{"id":43139,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/agreement-and-plan-of-merger-united-states-surgical-corp-and.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"agreement-and-plan-of-merger-united-states-surgical-corp-and","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/agreement-and-plan-of-merger-united-states-surgical-corp-and.html","title":{"rendered":"Agreement and Plan of Merger &#8211; United States Surgical Corp. and Progressive Angioplasty Systems Inc."},"content":{"rendered":"<pre>                          AGREEMENT AND PLAN OF MERGER\n\n                             Dated February 4, 1997\n\n                                  by and among\n\n                       UNITED STATES SURGICAL CORPORATION\n\n                             USSC DEL MEDICAL, INC.\n\n                                       and\n\n                      PROGRESSIVE ANGIOPLASTY SYSTEMS, INC.\n\n\n       This Agreement and Plan of Merger (\"Agreement\") is made and entered into\nFebruary 4, 1997 by and among United States Surgical Corporation, a Delaware\ncorporation (\"USSC\"), USSC Del Medical, Inc., a Delaware corporation\n(\"Transitory Sub\"), and Progressive Angioplasty Systems, Inc., a Delaware\ncorporation (\"PAS\") (collectively, the \"Parties\").\n\n       Intending To Be Legally Bound, and in consideration of the premises and\nmutual covenants contained herein, the parties hereto agree as follows:\n\n                                    ARTICLE I\n\n                                   DEFINITIONS\n\n       Section 1.01 DEFINITIONS.\n\n       As used in this Agreement, the following terms have the meanings set\nforth in this Article I.\n\n       \"Acquisition Proposal\" means any proposal for the acquisition of, or\nmerger or other business combination involving, PAS or the sale of any\nsecurities or a substantial portion of the assets of PAS, other than the\nansactions contemplated by this Agreement.\n\n       \"Act\" means the Securities Act of 1933, as amended, and the regulations\nand rules promulgated thereunder.\n\n       \"Action\" means any claim, action, suit or proceeding, whether civil or\ncriminal, at law or in equity.\n\n       \"Affiliate\" means, with respect to any Person, any Person directly or\nindirectly controlling, controlled by, or under common control with, such other\nPerson. The term \"control\" (including, with correlative meaning, the terms\n\"controlled by\" and \"under common control with\"), as used with respect to any\nPerson, means the possession, directly or indirectly, of the power to direct or\ncause the direction of the management and policies of such Person, whether\nthrough ownership of voting securities, by contract or otherwise.\n\n       \"Business Condition\" means the consolidated business and operations,\nproperties, assets, liabilities, litigation, commitments, earnings, financial\ncondition, prospects or results of operations.\n\n       \"Certificate of Merger\" means the Certificate of Merger as set forth on\nEXHIBIT A attached hereto.\n\n       \"Closing Price\" means the weighted average of the closing prices of a\nshare of USSC Common Stock as reported by THE WALL STREET JOURNAL under the New\nYork Stock Exchange composite transactions for the sixty (60) trading days\nending one (1) business day prior to \n\n\n                                       2\n\n\neither the Effective Date, in the case of the Aggregate Initial USSC Stock\n(defined below), a Milestone Achievement Date (defined below), or an Earn Out\nCalculation Date (defined below), as the case may be.\n\n       \"Code\" means the Internal Revenue Code of 1986 of the United States of\nAmerica, as amended.\n\n       \"Delaware Law\" means the Corporation Law of the State of Delaware.\n\n       \"Earn Out Period\" means the period commencing on the earliest of August\n1, l997, the Option Exercise Date under the Stock Option Agreement (as defined\nbelow) or the Effective Date, and ending December 31, 2003.\n\n       \"ERISA\" means the Employee Retirement Income Security Act of 1974, as\namended.\n\n       \"Exchange Act\" means the Securities Exchange Act of 1934, as amended.\n\n       \"GAAP\" means general accepted accounting principles consistently applied.\n\n       \"Governmental Body\" means any agency, bureau, commission, court,\ndepartment, political subdivision, tribunal, or other instrumentality of any\ngovernment, whether federal, state or local, domestic or foreign.\n\n       \"HSR Act\" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,\nas amended.\n\n       \"Initial Consideration\" means the Aggregate Initial USSC Stock.\n\n       \"Laws\" means statutes, laws, regulations, rules, ordinances, guidelines,\njudgments, orders, decisions or interpretation of any Governmental Body.\n\n       \"Lien\" means, with respect to any asset or property, any mortgage, lien,\npledge, charge, security interest or encumbrance of any kind in respect of such\nasset or property. For the purposes of this Agreement, PAS shall be deemed to\nown subject to a Lien any asset which it has acquired or holds subject to the\ninterest of a vendor or lessor under any conditional sale agreement, capital\nlease or other title retention agreement relating to such asset.\n\n       \"Material Adverse Effect\" means any event, change or effect that is\nmaterially adverse to the Business Condition.\n\n       \"PAS Capital Stock\" means all of the capital stock of PAS including all\nPAS Common Stock, PAS Preferred Stock and shares of PAS common stock issuable on\nexercise of PAS Options (defined below).\n\n       \"PAS Common Stock\" means the issued and outstanding shares of common\nstock, $0.001 par value, of PAS.\n\n\n                                       3\n\n\n       \"PAS Options\" means options to acquire up to an aggregate of 1,460,000\nshares of PAS Common Stock granted prior to the date hereof.\n\n       \"PAS Preferred Stock\" means all of the issued and outstanding shares of\nall classes of preferred stock of PAS.\n\n       \"Person\" means any individual, corporation, partnership, association,\ntrust or other entity or organization, including a governmental or political sub\ndivision or any agency or instrumentality thereof.\n\n       \"Registration Statement\" means that certain registration statement to be\nfiled with the SEC pursuant to this Agreement to register for resale in the U.S.\nthe common stock to be delivered pursuant hereto.\n\n       \"SEC\" means the United States Securities and Exchange Commission.\n\n       \"Shareholders\" means all holders of PAS Capital Stock immediately prior\nto Effective Time.\n\n       \"Stock Option Agreement\" means that certain agreement entitled Stock\nOption Agreement and Irrevocable Proxy, dated as of the date hereof by and among\nUSSC, Transitory Sub and certain Persons who are shareholders of PAS as of the\ndate hereof.\n\n       \"Tax\" along with the correlative \"Taxes\" and \"Taxable\" has the following\nmeaning (i) any net income, alternative or add-on minimum tax, gross income,\ngross receipts, sales, use, ad valorem, transfer, franchise, profits, license,\nwithholding, payroll, employment, excise, severance, escheat, abandonment,\nstamp, occupation, premium, property, environmental or windfall profit tax,\ncustom, duty or other tax, governmental fee or other like assessment or charge\nof any kind whatsoever, together with any interest or any penalty, addition to\ntax or additional amount imposed by any Governmental Body (a \"Taxing Authority\")\nresponsible for the imposition of any such tax (domestic or foreign), (ii) any\nliability for the payment of any amounts of the type described in (i) as a\nresult of being a member of an affiliated, consolidated, combined or unitary\ngroup for any Taxable period prior to the Effective Date, (iii) any liability\nfor the payment of any amounts of the type described in (i) due as a result of\nany of the transactions contemplated by this Agreement, and (iv) any liability\nfor the payment of any amounts of the type described in (i), (ii) or (iii) as a\nresult of any express or implied obligation to indemnify any other Person.\n\n       \"USSC Common Stock\" shall mean shares of common stock, $.10 par value, of\nUSSC.\n\n       Section 1.02 OTHER TERMS.\n\n       In addition to the foregoing defined terms, the following terms shall\nhave the meanings set forth in the referenced Articles, Sections and Exhibits\nand Schedules of this Agreement. All Article, Section and Schedule numbers used\nherein refer to Articles and Sections of this \n\n\n                                       4\n\n\nAgreement and Exhibits and Schedules attached hereto or delivered simultaneously\nherewith, unless otherwise specifically described.