Document:

exv10w2

 

Exhibit 10.2

ASSET PURCHASE AGREEMENT

          This ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of
October ___, 2006 by and among Steel City Products, LLC, a Delaware limited liability company
(“Seller”), Sterling Construction Company, Inc., a Delaware corporation (“Parent”)
and The Bostwick-Braun Company, an Ohio corporation (“Buyer”).

          WHEREAS, Seller is engaged in the sale and distribution of automotive accessories, pet
products, lawn and garden items and like items (the “Business”);

          WHEREAS, subject to the terms and conditions set forth herein, Buyer desires to purchase from
Seller and assume certain specifically enumerated liabilities, and Seller desires to sell to Buyer
subject to the assumption by Buyer of such specifically enumerated liabilities, substantially all
of Seller’s business, assets and properties, operating as a going concern, which constitute the
Business;

          WHEREAS, Parent is the sole member and the owner of all of the issued and outstanding equity
of Seller;

          WHEREAS, Parent will materially benefit from the transactions contemplated in this Agreement
and, accordingly, as a condition to the completion of the transactions contemplated herein, Buyer
has required Parent to make certain covenants and commitments to Buyer, all as more particularly
described herein; and

          WHEREAS, Parent is willing to provide to Seller and Buyer is willing to provide to Seller and
Parent the covenants and commitments herein set forth.

          NOW, THEREFORE, in exchange for the covenants and agreements contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I

DEFINED TERMS AND INTERPRETATION

          1.1 Certain Rules of Construction.

          (a) Unless the context of this Agreement otherwise requires, references in this Agreement to
the plural include the singular and references to the singular include the plural. Additionally,
whenever the context so requires, the masculine shall refer to the feminine and the neuter shall
refer to the masculine or the feminine.

          (b) Wherever any representation, warranty or other statement made in this Agreement is
qualified by phrases such as “to the knowledge of Seller”, or “Seller’s knowledge” or “known to
Seller” as well as similar words or phrases, such qualification shall mean the actual

 

 

knowledge of one or more of the directors, chief executive officer, president, vice presidents,
chief financial officer and controller of Seller and Parent.

          (c) The normal rules of construction that require the terms of an agreement to be construed
most strictly against the drafter of such agreement are hereby waived since each party has been
represented by counsel in the drafting and negotiation of this Agreement.

          (d) Unless otherwise explicitly indicated, all exhibits and schedules referred to in this
Agreement shall be deemed to be incorporated herein by reference.

          (e) The headings in this Agreement have been inserted solely for ease of reference and shall
not be considered in the interpretation or construction of this Agreement.

          (f) Unless otherwise explicitly indicated, when used throughout this Agreement, the term
“including” shall mean “including, without limitation”. It is the intent of the parties hereto
that the term “including” be a term of inclusion rather than a term of exclusion and the item or
items following the word “including” are illustrative examples rather than a limited list of the
items sought to be identified.

          1.2 Definitions. For purposes of this Agreement, the following terms have the
meanings set forth below:

          “Accounting Books” has the meaning set forth in Section 5.4(a).

          “Accounts Receivable” has the meaning set forth in Section 2.1(a)(iv).

          “Adjusted Working Capital” means the difference between (x) the sum of the value of
Seller’s Inventory, Accounts Receivable and other assets classified as current under GAAP as of the
Closing Date less (y) the aggregate amount of Seller’s Current Liabilities as of the Closing Date.

          “Affiliate” means an affiliate as defined in Rule 405 under the Securities Act of
1933, as amended.

          “Affiliated Group” means an affiliated group as defined in Section 1504 of the Code
(or any analogous combined, consolidated or unitary group defined under state, local or foreign
income Tax law) of which Seller is or has been a member.

          “Assumed Contracts” has the meaning set forth in Section 2.1(a)(i).

          “Assumed Liabilities” has the meaning set forth in Section 2.2(a).

          “Business” has the meaning set forth in the Recitals.

          “Buyer” has the meaning set forth in the Preamble.

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          “Buyer Parties” has the meaning set forth in Section 8.2(a).

          “Buyer’s Expenses” means any of Buyer’s liabilities or obligations for expenses or
fees incident to or arising out of the negotiation, preparation, approval or authorization of this
Agreement or the consummation (or preparation for the consummation) of the transactions
contemplated hereby.

          “Cap” has the meaning set forth in Section 8.2(d).

          “Claim” has the meaning set forth in Section 8.2(e).

          “Closing” has the meaning set forth in Section 2.4.

          “Closing Date” has the meaning set forth in Section 2.4.

          “Closing Payment” has the meaning set forth in Section 2.5(a).

          “Closing Working Capital Schedule” has the meaning set forth in Section
2.7(a).

          “COBRA” has the meaning set forth in Section 5.19(f).

          “Code” means the United States of America Internal Revenue Code of 1986, as amended.

          “Competitive Business” has the meaning set forth in Section 8.13(e)(ii).

          “Current Liabilities” has the meaning set forth in Section 2.2(a)(i).

          “Delinquent Accounts” has the meaning set forth in Section 8.10.

          “Dispute Accountant” has the meaning set forth in Section 2.7(c).

          “Dollars” means United States of America Dollars.

          “Employment Agreements” has the meaning set forth in Section 2.5(f).

          “Environmental and Safety Requirements” shall mean all federal, state, local and
foreign statutes, regulations, ordinances and similar provisions having the force or effect of law,
all judicial and administrative orders and determinations, all contractual obligations and all
common law concerning worker health and safety, and pollution or protection of the environment,
including all those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal (both on-site and off-site), distribution, labeling,
testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated

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biphenyls, noise or radiation, as each of the foregoing are enacted or in effect, prior to, or on
the Closing Date.

          “Equipment” has the meaning set forth in Section 2.1(a)(ii).

          “Equitable Principles” has the meaning set forth in Section 5.2.

          “Excluded Assets” has the meaning set forth in Section 2.1(b).

          “Excluded Liabilities” has the meaning set forth in Section 2.2(b).

          “GAAP” shall mean United States generally accepted accounting principles consistently
applied.

          “Governmental Approvals” has the meaning set forth in Section 3.1(b).

          “Historical Financial Statements” has the meaning set forth in Section 5.4(a).

          “Holdback” has the meaning set forth in Section 2.5(b).

          “Indebtedness” means at any particular time, without duplication, (i) indebtedness for
borrowed money, (ii) bonds, debentures, notes or other similar instruments or debt securities,
(iii) letters of credit and bankers’ acceptances issued for the account of Seller, (iv) cash/book
overdrafts, (v) deferred compensation arrangements, (vi) all obligations secured by any Lien, (vii)
capital lease obligations (other than those related to capital leases that are assumed by Buyer),
(viii) other liabilities classified as noncurrent liabilities in accordance with GAAP as of the
Closing Date and (ix) all accrued interest, prepayment premiums or penalties related to any of the
foregoing.

          “Indemnitee” has the meaning set forth in Section 8.2(e).

          “Indemnitor” has the meaning set forth in Section 8.2(e).

          “Interim Financial Statements” has the meaning set forth in Section 5.4.

          “Inventory” has the meaning set forth in Section 2.1(a)(iii).

          “Investments” means (i) any direct or indirect purchase or other acquisition of any
notes, obligations, instruments, stock, securities or ownership interest (including limited
liability company interests, partnership interests and joint venture interests) of any other Person
and (ii) any capital contribution to any other Person.

          “Knowledge” has the meaning set forth in Section 1.1(b).

          “Leased Real Property” has the meaning set forth in Section 5.9(b).

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          “Lien” means any mortgage, lien, security interest or other encumbrance (including any
conditional sale or other title retention agreement and any lease having substantially the same
effect as any of the foregoing and any assignment or deposit arrangement in the nature of a
security device).

          “Losses” has the meaning set forth in Section 8.2(a).

          “Market” has the meaning set forth in Section 8.13(e)(iii).

          “Material Adverse Effect” and “Material Adverse Change” mean any effect or
change that would be (or could reasonably be expected to be) materially adverse to the business,
assets, condition (financial or otherwise), operating results, prospects or operations of Seller or
the Business, taken as a whole, or to the ability of Seller or Parent to consummate timely the
transactions contemplated hereby.

          “Material Customers” has the meaning set forth in Section 5.24(a).

          “Material Suppliers” has the meaning set forth in Section 5.24(b).

          “Noncompetition Agreements” has the meaning set forth in Section 2.5(h).

          “Parent” has the meaning set forth in the Preamble.

          “PBGC” has the meaning set forth in Section 5.19(d).

          “Permit” means any franchise, approval, permit, license, order, registration,
certification, variance, authorization or similar right obtained from any permitting, licensing,
accrediting and certifying agency.

          “Permitted Liens” has the meaning set forth in Section 5.10(a).

          “Person” means any individual, sole proprietorship, partnership, joint venture, trust,
unincorporated association, corporation, limited liability company, entity or governmental entity
(whether federal, state, county, city or otherwise and including any instrumentality, division,
agency or department thereof).

          “Profit Sharing Plan” has the meaning set forth in Section 2.1(a)(xv).

          “Proprietary Rights” means all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all patents, patent applications
and patent disclosures and any reissuance, continuation, continuation-in-part, division, extension
or reexamination thereof; trademarks, service marks, trade dress, logos, trade names, internet
domain names and corporate names, together with all translations, adaptations, derivations and
combinations thereof and including all goodwill associated therewith; copyrights and copyrightable
works; mask works; and all registrations, applications and renewals for any of the foregoing; trade
secrets and confidential and proprietary information, including

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ideas, formulas, compositions, know-how, related processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, manufacturing and production
processes and techniques, customer and supplier lists, pricing and cost information and technical
data and manuals (in each case relating to products currently in production as well as former
products and products under development); computer software (including websites, data and related
documentation); all other proprietary rights; and all copies and tangible embodiments thereof (in
whatever form or medium), together with all books, records, drawings or other indicia, however
evidenced.

          “Protest Notice” has the meaning set forth in Section 2.7(b).

          “Purchase Price” has the meaning set forth in Section 2.3(a).

          ‘Purchased Assets” has the meaning set forth in Section 2.1(a).

          “Real Property Leases” has the meaning set forth in Section 5.9(b).

          “Restricted Persons” has the meaning set forth in Section 8.13(d).

          “Restrictive Covenants” has the meaning set forth in Section 8.13(d).

          “Retained Contracts” has the meaning set forth in Section 2.1(b)(iii).

          “Sales and Transfer Taxes” has the meaning set forth in Section 8.8(a).

          “Seller” has the meaning set forth in the Preamble.

          “Seller Employee Benefit Plan” has the meaning set forth in Section 5.19(a).

          “Seller Note” has the meaning set forth in Section 2.5(c).

          “Seller Parties” has the meaning set forth in Section 8.2(b).

          “Subsidiary” means, with respect to any Person, any corporation, partnership, limited
liability company, association or other business entity of which (i) if a corporation, a majority
of the total voting power of shares of stock entitled (irrespective of whether, at the time, stock
of any other class or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership,
limited liability company, association or other business entity, either (A) a majority of the
partnership or other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination
thereof, or (B) such Person is a general partner, managing member or managing director of such
partnership, limited liability company, association or other entity.

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          “Tax” or “Taxes” means any (i) federal, state, local or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer,
registration, value added, excise, natural resources, severance, stamp, occupation, premium,
windfall profit, environmental, customs, duties, real property, personal property, capital stock,
social security, unemployment, disability, payroll, license, employee or other withholding, foreign
or domestic withholding, or other tax, of any kind whatsoever, whether computed on a separate or
consolidated, unitary or combined basis or in any other manner, including any interest, penalties
or additions to tax or additional amounts in respect of the foregoing; (ii) liability of Seller for
the payment of any amounts of the type described in clause (i) arising as a result of being (or
ceasing to be) a member of any Affiliated Group (or being included (or required to be included) in
any Tax Return relating thereto); and (iii) liability of Seller for the payment of any amounts of
the type described in clause (i) as a result of any express or implied obligation to indemnify or
otherwise assume or succeed to the liability of any other person.

          “Tax Returns” means returns, declarations, reports, claims for refund, information
returns or other documents (including any related or supporting schedules, statements or
information) filed or required to be filed in connection with the determination, assessment or
collection of Taxes of any party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.

          “Third-Party Approvals” has the meaning set forth in Section 3.1(b).

          “Transaction Dispute” has the meaning set forth in Section 9.11.

          “Transferred Employees” has the meaning set forth in Section 8.3(a).

          “Warranty Claim Amount” has the meaning set forth in Section 8.11.

          “Warranty Claims” has the meaning set forth in Section 8.11.

          “Warranty Report” has the meaning set forth in Section 8.11.

          “Working Capital Adjustment” has the meaning set forth in Section 2.7(a).

          “Working Capital Commitment” means $5,508,061, determined according to Schedule
1.2.

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ARTICLE II

PURCHASE AND SALE OF PURCHASED ASSETS

          2.1 Purchase of Assets.

          (a) Purchased Assets. On the terms and subject to the conditions set forth in this
Agreement, Buyer shall purchase from Seller, and Seller shall sell, convey, assign, transfer and
deliver (or cause to be sold, conveyed, assigned, transferred and delivered) to Buyer on the
Closing Date, all of Seller’s right, title and interest as of the Closing Date in all of Seller’s
properties, assets and rights of any kind, whether tangible or intangible, real or personal (except
for the Excluded Assets) (the “Purchased Assets”), including the following:

      (i) all agreements, contracts, licenses, instruments, leases, subleases and other
arrangements relating to the Business, to which Seller is subject, bound or affected and all
rights thereunder described on Schedule 2.1(a)(i) (the “Assumed Contracts”)
but specifically excluding the Retained Contracts;

      (ii) all machinery and equipment (including all vehicles, cleaning equipment and office
equipment), spare parts, supplies, fixtures, trade fixtures, furniture, computers and
related software, including all of the personal property listed on Schedule
2.1(a)(ii) having a net book value of at least $5,000 (collectively, the
“Equipment”);

      (iii) all inventory (“Inventory”);

      (iv) all accounts, notes and other receivables, excluding any amounts due from Parent
(collectively, the “Accounts Receivable”);

      (v) all prepayments and prepaid expenses and cash deposits (including security and
customer deposits and prepayments);

      (vi) all claims, deposits, refunds, causes of action, rights of recovery and rights of
set-off or recoupment of any kind;

      (vii) all lists, books, records, documents, correspondence, and other information of
any kind (including those pertaining to accounts, Transferred Employees, customers,
suppliers, referral sources and other business relations) and all studies, plans, books,
ledgers, files and business records of every kind (including all financial, business and
marketing plans and information), in each case whether evidenced in writing, electronic data
(including by computer) or otherwise;

      (viii) all advertising, marketing, sales, promotional and trade show materials and all
other printed or written materials;

      (ix) all Permits (including all of the permits or licenses described on Schedule
2.1(a)(ix)), and all data and records held by the granting agencies (but only to

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the extent that the same are transferable or assignable by Seller to Buyer and only to the
extent of Seller’s rights therein and thereto);

      (x) to the extent transferable or assignable to Buyer, insurance policies and
associated prepayments and rights of recovery (other than those related to Excluded Assets
or Excluded Liabilities);

      (xi) all goodwill as a going concern and all other intangible properties, including all
Proprietary Rights;

      (xii) all rights and use of the name of Seller or any other name used in connection
with the Business, including “Steel City Products”;

      (xiii) the right to receive and retain mail and other communications (other than those
related to Excluded Assets or Excluded Liabilities), and all telephone numbers, facsimile
numbers, domain names and electronic mail addresses used by Seller (but only to the extent
that the same are transferable or assignable by Seller to Buyer and only to the extent of
Seller’s rights therein and thereto);

      (xiv) capital lease obligations related to capital leases assumed by Buyer that are
identified as Assumed Contracts in Schedule 2.1(a)(i);

      (xv) all assets and rights of Seller under the Steel City Products, LLC Profit Sharing
Plan (the “Profit Sharing Plan”), such Plan for purposes of this Agreement being considered
an Assumed Contract; and

      (xvi) all other properties, assets and rights owned by Seller at the Closing Date, or
in which Seller has an interest, which are not otherwise Excluded Assets and which are
transferable or assignable to Buyer.

          (b) Excluded Assets. Notwithstanding the foregoing, the following properties, assets
and rights (the “Excluded Assets”) are expressly excluded from the purchase and sale
contemplated hereby and, as such, are not included in the definition of Purchased Assets:

      (i) all cash and cash equivalents whether on hand or in depository or brokerage
accounts maintained at financial institutions (other than cash related to prepayments by
customers and deposits referred to in Section 2.1(a)(v), all of which shall be
Purchased Assets);

      (ii) all Seller Employee Benefit Plans and any rights and obligations associated with
such plans;

      (iii) All of the agreements and instruments described on Schedule 2.1(b)(iii),
including the existing employment agreement with Terrance W. Allan (the “Retained
Contracts”);

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      (iv) all accounts, notes, rights of recovery, rights of set-off and all other
receivables or claims of or due to Seller from Parent or from Ames Department Stores, Inc.
or any of their Affiliates;

      (v) Seller’s charter, qualifications to conduct business as a foreign corporation,
arrangements with registered agents relating to foreign qualifications, taxpayer and other
identification numbers, seals, minute books, stock transfer books, blank stock certificates,
and other documents relating to the organization, maintenance, and existence of Seller;

      (vi) any of the rights of Seller or Parent under this Agreement; and,

      (vii) all other assets and properties of Seller specifically listed or described on
Schedule 2.1(b)(vii).

          2.2 Assumption of Liabilities.

          (a) Assumed Liabilities. Subject to the conditions set forth in this Agreement, in
addition to the Purchase Price and as additional consideration for the Purchased Assets, Buyer
shall assume on the Closing Date and pay, discharge and perform promptly when due the following
liabilities and obligations of Seller specified below (collectively, the “Assumed
Liabilities”) and, no other liabilities or obligations of Seller including those liabilities
set forth in Section 2.2(b):

      (i) all of Seller’s accounts payable and other liabilities classified as current under
GAAP to the extent arising in the ordinary course of business consistent with past practice,
recorded on the books of Seller as of the Closing Date and included on the Closing Working
Capital Schedule less the Excluded Liabilities (collectively, the “Current
Liabilities”);

      (ii) Seller’s accrued liabilities to employees for vacation pay (which shall be Current
Liabilities and included in the Closing Working Capital Schedule); and

      (iii) all of Seller’s obligations under the Assumed Contracts (excluding any liability
or obligation occurring, accruing or existing on or prior to the Closing Date).

          (b) Liabilities Not Assumed. Notwithstanding anything to the contrary in this
Agreement, Buyer shall not assume or in any way become liable for any of Seller’s debts,
liabilities or obligations, whether accrued, absolute, contingent or otherwise, whether known or
unknown, whether due or to become due, whether or not related to the Business or the Purchased
Assets and whether or not disclosed on the Schedules attached hereto, and regardless of when or by
whom asserted, other than the Assumed Liabilities (collectively, the “Excluded
Liabilities”). Excluded Liabilities shall include the following:

      (i) all of Seller’s accounts payable, accrued expenses and other claims and liabilities
to Ames Department Stores, Inc. or any of its Affiliates;

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      (ii) any of Seller’s liabilities or obligations under this Agreement;

      (iii) any of Seller’s liabilities or obligations for expenses or fees incident to or
arising out of the negotiation, preparation, approval or authorization of this Agreement or
the consummation (or preparation for the consummation) of the transactions contemplated
hereby (including all attorneys’ and accountants’ fees and expenses and sales commissions);

      (iv) any liability or obligation of Seller for Taxes, including Sales and Transfer
Taxes related to the completion of the transactions contemplated herein or any liability or
obligation of Seller (A) for any Taxes which are imposed on or measured by the income of
Seller for any period, (B) for Taxes of any Person under Treasury Reg. § 1.1502-6 (or any
similar provision of state, local or foreign law), as a transferee or successor, by contract
or otherwise or (C) for Taxes attributable to any Tax sharing or similar agreement, as a
transferee or successor, by contract or otherwise;

      (v) any of Seller’s liabilities or obligations relating to performance or other bonuses
payable to any of Seller’s employees in connection with the fiscal year ending December 31,
2006, to the extent accrued prior to the Closing, it being understood that Seller shall pay
the same promptly after the end of 2006 and that Buyer may or may not continue such bonus
plan or program at its discretion, and any of Seller’s liabilities or obligations payable to
any of its employees on account of the transactions contemplated hereby, including retention
bonuses and success fees;

      (vi) any of Seller’s liabilities or obligations for or in respect of Indebtedness other
than capital lease obligations related to capital leases assumed by Buyer;

      (vii) any of Seller’s liabilities or obligations for or in respect of any of the
Retained Contracts;

      (viii) any of Seller’s liabilities or obligations to its employees, including, any
liabilities or obligations under any of Seller’s Employee Benefit Plans, other than under
the Profit Sharing Plan (provided that Buyer is assuming obligations thereunder only to the
extent accruing after the Closing Date);

      (ix) any of Seller’s liabilities or obligations relating to any amounts payable to
Parent or any Affiliate of Parent;

      (x) any liabilities or obligations in respect of any of the Excluded Assets (including
under any contracts, leases, commitments or understandings related thereto);

      (xi) any liabilities or obligations (contingent or otherwise and including liability
for response costs, personal injury, property damage or natural resource damage) arising
under Environmental and Safety Requirements, except for any such liabilities or

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obligations the facts or circumstances underlying which are caused, and only to the extent
caused, by operation of the Purchased Assets after the Closing;

      (xii) any Current Liabilities not included on the Closing Working Capital Schedule;

      (xiii) any of Seller’s liabilities set forth on Schedule 2.2(b);

      (xiv) any of Seller’s liabilities not included in the Assumed Liabilities;

      (xv) all liabilities and obligations under any and all product or service warranties
furnished to its customers with respect to goods sold or services provided to such customers
prior to the Closing except to the extent such warranties constitute pass-through warranties
of Seller’s vendors and suppliers; and,

      (xvi) any liabilities of Seller or Parent under the existing employment agreement with
Terrance W. Allan.

