materials shall be satisfactory in form and
substance to counsel for the receiving party. The conveyance, transfer,
assignment and delivery of the Assets shall be effected by Seller’s execution
and delivery to Buyer of one or more bills of sale substantially in the form
attached hereto as Exhibit A (each, a “Bill
of Sale”) and such other 

11

instruments of
conveyance, transfer, assignment and delivery as Buyer shall reasonably request
to cause Seller to transfer, convey, assign and deliver the Assets to Buyer.
The assignment and assumption of the Assumed Liabilities to Buyer shall be
effected by Seller’s and Buyer’s execution of an assignment and assumption
agreement substantially in the form attached hereto as Exhibit B (the “Assignment and Assumption Agreement”).

          3.03    Economic
Results; Risk of Loss. All Interim Operating Losses related to the Raw
Materials Inventory that are not transferred until the Final Closing Date shall
be solely for Seller’s account. All risk of loss or damage to the Raw Materials
Inventory that are not transferred until the Final Closing Date, whatever the
cause therefor, during the Interim Period shall be Seller’s. For purposes of
this Agreement, “Interim Operating Losses”
means all income and loss related to the operation of the Product Line as it
relates to the Raw Materials Inventory during the Interim Period. For purposes
of this Agreement, “Interim Period”
means the period commencing on 12:01 a.m., Central Daylight Time, on the Initial
Closing Date, and ending on 12:59 p.m., Central Daylight Time, on the Final
Closing Date. 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER

                    For
purposes of this Article IV, references to Seller’s “Knowledge” or similar qualifiers, shall mean the actual
knowledge of the officers of Seller, each having made diligent inquiry with
respect to the matter referenced, and any knowledge that would have been
acquired by any such Person upon diligent inquiry with respect to the matter
referenced. Each Seller, jointly and severally, hereby represents and warrants
to Buyer that, except as set forth in the Disclosure Schedule delivered by
Seller to Buyer on the date hereof (the “Seller
Disclosure Schedule”) (which Seller Disclosure Schedule shall be
prepared in accordance with Section 10.05 hereto): 

                    4.01     Incorporation;
Power and Authority. Radius Technologies is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all requisite power and authority and all authorizations,
licenses, permits and certifications necessary to carry on its business with
respect to the Product Line as now being conducted and as currently proposed to
be conducted, and to own, lease and use the Assets. Radius LLC is a limited
liability company duly organized, validly existing and in good standing under
the laws of the Commonwealth of Massachusetts and has all requisite power and
authority and all authorizations, licenses, permits and certifications
necessary to carry on its business with respect to the Product Line as now
being conducted and as currently proposed to be conducted, and to own, lease
and use the Assets. Each Seller has all necessary power and authority to
execute, deliver and perform this Agreement and each of the Related Agreements,
to consummate the transactions and perform its obligations contemplated by this
Agreement and each of the Related Agreements. Each Seller is duly qualified to
do business as a foreign entity in each jurisdiction in which the nature of its
business or its ownership of property requires it to be so qualified. Each
Seller is in full compliance with its organizational documents. 

                    4.02     Execution,
Delivery; Valid and Binding Agreement. The execution, delivery and
performance of this Agreement and the other documents and agreements 

12

contemplated
by this Agreement (collectively, the “Related
Agreements”) by Seller and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
requisite authority, corporate or otherwise (including stockholder approval, if
required), and no other authority (corporate or otherwise) is necessary to
authorize the execution, delivery and performance of this Agreement and the
Related Agreements. This Agreement and the Related Agreements have been duly
executed and delivered by Seller and, assuming that this Agreement and the
Related Agreements are the valid and binding agreements of Buyer, constitute
valid and binding obligations of Seller, enforceable in accordance with their
terms, except as may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the rights of creditors generally and
the availability of equitable remedies. 

                    4.03     No
Breach. The execution, delivery and performance of this Agreement and the
Related Agreements by Seller and the consummation of the transactions
contemplated hereby and thereby do not and will not conflict with or result in
any breach of any of the provisions of, or constitute a default under, result
in a violation of, result in the creation of a right of termination or
acceleration or any lien, security interest, charge, or encumbrance upon any of
the Assets or require any authorization, consent, approval, exemption or other
action by or notice to any court or other governmental body, under the
provisions of the organizational documents of Seller or any indenture,
mortgage, lease, loan agreement or other agreement or instrument by which the
Assets or the Project Line are bound or affected or by which Seller is bound or
affected where such conflict, default, violation, creation of a right of
termination or acceleration, lien, security interest, charge or encumbrance
would materially and adversely affect Seller’s ability to perform its
obligations under this Agreement, or any law, statute, rule or regulation or
order, judgment or decree to which Seller or the Assets are subject. The
execution, delivery and performance of this Agreement and the Related
Agreements by Seller and the consummation of the transactions contemplated
hereby and thereby do not and will not result in being declared void, voidable,
or without further binding effect, the terms, conditions or provisions of any
indenture, mortgage, lease, loan agreement or other agreement or instrument by
which the Assets or the Product Line are bound or affected or by which Seller
is bound or affected where such declaration would materially and adversely
affect Seller’s ability to perform its obligations under this Agreement, or any
material license, franchise or permit by which the Assets or the Product Line
are affected or by which Seller is affected where such declaration would
materially and adversely affect Seller’s ability to perform its obligations
under this Agreement. 

                    4.04     Governmental
Authorities; Consents. Except as set forth on Schedule 4.04, Seller
is not required to submit any notice, report or other filing with any governmental
authority in connection with the execution or delivery by it of this Agreement
or the consummation of the transactions contemplated hereby. No consent,
approval or authorization of any governmental or regulatory authority is
required to be obtained by Seller in connection with its execution, delivery
and performance of this Agreement. 

                    4.05     Financial
Statements. Seller has delivered to Buyer true, correct and complete copies
of Seller’s internally prepared profit and loss statements for the Product Line
for the two fiscal years ended December 31, 2009 and December 31, 2008, and for
the interim period ended September 30, 2010 (the “Product Line Sales Records”). The Product Line Sales Records
are based upon the books and records of Seller and accurately present the
information set forth therein for the respective periods indicated. 

13

                    4.06     Absence
of Undisclosed Liabilities. Seller has no Liabilities or contractual
obligations that affect, impair or apply to the Assets or the Product Line
(whether accrued, absolute, contingent, unliquidated or otherwise, whether due
or to become due, and regardless of when asserted) arising out of transactions
or events heretofore entered into, or out of any action or inaction, or any
state of facts existing, with respect to or based upon transactions or events
heretofore occurring, except as disclosed in Schedule 4.06 of the Seller
Disclosure Schedule or as set forth on the face of the Product Line Sales
Records. 

                    4.07     No
Material Adverse Changes. Since December 31, 2009, there has been no change
in the Assets that would have a Material Adverse Effect. For the purposes of
this Agreement, “Material Adverse Effect”
shall mean any one or more events, conditions, circumstances or conditions
which would result in, or may reasonably be expected to result in, individually
or in the aggregate, a material adverse effect on the advertising, sale,
manufacture, marketing or distribution of the Product Line, the Assets, or the
use by Buyer of the Assets in their intended manner. 

                    4.08     Title
to Assets; Sufficiency. Seller owns good and marketable title to the
Assets, free and clear of all liens and encumbrances. To the extent such
documents exist, Seller has delivered or made available to Buyer copies of the
title, bills of sale, or other instruments by which Seller acquired such
Assets. Upon execution and delivery by Seller of the instruments of conveyance
including the Bill of Sale, Buyer will become the true and lawful owner of, and
will receive good and marketable title to, the Assets, free and clear of all
liens and encumbrances. The Assets, together with the rights granted to Buyer
under the Assigned Contract, comprise all of the properties, assets and rights
necessary to conduct and operate the business of the Product Line in accordance
with Seller’s historical practices. 

                    4.09     Books
and Records. The books of account of Seller relating to the Product Line
and the Assets are complete and correct and have been maintained in accordance
with sound business practices. Each transaction by Seller relating to the
Product Line and the Assets is properly and accurately recorded on the books
and records relating to the Product Line and the Assets, and each document upon
which entries in the books and records of the Product Line and the Assets are
based is complete and accurate in all respects. 

                    4.10     Inventory.
Schedule 1.01(d) and Schedule 1.01(e) together contain a
description of all the Assets which constitute the Inventory. The Inventory
consists of items of a quality and quantity usable and, with respect to
Finished Goods Inventory only, salable at normal profit levels, in each case,
in the ordinary course of Seller’s business. The Finished Goods Inventory is
not slow-moving (as determined in accordance with past practices), obsolete,
damaged or defective, subject only to Seller’s standard reserve for inventory
and is merchantable and fit for its particular use. The Finished Goods
Inventory conforms to Seller’s warranties. Seller has on hand or has ordered
and expects timely delivery of such quantities of raw materials and supplies
and has on hand such quantities of work in process and finished goods as are
reasonably required (and are not in excess) to fill current orders submitted to
Seller with respect to the Product Line in a timely manner and to maintain the
manufacture and shipment of products up to the Initial Closing Date, and
thereafter in accordance with the Supply Agreement based upon agreed levels of
production. 

14

                    4.11     Tax
Matters.

	
  

 	
  

 
	
  

 	
                        (a)     There
 are no liens for Taxes upon any of the Assets. No proceedings have been
 commenced by any federal, state, local or foreign agency to create any liens
 for Taxes upon any of the Assets. For purposes of this Agreement, “Taxes” means all taxes, charges, fees,
 levies, or other assessments, including, without limitation, all net income,
 gross income, gross receipts, sales, use, ad valorem, transfer, franchise,
 profits, license, withholding, payroll, employment, social security,
 unemployment, excise, estimated, severance, stamp, occupation, property, or
 other taxes, customs duties, fees, assessments, or charges of any kind
 whatsoever, including, without limitation, all interest and penalties
 thereon, and additions to tax or additional amounts imposed by any taxing
 authority, domestic or foreign, upon the Assets. Seller has timely and
 properly paid (or has had paid on its behalf) all Taxes with respect to the
 Assets that were due and payable on or before the date hereof. 

 
	
  

 	
  

 
	
  

 	
                        (b)     No
 deficiency for any Taxes has been proposed, asserted or assessed against the
 Assets that has not been resolved and paid in full. No waiver, extension or
 comparable consent given by Seller regarding the application of the statute
 of limitations with respect to any Taxes or any Tax return relating to the
 Assets is outstanding, nor is any request for any such waiver or consent pending.
 

 
	
  

 	
  

 
	
  

 	
                        (c)     To
 Seller’s Knowledge, Seller does not expect or anticipate the assessment of
 any additional Taxes on the Assets or otherwise relating to the Product Line
 for periods prior to the applicable Closing, and has no Knowledge of any
 unresolved questions, claims or disputes concerning the Liability for Taxes
 relating to the Assets or the Product Line. There is no written dispute or
 claim, and to Seller’s Knowledge, any other dispute or claim, concerning any
 Tax Liability relating to the Assets or the Product Line for periods prior to
 the applicable Closing. 

 

                    4.12     Accounts
Receivable. All notes and accounts receivable of Seller relating to the
Assets and the Product Line are reflected properly on its books of account, are
valid, and have arisen from bona fide transactions in the ordinary course of
business. To the Knowledge of Seller, none of such notes and accounts
receivable are subject to valid setoffs or counterclaims.

                    4.13     Contracts
and Commitments.

	
  

 	
  

 
	
  

 	
                        (a)     The
 Assigned Contract (i) is legal, valid, binding and enforceable and in full
 force and effect, (ii) will continue to be legal, binding and enforceable and
 in full force and effect immediately following the applicable Closing in
 accordance with the terms thereof as in effect prior to the applicable
 Closing, and (iii) is assignable to Buyer without the consent of any Person. 