\n\n         TERM                                                SECTION\n         ----                                                -------\n    Accredited Investor                                 7.01\n    Advance                                             2.10\n    Aggregate Earn Out Dollar Amount                          2.08\n    Aggregate Earn Out USSC Stock                       2.08\n    Aggregate Extraordinary Transaction USSC Stock      2.09\n    Aggregate Initial USSC Stock                        2.05\n    Aggregate Milestone Dollar Amount                   2.07\n    Aggregate Milestone USSC Stock                      2.07\n    Aggregate PAS Common Stock Equivalents              2.05\n    Audited Financial Statements                        3.09\n    Auditors                                                  5.04\n    Calmedica                                                 7.01\n    By Laws                                                   3.01\n    CERCLA                                                    3.08\n    Certificate of Incorporation                        3.01\n    Cetificate of Merger                                2.01\n    Certificates                                              2.06\n    Certification                                       5.12; EXHIBIT C\n    COBRA                                                     3.23\n    Constituent Corporations                            2.04\n    Contracts                                                 3.18\n    Customers                                                 3.25\n    December Balance Sheet                                    3.09\n    December Unaudited Financial Statements             3.09\n    Delaware Filing                                           2.01\n    Default Interest                                          8.02\n    Dissenting Shares                                         2.05\n    Distributorship Agreements                          3.25\n    Earn Out Calculation Date                           2.08\n    Earn Out Consideration                                    2.08\n    Earn Out Dollar Amount                              2.08\n    Earn Out Formula                                          2.08\n    Effective Date                                      2.02\n    Effective Time                                      2.02\n    Employee Plans                                            3.22\n    Environmental Laws                                  3.08\n    Equipment                                                 3.14\n    Exchange Agent                                            2.06\n    Exchange Agreement                                  2.06\n    Exchange Ratio                                            2.05\n    Extraordinary Transaction                           2.09\n    Final Interim Period Unaudited Financial Statements 3.09\n\n\n                                        5\n\n\n    Financial Statements                                3.09\n    Hazardous Substances                                3.08\n    Indemnifying Shareholders                           2.08A\n    Intellectual Property                               3.16\n    Interim Period Unaudited Financial Statements       3.09; 5.11\n    Inventories                                               3.13\n    Legal Requirements                                  3.07\n    Merger                                              2.01\n    Milestone                                                 2.07; EXHIBIT 2.07\n    Milestone Achievement Date                          2.07\n    Milestone Dollar Amount                             2.07\n    Net Cash Closing Amount                             2.05\n    Non Consummation Equity                             8.02; EXHIBIT 8.02\n    Notified Party                                      5.12\n    Notifying Party                                           5.12\n    Open Purchase Orders                                3.25\n    Ownership Percentage                                2.05\n    PAS Common Stock Equivalents                        2.05\n    PAS Returns                                         3.26\n    PAS Subsidiary Securities                           3.02\n    PAS Supplemental Disclosure Schedule                5.13\n    Qualified Plan                                      3.14\n    Professional Fees                                         3.15\n    Proposed Supply Agreement                           5.02\n    Surviving Corporation                               2.04\n    Underground Storage Tanks                           3.08\n    USSC Financial Statements                           4.06\n    USSC SEC Documents                                        4.05\n    Vendors                                                   3.25\n\n                                   ARTICLE II\n\n                                   THE MERGER\n\n       Section 2.01 MERGER. Subject to the terms and conditions of this\nAgreement and of the Certificate of Merger in substantially the form attached\nhereto as EXHIBIT A (the \"Certificate of Merger\"), Transitory Sub will be merged\nwith and into PAS (the \"Merger\") in accordance with Delaware Law.\n\n       Section 2.02 EFFECTIVE TIME. Subject to the provisions of this Agreement,\na properly executed copy of the Certificate of Merger, together with required\nofficers' certificates, shall be filed with the Secretary of State of the State\nof Delaware in accordance with Delaware Law (the \"Delaware Filing\"). The Merger\nshall become effective upon the Delaware Filing (the date of such filing being\nhereinafter referred to as the \"Effective Date\" and the time of confirmation of\n\n\n                                       6\n\n\nsuch filing being hereinafter referred to as the \"Effective Time\").\n\n       Section 2.03 EFFECTIVE DATE. The Effective Date shall occur on the third\nbusiness day after satisfaction or waiver of the latest to occur of the\nconditions set forth in Article VII hereto. The closing on the Effective Date\nshall occur at the offices of USSC, 150 Glover Avenue, Norwalk, Connecticut\n06856, unless a different date or place is agreed to in writing by the parties\nhereto.\n\n       Section 2.04 EFFECT OF THE MERGER. Subject to the terms and conditions of\nthis Agreement, at the Effective Time (i) the separate existence of Transitory\nSub shall cease and Transitory Sub shall be merged with and into PAS (Transitory\nSub and PAS are sometimes referred to herein as the \"Constituent Corporations\",\nand PAS after the Merger is sometimes referred to herein as the \"Surviving\nCorporation\"), (ii) the Certificate of Incorporation of the Surviving\nCorporation shall be amended to read as did the Certificate of Incorporation of\nthe Transitory Sub immediately prior to the Effective Time (except that the name\nof the Surviving Corporation will remain unchanged), (iii) the Bylaws of the\nSurviving Corporation shall be amended to read as did the Bylaws of the\nTransitory Sub immediately prior to the Effective Time (except that the name of\nthe Surviving Corporation will remain unchanged), (iv) the directors and\nofficers of Transitory Sub shall be the directors and officers of the Surviving\nCorporation (retaining their respective positions and terms of office), and (v)\nthe Merger shall have all the effects provided by applicable law.\n\n       Section 2.05 EFFECT ON CAPITAL STOCK. Subject to the terms and conditions\nof this Agreement, as of the Effective Time, by virtue of the Merger and without\nany action on the part of the holders of any shares of PAS Capital Stock:\n\n       (a) CANCELLATION OF PAS TREASURY STOCK; UNISSUED PAS CAPITAL STOCK. All\nunissued shares of PAS Capital Stock, shares of PAS Capital Stock held in PAS's\ntreasury (if any), Shares of PAS Capital Stock held of record as of the date of\nthis Agreement by USSC and its Affiliates (whether or not transferred after the\ndate hereof) and all subscriptions, options, warrants or other agreements, and\nconversion, exchange or other rights of any kind other than pursuant to this\nAgreement entitling any Person to purchase or otherwise acquire any PAS Capital\nStock (other than PAS Options) shall be canceled and no stock of USSC or other\nconsideration shall be delivered in exchange therefor.\n\n       (b) ISSUED AND OUTSTANDING PAS CAPITAL STOCK. At the Effective Time, each\nissued and outstanding share of PAS Capital Stock (other than shares to be\ncanceled pursuant to Section 2.05(a) hereof and shares, if any, held by Persons\nwho have not voted such shares in favor of the Merger and with respect to which\nsuch Person is entitled to exercise appraisal rights in accordance with section\n262 of the Delaware Law (\"Dissenting Shares\")) shall be converted into the right\nto receive, without any action on the part of the holders thereof, the\nconsideration as set forth in this Agreement.\n\n       (c) DISSENTERS' RIGHTS. Any Dissenting Shares shall not be converted as\ndescribed in subsection (b) above but instead shall be converted into the right\nto receive such consideration as may be determined to be due with respect to\nsuch Dissenting Shares pursuant to Delaware \n\n\n                                       7\n\n\nLaw. If after the Effective Time any Dissenting Shares shall lose their status\nas Dissenting Shares, then as of the occurrence of the event which causes the\nloss of such status, such shares shall be converted into the right to receive\nthe Aggregate Initial USSC Stock in accordance with this Article II.\n\n       (d) FRACTIONAL SHARES. In calculating the Aggregate Initial USSC Stock,\nno fractional shares of USSC Common Stock shall be issued, but in lieu thereof\neach holder of shares of PAS Capital Stock who would otherwise be entitled to\nreceive a fraction of a share of USSC Common Stock shall be entitled to receive\nfrom USSC an amount of cash equal to the Closing Price multiplied by the\nfraction of a share of USSC Common Stock to which such holder would otherwise be\nentitled. The fractional share interests of each PAS shareholder shall be\naggregated, so that no PAS shareholder shall receive cash in an amount greater\nthan the value of one full share of USSC Common Stock.\n\n       (e) INITIAL CONSIDERATION. Subject to Section 2.05(c), the number of\nshares of USSC Common Stock which shall be issued and delivered at the Effective\nTime to a holder of any shares of PAS Capital Stock (other than as provided in\nSection 2.05(a)) immediately prior to the Effective Time shall be that number\nwhich results from multiplying (x) the Aggregate Initial USSC Stock (as defined\nbelow), by (y) such holder's Ownership Percentage (as defined below).