          Seller hereby acknowledges that it is retaining the Excluded Liabilities, and Seller shall
pay, discharge and perform all such liabilities and obligations promptly when due.

          2.3 Purchase Price.

          (a) In addition to the assumption of the Assumed Liabilities set forth in Section
2.2(a) above, the aggregate purchase price to be paid for the Purchased Assets shall be the sum
of Six Million Four Hundred Forty Thousand ($6,440,000) in the aggregate, subject to the Working
Capital Adjustment set forth in Section 2.7 below and the adjustments relating to the
collection of Accounts Receivable, warranty claims and the sale of Inventory set forth in
Sections 8.10, 8.11 and 8.14 below (the “Purchase Price”).

          (b) Buyer shall pay the Purchase Price to Seller in the manner described in Section
2.5 below.

          2.4 Closing. The closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place at the offices of Shumaker, Loop & Kendrick, LLP in Toledo,
Ohio, at 10:00 a.m. local time on October 27, 2006, or at such other time or place as is mutually
agreeable to the parties, or, if any of the conditions to Closing set forth in Article III
have not been satisfied or waived by the party entitled to the benefit thereof on or prior to such
date, on the second business day following satisfaction or waiver of such conditions (the
“Closing Date”); provided, however, that in no event shall the Closing Date
occur later than November 3, 2006. The Closing shall be deemed to have occurred at 11:59 p.m.
Eastern Time on the Closing Date.

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          2.5 Closing Deliveries. At the Closing:

          (a) Buyer shall deliver to Seller an amount equal to Four Million, Five Hundred Ninety
Thousand Dollars ($4,590,000) (the “Closing Payment”) by wire transfer of immediately
available funds to the accounts designated by Seller;

          (b) Buyer shall retain an amount equal to One Million Two Hundred Thousand Dollars
($1,200,000) (the “Holdback”) until the Working Capital Adjustment set forth Section
2.7 is completed;

          (c) Buyer shall execute and deliver to Seller a promissory note in the principal amount of Six
Hundred Fifty Thousand Dollars ($650,000) in the form attached hereto as Exhibit 2.5(c)
(the “Seller Note”).

          (d) Buyer shall assume the Assumed Liabilities by delivery of an instrument in form reasonably
satisfactory to Seller;

          (e) Seller shall convey all of the Purchased Assets to Buyer and shall deliver to Buyer such
appropriately executed instruments of sale, transfer, assignment, conveyance and delivery,
assignments of leases, estoppel certificates, assignments, vehicle titles, transfer tax
declarations and all other instruments of conveyance which are necessary or desirable to effect
transfer to Buyer of Seller’s title to the Purchased Assets (free and clear of all Liens, other
than Permitted Liens);

          (f) Buyer shall enter into employment agreements in the form of Exhibit 2.5(f)
attached hereto with each of Terrance W. Allan, Patrick Nicholson, Mark O’Hara, Michael Glasser,
David McCauslen, Samuel Wagner and Theodore Pakacy (the “Employment Agreements”);

          (g) Seller shall to deliver to Buyer releases of all Liens, relating to the Purchased Assets
(other than the Permitted Liens);

          (h) Seller shall deliver to Buyer (i) a certificate of Seller, dated as of the Closing Date,
stating that the conditions specified in subsections (a) through (d) of Section 3.1 below
have been satisfied as of the Closing; (ii) copies of all payoff letters, Third-Party Approvals and
Governmental Approvals; (iii) all books, records and other materials related to or used in the
Business not previously delivered to Buyer; (iv) a certified copy of Seller’s certificate of
formation; (v) good standing certificates of Seller in each jurisdiction in which it does business
and the character of Seller’s properties or the nature of Seller’s activities require it to be
qualified to do business; and (vi) such other documents or instruments as are required to be
delivered at the Closing pursuant to the terms hereof or that Buyer reasonably requests a
reasonable time prior to the Closing Date to effect the transactions contemplated hereby; and

          (i) Buyer shall deliver to Seller (i) a certificate signed by the chief executive officer of
Buyer and on behalf of Buyer, dated as of the Closing Date, stating that the conditions specified
in subsections (a) through (c) of Section 3.2 below have been satisfied and (ii) such

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other documents or instruments as are required to be delivered by Buyer at the Closing pursuant to
the terms hereof or that Seller reasonably requests a reasonable time prior to the Closing Date to
effect the transactions contemplated hereby.

          2.6 Allocation of Purchase Price. Each party shall be free to prepare and file all
Tax Returns (including Internal Revenue Service Form 8594), in such form as each of Buyer and
Seller, in their sole and absolute discretion, shall deem reasonable and appropriate.

          2.7 Adjustment to Purchase Price.

          (a) Following the Closing, the Purchase Price shall be increased or reduced on a Dollar for
Dollar basis, to the extent that the Adjusted Working Capital as of the Closing is more or less
than the amount of the Working Capital Commitment (the “Working Capital Adjustment”). As
soon as practicable after the Closing Date, but not more than sixty (60) days after the Closing
Date, Buyer shall prepare and deliver to Seller a detailed schedule as well as copies of all spread
sheets and other work papers that were material to the preparation thereof (collectively, the
“Closing Working Capital Schedule”) setting forth each and every item of Adjusted Working
Capital with specific identification of obligors and obligees, the amount of the Working Capital
Adjustment, if any, and Buyer’s calculation of such Adjustment. The Closing Working Capital
Schedule shall be prepared in accordance with GAAP.

          (b) Within thirty (30) days of Buyer’s delivery of the Closing Working Capital Schedule,
Seller may deliver written notice to Buyer of any objections and the basis therefor, which Seller
may have to the Closing Working Capital Schedule (the “Protest Notice”). The failure of
Seller to deliver such Protest Notice within the prescribed time period will constitute Seller’s
acceptance of the Closing Working Capital Schedule as determined by Buyer.

          (c) If Buyer and Seller are unable to resolve any disagreement with respect to the Closing
Working Capital Schedule within twenty (20) days following Buyer’s receipt of the Protest Notice,
then the items in dispute will be referred, together with a written statement of each party as to
its position on any matters in dispute regarding the Closing Working Capital Schedule, to Markovitz
Dugan and Associates, 1001 East Entry Drive, Pittsburgh, Pennsylvania 15216 (the “Dispute
Accountant”) for final determination, which determination shall be final and binding on both
Buyer and Seller. The Dispute Accountant shall be instructed to, and shall, (i) limit its
determinations only to the items in dispute, (ii) make its determination as to each such item based
upon the terms and provisions of this Agreement, (iii) not assign a value to any item greater than
the higher value for such unresolved item claimed by either Buyer or Seller or less than the lower
value for such item claimed by either Buyer or Seller. The fees and expenses of the Dispute
Accountant shall be shared equally by the parties.

          (d) Within ten (10) days of the final determination of the amount of the Adjusted Working
Capital the following shall occur:

      (i) If there is no Working Capital Adjustment, then Buyer shall pay to Seller by wire
transfer of immediately available funds to an account designated in writing by Seller an
amount equal to the Holdback.

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      (ii) If the Working Capital Adjustment is a positive number, Buyer shall pay to Seller
by wire transfer of immediately available funds to an account designated in writing by
Seller an amount equal to the sum of such Working Capital Adjustment and the Holdback.

      (iii) If the Working Capital Adjustment is a negative number but less than the
Holdback, Buyer shall pay to Seller by wire transfer of immediately available funds to an
account designated in writing by Seller an amount equal to the amount of the Holdback less
such Working Capital Adjustment.

      (iv) If the Working Capital Adjustment is a negative number and exceeds the Holdback,
Seller shall pay to Buyer by wire transfer of immediately available funds to an account
designated in writing by Buyer in an amount equal to the amount of such Working Capital
Adjustment less the Holdback (which shall be retained by Buyer).

ARTICLE III

CONDITIONS TO CLOSING

          3.1 Conditions to Buyer’s Obligation. The obligation of Buyer to consummate the
transactions contemplated by this Agreement is subject to the satisfaction of the following
conditions as of the Closing:

          (a) The representations and warranties in Article V hereof shall be true and correct
in all material respects, and Seller and Parent shall have performed in all material respects all
of the covenants and agreements required to be performed by Seller and Parent under this Agreement
on or prior to the Closing Date;

          (b) Buyer and Seller shall have received or obtained all (i) third party approvals that are
required in order to prevent a breach of or default under, a termination or modification of, or
acceleration of the terms of, any Assumed Contract (collectively, the “Third-Party
Approvals”), and (ii) all governmental and regulatory consents and approvals that are necessary
for consummation of the transactions contemplated hereby, in each case on terms reasonably
satisfactory to Buyer (collectively, the “Governmental Approvals”);

          (c) Since June 30, 2006, there shall have been no Material Adverse Change;

          (d) No suit, action or other proceeding, or injunction, order, decree or judgment relating
thereto, shall be pending before any court or governmental or regulatory official, body or
authority in which it is sought to restrain or prohibit or to obtain damages or other relief in
connection with the transactions contemplated hereby and no such injunction, order, decree or
judgment shall be in effect;

          (e) Buyer shall have completed its due diligence investigation of the Business, the Purchased
Assets and the Assumed Liabilities, including the Environmental Audit,

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Inspections and Tests, if any, and shall be satisfied, in its sole and absolute discretion, with
the results of such investigations; and

          (f) Seller and General Warehousemen and Employees Union Local 636 and General Warehousemen and
Employees Union Local 636 (Clerical) shall have executed and delivered to Buyer, along with written
acknowledgements by each labor union of the Buyer’s assumption thereof as a successor employer,
those certain collective bargaining agreements attached hereto as Exhibit 3.1(f), which
shall be Assumed Contracts for purposes of this Agreement.

          All proceedings to be taken by Seller or Parent in connection with the consummation of the
transactions contemplated hereby and all certificates, instruments and other documents required to
effect the transactions contemplated hereby reasonably requested by Buyer shall be reasonably
satisfactory in form and substance to Buyer.

          3.2 Conditions to Seller’s Obligations. The obligation of Seller to consummate the
transactions contemplated by this Agreement is subject to satisfaction of the following conditions
as of the Closing:

          (a) The representations and warranties made by Buyer in this Agreement and in any certificate
delivered by Buyer pursuant hereto shall be true and correct in all material respects as of the
Closing Date;

          (b) Buyer shall have performed in all material respects all of the covenants and agreements
required to be performed by Buyer under this Agreement on or prior to the Closing Date; and

          (c) No suit, action or other proceeding, or injunction, order, decree or judgment relating
thereto, shall be pending before any court or governmental or regulatory official, body or
authority in which it is sought to restrain or prohibit or to obtain damages or other relief in
connection with the transactions contemplated hereby and no such injunction, order, decree or
judgment shall be in effect.

          All proceedings to be taken by Buyer in connection with consummation of the transactions
contemplated hereby and all documents required to be delivered by Buyer to effect the transactions
contemplated hereby shall be reasonably satisfactory in form and substance to Seller.

ARTICLE IV

COVENANTS PRIOR TO CLOSING

          4.1 General. Subject to the terms of this Agreement, each party shall use
commercially reasonable efforts to take the actions and do the things necessary, proper or
advisable in order to consummate and make effective the transactions contemplated by this
Agreement.

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          4.2 Affirmative Covenants of Seller. Except as otherwise expressly provided herein or
as expressly consented to in writing by Buyer, prior to the Closing, Parent shall cause Seller to,
and Seller shall:

          (a) conduct the Business (including management of working capital and incurrence of and
payment or financing of capital expenditures) only in the ordinary course of business consistent
with past practice;

          (b) preserve intact its business organization and goodwill and use commercially reasonable
efforts to keep available the services of its officers and employees and maintain satisfactory
relationships with suppliers, customers and others having business relationships with the Business;

          (c) afford, and cause its officers, directors, employees, attorneys, accountants and other
agents to afford to Buyer and its accounting, legal and other representatives and lenders, as well
as their respective officers, employees, affiliates and other agents, reasonable access during
normal business hours and upon reasonable notice to business, financial, tax, compensation and
other data and information concerning the Business and its affairs and operations, including all
properties, personnel, customers, suppliers, books, records, contracts and other documents and
computer systems, including all data bases and software, of or pertaining to Seller and the
Business;

          (d) afford Buyer an opportunity, at Buyer’s expense, to obtain a so-called Phase I
environmental audit (the “Environmental Audit”) of the Leased Real Property;

          (e) deliver to Buyer any information and data pertaining to the Leased Real Property possessed
by Seller, including, title work, surveys, soil boring tests, environmental reports, engineering
feasibility studies, land use plans, building plans and specifications, zoning permits, building
permits, appraisals, inspection reports, maintenance agreements and utility contracts
(collectively, the “Tests”);

          (f) maintain the Purchased Assets in reasonable operating condition and repair (subject only
to ordinary wear and tear and potential casualty loss), maintain insurance reasonably comparable to
that in effect on the date of the Interim Financial Statements, maintain all supplies and spare
parts at customary operating levels consistent with past practice, replace in accordance with past
practice any inoperable, worn out or obsolete Purchased Assets with modern assets of comparable
quality, if available, and, in the event of a casualty, loss or damage to any of such Purchased
Assets prior to the Closing Date for which Seller is insured, either repair or replace such
Purchased Assets or, if Buyer agrees, transfer the proceeds of such insurance to Buyer in lieu of
such repair or replacement;

          (g) maintain its books, accounts, records, financial statements, balance sheets and statements
of income and cash flows in a manner consistent with past practice;

          (h) comply with all of its legal requirements and contractual obligations and pay all
applicable Taxes when due and payable in the ordinary course of business;

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          (i) give all notices and use commercially reasonable efforts to obtain all authorizations,
consents, accreditations, licenses, permits and approvals necessary or desirable to consummate the
transactions contemplated hereby;

          (j) obtain releases of all Liens relating to the Purchased Assets (other than the Permitted
Liens), and deliver to Buyer written evidence of the release thereof (including, as applicable,
UCC-3 termination statements with respect thereto);

          (k) use commercially reasonable efforts to maintain in full force and effect the existence of
all Proprietary Rights; and

          (l) promptly inform Buyer in writing of any material variances from the representations and
warranties contained in Article V hereof which become known to Seller or any breach of any
covenant hereunder by Seller.

          4.3 Affirmative Covenant of Buyer. Buyer shall promptly inform Seller and Parent in
writing of any material variances from the representations and warranties contained in Article VI
hereof which become known to Buyer or any breach of any covenant hereunder by Buyer.

          4.4 Negative Covenants of Seller. Except as otherwise expressly provided herein or as
expressly consented to or requested in writing by Buyer, prior to the Closing Date, Seller shall
not, and Parent shall cause Seller not to:

          (a) enter into, amend, modify or terminate any employment, severance or collective bargaining
agreement or other agreement or arrangement with any Transferred Employees or their representative,
or grant any increase in salary or bonus or otherwise increase the compensation payable to any
employee, consultant, advisor or agent employed by or rendering services to the Business, except
wage or salary increases as required by preexisting contracts or compensation policies which are
consistent with past practice to the extent described on Schedule 4.4(a);

          (b) enter into, amend or modify any Seller Employee Benefit Plan, or other employee benefit
plan or arrangement associated with such plans, except in the ordinary course of business
consistent with past practice;

          (c) sell, lease, license or otherwise dispose of any interest in any of the Purchased Assets
except Inventory in the ordinary course of business, or permit, allow or suffer any of the
Purchased Assets to be subjected to any Liens other than any which shall be in existence as of the
date of this Agreement (all of which shall be released, satisfied or otherwise discharged as of the
Closing Date, other than the Permitted Liens);

          (d) engage in any promotional sales or discount or other activity that has or would reasonably
be expected to have the primary effect of accelerating to pre-Closing periods

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sales to customers that would otherwise be expected to occur in post-Closing periods except in the
ordinary course of business consistent with past practice;

          (e) accelerate the collection of Accounts Receivable or delay the payment of payables or other
accrued liabilities as compared to the Seller’s past practice;

          (f) decrease the price of any of its products or services, other than decreases in the
ordinary course of business consistent with past practice;

          (g) terminate or modify any government license, permit or other authorization, other than in
the ordinary course of business consistent with past practice;

          (h) enter into any new, or amend or terminate any existing, material contracts, agreements or
commitments other than in the ordinary course of business, consistent with past practice;

          (i) institute any material change in the conduct of the Business, or any change in its method
of purchase, sale, management, marketing, operation, accounting, collection or payment; or

          (j) reduce or delay any budgeted or planned capital expenditures except in the ordinary course
of business.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT

          As an inducement to Buyer to enter into this Agreement, each of Seller and Parent, jointly and
severally, hereby represents and warrants to Buyer that:

          5.1 Organization and Corporate Power. Seller is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of Delaware. Seller
has obtained and currently maintains all qualifications to do business as a foreign limited
liability company in all other jurisdictions in which the character of Seller’s properties or the
nature of Seller’s activities require it to be so qualified, other than any such qualifications
which the failure to obtain or maintain would not have a Material Adverse Effect. Seller has
sufficient corporate power and authority and all authorizations, licenses and permits necessary to
own and operate the Business and to conduct the Business as now conducted except where the failure
to hold any authorization, license or permit would not result in a Material Adverse Effect. Seller
employs salesmen in Ohio, Michigan, New York and Kentucky. Otherwise, Seller has no assets (other
than the laptop computers referred to on Schedule 5.23) or personnel located outside
Pennsylvania.

          5.2 Authorization; No Breach.

      (a) The execution, delivery and performance of this Agreement and the other agreements
contemplated hereby to be executed and delivered by Seller and Parent and

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consummation of the transactions contemplated hereby and thereby have been duly and
validly authorized by all requisite action on the part of Seller and Parent. This Agreement
and the other agreements contemplated hereby to be executed and delivered by Seller and
Parent constitute legal, valid and binding obligations of each of them, enforceable in
accordance with their respective terms, except to the extent that the enforcement hereof and
thereof may be limited by the effect or application of laws, rules, regulations, judicial
opinions and actions, whether in law or in equity, related to bankruptcy, insolvency,
moratorium, receivership, fraudulent conveyance, creditor’s rights, public policy or general
equitable principles (collectively, “Equitable Principles”).

      (b) Except as set forth on Schedule 5.2, the execution, delivery and
performance of this Agreement and the other agreements contemplated hereby to be executed
and delivered by Seller and Parent and consummation of the transactions contemplated hereby
and thereby do not and shall not (except to the extent that the same will not have a
Material Adverse Effect) (a) conflict with or result in any breach of any of the provisions
of, constitute a default under, result in a violation of, give any third party the right to
terminate or to accelerate any obligation under, result in the creation of any Lien upon any
of the Purchased Assets or the Business, or except to the extent already obtained or
performed, require any authorization, consent, approval, exemption or other action by or
notice to or filing with any court or other governmental or regulatory body or authority,
under, the provisions of the organizational and operating documents of Seller or Parent, or
(b) except to the extent already obtained or performed, require any authorization, consent,
approval or other action under any indenture, mortgage, lease, loan agreement, contract,
understanding, commitment or other agreement by which Seller is bound or affected, or any
law, statute, rule or regulation to which of Seller or Parent is subject.

          5.3 Subsidiaries. Seller has no (and in the past five years has not had any)
Subsidiaries.

          5.4 Financial Statements. Seller has delivered to Buyer the financial statements of
the Business for the fiscal years ended December 31, 2003, December 31, 2004 and December 31, 2005,
together with any notes to and any supplemental information and schedules included in such
financial statements (collectively, the “Historical Financial Statements”), all as prepared
by Seller. The balance sheets included in the Historical Financial Statements are true, accurate
and complete in all material respects and fairly present, in all material respects, the financial
position of the Business as of their respective dates. The statements of operations and cash flows
included in the Historical Financial Statements are true, accurate and complete in all material
respects and fairly present, in all material respects, the results of operations and cash flows of
Seller and the Business for the respective periods set forth therein, in each case in accordance
with GAAP. The Historical Financial Statements are consistent in all material respects, with the
accounting records, ledgers and books of original entry of Seller (the “Accounting Books”).
Seller has delivered to Buyer the unaudited financial statements for the eight (8) month period
ended August 31, 2006 (the “Interim Financial Statements”). The Interim Financial
Statements are true, accurate and complete in all material respects, are consistent in all material
respects with the Accounting Books of Seller and, subject

20

 

to normal year-end adjustments and accruals (none of which individually or in the aggregate are
material or inconsistent with the Historical Financial Statements), the taking of a physical
inventory and the lack of footnote disclosures, present fairly, in all material respects, the
financial position, results of operations and cash flows of the Business as of the date and for the
period therein set forth, in accordance with GAAP.

