ASSET PURCHASE AGREEMENT

Asset Purchase Agreement

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This Asset Purchase Agreement involves

GE OSMONICS, INC | MAR COR PURIFICATION, INC

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Title: ASSET PURCHASE AGREEMENT
Governing Law: Minnesota Date: 4/4/2007
Industry: Medical Equipment and Supplies Sector: Healthcare

Exhibit 2.1

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT dated March 30, 2007 is between GE OSMONICS, INC. , a Minnesota corporation (“ Seller ”), and MAR COR PURIFICATION, INC. , a Pennsylvania corporation (“ Purchaser ”).

PREAMBLE:

Seller, through its water dialysis division, produces, markets, sells and services medical devices and other products, certain of which are registered with the United States Food and Drug Administration (“ FDA ”), including: (i) reverse osmosis systems, (ii) water treatment equipment such as blending and distribution units for dialysis water purification and distribution applications, and (iii) consumables and spare parts relating thereto (the “ Business ”). Seller wishes to sell, and Purchaser wishes to purchase, certain of Seller’s assets that are used exclusively in the Business on the terms and conditions set forth in this Agreement.

THEREFORE, and in consideration of the mutual promises and covenants set forth herein, Seller and Purchaser hereby agree as follows:

ARTICLE 1
DEFINITIONS

In addition to all other terms defined elsewhere in this agreement, the following terms shall have the meanings set forth below:

Section 1.1 “ Action ” means any claim, suit, litigation, proceeding, labor dispute, arbitral action, governmental audit, inquiry, criminal prosecution, investigation or charge.

Section 1.2 “ Advisors ” has the meaning as defined in Section 9.1.

Section 1.3 “ Affiliate ” means, with respect to any specified Person, any other Person that, at the time of determination, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such specified Person.

Section 1.4 “ Assumed Warranty Obligations ” means warranty claims and obligations concerning Seller’s products sold or delivered to customers prior to the Closing Date. Assumed Warranty Obligations do not include product recalls or field corrective actions, including those associated with medical device reports (“ MDRs ”).

Section 1.5 “ Books and Records ” means all of Seller’s books, records or other documents or data (or excerpts thereof) relating exclusively to the Business, including with respect to customers (current and prospective), suppliers and providers of services, all marketing and sales literature, and all training manuals and administrative records, whether in tangible, electronic or electromagnetic form; provided, however, that in no event shall “Books and Records” include (a) any Tax Returns and any worksheets, notes, files or documents primarily related thereto, wherever located, (b) any documents prepared for the benefit of the Seller in connection with the transactions contemplated by this Agreement, (c) any minute books and corporate records of Seller or its Affiliates, as the case may be, (d) any components of the

information contained in Books and Records being transferred that are not related to the Business or that are otherwise excluded by agreement of the parties; (e) records relating to employees of Seller other than the Employees; and (f) any materials that are privileged or are otherwise subject to third-party privacy rights, including any materials that are protected by the attorney-client privilege or attorney work product doctrine.

Section 1.6 “ Business ” has the meaning as defined in the Preamble.

Section 1.7 “ Cap ” has the meaning as set forth in Section 7.4.1.

Section 1.8 “ Closing ” has the same meaning as defined in Section 3.1.

Section 1.9 “ Closing Date” has the same meaning as defined in Section 3.1.

Section 1.10 “ Closing Statement ” has the meaning as defined in Section 3.2.1(b).

Section 1.11 “ Collateral Agreements ” has the meaning as defined in Section 4.4.

Section 1.12 “ Confidential Information ” means all trade secrets and other confidential and/or proprietary information of the particular Person, including but not limited to information derived from reports, investigations, research, work in progress, codes, marketing and sales programs, financial projections, cost summaries, pricing formulae, contract analyses, financial information, projections, data, drawings, confidential filings with any state or federal agency, software source code and/or object code, computer hardware configurations, and all other confidential concepts, methods of doing business, ideas, materials or information prepared or performed for, by or on behalf of such Person by its employees, officers, directors, agents, representatives, or consultants.

Section 1.13 “ Contracts ” means all contracts, subcontracts, agreements, leases, licenses, commitments, sales and purchase orders, installation contracts, and other instruments, arrangements or understandings to which Seller is a party or by which it is bound and which have been entered into in the Ordinary Course of Business and relate exclusively to the Business, other than those which relate exclusively to the Excluded Assets or the Retained Leases.

Section 1.14 “ Deductible Amount ” has the meaning as set forth in Section 7.4.1.

Section 1.15 “ Disclosing Party ” has the meaning as defined in Section 9.1.

Section 1.16 “ Disclosure Schedule ” means the schedules of exceptions and other disclosures designated “Disclosure Schedule” and attached to this agreement.

Section 1.17 “ Employees ” means all Persons who, immediately prior to the Closing Date, are current employees of Seller used exclusively in the Business (including those on vacation, layoff, disability or leave of absence, whether paid or unpaid) and who are listed on Exhibit B .

