FORECLOSURE SALE AGREEMENT

Exhibit 2.1

FORECLOSURE SALE AGREEMENT

     This FORECLOSURE SALE AGREEMENT (the “ Agreement ”) is entered into as of July 2, 2009 by and between Comerica Bank (“ Lender ” or “ Seller ”) and Synovis Surgical Sales, Inc., a wholly-owned subsidiary of Synovis Life Technologies, Inc. (“ Purchaser ”).

RECITALS

     A. Pegasus Biologics, Inc. a Delaware corporation (“ Borrower ”) has borrowed funds from Lender pursuant to that certain Loan and Security Agreement by and between Lender and Borrower dated as of November 21, 2006, (as amended from time to time, including by that certain First Amendment to Loan and Security Agreement dated as of July 16, 2008, collectively the “ Loan Agreement ”).

     B. As of May 21, 2009, there is owing under the Loan Agreement a principal amount of $5,236,111.08 (not including, to the extent applicable, any contingent obligations, e.g. those arising out of any undrawn letters of credit issued by Lender for Borrower’s benefit), accrued and unpaid interest through May 19, 2009 in the amount of $13,126.64, accrued interest thereafter at the per diem rate of $1,418.12, legal fees and costs, plus all other outstanding amounts and costs of enforcement due under the Loan Agreement. Such amount, plus accruing interest and costs and accrued and accruing attorneys’ fees and costs are hereinafter referred to herein as the “Existing Debt.”

     C. Certain Events of Default have occurred and exist under the Loan Agreement, including under Sections 8.4 and 8.6 (collectively, the “ Existing Default ”). Lender has delivered a Notice of Default dated May 15, 2009 to Borrower. The Existing Default entitled Lender immediately to enforce all the remedies set forth in the Loan Agreement. Borrower has asked Bank to forbear from exercising those remedies as a result of the Existing Default, and Lender has agreed and Lender and Borrower have entered into that certain Forbearance Agreement and Second Amendment to Loan and Security Agreement, dated May 22, 2009 (the “ Forbearance Agreement ”).

     D. Lender has the unequivocal right to enforce all of its remedies against Borrower and the Collateral described on Exhibit “A” hereto (the “ Collateral ”).

     E. Borrower has determined that a sale, lease, license or other disposition of, as applicable, all or any part of the Collateral in one or more private sales to be held on or after the date of this Agreement (the “ Foreclosure Sale Process ”) is in its best interests and the best interests of the creditors of Borrower.

     F. Borrower has agreed to cooperate with Lender and facilitate the sale of the Collateral pursuant to the Foreclosure Sales Process, as set forth in this Agreement.

     G. On July 2, 2009, Seller delivered to Borrower and all junior lienholders entitled to receive the same a Notice of Private Sale of Collateral (“ Notice ”), in the form attached hereto

as Exhibit “D” . Borrower agreed that the Notice is reasonable, made in good faith and is the only notice which Seller, as secured lender exercising the rights as a secured creditor under the Loan Agreement pursuant to the Uniform Commercial Code as enacted in the State of California, is required to make in order to validate the sale of the Transferred Assets (as defined below) under this Agreement.

     H. On July 2, 2009, Seller exercised its post default rights under the California Commercial Code with respect to the Collateral and subject to the terms and conditions of this Agreement, Seller has agreed to sell to Purchaser, all of Debtor’s right, title and interest in the Collateral described on Exhibit “A” other than the Excluded Assets (as defined herein) (the Collateral other than the Excluded Assets is hereinafter referred to as the “ Transferred Assets ”).

     I. Pursuant to that certain Peaceful Foreclosure Agreement of even date herewith (the “ Peaceful Foreclosure Agreement ”), Debtor has consented to the Foreclosure Sale Process and the sale by Seller to Purchaser of Debtor’s right, title and interest in and to the Transferred Assets on the terms set forth in this Agreement, and Debtor has agreed to cooperate with Seller to facilitate the sale of all of its right, title, and interest in and to the Transferred Assets.

AGREEMENT

     NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Purchaser and Seller hereby agree as follows:

     1.  Sale of Transferred Assets . Upon the terms and subject to the conditions of this Agreement, in consideration of and in exchange for Seller’s receipt of the Purchase Price defined in Section 3 herein, Seller agrees, on the Closing Date (as defined herein), to irrevocably sell, transfer, assign, convey, and set over to Purchaser, and Purchaser hereby agrees to purchase from Seller, all of Debtor’s right, title and interest in the Transferred Assets, “as is”, “where is”, and without recourse, and (except as set forth in Section 8 below) without representations or warranties of any kind, express or implied, including, without limitation, any warranties as to title, possession, quiet enjoyment, merchantability, value, useful life, fitness for intended use, or similar representations and warranties. On the Closing Date, Seller and Purchaser shall execute and deliver to each other a Bill of Sale, substantially in the form attached hereto as Exhibit “B” .