 
	
  

 	
  

 
	
  

 	
                        (b)     With
 respect to the Assigned Contract, Seller (i) has performed all obligations
 required to be performed by it in connection therewith and is not in breach
 or default, and no event has occurred which with notice or lapse of time
 would constitute a breach or default or permit termination, modification or
 acceleration under the Assigned Contract, (ii) is not in receipt of any claim
 of default, (iii) has no present expectation or 

 

15

	
  

 	
  

 
	
  

 	
 intention of not fully performing any material
 obligation pursuant to the Assigned Contract, (iv) has no Knowledge of any
 breach or expected breach by any other party to the Assigned Contract, and
 (v) has not received any written or oral demand for renegotiation thereof or
 commenced the process of renegotiating and terms of the Assigned Contract.

 
	
  

 	
  

 
	
  

 	
                        (c)     Prior
 to the date of this Agreement, Seller has made available to Buyer a correct
 and complete copy of the Assigned Contract, together with all amendments,
 waivers or other changes thereto. 

 

                    4.14      Intellectual
Property Rights. 

	
  

 	
  

 
	
  

 	
                        (a)     Schedule 1.01(a)
 describes all of the Intellectual Property owned by, licensed to or otherwise
 controlled by Seller in connection with the Assets, or used in, developed for
 use in, or necessary for, the Product Line, and identifies each license,
 agreement, or other permission which Seller has granted to any third party
 with respect to any of the Intellectual Property. Seller has listed on Schedule
 1.01(a) all service marks, trade names, trade dress and other designators
 of origin, and has delivered to Buyer correct and complete copies of all
 registrations and applications for internet domain names and uniform resource
 locators, copyright registrations and applications, licenses, sublicenses,
 agreements, and permissions (as amended to date) relating to the Intellectual
 Property. 

 
	
  

 	
  

 
	
  

 	
                        (b)     Seller
 owns or has the exclusive right to use pursuant to license, sublicense,
 agreement or permission all of the Intellectual Property (except as to
 general industry know-how, as to which Seller has the non-exclusive right to
 use). 

 

	
  

 	
  

 
	
  

 	
                        (i)     With
 respect to each item of the Intellectual Property (exclusive of general
 industry know-how) which Seller owns, Seller solely possesses all right,
 title and interest in and to the item, free and clear of any lien or
 encumbrance. Seller is the official and sole owner of record of all
 registered Intellectual Property. To Seller’s Knowledge, no owned
 Intellectual Property (exclusive of general industry know-how) has been
 infringed by any other Person. Seller owns all of the Intellectual Property
 developed by its current and former employees and independent contractors
 during the period of their employment or within the scope of their
 contracting or consulting relationship, as the case may be, with Seller and
 to Seller’s Knowledge no such Person has any claim with respect to any of the
 Intellectual Property (exclusive of general industry know-how). All owned
 Intellectual Property (exclusive of general industry know-how) is valid and
 enforceable, and no Person has asserted to Seller, orally or in writing, that
 any owned Intellectual Property (exclusive of general industry know-how) is
 invalid or not enforceable. 

 
	
  

 	
  

 
	
  

 	
                        (ii)    All
 registrations relating to the Intellectual Property are in full force and
 effect, and all actions required to keep such registrations pending or in
 effect or to provide full available protection of registered Intellectual
 Property or the Intellectual Property for which a registration is pending,
 including payment 

 

16

	
  

 	
  

 
	
  

 	
 of filing, examination, annuity, and maintenance
 fess and filing of renewals, statements of use or working, affidavits of
 incontestability and other similar actions, have, except as set forth in Schedule
 4.14(b)(ii), been taken to the extent due prior to the Initial Closing
 Date, and no such Intellectual Property is, to Seller’s Knowledge, the
 subject of any interference, opposition, cancellation, nullity,
 re-examination or other proceeding placing in question the validity or scope
 of such rights. All products covered by registered Intellectual Property and
 all usages of registered Intellectual Property have been marked with the
 appropriate patent, trademark, or other markings in a manner consistent with
 industry standards.

 
	
  

 	
  

 
	
  

 	
                        (iii)    Each
 item of the Intellectual Property owned immediately prior to the Initial
 Closing hereunder will be owned by Buyer on the same terms and conditions
 immediately subsequent to the Initial Closing. Seller has taken commercially
 reasonable actions to maintain and protect each item of the Intellectual
 Property that it owns or uses.

 

	
  

 	
  

 
	
  

 	
                        (c)     The
 documentation relating to all trade secrets and know-how pertaining to the
 Assets or the manufacture of the Product Line (which is generally listed in Schedule
 1.01(a)) is current and accurate and, together with the training to be
 provided and the documentation relating to the know-how to be transferred to
 Buyer in connection with the Manufacturing Transfer as provided in Section
 2.02(h)(i) of this Agreement, is sufficient in detail and content to
 reasonably identify and explain such trade secrets and know-how and to allow
 their full and proper use without reliance on the knowledge or memory of any
 individual. All reasonable precautions have been taken to protect the
 secrecy, confidentiality and value of the trade secrets and all other
 proprietary information used by Seller in connection with the Assets and
 Seller’s manufacture and sale of the Product Line, including the
 implementation and enforcement of policies requiring each employee or
 independent contractor who has access to trade secrets to execute appropriate
 proprietary information and confidentiality agreements, and each current and
 former employee and independent contractor of Seller has executed such an
 agreement. To Seller’s Knowledge, there has been no breach or other violation
 of such agreements. Seller has an unqualified right to use all trade secrets,
 know-how and other proprietary information currently used in connection with
 the Assets and Seller’s manufacture and sale of the Product Line, subject to
 any contract relating to licensed-in Intellectual Property. To Seller’s
 Knowledge, no such trade secret or other proprietary information is part of
 the public knowledge or literature, and to Seller’s Knowledge, no trade
 secret or other proprietary information has been used, divulged or
 appropriated either for the benefit of any Person other than Seller or to the
 detriment of Seller. 

 
	
  

 	
  

 
	
  

 	
                        (d)     Seller
 has not taken action, or failed to take an action, that might have the effect
 of estopping or otherwise limiting its right to enforce owned Intellectual
 Property against any Person.

 
	
  

 	
  

 
	
  

 	
                        (e)     With
 respect to the Assets or the Product Line or any component of any of the
 Assets or the Product Line, Seller has not infringed, misappropriated or
 otherwise violated any intellectual property right (including, but not
 limited to, patent, 

 

17

	
  

 	
  

 
	
  

 	
 copyright, trademark, service mark, trade names,
 trade dress, trade secret, or know-how right) of any third-party, and Seller
 has not received any notice of any infringement, misappropriation or
 violation by Seller of any such intellectual property right of any
 third-party. No infringement, misappropriation or violation of any
 intellectual property right of a third-party by Seller, the Assets or the
 Property Line has occurred or is expected to occur with respect to Seller,
 the Assets or the Product Line or any component of any of the Assets or the
 Product Line prior to the applicable Closing Date.

 
	
  

 	
  

 
	
  

 	
                        (f)     The
 Intellectual Property does not include any software. Seller does not use or
 rely on any software in connection with the Assets or for the manufacture or
 sale of the Product Line other than standard business software of the type
 listed on Schedule 1.01(a). Seller does not use, rely on or contract
 with any Person to provide service bureau, outsourcing or other computer
 processing services to Seller, in lieu of or in addition to its use of such
 software.

 

                    4.15     Litigation.
No Litigation is pending, including product liability claims, or, to the
Knowledge of Seller, threatened against Seller, the Assets or the Product Line,
at law or in equity, and there is no reasonable basis known to Seller for any
of the foregoing. None of Seller, the Assets or the Product Line is subject to
any outstanding governmental order. Seller has not received any opinion or
legal advice to the effect that Seller is exposed from a legal standpoint to
any Liability or disadvantage which may be material to the Assets or the
Product Line. For purposes of this Agreement, “Litigation” means any suit,
charge, complaint, claim, action, grievance, arbitration, mediation,
investigation, proceeding or litigation (whether civil, criminal,
administrative or investigative).

                    4.16     Regulatory Compliance.

	
  

 	
  

 
	
  

 	
                        (a)     Seller
 has no Knowledge of any actual or threatened enforcement action or
 investigation by the Food and Drug Administration (the “FDA”), Seller’s notified body
 (for CE marking) (its “Notified Body”) or any other Governmental
 Entity that has jurisdiction over Seller’s operations relating to the Assets
 or the Product Line. Seller does not have any Knowledge that the FDA,
 Seller’s Notified Body or any other Governmental Entity is considering such
 action. Seller’s operation of business relating to the Assets and the Product
 Line, including the manufacture, import, export, testing, development,
 processing, packaging, labeling, storage, marketing, sales and distribution
 of the products of the Product Line is, and at all times has been, in
 material compliance with all applicable laws and Permits relating to the
 Assets or the Product Line. 

 
	
  

 	
  

 
	
  

 	
                        (b)     All
 Permits required to be filed with, maintained for or furnished to the FDA or
 Seller’s Notified Body and all material Permits required to be filed with,
 maintained for or furnished to any other Governmental Entity by Seller with
 respect to the Assets or the Product Line or, to Seller’s Knowledge, any
 Product Line Partner, have been so filed, maintained or furnished by Seller,
 and the Product Line Partners, as applicable. All such reports, documents,
 claims and notices by Seller were complete and accurate in all material respects
 on the date filed or furnished (or were corrected in or supplemented by a
 subsequent filing), such that no material liability exists with respect to
 any such filing, and remain complete and accurate. 

 

18

	
  

 	
  

 
	
  

 	
                        (c)     Neither
 Seller nor, to Seller’s Knowledge, any Product Line Partner, has, received
 any FDA Form 483, notice of adverse finding, Warning Letters, untitled
 letters or other correspondence or notice from the FDA, Seller’s Notified
 Body or other Governmental Entity with respect to the Assets or the Product
 Line (i) alleging or asserting noncompliance with any applicable laws or
 Permits and Seller has no Knowledge or reason to believe that the FDA,
 Seller’s Notified Body or any other Governmental Entity is considering such
 action or (ii) contesting the investigational device exemption, pre-market
 clearance or approval of, the uses of or the labeling or promotion of any
 Medical Devices. Seller has not had any product or manufacturing site
 utilized in connection with the Assets or the Product Line subject to a
 Governmental Entity (including the FDA and Seller’s Notified Body) shutdown
 or import or export prohibition, nor has Seller received any FDA Form 483 or
 other Notified Body or Governmental Entity written notice of inspectional
 observations, “warning letters,” “untitled letters,” or written requests or
 requirements to make changes to the Product Line’s products that, if not
 complied with, would reasonably be expected to result in a material liability
 to Seller or with respect to the Assets or the Product Line, or similar
 correspondence or notice from the FDA, Seller’s Notified Body or Governmental
 Entity in respect of the Assets or the Product Line and alleging or asserting
 noncompliance with any applicable laws, Business Permits or such requests or
 requirements of a Governmental Entity and, to Seller’s Knowledge, none of the
 FDA, Seller’s Notified Body and any Governmental Entity is considering such
 action. 

 
	
  

 	
  

 
	
  

 	
                        (d)     No
 Permit issued with respect to the Assets or the Product Line or, to Seller’s
 Knowledge, to any Product Line Partner, by the FDA, Seller’s Notified Body or
 any other Governmental Entity has been limited, suspended, modified or
 revoked and Seller has no Knowledge that the FDA, Seller’s Notified Body or
 any other Governmental Entity is considering such action. 

 
	
  

 	
  

 
	
  

 	
                        (e)     To
 Seller’s Knowledge, the Regulatory Data is full and complete in all material
 respects and nothing in such Regulatory Data is false or misleading in any
 material respect. All Regulatory Data, including, but not limited to, all
 information about any product adverse effects, in the possession or control
 of Seller has been made available to Buyer. The Regulatory Data: (i) has been
 obtained and compiled in accordance with all material requirements and
 procedures of the FDA, Seller’s Notified Body or other Governmental Entity;
 and (ii) to Seller’s Knowledge, does not contain any information that will
 render products as “adulterated” or “misbranded” under the Federal Food,
 Drug, and Cosmetic Act or similar law of any foreign Governmental Entity. To
 the Seller’s Knowledge, there is nothing in the Regulatory Data that would
 cause any regulatory submission by Seller (or Buyer following the Initial
 Closing) to be disallowed or delayed.