\n\n              (i) The Aggregate Initial USSC Stock is that number of shares of\nUSSC Common Stock which equals the result from dividing (A) Seventy Five Million\nDollars ($75,000,000), minus the amount by which the cash reflected on the\nbalance sheet contained in the Final Interim Period Unaudited Financial\nStatements, net of all outstanding loans and other indebtedness for money\nborrowed (\"Net Cash Closing Amount\"), is less than Twelve Million Seven Hundred\nFifty Thousand Dollars ($12,750,000) (which amount shall be reduced subsequent\nto August 1, l997 at a pro rated rate of Seven Hundred and Fifty Thousand\nDollars ($750,000) per month) , by (B) the Closing Price. The Net Cash Closing\nAmount shall include, without limitation, cash received upon exercise of the PAS\nOptions on or prior to the Effective Date. Payment by PAS prior to the Effective\nDate of up to One Million Dollars ($1,000,000) of Professional Fees shall not be\ndeemed to reduce the aforesaid Net Cash Closing Amount.\n\n              (ii) A holder's Ownership Percentage is that fraction the\nnumerator of which is such holder's total PAS Common Stock Equivalents (as\ndefined below) calculated as of the Effective Time and the denominator of which\nis the Aggregate PAS Common Stock Equivalents (as defined below) calculated as\nof the Effective Time. A certificate showing each holder's Ownership Percentage\nshall be available upon request by such holder from PAS following the Effective\nTime.\n\n              (iii) A holder's total PAS Common Stock Equivalents are the\naggregate number of shares of PAS Common Stock held by such holder immediately\nprior to the Effective Time plus the aggregate number of shares of PAS Common\nStock into which the aggregate number of shares of PAS Preferred Stock held by\nsuch holder immediately prior to the Effective Time are convertible in\naccordance with the PAS Amended and Restated Certificate of Incorporation and\nBylaws then in effect.\n\n\n                                       8\n\n\n              (iv) The Aggregate PAS Common Stock Equivalents are: (a) the\naggregate number of shares of PAS Common Stock issued and outstanding\nimmediately prior to the Effective Time, plus (b) the aggregate number of shares\nof PAS Common Stock into which the aggregate number of shares of PAS Preferred\nStock issued and outstanding immediately prior to the Effective Time, are\nconvertible at the Effective Time in accordance with the PAS Amended and\nRestated Certificate of Incorporation and Bylaws as then in effect, plus (c) the\nnumber of shares of PAS Common Stock into which the PAS Options outstanding\nimmediately prior to the Effective Time are deemed to convert upon payment of\nthe exercise price at the Closing, as described in Section 2.05(f) below, or, in\nthe event of a cashless exercise, of such PAS Options (in whole or in part).\n\n              (v) The ratio of the Aggregate Initial USSC Stock to the Aggregate\nPAS Common Stock Equivalents is the \"Exchange Ratio\".\n\n       (f) STOCK OPTIONS. Each outstanding PAS Option shall by virtue of the\nMerger and without any action on the part of the holders thereof, be converted\ninto the right to receive USSC Common Stock included in the Aggregate Initial\nUSSC Stock payable pursuant to Section 2.05(e) above. Each such PAS Option shall\nfirst be deemed to convert into the number of PAS Common Stock Equivalents\nprovided for in Section 2.05(e)(iv) above. The holders of such PAS Options shall\nthen receive shares of USSC Common Stock based on such deemed PAS Common Stock\nEquivalents, in the same manner as all other holders of PAS Common Stock\nEquivalents, which shall be paid in the manner described in Section 2.06 (except\nthat references in Section 2.06 to the surrender of the Certificates shall not\nbe applicable). Following the conversion into USSC Common Stock, the PAS Options\nshall then be canceled and no longer be outstanding.\n\n       Section 2.06 EXCHANGE OF CERTIFICATES.\n\n       (a) EXCHANGE AGENT. Prior to the Effective Time, USSC shall have entered\ninto an agreement (\"Exchange Agreement\") with First Chicago Trust Company of New\nYork, its transfer agent, or another entity at its option, to act as exchange\nagent (the \"Exchange Agent\") in the Merger.\n\n       (b) USSC TO PROVIDE THE AGGREGATE INITIAL USSC STOCK. As soon as\npracticable after the Effective Time, but in no event later than five (5)\nbusiness days after the Effective Date, USSC shall make available in accordance\nwith the provisions of this Article II, through such reasonable procedures as\nUSSC may adopt, the Aggregate Initial USSC Stock payable pursuant to Section\n2.05 and the provisions of this Agreement in exchange for outstanding shares of\nPAS Capital Stock.\n\n       (c) EXCHANGE PROCEDURES. As soon as practicable after the Effective Time,\nbut in no event later than five (5) business days after the Effective Time, the\nExchange Agent shall mail to each holder of record of a certificate or\ncertificates (\"Certificates\") which immediately prior to the Effective Time\nrepresented outstanding shares of PAS Capital Stock (other than Dissenting\nShares which continue to have the status of Dissenting Shares) whose shares are\n\n\n                                       9\n\n\nbeing converted into the Aggregate Initial USSC Stock pursuant to this\nAgreement, (i) a letter of transmittal (which shall specify that delivery shall\nbe effected, and risk of loss and title to the Certificates shall pass, only\nupon delivery of the Certificates to the Exchange Agent and shall be in such\nform and have such other provisions as USSC may reasonably specify), and (ii)\ninstructions for use in effecting the surrender of the Certificates in exchange\nfor the Aggregate Initial USSC Stock. Upon surrender of a Certificate for\ncancellation to the Exchange Agent, together with such letter of transmittal,\nduly executed, the holder of such Certificate shall be entitled to receive in\nexchange therefor the Aggregate Initial USSC Stock to which the holder of PAS\nCapital Stock is entitled pursuant to Section 2.05 hereof, along with a check\nrepresenting the value of any fractional shares as determined pursuant to\nSection 2.05(d) hereof. The Certificate so surrendered shall forthwith be\ncanceled. Until surrendered as contemplated by this Section 2.06, each\nCertificate shall be deemed at any time after the Effective Time solely to\nrepresent the right to receive upon such surrender such whole number of shares\nof USSC Common Stock and cash as provided by this Article II and the provisions\nof Delaware Law as of the Effective Time. Upon surrender of the per share\nexercise price specified in each PAS Option, the holder of such PAS Option shall\nbe entitled to receive in exchange therefor the Aggregate Initial USSC Stock to\nwhich the holder of the PAS Option is entitled pursuant to Section 2.05 hereof,\ntogether with a check representing the value of any fractional shares as\ndetermined pursuant to Section 2.05(d) hereof.\n\n       (d) PAYMENTS OF DIVIDENDS WITH RESPECT TO UNEXCHANGED PAS COMMON STOCK.\nNo dividends on PAS Common Stock have heretofore been paid with respect to the\nPAS Common Stock and no dividends shall be paid to the holder of any surrendered\nor unsurrendered Certificate, except for the distribution of the Distributed\nAssets as contemplated by this Agreement.\n\n       (e) NO FURTHER OWNERSHIP RIGHTS IN PAS CAPITAL STOCK. All PAS Common\nStock delivered upon the surrender for exchange of shares of USSC Capital Stock\nin accordance with the terms hereof shall be deemed to have been delivered in\nfull satisfaction of all rights pertaining to such shares of PAS Capital Stock.\nThere shall be no further registration of transfers on the stock transfer books\nof the Surviving Corporation of the shares of PAS Capital Stock which were\noutstanding immediately prior to the Effective Time. If, after the Effective\nTime, Certificates are presented to the Surviving Corporation for any reason,\nthey shall be canceled and have no rights except to receive the consideration to\nthe extent provided in this Article II.\n\n       (f) OWNERSHIP RIGHTS IN THE USSC COMMON STOCK. Unless and until the\nMerger shall become effective at the Effective Time in accordance with this\nAgreement and the PAS Capital Stock of a shareholder is tendered and the\nCertificate is issued to such shareholder, such Shareholder shall not have or be\nentitled to exercise any of the rights, preferences or privileges pertaining to\nany shares of USSC Common Stock constituting the Aggregate Initial USSC Stock\notherwise payable to such Shareholder, nor any dividend or other distribution\nwhich may be paid or payable on or after the date hereof with respect to the\nUSSC Common Stock constituting the Aggregate Initial USSC Stock otherwise\npayable to such Shareholder.\n\n       (g) TRANSFER RIGHTS IN THE USSC COMMON STOCK.\n\n\n                                       10\n\n\n       The issuance and delivery of USSC Stock as Aggregate Initial USSC Stock\npursuant to this Agreement has not been registered under the Act, and no\ntransfer thereof may be made unless and until such USSC Stock is registered\nunder the Act (as contemplated by this Agreement) or an exemption from such\nregistration is available. USSC need not recognize any Person other than the\nShareholders as having an interest in such USSC Stock unless the acquisition\nthereof has been made in compliance with the Act. The certificates for such USSC\nStock shall bear a legend, in form and substance designated by the General\nCounsel of USSC, to reflect the provisions of this Section 2.06(g).\n\n       Section 2.07 MILESTONE CONSIDERATION.