Section 1.18 “ Environmental Laws ” means any and all federal, state and local laws and regulations, published and legally binding guidance document, ordinance or Requirement of Law as

they exist as of the Closing Date, governing the protection of the environment, human health and safety, such as the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Sections 9601, et seq .; the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seq.; the Clean Water Act, 33 U.S.C. Sections 1251 et seq .; the Clean Air Act, 42 U.S.C. Sections 7401 et seq .; the Toxic Substances Control Act, 15 U.S.C. Sections 2601 et seq .; and the Safe Drinking Water Act, 42 U.S.C. Sections 300(f) et seq .

Section 1.19 “ Escrow ” has the meaning as defined in Section 2.5.

Section 1.20 “ Escrow Agreement ” has the meaning as defined in Section 2.5

Section 1.21 “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

Section 1.22 “ Excluded Assets ” has the meaning as defined in Section 2.2.

Section 1.23 “ Exhibits ” mean the exhibits attached to this agreement.

Section 1.24 “ Factor ” has the meaning defined in Section 6.10.

Section 1.25 “ FDA ” has the meaning as defined in the Preamble.

Section 1.26 “ FDC Act ” has the meaning as defined in Section 4.14.

Section 1.27 “ February 2007 Financial Statements ” has the meaning defined in Section 4.7.

Section 1.28 “ Financial Reports ” has the meaning defined in Section 4.7.

Section 1.29 “ Final Inventory Schedule ” has the meaning defined in Section 6.9.3.

Section 1.30 “ FMC Agreement ” has the meaning defined in Section 4.11.3.

Section 1.31 “ FMC-NA ” has the meaning defined in Section 4.11.3.

Section 1.32 “ GE Employee Plan ”, “ GE Layoff Plan for Exempt Employees ”, “ GE Job and Income Security Plan for Non-Exempt Salaried Employees ”, “ GE Job and Income Security Plan for Non-Exempt Hourly Employees ”, “ GE Pension Plan ”, “ GE Savings and Security Program ”, “ GE Excess Benefit Plan ”, “ GE Supplementary Pension Plan ”, and “ GE Life, Disability and Medical Plan ” means each of the respective compensation and benefit plans of Seller, copies of which were provided to Purchaser prior to the Closing Date. Such compensation and benefit plans are collectively referred to as the “ GE Employee Plans .”

Section 1.33 “ GE Marks ” means all trademarks, logos, trade names and names which are owned by General Electric Company or any of its Affiliates (other than those used exclusively in connection with the Business or otherwise specifically included in the Intellectual Property), including, without limitation, the names “Osmonics”, “General Electric”, “General Electric Company” and “GE”.

Section 1.34 “ Governmental Entity ” means any United States federal, state or local or any supra-national or non-U.S. government, political subdivision, governmental, regulatory or administrative authority, instrumentality, agency, body or commission, self-regulatory organization or any court, tribunal, or judicial or arbitral body.

Section 1.35 “ Hazardous Substances ” means any substance, waste, material, pollutant, contaminant or chemical regulated under any Environmental Law, including without limitation, hazardous substances as defined in the Comprehensive Environmental Response, Compensation and Liability Act, as of the Closing Date, and hazardous waste as defined in the Resource Conservation and Recovery Act, as of the Closing Date, and any petroleum, petroleum-based waste or petroleum breakdown product.

Section 1.36 “ IRS ” means the Internal Revenue Service of the United States Department of the Treasury.

Section 1.37 “ Initial Purchase Price ” has the meaning as defined in Section 2.5.1.

Section 1.38 “ Intellectual Property ” means all right, title and interest of Seller in and to the patents, trademarks, trade secrets, trade names, service marks, brand names, databases, processes, formulae, know-how, inventions, innovations, discoveries, improvements, confidential information, mailing lists, customer and prospective customer lists, market studies, designs, logos, slogans, copyrights, manuals, documentation and other intellectual property rights relating exclusively to the Products or the Business, and labels or registrations or licenses thereof or applications therefor, which Seller uses exclusively in or which exclusively relate to the Business, including the names “Zyza Tech” and “23G” and all goodwill associated therewith. However, the Intellectual Property shall not include the GE Marks.

Section 1.39 “ Internal Revenue Code ” means the Internal Revenue Code of 1986, as amended.

Section 1.40 “ Inventory ” means all finished products and all raw materials, spare or replacement parts, component parts, work in progress, demonstration units, wrapping, labeling, supply items, packaging and similar items relating to the Products, in each case wherever the same may be located (and whether on consignment or otherwise).

Section 1.41 “ Inventory Value ” has the meaning as defined in Section 6.9.1.

Section 1.42 “ Knowledge ” means the actual knowledge of Sean West, Andrew Zaske and Joseph Kline.

Section 1.43 “ Lease ” means the Lease Agreement dated May 6, 2004, by and between Brecksville Corporate Center Limited Partnership and Seller, which constitutes the lease (or amendment thereto) for the Leased Premises.

Section 1.44 “ Lease Expiration Date ” has the meaning as defined in the Transition Services Agreement.

Section 1.45 “ Leased Premises ” means the service center leased and occupied by Seller at 6650 West Snowville Road, Unit F, Brecksville, Ohio 44141, including the space appurtenant thereto to which Seller has rights of use or which Seller has a right to traverse pursuant to its Lease, but only to the extent of such rights.