 
	
  

 	
  

 
	
  

 	
                        (f)     Each
 product or product candidate that is, as of the date of this Agreement, a
 part of the Product Line and that is subject to the Federal Food, Drug and
 Cosmetic Act (including the rules and regulations of the FDA promulgated
 thereunder, the “FDCA”) or, to Seller’s Knowledge,
 comparable laws in any non-U.S. jurisdiction, that has been developed,
 manufactured, test distributed or marketed by or on behalf of Seller with
 respect to the Assets or the Product Line (each such product or product 

 

19

	
  

 	
  

 
	
  

 	
 candidate, a “Medical Device”), is being or has been
 developed, manufactured, tested, distributed and marketed in compliance with
 all applicable requirements under the FDCA and, to Seller’s Knowledge,
 comparable laws in any non-U.S. jurisdiction, including those relating to
 investigational use, pre-market clearance or approval, registration and
 listing, good manufacturing practices, good clinical practices, good
 laboratory practices, labeling, advertising, record keeping and filing of
 required reports. None of the Medical Devices are “adulterated” or
 “misbranded” under the FDCA or, to Seller’s Knowledge, similar law of any
 foreign Governmental Entity. All Medical Devices have received a pre-market
 clearance and may be lawfully placed into commerce and sold as they are
 currently manufactured. In addition, Seller and, to Seller’s Knowledge, the
 Product Line Partners, are in material compliance with all other applicable
 FDA requirements and all other applicable laws relating to the Assets or the
 Product Line. Seller maintains complete documentation showing that components
 used in the Product Line are manufactured in accordance with the Seller’s
 specifications therefor. The processes used to produce the Product Line’s
 products are completely and accurately described in documents maintained by
 Seller with respect to the Product Line, and such documents have been made
 available to the Buyer. Such processes are adequate to ensure that commercial
 quantities of the Product Line’s products will conform to the specifications
 established therefor and will be (i) of merchantable quality, (ii) salable in
 the ordinary course of business at prevailing market prices, (iii) free from
 defects in design, material and workmanship, and (iv) suitable for their
 intended purposes and efficacy levels.

 
	
  

 	
  

 
	
  

 	
                        (g)     Except
 as set forth in Schedule 4.16 of the Seller Disclosure Schedule,
 Seller is the sole and exclusive owner of all Permits, including without
 limitation all pre-market clearances, necessary for it to sell, market and
 distribute the Medical Devices. Seller has not previously sold or transferred
 in any manner, in whole or in part, directly or indirectly, any of the
 Permits necessary to sell the Medical Devices, including without limitation
 pre-market clearances for the Medical Devices. Seller will transfer all such
 Permits to Buyer at the Initial Closing to the extent transferable.

 
	
  

 	
  

 
	
  

 	
                        (h)     Seller
 has not either voluntarily or involuntarily initiated, conducted or issued,
 or caused to be initiated, conducted or issued, any recall, field
 notifications, field corrections, market withdrawal or replacement, safety
 alert, warning, “dear doctor” letter, investigator notice, safety alert or
 other notice or action relating to an alleged lack of safety, efficacy or
 regulatory compliance of Seller with respect to any Asset or the Product
 Line. Seller has no Knowledge of any facts which are reasonably likely to
 cause (1) the recall, market withdrawal or replacement of any Product Line
 product; (2) a change in the marketing classification or a material change in
 the labeling of any such products, or (3) a termination or suspension of the
 marketing of such products.

 
	
  

 	
  

 
	
  

 	
                        (i)     Seller
 has not received any written notice that the FDA or any other Governmental
 Entity has (i) commenced, or threatened to initiate, any action to withdraw
 its investigational device exemption, pre-market clearance or pre-market
 approval or request the recall of any Medical Device, (ii) commenced, or
 threatened to initiate, any action to enjoin manufacture or distribution of
 any Medical Device or (iii) commenced, or threatened to initiate, any action
 to enjoin the manufacture or distribution 

 

20

	
  

 	
  

 
	
  

 	
 of any Medical Device produced at any facility where
 any Medical Device is manufactured, tested, processed, packaged or held for
 sale.

 
	
  

 	
  

 
	
  

 	
                        (j)     Seller
 has at all times manufactured, marketed, sold and distributed the products in
 the Product Line in compliance with applicable federal or state criminal or
 civil laws (including the federal Anti-Kickback Statute (42 U.S.C.
 §1320a-7(b)), Stark law (42 U.S.C. §1395nn), False Claims Act (42 U.S.C.
 §1320a-7b(a)), Health Insurance Portability and Accountability Act of 1996
 (42 U.S.C. §1320d et seq., and any comparable state or local laws), any
 federal Civil Money Penalties Statute and, in each case, any similar or
 comparable state or local laws as well as the regulations promulgated
 pursuant to such laws, or which are cause for civil or criminal penalties or
 mandatory or permissive exclusion from Medicare (Title XVIII of the Social
 Security Act), Medicaid (Title XIX of the Social Security Act) or any other
 state or federal health care program (each, a “Program”). To Seller’s
 Knowledge there is no Litigation threatened against Seller that could
 reasonably be expected to result in its exclusion from participation in any
 Program or other third party payment programs in which the Product Line
 participates. Seller has not been sanctioned within the meaning of Social
 Security Act Section 1128A or any amendments thereof or debarred, excluded or
 suspended from participation in any federal or state health care program. In
 addition, neither Seller nor any of its affiliates have been debarred or
 convicted of a crime for which a Person can be debarred under 21 U.S.C. §
 335a, nor have they been threatened to be debarred or indicted for a crime or
 otherwise engaged in conduct for which a Person can be debarred.

 
	
  

 	
  

 
	
  

 	
                        (k)     Seller
 has made available to Buyer copies of any written complaints received from
 employees, independent contractors, vendors, physicians or any other Person
 asserting that Seller has violated any applicable law with respect to the
 Assets or the Product Line. As of the date hereof, (i) Seller is not a party
 to a corporate integrity agreement with the United States Department of
 Health and Human Services Office of Inspector General that relate to the
 Assets or the Product Line, (ii) the Seller has no reporting obligations with
 respect to the Assets or the Product Line pursuant to any settlement
 agreement entered into with any Governmental Entity, (iii) Seller has not
 been subject to any government payor program investigation conducted by any
 Governmental Entity with respect to the Assets or the Product Line, except
 with respect to individual claims for reimbursement in the ordinary course of
 business, (iv) Seller has not been a defendant in any qui tam or other
 litigation under the federal False Claims Act pertaining to the Assets or the
 Product Line and (v) within the past six years, Seller has not been served
 with or received any written search warrant, subpoena, civil investigative
 demand or contact letter from any Governmental Entity pertaining to the
 Assets or the Product Line.

 
	
  

 	
  

 
	
  

 	
                        (l)     Seller
 has delivered to Buyer complete and accurate written documentation of the
 processes and procedures used or necessary to manufacture the Product Line
 products (the “Manufacturing Documentation”). The manufacture of the
 products of the Product Line by Seller is being conducted in compliance in
 all material respects with all applicable laws including the FDA’s Quality
 Systems Regulation at 21 CFR Part 820 for products sold in the United States,
 and the respective counterparts thereof promulgated by Governmental Entities
 in countries outside the United States.

 

21

	
  

 	
  

 
	
  

 	
                         (m)     Seller
 is not the subject of any pending or, to Seller’s Knowledge, threatened,
 investigation in respect of the Assets, the Product Line or the Product Line
 products, by the FDA pursuant to its “Fraud, Untrue Statements of Material
 Facts, Bribery, and Illegal Gratuities” Final Policy set forth in 56 Fed.
 Reg. 46191 (September 10, 1991) and any amendments thereto. To Seller’s
 Knowledge, neither Seller, nor any officer, employee or agent of Seller, nor
 any other Person acting on their behalf, has directly or indirectly, given or
 agreed to give any gift or similar benefit to any customer, supplier,
 governmental employee or other Person who is or may be in a position to help
 or hinder the Seller’s business pertaining to the Assets or the Product Line
 (or assist the Seller in connection with any actual or proposed transaction)
 in violation of any applicable law.

 

          4.17     Insurance.

	
  

 	
  

 
	
  

 	
                         (a)     Seller
 has at all times maintained insurance relating to the Assets and the Product
 Line and covering all forms of insurance customarily obtained by similar businesses
 in the same industry. Such insurance (i) is in full force and effect and (ii)
 the terms of coverage have been disclosed to Buyer in Schedule 4.17 of
 the Seller Disclosure Schedule. Schedule 4.17 of the Seller Disclosure Schedule lists each policy
 of insurance in effect.

 
	
  

 	
  

 
	
  

 	
                         (b)     Schedule 4.17 of the Seller
 Disclosure Schedule lists by year for the current policy year and each of the
 two preceding policy years a summary of the loss experience of Seller with
 respect to the Assets and the Product Line under each policy involving any
 claim in excess of $50,000, setting forth (i) the name of the claimant, (ii)
 a description of the policy by insurer, type of insurance and period of
 coverage and (iii) the amount and a brief description of the claim. 

 

	
  

 	
  

 
	
  

 	
             4.18     Warranties.
 Schedule 4.18 of the Seller Disclosure
 Schedule summarizes all claims outstanding, pending or, to the Knowledge of
 Seller, threatened for breach of any warranty relating to any Assets or products
 in the Product Line sold by Seller prior to the date hereof. The description
 of Seller’s product warranties related to the Assets and the Product Line set
 forth under Schedule 4.18 of the Seller Disclosure Schedule is correct
 and complete. None of the products in the Product Line has been the subject
 of any claim alleging that such products are defective, or any product recall
 or return (whether voluntary or involuntary).

 
	
  

 	
  

 
	
  

 	
             4.19     Compliance
 with laws; Permits.

 

	
  

 	
  

 
	
  

 	
                         (a)     Seller
 and its officers, directors, shareholders, agents and employees have complied
 at all times in all material respects with all applicable laws, regulations,
 governmental orders, and other requirements relating to the Assets, the
 Product Line and the Assumed Liabilities, and to which Seller may be subject,
 including, but not limited to, federal, state, local and foreign laws,
 ordinances, rules, regulations and other requirements pertaining to product
 labeling and consumer products safety, and no claims have been filed against
 Seller alleging a violation of any such laws, regulations or other
 requirements and Seller has not received any notice asserting that it is not
 so in 

 

22

	
  

 	
  

 
	
  

 	
 compliance. To its Knowledge, Seller is not relying
 on any exemption from or deferral of any law, regulation, governmental order,
 other requirement, or governmental authorization that would not be available
 to Buyer after the applicable Closing.

 
	
  

 	
  

 
	
  

 	
                         (b)      Seller
 has, in full force and effect, all Permits. A true, correct and complete list
 of all the Permits is set forth in Schedule 1.01(g), with an
 indication as to whether each Permit is assignable to Buyer. Seller has
 conducted its business relating to the Assets and the Product Line in
 compliance in all material respects with the terms and conditions of the
 Permits. Seller will transfer all Permits to Buyer at the Initial Closing to
 the extent they are transferable.

 

                      4.20      Distributor
Customer List. Schedule 4.20 of the Seller Disclosure Schedule sets
forth the identity of each customer that is a distributor for the Product Line,
the products sold to each such customer and the price at which such products
were sold.

                      4.21      Product
Liability. Within the past three years, Seller has had no liability (and
there is no known basis for any present or future action, lawsuit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against any of them
giving rise to any liability) arising out of any injury to individuals or
property as a result of the ownership, possession, or use of any product in the
Product Line that is manufactured, sold, or delivered by Seller. No product in
the Product Line that has been manufactured, sold or delivered by Seller, or
any part or component thereof, is or has been the subject of any product
recall, service bulletin or similar product corrective action in connection
with any actual, alleged or potential product defect.