\n\n       (a) CALCULATION OF MILESTONE CONSIDERATION. Subject to Section 2.09A\nbelow, Shareholders who receive Aggregate Initial USSC Stock in accordance with\nSection 2.05 above or pursuant to the Stock Option Agreement, shall, in\naddition, be entitled to receive USSC Common Stock based upon the achievement by\nUSSC, PAS or any of their Affiliates, as the case may be, subsequent to the\nEffective Date of each milestone set forth in EXHIBIT 2.07 (each, a \"Milestone\"\nand collectively, the \"Milestones\"), provided, however, if any such Milestone\nshall have been achieved prior to the payment of the Aggregate Initial USSC\nStock then payment in respect of such Milestone shall be paid concurrently with\npayment of the Aggregate Initial USSC Stock. The Aggregate USSC Stock payable\nwith respect to achievement of a Milestone as aforesaid is that number of shares\nof USSC Common Stock (\"Aggregate Milestone USSC Stock\") which equals the result\nfrom dividing (A) the dollar amount of the milestone payment set forth opposite\nsuch Milestone on EXHIBIT 2.07 attached hereto (each a \"Milestone Dollar Amount\"\nand, collectively, the \"Aggregate Milestone Dollar Amount\"), by (B) the Closing\nPrice, calculated with reference to the date such Milestone is achieved by USSC,\nPAS or any of their Affiliates, as the case may be, as of or subsequent to the\nEffective Date (a \"Milestone Achievement Date\"). The number of shares of USSC\nCommon Stock which shall be issued and delivered to a Shareholder who receives\nAggregate Initial USSC Stock under Section 2.05 above with respect to the\nachievement by USSC, PAS or any of their Affiliates, as the case may be, of a\nMilestone shall be equal to that number which results from multiplying (x) the\nAggregate Milestone USSC Stock, by (y) such holder's Ownership Percentage.\nNotwithstanding the foregoing or anything else in this Agreement to the\ncontrary, the parties recognize that although the Aggregate Milestone Dollar\nAmount set forth on EXHIBIT 2.07 would be Thirty Eight Million Five Hundred\nThousand Dollars ($38,500,000) if all of the Milestones were to be achieved as\naforesaid, it is hereby understood and agreed that, regardless of the number of\nMilestones which may become achieved as aforesaid, in no event shall the\nAggregate Milestone Dollar Amount in respect of all Milestones exceed an\naggregate of Twenty Five Million Dollars ($25,000,000), and such amount shall be\npaid pro rata to PAS Shareholders in accordance with this Agreement. Payment\nunder this Agreement with respect to a Milestone shall be paid soon as\npracticable following the achievement of such Milestone.\n\n       (b) PAYMENT OF MILESTONE CONSIDERATION. As soon as practicable after the\nachievement of a Milestone, USSC shall make available to the Exchange Agent,\nthrough such reasonable procedures as USSC may adopt, the applicable Milestone\nConsideration payable to the Shareholders pursuant to Section 2.07(a) above. The\nprovisions of Sections 2.05(d) (Fractional \n\n\n                                       11\n\n\nShares) and 2.06(g) (Transfer Rights in the USSC Common Stock) shall apply to\neach distribution of USSC Common Stock constituting the Aggregate Milestone USSC\nStock with respect to a Milestone. Unless and until (i) the Merger shall become\neffective on the Effective Date in accordance with this Agreement and the Plan\nof Merger, (ii) the PAS Capital Stock is tendered in accordance with Section\n2.06 above, and (iii) a Milestone has been achieved by USSC or PAS and stock\nissued, as the case may be, none of the Shareholders shall have or be entitled\nto exercise any of the rights, preferences or privileges pertaining to any\nshares of USSC Common Stock constituting the Aggregate Milestone USSC Stock with\nrespect to such Milestone, nor any dividends or other distribution which may be\npaid or payable on or after the date hereof with respect to the USSC Common\nStock constituting the Aggregate Milestone USSC Stock with respect to such\nMilestone.\n\n       Section 2.08 EARN OUT CONSIDERATION.\n\n       (a) CALCULATION OF EARN OUT CONSIDERATION. Subject to Section 2.08A\nbelow, Shareholders who receive Aggregate Initial USSC Stock in accordance with\nSection 2.05 above shall, in addition, be entitled to receive USSC Common Stock\n(collectively, the \"Earn Out Consideration\") based upon Net Sales of Products\nduring the Earn Out Period calculated under the earn out formula set forth in\nEXHIBIT 2.08 attached hereto (the \"Earn Out Formula\"). The Aggregate USSC Stock\npayable with respect to Earn Out Consideration during each calendar quarter\nduring the Earn Out Period is that number of shares of USSC Common Stock\n(\"Aggregate Earn Out USSC Stock\") which equals the result from dividing (A) the\ndollar amount of the Earn Out Consideration earned under the Earn Out Formula\nduring such calendar quarter (each an \"Earn Out Dollar Amount\" and,\ncollectively, the \"Aggregate Earn Out Dollar Amount\"), by (B) the Closing Price,\ncalculated as of the last day of such calendar quarter (an \"Earn Out Calculation\nDate\"). The number of shares of USSC Common Stock which shall be issued and\ndelivered to a Shareholder who receives Aggregate Initial USSC Stock under\nSection 2.05 above with respect to Earn Out Consideration shall be equal to that\nnumber which results from multiplying (x) the Aggregate Earn Out USSC Stock, by\n(y) such holder's Ownership Percentage. Notwithstanding the foregoing or\nanything else in this Agreement to the contrary, it is hereby understood and\nagreed that in no event shall the Aggregate Earn Out Dollar Amount in respect of\nall Net Sales of Products exceed an aggregate of Fifty Million Dollars\n($50,000,000).\n\n       (b) PAYMENT OF EARN OUT CONSIDERATION. Provided that the Effective Date\nshall have occurred, or the Option pursuant to the Stock Option Agreement shall\nhave been exercised, then within sixty (60) days following the end of each\ncalendar quarter during the Earn Out Period, USSC shall make available to the\nExchange Agent, through such reasonable procedures as USSC may adopt, the Earn\nOut Consideration payable to the Shareholders pursuant to Section 2.08(a) above.\nThe provisions of Sections 2.05(d) (Fractional Shares) and 2.06(g) (Transfer\nRights in the USSC Common Stock) shall apply to each distribution of USSC Common\nStock constituting the Aggregate Earn Out USSC Stock with respect to a calendar\nquarter during the Earn Out Period. Unless and until (i) the Merger shall become\neffective on the Effective Date in accordance with this Agreement and the Plan\nof Merger, (ii) the PAS Capital Stock is tendered in accordance with Section\n2.06 above, and (iii) Net Sales of Products have occurred, none of the\nShareholders shall have or be entitled to exercise any of the rights,\npreferences or privileges pertaining to any shares of USSC Common Stock\nconstituting the Aggregate Earn Out USSC Stock, nor any dividends or \n\n\n                                       12\n\n\nother distribution which may be paid or payable on or after the date hereof with\nrespect to the USSC Common Stock constituting the Aggregate Earn Out USSC Stock.\n\n       Section 2.08A REALLOCATION OF MILESTONES AND EARN OUT CONSIDERATION.\nPursuant to the Stock Option Agreement, those certain shareholders of PAS listed\non Exhibit A thereto (collectively, the \"Indemnifying Shareholders\"), have\nagreed, among other things, to indemnify USSC with respect to losses arising\nfrom any breach by PAS of a representation, warranty, covenant or agreement\ncontained herein. To the extent any Indemnifying Shareholders shall have made\nany such indemnification payment to USSC prior to any Milestone Achievement Date\nor any Earn Out Calculation Date (and if and to the extent such Shareholder\nshall not have already received a compensation distribution with respect to such\nindemnification payment under this Section 2.08A) then the Milestone or Earn Out\npayment payable as of such Date shall be reallocated to, and paid to, such\nIndemnifying Shareholder (or, if more than one Indemnifying Shareholder shall\nhave made such a payment, pro rata among such Indemnifying Shareholders) to the\nextent of such indemnification payment, and the balance (if any) of such\nMilestone or Earn Out payment shall be distributed pro rata among the\nShareholders (including the Indemnifying Shareholders) in accordance with their\nownership percentages in PAS and who are otherwise entitled thereto under\nSection 2.07 or 2.08 hereinabove.\n\n       Section 2.09 EXTRAORDINARY TRANSACTION CONSIDERATION.\n\n       (a) CALCULATION OF EXTRAORDINARY TRANSACTION CONSIDERATION. If at any\ntime after the date of this Agreement (i) USSC shall become acquired by, or\nmerge with, a company whose name is set forth on EXHIBIT 2.09 attached hereto,\nor any successor to such company (each, an \"Extraordinary Transaction\"), and\n(ii) either (A) USSC has exercised the Option under the Stock Option Agreement,\nor (B) consummated the Merger contemplated hereunder, then, in such event, USSC\nshall notify the Shareholders that an Extraordinary Transaction has occurred and\nUSSC, or the entity resulting from such Extraordinary Transaction, as the case\nmay be, shall make available to the Exchange Agent upon the later to occur of\nsuch Extraordinary Transaction or the Merger contemplated hereunder, or the\nexercise of the Option under the Stock Option Agreement, through such reasonable\nprocedures as may be adopted by USSC, or the entity resulting from such\nExtraordinary Transaction, as the case may be, USSC Common Stock, or an\nequivalent amount of common stock of the entity resulting from such\nExtraordinary Transaction, as the case may be (\"Aggregate Extraordinary\nTransaction USSC Stock\") for distribution to the Shareholders, equal to (i)\nAggregate Milestone Consideration in an amount equal to (x) Twenty Five Million\nDollars ($25,000,000), less (y) the sum of (A) the amount of Aggregate Milestone\nStock theretofore paid, and (B) the amount of Aggregate Milestone Stock then\nactually due and payable under Section 2.08 above, plus (ii) Aggregate Earn Out\nConsideration in an amount equal to (x) Fifty Million Dollars ($50,000,000),\nless (y) the sum of (A) the amounts of Aggregate Earn Out Stock theretofore paid\nunder Section 2.08 above, and (B) the amounts of Aggregate Earn Out Stock then\nactually due and payable under Section 2.08 above. The number of shares of USSC\nCommon Stock which shall be issued and delivered to a Shareholder who receive\nAggregate Initial USSC Stock under Section 2.05 above with respect to Aggregate\nExtraordinary Transaction USSC Stock, or the common stock of the entity\nresulting from such Extraordinary Transaction, as the case may be, shall be\nequal to that number which results from multiplying (x) the Aggregate\nExtraordinary Transaction USSC Stock, by (y) such holder's Ownership \n\n\n                                       13\n\n\nPercentage. In no event shall the amount payable under this Section 2.10 exceed\nSeventy Five Million Dollars ($75,000,000).