EXCLUSIVE MANUFACTURING AND DISTRIBUTION AGREEMENT

EXHIBIT 10.19

EXCLUSIVE MANUFACTURING AND DISTRIBUTION AGREEMENT

      THIS EXCLUSIVE MANUFACTURING AND DISTRIBUTION AGREEMENT (the “Agreement”) is made and entered into as of the 18th day of April, 2005, by and between Uroplasty, Inc., 2718 Summer Street N.E., Minneapolis, Minnesota 55413 (“Uroplasty”), and CystoMedix, Inc., 1887 Station Parkway N.W., Building #7, Andover, Minnesota 55304 for itself and all of its wholly-owned subsidiaries (collectively “CystoMedix”).

RECITALS :

      WHEREAS , Uroplasty manufactures and currently markets outside of the United States a family of injectable implant products used for soft-tissue augmentation for specific indications in urology, urogynecology, gynecology, colon and rectal, otolaryngology and plastic surgery markets;

      WHEREAS , CystoMedix is a medical device company that develops products for patients in the urogynecology and gynecology markets and has developed, and continues to develop, neurostimulation devices currently being, or proposed to be, marketed under the brand names and trademarks (collectively, the “Trademarks”) URGENT®, “URGENT-PC™” and “URGENT-SQ™” (collectively as now existing or hereafter improved, modified or enhanced, the “Products”);

      WHEREAS , subject to FDA and other applicable regulatory approvals, Uroplasty desires to act as the exclusive manufacturer and distributor of the Products in the territories named herein, and CystoMedix desires and is willing to grant such rights to Uroplasty, on the terms and conditions contained herein.

NOW THEREFORE, IT IS AGREED AS FOLLOWS :

1.      Exclusive Manufacturing and Distribution Agreement .

     (a) For five years beginning on the Effective Date as described in Section 11 below (the “License Term”), CystoMedix hereby appoints and grants to Uroplasty, and Uroplasty hereby accepts from CystoMedix, the exclusive right and license to use, manufacture, market, sell and distribute the Products during the term of this Agreement, upon the terms and conditions contained herein.

     (b) The rights granted to Uroplasty under this Agreement shall extend throughout the territory of the United States of America, Canada, and all countries recognizing the medical device CE mark approval of the European Union, as the same may change from time to time (the “Territory”).

     (c) In connection with the above rights, CystoMedix hereby grants Uroplasty during the License Term:

     (i) an exclusive right and license to manufacture, have manufactured, use, sell, lease or otherwise dispose of Products in the Territory under CystoMedix’s U.S. Patent Nos. 6,493,588 and 5,711,314, under U.S. Patent Application Serial Nos. 10/195,197, 10/492,578 and 10/905,501 (and any patents that may issue with respect thereto) and under any other now existing or hereafter created U.S. or foreign patent or patent applications owned or controlled by CystoMedix (all together, the “CystoMedix Patent Rights”) and

     (ii) an exclusive right and license to make, use, lease, sell or otherwise dispose of the Products bearing the Trademarks together with all logos and designs or any other trademark, name or logo which CystoMedix uses to identify the Products now or hereafter, in the Territory.

     (d) Uroplasty has the absolute right in its sole discretion to grant one or more sublicenses to third parties for any or all of the rights granted to it by CystoMedix under this Agreement.

     (e) CystoMedix agrees that during the License Term, CystoMedix shall not enter into any arrangement or agreement with any other party for the manufacture, marketing, sale or distribution of the Products, or any product which competes with the Products, in the Territory, or cause or assist in any way in the creation, manufacture, marketing, sale or distribution of the Products, or any product which competes with the Products, in the Territory.

     (f) Despite the other provisions of this Agreement, CystoMedix may continue to serve its existing URGENT-PC customers and new prospects in the Territory until Uroplasty gives written notice to CystoMedix. Upon receipt of this notice, CystoMedix will promptly (but in not more than 10 business days) terminate its business activities in the Territory and turn over all customer relationships and prospects to Uroplasty.