                      4.22      Brokerage.
Except for the commission payable by Seller to Capstone Partners, LLC, no third
party shall be entitled to receive any brokerage commissions, finder’s fees,
fees for financial advisory services or similar compensation in connection with
the transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of Seller. 

                      4.23      Availability
of Documents. Seller has delivered or made available to Buyer correct and
complete copies of the items referred to in the Seller Disclosure Schedule or
in this Agreement (and in the case of any items not in written form, a written
description thereof).

                      4.24      Solvency.

	
  

 	
  

 
	
  

 	
                         (a)      Seller
 is not insolvent and will not be rendered insolvent by any of the
 transactions contemplated by this Agreement. As used in this Section 4.24,
 “insolvent” means that the sum of the debts and other probable liabilities of
 Seller exceeds the present fair saleable value of its assets.

 
	
  

 	
  

 
	
  

 	
                         (b)      Immediately
 after giving effect to the consummation of the transactions contemplated by
 this Agreement, (i) Seller will be able to pay its liabilities as they become
 due in the usual course of its business; (ii) Seller will not have
 unreasonably small capital with which to conduct its present or proposed
 business; (iii) Seller will have assets (calculated at fair market value)
 that exceed its liabilities; (iv) taking into account all pending and known
 threatened litigation, final judgments against Seller in actions for 

 

23

	
  

 	
  

 
	
  

 	
 money damages are not reasonably anticipated to be
 rendered at a time when, or in amounts such that, Seller will be unable to
 satisfy any such judgments in accordance with their terms (taking into
 account the maximum probable amount of such judgments in any such actions and
 the earliest reasonable time at which such judgments might be rendered) as
 well as all other obligations of Seller; and (v) the cash available to
 Seller, after taking into account all other anticipated uses of the cash, is
 expected to be sufficient to pay all such debts and judgments promptly in
 accordance with their terms.

 

                      4.25      Disclosure.
None of this Agreement, the Related Agreements, the Exhibits hereto, any of the
documents delivered by or on behalf of Seller pursuant to Article VIII hereof,
nor the Seller Disclosure Schedule (collectively, the “Seller Documents”), taken as a whole,
contain any untrue statement of a material fact regarding the Assets, the
Product or the Assumed Liabilities or any of the other matters dealt with in
this Article IV relating to Seller’s ownership and operation of the Product
Line or the Assets or the transactions contemplated by this Agreement.

                      4.26      Investigation
by Buyer. Notwithstanding anything to the contrary in this Agreement, (a)
no investigation by Buyer shall affect the representations and warranties of
Seller under this Agreement or contained in any other writing to be furnished
to Buyer in connection with the transactions contemplated hereby and (b) such
representations and warranties shall not be affected or deemed waived by reason
of the fact that Buyer knew or should have known that any of the same is or
might be inaccurate in any respect. 

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

                      Buyer
hereby represents and warrants to Seller that: 

                      5.01      Incorporation
and Power. Buyer is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Minnesota, with the requisite
corporate power and authority to enter into this Agreement and perform its
obligations hereunder.

                      5.02      Execution,
Delivery; Valid and Binding Agreement. The execution, delivery and
performance of this Agreement and the Related Agreements by Buyer and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all requisite corporate action, and no other
corporate proceedings on its part are necessary to authorize the execution,
delivery or performance of this Agreement and the Related Agreements. This
Agreement and the Related Agreements have been duly executed and delivered by
Buyer and, assuming that this Agreement and the Related Agreements are the
valid and binding agreements of Seller, constitute the valid and binding
obligations of Buyer, enforceable in accordance with their terms, except as may be limited by bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting the rights of
creditors generally and the availability of equitable remedies.

24

                      5.03      Authority,
No Breach. Buyer has the requisite corporate power and authority to execute
and deliver this Agreement and each of the Related Agreements and to perform
its obligations hereunder and thereunder. The execution, delivery and
performance of this Agreement and the Related Agreements by Buyer and the
consummation by Buyer of the transactions contemplated hereby and thereby do
not conflict with or result in any breach of any of the provisions of,
constitute a default under, result in a violation of, result in the creation of
a right of termination or acceleration or any lien, security interest, charge
or encumbrance upon any assets of Buyer, or require any authorization, consent,
approval, exemption or other action by or notice to any court or other governmental
body, under the provisions of the Certificate of Incorporation or Bylaws of
Buyer or any indenture, mortgage, lease, loan agreement or other agreement or
instrument by which Buyer or its assets are bound or affected, or any law,
statute, rule or regulation or order, judgment or decree to which Buyer or its
assets is subject.

                      5.04      Governmental
Authorities; Consents. Buyer is not required to submit any notice, report
or other filing with any governmental authority in connection with the
execution or delivery by it of this Agreement or the consummation of the
transactions contemplated hereby. No consent, approval or authorization of any
governmental or regulatory authority or any other Person is required to be
obtained by Buyer in connection with its execution, delivery and performance of
this Agreement or the transactions contemplated hereby.

                      5.05      Brokerage.
No third party shall be entitled to receive any brokerage commissions, finder’s
fees, fees for financial advisory services or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of Buyer. 

                      5.06      Investigation
by Seller. Notwithstanding anything to the contrary in this Agreement, (a)
no investigation by Seller shall affect the representations and warranties of
Buyer under this Agreement or contained in any other writing to be furnished to
Seller in connection with the transactions contemplated hereby and (b) such
representations and warranties shall not be affected or deemed waived by reason
of the fact that Seller knew or should have known that any of the same is or
might be inaccurate in any respect. 

ARTICLE VI

COVENANTS OF SELLER

                      The
covenants and agreements of Seller set forth in this Article VI shall be joint
and several.

                      6.01      Conduct
Relating to the Assets.

	
  

 	
  

 
	
  

 	
                          (a)      In
 connection with the Assets other than the Raw Materials Inventory, Seller
 agrees that, from the date hereof until the Initial Closing Date, without the
 prior written consent of Buyer:

 

25

	
  

 	
 

 
	
  

 	
                           (i)      Seller
 shall not take any action with respect to such Assets except on an
 arm’s-length basis and in accordance with all applicable laws, rules and
 regulations and the past custom and practice of Seller with respect to the
 Assets or the Product Line;

 
	
  

 	
  

 
	
  

 	
                           (ii)     Seller
 shall manage Inventory levels in the ordinary course of business and in
 accordance with the past custom and practice of Seller with respect to the
 Assets or the Product Line;

 
	
  

 	
  

 
	
  

 	
                           (iii)    Seller
 shall not, directly or indirectly, sell, pledge, dispose of or encumber
 any of the Assets;

 
	
  

 	
  

 
	
  

 	
                           (iv)    Seller
 will not enter into any contract relating to the Assets that would have been
 an Assigned Contract if such contract had been in effect on the date of this
 Agreement;

 
	
  

 	
  

 
	
  

 	
                           (v)      Seller
 shall not cancel or terminate its current insurance policies covering the
 Assets, or cause any of the coverage thereunder to lapse, unless simultaneously
 with such termination, cancellation or lapse, replacement policies providing
 coverage equal to or greater than the coverage under the canceled, terminated
 or lapsed policies are in full force and effect; and

 
	
  

 	
  

 
	
  

 	
                           (vi)    Seller
 shall: (A) use all reasonable efforts to preserve intact the Assets;
 (B) not intentionally take any action which would render, or which
 reasonably may be expected to render, any representation or warranty made by
 it in this Agreement with respect to Seller, the Assets or the Product Line
 untrue at the Initial Closing; and (C) notify Buyer of any emergency or
 other change in the normal course of the business and of any governmental or
 third party complaints, investigations or hearings (or communications
 indicating that the same may be contemplated) relating to the Assets or the
 Product Line.

 

	
  

 	
  

 
	
  

 	
                          (b)      In
 connection with the Raw Materials Inventory, Seller agrees that, from the
 date hereof until the Final Closing Date, without the prior written consent
 of Buyer:

 

	
  

 	
  

 
	
  

 	
                           (i)      Seller
 shall not take any action with respect to the Raw Materials Inventory except
 on an arm’s-length basis and in accordance with all applicable laws, rules
 and regulations and in accordance with the terms and conditions of the Supply
 Agreement;

 
	
  

 	
  

 
	
  

 	
                           (ii)     Seller
 shall manage the Raw Materials Inventory levels in accordance with the terms
 and conditions of the Supply Agreement;

 
	
  

 	
  

 
	
  

 	
                           (iii)    Seller
 shall not, directly or indirectly, sell, pledge, dispose of or encumber
 any of the Raw Materials Inventory;

 

26

	
  

 	
  

 
	
  

 	
                           (iv)     Seller
 will not enter into any contract relating to the Raw Materials Inventory that
 would have been an Assigned Contract if such contract had been in effect on
 the date of this Agreement;

 
	
  

 	
  

 
	
  

 	
                           (v)      Seller
 shall not cancel or terminate its current insurance policies covering the Raw
 Materials Inventory, or cause any of the coverage thereunder to lapse, unless
 simultaneously with such termination, cancellation or lapse, replacement
 policies providing coverage equal to or greater than the coverage under the
 canceled, terminated or lapsed policies are in full force and effect; and

 
	
  

 	
  

 
	
  

 	
                           (vi)     Seller
 shall: (A) use all reasonable efforts to preserve intact the Raw
 Materials Inventory until used in production and manufacturing; (B) not
 intentionally take any action which would render, or which reasonably may be
 expected to render, any representation or warranty made by it in this
 Agreement with respect to the Raw Materials Inventory untrue at the Final
 Closing; and (C) notify Buyer of any emergency or other change in the
 normal course of the business and of any governmental or third party
 complaints, investigations or hearings (or communications indicating that the
 same may be contemplated) relating to the Raw Materials Inventory.

 

                    6.02      Consents,
Approvals, Filings. As promptly as practicable after the execution of this
Agreement, Seller agrees that it shall diligently and in good faith assist
Buyer, using commercially reasonable efforts, in obtaining or making, as
applicable, all consents, approvals, filings and submissions required from or
to any third parties, regulatory or judicial bodies, or under any laws or
regulations applicable to the Assets for the consummation of or in connection
with the transactions contemplated hereby that have not been obtained prior to
the Closing and that are listed on Schedule 6.02, and Seller shall
provide any notices required to be delivered to the FDA regarding the transfer
of the 510k registrations listed on Schedule 1.01(h). Seller will
coordinate and cooperate with Buyer in exchanging such information, will not
make any such filing without providing to Buyer a final copy thereof for its
review and consent at least two full business days in advance of the proposed
filing and will provide such reasonable assistance as Buyer may request in
connection with all of the foregoing.

                    6.03      No
Negotiations, etc. From and after the date of this Agreement until the
Final Closing, Seller shall not, directly or indirectly, through any officer,
director, agent or otherwise, solicit, initiate or encourage submission of any
proposal or offer from any Person (including any of its or their officers or
employees) relating to any liquidation, license, acquisition, purchase or other
transfer of any of the Raw Materials Inventory, any transfer of any interest of
Seller in the Product Line or any Asset, or any sale of the equity interests of
Seller, or other similar transaction or business combination involving Seller,
the Assets or the Product Line (each, a “Competing Transaction”) or participate in
any negotiations or discussions regarding a Competing Transaction, or furnish
to any other Person any information, or otherwise cooperate in any way, with
respect to a possible Competing Transaction or assist or participate in,
facilitate or encourage, any effort or attempt by any other Person to do or
seek a possible Competing Transaction. Seller shall promptly notify Buyer if any
proposal or offer, or any inquiry from or contact with any Person with respect
to a possible Competing Transaction is made and shall 

27

promptly provide Buyer with such information regarding
such proposal, offer, inquiry or contact as Buyer may request. 