     2.  Excluded Assets . Notwithstanding anything to the contrary in this Agreement, the Transferred Assets shall not include any of the Excluded Assets and the Excluded Assets shall not be transferred to Purchaser, but shall be retained by Seller. For purposes of this Agreement, “ Excluded Assets ” shall mean the following items:

          a. all cash, cash equivalents and uncashed checks received prior to the Closing Date,

          b. any contracts of insurance and any rights of Seller as an additional insured or loss payee on any insurance contract obtained by Debtor,

          c. any right that Debtor has with respect to tax refunds, claims for tax refunds and tax attributes arising prior to the Closing Date,

          d. to the extent the transfer contemplated herein is prohibited by any license or other agreement, which prohibition is enforceable in accordance with applicable law, any software or other licensed products that may be installed on or attached to the Transferred Assets delivered to Purchaser,

          e. corporate minute books, and other books and records that do not relate to the Transferred Assets.

          f. any right that Debtor has with respect to IDE study titled “DurADAPT™ Bioimplant Dural Substitute’, Clinical Protocol P05-011-CR dated February 21, 2006.

     3.  Purchase Price . As consideration for the sale, transfer, and conveyance of the Transferred Assets by Seller, Purchaser agrees to pay at Closing (as defined below). $12,100,000 (the “ Purchase Price ”) for all of the Transferred Assets. The Purchase Price will be paid to Seller pursuant to the wire instructions listed on Exhibit “C” , for further credit, if at all, to the parties identified in, and in accordance with the terms and conditions of, the Forbearance Agreement.

     4.  Closing . Subject to satisfaction of the conditions precedent set forth in Sections 5 and 6 below, the closing of the sale (the “ Closing ”) will be held within three (3) business days following satisfaction or waiver (by the party for whose benefit such condition exists) of the conditions set forth in Sections 6 and 7. The date on which the Closing is consummated is referred to herein as a “ Closing Date .”

     5.  Delivery of Possession . Seller shall be under no obligation to cause delivery of control or possession of the Transferred Assets to Purchaser. Purchaser understands and acknowledges that Debtor, and not Seller, is in possession and control of the Transferred Assets, and that Debtor shall be solely responsible and liable to Purchaser for such transfer of control and possession.

     6.  Seller’s Conditions Precedent . Seller’s obligations to consummate the Closing shall be conditioned upon the satisfaction or waiver of the following:

          a. The representations, warranties, and covenants of Purchaser made herein shall have been true when made and at all times after the date when made, to and including the Closing Date, with the same force and effect as if made on and as of each such times, including the Closing Date.

          b. As of the Closing Date, the sale of the Transferred Assets by Seller or any of the transactions contemplated hereby are not prohibited by any stay or injunction in any litigation, governmental action, or other proceeding, including, without limitation, the “automatic stay” under 11 U.S.C. § 362 in any pending case under title 11 of the United States Code by or against Debtor.

          c. Purchaser shall have paid the Purchase Price.

          d. The Closing occurs on or before July 15, 2009.

     7.  Purchaser’s Conditions Precedent . Purchaser’s obligations to consummate the Closing shall be conditioned upon the satisfaction or waiver of the following:

          a. The representations, warranties, and covenants of Seller made herein shall have been true when made and at all times after the date when made, to and including the Closing Date, with the same force and effect as if made on and as of each such times, including the Closing Date.

          b. As of the Closing Date, the sale of the Transferred Assets by Seller or any of the transactions contemplated hereby are not prohibited by any stay or injunction in any litigation, governmental action, or other proceeding, including, without limitation, the “automatic stay” under 11 U.S.C. § 362 in any pending case under title 11 of the United States Code by or against Debtor.

          c. Seller shall have executed and delivered to Purchaser a Bill of Sale in the form attached as Exhibit “B” hereto, with respect to the Transferred Assets.

          d. Seller shall have enforced its security interest in the Transferred Assets effective as of its receipt of the payment in good funds, of the Purchase Price.

          e. Borrower shall have executed and delivered to Purchaser assignments, in form and substance satisfactory to Purchaser, of the intellectual property rights listed on Part I of Exhibit “E” .

          f. Seller shall have obtained and delivered to Purchaser consents to the transactions contemplated by this Agreement, in form and substance satisfactory to Purchaser, from the Borrower’s contractual counterparties to the agreements listed on Part II of Exhibit “E” .

          g. Purchaser shall have obtained from the Borrower’s lessor a lease, in form and substance satisfactory to Purchaser, to the leased premises described in Part III of Exhibit “E” (the “Transferred Premises”).

          h. Borrower shall have delivered to Purchaser possession of the Transferred Assets and the Transferred Premises.

          i. Borrower shall have delivered evidence reasonably satisfactory to Purchaser (i) that all insurance policies historically maintained by the Borrower are in effect as of the Closing Date, and (ii) of the binding of a six year tail for a product liability policy reasonably acceptable to Purchaser.

     8.  Representations and Warranties of Seller . Except as to Seller’s representations and warranties as to due authority and the like as expressly provided below, the Transferred Assets are being sold “as is,” and “where is” with no express or implied representations or warranties of any kind, nature, or type whatsoever from, or on behalf of, Seller. Notwithstanding the foregoing, Seller represents and warrants to Purchaser, as follows:

          a. Seller (i) is duly organized, validly existing, and in good standing under the laws of Texas; and (ii) has all requisite organizational power and authority to execute, deliver, and perform the transactions contemplated hereby.

          b. The execution, delivery, and performance by Seller of this Agreement and the consummation of the transaction contemplated hereby are within the power of Seller and have been duly authorized by all necessary actions on the part of Seller. The execution of this Agreement by Seller constitutes, or will constitute, a legal valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as limited by bankruptcy, insolvency, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.

          c. No consent, approval, authorization or order of, or registration or filing with, or notice to, any court or governmental agency or body having jurisdiction or regulatory authority over Seller (or any of its properties) is required for (i) Seller’s execution and delivery of this A