\n\n       (b) PAYMENT OF EXTRAORDINARY TRANSACTION CONSIDERATION. As soon as\npracticable following the Extraordinary Transaction, USSC, or the resulting\nentity, as the case may be, shall make available to the Exchange Agent, through\nsuch reasonable procedures as shall be adopted by USSC, or the resulting entity,\nas the case may be, the Aggregate Extraordinary Transaction Consideration\npayable pursuant to Section 2.09(a) above. The provisions of Sections 2.05(d)\n(Fractional Shares) and 2.06(g) (Transfer Rights in the USSC Common Stock) shall\napply to each distribution of USSC Common Stock, constituting the Aggregate\nExtraordinary Transaction Stock. Unless and until (i) the Merger shall become\neffective on the Effective Date in accordance with this Agreement and the Plan\nof Merger, (ii) the PAS Capital Stock is tendered in accordance with Section\n2.06 above, and (iii) an Extraordinary Transaction shall have occurred, none of\nthe Shareholders shall have or be entitled to exercise any of the rights,\npreferences or privileges pertaining to any shares of USSC Common Stock\nconstituting the Aggregate Extraordinary Transaction USSC Stock, nor any\ndividends or other distribution which may be paid or payable on or after the\ndate hereof with respect to the USSC Common Stock constituting the Aggregate\nExtraordinary Transaction USSC Stock.\n\n       Section 2.10 ADVANCE. Incident to and in contemplation of the\nconsummation of the transactions set forth herein, and subject to the terms of\nthis Agreement, USSC will advance to PAS the sum of Fifteen Million Dollars\n($15,000,000) (the \"Advance\") promptly following USSC's determination to proceed\nwith the transactions contemplated hereby not later than one (1) business day\nfollowing USSC's receipt of the PAS Supplemental Disclosure Schedule. If USSC\ndetermines to proceed with the transactions after receipt of the PAS\nSupplemental Disclosure Schedule from PAS, such payment shall be made on such\ndate or the next succeeding business day.\n\n                                   ARTICLE III\n\n                      REPRESENTATIONS AND WARRANTIES OF PAS\n\n       PAS hereby represents and warrants to USSC and Transitory Sub, and shall\nbe deemed to so represent and warrant on and as of the Effective Date (but in no\nevent shall such representations and warranties speak as of a date subsequent to\nAugust 1, l997), except as disclosed in a document referring specifically to the\nrepresentations and warranties in this Agreement which reasonably identifies the\nbasis for any exception to a representation and warranty in this Agreement (\"PAS\nDisclosure Schedule\", which term shall also include the PAS Supplemental\nDisclosure Schedule as defined below) as follows:\n\n       Section 3.01 ORGANIZATION; AUTHORITY AND APPROVAL.\n\n       (a) PAS is duly incorporated, validly existing and in good standing under\nthe laws of the \n\n\n                                       14\n\n\nState of Delaware. PAS has the corporate power to execute, deliver and perform\nthis Agreement and to consummate the transactions contemplated hereby. This\nAgreement constitutes the valid and binding agreement of PAS, enforceable\nagainst it in accordance with its terms, subject to bankruptcy laws affecting\ncreditors' rights generally and to the discretion of a court to grant equitable\nrelief. PAS has the corporate power and authority to own and lease the\nproperties and assets it now owns and leases and to carry on its business as and\nwhere such properties and assets are now owned or leased and such business is\nnow conducted. PAS has heretofore delivered to USSC true, correct and complete\ncopies of its articles of incorporation and by laws or equivalent governing\ninstruments, each as amended to the date hereof, of PAS (respectively, the\n\"Certificate of Incorporation\" and \"By Laws\"). PAS is duly licensed or qualified\nto do business as a foreign corporation and is in good standing in all\njurisdictions in which the character of the property and assets now owned or\nleased by it or the nature of the business now conducted by it requires it to be\nso licensed or qualified, except where the failure to be so licensed or\nqualified is not material to PAS's business taken as a whole.\n\n       (b) The PAS Disclosure Schedule sets forth the name and respective\njurisdiction of incorporation or organization of all Subsidiaries of PAS. Except\nas set forth in the PAS Disclosure Schedule, each PAS is wholly owned by PAS.\nEach PAS Subsidiary is a corporation or other entity duly incorporated or\notherwise organized, validly existing and in good standing (or local law\nequivalent) under the Laws of its jurisdiction of organization. Each of PAS's\nSubsidiaries has the corporate power and authority to own and lease the\nproperties and assets it now owns and leases and to carry on its business as and\nwhere such properties and assets are now owned or leased and such business is\nnow conducted. PAS has heretofore delivered to USSC true, correct and complete\ncopies of the articles of incorporation, by laws, or equivalent governing\ninstruments, each as amended to the date hereof for each such Subsidiary. Each\nof PAS's Subsidiaries is duly licensed or qualified to do business as a foreign\ncorporation and is in good standing in all jurisdictions in which the character\nof the property and assets now owned or leased by it or the nature of the\nbusiness now conducted by it requires it to be so licensed or qualified, except\nwhere the failure to be so licensed or qualified is not material to PAS's\nbusiness taken as a whole.\n\n       Section 3.02 CAPITALIZATION. The authorized capital stock of PAS consists\nof 50,000,000 shares of Common Stock, par value $0.001, and 5,000,000 shares of\nPreferred Stock, par value $0.001, of which 1,116,810 shares are designated as\nSeries A Preferred Stock and 3,450,000 share are designated as Series B\nPreferred Stock. As of the date hereof, there are 6,668,329 shares of PAS Common\nStock outstanding, 1,116,810 shares of PAS Series A Preferred Stock outstanding\nand 3,450,000 PAS Series B Preferred Stock outstanding. As of the date hereof,\nno PAS Capital Stock is held by PAS in its treasury. All of the issued and\noutstanding shares of PAS Capital Stock have been duly authorized and are\nvalidly issued and outstanding, fully paid and non assessable. All of the\noutstanding capital stock of, or other ownership interests (the \"PAS Subsidiary\nSecurities\") in each Subsidiary held by PAS is owned by PAS, directly or\nindirectly, free and clear of any Lien and free of any other limitation or\nrestriction (including any restriction on the right to vote, sell or otherwise\ndispose of such capital stock or other ownership interests). Except as set forth\nin the PAS Disclosure Schedule, there are outstanding no subscriptions, options,\nwarrants or other agreements, or conversion, exchange or other rights of any\nkind other than this Agreement entitling any Person to purchase or otherwise\nacquire \n\n\n                                       15\n\n\nany PAS Capital Stock or any PAS Subsidiary Securities and no PAS Capital Stock\nor any PAS Subsidiary Securities is reserved for issuance for any purpose. PAS\nhas collected or will collect prior to the Effective Time and either has paid or\nwill pay prior to the Effective Time same to the proper taxing authorities or\nretains and reflects on the Interim Period Financial Statements the full amount\nof any withholding due in connection with the exercise of any of the foregoing\nby any holder thereof. There are no agreements, commitments or restrictions\nrelating to ownership or voting of PAS Capital Stock or other securities of PAS\nor any PAS Subsidiary Securities. The PAS Disclosure Schedule contains a\ncomplete and correct list of the name, address and shareholdings of each\nShareholder. Upon the consummation of the transactions contemplated hereby in\naccordance with the terms hereof, USSC will own one hundred percent (100%) of\nthe issued and outstanding PAS Capital Stock, except Dissenting Shares.\n\n       Section 3.03 CERTAIN INTERESTS.\n\n       (a) Except as set forth in the PAS Disclosure Schedule or for liabilities\narising under this Agreement, neither PAS nor any PAS Subsidiary owns any note,\nbond, debenture or other indebtedness and is not a creditor, of any Shareholder\nor any Affiliate of such Shareholder, and no Shareholder or any Affiliate of\nsuch Shareholder or any employee of PAS or an PAS Subsidiary owns any note,\nbond, debenture or other indebtedness, or is otherwise a creditor, of PAS or any\nPAS Subsidiary.