          5.5 Accounts Receivable; Payables.

          (a) Except as set forth on Schedule 5.5, all Accounts Receivable reflected on the
Interim Financial Statements, and as shall exist on the Closing Date, are valid receivables arising
in the ordinary course of business and are current and collectible in the ordinary course of
business (subject only to the reserve for bad debts set forth on the face of the balance sheet
contained in Interim Financial Statements as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of the Business) at the aggregate recorded
amount therefor as shown on the Interim Financial Statements and the Closing Working Capital
Schedule as finally determined, as the case may be.

          (b) All of the trade accounts payable reflected on the Interim Financial Statements and all
trade accounts payable as shall be reflected on the Closing Working Capital Schedule, as finally
determined, arose in the ordinary course of business and in a manner consistent with Seller’s past
practice.

          5.6 Warranty. Since January 1, 2005, all products sold and services rendered by
Seller have been in conformity with all contractual commitments and all express and implied
warranties. No products sold by Seller are subject to any guaranty, warranty or other indemnity
beyond the applicable standard terms and conditions of such sale (including as a result of any
course of conduct between Seller and any Person or as a result of any statements in any of Seller’s
promotional literature). Schedule 5.6 contains copies of the standard terms and conditions
of sale for goods sold or services provided by Seller.

          5.7 No Material Adverse Change. Since June 30, 2006, there has occurred no fact,
event or circumstance which has had or could reasonably be expected to have a Material Adverse
Effect.

          5.8 Absence of Certain Developments. Except as set forth on Schedule 5.8,
since December 31, 2005 and except as is contemplated to occur pursuant to this Agreement, Seller
has not:

          (a) mortgaged, pledged or subjected to any Lien, any of the Purchased Assets;

          (b) sold, leased, assigned or transferred any of its tangible assets, except in the ordinary
course of business consistent with past practice, or canceled, without fair consideration, any
material debts or material claims owing to or held by it;

          (c) made or granted any bonus or any wage or salary increase to any employee or group of
employees (except as required by pre-existing contracts or consistent with

21

 

past practice and disclosed on Schedule 5.14), or made or granted any increase in any
employee benefit plan or arrangement, or amended or terminated any existing Seller Employee Benefit
Plan or arrangement or adopted any new Seller Employee Benefit Plan or arrangement;

          (d) incurred any Indebtedness for borrowed money or incurred or became subject to any
liability, except (i) current liabilities incurred in the ordinary course of business consistent
with past practice, and (ii) liabilities under contracts entered into in the ordinary course of
business consistent with past practice;

          (e) made any loans or advances to, or guarantees for the benefit of, any Person in an amount,
in the aggregate, in excess of Ten Thousand Dollars ($10,000) other than the extension of trade
credit in the ordinary course of business consistent with past practice;

          (f) suffered any extraordinary losses or waived any rights of material value, whether or not
in the ordinary course of business or consistent with past practice;

          (g) suffered any damage, destruction or casualty loss to its tangible assets in excess of Ten
Thousand Dollars ($10,000), whether or not covered by insurance;

          (h) made any change in any method of accounting or accounting policies, other than those which
have been disclosed in writing to Buyer;

          (i) instituted or permitted any material change in the conduct of the Business;

          (j) delayed or postponed the payment of any accounts payable or commissions or any other
liability or obligation or agreed or negotiated with any party to extend the payment date of any
accounts payable or commissions or any other liability or obligation or accelerated the collection
of (or discounted) any accounts or notes receivable in each case, except in the ordinary course of
business consistent with past practice;

          (k) entered into any agreement or arrangement prohibiting or restricting it from freely
engaging in any business or otherwise restricting the conduct of its business anywhere in the
world;

          (l) sold, assigned, licensed, sublicensed, transferred or encumbered any Proprietary Rights or
other intangible assets, or abandoned or permitted to lapse any Proprietary Rights;

          (m) taken any action or failed to take any action for the primary purpose of accelerating to
pre-Closing periods sales to customers or other revenues that would otherwise be expected to take
place or be incurred after the Closing; or

          (n) entered into, amended or terminated any contract other than in the ordinary course of
business consistent with past practice.

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          5.9 Real Property.

          (a) Seller does not own any real property;

          (b) Schedule 5.9(b) sets forth a true and complete description of all real property
leased, licensed to or otherwise used or occupied (but not owned) by Seller (collectively, the
“Leased Real Property”). Seller has a valid and subsisting leasehold estate in the Leased
Real Property. A true and correct copy of each such lease, license, or occupancy agreement, and
any amendments thereto, with respect to the Leased Real Property (collectively, the “Real
Property Leases”) has been delivered to Buyer, and no changes have been made to any Real
Property Leases since the date of delivery. All of the Leased Real Property is used or occupied by
Seller pursuant to a Real Property Lease. With respect to each Real Property Lease: (i) such Real
Property Lease is valid, binding and enforceable in accordance with its terms and is in full force
and effect, (ii) all rents, deposits and additional rents due pursuant to such Real Property Lease
have been paid in full and no security deposit or portion thereof has been applied in respect of a
breach or default under such Real Property Lease that has not be redeposited in full, (iii) there
is no existing default by Seller, or, to the Knowledge of Seller, the lessor, under any of the Real
Property Leases, and no event has occurred that (with notice, lapse of time or both) could
reasonably be expected to constitute a breach or default under any of the Real Property Leases by
any party or give any party the right to terminate, accelerate or modify any Real Property Lease,
(iv) Seller has not received any notice that it is in default under any Real Property Lease or that
the owner of any Leased Real Property has made any assignment, mortgage, pledge or hypothecation of
such Real Property Lease or the rents or use fees due thereunder other than possible assignments of
leases to lenders securing mortgages on the Leased Real Property. Except as set forth on
Schedule 5.9(b), no Affiliate of Seller or Parent is the owner or lessor of any Leased Real
Property. The Leased Real Property is (i) in good condition and repair (subject to normal wear and
tear) and (ii) sufficient for the operation of the Business as it is currently conducted. Seller
has not subleased, licensed or otherwise granted any Person the right to use or occupy any of the
Leased Real Property.

          5.10 Title to Assets; Condition and Sufficiency.

          (a) Seller has good and valid title to all of the Purchased Assets, free and clear of all
Liens, except for (i) liens for current property Taxes not yet due and payable and (ii) Liens
securing Seller’s repayment obligations in connection with Seller’s Indebtedness (which Liens
related to Seller’s Indebtedness shall be released at or prior to Closing) (with the items in
clause (i) and, until Closing, clause (ii) above, being collectively referred to herein as the
“Permitted Liens”).

          (b) Except as disclosed on Schedule 5.10(b), the Purchased Assets include all of the
assets, whether tangible or intangible, real or personal, that are necessary or useful for the
conduct of the Business as currently conducted.

          (c) The Equipment and other tangible assets (whether owned or leased) included in the
Purchased Assets are, except for ordinary wear and tear, in good condition and

23

 

repair and are usable in the ordinary course of business, and all such assets have been installed
and maintained in compliance with all applicable laws, regulations and ordinances.

          5.11 Inventory. The Inventory is (a) usable or saleable in the ordinary course of the
Business, (b) sufficient but not excessive in kind or amount for the conduct of the Business as it
is presently being conducted, and (c) reflected in the Interim Financial Statements and in the
Closing Working Capital Schedule at an amount which reflects values not in excess of the lower of
cost or market determined in accordance with GAAP.

          5.12 Customer Tooling and Raw Materials. Neither Seller, Parent nor any of their
Affiliates has any developed proprietary tools, molds, dies or equipment belonging to any of the
customers of the Business, and neither Seller, Parent nor any of their Affiliates is in possession
or control of any raw materials owned by any of Seller’s customers for use in connection with the
Business and/or the production, assembly and/or manufacture of products or the provision of
services.

          5.13 Tax Matters.

          (a) Seller has filed or has caused to be filed on a timely basis (after giving effect to any
requested extensions of any filing dates) all Tax Returns that are or were required to be filed,
either separately or as a member of an Affiliated Group, and all such Tax Returns have been
prepared in compliance with all applicable laws and regulations and are true and accurate. All
Taxes due and payable by Seller and its Affiliates have been paid. The charges, accruals, and
reserves for Taxes with respect to the Business for any pre-Closing Tax period reflected in the
Interim Financial Statements and for any Tax period that ends with or after the Closing Date
reflected on the Closing Working Capital Schedule as finally determined are adequate to cover such
Taxes and are at least equal to Seller’s liability for Taxes with respect to the Business as of the
Closing Date.

          (b) Except as set forth on Schedule 5.13(b):

      (i) neither Seller nor Parent, on behalf of Seller, has requested or been granted an
extension of the time for filing any Tax Return which has not yet been filed, or consented
to extend to a date later than the date hereof the time in which any Tax may be assessed or
collected by any taxing authority;

      (ii) no deficiency or proposed adjustment which has not been settled or otherwise
resolved for any material amount of Tax has been proposed, asserted or assessed by any
taxing authority against Seller, and there is no action, suit, taxing authority proceeding
or audit now in progress, pending or, to Seller’s Knowledge, threatened against or with
respect to Seller;

      (iii) except for Permitted Liens, there are no liens for Taxes upon the Purchased
Assets;

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      (iv) no claim has ever been made by a taxing authority in any jurisdiction where Seller
does not file Tax Returns that Seller is or may be subject to Taxes assessed by such
jurisdiction; and

      (v) Seller or Parent, on behalf of Seller, has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, shareholder or other third party, and all Forms W-2 and
1099 required with respect thereto have been or will be properly completed and timely filed.

          (c) Schedule 5.13(c) contains a list of states, territories and jurisdictions (whether
foreign or domestic) in which Seller was required to file Tax Returns for the Business for the
fiscal year ended December 31, 2005.

          5.14 Contracts and Commitments.

          (a) Except as set forth on Schedule 5.14 with respect to the Business or the Purchased
Assets, and except as a result of the transactions contemplated by this Agreement, Seller is not a
party to any oral or written:

      (i) management agreement, contract for the employment of any officer, individual
employee or other person on a full-time, part-time or consulting basis or providing for the
payment of any cash or other compensation or benefits upon the sale of the Business or the
Purchased Assets;

      (ii) agreement pursuant to which any current or former employee is entitled to payment
for a covenant not to compete with Seller or the Business;

      (iii) agreement or indenture relating to the borrowing of money or to mortgaging,
pledging or otherwise placing a material Lien on any of Seller’s assets or letter of credit
arrangements;

      (iv) agreements with respect to the lending or investing of funds;

      (v) license or royalty agreements;

      (vi) guaranty of any obligation for borrowed money, other than endorsements made for
collection;

      (vii) lease or agreement under which Seller is lessee of or holds or operates any
property, real or personal, owned by any other party;

      (viii) lease or agreement under which Seller is lessor of or permits any third party to
hold or operate any property, real or personal, owned or controlled by Seller;

      (ix) distributor, vendor or customer agreements;

25

 

      (x) contract which prohibits Seller from freely engaging in the Business anywhere in
the world;

      (xi) contract relating to the marketing, sale, advertising or promotion of its products
or services;

      (xii) franchise or agency agreements;

      (xiii) contract with any officer, director, manager, member, shareholder, parent or
other Affiliate;

      (xiv) warranty agreement with respect to products sold or indemnity agreement with any
supplier or customer under which Seller is obligated to indemnify such supplier or customer
against liability claims; or

      (xv) agreements relating to ownership of or Investments in any business or enterprise,
including Investments in joint ventures and minority equity investments.

          (b) All of the contracts, leases, agreements and instruments set forth or required to be set
forth on Schedule 5.14 are valid, binding and enforceable in accordance with their
respective terms except to the extent that the enforcement thereof may be subject to the
application of Equitable Principles. Except as set forth on Schedule 5.14, (i) Seller has
substantially performed all obligations required to be performed by it and is not in default under
or in breach of nor in receipt of any claim of default or breach under any contract, lease,
agreement or instrument to which Seller is subject; (ii) no event has occurred which with the
passage of time or the giving of notice or both would result in a default, breach or event of
noncompliance by Seller under any contract, lease, agreement or instrument to which Seller is
subject; (iii) Seller, as of the date hereof, has no present expectation or intention of not fully
performing all such obligations; and (iv) Seller has no Knowledge of any breach or anticipated
breach by the other parties to any contract, lease, agreement, instrument or commitment to which it
is a party. Seller is not a party to any contract, agreement or commitment the performance of
which could reasonably be expected to have a Material Adverse Effect.

          (c) Schedule 5.14 sets forth each contract, commitment or obligation of Seller, which
is secured by a letter of credit, performance bond, guarantee or the like (other than guarantees of
Seller) and the nature and amount of such security.

          (d) Buyer has been afforded an opportunity to review, and if so requested by Buyer, to receive
a true and correct copy of all written contracts (and a true and correct written description of all
oral contracts) which are referred to on Schedule 5.14, together with all amendments,
exhibits, attachments, waivers or other changes thereto.

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          5.15 Proprietary Rights.

          (a) Schedule 5.15 contains a complete and accurate list of all (i) registered
Proprietary Rights owned or used by Seller, (ii) pending applications for other registrations of
Proprietary Rights filed by or on behalf of Seller, (iii) material unregistered Proprietary Rights
owned or used by Seller and (iv) material licenses and other rights granted by any third party to
Seller or by Seller to any third party with respect to any Proprietary Rights. Seller owns and
possesses all right, title and interest to, or has the right to use pursuant to a valid and
enforceable license, all Proprietary Rights necessary for the operation of the Business as
presently conducted, free and clear of all Liens except for Permitted Liens.

          (b) Except as set forth on the attached Schedule 5.15, there have been no claims made
against Seller asserting the invalidity, misuse or unenforceability of any of the Proprietary
Rights owned or used by Seller and, to Seller’s Knowledge, there is no basis for any such claim.
The transactions contemplated by this Agreement will not impair Seller’s right, title or interest
in and to the Proprietary Rights listed on Schedule 5.15, and all of such Proprietary
Rights shall be owned or available for use by Seller on identical terms and conditions after the
Closing.

          5.16 Litigation. Except as set forth on the attached Schedule 5.16, there are
no actions, suits, proceedings (including any grievance or arbitration proceedings), orders,
investigations or claims pending or, to Seller’s Knowledge, threatened against Seller, the Business
or the Purchased Assets (or pending or, to Seller’s Knowledge, threatened against any of the
officers, directors or employees of Seller with respect to the Business), or pending by Seller
against any Person, at law or in equity, or before or by any governmental department, commission,
board, bureau, agency or instrumentality (including any actions, suits, proceedings or
investigations with respect to the transactions contemplated by this Agreement); Seller is not the
subject of any grievance or arbitration proceedings under collective bargaining agreements or
otherwise or any governmental investigations or inquiries relating to the Business; and there is no
basis for any of the foregoing.

          5.17 Brokerage and Transaction Bonuses. Except as set forth on Schedule 5.17,
which obligations will be paid by Seller or Parent on or before the Closing Date, (a) there are no
claims for brokerage commissions, finders’ fees 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 or Parent and (b) there are no special bonuses or other similar compensation
payable to any employee in connection with the transactions contemplated hereby.

          5.18 Employees.

          (a) Except as disclosed on the attached Schedule 5.18 and except with respect to the
transactions contemplated by this Agreement: (i) Seller is not party to or bound by any collective
bargaining agreement or relationship with any labor organization; (ii) to Seller’s Knowledge, no
executive or manager of Seller (A) has any present intention to terminate their employment, or (B)
is a party to any confidentiality, noncompetition, proprietary rights or other

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such agreement between such employee and any other Person besides Seller that would be material to
the performance of such employee’s employment duties, or the ability of Buyer after the Closing to
conduct the Business; (iii) within the past five (5) years, no labor organization or group of
employees has filed any representation petition or made any written or oral demand for recognition;
(iv) no union organizing or decertification efforts are underway or, to Seller’s Knowledge,
threatened and no other question concerning representation exists; (v) no labor strike, work
stoppage, slowdown, or other material labor dispute has occurred, and none is underway or, to
Seller’s Knowledge, threatened; (vi) there is no existing worker’s compensation liability,
experience or matter arising from the Business that could increase Seller’s obligations under any
worker’s compensation law or insurance program after the Closing; (vii) there is no
employment-related charge, complaint, grievance, investigation, inquiry or obligation of any kind,
pending or, to Seller’s Knowledge, threatened in any forum, relating to an alleged violation or
breach by Seller or Parent (or any of their officers or directors) of any law, regulation or
contract with respect to the Business and there is no basis for any such claim.

          (b) Except as set forth on Schedule 5.18, there are no written personnel policies,
rules or procedures applicable to employees of Seller.

          (c) With respect to the transactions contemplated by this Agreement, any notice required under
any law or collective bargaining agreement has been given, and all bargaining obligations with any
employee representative have been, or prior to the Closing will be, satisfied. Seller has not
implemented any plant closing or mass layoff of employees under the Worker Adjustment and
Retraining Notification Act, as amended.

          (d) Schedule 5.18 sets forth all employees of the Business who have terminated their
employment, voluntarily or involuntarily, with Seller and/or the Business at any time in the six
(6) month period preceding the date of this Agreement and the reasons for such termination.

          5.19 Employee Benefit Plans.

          (a) Except (i) as set forth on Schedule 5.19, Seller does not maintain, contribute to
or have any liability under (or with respect to) any plan or arrangement providing benefits to
current or former employees, including any bonus plan, plan for deferred compensation,
profit-sharing bonuses, equity plan, including any option, appreciation right or purchase plan,
employee health, life or other welfare benefit plan, severance arrangement or policy, any plan,
arrangement, agreement, program or commitment to provide for insurance coverage (including any
self-insured arrangements) disability benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits, life or accident benefits (including voluntary employee benefits
association (as defined in Section 501(c)(9) of the Code) providing for the same or other
benefits), or other arrangement, whether or not terminated, whether or not in writing or oral, and
whether or not subject to ERISA. Each item listed or required to be listed on Schedule
5.19 is referred to herein as a “Seller Employee Benefit Plan”.

          (b) Each Seller Employee Benefit Plan and all related trusts, insurance contracts and funds
have been maintained, funded and administered in compliance with their

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respective terms and with all applicable laws. Each Seller Employee Benefit Plan that is intended
to be qualified within the meaning of Section 401(a) of the Code has received a favorable
determination letter to that effect from the Internal Revenue Service (the “IRS”), and
nothing has occurred since the date of such letter which would prevent any such Seller Employee
Benefit Plan from remaining so qualified.

          (c) Except (i) as set forth and described in reasonable detail on Schedule 5.19, none
of the Seller Employee Benefit Plans or any other commitments of Seller, Parent or any Affiliate
obligates Seller to pay any separation, severance, termination or similar benefit, accelerate any
vesting schedule, increase any employee account balance, or alter or increase any benefits to any
current or former employee, solely as a result of any transaction contemplated by this Agreement or
solely as a result of a change in control or ownership within the meaning of Section 280G of the
Code and no Seller Employee Benefit Plan has any obligation to provide any retiree welfare
benefits.

          (d) Except as set forth on Schedule 5.19, with respect to Seller Employee Benefit
Plans (i) Seller does not maintain, contribute to or have any actual or potential liability under
any defined benefit plan, as defined in Section 3(35) of ERISA; (ii) no withdrawal of Seller from a
pension plan (as defined in Section 3(35) of ERISA) in which it was a “substantial employer” as
defined in Section 4001(a)(2) of ERISA or was deemed to be under Section 4062(e) of ERISA has
occurred; (iii) Seller has not terminated a pension plan as defined in Section 3(3) of ERISA, filed
a notice of intent to terminate a pension plan, or treated a pension plan amendment as a
termination under Section 4041 of ERISA; (iv) the Pension Benefits Guarantee Corporation
(“PBGC”) has not instituted proceedings to terminate a pension plan; (v) no lien on Seller
pursuant to Section 412 of the Code or Section 302 of ERISA has been imposed; (vi) no transaction
described in Section 4069 of the ERISA has occurred; and (vii) there are no pending or, to Seller’s
Knowledge, threatened actions, suits, investigations or claims with respect to any Seller Employee
Benefit Plan (other than routine claims for benefits in the ordinary course of business) which
could result in any liability to Buyer (whether direct or indirect) and there is no basis for any
such actions, suits, investigations or claims.

          (e) Except as set forth on the attached Schedule 5.19, (i) Seller has no obligation to
contribute to (or any other liability, including current or potential withdrawal liability, with
respect to) any Multiemployer Plan; (ii) Seller has not engaged in a partial or complete withdrawal
from a Multiemployer Plan, as defined in Section 4001(a)(3) of ERISA; and (iii) no event or
condition which results in the termination of a Multiemployer Plan to which Seller has liability
under Section 4041A of ERISA or Section 4042 of ERISA, respectively, has occurred.

          (f) Seller, or Parent on behalf of Seller, has complied in all respects with all obligations
under Section 4980B of the Code and Sections 601-608 of ERISA (“COBRA”) as well as any comparable
provisions of state law with respect to employees and former employees of Seller.

          (g) All contributions and payments with respect to each Seller Employee Benefit Plan have been
timely made when due, and all contributions for the period prior to the

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Closing Date, which are not yet due, have been made or accrued and reflected in the Closing Working
Capital Schedule.

          (h) With respect to each Seller Employee Benefit Plan, there have been no prohibited
transactions, as defined in Section 4975 of the Code or Section 406 of ERISA which are not covered
by a prohibited transaction class exemption.

          (i) All required reports and descriptions including IRS Form 5500 Annual Reports, Summary
Annual Reports and Summary Plan Descriptions with respect to each Seller Employee Benefit Plan have
been properly and timely filed with the appropriate government agency and distributed to
participants as required by ERISA.