Section 1.46 “ Liability ” or “ Liabilities ” means any direct or indirect liability, indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or endorsement of or by any Person of any type, whether or not accrued and whether absolute, contingent, matured or unmatured, known or unknown, and choate or inchoate, whether or not of a kind required by generally accepted accounting principals to be set forth, accrued, reserved or reflected in a financial statement.

Section 1.47 “ Lien ” means any mortgage, deed of trust, pledge, hypothecation, security interest, encumbrance, claim, lien or charge of any kind.

Section 1.48 “ Loss(es) ” means all loss, liability, damage or deficiency, including interest, penalties, costs of preparation and investigation and reasonable attorneys’ fees; provided that except as set forth in the next sentence, Losses shall not include Special Damages. For the avoidance of doubt, amounts paid by or on behalf of an indemnitee in respect of a Third Party Claim shall be considered to be Losses regardless of whether any of such amounts recovered by a third party through such payment include or were classified as Special Damages in such resolution or judgment.

Section 1.49 “ Material Adverse Effect ” means, with respect to any Person (or where applicable, the Business), any event, circumstance, change, condition, development or occurrence either individually or in the aggregate, resulting in or reasonably likely to result in a material adverse effect on (a) the business (as now conducted), results of operations, financial condition, properties, assets or liabilities of such Person or the Business (b) the legality or enforceability of this agreement, or (c) the ability of such Person to perform its obligations and to consummate the transactions under this agreement; provided; however, that (i) any adverse change, event or effect arising from or relating to general business or economic conditions, including without limitation any change, event or effect relating to any war, acts of terrorism or similar events, which does not affect the Business in a materially disproportionate manner, shall not be deemed to constitute a Material Adverse Effect and (ii) any adverse change, event or effect resulting from the announcement of the transactions contemplated hereby shall not be deemed to constitute and shall not be taken into account in determining whether there has been a Material Adverse Effect.

Section 1.50 “ Material Contracts ” has the meaning as defined in Section 4.11.1.

Section 1.51 “ MDRs ” has the meaning as defined in Section 1.4.

Section 1.52 “ Notice of Disagreement ” has the meaning as defined in Section 6.9.4.

Section 1.53 “ Order ” means any decree, judgment, ruling, arbitration award, assessment, writ, injunction or similar order of any Governmental Entity (in each such case whether preliminary or final).

Section 1.54 “ Ordinary Course of Business ” means the ordinary course of business consistent with past custom and practice of Seller in the conduct of the Business.

Section 1.55 “ Permits ” has the meaning as defined in Section 4.13.

Section 1.56 “ Permitted Liens ” means the following Liens: (a) Liens for Taxes, assessments or other governmental charges or levies that are not yet due or payable or that are being contested in good faith by appropriate proceedings; (b) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen, repairmen and other Liens imposed by applicable law and on a basis consistent with past practice for amounts not yet due; (c) Liens incurred or deposits made in the Ordinary Course of Business in connection with workers’ compensation, unemployment insurance or other types of social security; (d) Liens not created by Seller or its Affiliates that affect the underlying fee interest of any real property that Seller owns or leases; (e) Liens incurred in the Ordinary Course of Business securing obligations or liabilities that are not individually or in the aggregate material to assets of Seller; (f) any set of facts an accurate up-to-date survey would show, provided such facts do not materially interfere with the present use, enjoyment and occupation of the relevant real property owned or leased by Seller; (g) in the case of the Intellectual Property, licenses, options to license, or covenants not to assert claims of infringement, in each case in existence as of the Closing Date, from Seller to third parties and identified in Section 1.56 of the Disclosure Schedule; (h) any rights of lessor’s to any leased property of Seller; and (i) any liabilities set forth in the February 2007 Financial Statements (and any liabilities incurred since that date that were incurred in the Ordinary Course of Business).

Section 1.57 “ Person ” means any natural person, corporation, partnership, joint venture, limited liability company, association, group, organization or other entity.

Section 1.58 “ Preexisting Conditions ” has the meaning as defined in Section 6.2.1(f).

Section 1.59 “ Preliminary Inventory Schedule ” has the meaning as defined in Section 6.9.1.

Section 1.60 “ Products ” means those products set forth in the document titled “Purchased Products List” and delivered to Purchaser on the Closing Date.

Section 1.61 “ Purchased Assets ” has the meaning as defined in Section 2.1.

Section 1.62 “ Purchase Price ” has the meaning as defined in Section 2.5.1.

Section 1.63 “ Purchaser ” has the meaning as defined in the introduction.

Section 1.64 “ Purchaser FMC Sales ” has the meaning defined in Section 6.10.

Section 1.65 “ Purchaser Indemnified Parties ” has the meaning as defined in Section 7.2.

Section 1.66 “ Rebate Period ” has the meaning defined in Section 6.10.

Section 1.67 “ Receiving Party ” has the meaning as defined in Section 9.1.