     2.      Uroplasty’s Responsibilities . During the License Term, Uroplasty will at its sole cost and expense:

     (a)  Regulatory Compliance . Undertake and manage all regulatory affairs for the sale and marketing of the Products in the Territory (such as the FDA 510(k) regulatory approval process in the United States, the European Medical Device Directives for CE marking, or Canadian Medical Device Regulations including CMDCAS) including using its commercially reasonable efforts to obtain and maintain regulatory and marketing approval for the sale and marketing of the Products in the Territory, undertaking design control and clinical testing and clinical trial requirements and obtaining approval for the use of labeling and promotional materials for the Products. Uroplasty will also undertake any testing and documentation necessary to obtain and file for marketing clearance in the Territory, including compliance with any applicable quality system regulations for design history. Uroplasty will exclusively own such testing results and documentation, the development work related thereto, the regulatory file

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materials and any regulatory and marketing clearances (including the CE mark and U.S. FDA 510(k) clearance) it obtains (the “Product Regulatory Materials”). Uroplasty will list the Products, as finalized by Uroplasty, with the U.S. FDA and other applicable regulatory agencies as Uroplasty products.

     After the License Term (but only if the License Term ends upon the natural expiration of this Agreement and specifically other than on account of (a) Uroplasty’s exercise of its Option or Right of First Refusal as described in Section 6 below or (b) a material breach by CystoMedix), Uroplasty will transfer ownership of the Product Regulatory Materials relating to the URGENT-PC product (in the form that such product exists on the date of this Agreement and not as improved, enhanced or modified hereafter) to CystoMedix.

     (b)  Manufacturing of Products . Establish its own manufacturing facility (or outsource to a third party) for the manufacture of the Products according to all regulatory requirements of the Territory in which the Products will be distributed (i.e., U.S. FDA Quality System Regulations, European Medical Device Directives, or Canadian Medical Device Requirements (CMDCAS)) utilizing the documents provided by CystoMedix pursuant to Section 3(c) below. Uroplasty will own the manufacturing processes and documentation it develops and uses for the Products.

     (c)  Marketing . Use its commercially reasonable efforts to market and sell the Products in the Territory at such prices, and on such terms, as Uroplasty shall determine in its sole discretion, and aid CystoMedix in obtaining applicable trademark registrations for the Trademarks in the Territory.

     3.      CystoMedix’s Responsibilities . During the License Term, CystoMedix will at its sole cost and expense:

     (a)  Regulatory Assistance . Use its commercially reasonable efforts to assist Uroplasty in obtaining and maintaining FDA 510(k) marketing clearance in the United States and other similar and applicable regulatory approval for the marketing and sale of the Products in the Territory including by sharing (without cost) all technical files including but not limited to preclinical testing, design files, clinical, manufacturing, marketing and other data in CystoMedix’s possession, or otherwise available to it relating to the Products and regulatory approvals, and by providing (without cost) sample products for testing.

     (b)  Regulatory Compliance . Supply Uroplasty with (i) any and all worldwide regulatory status changes relative to the Products market clearances, including any and all worldwide regulatory agency/Notified Body/consultant correspondence, (ii) worldwide clinical adverse event experience (including investigational notes), (iii) assistance as Uroplasty requests to investigate and resolve Products complaints and/or clinical adverse events and (iv) update the CystoMedix registration with the U.S. FDA and the Product device listings to reflect the provisions of this Agreement. CystoMedix will retain all responsibility, including regulatory

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responsibility, for clearance, design, manufacture, distribution, labeling and advertising of any Products manufactured by it, including prior to the date of this Agreement.

     (c)  Products Design and Manufacturing Specifications . Deliver to Uroplasty the necessary product design and manufacturing specifications, as amended, modified or enhanced from time to time, for the manufacture of the Products (“Products Design and Manufacturing Specifications”).

     (d)  Marketing Assistance . Use its commercially reasonable efforts to assist Uroplasty in the marketing of the Products by sharing (without cost) all of CystoMedix’s current and future marketing materials, including but not limited to product photographs and graphics, trademark logos and designs, brochures and website designs, customer lists and leads in the Territory and other information as reasonably requested by Uroplasty from time to time.

     (e)  CystoMedix Patent Rights . Use its commercially reasonable efforts to maintain the validity and continuation of the outstanding CystoMedix Patent Rights, and to prosecute the issuance of the patent applications that are a part thereof.