          (j) For purposes of this Section 5.19, the term “Seller” also includes all
organizations under common control with Seller pursuant to Section 414 of the Code.

          5.20 Insurance. Schedule 5.20 contains a list of each insurance policy
maintained by Seller with respect to its properties, assets and business, including the Purchased
Assets and Business, and each such policy is in full force and effect. Seller is not in default
with respect to its obligations under any insurance policy maintained by it, and since January 1,
2004, Seller has not been denied insurance coverage. The insurance coverage of Seller is of a kind
and type routinely carried by entities of similar size engaged in similar lines of business.
Except as set forth on Schedule 5.20, Seller does not have any self-insurance or
co-insurance programs.

          5.21 Compliance with Laws; Permits; Certain Operations. Except as set forth on
Schedule 5.21 and except for Environmental and Safety Requirements which are set forth in
Section 5.22:

          (a) Seller has complied and is in compliance with, all applicable laws, ordinances, codes,
rules, requirements and regulations of federal, state and local governments and all agencies
thereof, and no notices have been received by and to the Knowledge of Seller no claims have been
filed against Seller alleging a violation of any such laws, ordinances, codes, rules, requirements
or regulations.

          (b) Seller has complied and is in compliance with, all applicable laws (including the
Americans with Disabilities Act) relating to the employment of labor, including provisions thereof
relating to wages, hours, equal opportunity, nondiscrimination, collective bargaining, the payment
of social security and other taxes and all requirements, rules and regulations of the United States
Immigration and Naturalization Service;

          (c) Seller holds all permits, licenses, certificates, accreditations or other authorizations
of federal, state and local governmental agencies required for the conduct of the Business, and the
attached Schedule 5.21 sets forth a list of all of such permits, licenses, certificates,
accreditations and other authorizations. Seller is in material compliance with all terms and
conditions of any such required permits, licenses, accreditations and authorizations; and

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          (d) No officer, director, manager, employee, consultant, advisor or agent of Seller has been
or is authorized to make or receive, and Seller has no Knowledge of any of its officers, directors,
employees, consultants, advisors or agents making or receiving, any bribe, kickback payment or
other illegal payment at any time.

          5.22 Environmental and Safety Matters. Except as set forth in Schedule 5.22
attached hereto:

          (a) With respect to the Business, Seller has complied and is in compliance with all
Environmental and Safety Requirements.

          (b) Without limiting the generality of the foregoing, Seller has obtained and complied with,
and is in compliance with, all permits, licenses and other authorizations that are required
pursuant to Environmental and Safety Requirements, and a list of all such permits, licenses and
other authorizations is set forth on Schedule 5.22.

          (c) Seller has not received any notice, report or other information regarding any actual or
alleged violation of Environmental and Safety Requirements, or any liabilities or potential
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise), including any
investigatory, remedial or corrective obligations, arising under Environmental and Safety
Requirements.

          (d) Neither Seller nor any of its predecessors or Affiliates has treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or released any substance,
including any hazardous substance, or owned or operated any property or facility (and no such
property or facility is contaminated by any such substance) in a manner that has given or would
give rise to liabilities, including any liability for response costs, corrective action costs,
personal injury, property damage, natural resources damages or attorney fees, or any investigative,
corrective or remedial obligations, pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or the Solid Waste Disposal Act, as amended, or
any other Environmental and Safety Requirements.

          (e) Neither this Agreement nor consummation of the transactions that are the subject of this
Agreement will result in any obligations for site investigation or cleanup, or notification to or
consent of government agencies or third parties pursuant to any of the so-called
“transaction-triggered” or “responsible property transfer” Environmental and Safety Requirements.

          (f) Seller has not, either expressly or by operation of law, assumed or undertaken any
liability, including any obligation for corrective or remedial action, of any other Person relating
to Environmental and Safety Requirements.

          (g) Seller has furnished to Buyer all environmental audits, reports and other material
environmental documents relating to its or its predecessors’ past or current properties, facilities
or operations that are in its possession or under its reasonable control.

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          5.23 Locations of Assets. Except as set forth on Schedule 5.23, all of the
Purchased Assets are located at or on the Leased Real Property.

          5.24 Customers and Suppliers.

          (a) Schedule 5.24(a) sets forth the top 20 customers of Seller (based on the dollar
amount of sales to such customers) for each of the years ended December 31, 2005 and December 31,
2004 (the “Material Customers”). Except as set forth on Schedule 5.24(a), (i) all
Material Customers continue to be customers of Seller, and none of such Material Customers has
reduced materially its business with Seller from the levels achieved during the year ended December
31, 2005, and, to the Knowledge of Seller, no such reduction is expected to occur; (ii) no Material
Customer has terminated its relationship with Seller, nor has Seller received notice that any
Material Customer intends to do so; (iii) Seller is not involved in any claim, dispute or
controversy with any Material Customer; and (iv) Seller is not involved in any claim, dispute or
controversy with any of its other customers that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

          (b) Schedule 5.24(b) sets forth the top 20 suppliers of Seller (based on the dollar
amount of purchases from such suppliers) for each of the years ended December 31, 2005 and December
31, 2004 (“Material Suppliers”). Except as set forth on Schedule 5.24(b), (i) all
Material Suppliers continue to be suppliers of Seller and none of such Material Suppliers has
reduced materially its business with Seller from the levels achieved during the year ended December
31, 2005, and, to the Knowledge of Seller, no such reduction is expected to occur; (ii) no Material
Supplier has terminated its relationship with Seller, nor has Seller received notice that any
Material Supplier intends to do so; (iii) Seller is not involved in any material claim, dispute or
controversy with any Material Supplier except for minor disputes over supplier invoices that are
noted in the Closing Working Capital Schedule and recorded at the amounts claimed due by the
suppliers; and (iv) Seller is not involved in any claim, dispute or controversy with any of its
other suppliers except for minor disputes over supplier invoices that are noted in the Closing
Working Capital Schedule and recorded at the amount claimed due by the Suppliers and that,
individually or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect.

          5.25 Affiliate Transactions. Except as set forth on Schedule 5.25, no
officer, director, manager, member, employee or Affiliate of Seller or, to Seller’s Knowledge, any
individual related by blood, marriage or adoption to any such individual or any entity in which any
such Person or individual owns any beneficial interest, is a party to any agreement, contract,
commitment or transaction with Seller or has any interest in any property used by Seller.

          5.26 Full Disclosure. Seller has no knowledge of any events, transactions or other
facts that, either individually or in the aggregate could have a Material Adverse Effect on the
general affairs, business, properties (including the Purchased Assets), financial position, results
of operations, prospects or net worth of the Business.

          5.27 Accuracy of Information. The statements contained in the schedules referred to
in this Agreement and in any other written documents executed and/or delivered by or

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on behalf of Seller pursuant to terms of this Agreement are true, correct and complete in all
respects, and such schedules and such other documents do not omit, and will not omit when
delivered, any material fact necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. No representation or warranty contained
herein or made hereunder contains or will contain any misstatement of a material fact, or omits or
will omit to state a material fact required to be stated herein or therein in order to make the
statements contained herein or therein, in light of the circumstances under which they were made,
not misleading.

          5.28 Closing Date. The representations and warranties of Seller in this Article
V and elsewhere in this Agreement and all information delivered in any schedule or exhibit
attached hereto or in any certificate delivered to Buyer are true and correct on the date of this
Agreement and shall be true and correct as of the Closing (including where such representation is
contained in the Closing Working Capital Schedule) except to the extent that any such
representations and warranties are, by their express terms, made and given with respect to facts or
circumstances existing at a particular date.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF BUYER

          As an inducement to Seller to enter into this Agreement, Buyer hereby represents and warrants
to each of Seller and Parent as follows:

          6.1 Organization, Power and Authority. Buyer is a corporation duly incorporated and
validly existing under the laws of the State of Ohio. Buyer has full power and authority to enter
into this Agreement and to perform its obligations hereunder.

          6.2 Authorization. The execution, delivery and performance of this Agreement and the
other agreements contemplated hereby to be executed and delivered by Buyer, and consummation of the
transactions contemplated hereby and thereby have been duly and validly authorized by all requisite
action on the part of Buyer. This Agreement and the other agreements contemplated hereby to be
executed and delivered by Buyer constitute valid and binding obligations of Buyer, enforceable in
accordance with their respective terms, subject, in each case, to the application of Equitable
Principles.

          6.3 Governmental Authorities and Consents. No consent, approval or authorization of
any governmental or regulatory authority is required to be obtained by Buyer in connection with the
execution and delivery of this Agreement or the consummation of the transactions contemplated
hereby.

          6.4 Brokerage Payments. Except for a payment to be made by Buyer to The Midland Group
there are no claims for brokerage commissions, finders’ fees or similar compensation in connection
with the transactions contemplated by this Agreement based on the any arrangement or agreement made
by or on behalf of Buyer.

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          6.5 Closing Date. The representations and warranties of Buyer in this Article
VI and elsewhere in this Agreement and all information delivered in any certificate, instrument
or other writing executed by Buyer and delivered to Seller are true and correct on the date of this
Agreement and shall be true and correct as of the Closing.

ARTICLE VII

TERMINATION

          7.1 Termination. This Agreement may be terminated at any time prior to the Closing:

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

          (b) by Buyer if there has been a misrepresentation, breach of warranty or breach of a covenant
by Seller with respect to the representations, warranties or covenants set forth in this Agreement
or the schedules and exhibits attached hereto, which, in the case of breach of any covenant or
agreement, has not been cured within fifteen (15) days after written notification thereof by Buyer;

          (c) by Seller if there has been a misrepresentation, breach of warranty or breach of covenant
by Buyer with respect to the representations, warranties or covenants set forth in this Agreement
or the schedules and exhibits attached hereto, which in the case of breach of any covenant or
agreement, has not been cured within fifteen (15) days after written notification thereof by
Seller; or

          (d) by either Buyer or Seller if the transactions contemplated hereby have not been
consummated by October 31, 2006; provided that the party electing termination
pursuant to this Section 7.1(d) is not in material breach of any of its representations,
warranties, covenants or agreements contained in this Agreement or the schedules and exhibits
attached hereto.

          7.2 Effect of Termination. In the event of termination of this Agreement by either
Buyer or Seller as provided above, this Agreement shall forthwith become void and of no further
force and effect, except that the provisions of Sections 7.1 (Termination), 7.2
(Effect of Termination), 8.5 (Expenses), and Article IX (Miscellaneous) shall
survive such termination indefinitely, and except that nothing in Section 7.1 or this
Section 7.2 shall be deemed to release any party from any liability for any breach by such
party of the terms and provisions of this Agreement or to impair the right of any party to compel
specific performance by another party of its obligations under this Agreement.

ARTICLE VIII

ADDITIONAL AGREEMENTS

          8.1 Survival of Representations, Warranties and Covenants and Rights of Indemnity.
The representations and warranties, covenants and agreements in this Agreement and the schedules
and exhibits attached hereto, as well as the corresponding rights of the parties to

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seek indemnity under this Article VIII for a breach or violation thereof, shall survive the
Closing as follows:

          (a) the representation and warranties in Section 5.13 (Tax Matters), as well as the
corresponding rights of the parties to seek indemnity under Article VIII hereof for a
breach or violation thereof, shall terminate ten (10) days after such date as the applicable
statutes of limitations with respect to the liabilities in question expire (giving effect to any
extensions or waivers thereof);

          (b) the representations and warranties in Section 5.1 (Organization and Power),
Section 5.2(a) (Authorization), Section 5.10(a) (Title to Assets), Section
5.17 (Brokerage and Transaction Bonuses), Section 6.2 (Authorization), and Section
6.4 (Brokerage), shall not terminate at any time, and all covenants and agreements of the
parties shall not terminate until the same have been fully performed in accordance with their
terms; and

          (c) all other representations and warranties in this Agreement and the Schedules and exhibits
hereto, as well as the corresponding rights of the parties to seek indemnity under this Article
VIII for a breach or violation thereof, shall terminate on the second anniversary of the
Closing Date except for Claims made on or before such date.

          8.2 General Indemnification.

          (a) Indemnification for Benefit of Buyer. Seller and Parent, jointly and severally,
shall indemnify Buyer and its Affiliates, officers, directors, employees, agents, representatives,
successors and assigns (collectively, the “Buyer Parties”) and save and hold each of them
harmless from and against any loss, liability, demand, claim, action, cause of action, cost,
damage, deficiency, Tax, penalty, fine or expense, whether or not arising out of third party claims
(including interest, penalties, reasonable attorneys’ fees and expenses and all reasonable amounts
paid in investigation, defense or settlement of any of the foregoing and enforcement of its rights
hereunder) (collectively, “Losses”) which any such Buyer Party may suffer, sustain or
become subject to, as a result of, in connection with, relating or incidental to or by virtue of:
(i) any breach of any representation or warranty of Seller under this Agreement or any of the
schedules or exhibits attached hereto, or in any of the certificates or other instruments or
documents furnished to Buyer by Seller pursuant to this Agreement; (ii) any nonfulfillment or
breach of any covenant, agreement or other provision by Seller or Parent under this Agreement or
any of the exhibits attached hereto; (iii) any liability or obligation which is an Excluded
Liability; and (iv) any liability or obligation of Seller or Parent other than the Assumed
Liabilities.

          (b) Indemnification for Benefit of Seller. Buyer shall indemnify Seller, Parent and
their Affiliates, officers, directors, employees, agents, representatives, successors and permitted
assigns (collectively, the “Seller Parties”) and hold them harmless from and against any
Losses which Seller Parties may suffer, sustain or become subject to, as the result of, in
connection with, relating or incidental to or by virtue of (i) any breach of any representation or
warranty of Buyer under this Agreement or any of the schedules or exhibits attached hereto, or in
any of the certificates or other instruments or documents furnished to Seller by Buyer pursuant to

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this Agreement; (ii) any nonfulfillment or breach of any covenant, agreement or other provision by
Buyer under this Agreement or any of the exhibits attached hereto, or (iii) any liability or
obligation which is an Assumed Liability.

          (c) Manner of Payment. Except as otherwise provided herein, any indemnification of
the Buyer Parties or Seller Parties pursuant to this Section 8.2 shall be effected by wire
transfer of immediately available funds from Seller, Parent or Buyer, as the case may be, to an
account designated by Buyer or Seller, as the case may be, within five (5) days after the
determination thereof (it being understood that undisputed amounts shall be promptly paid on
demand). Any such indemnification payments shall include interest at the annual rate of eight
percent (8%), calculated on the basis of a 365-day year and the actual number of days elapsed from
the date any Loss is suffered or sustained to the date of payment. All indemnification payments
under this Section 8.2 shall be deemed adjustments to the Purchase Price.

          (d) Limitations on Indemnity. Notwithstanding any provision herein to the contrary,
the maximum liability of Seller and Parent, in the aggregate, to the Buyer Parties, in the
aggregate, for breach of representations and warranties pursuant to Section 8.2(a)(i)
(other than with respect to the representations and warranties contained in Section 5.2(a)
(Authorization), Section 5.10(a) (Title to Assets), Section 5.13 (Tax Matters), and
Section 5.17 (Brokerage and Transaction Bonuses)), shall be an amount equal to twenty-five
percent (25%) of the Purchase Price (exclusive of the Assumed Liabilities) determined under
Section 2.3(a) hereof (the “Cap”). Nothing in this Agreement (including this
Section 8.2(d)) shall limit or restrict the right of the Buyer Parties to maintain or
recover any amounts in connection with any action or claim based upon fraudulent misrepresentation
or deceit, or the breach of any covenant or agreement, or the indemnification Buyer Parties are
entitled to pursuant to Sections 8.2(a)(ii), (iii) and (iv) or Section 8.2(a)(i)
(but only with respect to breach of representations and warranties in Sections 5.2(a), 5.10(a),
5.13 and 5.17) which Losses shall not be subject to the Cap. Any party making a claim
for indemnification under Section 8.2(a) or (b) must do so in writing in the manner
specified for the giving of notices hereunder, and such notice must describe, with
reasonable specificity, the claim, the amount thereof (if known and quantifiable), and the basis
for indemnification under this Agreement.

          (e) Defense of Third Party Claims. Any party making a claim for indemnification under
this Section 8.2(e) (an “Indemnitee”) arising from any action, lawsuit, proceeding,
investigation or other claim (a “Claim”) against it by a third party, shall notify the
indemnifying party (an “Indemnitor”) of the Claim in writing promptly after receiving
written notice of it, describing, with reasonable specificity, the Claim, the amount thereof (if
known and quantifiable), and the basis for indemnification under this Agreement; provided
that the failure to so notify an Indemnitor shall not relieve the Indemnitor of its
obligations hereunder except to the extent that (and only to the extent that) such failure shall
have caused the damages for which the Indemnitor is obligated to be greater than such damages would
have been had the Indemnitee given the Indemnitor prompt notice hereunder. Any Indemnitor shall be
entitled to participate in the defense of such Claim giving rise to an Indemnitee’s claim for
indemnification at such Indemnitor’s expense, and at its option (subject to the limitations set
forth below) shall be entitled to assume the defense thereof by appointing reputable counsel
reasonably acceptable to

36

 

          the Indemnitee to be the lead counsel in connection with such defense; provided that, prior
to the Indemnitor assuming control of such defense it shall first (i) verify to the Indemnitee in
writing that such Indemnitor shall be fully responsible (with no reservation of any rights) for all
Losses relating to such claim for indemnification and that it will provide full indemnification to
the Indemnitee with respect to the Claim giving rise to such claim for indemnification hereunder,
and (ii) enter into an agreement with the Indemnitee in form and substance reasonably satisfactory
to the Indemnitee which agreement (subject to the limitations contained in Section 8.2(d))
unconditionally guarantees the payment and performance of any Losses which may arise with respect
to the Claim giving rise to such claim for indemnification hereunder; and provided
further, that:

      (A) the Indemnitee shall be entitled to participate in the defense of such
Claim and to employ counsel of its choice for such purpose; provided
that the reasonable fees and expenses of such separate counsel shall be
borne by the Indemnitee (other than any fees and expenses of such separate counsel
that are incurred prior to the date the Indemnitor effectively assumes control of
such defense which, notwithstanding the foregoing, shall be borne by the
Indemnitor);

      (B) the Indemnitor shall not be entitled to assume control of such defense and
shall pay the reasonable fees and expenses of counsel retained by the Indemnitee if
(1) the Claim for indemnification relates to or arises in connection with any
criminal proceeding, action, indictment, allegation or investigation; (2) the
Indemnitee reasonably believes an adverse determination with respect to the Claim
giving rise to such claim for indemnification would be materially detrimental to or
materially injure the Indemnitee’s reputation or future business prospects; (3) the
Claim involves the request for an injunction; or (4) the Indemnitor fails or is
failing to vigorously prosecute or defend such Claim; and

      (C) if the Indemnitor shall control the defense of any such Claim, the
Indemnitor shall obtain the prior written consent of the Indemnitee (which shall not
be unreasonably withheld) before entering into any settlement of a Claim or ceasing
to defend such Claim if, pursuant to or as a result of such settlement or cessation,
injunctive or other equitable relief will be imposed against the Indemnitee or if
such settlement does not expressly and unconditionally release the Indemnitee from
all Losses with respect to such Claim without prejudice.

          8.3 Employee and Related Matters.

          (a) Transferred Employees. As of the Closing Date and at its sole discretion, Buyer
may offer employment to all or some of the employees of Seller who are employed by Seller in the
Business at the Closing Date. The employees who accept such employment are referred to as
“Transferred Employees” in this Agreement. Nothing in this Agreement shall limit Buyer’s
ability after the Closing to modify the salary or wage level or terminate the employment of any
Transferred Employee at any time and for any reason, including without cause.

37

 

          (b) Mutual Cooperation. Subject to applicable confidentiality laws, Seller shall
provide promptly to Buyer, at Buyer’s request, any information or copies of personnel records
(including addresses, dates of birth, dates of hire and dependent information) relating to the
employees whom Buyer has indicated are likely to become Transferred Employees or relating to the
service of such employees with Seller (and predecessors of Seller, as applicable) prior to the
Closing Date. Seller and Buyer shall each cooperate with the other and shall provide to the other
such documentation, information and assistance as is reasonably necessary to effect the provisions
of this Section 8.3.

          8.4 Press Release and Announcements. Without the prior approval of the other party,
no party hereto shall disclose to the public or to any third party any information concerning the
transactions contemplated hereby, other than disclosures to its financial, legal or other advisors
and to governmental authorities as required or as may, in the reasonable opinion of counsel, be
required by law. Buyer and Seller shall cooperate in the preparation of all press releases and to
the extent practicable shall issue press releases relating to the transactions contemplated hereby
jointly. Notwithstanding the foregoing, Buyer agrees that Parent may in its sole discretion issue
a press release and may file the same with the Securities and Exchange Commission on or immediately
after the execution of this Agreement (or at any time prior thereto if its counsel shall advise
Parent that it is obligated to do so under applicable securities laws) and again on or immediately
after the Closing Date. Parent shall consult with Buyer on the substance and timing of such
releases. Buyer shall not itself make any public announcement relating to the subject matter of
this Agreement prior to Parent’s first public announcement thereof without the prior written
approval of Parent, which approval shall not be unreasonably withheld.

          8.5 Expenses. Except as otherwise provided herein, Seller, Buyer and Parent shall pay
their own fees, costs and expenses (including fees, costs and expenses of legal counsel, investment
bankers, brokers and other representatives and consultants) incurred in connection with the
negotiation of this Agreement, the performance of their obligations hereunder and consummation of
the transactions contemplated hereby.