Section 1.68 “ Requirement of Law ” means any statute or law, treaty, ordinance, rule or regulation or any judgment, decree, order, regulation, rule or determination of any arbitrator or court or other Governmental Entity, in each case applicable to or binding upon Seller or any of its properties related to the Business.

Section 1.69 “ Retained Leases ” means any agreement, contract, obligation, promise or undertaking to which Seller is a party or by which it is bound and which constitutes a lease (or amendment thereto) for one of the Retained Leased Premises and which relates to the Business.

Section 1.70 “ Retained Leased Premises ” means the office and warehouse space occupied by Seller at 5951 Clearwater Drive, Minnetonka, Minnesota 55343, the service center leased and occupied by Seller at 11113 N.E. 33 rd Place, Belleview, Washington 98004, and the service center leased and occupied by Seller at 4740 Bronze Way, Dallas, Texas 75236, in each case also including space appurtenant thereto to which Seller has rights of use or which Seller has a right to traverse pursuant to its Lease, but only to the extent of such rights.

Section 1.71 “ Retained Liabilities ” has the meaning as defined in Section 2.4.

Section 1.72 “ Seller ” has the meaning as defined in the introduction.

Section 1.73 “ Seller Acquisition Date ” has the meaning as defined in Section 4.1.

Section 1.74 “ Seller FMC Sales ” has the meaning defined in Section 6.10.

Section 1.75 “ Seller Indemnified Parties ” has the meaning as defined in Section 7.3.

Section 1.76 “ Seller Restricted Parties ” has the meaning as defined in Section 6.5.

Section 1.77 “ Special Damages ” means lost profits, lost revenues, lost opportunities, consequential, punitive, treble or other special damages regardless of the legal theory.

Section 1.78 “ Supply Agreement ” has the meaning defined in Section 3.2.1(d).

Section 1.79 “ Tax ” or “ Taxes ” means any taxes, fees, levies, duties, tariffs, imposts and other charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any governmental or taxing authority, including without limitation taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers’ compensation, unemployment compensation or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp transfer, value added or gains taxes; license, registration and documentation fees; and customs’ duties, tariffs and similar charges.

Section 1.80 “ Tax Proceeding ” means any action, suit, investigation, audit, examination, claim or other administrative or judicial proceeding relating to Taxes or Tax Returns.

Section 1.81 “ Tax Return ” or “ Tax Returns ” means all reports, returns, declarations, claims for refund or statements of any kind or nature relating to Taxes, and any schedule or attachment thereto or any amendment thereof.

Section 1.82 “ Third Party Claim ” has the meaning as defined in Section 7.5.1(a).

Section 1.83 “ Third Party Consents ” has the meaning as defined in Section 4.6.

Section 1.84 “ Trademark License Agreement ” has the meaning defined in Section 3.2.1(e).

Section 1.85 “ Transition Services Agreement ” has the meaning defined in Section 3.2.1(c).

Section 1.86 “ Transfer Taxes ” has the meaning as defined in Section 2.6.

Section 1.87 “ 2006 Financial Statements ” has the meaning as defined in Section 4.7.

Section 1.88 “ Unassigned Asset ” has the meaning as defined in Section 6.7.1.

ARTICLE 2
PURCHASE AND SALE OF ASSETS

Section 2.1 Transfer of Purchased Assets. Upon the terms and subject to the conditions contained herein, at the Closing, Seller shall sell, convey, transfer, assign and deliver to Purchaser, all of Seller’s right, title and interest in the following assets that are related to the Business, wherever such assets are located (collectively, the “ Purchased Assets ”) and Purchaser shall purchase and accept the Purchased Assets:

2.1.1 all fixed assets and tangible personal property owned, leased or licensed by Seller and used exclusively in the Business, comprised of: (i) the furniture, equipment, furnishings , and other similar tangible assets owned by Seller which are located at the Leased Premises, the Retained Leased Premises or elsewhere and set forth on Exhibit 2.1.1 ; (ii) the manufacturing and assembly equipment, test equipment, safety and material handling equipment, bar code equipment, certain computers and computer peripherals that are freely transferable by Seller, and all other machines and equipment used exclusively in the Business and set forth in Exhibit 2.1.1 ; (iii) assembly benches, molds and tooling and the material handling and warehouse racking and all other tangible assets related to or used in connection with the manufacturing processes of the Products or otherwise used in the Business and set forth on Exhibit 2.1.1 ; (iv) all Products located at the Leased Premises, Retained Leased Premises, customer locations, dealer locations, Seller’s warehouses, in transit to or from such premises, locations or warehouses, or elsewhere; (v) all Inventory, wherever located; and (vi) all boxes, packaging materials and supplies;

2.1.2 all of Seller’s rights in and under the Contracts and the Lease, including Seller’s rights in and to the Leased Premises and any improvements therein made by Seller, but excluding items that are tangible personal property which would otherwise constitute a portion of

the Purchased Assets but which under local law are classified as fixtures, and only to the extent that such rights relate to matters arising after the Closing Date;

2.1.3 all contracts to provide goods or services to or from Seller entered into in the Ordinary Course of Business and related exclusively to the operation of the Business but only to the extent that such rights relate to matters arising after the Closing Date;

2.1.4 the Books and Records;