     (f)  Financial Records . Use its commercially reasonable efforts to maintain financial and accounting records sufficiently adequate so as to permit a independent registered public accounting firm to audit the financial statements of CystoMedix and subsidiaries as of and for the two years ended, or ending, as of then most recent CystoMedix fiscal year end (provided, that in no event shall CystoMedix be required to have financial and accounting records auditable for its fiscal year ended March 31, 2003 or earlier). To this end, CystoMedix agrees during the License Term, and prior to any exercise of Uroplasty’s Option or Right of First Refusal (as described in Section 6 below), (i) to retain a third party firm reasonably acceptable to Uroplasty (Matrix Associates, Inc. is hereby pre-cleared for this purpose) to assist CystoMedix on a quarterly basis in preparing appropriate financial statements and maintaining appropriate accounting procedures and (ii) to retain an independent registered accounting firm to observe the taking of CystoMedix’s inventory on the last day of each fiscal year.

     4.  Inventory . Within 10 (ten) days following the Effective Date, deliver to Uroplasty 3/4ths of CystoMedix’s inventory. This inventory is currently in multiple locations within The Netherlands and the United States. The parties will equitably divide the component parts, subassemblies and finished items in a manner that will reasonably allocate 3/4th of the useful components and subassemblies (including those that can reasonably be salvaged from finished goods) for Uroplasty. Uroplasty shall pay CystoMedix for such inventory the sum of $25,000 in one lump sum payment payable within ten (10) days following the Effective Date.

     5.       Improved Products . Any improvement, enhancement or modification to the Products during the License Term, whether made singly or jointly by either CystoMedix or Uroplasty, their employees, independent contractors or agents, and whether or not patentable (all together, “Improved Products”), shall be owned exclusively by Uroplasty, subject to the following. Uroplasty will have the exclusive right to determine whether to seek patent protection for any of

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the Improved Products and will bear all patent prosecution and patent maintenance charges with respect to them. During (i) the License Term and (ii) after the License Term (but only if the License Term ends upon the natural expiration of this Agreement and specifically other than on account of (a) Uroplasty’s exercise of its Option or Right of First Refusal as described in Section 6 below or (b) a breach by CystoMedix), Uroplasty grants CystoMedix an exclusive, royalty-free, right and license to manufacture, have manufactured, use, sell, lease or otherwise dispose of the Improved Products outside of the Territory. However, in order to give Uroplasty the opportunity to file for patent protection on the Improved Products outside of the Territory, CystoMedix must give Uroplasty at least 90 days prior written notice of CystoMedix’s intention to market the Improved Products in any jurisdiction outside of the Territory. Using good faith at all times, the parties will notify, provide and otherwise cooperate with each other in all respects regarding the Improved Products without additional charge under this Agreement. Without limitation, this includes CystoMedix’s obligation to arrange for assignment by CystoMedix’s employees to Uroplasty of any rights to Improved Products.

     6.      Option and Right of First Refusal .

     (a) CystoMedix hereby grants Uroplasty the exclusive right and option to acquire all but not less than all of the assets of CystoMedix (the “Option”) pursuant to the asset purchase agreement attached as Exhibit A hereto (the “Asset Purchase Agreement”). Uroplasty may exercise this Option at any time beginning on January 1, 2006, but not later than 5:00 p.m. Central Time on June 30, 2008, by providing an executed copy of the Asset Purchase Agreement to CystoMedix.

     (b) In addition, if at any time before Uroplasty exercises its Option (including prior to the date that Uroplasty may first exercise the Option), CystoMedix receives a bona fide written offer by a third party, acceptable to CystoMedix, for the “Sale and Purchase” (as defined below) of CystoMedix (the “Written Offer”), Uroplasty shall have the first right and option (the “Right of First Refusal”) to consummate the transaction described in the Written Offer (at Uroplasty’s sole election) either (a) on the terms and conditions described in the Written Offer or (b) pursuant to the terms of the Asset Purchase Agreement. Upon receipt of the Written Offer, CystoMedix shall immediately deliver a copy of the Written Offer to Uroplasty. Uroplasty shall exercise its Right of First Refusal by giving written notice to CystoMedix within thirty (30) days of receiving a copy of the Written Offer. In the event that Uroplasty does not exercise the Right of First Refusal, CystoMedix may consummate a Sale and Purchase transaction pursuant to the terms of the Written Offer within 120 days of the date of the Written Offer; provided, that the purchaser or successor to CystoMedix or its assets agrees in writing to be bound by the provisions of this Agreement (including Uroplasty’s Option rights with respect to the assets or business formerly of CystoMedix that is purchased or otherwise acquired by the purchaser or successor pursuant to the Sale and Purchase transaction). If CystoMedix does not consummate the Sale and Purchase transaction within such 120-day period, the Right of First Refusal shall thereafter again apply. The term “Sale and Purchase” includes one or a combination of (a) a sale of all or substantially all of the assets of CystoMedix, (b) an issuance, sale or transfer of CystoMedix’s equity securities (including securities convertible into equity securities)