          8.6 Further Transfers; Transition Assistance.

          (a) Seller shall execute and deliver such further instruments of conveyance and transfer and
take such additional action as Buyer may reasonably request to effect, consummate, confirm or
evidence the transfer to Buyer of the Purchased Assets, the assumption by Buyer of the Assumed
Liabilities including with respect to obtaining and maintaining all licenses, permits,
authorizations, accreditations and consents necessary or desirable in connection therewith, and
Seller shall execute such documents as may be reasonably necessary to assist Buyer in preserving or
perfecting its rights in the Purchased Assets and its ability to conduct the Business. All such
actions shall be at Buyer’s expense unless the same are caused or necessitated by a breach of any
of Seller’s or Parent’s representations, warranties, covenants or agreements herein, in which case
such actions shall be at Seller’s expense. Following the Closing, Seller and Buyer agree to
cooperate with each other and to provide each other with all information and documentation
reasonably necessary to permit the preparation and filing of all federal, state, local and other
Tax returns with respect to the Business.

38

 

          (b) From the date hereof, Seller shall not in any manner take or cause to be taken any action
which is designed or intended to discourage, or would be reasonably anticipated to have the effect
of discouraging customers, suppliers, distributors, referral sources, insurance companies,
lessors, consultants, advisors and other business associates from maintaining the same business
relationships with Buyer or the Business after the date of this Agreement as were maintained with
Seller prior to the date of this Agreement.

          8.7 Nonassignable Contracts and Permits. To the extent that the assignment hereunder
by Seller to Buyer of any Assumed Contract or Permit is not permitted or is not permitted without
the consent of any other party to such Assumed Contract, this Agreement shall not be deemed to
constitute an assignment of any such Assumed Contract or Permit if such consent is not given or if
such assignment otherwise would constitute a breach of, or cause a loss of contractual benefits
under, any such Assumed Contract or Permit, and Buyer shall assume no obligations or liabilities
under any such Assumed Contract or Permit. Seller shall use commercially reasonable efforts to
advise Buyer promptly in writing with respect to any Assumed Contract or Permit which Seller knows
or has substantial reason to believe will or may not be assignable to Buyer. Without in any way
limiting Seller’s obligation to obtain all consents and waivers necessary for the sale, transfer,
assignment and delivery of the Purchased Assets to Buyer hereunder, if any such consent is not
obtained or if such assignment is not permitted irrespective of consent and the Closing hereunder
is consummated, Seller shall cooperate with Buyer following the Closing Date in any reasonable
arrangement designed to provide Buyer with the rights and benefits (subject to the obligations)
under any such Assumed Contract or Permit, including enforcement for the benefit of Buyer of any
and all rights of Seller against any other party arising out of any breach or cancellation of any
such Assumed Contract or Permit by such other party and, if requested by Buyer, acting as an agent
on behalf of Buyer or as Buyer shall otherwise reasonably require.

          8.8 Tax Matters.

          (a) Sales and Transfer Taxes. All sales, use, excise, value-added, goods and
services, transfer, recording, documentary, registration, conveyancing and similar taxes that may
be imposed on the sale and transfer of the Purchased Assets (including any stamp, duty or other tax
chargeable in respect of any instrument transferring property and any recording fees or expenses
payable in connection with the sale and transfer of the Proprietary Rights), together with any and
all penalties, interest and additions to tax with respect thereto (collectively, “Sales and
Transfer Taxes”), shall be paid by Buyer. Buyer will, at its own expense, file all necessary
Tax Returns and other documentation with respect to all Sales and Transfer Taxes, and, if required
by applicable law, Seller will join in the execution of any such Tax Returns and other
documentation. Buyer and Seller shall cooperate in providing each other with appropriate resale
exemption certification and other similar tax and fee documentation.

          (b) Cooperation on Tax Matters. Buyer and Seller agree (i) to retain all books and
records with respect to Tax matters pertinent to the Business and the Purchased Assets relating to
any taxable period beginning before the Closing Date until thirty (30) days after expiration of the
statute of limitations (and, to the extent notified by Buyer or Seller, any

39

 

extensions thereof) of the respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (ii) to give the other party reasonable
written notice prior to transferring, destroying or discarding any such books and records and, if
the other party so requests, Buyer or Seller, as the case may be, shall allow the other party to
take possession of such books and records.

          8.9 Confidentiality Agreements. At the Closing, Seller, to the extent it is permitted
to do so, shall assign to Buyer all of its rights under all confidentiality agreements with
prospective bidders entered into in connection with the process leading to sale of the Business.
In addition, Seller shall use its commercially reasonable efforts to obtain the return or
destruction as promptly as possible of all confidential information delivered to prospective
buyers, will not release any prospective buyers from their obligations under any such
confidentiality agreements, and, at Buyer’s request, will provide Buyer with a certificate
describing the status of the return or destruction of all confidential information provided to such
prospective buyers.

          8.10 Accounts Receivable. Seller constitutes and appoints Buyer as its exclusive
agent for the purpose of collecting all of the Accounts Receivable as of the Closing Date that are
included in the Purchased Assets. Buyer is authorized and empowered, in the name and on behalf of
Seller, to take all legally permissible actions and to cause all such actions to be taken as are or
may become necessary to collect such Accounts Receivable, including the power and authority to
endorse checks, drafts and other negotiable instruments made payable to Seller, the ability to
demand and receive payments under and pursuant to the terms of letters of credit issued for the
benefit of Seller, and the ability to deposit the proceeds from each of the foregoing into an
account or accounts owned or maintained by Buyer. Buyer shall not agree with any customer to the
reduction or compromise of any amounts that were due to Seller at or prior to the Closing without
Parent’s prior written consent, which consent shall not be withheld unreasonably. All Accounts
Receivable that are included in the Purchased Assets but not collected by Buyer within one hundred
twenty (120) days following the Closing Date (the “Delinquent Accounts”) shall first be off
set against any reserve for bad debts on the books of Seller at the Closing and to the extent in
excess of that amount shall be repurchased by Seller or Parent at the full invoiced amount of such
Delinquent Account, at Parent’s option, either pursuant to a direct cash payment to Buyer or an
offset of the Seller Note. All such repurchased Delinquent Accounts shall be assigned by Buyer to
Seller. All sums received by Buyer for Delinquent Accounts repurchased by Seller shall be remitted
to Seller on a monthly basis less any outside collection fees or legal fees and expenses actually
incurred by Buyer in the collection of such Delinquent Accounts.

          8.11 Post-Closing Warranty Claims. From and after the Closing Date Buyer shall in
good faith and at its own expense pursue the satisfaction of all returns, recalls, replacements and
allowances for warranty claims under product or service warranties (collectively, “Warranty
Claims”) made by customers of the Business relating to services provided or products produced, held
or sold by Seller prior to the Closing Date against the vendor or supplier of the product or
service. In the event and to the extent that Buyer is unsuccessful in obtaining satisfaction of
such Warranty Claims against the appropriate vendor or supplier, Buyer may submit a report of such
Warranty Claims less any reserve set forth on the Closing Working Capital Schedule for warranty
claims (the “Warranty Report”) to Seller which

40

 

details the Warranty Claims as to which Buyer was unsuccessful, the efforts made to obtain
satisfaction of them from the vendor or supplier and the actual out-of-pocket costs incurred by
Buyer to satisfy such Warranty Claims (the “Warranty Claim Amount”). Seller and/or Parent
shall pay to Buyer within fifteen (15) days of receipt of the Warranty Report the Warranty Claim
Amount if and to the extent it exceeds any reserve established for warranty claims as of the
Closing Date and reflected on the Closing Working Capital Schedule.

          8.12 Name. Seller understands that, subsequent to the Closing, Buyer shall have all
of Sellers’ and Parent’s right to use the name “Steel City Products” and that such name is included
in the Purchased Assets hereunder.

          8.13 Covenant Not to Compete; Covenant Not to Solicit. In addition to the covenants
and obligations set forth in the Noncompetition Agreements, which shall in no way be limited by the
provisions of this Section 8.13, each of Seller and Parent hereby agree as follows:

          (a) It will not, without the express written approval of Buyer, anywhere in the Market,
directly or indirectly, in one or a series of transactions, own, manage, operate, control, invest
or acquire an interest in, or otherwise engage or participate in, whether as a proprietor, partner,
joint venturer, investor, lessor, agent, representative or other participant, any Competitive
Business, without regard to (i) whether the Competitive Business has an office, manufacturing or
other business facilities within or without the Market, or (ii) whether any of the activities
referred to above occur or are performed within or without the Market; provided,
however, that Seller and Parent may, directly or indirectly, in one or a series of
transactions, own, invest or acquire an interest in up to two percent (2%) of the capital stock of
a corporation whose capital stock is traded publicly and that is in or owns a Competitive Business.

          (b) It will not without the express prior written approval of Buyer (i) directly or
indirectly, in one or a series of transactions, recruit, solicit or otherwise induce or influence
any officer, employee, sales agent, supplier, customer, food broker, representative or any other
person, firm or entity which has a business relationship with the Business or had a business
relationship with the Business within the six (6) month period preceding the date of the incident
in question, to discontinue, reduce or adversely modify such employment, agency or business
relationship with the Business, or (ii) employ or seek to employ or cause any Competitive Business
to employ or seek to employ any person who is then (or was at any time within six (6) months prior
to the date it or the Competitive Business employs or seeks to employ such person) employed or
retained by the Business.

          (c) If, at the time of enforcement of any of the provisions of this Section 8.13, a
court determines that the restrictions stated herein are unreasonable under the circumstances then
existing, then the parties hereto agree that the maximum period, scope or geographical area
reasonable under the circumstances shall be substituted for the stated period, scope or area. The
parties further agree that such court shall be allowed to revise the restrictions contained herein
to cover the maximum period, scope or geographical area permitted by law.

          (d) If Seller or Parent (the “Restricted Persons”) breaches, or threatens to commit a
breach of any of the provisions of this Section 8.13 (the “Restrictive Covenants”),

41

 

Buyer shall have the following rights and remedies, each of which rights and remedies shall be
independent of the others and severally enforceable, and each of which is in addition to, and not
in lieu of, any other rights and remedies available to Buyer at law or in equity:

      (i) the right and remedy to have the Restrictive Covenants specifically enforced by any
court of competent jurisdiction, it being agreed that any breach or threatened breach of the
Restrictive Covenants could cause irreparable injury to Buyer and that money damages would
not provide an adequate remedy to Buyer; and

      (ii) the right and remedy to require the Restricted Persons to account for and pay over
to Buyer any profits, monies, accruals, increments or other benefits derived or received by
the Restricted Persons as the result of any transactions constituting a breach of the
Restrictive Covenants.

          (e) For purposes of this Section 8.13, the following terms shall have the meanings set
forth below:

	 	(i)	 	“Business” means the sale and distribution of
automotive accessories, pet products, lawn and garden items and like items.
	 
	 	(ii)	 	“Competitive Business” means any business which
competes, directly or indirectly, with the Business in the Market.
	 
	 	(iii)	 	“Market” means any county in the United States of
America and each similar jurisdiction in any other country in which the
Business was conducted or pursued, or engaged in, by Seller or any predecessor
within five (5) years prior to the date hereof or is conducted or engaged in or
actively pursued by the Buyer at any time during the Restricted Period.
	 
	 	(iv)	 	“Restricted Period” means the period commencing on the
Closing Date and continuing through the fifth anniversary of the Closing Date;
provided, however, that the Restricted Period shall be extended by any period
of violation of the restrictions set forth in this Section 8.13.

          8.14 Inventory. On the first anniversary of the Closing Date, the remaining principal
balance of the Seller Note shall be reduced by the sum of (a) the lesser of (i) eighty percent
(80%) of the value of any Inventory included on the Closing Working Capital Schedule and
specifically set forth on Schedule 8.14 that has not been sold, or (ii) $130,000, and (b)
interest paid on the Seller Note from and after the Closing Date attributable to the amount of the
principal reduction in (a) above.

          8.15 Set-Off Right. The Buyer Parties shall be entitled to (but shall not be required
to) set off any amounts that are finally determined by agreement of the parties, or failing such
agreement, by the final, non-appealable decision of a court of competent jurisdiction to be due or
payable to any of the Buyer Parties by Seller or Parent pursuant to this Agreement (including
Section 8.2) against any amounts otherwise due and payable by any of the Buyer

42

 

Parties or any of their Affiliates to Seller or Parent, including any amounts due under the Seller
Note.

          8.16 Terrance Allan. Neither Seller, Parent nor any Affiliate of either shall offer
to pay or pay Terrance Allan any form of consideration triggered by or contingent upon his
termination of employment with Buyer for any reason whatsoever.

ARTICLE IX

MISCELLANEOUS

          9.1 Amendment and Waiver. This Agreement may be amended, or any provision of this
Agreement may be waived; provided that any such amendment or waiver shall be
binding upon Seller and Parent only if set forth in a writing executed by Seller and referring
specifically to the provision alleged to have been amended or waived, and any such amendment or
waiver shall be binding upon Buyer only if set forth in a writing executed by Buyer and referring
specifically to the provision alleged to have been amended or waived. No course of dealing between
or among the parties shall be deemed effective to modify, amend or discharge any part of this
Agreement or any rights or obligations of any party under or by reason of this Agreement and a
waiver of any provision by any party on one occasion shall not be deemed to be a waiver of the same
or any other breach on any other occasion.

          9.2 Notices. All notices, demands and other communications to be given or delivered
under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to
have been given (a) when personally delivered, sent by facsimile or sent by reputable overnight
express courier (charges prepaid), or (b) four (4) days following mailing by certified or
registered mail, postage prepaid and return receipt requested. Unless another address is specified
in writing pursuant to this section, notices, demands and communications to Seller and Buyer shall
be sent to the addresses indicated below:

Notices to Seller or Parent:

Sterling Construction Company, Inc.

20810 Fernbush Lane

Houston, TX 77073

Attention: Chief Financial Officer

In each case with a copy to:

(which shall not constitute notice to Seller or Parent)

Roger M. Barzun, Esq.
 60 Hubbard Street

Concord, MA 01742

43

 

Notices to Buyer:

William R. Bollin

Chairman – CEO

The Bostwick-Braun Company

P.O. Box 986

Toledo, Ohio 43697

Telecopy No. (419) 259-3622

In each case with a copy to:

(which shall not constitute notice to Buyer):

David F. Waterman, Esq.

Shumaker, Loop & Kendrick, LLP

1000 Jackson Street

Toledo, Ohio 43604-5573

Telecopy No. (419) 241-6894

          9.3 Assignment.

          (a) This Agreement and all of the provisions hereof shall 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 or
delegated by Buyer or Seller, as the case may be, without the prior written consent of the other
party.

          (b) Notwithstanding the foregoing, (i) Buyer may (at any time prior to the Closing), in its
sole discretion, assign in whole or in part its rights and obligations pursuant to this Agreement
(including the right to purchase the Purchased Assets and the obligation to assume the Assumed
Liabilities) to one or more of its Affiliates, and Buyer may, in its sole discretion, direct Seller
to convey the Purchased Assets, in whole or in part, to such Affiliates, in each case provided that
Buyer agrees to remain liable for all of Buyer’s obligations hereunder; (ii) Buyer may assign this
Agreement and its rights and obligations hereunder, including its rights and obligations under any
agreement executed by Buyer pursuant to the terms of this Agreement, in whole or in part, in
connection with a merger or consolidation involving Buyer or in connection with a sale of any stock
or assets of Buyer or its Affiliates or other disposition of all or any portion of the Business;
provided, that Buyer may not assign its obligations hereunder unless Buyer also remains responsible
therefor or the assignee is at least as creditworthy as Buyer; and (iii) Buyer may assign any and
all of its rights pursuant to this Agreement, including its rights to indemnification, to any of
its lenders as collateral security.

          9.4 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement or the application of any such provision to any person or circumstance shall be
held to be prohibited by or invalid, illegal or unenforceable under applicable law in any respect
by a court of competent jurisdiction, such provision shall be

44

 

ineffective only to the extent of such prohibition or invalidity, illegality or unenforceability,
without invalidating the remainder of such provision or the remaining provisions of this Agreement.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added
automatically as a part of this Agreement a legal, valid and enforceable provision as similar in
terms to such illegal, invalid, or unenforceable provision as may be possible.

          9.5 Entire Agreement. This Agreement and the agreements and documents referred to
herein contain the entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and supersede all prior agreements and understandings, whether written or
oral, relating to such subject matter in any way (including the letter of intent, dated August 22,
2006, between Buyer and Seller).

          9.6 Counterparts. This Agreement may be executed in one or more counterparts
(including by means of telecopied signature pages), all of which shall be considered one and the
same agreement, and shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other party. This Agreement when signed by a party may be
delivered by telecopier or other facsimile transmission with the same force and effect as if an
original manually signed counterpart had been delivered.

          9.7 Governing Law. The law of the State of Delaware shall govern all questions
concerning the construction, validity, interpretation and enforceability of this Agreement and the
exhibits and schedules attached hereto, and the performance of the obligations imposed by this
Agreement, without giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware.

          9.8 Specific Performance. Each of the parties acknowledges and agrees that the other
party could 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. Accordingly, each of
the parties agrees that the other party shall be entitled to an injunction or injunctions to
prevent breach of the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any action instituted in any court of the United States of
America or any state thereof having jurisdiction over the parties and the matter, in addition to
any other remedy to which they may be entitled at law or in equity.

          9.9 No Third-Party Beneficiaries. This Agreement is for the sole benefit of the
parties hereto and their permitted assigns and nothing herein expressed or implied shall give or be
construed to give any person or entity, other than the parties hereto and such permitted assigns,
any legal or equitable rights hereunder.

          9.10 Bulk Transfer and Similar Laws. Buyer hereby waives compliance by Seller with
the provisions of Section 1403 of the Pennsylvania Fiscal Code and of any so-called bulk transfer
laws of any jurisdiction in connection with the sale of the Purchased Assets. Seller agrees to
indemnify Buyer against all liability, damage or expense which Buyer may suffer due to the failure
to so comply or to provide notice required by any such law.

45

 

          9.11 Qualification; Tax Matters. Buyer acknowledges the disclosure by Seller and
Parent that Seller is not qualified to do business in any state other than Pennsylvania
notwithstanding its employment of sales personnel in Michigan, Ohio, New York and Kentucky, and
that Seller does not pay franchise, income and other taxes to New York or Kentucky, although
payroll taxes are paid to such states. However, such disclosure, and Buyer’s knowledge thereof,
shall not affect any of the rights of Buyer to indemnification under Article VIII if and to the
extent any of the Buyer Parties would be entitled to such indemnification for Losses thereunder.

[THE REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

46

 

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date and year first written above.

	 	 	 	 	 	 	 
	THE BOSTWICK-BRAUN COMPANY	 	STEEL CITY PRODUCTS, LLC
	 	 	 	 	By: 	Sterling Construction Company, Inc.,

Its Sole Member
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Its:

	 	 	 	Its:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	STERLING CONSTRUCTION
COMPANY, INC.	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Its:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

47

 

SCHEDULE 1.2

Working Capital Commitment

Balances as of June 30, 2006

	 	 	 	 	 
	Trade
Accounts Receivable — Net
	 	$	3,121,734	 
	Inventories
	 	 	5,480,969	 
	Prepaid Assets
	 	 	72,873	 
	 
	 	 	 	 
	Less: Trade Accounts Payable
	 	 	(3,106,925	)
	Less: Accrued cooperative advertising allowances
	 	 	(60,590	)
	 
	 	 	 
	 
	 	 	 	 
	Working Capital Commitment
	 	$	5,508,061	 
	 
	 	 	 

48exv10w15

 

CONFIDENTIAL

CERTAIN INFORMATION HAS BEEN REDACTED

CONFIDENTIAL TREATMENT REQUESTED

Exhibit 10.15

CROSS LICENSE AGREEMENT

     This Cross License Agreement (“Cross License”), dated as of September 1, 2005 (“Effective
Date”), is made by and between Intuitive Surgical, Inc., a Delaware corporation having its
principal place of business at 950 Kifer Road, Sunnyvale, California 94086, (“ISI”), and Hansen
Medical, Inc., a Delaware corporation having its principal place of business at 380 North Bernardo
Avenue, Mountain View, California 94043 (“Hansen”). Hansen and ISI may be referred to herein
individually as a “Party”, and collectively as the “Parties”.

RECITALS

     WHEREAS, ISI and Hansen each owns or controls rights under various patents, utility models and
applications therefor in various countries of the world with respect to the medical devices
industry; and

     WHEREAS, each Party desires to acquire licenses under such patents, utility models and
applications therefor of the other Party and to grant licenses under such patents and utility
models and applications therefor to the other Party, all for specific purposes and as provided in
and subject to the terms of this Cross License.

     NOW, THEREFORE, in consideration of the mutual covenants and premises contained herein, the
Parties agree as follows:

     1. DEFINITIONS

     As used in this Cross License, the following capitalized terms shall have the following
meanings:

          1.1 “Acquisition” means (A) any consolidation or merger of a Party with or into any
other corporation or other entity or person, or any other corporate reorganization, other than any
such consolidation, merger or reorganization in which the stockholders of a Party immediately prior
to such consolidation, merger or reorganization, continue to hold at least a majority of the voting
power of the surviving entity in substantially the same proportions (or, if the surviving
entity is a wholly owned subsidiary, its parent) immediately after
such consolidation, merger
or reorganization; or (B) any transaction or series of related transactions to which a Party is a
party in which in excess of fifty percent (50%) of such Party’s voting power is transferred;
provided that an Acquisition shall not include any transaction or series of transactions
principally for bona fide equity financing purposes in which cash is received by such Party or any
successor or indebtedness of such Party is cancelled or converted or a combination thereof.