2.1.5 the Permits related exclusively to the operation of the Business, to the extent assignable;

2.1.6 all web content related exclusively to the Business contained in websites of Seller or its Affiliates;

2.1.7 all online manuals and information related exclusively to the Products or the Business contained in websites of Seller or its Affiliates;

2.1.8 all documentation and data (written, electronic and otherwise) of Seller pertaining exclusively to the Business including, without limitation, computer print-outs, invoices, customer lists, prospect lists, credit records and information, purchase and sales records and information, merchandise records, sales promotion materials and other documents and items incidental to the Business (but not including any such items which are specifically excluded from the definition of “Books and Records”);

2.1.9 all drawings, designs, sketches, plans and other similar matters, however evidenced;

2.1.10 all trade secrets, business and marketing plans and manufacturing know-how, confidential and proprietary information, and goodwill related to the Business;

2.1.11 all of Seller’s in-process technology, enhancements, designs, modifications, testing data, and the like for product improvements and/or new product concepts related exclusively to the Products or the Business;

2.1.12 all of Seller’s rights (to the extent transferable or assignable by Seller) with respect to phone numbers and fax numbers used exclusively in the Business;

2.1.13 all Intellectual Property related exclusively to the Business; and

2.1.14 all of Seller’s rights with respect to any manufacturer’s warranties relating to the Purchased Assets to the extent that such rights are assignable.

Section 2.2 Excluded Assets. Purchaser is purchasing only the Purchased Assets and Seller shall retain all other assets of Seller, whether or not related to the Business, including without limitation, the GE Marks, all rights in and under the Retained Leases, vehicles and delivery vans owned or leased by Seller, all computers and computer programs, software, hardware and peripherals (except to the extent that such computer and computer peripherals are

listed in Exhibit 2.1.1 ), all accounts receivable related to the Business, all accounts receivable from any Affiliate of Seller or any other division of Seller, all cash and cash equivalents related to the Business, all bank accounts related to the Business, and all deposits and prepaid expenses related to the Business (collectively, “ Excluded Assets ”).

Section 2.3 Assumed Liabilities . Purchaser shall be solely responsible for all Liabilities arising out of Purchaser’s conduct of the Business after the Closing Date. In addition, at the Closing Purchaser shall assume all the Liabilities of Seller relating to or arising out of the Business or the Purchased Assets (the “ Assumed Liabilities ”) other than the Retained Liabilities.

Section 2.4 Retained Liabilities . Notwithstanding any provision in this Agreement to the contrary, Purchaser is not assuming any of the following Liabilities of Seller (collectively, the “ Retained Liabilities ”):

2.4.1 any Liability of Seller to the extent not relating to the Business;

2.4.2 product liability (strict liability or otherwise), product recalls or field corrective actions, including those associated with MDRs, fraudulent concealment or tort claims (other than the Assumed Warranty Obligations) concerning Seller’s products sold or delivered to customers prior the Closing Date;

2.4.3 any Liability relating to an Excluded Asset;

2.4.4 any accounts payable or notes payable of Seller;

2.4.5 any financed or other debt that Seller owes to any Person;

2.4.6 any Liability that Seller has to any of its Affiliates or any other division of Seller;

2.4.7 any Action that is pending or threatened against Seller as of the Closing Date;

2.4.8 any obligation of Seller that it expressly undertakes pursuant to this agreement;

2.4.9 any Liability relating to the GE Employee Plans or other compensation or benefit plan of Seller or under which any past or present employee of Seller has participated or is currently participating, or any violation of a Requirement of Law related thereto or arising thereunder, or any funding deficiency with respect to, or any breach of or default under the terms of such plans occurring prior to or existing on the Closing Date;

2.4.10 Taxes with respect to Seller or the Business with respect to any period prior to the Closing Date;

2.4.11 guarantees by Seller of any indebtedness or obligation of any other Person for borrowed money or otherwise;

2.4.12 except for any of the following to the extent relating to the Leased Premises, any civil or criminal penalties or other Liabilities or any payments in the nature thereof, or any damages or clean-up costs, under any Environmental Laws or any federal, state, local or foreign law, rule, regulation or policy governing occupational health and safety matters, or founded upon a private right of action or third party claim in respect of Hazardous Substances or occupational health or safety matters, imposed upon, or sought to be imposed upon, Seller, or Purchaser on account of any act or omission of Seller or its Affiliates, or on account of any state of facts or conditions existing prior to the Closing Date;

2.4.13 subject to Section 6.2.1, compensation and benefits owing to employees of Seller (whether due or accruing prior to or after the Closing Date), including, without limitation, salary, bonus, commission, vacation pay, severance pay, deferred and accrued compensation, health care and pension benefits, and other compensation payable under contract, benefit plan, or otherwise;

2.4.14 the sale of the Purchased Assets hereunder, including, without limitation, fees of Seller’s attorneys and other advisors;

2.4.15 Liabilities under or related to Retained Leases; and

2.4.16 pending, threatened or future Actions by or with respect to current or past employees of Seller based upon, or related to, the employment relationship between Seller and its employees, the termination of such employment relationship, or any actual or alleged act, action, occurrence, transaction, omission or communication that transpired or occurred at any time prior to the Closing Date, including, without limitation, claims under any Requirement of Law related to human rights, discrimination, civil rights, employee compensation, disabilities, fair labor or medical leave.