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representing a majority interest of CystoMedix following the consummation of the transaction, (c) a merger or consolidation of CystoMedix with or into another company or entity or (d) other similar extraordinary corporate transaction.

     7.      Royalties . In consideration of the exclusive manufacturing and distribution rights granted by CystoMedix to Uroplasty hereunder, Uroplasty shall pay to CystoMedix the following royalties:

     (a) $225,000 is due and payable by Uroplasty on the Effective Date (the “Initial Royalty Payment”).

     (b) $250,000 is payable in twelve equal and successive monthly installments of $20,833.33 due on each monthly anniversary date of the Effective Date (the “Scheduled Monthly Royalty Payments”).

     (c) Uroplasty shall pay CystoMedix 7% of Uroplasty’s “Net Product Revenues” during the License Term. The term “Net Product Revenues” means (i) the actual amounts billed during the License Term by Uroplasty (translated into U.S. dollars consistent with the manner in which Uroplasty reports its revenues for SEC reporting purposes) for Uroplasty’s sale of Products to end users or distributors, or from Uroplasty’s sublicense of its rights hereunder to manufacture or distribute Products, in the Territory, less (ii) trade discounts to customers, refunds, advertising allowances, sales and excise taxes, other customer allowances or discounts actually given by Uroplasty and shipping and insurance charges. Royalties are due and payable quarterly within 45 days after the end of each of Uroplasty’s fiscal quarters on Net Product Revenues actually received during the applicable fiscal quarter. Simultaneously with the quarterly payments, Uroplasty shall deliver to CystoMedix a report of the Net Product Revenues and the computation of the royalty. Uroplasty agrees to maintain full and accurate records in sufficient detail to enable CystoMedix to determine the royalties payable hereunder. Despite any of the foregoing, royalties computed under this paragraph (c) shall be offset against (and thus reduced by) payments of the Scheduled Monthly Royalty Payments.

     8.      Product Purchases . During the License Term, Uroplasty grants CystoMedix the non-exclusive right to purchase, and Uroplasty agrees to sell, the Products to CystoMedix solely for sales outside of the Territory at a price, and on terms and conditions, to be determined by the parties in good faith. CystoMedix will be responsible for determining the regulatory clearance requirements, including manufacturing, submissions, labeling and promotional requirements in the jurisdiction in which CystoMedix supplies Products.

     9.      CystoMedix’s Representations and Warranties . CystoMedix represents and warrants to Uroplasty that (i) except as described on the attached Exhibit B , it is the full and exclusive owner of all right, title and interest in and to the Products, the Products Design and Manufacturing Specifications, the CystoMedix Patent Rights and the Trademarks (collectively the “CystoMedix Intellectual Property”), (ii) it has the sole and exclusive right to grant the rights under this Agreement to Uroplasty throughout the term of the Agreement, (iii) except as

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described on the attached Exhibit B , CystoMedix has received no notice alleging, and its executive officers are not aware, that the use of the CystoMedix Intellectual Property prior to the date hereof, or as contemplated and provided for herein, infringes or will infringe any patent, copyright, or other proprietary right of and third party in any jurisdiction and (iv) the making of this Agreement does not violate any agreement, right, or other obligation existing between CystoMedix and any other person, firm, corporation or entity. In addition, CystoMedix agrees that on or before the Effective Date, it will arrange for the holders of a majority of the outstanding shares of CystoMedix’s capital stock to execute and deliver to Uroplasty the consent to the transactions contemplated hereby in the form attached as Exhibit C .