                      6.04      Updates
of Seller Disclosure Schedule. From and after the date of the Initial
Closing Date until the Final Closing Date, Seller shall promptly notify Buyer
by written update to the Seller Disclosure Schedule (a) if any representation
or warranty made by Seller in this Agreement with respect to the Raw Materials
Inventory or the Manufacturing Assets was when made, or has subsequently
become, untrue in any material respect, (b) of the occurrence or non-occurrence
of any event, the occurrence or non-occurrence of which may cause any condition
to the obligations of any party hereto to effect the transactions contemplated
by this Agreement on the Final Closing Date not to be satisfied or (c) of the
failure of Seller to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by Seller pursuant to this Agreement
which would be likely to result in any condition to the obligations of any
party hereto to effect the transactions contemplated hereby on the Final
Closing Date not to be satisfied. The delivery of any notice pursuant to this
Section 6.04 shall not cure any breach of any representation or warranty
requiring disclosure of such matter prior to the date of this Agreement or
otherwise limit or affect the rights of, or the remedies available to, Buyer.

                      6.05      Use
of Name. Except as may be expressly permitted pursuant to the terms of the
Supply Agreement, Seller agrees not to use any mark transferred to Buyer under
Section 1.01(a)(ii) after the Initial Closing Date. 

                      6.06      Conditions.
Seller take all commercially reasonable actions necessary or desirable to cause
the conditions set forth in Section 8.01 to be satisfied and to consummate
the transactions contemplated herein as soon as reasonably possible after the
satisfaction thereof and in any event prior to the applicable Closing Date.

                      6.07      Tax
Matters. All Taxes imposed in connection with the transfer and sale of the
Assets shall be borne by Seller, provided that Buyer shall be responsible for
any use taxes in connection with its use of the Assets after the applicable
Closing. 

                      6.08      Protection
of Trade Secrets, Know-How and Other Confidential Information. Except as
permitted or directed by Buyer, Seller shall not, and shall use its best
efforts to cause Seller’s employees and affiliates to not, divulge, furnish or
make accessible to anyone or use in any way any confidential or proprietary
knowledge or information relating to the Product Line or the Assets that is
required to be transferred to Buyer hereunder, whether developed by Seller or
by others, concerning any trade secrets, confidential or secret designs,
processes, formulae, products or future products, plans, devices or material
(whether or not patented or patentable) directly or indirectly useful in any
aspect for any of the Assets, any customer or supplier lists relating to the
Assets, any confidential or secret development or research work relating to the
Assets, any clinical research, data, or information, or any other confidential
information or secret aspects of the Assets. Seller acknowledges that the
above-described knowledge or information constitutes a unique and valuable
asset of the Assets, and that any disclosure or other use of such knowledge or
information by Seller would be wrongful and would cause irreparable harm to
Buyer. Seller will refrain from any acts or omissions that would reduce the
value of such knowledge or information to Buyer.

28

                      6.09      Noncompetition.

	
  

 	
  

 
	
  

 	
                         (a)      For
 two (2) years after the Final Closing Date (the “Restricted Period”), Seller
 shall not, and shall cause its 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 provide, offer or
 manufacture, or seek to provide, offer or manufacture, snare or retrieval
 products that are the same or similar in any material respect to those
 offered by Seller as part of the Product Line or that are deemed to be
 “products of the Product Line” for purposes of Section 2.04(b)(i)(A). The
 services provided by Seller to Buyer under the Supply Agreement shall not be
 considered a Competitive Business for purposes of this Section 6.09.

 
	
  

 	
  

 
	
  

 	
                         (b)      Seller
 shall not, directly or indirectly, assist or encourage any other Person in
 carrying out, directly or indirectly, any activity that would be prohibited
 by the above provisions of Sections 6.09 or Section 6.10 if such
 activity were carried out by Seller, either directly or indirectly. In
 particular, Seller agrees not to, directly or indirectly, induce any employee
 of Seller or Buyer to carry out, directly or indirectly, any such activity.

 
	
  

 	
  

 
	
  

 	
                         (c)      Seller
 agrees that the restrictions and agreements contained in Sections 6.09
 or 6.10 are reasonable and necessary to protect the legitimate interests of
 Buyer and that any violation of Sections 6.09 or 6.10 will cause
 substantial and irreparable harm to Buyer 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 6.09 or 6.10.

 
	
  

 	
  

 
	
  

 	
                         (d)      If
 the duration or extent of the restrictions provided for in Sections 6.09
 or 6.10 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. Seller acknowledges the
 uncertainty of the law in this respect and expressly stipulates that this
 Agreement 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 6.09(a).

 

29

                    6.10     Agreement
Not to Solicit. During the Restricted Period, Seller shall not (i) directly
or indirectly attempt to hire away any then-current employee of Buyer or any of
its affiliates or to persuade any such employee to leave employment with Buyer
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 Buyer or the Product Line has established or is actively
seeking to establish a business or customer relationship. 

                    6.11     Cooperation
and Exchange of Information. 

	
  

 	
  

 
	
  

 	
                       (a)     Buyer
 shall have the right for a period of seven years following the Final Closing
 Date to have reasonable access to review such books, records and accounts,
 including financial and tax information, correspondence, production records,
 and other records of Seller relating to the Product Line, the Assets and
 Assumed Liabilities for the limited purposes of complying with its
 obligations under applicable laws and regulations, including financial
 reporting obligations, in all cases to the extent such books, records and
 accounts have not been destroyed in accordance with Seller’s document
 retention policy. Except in accordance with Seller’s document retention
 policy, Seller shall not destroy any such books, records or accounts retained
 by it without first providing Buyer with the opportunity to obtain or copy
 such books, records, or accounts. For a period of two years following the
 Initial Closing Date, Seller shall provide Buyer with such cooperation and
 information as Buyer reasonably may request of Seller pursuant to this
 Section 6.11, including but not limited to making its employees available on
 a mutually convenient basis to provide explanation of any documents or
 information provided hereunder; provided,
 however, that in the event any
 such request will exceed one hour, Buyer and Seller shall agree on an
 appropriate hourly fee before Seller is required to comply with such request
 as set forth herein. 

 
	
  

 	
  

 
	
  

 	
                       (b)     Seller
 shall have the right for a period of seven years following the Final Closing
 Date to have reasonable access to review such books and records of Seller
 constituting Assets transferred to Buyer pursuant to this Agreement, for the
 limited purposes of comply with its obligations under applicable laws and
 regulations, including financial reporting obligations, in all cases to the
 extent such books, records and accounts have not been destroyed in accordance
 with Buyer’s document retention policies in effect from time to time. Except
 in accordance with Buyer’s document retention policies in effect from time to
 time, Buyer shall not destroy any such books or records retained by it without
 first providing Seller with the opportunity to obtain or copy such books and
 records. For a period of two years following the Initial Closing Date, Buyer
 shall provide Seller with such cooperation and information as Seller
 reasonably may request of Buyer pursuant to this Section 6.11. 

 
	
  

 	
  

 
	
  

 	
                       (c)     Promptly
 upon request by Buyer made at any time during the seven-year period following
 the Final Closing Date, Seller shall authorize the release to Buyer of all
 files pertaining to the Assets or Assumed Liabilities held by any federal,
 state, county or local authorities, agencies or instrumentalities. 

 
	
  

 	
  

 
	
  

 	
                       (d)     To
 induce Buyer to enter into this Agreement and consummate the transactions
 provided for herein, Seller agrees that following the Initial Closing and
 until 

 

30

	
  

 	
  

 
	
  

 	
 the
 Manufacturing Transfer has occurred, Seller shall cause each member of its
 senior management and engineering staff, including without limitation Maureen
 Finlayson and Rich DeMello, to make themselves available by telephone during
 normal business hours to consult with Buyer’s employees regarding the Product
 Line, the Assets, and clinical performance of the products in the Product
 Line, for no additional compensation from Buyer.

 

                    6.12     Insurance
Coverage. From and after the Initial Closing Date and for three years
thereafter, Seller shall have and maintain in effect, at Seller’s sole cost,
the following insurance relating to Seller’s past operation of the Product
Line: Commercial General Liability Insurance and Products Liability Insurance
for each occurrence of bodily injury and property damage, in an amount of not
less than $2,000,000 for each such policy. 

                    6.13     Restrictions
on Seller Dissolution. Seller shall not liquidate, dissolve, or otherwise
cease to exist prior to the expiration of any warranty applicable to work
performed by Seller under the Assigned Contract. 

                    6.14     Design
and Manufacture of New Product. Seller, at its sole cost and expense, shall
use its commercially reasonable best efforts to (a) complete the design of a
new low-profile handle for the QUATTRO Elite Snare in accordance with
applicable laws and regulations and the specifications described in Schedule
6.14 hereto, and (b) transfer the manufacturing of such new handle to Buyer
on or before December 31, 2010.

                    6.15     Manufacturing
Transfer. In connection with the Manufacturing Transfer, Seller shall, at
its own expense, provide to Buyer and its employees the training and
documentation described on Schedule 6.15 hereto with respect to the products of
the Product Line transferred to Buyer between the Initial Closing Date and the
date of completion of the Manufacturing Transfer.  

ARTICLE VII

COVENANTS OF BUYER

                    7.01     Regulatory
Filings. As promptly as practicable after the execution of this Agreement,
Buyer shall make or cause to be made all filings and submissions under any laws
or regulations applicable to Buyer for the consummation of the transactions
contemplated herein. Buyer will coordinate and cooperate with Seller in
exchanging such information, will not make any such filing without providing to
Seller a final copy thereof for its review and consent at least two full
business days in advance of the proposed filing and will provide such
reasonable assistance as Seller may request in connection with all of the
foregoing. 

                    7.02     Conditions.
Buyer shall take all commercially reasonable actions necessary or desirable to
cause the conditions set forth in Section 8.02 to be satisfied and to
consummate the transactions contemplated herein as soon as reasonably possible
after the satisfaction thereof and in any event prior to the applicable Closing
Date. 

31

ARTICLE VIII

CONDITIONS TO CLOSING

                    8.01     Conditions
to Buyer’s Obligations. 

                      (a)   The
obligation of Buyer to consummate the transactions contemplated by this
Agreement is subject to the satisfaction of the following conditions on or
before the Initial Closing Date: 

	
  

 	
  

 
	
  

 	
                     (i)     The
 representations and warranties set forth in Article IV hereof that are not
 subject to materiality or Material Adverse Effect qualifications shall be
 true and correct in all material respects at and as of the Initial Closing
 Date as though then made and as though the Initial Closing Date had been
 substituted for the date of this Agreement throughout such representations
 and warranties, except that any such representation or warranty made as of a
 specified date (other than the date hereof) shall only need to have been true
 and correct on and as of such date, and the representations and warranties
 set forth in Article IV hereof that are subject to materiality or Material Adverse
 Effect qualifications shall be true and correct in all respects at and as of
 the Initial Closing Date as though then made and as though the Initial
 Closing Date had been substituted for the date of this Agreement throughout
 such representations and warranties, except that any such representation or
 warranty made as of a specified date (other than the date hereof) shall only
 need to have been true and correct on and as of such date; 

 
	
  

 	
  

 
	
  

 	
                     (ii)    Seller
 shall have performed all of the covenants and agreements required to be
 performed and complied with by it in all material respects under this
 Agreement prior to the Initial Closing Date; 

 
	
  

 	
  

 
	
  

 	
                     (iii)   The
 parties shall have obtained, or applied for, each consent and approval
 necessary as listed on Schedule 6.02, at no cost to Buyer, in order
 that the transactions contemplated herein not constitute a breach or
 violation of, or result in a right of termination or acceleration of, or
 creation of any encumbrance on any of the Assets pursuant to the provisions
 of, any Assigned Contract, agreement, arrangement or undertaking of or
 affecting Seller or any license, franchise or permit of or affecting Seller; 

 
	
  

 	
  

 
	