Section 2.5 Purchase Price; Escrow .

2.5.1 The initial purchase price for Business and Purchased Assets shall be Thirty Million Seven Hundred Thousand Dollars ($30,700,000). This amount is the “ Initial Purchase Price .” The Initial Purchase Price, as adjusted in accordance with Section 2.5.2 below, shall be the “ Purchase Price .” Subject to Section 2.5.3 below, Purchaser shall pay the Purchase Price (exclusive of the adjustment under Sections 2.5.2(a) and (c)) to Seller via wire transfer at the Closing. The Purchase Price shall be in addition to Purchaser’s assumption of the Assumed Liabilities pursuant to this Agreement.

2.5.2 (a) Vacation Adjustment. The Initial Purchase Price shall be reduced to reflect the accrued and unused vacation time of Employees as of the Closing Date that is being assumed by Purchaser under Section 6.2.1. Seller shall pay to Purchaser an amount equal to amount of such accrued and unused vacation time within 10 days of the Closing Date.

(b) Warranty Claim Adjustment . The Initial Purchase Price shall be reduced at Closing by $80,000.00 to compensate Purchaser for assuming the Assumed Warranty Obligations under Section 2.3.

(c) Inventory Adjustment . The Initial Purchase Price shall be adjusted in accordance with Section 6.9 by the amounts by which the Inventory Value as of the close of business on March 30, 2007 is greater than or less than $1,900,000. Any adjustment under this Section 2.5.2(c) shall occur when the Inventory Value is finalized in accordance with Section 6.9.

2.5.3 Purchaser shall place $1,000,000 of the Initial Purchase Price in an escrow account (the “ Escrow ”) to be held for a period of twelve (12) months to offset any claims that Purchaser may have against Seller pursuant to ARTICLE 7 of this agreement. At Closing, Purchaser and Seller shall enter into a duly executed escrow agreement substantially in the form of Exhibit A (the “ Escrow Agreement ”).

Section 2.6 Closing Costs; Transfer Taxes . Purchaser shall pay all costs and expenses incurred in connection with recording title to the Purchased Assets; provided, however, that Seller shall bear all costs of any curative efforts necessary to transfer good and valid title to the Purchased Assets. Purchaser shall bear all Taxes that are not in the nature of income, gross receipts or similar types of Taxes that arise as a result of the transfer and sale of the Purchased Assets from Seller to Purchaser (the “ Transfer Taxes ”). With respect to any state, county or municipal sales taxes that arise as a result of the transfer and sale of the Purchased Assets from Seller to Purchaser, Purchaser shall deliver the amount of such taxes (if any) to Seller at the Closing or within five business days thereafter. If Purchaser presents a valid Minnesota manufacturing exemption certificate or any other valid exemption or re-sale certificate to Seller at Closing, Purchaser shall not be obligated to deliver the amount of the applicable sales tax to Seller on those Purchased Assets that are exempt from such tax upon having a valid exemption or re-sale certificate. Seller shall remit the Transfer Taxes to the appropriate Governmental Authority after the Closing. The Tax Returns for any Transfer Taxes required by reason of the transfer shall be prepared and filed in a timely manner by the party normally obligated by law or regulation to make such filing. The parties shall reasonably cooperate with each other in connection with the preparation and filing of such returns, in obtaining all available exemptions from the Transfer Taxes and in providing each other in a timely manner with resale certificates and any other documents necessary to satisfy any such exemptions.

ARTICLE 3
CLOSING

Section 3.1 Closing. The closing of the transactions contemplated herein (the “ Closing ”) shall be held at 10:00 a.m. local time on March 30, 2007 at the offices of Seller (including delivery of documents by facsimile) or on such other date and at such other location as is mutually agreed by the parties (the “ Closing Date ”). For the purpose of any calculation or determination required to be made by either of the parties following the Closing, the Closing shall be deemed to have been effective as of 11:59 p.m. on the Closing Date.

Section 3.2 Conveyances at Closing .

3.2.1 To effect the sale and transfer and other transactions referred to in ARTICLE 2, Seller shall, at the Closing, execute or cause to be executed, as appropriate, and deliver to Purchaser:

(a) the Assignment and Bill of Sale;

(b) a closing statement which sets forth the Purchase Price, including any adjustments thereto (exclusive of the Inventory Adjustment) (the “ Closing Statement ”);

(c) Transition Services Agreement: Seller shall have delivered to Purchaser a duly executed transition services agreement substantially in the form of Exhibit C (the “ Transition Services Agreement ”);

(d) Supply Agreement: Seller shall have delivered to Purchaser a duly executed product supply agreement substantially in the form of Exhibit D (the “ Supply Agreement ”);

(e) Trademark License Agreement: Seller shall have delivered to Purchaser a duly executed trademark license agreement substantially in the form of Exhibit E (the “ Trademark License Agreement ”);

(f) the Escrow Agreement;