\n\n       (b) Except as set forth in the PAS Disclosure Schedule, no officer or\ndirector of either PAS or any PAS Subsidiary, or any immediate relative of any\nsuch officer or director residing at the same address as such officer or\ndirector, is a party to or has any interest with respect to any material\ncontract, agreement or arrangement which relates to or affects in any material\nrespect the business of PAS or any PAS Subsidiary or has any material interest\nin any property, real or personal, tangible or intangible, used in the business\nof PAS or any PAS Subsidiary as currently conducted.\n\n       Section 3.04 NO CONFLICT OR RESTRICTIONS. The execution, delivery and\nperformance of this Agreement by PAS does not, and the consummation by PAS of\nthe transactions contemplated hereby will not: (i) violate or conflict with the\nCertificate of Incorporation or By laws of PAS or the articles of incorporation\nor by laws of any PAS Subsidiary; (ii) violate or conflict with any Law\ncurrently applicable to PAS or any PAS Subsidiary; (iii) require any filing,\napproval, consent, authorization or other action with respect to PAS or any PAS\nSubsidiary; (iv) violate or conflict with, result in a breach of, constitute a\ndefault under (whether with notice or the lapse of time or both), or give rise\nto a right of termination or to accelerate or permit the acceleration of the\nperformance required by, any Lien, loan arrangement, lease, license or other\nagreement or instrument to which PAS or any PAS Subsidiary is a party or by\nwhich PAS or any PAS Subsidiary or any of their respective assets is bound; or\n(v) result in the creation of any Lien upon the assets of PAS or any PAS\nSubsidiary under any such Lien, loan arrangement, lease, agreement or\ninstrument, which violation, conflict, failure to take action or obtain consent,\napproval or authorization, breach, termination, acceleration, default or lien\nspecified in the foregoing clauses (ii) through (v) could have a Material\nAdverse Effect.\n\n\n                                       16\n\n\n       Section 3.05 LITIGATION. Except as disclosed in the PAS Disclosure\nSchedule, there are no Actions, formal or informal, pending or, to the actual\nknowledge of PAS, threatened against PAS, any PAS Subsidiary or any of its\nassets, or, in connection with the business of PAS or any PAS Subsidiary\nrelating to the business of PAS or any PAS Subsidiary or any of the officers,\ndirectors or employees of PAS or any PAS Subsidiary. Neither PAS nor any PAS\nSubsidiary has been charged by any governmental agency with a violation of, or\n(to the actual knowledge of PAS) threatened by any Governmental Bodies with a\ncharge of a violation of, any Laws.\n\n       Section 3.06 NO DEFAULT. Except as disclosed in the PAS Disclosure\nSchedule, neither PAS nor any PAS Subsidiary is in default under, and, to the\nactual knowledge of PAS, no condition exists that with notice or lapse of time\nor both would constitute a default under, (i) any Lien, loan arrangement, lease\nor agreement or instrument of any nature to which PAS or any PAS Subsidiary is a\nparty or by which any of the assets of PAS or any PAS Subsidiary is bound, or\n(ii) any judgment, order, or injunction or permit of any Governmental Body.\n\n       Section 3.07 COMPLIANCE. Except as disclosed in the PAS Disclosure\nSchedule, PAS and each PAS Subsidiary is in compliance with all Laws of any\nGovernmental Bodies applicable to the business and operations of PAS and each\nPAS Subsidiary (including, without limitation, any Laws relating to securities,\nproperties, businesses, products, manufacturing processes, advertising, sales or\nemployment practices, terms and conditions of employment, wages and hours,\nsafety, occupational safety, health or welfare conditions relating to premises\noccupied, environmental protection, product safety and liability or civil\nrights) (\"Legal Requirements\").\n\n       Section 3.08 ENVIRONMENTAL MATTERS.\n\n       (a) Neither PAS nor any PAS Subsidiary has (i) transported, stored,\ntreated or disposed, nor has any of them allowed or arranged for any third\nparties to transport, store, treat or dispose of Hazardous substances or other\nwaste to or at any location other than a site lawfully permitted to receive such\nHazardous substances or other waste for such purposes, nor has any of them\nperformed, arranged for or allowed by any method or procedure such\ntransportation, storage, treatment or disposal in contravention of any laws or\nregulations; or (ii) disposed, or allowed or arranged for any third parties to\ndispose of Hazardous substances or other waste upon real property currently or\npreviously owned or leased by any of them or any predecessor of PAS or any PAS\nSubsidiary during the period of occupation by PAS, any PAS Subsidiary or any\npredecessor of any of them, except as permitted by law. For purposes of this\nSection 3.09, (x) \"Hazardous substance\" or \"Hazardous substances\" shall mean any\nsubstance or substances that are hazardous, and shall include, without\nlimitation: (A) those substances included within the definitions of \"hazardous\nsubstances,\" \"hazardous materials\", \"toxic substances,\" or \"solid waste\" in any\nof the Environmental Laws, or so designated in accordance with any Environmental\nLaws; and (B) any material, waste or substance which contains (1) any asbestos\n(friable or non-friable), (2) any polychlorinated biphenyls in any\nconcentration, (3) any petroleum or petroleum product, (4) any explosives, (5)\nany radioactive materials, (6) any infectious wastes, or (7) any material which\nmust be removed from real property currently or previously owned or leased by\nPAS, any PAS Subsidiary or any predecessor of any of them \n\n\n                                       17\n\n\nduring the period of occupation by PAS, any PAS Subsidiary or any predecessor of\nany of them pursuant to any administrative order or enforcement proceeding, and\n(y) \"Environmental Laws\" shall mean all Federal, state and local environmental\nstatutes and ordinances, and any rule or regulation promulgated thereunder, and\nany order, standard, interim regulations, moratorium, policy or guideline of any\nFederal, state or local government, department or agency pertaining thereto, and\nall state and local counterparts of related statutes, laws, regulations, and\norders and treaties of the United States (with any reference to any such\nEnvironmental Law or provision thereof, either in this Section or elsewhere in\nthis Agreement, being deemed to include any amendment, extension or successor\nthereof).\n\n       (b) Neither PAS nor any PAS Subsidiary has Released any Hazardous\nsubstance on, into or beneath the surface of any parcel of real property\ncurrently or previously owned or leased by PAS, any PAS Subsidiary or any\npredecessor of any of them during the period of occupation by PAS, any PAS\nSubsidiary or any predecessor of any of them. For purposes of this Section 3.09,\nthe term \"Release\" shall mean releasing, spilling, pumping, pouring, emitting,\nemptying, discharging, injecting, escaping, leaching, disposing or dumping.\n\n       (c) Neither PAS nor any PAS Subsidiary has received any written notice,\nthat PAS or any PAS Subsidiary is a potentially responsible party for a Federal\nor state environmental cleanup site or for corrective action under the\nComprehensive Environmental Response Compensation and Liability Act of 1980, as\namended (\"CERCLA\") or any other applicable law or regulation. Neither PAS nor\nany PAS Subsidiary has submitted nor has any of them been required to submit any\nnotice pursuant to Section 103(c) of CERCLA with respect to real property\ncurrently or previously owned or leased by PAS, any PAS Subsidiary or any\npredecessor of any of them. Neither PAS nor any PAS Subsidiary has received any\nwritten or oral request for information in connection with any Federal or state\nenvironmental cleanup site. Neither PAS nor any PAS Subsidiary has been\nrequested to nor has any of them undertaken any response or remedial actions or\nclean-up actions of any kind at the request of any Federal state or local\ngovernmental entity, or at the request of any other person or entity.\n\n       (d) Neither PAS nor any PAS Subsidiary uses, and none of them have ever\nused, any Underground Storage Tank, and during the occupation by PAS, any PAS\nSubsidiary or any predecessor of PAS or any PAS Subsidiary, there have not been\nto PAS's knowledge any Underground Storage Tanks on real property currently or\npreviously owned or leased by PAS, any PAS Subsidiary or any predecessor of PAS\nor any PAS Subsidiary. For purposes of this Section 3.09, the term \"Underground\nStorage Tank\" shall have the meaning given it in the Resource Conservation and\nRecovery Act, as amended.\n\n       (e) There are no laws, regulations, ordinances, licenses, permits or\norders relating to environmental or worker safety matters requiring any material\nwork, repairs, construction or capital expenditures with respect to the assets\nor properties owned or leased by PAS and any PAS Subsidiary. The PAS Disclosure\nSchedule identifies for the period PAS, any PAS Subsidiary or any predecessor of\nPAS or any PAS Subsidiary occupied real property leased or owned (i) all\nenvironmental audits, assessments or occupational health studies undertaken by\ngovernmental agencies or PAS, any PAS Subsidiary or any agents of any of them;\n(ii) the results of any ground, water, soil, air or asbestos monitoring\nundertaken; (iii) all written \n\n\n                                       18\n\n\ncommunications between PAS or any PAS Subsidiary and environmental agencies\nwithin the past five years; and (iv) all citations to PAS or any PAS Subsidiary\nissued within the past five years under the United States Occupational Safety\nand Health Act, as amended.\n\n       Section 3.09 FINANCIAL INFORMATION.