  

 	
                     (iv)    All
 governmental filings, authorizations and approvals as listed on Schedule
 6.02 will have been duly made, applied for or waived; 

 
	
  

 	
  

 
	
  

 	
                     (v)     Buyer
 will have received evidence satisfactory to it that there is not threatened,
 instituted or pending any action or proceeding, before any court or
 governmental authority or agency, domestic or foreign, (i) challenging or
 seeking to make illegal, or to delay or otherwise directly or indirectly
 restrain or prohibit, the consummation of the transactions contemplated
 hereby or seeking to obtain material damages in connection with such
 transactions, (ii) seeking to 

 

32

	
  

 	
  

 
	
  

 	
 invalidate
 or render unenforceable any material provision of this Agreement or the
 Related Agreements or (iii) otherwise relating to and materially adversely
 affecting the transactions contemplated hereby;

 
	
  

 	
  

 
	
  

 	
                     (vi)     There
 shall be no fact or circumstance existing as of the date of this Agreement
 which has not been disclosed to Buyer as of the Initial Closing Date
 regarding the Assets or the Assumed Liabilities, which is, individually or in
 the aggregate with other such facts and circumstances, materially adverse to
 the value of the Assets, as determined by Buyer in its reasonable discretion;
 

 
	
  

 	
  

 
	
  

 	
                     (vii)    The
 transactions contemplated by this Agreement and the Related Agreements will
 have been approved by Buyer’s Board of Directors; 

 
	
  

 	
  

 
	
  

 	
                     (viii)   Buyer
 shall be satisfied in its sole discretion with its operational, intellectual
 property, and legal due diligence with respect to the Assets; 

 
	
  

 	
  

 
	
  

 	
                     (ix)     Buyer
 shall have all releases as necessary to release all liens, claims,
 encumbrances and security interests in the Assets, except for security
 interests and other liens relating to liabilities to be assumed by Buyer
 pursuant to Section 1.03; 

 
	
  

 	
  

 
	
  

 	
                     (x)      Buyer
 shall have entered into the Supply Agreement with Seller in the form attached
 hereto as Exhibit C; 

 
	
  

 	
  

 
	
  

 	
                     (xi)     Each
of Maureen Finlayson and Rich DeMello shall have entered into a
Noncompetition Agreement with Buyer in the form attached hereto as Exhibit D; and 

 
	
  

 	
  

 
	
  

 	
                     (xii)    Seller
 shall have delivered to Buyer all of the following with respect to the
 Initial Closing Assets: 

 

	
  

 	
  

 	
  

 
	
  

 	
 (A)

 	
 the executed
 Bill of Sale and such other executed instruments of conveyance, transfer,
 assignment and delivery as Buyer shall have reasonably requested pursuant to
 Section 3.02 hereof; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (B)

 	
 a copy of
 the Assignment and Assumption Agreement, including, but not limited to,
 assignment of the Assigned Contract, the Permits and certain Intellectual
 Property Assets, executed by Seller; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (C)

 	
 a
certificate of an appropriate officers of Seller substantially in the forms
set forth in Exhibit E hereto, dated the Initial Closing Date, (i) stating
that the conditions precedent set forth in subsection  

 

33

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)(i),
 (a)(ii) and (a)(v) above have been satisfied; (ii) setting forth and
 certifying the text of the resolutions adopted by the board of directors of
 Seller authorizing the execution, delivery, and performance of this Agreement
 and the Related Agreements; (iii) setting forth and certifying the text of
 the resolutions adopted by the stockholders or members, as appropriate, of
 Seller approving the sale of the Assets (if required); and (iv) setting forth
 and certifying as to the incumbency of the officers of each Seller authorized
 to execute and deliver this Agreement and the Related Agreements;

 
	
  

 	
  

 	
  

 
	
  

 	
 (D)

 	
 certificates
 dated as of a recent date as to the good standing of each Seller, executed by
 the appropriate officials of the jurisdiction of organization or formation of
 each Seller; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (E)

 	
 copies of
 the third party and governmental consents and approvals referred to in subsections
 (c) and (d) above; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (F)

 	
 assignment,
 in the form(s) set forth in Exhibit F, of certain Intellectual
 Property Assets, duly executed by Seller, together with other agreements,
 instruments, certificates and other documents necessary or appropriate, in
 the opinion of Buyer’s counsel, to assign all of Seller’s rights and
 interests in and to such Intellectual Property to Buyer; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (G)

 	
 the Finished
Goods Inventory, all documents or other tangible materials described in
Section 1.01(a)(viii), the Equipment (other than the Equipment that is
necessary to manufacture the products required by Seller under the Supply
Agreement), a copy of the Assigned Contract, and copies of the Permits;  

 
	
  

 	
  

 	
  

 
	
  

 	
 (H)

 	
 the Customer
 List; and 

 
	
  

 	
  

 	
  

 
	
  

 	
 (I)

 	
 such other
 certificates, documents and instruments as Buyer reasonably requests related
 to the transactions contemplated hereby. 

 

                    (b)     The
obligation of Buyer to consummate the transactions contemplated by this
Agreement to be consummated on the Final Closing Date is subject to the
satisfaction of the following conditions on or before the Final Closing Date: 

34

                    (i)     The
representations and warranties set forth in Article IV that are not subject to
materiality or Material Adverse Effect qualifications, as the same relate to
the Raw Materials Inventory, shall be true and correct in all material respects
at and as of the Final Closing Date as though then made and as though the Final
Closing Date had been substituted for the date of this Agreement throughout
such representations and warranties, except that any such representation or
warranty made as of a specified date (other than the date hereof) shall only
need to have been true and correct on and as of such date, and the representations
and warranties set forth in Article IV that are subject to materiality or
Material Adverse Effect qualifications, as the same relate to the Assets to be
transferred to Buyer on the Final Closing Date, shall be true and correct in
all respects at and as of the Final Closing Date as though then made and as
though the Final Closing Date had been substituted for the date of this
Agreement throughout such representations and warranties, except that any such
representation or warranty made as of a specified date (other than the date
hereof) shall only need to have been true and correct on and as of such date; 

                    (ii)    Seller
shall have performed all of the covenants and agreements required to be
performed and complied with by it in all material respects under this Agreement
prior to the Final Closing Date; 

                    (iii)   The
Manufacturing Transfer shall have occurred in accordance with Section 2.02(h)
and Schedule 2.02(h); 

                    (iv)   Buyer
will have received evidence satisfactory to it that there is not threatened,
instituted or pending any action or proceeding, before any court or
governmental authority or agency, domestic or foreign, (i) challenging or
seeking to make illegal, or to delay or otherwise directly or indirectly
restrain or prohibit, the consummation of the transactions contemplated hereby
on the Final Closing Date or seeking to obtain material damages in connection
with such transactions, (ii) seeking to invalidate or render unenforceable any
material provision of this Agreement or the Related Agreements relating to the
transactions to be consummated on the Final Closing Date or (iii) otherwise
relating to and materially adversely affecting the transactions contemplated
hereby on the Final Closing Date; 

                    (v)     No
Person will have asserted or threatened that such Person is the owner of, or
has the right to acquire or to obtain ownership of, any of the Raw Materials
Inventory or is entitled to all or any portion of the Purchase Price with
respect thereto; 

                    (vi)    No
Material Adverse Effect with respect to the Raw Materials Inventory shall have
occurred; 

                    (vii)   Seller
shall have complied with the covenants set forth in Section 6.14; and 

35

                    (viii)  Seller
shall have delivered to Buyer all of the following with respect to the Raw
Materials Inventory: 

	
  

 	
  

 	
  

 
	
  

 	
 (A)

 	
 an executed
 Bill of Sale and such other executed instruments of conveyance, transfer,
 assignment and delivery as Buyer shall have reasonably requested pursuant to
 Section 3.02 hereof, provided that Buyer shall request any such additional
 instrument no later than three business days prior to the Final Closing Date;
 

 
	
  

 	
  

 	
  

 
	
  

 	
 (B)

 	
 a
 certificate of an appropriate officer of Seller substantially in the form set
 forth in Exhibit E hereto, dated the Final Closing Date, (i) stating
 that the conditions precedent set forth in subsection (b) above have been
 satisfied; and 

 
	
  

 	
  

 	
  

 
	
  

 	
 (C)

 	
 the Raw
 Materials Inventory. 

 

                    8.02     Conditions
to Seller’s Obligations. 

                      (a)   The
obligations of Seller to consummate the transactions contemplated by this
Agreement are subject to the satisfaction of the following conditions on or
before the Initial Closing Date: 

	
  

 	
  

 
	
  

 	
                     (i)       The
 representations and warranties set forth in Article V hereof that are not
 subject to materiality or material adverse effect qualifications shall be
 true and correct in all material respects at and as of the Initial Closing as
 though then made and as though the Initial Closing Date had been substituted
 for the date of this Agreement throughout such representations and
 warranties, except that any such representation or warranty made as of a
 specified date (other than the date hereof) shall only need to have been true
 and correct on and as of such date, and the representations and warranties
 set forth in Article V hereof that are subject to materiality or material
 adverse effect qualifications shall be true and correct in all respects at
 and as of the Initial Closing as though then made and as though the Initial
 Closing Date had been substituted for the date of this Agreement throughout
 such representations and warranties, except that any such representation or
 warranty made as of a specified date (other than the date hereof) shall only
 need to have been true and correct on and as of such date; 

 
	
  

 	
  

 
	
  

 	
                     (ii)      Buyer
 shall have performed all of the covenants and agreements required to be
 performed by it under this Agreement in all material respects prior to the
 Initial Closing; 

 
	
  

 	
  

 
	
  

 	
                     (iii)     All
 governmental filings, authorizations and approvals that are required for the
 consummation of the transactions contemplated hereby shall have been duly
 made, applied for or waived; 

 

36

	
  

 	
  

 
	
  

 	
                     (iv)     Buyer
shall have entered into the Supply Agreement with Seller in the form attached
hereto as Exhibit C; and  

 
	
  

 	
  

 
	
  

 	
                     (v)      Buyer
 shall have delivered to Seller all of the following: 

 

	
  

 	
  

 	
  

 
	
  

 	
 (A)

 	
 a wire
 transfer or bank draft in immediately available funds representing the
 Closing Payment; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (B)

 	
 a copy of
 the Assignment and Assumption Agreement, executed by Buyer; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (C)

 	
 a
 certificate of an appropriate officer of Buyer substantially in the form set
 forth as Exhibit G hereto, dated the Initial Closing Date, stating
 that the conditions precedent set forth in subsections (a)(i) and (a)(ii)
 above have been satisfied and setting forth and certifying the text of the
 resolutions adopted by the board of directors of Buyer authorizing the
 execution, delivery, and performance of this Agreement; and 

 
	
  

 	
  

 	
  

 
	
  

 	
 (D)

 	
 such other
 certificates, documents and instruments as Seller or its counsel may
 reasonably request related to the transactions contemplated hereby. 

 

                    (b)     The
obligations of Seller to consummate the transactions contemplated by this
Agreement are subject to the satisfaction of the following conditions on or
before the Final Closing Date: 

	
  

 	
  

 
	
  

 	
                     (i)      The
 representations and warranties set forth in Article V hereof that are not
 subject to materiality or material adverse effect qualifications shall be
 true and correct in all material respects at and as of the Final Closing as
 though then made and as though the Final Closing Date had been substituted
 for the date of this Agreement throughout such representations and
 warranties, except that any such representation or warranty made as of a
 specified date (other than the date hereof) shall only need to have been true
 and correct on and as of such date, and the representations and warranties
 set forth in Article V hereof that are subject to materiality or material
 adverse effect qualifications shall be true and correct in all respects at and
 as of the Final Closing as though then made and as though the Final Closing
 Date had been substituted for the date of this Agreement throughout such
 representations and warranties, except that any such representation or
 warranty made as of a specified date (other than the date hereof) shall only
 need to have been true and correct on and as of such date; 

 
	
  

 	
  

 
	
  

 	
                     (ii)     Buyer
 shall have performed all of the covenants and agreements required to be
 performed by it under this Agreement in all material respects prior to the
 Final Closing; and 

 

37

	
  

 	
  

 
	
  

 	
                     (iii)   Buyer
shall have delivered to Seller a certificate of an appropriate officer of
Buyer substantially in the form set forth as Exhibit G hereto, dated the
Final Closing Date, stating that the conditions precedent set forth in
subsections (i) and (ii) above have been satisfied.  