(g) Board Resolutions: A copy of the text of the resolutions adopted by the board of directors of Seller authorizing the execution, delivery and performance of this Agreement and the consummation of all of the transactions contemplated by this Agreement, duly certified by Seller’s secretary to the effect that such copies are true, correct and complete copies of such resolutions and that such resolutions were duly adopted and have not been amended or rescinded;

(h) Good Standing: Copies of a recently dated certificate of good standing for Seller from the office of the Secretary of State of the State of Minnesota;

(i) Intellectual Property: Instruments of assignment to Purchaser, executed by Seller, assigning the entire right, title and interest of Seller in, to and under the Intellectual Property, in form and substance reasonably satisfactory to both parties; and

(j) Further Assurances: Such other instrument or instruments of transfer as shall be necessary or appropriate, as Purchaser or its counsel shall reasonably request, to carry out and effect the purpose and intent of this agreement.

3.2.2 To effect the sale and transfer and other transactions referred to in ARTICLE 2, Purchaser shall, at the Closing, execute or cause to be executed, as appropriate, and deliver to Seller:

(a) the Closing Statement;

(b) the Transition Services Agreement;

(d) the Trademark License Agreement;

(e) the Escrow Agreement;

(f) Board Resolutions: A copy of the text of the resolutions adopted by the board of directors of Purchaser authorizing the execution, delivery and performance of this agreement and the consummation of all of the transactions contemplated by this agreement, duly certified by Purchaser’s secretary or assistant secretary to Seller to the effect that such copies are true, correct and complete copies of such resolutions and that such resolutions were duly adopted and have not been amended or rescinded;

(g) Purchase Price: Evidence satisfactory to Seller of the wire transmission of (i) the Purchase Price (subject to the adjustment under Sections 2.5.2(a) and (c) and exclusive of the Escrow) and any Transfer Taxes pursuant to Section 2.6 to Seller and (ii) the Escrow to the escrow agent specified in the Escrow Agreement; and

(h) Further Assurances: Such other instrument or instruments of transfer as shall be necessary or appropriate, as Seller or its counsel shall reasonably request, to carry out and effect the purpose and intent of this agreement.

Section 3.3 Allocation of Purchase Price . The parties agree that the Purchase Price will be allocated among the Purchased Assets by Purchaser based upon the report of its independent third party specialist as soon as possible but in no event more than 30 days following the Closing Date. Purchaser shall provide Seller with written notice of the allocation of the Purchase Price within such 30 day period. In the event that Seller disagrees with the allocation of Purchaser’s independent third party specialist, Seller shall have 30 days to notify Purchaser that Seller disagrees with such allocation and retain, at its expense, its own independent third party specialist to determine the allocation of the Purchase Price. Seller shall provide Purchaser with the final allocation of Seller’s independent third party specialist within such 30 day period. In the event that Purchaser’s independent third party specialist and Seller’s third party specialist cannot agree on a final allocation of the Purchase Price within 10 days of when Purchaser received Seller’s allocation, the independent third party specialists of each party shall agree upon a third independent third party specialist whose final allocation of the Purchase Price shall be binding upon both Purchaser and Seller. Any costs associated with a third independent third party specialist shall be split equally between the parties. Purchaser and Seller each shall report the transaction in accordance with such allocation, and shall not take a position inconsistent with such allocation except with the written consent of the other party or except as may be necessary to resolve a tax audit or other tax controversy. Purchaser and Seller shall complete the information required for the IRS e-filing requirements of Form 8594 reflecting such allocation and Purchaser and Seller will take no position with any tax authorities inconsistent with such allocation.

Section 3.4 Simultaneous Transactions. All things which this agreement contemplates are to happen at or in connection with the Closing shall be deemed to have happened simultaneously, and unless all such things shall happen or shall be waived, none shall be deemed to have occurred.

ARTICLE 4
SELLER’S REPRESENTATIONS AND WARRANTIES

Seller represents and warrants to Purchaser that, except as may be set forth in the Disclosure Schedule, the following statements are true and correct as of this date:

Section 4.1 Seller’s Knowledge. For purposes of all representations and warranties that Seller provides in this agreement, all such representations and warranties with respect to any events, facts or circumstances that occurred before February 28, 2003 (the “ Seller Acquisition Date ”) that would affect in any way any of the representations and warranties Seller has given in this agreement or any other document or instrument contemplated herein are based on Seller’s Knowledge.

Section 4.2 Organization and Good Standing; Qualification. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Minnesota, with all requisite corporate power and authority to carry on the business in which it is engaged, and to own and operate the assets, properties and businesses it owns and to carry on the Business as it is now being conducted.

Section 4.3 Title to Purchased Assets. Seller has good, marketable and valid title to all the Purchased Assets and full right, power and authority to sell, convey, assign, transfer and deliver all the Purchased Assets to Purchaser, and Purchaser shall acquire, good and valid title to all the Purchased Assets, free and clear of any Liens except for: (i) Permitted Liens and (ii) the Assumed Liabilities. Except for the Excluded Assets, the tangible assets included in the Purchased Assets constitute all of the tangible assets of Seller necessary for or material to the operation of the Business in the manner conducted prior to the Closing Date.