10.      Indemnity .

     (a)  By CystoMedix . CystoMedix shall indemnify, protect, defend, and hold Uroplasty, its sublicensees, parents, subsidiaries, and affiliates, and the respective officers, directors, shareholders, agents, and employees of all of the foregoing, harmless from and against any and all costs, claims, suits, losses, damages, liabilities, and expenses (including reasonable attorney’s fees) arising out of or resulting from (i) product, design and manufacturing defects in the Products as a result of the use of the Products Design and Manufacturing Specifications by CystoMedix, (ii) the breach by CystoMedix of any representation, warranty, covenant or obligation contained in this Agreement, (iii) the marketing, manufacture, distribution or use of the Products, and the activities of CystoMedix related thereto, prior to the Effective Date or (iv) any marketing, manufacture, distribution or other exploitation of the Products by CystoMedix outside the Territory.

     (b)  By Uroplasty . Uroplasty shall indemnify, protect, defend, and hold CystoMedix, its parents, subsidiaries, and affiliates, and the respective officers, directors, shareholders, agents, and employees of all of the foregoing, harmless from and against any and all costs, claims, suits, losses, damages, liabilities, and expenses (including reasonable attorney’s fees) arising out of or resulting from (i) manufacturing defects in the Products resulting from other than the use of the Products Design and Manufacturing Specifications of CystoMedix or (ii) the breach by Uroplasty of any representation, warranty, covenant or obligation contained in this Agreement.

     11.      Effective Date and Termination . The Effective Date of the License Term is the date that Uroplasty pays the Initial Royalty Payment to CystoMedix. In any event, the Effective Date shall not be later than the earlier of (i) ten days after (and Uroplasty shall by such date pay the Initial Royalty Payment) the closing of one or more public or private offerings of Uroplasty’s securities that, with any other closing on or after the date hereof, aggregates at least $5,000,000 or (ii) August 1, 2005.

     Despite anything to the contrary in this Agreement, the License Term and this Agreement may terminate early as follows:

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     (a) by mutual written agreement of the parties;

     (b) by either party upon written notice to the other of a material breach of this Agreement, but only if the other party does not cure the breach within 60 days after receipt of such written notice;

     Upon any termination, Uroplasty may dispose of all Products in its remaining inventory in the normal course of business.

12.      Confidentiality .

     (a) Each party agrees to keep confidential all proprietary and confidential information (written and oral) concerning the other’s business, financial, operational and acquisition plans and projections including the terms of this Agreement and the Asset Purchase Agreement. Each agrees to use this information only to further this Agreement. Neither party will disclose any of this information to any person, firm or entity, except on a need-to-know basis to its respective employees, agents, attorneys and advisors who agree to maintain the confidentiality of this information.

     (b) CystoMedix agrees that neither it nor its officers, directors, employees or agents, or any of their affiliates, will, directly or indirectly, purchase or sell (whether in a short sale transaction or otherwise) any of Uroplasty’s Common Stock (or options, warrants or other rights to purchase or acquire Uroplasty Common Stock) during the following time periods:

          (i) from this date until the day following the date Uroplasty issues a press release announcing the terms and conditions of this Agreement, and

          (ii) from the date Uroplasty exercises the Option or Right of First Refusal contained in Section 6 until the day following the date Uroplasty issues a press release announcing either abandonment of the Option or Right of First Refusal transaction or the consummation of the Option or Right of First Refusal transaction. In no event will CystoMedix or any of its officers, directors, employees or agents, or any of their affiliates, purchase or sell any of Uroplasty’s securities while in possession of material, non-public information related to Uroplasty.

     (c) A party is not responsible to keep confidential any information that (i) is or becomes public other than as a result of acts by or through such party, (ii) it can demonstrate is already known by such party at the time of the other’s disclosure, (iii) it independently obtains from a third party having no duty of confidentiality to the other, (iv) it independently develops without using confidential information from the other or (v) it must disclose pursuant to applicable laws or court order. CystoMedix acknowledges that Uroplasty will disclose regulatory and other data of CystoMedix to the FDA in connection with 510(k) applications and other applicable regulatory authorities in the Territory and that Uroplasty may file this Agreement with the U.S. Securities and Exchange Commission as part of Uroplasty’s periodic filings.