\n\n       (a) PAS has delivered to USSC prior to the date hereof copies of (i) the\nconsolidated balance sheets of PAS as of December 31, l994, December 31, 1995\nand June 30, l996, and the related consolidated statements of operations,\nshareholders' equity and cash flows for the fiscal years then ended, including\nthe notes thereto, each certified by Coopers &amp; Lybrand L. L. P. (collectively,\nthe \"Audited Financial Statements\"), and (ii) the unaudited consolidated balance\nsheet of PAS as of December 31, 1996 (the \"December Balance Sheet\") and the\nunaudited consolidated statement of operations for the fiscal period then ended\ntogether with a certification by the Chief Financial Officer of PAS, that, to\nthe best of his knowledge, each of same present fairly the financial condition\nand results of operations of PAS as of the dates set forth therein\n(collectively, the \"December Unaudited Financial Statements\").\n\n       (b) Within fifteen (15) business days after the last day of each month\nduring the period commencing with the date hereof and ending on the last day of\nthe month preceding the Effective Date, PAS shall deliver to USSC monthly an\nunaudited consolidated balance sheets of PAS, the related consolidated\nstatements of income and changes in shareholders' equity and cash flows and\ndetail of general and administrative expenses for each monthly period from\nFebruary, 1997, through the month end immediately preceding the Effective Date,\ntogether with a certification by the Chief Financial Officer of PAS, that, to\nthe best of his knowledge, each of same present fairly the financial condition\nand results of operations of PAS as of the dates set forth therein\n(collectively, the \"Interim Period Unaudited Financial Statements\"). Within\nthree (3) business days after PAS completes the audited financial statements for\nthe fiscal year ended December 31, l996, PAS shall deliver same to USSC,\ntogether with the audit report from PAS's outside auditors.\n\n       (c) Three (3) business days prior to the Effective Date PAS shall deliver\nto USSC an unaudited consolidated balance sheet of PAS, the related consolidated\nstatement of income and changes in shareholders' equity and cash flows and\ndetail of general and administrative expenses for the period commencing on the\nfirst day of the then current calendar month through the close of business on\nthe third day preceding the Effective Date together with a certification of the\nChief Financial Officer of PAS, that, to the best of his knowledge, each of the\nsame present fairly the financial condition and results of operation of PAS as\nof the dates set forth therein (collectively, the \"Final Interim Period\nUnaudited Financial Statements\").\n\n       (d) The Audited Financial Statements and the December Unaudited Financial\nStatements are, and the Interim Period Unaudited Financial Statements and the\nFinal Interim Period Unaudited Financial Statements will be, complete and\ncorrect according to the books and records of PAS and prepared in accordance\nwith GAAP consistently applied (except that the December Unaudited Financial\nStatements do not, and the Interim Period Unaudited Financial Statements and the\nFinal Interim Period Unaudited Financial Statements will not, contain all of the\nfinancial statements or the notes required under GAAP). The Audited Financial\nStatements \n\n\n                                       19\n\n\nand the December Unaudited Financial Statements do, and the Interim Period\nUnaudited Financial Statements and the Final Interim Period Unaudited Financial\nStatements will, fairly present the financial position and results of operations\nof PAS as of the respective dates. The Audited Financial Statements, the\nDecember Unaudited Financial Statements, the Interim Period Unaudited Financial\nStatements and the Final Interim Period Unaudited Financial Statements are\nhereinafter referred to collectively as the \"Financial Statements\".\n\n       Section 3.10 UNDISCLOSED LIABILITIES. Except for (i) liabilities set\nforth and adequately reserved against in the December Balance Sheet, and (ii)\nProfessional Fees which are incurred by PAS subsequent to January 31, 1997 and\nsubject to the limitation on amount set forth in this Agreement, PAS has no\nliabilities or loss contingencies (whether accrued, unmatured, contingent or\notherwise or whether due or to become due).\n\n       Section 3.11 TITLE TO PROPERTIES; LIENS. Subject to Section 3.16, PAS and\neach PAS Subsidiary has good and marketable title to or, in the case of leases\nand licenses, valid leasehold interests or licenses in, all its properties and\nassets (real, personal or mixed, tangible or intangible) used in its business.\n\n       Section 3.12 REAL PROPERTY. Neither PAS nor any PAS Subsidiary has ever\nowned any real property. No PAS Subsidiary has ever leased any real property and\nhas no liability in respect of any real property lease. PAS has heretofore\noccupied only the real property pursuant to the leases set forth in the PAS\nDisclosure Schedule.\n\n       Section 3.13 INVENTORIES AND EQUIPMENT.\n\n       (a) The PAS Disclosure Schedule sets forth a complete and correct list of\neach item of raw materials, work in process and finished goods in the\ninventories (the \"Inventories\") of PAS and each PAS Subsidiary. The Inventories\nshown on the Audited Financial Statements were valued at cost determined on a\nfirst-in first-out basis with proper allowance for obsolescence, in accordance\nwith GAAP. The inventories consist of items which are to PAS's knowledge of\nquality and quantity readily usable or saleable in the normal course of business\nof PAS and each PAS Subsidiary, except such amounts as are reserved in\naccordance with GAAP.\n\n       (b) The PAS Disclosure Schedule sets forth (i) a complete and correct\nlist and description in reasonable detail of all machinery, equipment, tools,\ndies and fixtures (collectively, \"Equipment\") used in the conduct of PAS's\nbusiness, including the physical location thereof; and (ii) a list or\ndescription in reasonable detail of all warranties and service or repair\ncontracts affecting any of the Equipment. Except as set forth in the PAS\nDisclosure Schedule, the Equipment is in good operating condition and in a good\nstate of maintenance and repair.\n\n       Section 3.14 PROFESSIONAL FEES AND SUPPLIERS. The PAS Disclosure Schedule\nsets forth a complete and correct list containing the names and amounts due on\nthe date hereof to all providers of financial, legal, accounting and escrow\nservices to PAS and each PAS Subsidiary (hereinafter collectively, \"Professional\nFees\") which schedule shall be updated by PAS and each PAS Subsidiary for\nadditional services between the period commencing on the date hereof \n\n\n                                       20\n\n\nand ending on the Effective Time but which unpaid Professional Fees shall in no\nevent exceed One Million Dollars ($1,000,000). Except for providers of\nfinancial, legal, accounting and escrow services all of which have been paid in\nfull prior to the date of this Agreement there are and have been no suppliers of\nproducts or services to PAS or any PAS Subsidiary during the one (1) year ended\nas of the date of this Agreement other than as set forth in the PAS Disclosure\nSchedule.\n\n       Section 3.15 RECEIVABLES. On or prior to the Effective Date PAS and each\nPAS Subsidiary will have collected all amounts, if any, loaned or advanced to or\notherwise receivable from directors and officers, the Shareholders, as defined\nin the Stock Option Agreement, and their Affiliates, including the amounts\nthereof, if any, set forth in the PAS Disclosure Schedule. All accounts\nreceivable reflected in the Financial Statements, have arisen in the ordinary\ncourse of business and represent valid and collectible obligations owed to PAS\nand each PAS Subsidiary less an amount not in excess of the allowance for\ndoubtful accounts provided for in the Financial Statements.\n\n       Section 3.16 INTELLECTUAL PROPERTY.\n\n       (a) The PAS Disclosure Schedule sets forth a complete and correct list of\neach trademark (whether or not registered), trademark application, trade name,\nservice mark, copyright registration, patent, and patent application owned by\nPAS or any PAS Subsidiary or in which it has any interest (collectively,\n\"Intellectual Property\").\n\n       (b) Except as disclosed in the PAS Disclosure Schedule, through the\nEffective Time neither PAS nor any PAS Subsidiary shall have sold, transferred,\nlicensed or otherwise disposed of any of their respective rights, title and\ninterests in and to (or entered into any agreement to do any of the foregoing)\nany Intellectual Property or other proprietary rights (including licenses, shop\nrights and contract rights and arrangements) that it had any rights, title or\ninterest in at any time prior to the Effective Date relating to any medical\ndevice (including technology, know-how, techniques and improvements or\nmodifications relating thereto) owned, acquired or developed by PAS or any PAS\nSubsidiary.\n\n       (c) Except as disclosed in the PAS Disclosure Schedule with respect to\neach such item of Intellectual Property, (i) all of the rights, title and\ninterest therein is owned by, or subject to a duty of assignment to, PAS or PAS\nSubsidiary, as the case may be, free and clear of any Lien, license, sublicense,\nassignment or option, (ii) the execution of this Agreement and carrying out of\nthe transactions contemplated hereby will not invalidate, be in violation of, or\ncause any penalty or premium to become due with respect to any of the\nIntellectual Property which is subject of a license, sublicense or similar\narrangement.