 

ARTICLE IX

SURVIVAL; INDEMNIFICATION

                    9.01     Reliance
and Survival of Representations and Warranties. Notwithstanding any investigation
made by or on behalf of the parties hereto or the results of any such
investigation, and notwithstanding the participation of the parties in each
Closing, each party shall be deemed to have relied on the representations,
warranties and covenants of the other parties, and the representations and
warranties contained in Article IV and Article V, and the indemnification
obligations of Buyer and Seller with respect thereto, shall survive each
Closing for a period of 18 months, except for (a) the representations and
warranties contained in Section 4.11 (Tax Matters), which shall survive each
Closing for the applicable statute of limitation period, (b) the
representations and warranties contained in Section 4.14 (Intellectual Property
Rights) and 4.16 (Regulatory Compliance), which shall survive each Closing for
a period of five years, and (c) the representations and warranties contained in
Sections 4.01 (Incorporation; Power and Authority), 4.02 (Execution, Delivery;
Valid and Binding Agreement), 4.08 (Title to Assets), 4.22 (Brokerage) and 5.05
(Brokerage), which shall survive indefinitely. Notwithstanding the foregoing,
any representation or warranty, and the indemnification obligations with
respect thereto, that would otherwise terminate in accordance with this Section
9.01 shall continue to survive, if notice of a claim shall have been timely
given under Section 9.04 on or prior to such termination date, until such claim
has been satisfied or otherwise resolved as provided in this Article IX. 

                    9.02     Indemnification
by Seller. Subject to the limitations of Sections 9.01 and 9.05, Seller
shall, jointly and severally, indemnify in full, defend and hold harmless
Buyer, its respective officers, directors, employees, agents and shareholders
(collectively, the “Buyer Indemnified Parties”)
against any loss, Liability, deficiency, damage, expense or cost (including
reasonable attorneys’ fees and expenses) (collectively, “Losses”), whether or not involving a
third-party Claim (as defined in Section 9.04(a)) prior to the expiration of
the indemnification obligation of Seller hereunder, which the Buyer Indemnified
Parties may suffer, sustain or become subject to, as a result of any of the
following: 

	
  

 	
  

 
	
  

 	
                     (a)     any
 breach of or inaccuracy in any of the representations and warranties of
 Seller contained in this Agreement, the Supply Agreement, or any certificate
 delivered by or on behalf of Seller pursuant to this Agreement or the Supply
 Agreement (determined without giving effect to any update to the Seller
 Disclosure Schedule); 

 
	
  

 	
  

 
	
  

 	
                     (b)     any
 breach of, or failure to perform, any agreement or covenant of Seller
 contained in this Agreement or the Supply Agreement; 

 

38

	
  

 	
  

 
	
  

 	
                     (c)     any
 Claim or threatened Claim against Buyer Indemnified Parties that arises in
 connection with the actions or inactions of Seller with respect to the Assets
 or Assumed Liabilities prior to the applicable Closing Date; 

 
	
  

 	
  

 
	
  

 	
                     (d)     any
 former or present employees, officers and/or managers of, consultants to, or
 independent contractors to, Seller holding any rights in or to the
 Intellectual Property; or 

 
	
  

 	
  

 
	
  

 	
                     (e)     any
 Excluded Liability, including any product liability Claims relating to the
 Assets and/or sales and Business, or components thereof, prior to the
 applicable Closing Date. 

 
	
  

 	
  

 
	
                     9.03     Indemnification
 by Buyer. Subject to the limitations of Sections 9.01 and 9.05, Buyer
 agrees to indemnify in full, defend and hold harmless Seller, its respective
 officers, managers, employees, agents and shareholders (collectively, the “Seller Indemnified Parties”) against any
 Losses, whether or not involving a third-party Claim incurred prior to the
 expiration of the indemnification obligations of Buyer hereunder, which
 Seller may suffer, sustain or become subject to as a result of any of the
 following: 

 
	
  

 	
  

 
	
  

 	
                     (a)     any
 breach of or inaccuracy in any of the representations and warranties of Buyer
 contained in the Buyer Documents or in any certificate delivered by or on
 behalf of Buyer pursuant to this Agreement; 

 
	
  

 	
  

 
	
  

 	
                     (b)     any
 breach of, or failure to perform, any agreement or covenant of Buyer
 contained in the Buyer Documents; or 

 
	
  

 	
  

 
	
  

 	
                     (c)     except
 to the extent that Seller agrees to indemnify Buyer under Section 9.02, any
 Claim or threatened Claim against any Seller Indemnified Party that arises
 solely in connection with the actions or inactions of Buyer with respect to
 the Assets or Assumed Liabilities after the Closing Date. 

 
	
  

 	
  

 
	
                     9.04     Method
 of Asserting Claims. As used herein, an “Indemnified Party” shall refer to a Buyer Indemnified Party
 or Seller Indemnified Party, as applicable, and the “Indemnifying Party” shall refer to the
 party or parties hereto obligated to indemnify such Indemnified Party. 

 
	
  

 	
  

 
	
  

 	
                     (a)     In
 the event that any of the Indemnified Parties is made a defendant in or party
 to any action or proceeding, judicial or administrative, instituted by any
 third party for the Liability or the costs or expenses of which are Losses
 (any such third party action or proceeding being referred to as a “Claim”), then such Indemnified Party
 shall give the Indemnifying Party prompt notice thereof. The failure to give
 such notice shall not affect any Indemnified Party’s ability to seek
 reimbursement unless such failure has materially and adversely affected the
 Indemnifying Party’s ability to defend successfully a Claim. The Indemnifying
 Party shall be entitled to contest and defend such Claim; provided, that the Indemnifying Party
 diligently contests and defends such Claim. Notice of the intention so to
 contest and defend shall be given by the Indemnifying Party to the
 Indemnified Party within fifteen (15) business days after the Indemnified
 Party’s notice of such Claim (but, in any event, at least five (5) business 

 

39

	
  

 	
  

 
	
  

 	
 days prior
 to the date that an answer to such Claim is due to be filed). Such contest
 and defense shall be conducted by reputable attorneys retained by the
 Indemnifying Party. If the Indemnifying Party fails to give such notice or
 assume such defense, then the Indemnified Party shall be entitled to
 undertake such defense and its reasonable costs and expenses (including,
 without limitation, attorney fees and expenses) shall be included in the Loss
 to be indemnified by the Indemnifying Party. If the Indemnifying Party elects
 to contest and defend a Claim, the Indemnified Party shall be entitled at any
 time, at its own cost and expense (which expense shall not constitute a Loss
 unless the Indemnified Party reasonably determines that the Indemnifying
 Party is not adequately representing or, because of a conflict of interest,
 may not adequately represent, any interests of the Indemnified Parties, and
 only to the extent that such expenses are reasonable), to participate in such
 contest and defense and to be represented by attorneys of its or their own
 choosing. If the Indemnified Party elects to participate in such defense, the
 Indemnified Party will cooperate with the Indemnifying Party in the conduct
 of such defense. Neither the Indemnified Party nor the Indemnifying Party may
 concede, settle or compromise any Claim without the consent of the other
 party, which consents will not be unreasonably withheld or delayed.
 Notwithstanding the foregoing, if (i) a Claim seeks equitable relief or (ii)
 the subject matter of a Claim relates to the ongoing business of any of the
 Indemnified Parties, which Claim, if decided against any of the Indemnified
 Parties, would materially adversely affect the ongoing business or reputation
 of any of the Indemnified Parties, then, in each such case, the Indemnified
 Parties alone shall be entitled to contest, defend and settle such Claim in
 the first instance and, if the Indemnified Parties do not contest, defend or
 settle such Claim, the Indemnifying Party shall then have the right to
 contest and defend (but not settle) such Claim. 

 
	
  

 	
  

 
	
  

 	
                     (b)     In
 the event any Indemnified Party should have a claim for indemnification
 against any Indemnifying Party (whether such claim does not involve a Claim
 or involves a settled or resolved Claim which the Indemnifying Party has not
 defended for any reason, or a Claim from which an Indemnified Party has
 suffered Losses by reason of the Indemnifying Party’s failure to adequately
 represent a Indemnified Party’s interests or otherwise to indemnify the
 Indemnified Party), the Indemnified Party shall deliver a notice of such
 claim to the Indemnifying Party, setting forth in reasonable detail the
 identity, nature and estimated amount of Losses (if reasonably determinable)
 related to such claim or claims, with reasonable promptness and in all events
 prior to the expiration of the Indemnifying Party’s indemnification
 obligation hereunder. If the Indemnifying Party notifies the Indemnified
 Party that it does not dispute the claim described in such notice or fails to
 notify the Indemnified Party within 20 days after delivery of such notice by
 the Indemnified Party whether the Indemnifying Party disputes the claim
 described in such notice, the Loss in the amount specified in the Indemnified
 Party’s notice will be conclusively deemed a Liability of the Indemnifying Party
 and the Indemnifying Party shall pay the amount of such Loss to the
 Indemnified Party on demand. If the Indemnifying Party has timely disputed
 its Liability with respect to such claim, the Indemnifying Party and the
 Indemnified Party will proceed in good faith to negotiate a resolution of
 such dispute for a period of at least 30 days before submission of such claim
 to a court pursuant to Article XI. 

 

40

	
  

 	
  

 
	
                     9.05     Limitations
 on Indemnification. 

 
	
  

 	
  

 
	
  

 	
                     (a)     After
 the Initial Closing, the rights set forth in this Article IX shall be each
 party’s sole and exclusive remedies against the other parties hereto for
 breaches of or inaccuracies in representations and warranties or breaches of
 covenants contained in this Agreement and the Related Documents.
 Notwithstanding the foregoing, nothing herein shall (i) prevent any
 Indemnified Party from bringing an action based upon allegations of fraud
 with respect to any party in connection with this Agreement and the Related Documents
 or (ii) prohibit any party from seeking specific performance or injunctive
 relief against any other party of any covenant hereunder. In the event an
 action based upon allegations of fraud with respect to any party in
 connection with this Agreement and the Related Documents is brought, the
 prevailing party’s attorneys’ fees and costs shall be paid by the
 nonprevailing party. 

 
	
  

 	
  

 
	
  

 	
                     (b)     Any
 indemnification payable under this Article IX shall be, to the extent
 permitted by law, an adjustment to the Purchase Price. In addition, the
 parties shall make appropriate adjustments for any tax benefits or costs
 actually realized, any insurance benefits actually realized by the
 Indemnified Party and any resultant increase in insurance premiums of the
 Indemnified Party in determining Losses for purposes of this Article IX. 

 
	
  

 	
  

 
	
  

 	
                     (c)     Seller
 will indemnify in full, defend and hold harmless Buyer Indemnified Parties
 against any Losses pursuant to Section 9.02(a) only if the aggregate amount
 of all Losses for which the Buyer Indemnified Parties would be entitled to
 indemnification under Section 9.02(a) exceeds $50,000 (the “Basket”), in which case Seller shall be
 liable to the Buyer Indemnified Parties hereby for the aggregate amount of
 all such Losses (and not just the Losses in excess of the Basket); provided, however, that the limitations set forth in this Section
 9.05(c) shall not apply to (i) breaches of the representations and warranties
 contained in Sections 4.01 (Incorporation; Power and Authority), 4.02
 (Execution, Delivery; Valid and Binding Agreement), 4.08 (Title to Assets) or
 4.11 (Tax Matters), or (ii) Losses by reason of any claims brought on the
 basis of fraud or willful misconduct. 