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13.      Miscellaneous .

     (a)  Assignment . This Agreement is binding upon, and will inure to the benefit of, the parties hereof and their respective permitted successors and assigns. Without limiting the foregoing, Uroplasty may assign this Agreement to any person, firm or entity that acquires all or substantially all of Uroplasty’s assets or acquires Uroplasty by stock acquisition or merger.

     (b)  No Amendment or Waiver . No provision of this Agreement will be deemed waived, amended or modified unless made in writing and signed by both parties. No waiver of rights shall constitute a subsequent waiver of any rights whatsoever.

     (c)  Entire Agreement . This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and shall supersede all proposals and prior agreements and understandings, oral or written, and any other communications between the parties regarding this subject matter.

     (d)  Severability . If any provision of this Agreement is determined by a court of competent jurisdiction to be in violation of any applicable law or otherwise unenforceable or invalid, such provision will be deemed null and void to such extent as it will be determined to be illegal, unenforceable or invalid under such law, but this Agreement will otherwise remain in full force and effect.

     (e)  Relationship of Parties. Uroplasty and CystoMedix are not partners, venturers, representatives, agents or employees of each other. Neither party has the authority to act for, represent or bind the other party in any manner. Neither party shall be responsible for the debts or liabilities of the other party unless agreed to in a separate written instrument and no party shall succeed to the debts or liabilities of the other solely by virtue of this Agreement.

     (f)  Governing Law . This Agreement shall be governed by Minnesota law excluding its choice of law provision.

      IN WITNESS WHEREOF , the undersigned have hereunto affixed their signatures.

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      THIS ASSET PURCHASE AGREEMENT (the “Agreement”) dated ___, 200___, is by and among Uroplasty, Inc., a Minnesota corporation (“Uroplasty”), and CystoMedix, Inc., a Minnesota corporation (“CystoMedix”).

R E C I T A L S :

      WHEREAS , Uroplasty manufactures and markets a family of injectable implant products used for soft-tissue augmentation for specific indications in urology, urogynecology, gynecology, colon and rectal, otolaryngology and plastic surgery markets;

      WHEREAS , CystoMedix is a medical device company that has developed products for patients in the urogynecology and gynecology markets, including neurostimulation devices currently being, or proposed to be, marketed under the brand names and trademarks (collectively, the “Trademarks”) URGENT®, “URGENT-PC™” and “URGENT-SQ™” (collectively as now existing or hereafter improved, modified or enhanced, and with any other CystoMedix products, being referred to hereafter as the “Products”);

      WHEREAS , pursuant to an Exclusive Manufacturing and Distribution Agreement dated April 18, 2005 (the “License Agreement”), Uroplasty has been acting as the exclusive manufacturer and distributor of the Products in particular territories named therein; and

      WHEREAS , pursuant to the License Agreement, Uroplasty has exercised its option or its right of first refusal to acquire all of CystoMedix’s assets on the terms and conditions of this Agreement;

      NOW THEREFORE, IT IS AGREED AS FOLLOWS :

      SECTION 1. DEFINITIONS

     Unless otherwise defined elsewhere in this Agreement, as used in this Agreement and any exhibits or schedules hereto, the following words and phrases shall have the meanings set forth below:

     “Act” shall mean the Securities Act of 1933, as amended.

     “Authorization” and “Authorizations” shall have the meanings ascribed to them in Section 5.23 below.

     “Base Balance Sheet” shall have the meaning ascribed to it in Section 5.4 below.

     “Closing” shall mean the consummation of the transactions contemplated herein as described in Section 4.1 below.

     “Closing Date” shall be the date of the Closing as described in Section 4.1 below.

     “Code” shall mean the Internal Revenue Code of 1986, as amended and interpreted by treasury regulations.

     “Uroplasty Common Stock” shall mean the Common Stock of Uroplasty, par value $.01 per share.

     “Employee Benefit Plans” shall have the meaning ascribed to it in Section 5.25(a) below.

     “Environmental Law” shall mean any environmental or health and safety-related law, regulation, rule, ordinance, or by-law at the federal, foreign, state, or local level, whether existing as of the date hereof, previously enforced or subsequently enacted.