Section 4.4 Authorization and Validity. The execution, delivery and performance by Seller of this agreement and the other agreements contemplated hereby (the “ Collateral Agreements ”), and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by all required corporate action of Seller. This agreement and all Collateral Agreements have been duly executed and delivered by Seller and (assuming the due authorization, execution and delivery by the Purchaser) constitutes the legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally or the availability of equitable remedies.

Section 4.5 No Violation. Except for obtaining the Third Party Consents, neither the execution, delivery or performance of this agreement or the Collateral Agreements nor the consummation of the transactions contemplated hereby or thereby will (i) conflict with, or result in a violation or breach of the terms, conditions or provisions of, or constitute a default (or an event which, with the giving of notice of lapse of time or both, would constitute a default) under, or result in the termination of, or acceleration of the performance required by, or result in the creation or imposition of any Lien upon any property or assets of Seller, the articles of incorporation or bylaws of Seller, (ii) conflict with, or result in a material breach of the terms, conditions or provisions of, or constitute a default under, any agreement indenture, right of first refusal, non-competition agreement or other instrument under which Seller is bound or to which

any of the assets of Seller are subject, or result in the creation or imposition of any security interest, lien, charge or encumbrance upon any of the assets of Seller, or (iii) violate or conflict with any Order or Requirement of Law that is applicable to Seller.

Section 4.6 Governmental Authorities; Third Party Consents. Except as set forth in Section 4.6 of the Disclosure Schedule, Seller is not required to submit any notice, report or other filing with any Governmental Entity in connection with the execution or delivery by Seller of this agreement or the consummation of the transactions contemplated hereby or thereby, and no action, consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity or any other Person other than the executive management of Seller is required to be obtained in connection with the execution, delivery and performance of this agreement or any of the Collateral Agreements or the transactions contemplated herein or therein (the “ Third Party Consents ”).

Section 4.7 Financial Information. Section 4.7 of the Disclosure Schedule includes a copy of the balance sheets of the Business as at December 31, 2005 and 2006 and the related statements of income for the years then ended (the “ 2006 Financial Statements ”). Section 4.7 of the Disclosure Schedule also includes copy of the balance sheet of the Business at February 28, 2007 and the related statement of income for the two months then ended (the “ February 2007 Financial Statements ”). The 2006 Financial Statements and the February 2007 Financial Statements are collectively referred to as the “ Financial Reports .” The Financial Reports fairly present in all material respects the financial condition and results of operations of the Business as of the dates and for the periods indicated, except that any projections and estimates set forth in the Financial Reports were for Seller’s internal purposes only and Seller makes no representations or warranties whatsoever related to any such projections and estimates. As at the Closing Date, Seller does not have Knowledge of any Liabilities of Seller that are related exclusively to the Business other than those that were adequately accrued, reserved for or reflected in the balance sheet included in the February 2007 Financial Statements, except for (i) Retained Liabilities, (ii) Liabilities under the Contracts and the Lease and the accrued and unused vacation of the Employees as of the Closing Date, and (iii) Liabilities incurred in the Ordinary Course of Business consistent with past practice.

Section 4.8 Employee Matters. Seller is not a party to any collective bargaining or labor agreement, arbitration, lawsuit or administrative proceeding with respect to its employees and there has been no material work stoppage against Seller, and, to Seller’s Knowledge, is any stoppage threatened against Seller. No petition has been filed for recognition of any Person as the collective bargaining representative for the Employees. Seller is and has been in compliance with all applicable laws respecting employment and employment practices and the terms and conditions of employment, wages and hours, including, without limitation, any such laws respecting employment discrimination, occupational safety and health, and unfair labor practices, except where such noncompliance would not cause a Material Adverse Effect on the Business, taken as a whole. Seller is not delinquent in any payments to the Employees for any wages, salaries, commissions, bonuses or other direct compensation for any services performed by them or any amounts required to be reimbursed to the Employees. Set forth on Exhibit B attached hereto is a complete and accurate list of the Employees, together with the title and annual compensation (including bonuses and commissions) of each such Person.

Section 4.9 Taxes.

4.9.1 Filing of Tax Returns . Since the Seller Acquisition Date, Seller (or the combined, unitary or consolidated group of which it is a member) has duly and timely filed (in accordance with any extensions granted by the appropriate governmental agency, if applicable) with the appropriate Governmental Entity all Tax Returns required to be filed by the United States or any state or any political subdivision thereof. All such Tax Returns are, to the extent they relate to Seller, complete and accurate in all material respects. There are no Liens for Taxes with respect to the Purchased Assets, except for statutory liens for current Taxes not yet delinquent, and no taxing authority has made any claims in writing with respect to Taxes related to the Business.

4.9.2 Payment of Taxes . Since the Seller Acquisition Date, except for such items as Seller or its respective Affiliates may be disputing in good faith, (i) Seller has paid or made adequate provision for payment of Taxes that have become due with respect to any Tax Returns that it has filed and (ii) Seller is not delinquent in the payment of any Tax with respect to the Business.

Section 4.10

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