          1.2 “Affiliate” means, with respect to a Party, any entity that controls, is
under

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

1

 

CONFIDENTIAL

CERTAIN INFORMATION HAS BEEN REDACTED

CONFIDENTIAL TREATMENT REQUESTED

common control with, or is controlled by, such Party. For the purposes of this definition, the
term “control” (with correlative meanings for the terms “controlled by” and “under common control
with”) means that the applicable entity: (a) has beneficial ownership of greater than fifty percent
(50%) of the voting securities of the subject corporation or other business organization with
voting securities, (b) has greater than a fifty percent (50%) interest in the net assets or profits
of the subject partnership or other business organization without voting securities, or (c) has the
actual ability (through contract or otherwise) to direct and control the management and general
business activities of the subject corporation, partnership or other business organization.

          1.3 “Applicable Law” means, as to any Person, any statute, law, rule, regulation,
directive, treaty, judgment, order, decree or injunction of any Governmental Authority that is
applicable to or binding upon such Person or any of its properties.

          1.4 “Asset Transfer” shall mean a sale, lease, exclusive license or other disposition
of all or substantially all of the assets of a Party.

          1.5 “CIP” means a continuation-in-part patent application as defined in Section 201.08
of the Manual of Patent Examining Procedures.

          1.6 “Co-exclusive” means, with respect to the grant of license rights in a specified
field of use and under identified intellectual property owned or controlled by the licensor, (a)
that such license is the sole license under such intellectual property in such field of use, (b)
that the licensor covenants that it and its Affiliates shall not grant to any other entity or
party, any license or similar rights in such field of use under such licensor intellectual property
(or any part thereof), including any license under such intellectual property to make, have made,
use, offer for sale, sell, distribute and import products within the specified field of use (but
provided that the foregoing shall not prevent licensor from granting (or impliedly granting) such
rights solely to customers of licensor products that are covered by the applicable patent rights
and solely to the extent required for such customers to use, re-sell, export and/or import such
products), and (c) that the licensor retains the rights to use and practice such intellectual
property in such field of use for its own account (i.e., despite the grant to the licensee, the
licensor is not prevented from making, having made, using, marketing, offering for sale, selling,
importing, distributing (directly or indirectly) or otherwise exploiting its products or services
in the specified field of use under such intellectual property.)

          1.7 “Effective Date” shall have the meaning set forth in the Preamble of this Cross
License.

          1.8 “Governmental Authority” means any domestic or foreign government, governmental
authority, court, tribunal, agency or other regulatory, administrative or judicial agency,
commission or organization, and any subdivision, branch or department of any of the foregoing.

          1.9 “Hansen Disposable” has the meaning set forth in Section 3.3(b).

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

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          1.10 “Hansen Field of Use” means the research, development, manufacture, use, sale,
promotion, distribution and importation of medical devices and systems for intravascular approaches
for the diagnosis and/or treatment of cardiovascular, neurovascular and peripheral vascular
diseases.

          1.11 “Hansen Know-How” means the information disclosed to ISI by Hansen prior to the
Effective Date, but excluding all information disclosed in the Hansen Patents.

          1.12 “Hansen Investors Rights Agreement” shall have the meaning set forth in Section
3.2.

          1.13 “Hansen Patent” means: (a) any patent or patent application that has a filing
date on or prior to the Effective Date and that is either (i) owned by Hansen or an Affiliate of
Hansen, or (ii) licensed to Hansen or an Affiliate of Hansen, with the right to grant sublicenses
under such patents and patent applications; (b) any divisional, continuation, or
continuation-in-part (but only to the extent of claims in such CIP that are based on and enabled by
the subject matter disclosed in a patent or patent application meeting the criteria of subclause
(a) above) application that is based upon the patents or patent applications in subclause (a)
above, and all foreign patent applications claiming priority from any of the foregoing patents and
patent applications; and (c) any patent issuing on any of the foregoing applications, and including
any reissue, re-examination, renewal, extension, or supplementary protection certificate (or the
like) of any such patent. Notwithstanding the foregoing, if a patent or patent application that
would otherwise qualify as a Hansen Patent under this Section 1.13 is subject to an agreement
between Hansen (or a Hansen Affiliate) and a third party requiring Hansen (or a Hansen Affiliate)
to pay a royalty, net sales payment, or other consideration to such third party as a result of the
practice of the licensed rights, then such patent or patent application shall be included in the
Hansen Patents only if ISI agrees to bear the cost of such royalty, net sales payment, or other
consideration that Hansen (or a Hansen Affiliate) is obligated to pay under such agreement based on
ISI’s use or practice of such patent rights. For clarity, the term “Hansen Patent” shall not
include any patent or application (x) that is owned or controlled by an entity that is not an
Affiliate of Hansen as of the Effective Date and that subsequently becomes an Affiliate of Hansen;
or (y) rights to which Hansen acquires from a third party after the Effective Date, whether by
merger, acquisition, asset purchase, license or otherwise.

          1.14 “Hansen Royalty Product” means either a Hansen System Product or a Hansen
Disposable.

          1.15 “Hansen System Product” has the meaning set forth in Section 3.3(a).

          1.16 “Hansen Trade Secret” means any particular, identifiable Hansen Know-How that is
and remains, at the applicable time, an actual trade secret of Hansen, but excluding any Hansen
Know-How that is retained in the unaided memory of an ISI employee.

          1.17 “Insolvent Party” has the meaning set forth in Section 5.3.

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

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          1.18 “ISI Field of Use” means (a) the research, development, manufacture, use, sale,
promotion, distribution and importation of medical devices and systems for use in endoscopic,
laparoscopic, thoracoscopic or open diagnosis and/or surgical procedures, including, without
limitation, urologic surgery, ENT surgery, gynecologic surgery, general surgery, thoracic and
cardiovascular surgery; and (b) the research, development, manufacture, use, sale, promotion,
distribution and importation of medical devices and systems for gastrointestinal, respiratory, ENT,
urologic and gynecologic endoluminal diagnosis and/or surgery. For clarity, the research,
development, manufacture, use, sale, promotion, distribution and importation of medical devices and
systems for intravascular approaches for the diagnosis and/or treatment of cardiovascular,
neurovascular and peripheral vascular diseases are expressly excluded from the “ISI Field of Use”.

          1.19 “ISI Know-How” means the information disclosed to Hansen by ISI prior to the
Effective Date (including without limitation information retained in the unaided memory of [*],
obtained during their prior employment by ISI), but excluding all information disclosed in the ISI
Patents.

          1.20 “ISI Licensed Product” means a product or service manufactured or sold by ISI
that embodies, falls within the scope of, or is made using a method described in, any Valid Claim
of a Hansen Patent.

          1.21 “ISI Patent” means: (a) any patent or patent application that has a filing date
on or prior to the Effective Date, is either (i) owned by ISI or an Affiliate of ISI, or (ii)
licensed to ISI or an Affiliate of ISI, with the right to grant sublicenses under such patents and
patent applications; (b) any divisional, continuation, or continuation-in-part (but only to the
extent of claims in such CIP that are based on and enabled by the subject matter disclosed in a
patent or patent application meeting the criteria of subclause (a) above) application that is based
upon the patents or patent applications in subclause (a) above, and all foreign patent applications
claiming priority from any of the foregoing patents and patent applications; and (c) any patent
issuing on any of the foregoing applications, and including any reissue, re-examination, renewal,
extension, or supplementary protection certificate (or the like) of any such patent.
Notwithstanding the foregoing, if a patent or patent application that would otherwise qualify as an
ISI Patent under this Section 1.18 is subject to an agreement between ISI (or an ISI Affiliate) and
a third party requiring ISI (or an ISI Affiliate) to pay a royalty, net sales payment, or other
consideration to such third party as a result of the practice of the licensed rights, then such
patent or patent application shall be included in the ISI Patents only if Hansen agrees to bear the
cost of such royalty, net sales payment, or other consideration that ISI (or an ISI Affiliate) is
obligated to pay under such agreement based on Hansen’s use or practice of such patent rights. For
clarity, the term “ISI Patent” shall not include any patent or application (x) that is owned or
controlled by an entity that is not an Affiliate of ISI as of the Effective Date and that
subsequently becomes an Affiliate of ISI; or (y) rights to which ISI acquires from a third party
after the Effective Date, whether by merger, acquisition, asset purchase, license or otherwise.

          1.22 “ISI Trade Secret” means any particular, identifiable ISI Know-How that is and
remains, at the applicable time, an actual trade secret of ISI, but excluding any ISI Know-

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

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How that is retained in the unaided memory of a Hansen employee.

          1.23 “Materials Cost” means the sum of the following amounts paid by Hansen to a third
party, all of which shall be calculated in accordance with U.S. generally accepted accounting
principles consistently applied:

               (a) raw materials and packaging materials for producing the Hansen Products,

               (b) manufacturing, packaging, and/or sterilizing Hansen Products or any component thereof, and

               (c) with respect to the foregoing, all taxes (other than income taxes) and customs duty
charges imposed by governmental authorities with respect thereto, to the extent paid by Supplier
and not reimbursed or refunded by a third party.

          1.24 “Net Sales,” with respect to a Hansen Royalty Product, means the actual amounts
invoiced by Hansen or its distribution Affiliates to its respective customers or non-Affiliate
distributors (excluding internal sales or transfers to Hansen’s distribution Affiliates that
further distribute the product) on the sale or other commercial disposition of such Hansen Royalty
Product (and including any amounts of installation charges that are in excess of normal and
customary installation charges for similar products), less the sum of the following deductions: (a)
discounts, returns, promotional allowances, volume and incentive rebates, chargebacks, retroactive
price reductions and other similar adjustments or allowances actually given to such customers in
the normal course of business; (b) sales or use taxes, excise taxes, value-added taxes, and
customs duties and other governmental charges included in the invoiced amount; and (c) normal and
customary outbound transportation, shipping, and insurance, prepaid or allowed, if separately
itemized on the invoice to the customer, all of the foregoing accounted for under U.S. Generally
Accepted Accounting Principles as included in Hansen’s audited financial statement. Notwithstanding
the foregoing, in the case of disposition of the product to an Affiliate of Hansen (excluding
internal sales or transfers to Hansen’s distribution Affiliates that further distribute such
product), Net Sales will be the sales price of such product generally available to an unaffiliated
third party in an arms length transaction making similar quantity commitments at similar times.

          1.25 “Person” means a natural individual, Governmental Authority, partnership, firm,
corporation or other entity.

          1.26 “Valid Claim” means a claim of an issued or granted unexpired patent, which claim
has not been declared invalid or unenforceable by an un reversed decision or judgment of a court of
competent jurisdiction or other appropriate governmental authority from which no further appeal can
be taken, and which claim has not been admitted to be invalid through disclaimer, or found to be
unenforceable or no longer patentable through reissue, reexamination, interference, or opposition.

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

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          1.27 “Year” shall mean each twelve (12) month period beginning on the Effective Date
and thereafter on the anniversary date thereof.

          1.28 “Share Transfer Agreement” has the meaning set forth in Section 3.1.

          1.29 “Term” has the meaning set forth in Section 5.1.

     2. GRANT OF LICENSES

          2.1 Cross Licenses.

               (a) From ISI to Hansen. Subject to the terms and conditions of this Cross License, ISI hereby
grants to Hansen a Co-exclusive, worldwide, perpetual (except as provided in Article 5 herein),
royalty-bearing, and non-assignable (except as provided in Section 9.1 herein) license under the
ISI Patents to use and practice all inventions claimed therein solely in the Hansen Field of Use,
including to make, have made, use, promote, offer for sale, import and sell Hansen Royalty Products
in the Hansen Field of Use. Hansen will have the right to sublicense such rights solely in
accordance with Section 2.4.

               (b) From Hansen to ISI. Subject to the terms and conditions of this Cross License, Hansen
hereby grants to ISI a Co-exclusive, worldwide, perpetual (except as provided in Article 5 herein),
fully paid and royalty-free (except as provided in Section 1.11 herein), and non-assignable (except
as provided in Section 9.1 herein) license under the Hansen Patents to use and practice all
inventions claimed therein solely in the ISI Field of Use, including to make, have made, use,
promote, offer for sale, import and sell ISI Licensed Products solely in the ISI Field of Use. ISI
will have the right to sublicense such rights solely in accordance with Section 2.4.

          2.2 Know-How License From ISI to Hansen. Subject to the terms and conditions of this
Cross License, ISI hereby grants to Hansen a non-exclusive, worldwide, perpetual (except as
provided in Article 5 herein), fully-paid, royalty-free, and non-assignable (except as provided in
Section 9.1 herein) license (a) to use and practice all the ISI Know-How (including ISI Trade
Secrets (if any)) solely in connection with the research, development, manufacture, promotion, use,
import and sale of Hansen products in the Hansen Field of Use, and (b) to use and practice any ISI
Know-How that are not ISI Trade Secrets in connection with the research, development, manufacture,
promotion, use, import and sale of Hansen products outside the Hansen Field of Use. Hansen shall
have the right to sublicense such rights solely to customers of Hansen products solely in
connection with the sale and use of such products, and to collaborators of Hansen assisting in
developing Hansen products in the Hansen Field of Use provided such collaborators have a need to
know such ISI Know-How for the purposes of such collaboration and who execute a confidentiality
agreement with terms at least as protective as the terms of Section 6.5.

          2.3 Know-How License From Hansen to ISI. Subject to the terms and conditions of this
Cross License, Hansen hereby grants to ISI a non-exclusive, worldwide,

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

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perpetual (except as provided in Article 5 herein), fully-paid, royalty-free, and
non-assignable (except as provided in Section 9.1 herein) license (a) to use and practice all the
Hansen Know-How (including Hansen Trade Secrets (if any)) solely in connection with the research,
development, manufacture, promotion, use, import and sale of ISI products in the ISI Field of Use,
and (b) to use and practice any Hansen Know-How that are not Hansen Trade Secrets in connection
with the research, development, manufacture, promotion, use, import and sale of ISI products
outside the ISI Field of Use. ISI shall have the right to sublicense such rights solely to
customers of ISI products solely in connection with the sale and use of such products, and to
collaborators of ISI assisting in developing ISI products in the ISI Field of Use provided such
collaborators have a need to know such Hansen Know-How for the purposes of such collaboration and
who execute a confidentiality agreement with terms at least as protective as the terms of Section
6.5.

          2.4 Sublicensing. Neither Party may sublicense any of the rights and licenses granted
to it under Section 2.1 to any third party without the prior written consent of the other party.
Either Party may request the other Party’s consent to grant it the right to sublicense the rights
and licenses granted in Section 2.1 to such Party’s partners with whom such Party is involved in
joint product development, and the Party receiving such request will reasonably consider it and
will not unreasonably withhold such consent. Notwithstanding any of the foregoing, ISI’s consent
shall not be required for Hansen to sublicense any of the rights and licenses granted to it under
Section 2.1 solely to customers of Hansen products that are covered by the applicable patent rights
and solely to the extent required for such customers to use, re-sell, export and/or import such
products, and Hansen’s consent shall not be required for ISI to sublicense any of the rights and
licenses granted to it under Section 2.1 solely to customers of ISI products that are covered by
the applicable patent rights and solely to the extent required for such customers to use, re-sell,
export and/or import such products.

          2.5 Retained Rights. For clarity, none of the licenses granted in Sections 2.1 through
2.4 shall restrict (a) Hansen from itself using and practicing all inventions claimed in the Hansen
Patents in any field of use and (b) ISI from itself using and practicing all inventions claimed in
the ISI Patents in any field of use.

          2.6 Disclosure of Patent Files. Each Party shall, to the extent such disclosure has
not already been made, provide to the other Party within [*] days after the Effective Date complete
and accurate copies of all unpublished patent applications as filed owned or licensed by such Party
as of the Effective Date. Further, each Party shall respond accurately to reasonably requests by
the other Party to provide updates as to the status of the prosecution of applications in the ISI
Patents or Hansen Patents (as applicable) and to provide copies of any newly filed applications in
the ISI Patents or Hansen Patents (as applicable).

          2.7 Compliance with Sublicense Obligations. Hansen covenants that it shall comply with
any applicable terms of any license agreement between ISI and a third party that grant to ISI
license rights under the third party’s patents, which patents are ISI Patents that sublicensed to
Hansen under the terms of this Cross License. ISI covenants that it shall comply with any
applicable terms of any license agreement between Hansen and a third party that grant

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

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to Hansen license rights under the third party’s patents, which patents are Hansen Patents
that sublicensed to ISI under the terms of this Cross License.

     3. CONSIDERATION

          3.1 Stock Transfer. In consideration of the rights and licenses granted by ISI to
Hansen under this Cross License, Hansen will issue to ISI Five Hundred Thousand (500,000) shares of
Hansen’s Series B Preferred Stock pursuant to and in accordance with the terms of the Share
Transfer Agreement entered into by the Parties, the form of which is set forth in Exhibit A.

          3.2 Investor Rights. ISI shall within five (5) business days after the Effective Date,
enter into an Amended and Restated Investor Rights Agreement among Hansen, ISI and the other
preferred stockholders of Hansen (the “Hansen Investor Rights Agreement”) in substantially the form
attached as Exhibit B.

          3.3 Royalty. In consideration of the rights and licenses granted by ISI to Hansen
under Section 2.1(a) of this Cross License, Hansen shall pay ISI:

               (a) Royalties of [*] of the Net Sales of all Hansen hardware products (including proprietary
Hansen software components) comprising imaging, guidance or catheter control systems for use in the
Hansen Field of Use (collectively, “Hansen System Products”) during the Term; and

               (b) Royalties, at a royalty rate of ranging from [*] to [*] on the Net Sales of all [*] used
in the Hansen Field of Use [*], including, without limitation, [*]

                    (i) [*]

                    (ii) [*]

                    (iii) [*]; or

                    (iv) [*]

               (c) The Parties hereby acknowledge and agree that the foregoing method of calculating
royalties due under this Cross License shall apply to all Hansen Royalty Products as specified in
this Section 3.3, without regard to whether such any such Hansen Royalty Product embodies or
practices any of the claims of the ISI Patents. The Parties further agree that this method of
calculating royalties is more convenient for the Parties than attempting to resolve the question of
whether each particular Hansen Royalty Product sold does, or does not, embody or practice any claim
of the ISI Patents.

          3.4 Minimum Royalties. Hansen will pay ISI yearly license minimum royalties as
follows:

               (a) Until
the end of 2 years after the Effective Date, no minimum royalties are due.

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

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          (b) Every
year thereafter, the minimum royalty is $[*] per year.

     The minimum royalty payments are nonrefundable, but they are creditable against royalty
payments due pursuant to Section 3.3 until the entire credit is
exhausted. The yearly minimum
royalties will be paid in equal quarterly installments.

     4. ACCOUNTING AND REPORTS

          4.1 Payments and Royalty Reports. Hansen shall make royalty payments to ISI in
accordance with Section 3 above on a quarterly basis. Within [*] days after the end of each
calendar quarter during the Term, after commercial sales of Hansen Royalty Products has commenced,
Hansen shall deliver to ISI a written report setting forth the total number of units of the Hansen
Royalty Products sold or otherwise commercially disposed (or, if appropriate, indicating that no
Hansen Royalty Product was sold during such calendar quarter) and a calculation of the royalties
owed to ISI hereunder for the applicable quarterly period. If no royalties are due hereunder in any
calendar quarter, Hansen shall so indicate in its written report. Hansen shall accompany such
written report with an appropriate payment of royalty due for such quarterly period.

          4.2 Overdue Payments. If payment of any amount due to ISI becomes overdue, ISI may,
without prejudice to its other rights or remedies, charge interest on a day to day basis from the
due date until the payment has been paid in full, at the rate of one percent (1.0%) per month or,
if less, such other rate as may be the maximum permitted by law. Hansen shall not be entitled to
withhold payment in whole or in part on the grounds that it has a claim, counterclaim or set off
against ISI.

          4.3 Taxes. Hansen shall be permitted to deduct from payments made by Hansen to ISI
under this Cross License any foreign or domestic governmental taxes or charges of any kind that
Hansen may be required by law to withhold from such payments. Hansen shall use commercially
reasonable efforts to minimize any such taxes or charges. Hansen shall provide ISI with official
receipts issued by the appropriate taxing authority, or such other evidence as is reasonably
requested by ISI to establish that such taxes or charges have been paid. If, on the other hand, ISI
has the legal obligation to collect such taxes, then ISI alone shall be responsible for paying such
amount.

          4.4 Books And Records; Audit. Hansen will keep complete and accurate books and records
showing the information by which Hansen arrived at a royalty determination and shall, during the
Term and for a period of three (3) years after termination of this Cross License, permit a mutually
agreed auditor from a nationally recognized firm to inspect and copy said records as such auditor
may deem necessary to complete the inspection (but not to exceed one (1) inspection per year and no
more than one (1) inspection of records covering any particular time period) solely to verify the
accuracy of Hansen’s royalty reports. Such inspection may be made by ISI hereunder at any time and
from time to time during regular business hours upon at least five (5) business days’ advance
written notice. The fees and expenses of such inspection shall be borne by ISI, except that, if an
underpayment in royalties of more than five

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

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percent (5%) of the total royalties due to ISI hereunder for any payment period is discovered,
then such fees and expenses shall be borne by Hansen. If ISI agrees to pay a Hansen licensor
royalty or other amounts for the sublicense to ISI of Hansen Patents that are licensed to Hansen,
then the above records and audit provisions will apply to ISI mutatis mutandis as to ISI products
covered by such Hansen Patents.