     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

     “Escrow Agent” shall be a bank or trust company selected by Uroplasty, unless otherwise agreed to by the parties.

     “Escrow Agreement” shall mean the Escrow Agreement by and among Uroplasty, CystoMedix and the Escrow Agent.

     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

     “Financial Statements” shall have the meaning ascribed to it in Section 5.4 below.

     “Fraud” shall require a showing of an intent to deceive and, with respect to a claim of misrepresentation, that the party to be charged had Knowledge of the falsity of the representation (or acted recklessly in making the representation); and with respect to an omission, that the party to be charged Knowingly failed to disclose (or acted recklessly in failing to disclose).

     “Hazardous Materials” shall mean and include any hazardous waste, hazardous material, hazardous substance, petroleum product, oil toxic substance or pollutant as defined in or pursuant to the Resource Conservation and Recovery Act, as amended, the Comprehensive Environmental Response, Compensation and Liability Act, as amended, the Hazardous Materials Transportation Act or any other foreign, federal, state or local law, regulation, ordinance, rule or by-law, whether existing as of the date hereof, previously enforced or subsequently enacted pertaining to environmental or health and safety matters.

     “Intellectual Property” shall have the meaning ascribed to it in Section 5.13(a) below.

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     “Knowledge” shall mean actual knowledge after reasonable investigation by the individual or the entity referred to.

     “Person” shall mean an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental entity (or any department, agency or political subdivision thereof).

     “Purchase Consideration” shall have the meaning ascribed to it in Section 3.1 below.

     “Qualified Plan” shall have the meaning ascribed to it in Section 5.25(b) below.

     “SEC” shall mean the U.S. Securities and Exchange Commission.

     “Taxes” shall mean any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value-added, alternative or add-on minimum, estimated or other tax of any kind whatsoever, including any interest, penalty or addition thereto, whether disputed or not.

     “Tax Return” shall mean any return, declaration, report, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

      SECTION 2. SALE OF ASSETS

     2.1 Sale of Assets by CystoMedix . Subject to the terms and conditions set forth in this Agreement, at the Closing, CystoMedix will sell, convey, transfer, assign and deliver to Uroplasty (or to a subsidiary of Uroplasty, if so designated by Uroplasty, referred to hereafter as the “Acquisition Subsidiary”), and Uroplasty (or its Acquisition Subsidiary) will purchase from CystoMedix, the exclusive right, title and interest, free and clear of all liens, security interests and encumbrances, in and to all of CystoMedix’s assets, whether personal, intangible, intellectual or otherwise (collectively, the “Assets”), except as specifically excluded in this Section 2.1, including, without limitation, the following:

     (a)  Cash and Accounts Receivable . Any and all cash and bank accounts and all investments, investment accounts or other similar holdings, all accounts receivable and all credit balances, reimbursements or rebates arising prior to the Closing, but excluding any payments made or to be made by Uroplasty to CystoMedix pursuant to the License Agreement (such payments being part of the “Excluded Assets”).

     (b) Tangible Assets . All of CystoMedix’s physical assets utilized by or useful to it including, but not limited to, furniture, fixtures, equipment, machinery, hardware, office equipment, tools, supplies, inventories and any other tangible personal property or assets used or

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     usable by CystoMedix in the operation of its business wherever located (including products on evaluation with customers or potential customers), together with any replacements and additions made between the date of this Agreement and the Closing.

     (c)  Contracts and Agreements . All contracts and agreements of CystoMedix, including the confidentiality and noncompetition agreements between CystoMedix and each of the Transferred Employees and any other employee of CystoMedix hired by Uroplasty on or after the Closing Date and any renewals, extensions, amendments or modifications thereof (all together, the “Assigned Contracts”).

     (d)  Intangible Assets . All patents, copyrights, trademark and service marks, tradenames including “CystoMedix,” the domain name “cystomedix.com,” licenses, computer software, code, trade secrets, business plans, rights, governmental permits, licenses, approvals or authorizations, CystoMedix’s telephone numbers and other intangible property rights and interests applied for, issued to or owned in whole or in part by CystoMedix, or under which CystoMedix is licensed. Without limitation, the purchased assets include U.S. Patent Nos. 6,493,588 and 5,711,314, U.S. Patent Application Serial Nos. 10/195,197, 10/492,578 and 10/905,501 (and any patents that may issue with respect thereto) and any other U.S. or foreign patent or patent applications owned or controlled by CystoMedix (all together, the “CystoMedix Patent Rights”).