 
	
  

 	
  

 
	
  

 	
                     (d)     Buyer
 will indemnify in full, defend and hold harmless Seller Indemnified Parties
 against any Losses pursuant to Section 9.03(a) only if the aggregate amount
 of all Losses for which the Seller Indemnified Parties would be entitled to
 indemnification under Section 9.03(a) exceeds the Basket, in which case Buyer
 shall be liable to the Seller Indemnified Parties hereby for the aggregate
 amount of all such Losses (and not just the Losses in excess of the Basket); provided, however, that the limitations set forth in this Section
 9.05(d) shall not apply to Losses by reason of any claims brought on the
 basis of fraud or willful misconduct. 

 
	
  

 	
  

 
	
  

 	
                     (e)     Seller’s,
 on the one hand, and Buyer’s, on the other hand, aggregate indemnification
 obligations pursuant to Section 9.02(a) and Section 9.03(a), respectively,
 for claims for Losses shall be limited to $1,650,000; provided, however, that the limitations set forth in this first
 sentence of this Section 9.05(e) shall not apply to (i) breaches of the
 representations and warranties contained in Sections 4.01 (Incorporation; 

 

41

	
  

 	
  

 
	
  

 	
 Power and
 Authority), 4.02 (Execution, Delivery; Valid and Binding Agreement), 4.08
 (Title to Assets), 4.11 (Tax Matters) or 4.14 (Intellectual Property), or (ii)
 Losses by reason of any claims brought on the basis of fraud or willful
 misconduct. Seller’s aggregate indemnification obligations for all claims for
 Losses pursuant to Section 9.02(a), including claims relating to
 breaches of the representations and warranties contained in Section 4.14
 (Intellectual Property) but excluding (i) claims relating to breaches
 of the representations and warranties contained in Sections 4.01
 (Incorporation; Power and Authority), 4.02 (Execution, Delivery; Valid and
 Binding Agreement), 4.08 (Title to Assets) or 4.11 (Tax Matters), and (ii)
 Losses by reason of any claims brought on the basis of fraud or willful
 misconduct, shall be limited to the Purchase Price (excluding the value of
 the Assumed Liabilities to be assumed by Buyer pursuant to Section 1.03). 

 
	
  

 	
  

 
	
  

 	
                       (f)     Notwithstanding
 anything to the contrary contained herein, no Indemnifying Party shall be
 liable to or otherwise responsible to any Indemnified Party for punitive
 damages that arise out of or relate to this Agreement or the performance or
 breach thereof or any Liability excluded or assumed hereunder; provided, however, that the exclusion of punitive damages shall not
 apply to the extent that such damages are found by a court of competent
 jurisdiction to be liabilities of such Indemnified Party pursuant to any
 Claim which results in a Loss to such Indemnified Party. 

 

                    9.06       Materiality.
Notwithstanding any provision in this Agreement to the contrary, the
Indemnifying Party’s obligation to indemnify the Indemnified Party in
connection with a breach of any representation, warranty, covenant or other
agreement included in this Agreement or any of the Closing Agreements, and the
amount of Losses to be indemnified, shall be determined without regard to any
“materiality” (or correlative meanings) or “Material Adverse Effect”
qualifications, provisions or exceptions set forth in such representation,
warranty, covenant or other agreement, each of which shall be deemed to be
given for the purposes of this Article IX as though there were no such
qualifications, provisions or exceptions. 

ARTICLE X

MISCELLANEOUS

                    10.01     Press
Releases and Announcements. The parties agree that Buyer may issue a press
release or make any other public announcement related to this Agreement or the
transactions contemplated hereby without prior written approval of Seller.
Buyer agrees to consult with Seller prior to making such press release or
announcement. 

                    10.02     Confidentiality
Relating to Agreement. Seller shall not disclose this Agreement or the
Related Agreements without the prior written consent of Buyer, provided, however,
that Seller may disclose this Agreement and the Related Agreements to its
legal, accounting and tax advisors or if required by Seller pursuant to
applicable laws. 

                    10.03     Expenses.
Except as otherwise expressly provided for herein, Seller and Buyer will pay
all of their own expenses (including attorneys’, accountants’ and investment
bankers’ fees) incurred in connection with the negotiation of this Agreement
and the Related 

42

Agreements,
the performance of their respective obligations hereunder and thereunder, and
the consummation of the transactions contemplated by this Agreement and the
Related Agreements (whether consummated or not). 

                    10.04     Further
Assurances. On and after the Closing Date, Seller will take all appropriate
action and execute any documents, instruments or conveyances of any kind that
may be reasonably requested by Buyer to carry out any of the provisions of this
Agreement. 

                    10.05     Schedules.
The Seller Disclosure Schedule contains a series of Schedules corresponding to
the sections contained in this Agreement. Nothing in the Seller Disclosure
Schedule is deemed adequate to disclose an exception to a representation or
warranty made in this Agreement unless the Seller Disclosure Schedule
identifies in the corresponding Schedule the exception with particularity and
describes the relevant facts in adequate detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item is not deemed adequate to disclose an exception to a
representation or warranty unless the representation or warranty relates solely
to the existence of the document or other item itself. The Schedules in the
Seller Disclosure Schedule relate only to the representations and warranties in
the section and subsection of this Agreement to which they correspond and not
to any other representation or warranty in this Agreement; provided that an
exception disclosed in a particular Schedule shall be deemed to be disclosed
with respect to each other Schedule of the Seller Disclosure Schedule to which
it relates so long as such exception is reasonably cross-referenced in each
such other Schedule or described with sufficient particularity and detail that
it is readily apparent that the exception applies to another Schedule of the
Seller Disclosure Schedule 

                    10.06     Amendment
and Waiver. This Agreement may not be amended, a provision of this
Agreement or any default, misrepresentation or breach of warranty or agreement
under this Agreement may not be waived, and a consent may not be rendered,
except in a writing executed by the party against which such action is sought
to be enforced. Neither the failure nor any delay by any party in exercising
any right, power or privilege under this Agreement will operate as a waiver of
such right, power or privilege, and no single or partial exercise of any such
right, power or privilege will preclude any other or further exercise of such
right, power or privilege or the exercise of any other right, power or
privilege. In addition, no course of dealing between or among any party will be
deemed effective to modify or amend any part of this Agreement or any rights or
obligations of any party under or by reason of this Agreement. The rights and
remedies of the parties to this Agreement are cumulative and not alternative. 

                    10.07     Notices.
All notices, demands and other communications to be given or delivered under or
by reason of the provisions of this Agreement will be in writing and will be
deemed to have been given when personally delivered (with written confirmation
of receipt), when received if sent by a nationally recognized overnight courier
service (receipt requested), five (5) business days after being mailed by first
class U.S. mail, return receipt requested, or when receipt is acknowledged by
an affirmative act of the party receiving notice, if sent by facsimile,
telecopy or other electronic transmission device (provided that such an
acknowledgement does not include an acknowledgement generated automatically by
a facsimile or telecopy machine or other electronic transmission device).
Notices, demands and 

43

communications
to Buyer and Seller will, unless another address is specified in writing, be
sent to the address indicated below: 

	
  

 	
  

 	
  

 
	
 Notices to
 Buyer:

 	
 with a copy
 to:

 
	
  

 	
  

 	
  

 
	
  

 	
 Vascular
 Solutions, Inc.

 	
 Dorsey &
 Whitney LLP

 
	
  

 	
 6464
 Sycamore Court

 	
 50 South
 Sixth Street, Suite 1500

 
	
  

 	
 Minneapolis,
 Minnesota 55441

 	
 Minneapolis,
 Minnesota 55402

 
	
  

 	
 Attention:
 Chief Executive Officer

 	
 Attention:
 Timothy S. Hearn, Esq.

 
	
  

 	
 Facsimile
 No: (763) 656-4250

 	
 Facsimile:
 (612) 340-2868

 
	
  

 	
  

 	
  

 
	
 Notices to
 Seller:

 	
 with a copy
 to:

 
	
  

 	
  

 	
  

 
	
  

 	
 c/o Radius
 Medical Technologies Inc.

 	
 Nixon
 Peabody LLP

 
	
  

 	
 15 Craig
 Road

 	
 100 Summer
 Street

 
	
  

 	
 Acton,
 Massachusetts 01720

 	
 Boston,
 Massachusetts

 
	
  

 	
 Attention:
 Maureen Finlayson

 	
 Attention:
 Jonathan Karis, Esq.

 
	
  

 	
 Facsimile
 No: (978) 263-4465

 	
 Facsimile:
 (866) 375-3459

 

                    10.08     Binding
Effect; Assignment. This Agreement and all of the provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned by
either party hereto, other than to an affiliate of Buyer, without the prior
written consent of the other parties hereto. 

                    10.09     Severability.
Subject to Section 6.09(d), whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement. 

                    10.10     Complete
Agreement. This Agreement, the Related Agreements, the Exhibits and
Schedules hereto and thereto, the Seller Disclosure Schedule 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. Without limiting the generality of the foregoing, the
representations and warranties of the Seller and the Buyer made herein are the
sole and exclusive representations and warranties made by the parties to each
other in connection with the transactions contemplated hereby. 

                    10.11     Counterparts.
This Agreement may be executed in one or more counterparts, any one of which
need not contain the signatures of more than one party, but all such
counterparts taken together will constitute one and the same instrument. A
facsimile signature will be considered an original signature. 

44

                    10.12     Governing
law. 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 Agreement and the performance of the
obligations imposed by this Agreement. 

                    10.13     Jurisdiction.
Each of the parties 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 Agreement and agrees that all claims in
respect of the action or proceeding may be heard and determined in any such
court. Each party also agrees not to bring any action or proceeding arising out
of or relating to this Agreement in any other court. Each of the parties 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.
The parties agree that either or both of them may file a copy of this paragraph
with any court as written evidence of the knowing, voluntary and bargained
agreement between the parties irrevocably to waive any objections to venue or
to convenience of forum. 

                    10.14     Waiver
of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT
MAY ARISE UNDER THIS AGREEMENT 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 AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT. EACH PARTY 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, (III) IT MAKES SUCH WAIVER VOLUNTARILY AND (IV) IT
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 11.14. 

                    10.15     Specific
Performance. Each of the parties acknowledges and agrees that the subject
matter of this Agreement, including the Assets and Product Line of Seller, is
unique, that the other parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached, and that the remedies at law would
not be adequate to compensate such other parties not in default or in breach.
Accordingly, each of the parties agrees that the other parties will be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions of this Agreement in addition to any other remedy to which they may
be entitled, at law or in equity (without any requirement that Buyer provide
any bond or other security). The parties waive any defense that a remedy at law
is adequate and any requirement to post bond or provide similar security in
connection with actions instituted for injunctive relief or specific
performance of this Agreement. 

[Remainder
of page intentionally left blank]

45

                    IN
WITNESS WHEREOF, the parties hereto have executed this
Asset Purchase Agreement as of the day and year first above written. 

	
  

 	
  

 
	
  

 	
 VASCULAR SOLUTIONS, INC.

 
	
  

 	
  

 
	
  

 	
 /s/ James
 Hennen

 
	
  

 	
 By:   James
 Hennen, Chief Financial Officer

 
	
  

 	
  

 
	
  

 	
 RADIUS MEDICAL TECHNOLOGIES, INC.

 
	
  

 	
  

 
	
  

 	
 /s/ Maureen
 Finlayson

 
	
  

 	
 By:   Maureen
 A. Finlayson

 
	
  

 	
   Its:   President
 and Chief Executive Officer

 
	
  

 	
  

 
	
  

 	
 RADIUS MEDICAL, LLC

 
	
  

 	
  

 
	
  

 	
 /s/ Maureen
 Finlayson

 
	
  

 	
 By:   Maureen
 A. Finlayson

 
	
  

 	
   Its:   President
 and Manager

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