     5. TERM AND TERMINATION

          5.1 Term. This Cross License shall commence on the Effective Date and shall continue
in effect until the expiration of the last to expire of the ISI Patents and the Hansen Patents,
(“Term”), unless earlier terminated in accordance with the following provisions of this Section 5.
Upon such expiration, the license rights granted in Sections 2.3 and 2.4 shall survive.

          5.2 Material Breach.

               (a) If either Party believes that the other Party is in material breach of this Agreement,
then such Party may deliver notice of such alleged breach to the other Party. In such written
notice, the noticing Party shall identify the actions or conduct that such Party would consider to
be an acceptable cure of such breach. The Party receiving such notice shall use diligent efforts to
cure such breach as soon as practicable after receiving such written notice to cure such breach,
unless such Party believes that it is not in breach, in which case the Parties shall meet promptly
thereafter and discuss in good faith the issue and seek to reach a resolution mutually acceptable
to both Parties. If the allegedly breaching Party fails to cure such noticed breach, then, except
as otherwise provided in subsection (b) or in Section 5.3 below, the noticing Party shall not be
permitted to terminate this Agreement (and each Party covenants and agrees that the Party shall not
seek, in any court or other proceeding, to terminate the Agreement as a remedy except as permitted
in subsection (b) or Section 5.3 below), but may seek and obtain all other remedies as are
available to such Party at law or in equity pursuant to Section 5.7 below, if such breach is proved
to have occurred and not have been cured.

               (b) If Hansen breaches its obligation to pay royalties as required in Section 3.3, or to pay
royalties to a licensor of ISI as contemplated in Section 1.18 for patent rights sublicensed to
ISI, then ISI may deliver notice of such breach to Hansen, specifying the amount that is owed and
the basis for ISI’s belief that such amounts are owed and past-due. If ISI breaches its obligation
to pay royalties to a licensor of Hansen as contemplated in Section 1.13 for patent rights
sublicensed to ISI, then Hansen may deliver notice of such breach to ISI, specifying the amount
that is owed and the basis for Hansen’s belief that such amounts are owed and past-due. If Hansen
or ISI disputes that such amount is actually owed, such dispute shall be resolved (a) by the
auditor selected pursuant to Section 4.4, if such dispute is solely as to the amount of royalties
owed, and not as to whether there is a royalty obligation for particular products at issue, or (b)
by litigation in court in accordance with Section 9.3. The following sentence shall not apply
unless and until such dispute is resolved in the non-breaching Party’s favor, and the breaching
Party does not pay the amount determined to be owed within [*] days of such determination. If the
breaching Party’s failure to pay when due royalty amounts owed that are in excess of [*], and such
Party does not cure such failure to pay the owed royalties by the

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

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date [*] days after such notice, then such breach will be deemed to be a “Material Breach,”
for which the non-breaching Party may terminate this Agreement within 30 days by written notice to
the Party in breach, provided if such dispute is resolved in litigation in court, such termination
will be effective at such time no appeal is or can be taken from the court’s decision.

          5.3 Infringement Outside Licensed Field; Termination for Willful Infringement.

               (a) Each Party acknowledges and agrees that the license rights granted under this Agreement to
it by the other Party are limited to the specific, identified fields of use. Hansen covenants that
it shall not knowingly practice any issued ISI Patents outside of the Hansen Field of Use in a
manner that infringes the ISI Patents, and ISI covenants that it shall not knowingly practice any
issued Hansen Patents outside the ISI Field of Use in a manner that infringes the Hansen Patents.

               (b) If ISI believes that Hansen is violating its covenant in subsection (a) above and is
infringing the ISI Patents by actions outside the Hansen Field of Use, ISI may give Hansen notice
of such belief (the “Belief of Infringement”), which notice shall include all details that are the
basis for such belief and ISI’s proposal to cure such violation, and the Parties shall then meet
promptly thereafter under Section 5.7(a) to discuss the noticed Belief of Infringement and ISI’s
proposed resolution and to seek to reach a resolution of such Dispute. If Hansen does not cease the
violation that is the basis for such Belief of Infringement within [*] days of the date Hansen
receives such notice, and if the Parties do not reach a mutually acceptable other resolution to
such matter within [*] days after the receipt of the notice, then either Party may have the matters
relating to the Dispute and claim arising out of this Section 5.3(b) settled by litigation in court
in accordance with Section 9.3, to determine if Hansen in fact has infringed one or more valid and
enforceable issued ISI Patents outside the Hansen Field of Use. For the avoidance of doubt, Hansen
may raise as affirmative defenses to any infringement action brought by ISI, or as a basis for
declaratory relief action brought by Hansen, any and all defenses, available at law or equity, that
are available in patent actions. If such litigation results in a judgment of infringement from
which no appeal can be or is taken, and Hansen, despite such infringement judgment by the court,
fails to cease conducting the actions that were determined by the court to be infringing the ISI
Patents by the date [*] days after the date after which no appeal can be or is taken (the
“Determination Date”), then such failure shall be a “Material Breach,” for which ISI may terminate
this Agreement within 30 days by written notice to Hansen.

               (c) If Hansen believes that ISI is violating its covenant in subsection (a) above and is
infringing the Hansen Patents by actions outside the ISI Field of Use, Hansen may give ISI notice
of such belief (the “Belief of Infringement”), which notice shall include all details that are the
basis for such belief and Hansen’s proposal to cure such violation, and the Parties shall then meet
promptly thereafter under Section 5.7(a) to discuss the noticed Belief of Infringement and Hansen’s
proposed resolution and to seek to reach a resolution of such Dispute. If ISI does not cease the
violation that is the basis for such Belief of Infringement within [*] days of the date ISI
receives such notice, and if the Parties do not reach a mutually acceptable other

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

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resolution to such matter within [*] days after the receipt of the notice, then either Party
may have the matters relating to the Dispute and claim arising out of this Section 5.3(c) settled
by litigation in court in accordance with Section 9.3, to determine if ISI in fact has infringed
one or more valid and enforceable issued Hansen Patents outside the ISI Field of Use. For the
avoidance of doubt, ISI may raise as affirmative defenses to any infringement action brought by
Hansen, or as a basis for declaratory relief action brought by ISI, any and all defenses, available
at law or equity, that are available in patent actions. If such litigation results in a judgment of
infringement from which no appeal can be or is taken, and ISI, despite such infringement judgment
by the court, fails to cease conducting the actions that were determined by the court to be
infringing the Hansen Patents by the date [*] days after the Determination Date (as to such
judgment), then such failure shall be a “Material Breach,” for which Hansen may terminate this
Agreement within 30 days by written notice to ISI.

          5.4 Termination for Bankruptcy.

               (a) Notice of Bankruptcy Event. If either of the following events (a “Bankruptcy
Event”) occurs with respect to a Party (the “Bankrupt Party”), such Insolvent Party shall
immediately notify the other Party of the occurrence of such event:

                    (i) Any application, petition or action for relief is submitted by such Bankrupt Party for
commencement of proceedings under bankruptcy, corporate reorganization, insolvency or moratorium
law or any other law for the relief of, or relating to, debtors, now or hereafter in effect, or
makes any assignment for the benefit of creditors covering all or substantially all of its assets;
or

                    (ii) An involuntary petition is filed against such Bankrupt Party under any bankruptcy statute
now or hereafter in effect, or a custodian, receiver, trustee, assignee for the benefit of
creditors (or other similar official) is appointed to take possession, custody or control of any
property of such Insolvent Party.

               (b) Right to Terminate. If the Bankruptcy Event is not cured or otherwise terminated
within 90 days following occurrence the Bankruptcy Event, the Party that is not the Bankrupt Party
shall have the right to terminate this Cross License by giving notice in writing to the Bankrupt
Party.

          5.5 Effect of Termination. In the event of termination of this Cross License by one
Party (“Terminating Party”) pursuant to Section 5.2 or 5.3 or 5.8 or paragraph 7 of Exhibit C, all
licenses and rights granted hereunder by the Terminating Party to the other Party (“Terminated
Party”), shall automatically terminate as of the date of such termination of this Cross License
(except as otherwise provided in Section 5.8), but the licenses and rights granted hereunder by the
Terminated Party to the Terminating Party shall survive such termination, subject to the terms and
conditions of this Cross License. In the event of termination of this Cross License by one Party
pursuant to Section 5.4, all licenses and rights granted hereunder by the each Party to the other
Party shall automatically terminate as of the date of such termination of this Cross License.
Termination or expiration of the Cross License shall not relieve any Party

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

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of any obligation or liability accrued under this Cross License prior to termination or
expiration.

          5.6 Survival. Upon the expiration or any termination of this Cross License, the
provisions of Sections 1, 2.2, 2.3, 4, 5.5, 5.6, 6.4, 6.5, 7.1, 7.2, 8 and 9 all shall survive such
expiration or termination.

          5.7 Dispute Resolution.

               (a) If any dispute or issue arises between the Parties (a “Dispute”), including any alleged
breach of the terms or obligations of a Party (such as an allegation of breach of the covenants
under Section 5.3(a)), or the extent of a Party’s rights under the terms hereof, then the Parties
shall resolve such Dispute pursuant to the terms of this Section 5.7. As to any such Dispute,
either Party may give notice to the other Party to seek to resolve such Dispute. Within ten days of
giving of any such notice, the CEOs of the Parties shall meet to discuss the Dispute and seek to
reach a mutually agreeable resolution to the Dispute, which resolution shall be set forth in
writing signed by the Parties. If the CEOs of the Parties cannot reach agreement on a resolution to
the Dispute that is subject of a notice provided under this Section 5.7(a), within [*] days of
commencing discussions to resolve the matter, then either Party may have such Dispute resolved by
litigation in a court of applicable jurisdiction (subject to Section 9.3) except as provided in
Section 5.7(b), and provided further that the remedies available to the Parties in such litigation
are expressly limited by the applicable terms of this Agreement (including Section 5.2(a)).

               (b) A Party shall have the rights to initiate, on written notice to the other Party, the
procedure set forth in Exhibit C at any time, for the Parties to discuss a particular new product
being developed by such Party that is intended to be commercialized outside such Party’s licensed
field (i.e., outside the Hansen Field of Use as to a Hansen new product, or outside the ISI Field
of Use as to an ISI new product) to determine if such new product would, if sold in such intended
use, infringe any valid and enforceable issued patent in the other Party’s patent portfolio. Upon
such notice, the parties shall proceed under the terms of Exhibit C. For any dispute under Exhibit
C that is to be resolved by arbitration, such dispute shall be heard and a resolution determined by
an arbitration conducted in San Francisco, California under the American Arbitration Association
Commercial Arbitration Rules and Supplementary Procedures for Large Complex Disputes (together the
“AAA Rules”) by three arbitrators who are neutral and independent of the Parties and who have
expertise in the medical device field and in patents relating to medical devices. Each Party shall
select an arbitrator, and the selected arbitrators will select a third arbitrator, provided that
each such selected arbitrator must meet the foregoing criteria to be empowered to serve in the
arbitration. If the arbitrators selected by the Parties cannot agree on a third arbitrator within
thirty (30) days, the third arbitrator will be selected by the AAA. The arbitration shall be
conducted in accordance with the AAA Rules, as such rules and procedures are supplemented or
modified by the terms of this Section 5.7 and/or by written agreement of the Parties. The Parties
shall have such discovery rights as is reasonable in the case and as the arbitrators may allow,
consistent with the goal of providing for a full and fair hearing of the Dispute and an equitable
resolution of the Dispute, but in no event broader than that discovery permitted under the Federal
Rules of Civil Procedure. In conducting the arbitration,

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

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the arbitrators shall apply the California Rules of Evidence and shall allow raising of all
affirmative defenses to an infringement action, available at law or in equity, in their analysis of
whether a valid and enforceable issued patent is infringed. The arbitrators will hear each Party’s
case and positions as to the Dispute. In any event, such remedies cannot be contrary to the terms
of Exhibit C, and the arbitrators cannot award any Party any punitive, special, indirect or
consequential damages. The Parties will keep the arbitration and the results of the arbitration
confidential.

               (c) Notwithstanding any other provision of this Section 5.7, each Party shall be entitled to
seek a preliminary injunction or other temporary equitable remedy in court to protect such Party
from immediate, imminent harm by breach of this Agreement by the other Party. Each Party
acknowledges and agrees that the other Party hereto would be irreparably damaged in the event of a
continuing breach of Section 5.3(a).

          5.8 Termination by Hansen. Twelve and one-half (12.5) years after the Effective Date,
Hansen shall have the right to terminate the Cross License and all its obligations under Section
3.3 by written notice to ISI. Upon such termination, all licenses granted by ISI to Hansen shall
terminate, except that the license granted under Section 2.2 shall survive such termination
indefinitely solely as to ISI Know-How that are not ISI Trade Secrets, and all licenses granted by
Hansen to ISI under Section 2.1(b) and 2.3 shall survive such termination, subject to all other
applicable terms of the Cross License.

     6. MUTUAL COVENANTS

          6.1 No Solicitation. Each Party agrees that it will not, directly or indirectly,
solicit, recruit, retain, hire or employ any person that such Party knows, or has reason to know,
is employed by the other Party. Notwithstanding the foregoing, nothing herein shall be construed to
prohibit either Party from placing advertisements for employment that are directed at the public at
large in any newspaper, trade magazine, journals or other periodical in general circulation.

          6.2 Third Party Infringement.

               (a) ISI Patents. If a Party becomes aware that any ISI Patent is infringed by a third
party in the Hansen Field of Use (a “Hansen Field Infringement”), such Party shall promptly notify
the other Party in writing, which notice shall set forth the facts known to such Party regarding
such believed infringement in reasonable detail. ISI shall have the primary right, but not the
obligation, to institute, prosecute, and control any action or proceeding with respect to
infringement of ISI Patents Rights, by counsel of its own choice, and, if such action or proceeding
is brought by ISI, Hansen shall have the right, at its own expense, to be represented in such
action or proceeding by counsel of its own choice, and also to join such action as a plaintiff to
assert claims for infringement if such Hansen Field Infringement has resulted in lost profits by
Hansen or its Affiliates due to lost sales. For any infringement of the ISI Patents outside of the
Hansen Field of Use, ISI shall have the sole and exclusive rights to take action regarding such
infringement, including enforcing the patents and settling any such actions. Notwithstanding the
foregoing, if ISI does not bring such action or proceedings as to such

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

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Hansen Field Infringement within a period of one hundred twenty (120) days after receiving
notice from Hansen, Hansen shall have the right to bring and control (except as otherwise provided
below) any such action by counsel of Hansen’s own choice (a “Hansen Action”), [*]. For the purpose
of this Section 6.2(a), [*] shall require that [*], the following factors, which the parties agree
are [*], reasonably and in good faith: [*]. For any Hansen Action, ISI has the right with counsel
of its own choice, to defend itself against, and to control the responses to, any claim or defense
or counterclaim raised in the Hansen Action against ISI or regarding the validity or enforceability
of any ISI Patents.. The Parties will reasonably cooperate in the prosecution and defense of claims
concerning the defendant.

               (b) Hansen Patents. If a Party becomes aware that any Hansen Patent is infringed by a
third party in the ISI Field of Use (an “ISI Field Infringement”), such Party shall promptly notify
the other Party in writing, which notice shall set forth the facts known to such Party regarding
such believed infringement in reasonable detail. Hansen shall have the primary right, but not the
obligation, to institute, prosecute, and control any action or proceeding with respect to such ISI
Field Infringement of Hansen Patents Rights, by counsel of its own choice, and, if Hansen brings
such action or proceeding, ISI shall have the right, at its own expense, to be represented in such
action or proceeding by counsel of its own choice, and also to join such action as a plaintiff to
assert claims for infringement if such ISI Field Infringement has resulted in lost profits by ISI
or its Affiliates due to lost sales. With respect to any ISI Field Infringement that is causing a
material, detrimental impact on ISI, Hansen agrees to meet with ISI to discuss such infringement in
good faith and to reasonably consider ISI’s requests regarding Hansen taking action to cause the
cessation of such infringement. Notwithstanding the foregoing, if Hansen does not bring such action
or proceedings as to such ISI Field Infringement within a period of one hundred twenty (120) days
after receiving notice from ISI, ISI shall have the right to bring and control (except as provided
below) any such action by counsel of ISI’s own choice (an “ISI Action”), [*]. For the purpose of
this Section 6.2(b), [*] shall require that [*], the following factors, which the parties agree are
[*], reasonably and in good faith: [*]. For any ISI Action, Hansen has the right with counsel of
its own choice, to defend itself against, and to control the responses to, any claim or defense or
counterclaim raised in the ISI Action against Hansen or regarding the validity or enforceability of
any Hansen Patents.. The Parties will reasonably cooperate in the prosecution and defense of claims
concerning the defendant.

               (c) Cooperation. If one Party brings any action or proceeding as provided above, the
other Party agrees, if necessary, to give the first Party reasonable assistance to file and to
prosecute such suit, at the filing Party’s expense.

               (d) Allocation of Recoveries. The costs and expenses of all suits brought by either
Party under this Section 6.2 shall be reimbursed on a pro-rata basis to both Parties out of any
damages or other monetary awards recovered in such actions in favor of either Hansen and/or ISI.
Any amounts of such damages or other monetary awards recovered in such actions remaining after such
reimbursement shall be paid first to each Party according to the amounts of damages awarded to the
Party for lost sales as proved by the Party in such action (on a pro rata basis based on the
amounts of lost sales damages awarded to each Party, if applicable), and any remaining amounts of
such damages or other awards to then be divided

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

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between Hansen and ISI with [*] of the remainder to the Party bringing and prosecuting such
action or proceeding, and [*] to the other Party. No settlement or consent judgment or other
voluntary final disposition of a suit under this Section 6.2 may be entered into without the joint
consent of Hansen and ISI (which consent shall not be withheld unreasonably).

          6.3 Patent Marking. Hansen agrees to use reasonable efforts to mark to the extent
required by applicable law, statutes and regulations relating to patent marking all products that
Hansen is aware are claimed by claims of the ISI Patents (or the labels or packaging therefor) that
are made, used, imported, sold or distributed by or on behalf of Hansen and its distributors. ISI
agrees to use reasonable efforts to mark to the extent required by applicable law, statutes and
regulations relating to patent marking all products that ISI is aware are claimed by claims of the
Hansen Patents (or the labels or packaging therefor) that are made, used, imported, sold or
distributed by or on behalf of ISI and its distributors.

          6.4 Indemnification.

               (a) By Hansen. Hansen shall indemnify, defend and hold harmless ISI and its employees,
officers, directors and agents (each, an “ISI Indemnified Party”) from and against any and all
liability, loss, damage, cost, and expense (including reasonable attorneys’ fees) to any Third
Party (collectively, a “Liability”) which the ISI Indemnified Party may incur, suffer or be
required to pay resulting from any suit, action, claim or proceeding brought by the Third Party
based on or arising out of: (i) the breach by Hansen of any representation, warranty, covenant or
obligation contained in this Cross License, or (ii) the manufacture, promotion, sale or use of any
product by Hansen or its licensee (other than ISI). Notwithstanding the foregoing, Hansen shall
have no obligation under this Cross License to indemnify, defend or hold harmless any ISI
Indemnified Party with respect to any Liabilities or claims, demands, costs or judgments to the
extent that they result from: (1) the willful misconduct or negligent acts or omissions of ISI or
any of their respective employees, officers, directors or agents, or (2) the manufacture,
promotion, sale or use of any product by ISI or its licensee (other than Hansen).

               (b) By ISI. ISI shall indemnify, defend and hold harmless Hansen and its employees,
officers, directors and agents (each, a “Hansen Indemnified Party”) from and against any and all
liability, loss, damage, cost, and expense (including reasonable attorneys’ fees) to any Third
Party (collectively, a “Liability”) which the Hansen Indemnified Party may incur, suffer or be
required to pay resulting from any suit, action, claim or proceeding brought by the Third Party
based on or arising out of: (i) the breach by ISI of any representation, warranty, covenant or
obligation contained in this Cross License, or (ii) the manufacture, promotion, sale or use of any
product by ISI or its licensee (other than Hansen). Notwithstanding the foregoing, ISI shall have
no obligation under this Cross License to indemnify, defend or hold harmless any Hansen Indemnified
Party with respect to any Liabilities or claims, demands, costs or judgments to the extent that
they result from: (1) willful misconduct or negligent acts or omissions of Hansen, or any of its
employees, officers, directors or agents, or (2) the manufacture, promotion, sale or use of any
product by Hansen or its licensee (other than ISI).