     (e)  Regulatory Assets . CystoMedix’s FDA 510(k) and foreign marketing clearances or registrations for Products, including, without limitation, all technical and design files related to preclinical testing, design, clinical, manufacturing, marketing, distribution, labeling, advertising, clinical adverse event experience (including investigational notes) and other regulatory matters, and any and all worldwide regulatory agency/Notified Body/consultant correspondence.

     (f)  Product Design and Manufacturing Specifications . All product design and manufacturing specifications, as amended, modified or enhanced from time to time, for the manufacture of the Products (the “Products Design and Manufacturing Specifications”).

     (g)  Marketing Materials . All marketing materials, including but not limited to product photographs and graphics, trademark logos and designs, brochures and website designs.

     (h)  Goodwill . CystoMedix as a going concern, and any and all of its goodwill.

     (i)  Customers . Any and all of CystoMedix’s past and present customer lists, prospect and prospect lists and relationships with customers and suppliers.

     (j)  Business Records . All files, logs, records, books of account, financial records, supplier files and lists, including telephone numbers, payroll and personnel records, marketing data and reports, marketing information, brochures, art work, photographs, advertising materials, consultants’ reports, design drawings and other similar or related materials, but excluding CystoMedix’s corporate records and minute books (such latter materials also being part of the “Excluded Assets”).

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     2.2 Assumption of Liabilities . Uroplasty (and its Acquisition Subsidiary, if applicable) shall not assume and Uroplasty (and its Acquisition Subsidiary, if applicable) shall not be liable for any of the obligations or liabilities of CystoMedix or for obligations related to the Assets of any kind or nature other than obligations or liabilities:

     (a) arising in the ordinary course of business that are associated with the Assets (but not the Excluded Assets); provided, however, that Uroplasty (and its Acquisition Subsidiary, if applicable) will not assume any obligations for accrued, but unpaid, regular, bonus or back compensation, vacation pay, severance pay or other similar amounts payable to employees of CystoMedix;

     (b) arising under or related to any of the Assets after the Closing Date which Uroplasty agrees to specifically assume at Closing;

     (c) arising under those real property leases of CystoMedix which Uroplasty may desire to assume and which are assigned and assumed pursuant to an agreement satisfactory to the parties to be executed and delivered at Closing; and

     (d) up to $1,400,000 of loans payable to Mr. J. Stephen Schmidt, Chairman of CystoMedix or his affiliates (“Schmidt”), incurred by CystoMedix prior to the date of the License Agreement (the “Bridge Loan”).

     2.4 Right of Inspection . From the date hereof and until Closing, CystoMedix will make available at reasonable times CystoMedix’s books, records and other financial statements and information as are requested by Uroplasty for examination, and for the examination by its advisors and such other information relating to the Assets as Uroplasty may reasonably request.

SECTION 3. PURCHASE CONSIDERATION

     3.1 Purchase Consideration . As full payment for the transfer of the Assets under Section 2.1 by CystoMedix to Uroplasty, Uroplasty agrees to pay CystoMedix the sum of the following (the “Purchase Consideration”):

     (a)  Uroplasty Common Stock . In exchange for CystoMedix’s assets, on the Closing Date, Uroplasty will issue to CystoMedix that number of shares of Uroplasty’s Common Stock equal to the following formula (the “Shares”):

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     The term “Share Price” means the average of the high closing bid price of Uroplasty’s Common Stock, as quoted on the OTC Bulletin Board, during the 20 trading days prior to the Closing Date. All share computations shall be rounded to the nearest whole share.

     Despite the above, in computing the number of Shares issuable to CystoMedix, the $3,485,000 amount above shall increase at a rate of 10% per year (not compounded), commencing from the date that is two years after the date of the License Agreement, until Uroplasty exercises its Option or Right of First Refusal under the License Agreement.

     (b)  Sales and Use Taxes . CystoMedix shall pay any sales, use or oth