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

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               (c) Procedures. The obligations of the indemnifying Party under Sections 6.4(a) and
(b) are conditioned upon the delivery of written notice to the indemnifying Party of any potential
Liability promptly after the indemnified party becomes aware of such potential Liability. The
indemnifying Party shall have the right to assume the defense of any suit or claim related to the
Liability if it has assumed responsibility for the suit or claim in writing; however, if in the
reasonable judgment of the indemnified party, such suit or claim involves an issue or matter which
could have a materially adverse effect on the business operations or assets of the indemnified
Party, the indemnified Party may waive its rights to indemnity under this Cross License and control
the defense or settlement thereof, but in no event shall any such waiver be construed as a waiver
of any indemnification rights such Party may have at law or in equity. If the indemnifying Party
defends the suit or claim, the indemnified Party may participate in (but not control) the defense
thereof at its sole cost and expense. Neither Party may settle a claim or action related to a
Liability without the consent of the other Party, if such settlement would impose any monetary
obligation on the other Party or require the other Party to submit to an injunction or otherwise
limit the other Party’s rights under this Cross License. Any payment made by a Party to settle any
such claim or action shall be at its own cost and expense.

          6.5 Confidentiality.

               (a) The Parties recognize that, in connection with the performance of this Cross License, each
Party (in such capacity, the “Disclosing Party”) may disclose “Confidential Information” (as
defined below) to the other Party (the “Receiving Party”). For purposes of this Cross License,
"Confidential Information” means proprietary or confidential information (whether owned by the
Disclosing Party or a third party to whom the Disclosing Party owes a non-disclosure obligation)
regarding the Disclosing Party’s business or technology that is disclosed to the Receiving Party
and is marked as confidential at the time of disclosure to the Receiving Party, or if disclosed in
oral form, is identified as confidential at the time of oral disclosure and reduced in writing or
other tangible (including electronic) form including a prominent confidentiality notice and
delivered to the Receiving Party within thirty (30) days of disclosure. “Confidential Information”
shall not include the Cross License, the terms and conditions thereof and the transactions
contemplated hereby and thereby (which information shall be governed by Section 6.6 of this Cross
License) and information that the Receiving Party can demonstrate:

                    (i) was known to the Receiving Party free of any obligation of confidence at the time of the
disclosure by the Disclosing Party;

                    (ii) has become publicly known through no wrongful act of the Receiving Party;

                    (iii) has rightfully been received by the Receiving Party from a third party;

                    (iv) was communicated by the Disclosing Party to an unaffiliated third party free of any
obligation of confidence; or

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

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                    (v) has been independently developed by the Receiving Party without use or reference to any
Confidential Information of the Disclosing Party.

               (b) The Receiving Party agrees (x) not to use any such Confidential Information other than as
permitted under this Cross License (y) not to disclose any such Confidential Information, except
(1) to its employees who are reasonably required to have the Confidential Information in connection
herewith or with any of the other Transaction Documents, (2) to its agents, representatives,
attorneys and other advisers that have a need to know such Confidential Information, (3) pursuant
to, and to the extent of, a request or order by a Governmental Authority, or (4) or to the extent
such disclosure is reasonably necessary in filing or prosecuting patent, copyright and trademark
applications, prosecuting or defending litigation, complying with applicable governmental
regulations, obtaining regulatory approvals, marketing Products, or otherwise required by law;
provided, however, that if a Receiving Party is required by law or regulation to
make any such disclosure of a Disclosing Party’s Confidential Information it will give reasonable
advance notice to the Disclosing Party of such disclosure requirement and, except to the extent
inappropriate in the case of patent applications, will use its reasonable efforts to secure
confidential treatment of such Confidential Information required to be disclosed. The Receiving
Party agrees to take all reasonable measures to protect the secrecy and confidentiality of, and
avoid disclosure or unauthorized use of, the Disclosing Party’s Confidential Information.

               (c) Each Party acknowledges and agrees that (i) its obligations under this Section 6.5
are necessary and reasonable to protect the other Party and its business, and (ii) any violation of
these provisions could cause irreparable injury to the other Party for which money damages would be
inadequate, and (iii) as a result the other Party shall be entitled to obtain injunctive relief
against the threatened or pending breach of the provisions of this Section 6.5 without the
necessity of proving actual damages. The Parties agree that the remedies set forth in this
Section 6.5 are in addition to and in no way preclude any other remedies or actions that
may be available at law or under this Cross License.

          6.6 Confidentiality of Cross License; Publicity.

               (a) Each Party agrees that the existence of the Cross License, the terms and conditions
thereof and the transactions contemplated hereby and thereby shall be treated as confidential
information and that no reference thereto shall be made without the prior written consent of the
other Party (which consent shall not be unreasonably withheld or delayed) except (a) as required by
Applicable Law including, without limitation, by the SEC and the rules and regulations of any
applicable securities exchange or automated quotation system, or to the extent such disclosure is
reasonably necessary in prosecuting or defending litigation; provided, however,
that if a Party is required by law or regulation to make any such disclosure of such information it
will give reasonable advance notice to the other Party of such disclosure requirement and will use
its reasonable efforts to secure confidential treatment of such information required to be
disclosed, (b) to such Party’s accountants, attorneys and other professional advisers, banks,
existing or potential financing sources, including to potential investors, provided that
such Persons undertake in writing (or are otherwise bound by rules of

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

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professional conduct) to keep such information strictly confidential, (c) in connection with
the enforcement of this Cross License, (d) in connection with an actual or proposed Acquisition or
Asset Transfer of a Party or the acquisition or proposed acquisition of stock or assets by a Party
of any third party or the merger with or into any third party whether or not such transaction
constitutes an Acquisition, provided that such Persons undertake in writing to keep such
information strictly confidential (e) to a potential transferee of all or part of such Party’s
Securities in a Transfer made in accordance with this Cross License, provided that such
transferee undertakes in writing to keep such information strictly confidential, or (f) pursuant to
a press release approved by the other Party.

               (b) The Parties will consult with each other, in advance, with regard to the terms of all
proposed press releases, public announcements and other public statements with respect to the
transactions contemplated hereby. Any Party intending to disclose the terms of this Cross License
shall provide the nondisclosing Party an opportunity to review and comment on the intended
disclosure in reasonably sufficient time (such time period to depend on the urgency of the intended
disclosure) prior to public release, and shall provide the other Party with a written copy thereof,
in order to allow such other Party to comment upon such disclosure; provided however, such notice
and opportunity to review shall not be required for a disclosure which is substantially in a form
previously approved where the underlying facts disclosed in that previously approved disclosure are
still true, and where the circumstances surrounding the disclosure have not changed.

               (c) With respect to complying with the disclosure requirements of the SEC or any securities
exchange or automated quotation system in connection with any required filing of this Cross
License, the filing Party shall seek confidential treatment of this Cross License from the SEC or
securities exchange or automated quotation system and shall provide the other Party with at least
forty-eight (48) hours to review and comment on any such proposed filing. The filing Party shall
use reasonable efforts to incorporate the non-filing Party’s comments to such confidential
treatment request.

     7. WARRANTIES; DISCLAIMERS.

          7.1 No Warranty. Nothing contained in this Cross License shall be construed as:

               (a) a warranty or representation by either Party as to the validity, enforceability or scope
of any Hansen Patents or ISI Patents;

               (b) an agreement by either Party to bring or prosecute actions or suits against third parties
for infringement, or conferring any right to the other Party to bring or prosecute actions or suits
against third parties for infringement. It is specifically agreed between the Parties that the
existence of such alleged infringement by any third party, if any, shall not be a ground for the
refusal to make or a ground for the request for the reduction of the payments to be made by Hansen
under this Cross License;

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

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               (c) conferring any right to either Party to use in advertising, publicity, or otherwise, any
trademark, trade name or names of the other Party, or any contraction, abbreviation or simulation
thereof;

               (d) conferring on either Party, by implication, estoppel or otherwise, any licenses or other
rights under any patent, copyright, trade secrets or trademarks of the other Party, except the
licenses and rights expressly granted hereunder;

               (e) an obligation of a Party to furnish to the other Party any technical information or
know-how, including ISI Know-How or Hansen Know-How;

               (f) a warranty or representation that the exercise of any of the rights granted under this
Cross License will be free from infringement of or will not violate any intellectual property
rights or other proprietary rights of any third party; or

               (g) an obligation on either Party to prosecute, maintain or obtain any patents or utility
models or applications therefor.

          7.2 WARRANTY DISCLAIMER. EXCEPT AS EXPRESSLY PROVIDED IN SECTION 7.3, NEITHER PARTY
MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WITH RESPECT TO, AND HEREBY EXPRESSLY DISCLAIMS
ALL OTHER WARRANTIES AS TO, THE PATENTS OR KNOW-HOW SUCH PARTY LICENSES TO THE OTHER PARTY UNDER
THIS CROSS LICENSE OR ANY OTHER SUBJECT MATTER OF THIS CROSS LICENSE. BOTH PARTIES SPECIFICALLY
DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT WITH RESPECT TO THE ISI PATENTS, THE HANSEN PATENTS OR ANY OTHER SUBJECT MATTER OF
THIS CROSS LICENSE.

          7.3 Limited Warranties.

               (a) Each Party represents and warrants to the other Party that: (i) it is duly organized and
validly existing under the laws of its jurisdiction of incorporation or formation, and has full
corporate or other power and authority to enter into this Cross License and to carry out the
provisions hereof; (ii) it is duly authorized to execute and deliver this Cross License and to
perform its obligations hereunder, and the person or persons executing this Cross License on its
behalf has been duly authorized to do so by all requisite corporate or partnership action; and
(iii) this Cross License is legally binding upon it, enforceable in accordance with its terms, and
does not conflict with any agreement, instrument or understanding, oral or written, to which it is
a Party or by which it may be bound, nor violate any material law or regulation of any court,
governmental body or administrative or other agency having jurisdiction over it.

               (b) Hansen represents and warrants to ISI that: (i) Hansen has disclosed in writing to ISI
each patent or patent application (identifying the patent numbers or application serial numbers and
countries of prosecution) that is licensed to Hansen by a third

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

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party, and the specific terms of any and all payment amounts that Hansen would be obligated
pay to such third party licensor if Hansen sublicensed such patent or patent application to ISI as
a Hansen Patent under this Cross License; (ii) Hansen has disclosed in writing to ISI each patent
or patent application (identifying the patent numbers or application serial numbers and countries
of prosecution) that is licensed to Hansen by a third party and for which Hansen does not have the
right to grant ISI sublicenses under the terms of this Cross License.

               (c) ISI represents and warrants to Hansen that: (i) ISI has disclosed in writing to Hansen
each patent or patent application (identifying the patent numbers or application serial numbers and
countries of prosecution) that is licensed to ISI by a third party, and the specific terms of any
and all payment amounts that ISI would be obligated pay to such third party licensor if ISI
sublicensed such patent or patent application to Hansen as an ISI Patent under this Cross License;
(ii) ISI has disclosed in writing to Hansen each patent or patent application (identifying the
patent numbers or application serial numbers and countries of prosecution) that is licensed to ISI
by a third party and for which ISI does not have the right to grant Hansen sublicenses under the
terms of this Cross License.

     8. LIMITATION OF LIABILITY

          NOTWITHSTANDING ANYTHING ELSE IN THIS CROSS LICENSE OR OTHERWISE, NEITHER PARTY SHALL BE
LIABLE TO THE OTHER PARTY OR TO ANY OTHER PERSON OR ENTITY WITH RESPECT TO ANY SUBJECT MATTER OF
THIS CROSS LICENSE, UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE
THEORY, FOR ANY (A) INCIDENTAL, SPECIAL, PUNITIVE (OTHER THAN STATUTORY DAMAGES AVAILABLE FOR
WILLFUL INFRINGEMENT) CONSEQUENTIAL OR INDIRECT DAMAGES, (B) DAMAGES RESULTING FROM LOSS OF SALE,
BUSINESS, PROFITS OR GOODWILL, (C) COST OF PROCUREMENT OF SUBSTITUTE GOODS OR TECHNOLOGY, EVEN IF
THE REMEDIES PROVIDED FOR IN THIS CROSS LICENSE FAIL OF THEIR ESSENTIAL PURPOSE AND EVEN IF EITHER
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OR PROBABILITY OF SUCH DAMAGES.

     9. MISCELLANEOUS 

          9.1 Assignment. This Cross License and the rights and obligations hereunder may not be
transferred or assigned by either party without the prior written consent of the other party;
provided that, either party may, without the other party’s prior written consent, assign or
transfer this Cross License and its rights and obligations hereunder in connection with an
Acquisition or Asset Transfer. Subject to the foregoing, this Cross License shall be binding on,
inure to the benefit of, and be enforceable by the Parties and their respective heirs, successors
and permitted assigns.

          9.2 Amendment and Waiver. Except as otherwise expressly provided herein, any provision
of this Cross License may be amended and the observance of any provision of this Cross License may
be waived (either generally or in any particular instance and either

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

21

 

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retroactively or prospectively) only with the written consent of the parties. The failure of
either party to enforce its rights under this Cross License at any time for any period shall not be
construed as a waiver of rights.

          9.3 Governing Law and Legal Actions. This Cross License shall be governed by and
construed under the laws of California without regard to the conflicts of law provisions thereof.
The state and federal courts of the Northern District of California shall have exclusive
jurisdiction for disputes related to this Cross License, except as provided in Section 5.7, and the
parties hereby consent to the personal jurisdiction of the court.

          9.4 Headings. Headings and captions are for convenience only and are not to be used in
the interpretation of this Cross License.

          9.5 Notices. Any notice or other communication required or permitted to be made or
given to either party under this Cross License shall be deemed sufficiently made or given on the
date of delivery if delivered in person or by overnight commercial courier service with tracking
capabilities with costs prepaid, or five (5) days after the date of mailing if sent by certified
first class mail, return receipt requested and postage prepaid, to the address of the parties (and
addressed to the representative) set forth below or such other address (or representative) as may
be given from time to time under the terms of this notice provision:

	 	 	 
	If to ISI:

	 	If to Hansen:
	950 Kifer Road,

	 	380 North Bernardo Avenue
	Sunnyvale, California 94086

	 	Mountain View, California 94043
	Attention: General Counsel

	 	Attention: Vice President of Intellectual
	Telephone: (408) 523-2100

	 	Property
and Legal Affairs

	Facsimile: (408) 523-1390

	 	Telephone: (650) 406-5800
	 

	 	Facsimile: (650) 404-5901
	 
	 	 
	With a copy (which shall not constitute notice) to:

	 	With a copy (which shall not
constitute notice) to:
	 
	Wilson Sonsini Goodrich & Rosati

	 	Cooley Godward LLP
	650 Page Mill Road

	 	Five Palo Alto Square
	Palo Alto, California 94304-1050

	 	3000 El Camino Real
	Attention: Casey McGlynn

	 	Palo Alto, California 94306
	Telephone: (650) 493-9300

	 	Attention: Barclay Kamb
	Facsimile: (650) 493-6811

	 	Telephone: (650) 843-5000
	 

	 	Facsimile: (650) 849-7400

          9.6 Severability. If any provision of this Cross License is held to be illegal or
unenforceable, that provision shall be limited or eliminated to the minimum extent necessary so
that this Cross License shall otherwise remain in full force and effect and enforceable.

          9.7 Relationship of Parties. Each party acknowledges and agrees that the other party
is an independent contractor in the performance of each and every part of this Cross

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

22

 

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License and is solely responsible for all of its employees, contractors and agents and its
labor costs and expenses arising in connection therewith. The parties are not partners, joint
venturers, franchiser-franchisee or otherwise affiliated, and neither has any right or authority to
make any statements, representations or commitments of any kind, or to take any action, which shall
be binding on the other party, without the prior written consent of the other party. Without
limiting the foregoing, the parties agree that this Cross License is not intended to create a
franchise within the meaning of any applicable statute.

          9.8 Counterparts. This Cross License may be executed in counterparts, each of which
shall be deemed an original but all of which together shall constitute one and the same instrument.
This Cross License may be executed by facsimile with the original signatures following promptly by
one of the methods of delivery or mailing set forth in Section 9.5 above.

          9.9 Entire Agreement. The terms and conditions contained in this Cross License, the
Share Transfer Agreement and Hansen Investor Rights Agreement constitute the entire agreement
between the parties and supersede all previous agreements and understandings, whether oral or
written, between the parties with respect to the subject matter hereof.

******

     IN WITNESS WHEREOF the parties hereto have executed this Cross License as of the Effective
Date.

	 	 	 	 	 	 	 	 	 
	INTUITIVE SURGICAL, INC.	 	HANSEN MEDICAL, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Lonnie M. Smith
	 	By:
	 	/s/ Frederic H. Moll	 	 
	 

	 	 
	 	 	 	 	 	 
	Title:

	 	President and CEO
	 	Title:
	 	CEO	 	 
	Date:

	 	September 1, 2005
	 	Date:
	 	September 1, 2005	 	 

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

23

 

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EXHIBIT A

Share Transfer Agreement

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

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EXHIBIT B

Investors Rights Agreement

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

1

 

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EXHIBIT C

New Product Procedure

     1. If a Party (the “Initiating Party”) initiates pursuant to Section 5.7 of the Agreement the
procedure under this Exhibit C as to a new product of such Initiating Party that it plans to sell
for a use outside its licensed field (the “Subject Product”), the Parties shall then proceed under
the provisions of this Exhibit C, cooperatively and in good faith. Such Initiating Party shall
first provide a demonstration of the Subject Product to the other Party (the “Responding Party”)
and its legal representatives, under an appropriate confidential disclosure agreement entered into
by the Parties (and any such representatives).

     2. Such Responding Party then has up to [*] business days to provide to the Initiating Party a
list of written questions regarding the construction and operation of the Subject Product, and the
Initiating Party shall provide its answers to such questions, in confidence under the confidential
disclosure agreement, within [*] business days from its receipt of questions.

     3. Within [*] business days after timely receipt of the Initiating Party’s answers to the
written questions submitted under paragraph 2 above, or if no answers were requested or timely
received, then within [*] days after the demonstration, the Responding Party shall either: (a)
provide the Initiating Party with written notice (a “Non-Infringement Notice”) that such Responding
Party concludes that the Subject Product would not infringe any patents owned or controlled by such
Responding Party, or any claims or any claims in any patent applications owned or controlled by
such Responding Party were such applications to issue as patents; or (b) provide the Initiating
Party with written notice (an “Infringement Notice”) that such Responding Party believes that the
Subject Product would infringe one or more of the patents owned or controlled by such Responding
Party, or any claims or any claims in any patent applications owned or controlled by such
Responding Party were such applications to issue as patents, which notice shall include details of
such allegation and copies of the asserted patents or patent applications and shall provide the
detailed analysis for the basis for such Party’s belief that the Subject Product infringes that
indicated patents or would infringe the indicated patent applications (if such applications
issued).

     4. If the Responding Party provides an Infringement Notice as to the Subject Product, then the
Parties shall meet promptly after such notice is received, and the Parties shall discuss
cooperatively and in good faith the infringement issue covered by the Infringement Issue for up to
[*] business days and shall amicably and in good faith resolve the infringement issue by [*].

     5. If the Parties are unable to reach agreement after such [*] business day period, then the
Parties shall proceed under the provisions of Section 5.7(b) to resolve the question of whether the
Subject Product infringes one or more claims of the identified patents, including

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

 

 

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addressing and resolving any defenses that the Initiating Party may have to the assertion of
infringement (such as invalidity or unenforceability).

     7. [sic]The arbitrators may impose monetary sanctions (payable to the Responding Party) if the
Initiating Party does not provide all relevant information relating to the Subject Product
requested by the Responding Party or the arbitrators (including demonstrations of the product), or
otherwise cooperate fully with them. Similarly, the arbitrators may impose monetary sanctions
(payable to the Initiating Party) if the Responding Party does not provide all relevant information
relating to the subject patents requested by the Initiating Party or the arbitrators, or otherwise
cooperate fully with them. Such arbitration shall determine whether the Subject Product would
infringe the Responding Party’s patents that are the subject of the Infringement Notice. The
arbitrators will set forth in writing their decision regarding infringement or non-infringement of
such patents by the Subject Product, including the specific patents and claims analyzed by the
arbitrators and an explanation of the bases for such decision. Determinations made by the
arbitrators are binding upon the Parties, and cannot be appealed or litigated in federal court.
Notwithstanding the forgoing, if the arbitrators determine that the Subject Product infringes the
Responding Party’s patents and the Initiating Party does not cease the infringement within [*] days
after the arbitrators’ decision or in the future sells the Subject Product, then the Responding
Party may seek damages and other remedies by litigation in court in accordance with Section 9.3,
and to have the court determine if the Initiating Party is selling the Subject Product in violation
of the arbitrators’ determination of infringement. The Responding Party may submit the arbitrators’
decision in such litigation. If such litigation results in a judgment that the Initiating Party is
selling the Subject Product in violation of the arbitrators’ determination of infringement from
which no appeal can be or is taken, then the Initiating Party will have committed a “Material
Breach,” for which the Responding Party may terminate this Agreement within 30 days by written
notice to the Initiating Party.

     8. In the case of an arbitration under paragraph 7 above, the Responding Party shall pay all
arbitration expenses for the aspects of the arbitration that relate to the allegations of
infringement, the Initiating Party shall pay all arbitration expenses for the aspects of the
arbitration that relate to any of the Initiating Party’s asserted defenses, and each Party shall
pay its own legal expenses including deposition expenses and other discovery expenses related to
these proceedings. If the arbitration results in a determination that the Initiating Party
infringes the asserted patents, then the Responding Party shall be entitled to reimbursement the
arbitration expenses that it paid. If the arbitration results in a determination that the
Initiating Party does not infringe the asserted patents (including because of defenses of the
Initiating Party or simply due to non-infringement), then the Initiating Party shall be entitled to
reimbursement the arbitration expenses that it paid.

[*] Confidential information in this Exhibit has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the omitted portions.

-2-

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