\n\n       (d) Except as disclosed in the PAS Disclosure Schedule, neither PAS nor\nany PAS Subsidiary to the actual knowledge of PAS, (i) has infringed, has\nreceived notice asserting that it has infringed, is currently infringing or,\nwould infringe if the technology contained in PAS's existing patents and patent\napplications were commercialized on a worldwide basis, any trademark, trademark\napplication, trade name, service mark, copyright, patent, patent application or\nany other intellectual property right belonging to any other Person, (ii) is\naware \n\n\n                                       21\n\n\nof the existence or assertion by others of any intellectual property rights\ninconsistent with or potentially dominant of those of PAS and each PAS\nSubsidiary, (iii) is aware of any facts which it believes would render any of\nPAS's or any of PAS Subsidiary's Intellectual Property rights invalid or\ninadequate to protect the interest of PAS and each PAS Subsidiary therein, (iv)\nall documents conferring ownership of PAS's Intellectual Property including any\nagreement, power or attorney and recordation of license, are property executed\nand binding on PAS, and (v) neither it nor them is aware of any act of fraud or\nmisrepresentation in connection with the prosecution of the patents and patent\napplications within Intellectual Property including, without limitation, any\nmaterial prior art which not been disclosed in the cumulative prosecution of\nsuch patents and patent applications or any claim of prior invention by others.\n\n       (e) To the actual knowledge of PAS, (i) PAS has not authorized any\ndisclosure of PAS or PAS Subsidiary trade secrets or confidential information\ninvolving the Intellectual Property without legally enforceable restrictions on\ndisclosure by recipients thereof.\n\n       Section 3.17 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the PAS\nDisclosure Schedule or as expressly permitted by the terms of this Agreement,\nsince June 30, l996, there has not been:\n\n       (a) any Material Adverse Effect on the Business Condition of PAS or any\nPAS Subsidiary;\n\n       (b) any material change in any of the assets, licenses, permits or\nfranchises of PAS or any PAS Subsidiary, or any change in the nature of the\nbusinesses, or manner of conducting the businesses, of PAS or any PAS\nSubsidiary;\n\n       (c) any damage, destruction or loss (whether or not covered by\ninsurance);\n\n       (d) any change in the accounting methods or principles of PAS or any PAS\nSubsidiary;\n\n       (e) any declaration, setting aside or payment of dividend on, or any\nother distribution with respect to, any capital stock of PAS or PAS Subsidiary\nSecurities or any repurchase, redemption or other acquisition of any capital\nstock of PAS or any PAS Subsidiary Securities;\n\n       (f) any payment by PAS to any Shareholder or an Affiliate of any\nShareholder, any services or charges by any Shareholder, or any Affiliate of any\nShareholder, to PAS or any PAS Subsidiary or any other transaction (in any such\ncase, not of a type described in subsection (e) of this Section 3.18) between\nany Shareholder or an Affiliate of any Shareholder and any one or more of PAS\nand any PAS Subsidiary;\n\n       (g) any subscription, option or warrant to purchase, or other right to\npurchase or otherwise acquire, PAS capital stock, any security or other\ninstrument convertible into any class of PAS Capital Stock or any PAS Subsidiary\nSecurity, granted to any Person by PAS or any PAS Subsidiary, except for grants\nof stock options to employees in the ordinary course of business which stock\noption grants are consistent with PAS's past practices, provided there shall be\nno such grants to either Neal Eigler, Robert Hess or Frank Litvack, or any\nrelatives or \n\n\n                                       22\n\n\nAffiliates of any thereof;\n\n       (h) any issuance of shares of PAS Capital Stock (including, without\nlimitation, treasury shares) or PAS Subsidiary Securities other than upon the\nexercise of the PAS Options;\n\n       (i) any purchase of inventory by PAS or any PAS Subsidiary or any\nentering into by PAS or any PAS Subsidiary of any amendment or termination of\nany contract, agreement, lease, franchise, permit or license other than as\ndisclosed in the PAS Disclosure Schedule;\n\n       (j) except as disclosed in the PAS Disclosure Schedule, any incurrence,\nassumption or guarantee by PAS or any PAS Subsidiary of any indebtedness or\nliability for or in respect of borrowed money or any commitment to do the same;\n\n       (k) any Lien created or assumed by PAS or any PAS Subsidiary on any of\ntheir respective assets to secure indebtedness for borrowed money;\n\n       (l) any grant of any severance or termination pay to any present or\nformer employee or director of PAS or any PAS Subsidiary or any compensation or\nbenefits payable by PAS or any PAS Subsidiary under any employment agreements or\nseverance or termination pay policies to any of their respective present or\nformer employees;\n\n       (m) any employment, bonus or deferred compensation agreement entered into\nbetween either PAS or any PAS Subsidiary, on the one hand, and any of their\ndirectors, officers, or other former employees, on the other hand;\n\n       (m) any labor disputes or labor negotiations involving PAS or any PAS\nSubsidiary; or\n\n       (o) any amendment of the Articles of Incorporation or By-laws or the\narticles of incorporation or by laws of any PAS Subsidiary.\n\n       Section 3.18 CONTRACTS. (a) The PAS Disclosure Schedule contains a\ncomplete and correct list of all of the following to which PAS or any PAS\nSubsidiary is a party or by which any of them or any amount of any of their\nrespective assets is bound, whether written or oral (the \"Contracts\") involving\nany amount or amounts in excess of Twenty Five Thousand Dollars ($25,000) or\nwhich cannot be terminated on thirty (30) days or less without liability:\n\n              (i) any management or employment contract or other contract for\npersonal services with any officer, consultant, director, employee or any other\nPerson;\n\n              (ii) any plan, contract or arrangement providing for bonuses,\npensions, deferred compensation, retirement plan payments, profit sharing,\nincentive pay, hospitalization or medical expense, or for any other employee\nbenefit plans, whether or not insured;\n\n              (iii) any loan to or any plan, contract or arrangement providing\nfor insurance for any officer, consultant, director, or employee of PAS or any\nPAS Subsidiary or members of their families (other than directors and officers\nliability policies);\n\n\n                                       23\n\n\n              (iv) any union or collective bargaining agreements, and any labor\ncontracts or employment agreements providing for liability for severance pay;\n\n              (v) any lease, option, or agreement for real or personal property\nto which PAS or any PAS Subsidiary is a party other than agreements relating to\nIntellectual Property;\n\n              (vi) any secrecy, non-competition or other agreement that (A)\nrestricts the right of PAS or any PAS Subsidiary to engage in any place in any\nline of business, (B) would restrict the right of PAS or USSC or any of its\nsubsidiaries to engage in any place in any line of business after the Effective\nDate or (C) restricts the right of PAS or any PAS Subsidiary to use or disclose\nany information in its possession;\n\n              (vii) any license, sublicense or other agreement to which PAS or\nany PAS Subsidiary is a party (whether as licensor or licensee) involving or\nrelating to Intellectual Property;\n\n              (viii) any contract, commitment or agreement that involves or\nrelates to (A) capital expenditures by PAS or any PAS Subsidiary, or (B)\ndisposition of any amount of assets of PAS or any PAS Subsidiary;\n\n              (ix) any non-recurring contract, commitment or agreement between\nany Shareholder or any Affiliate of any Shareholder, on the one hand, and PAS or\nany PAS Subsidiary, on the other hand, that is not cancelable without cause on\nthirty (30) days or less notice;\n\n              (x) any contract relating to the rental or use of equipment, other\nthan personal property or fixtures by PAS or any PAS Subsidiary involving\npayment of fixed or contingent annual rentals;\n\n              (xi) any license or franchise agreement involving PAS or any PAS\nSubsidiary, either as licensor or licensee or as franchiser or franchisee;\n\n              (xii) any loan agreements, guaranties, bonding arrangements,\nrepurchase agreements, agency agreements, manufacturers' representative\nagreements, commission agreements, financing agreements, and security\nagreements;\n\n              (xiii) any contract or commitment not made in the ordinary course\nof business;\n\n              (xiv) any joint venture contract, including those currently under\nnegotiation (accompanied by a summary of the status of such negotiations);\n\n              (xv) any contract or agreement for the purchase of materials,\nsupplies or services, including individual purchase orders; and\n\n              (xvi) any other agreement or instrument not of a type covered by\nor specifically \n\n\n                                       24\n\n\nexcluded from the coverage of any of the other items of this Section 3.18.\n\n       (b) PAS has delivered to USSC true and correct copies of all Contracts\ndescribed in this Section 3.18 or listed on any other schedule that are in\nwriting, and complete and correct descriptions of all contracts that are not in\nwriting. Each of such plans, contracts, arrangements, instruments or other\nagreements is valid and in full force and effect and neither PAS nor any PAS\nSubsidiary nor any other party thereto is in default in any respect under the\nterms thereof. Except as disclosed in the PAS Disclosure Schedule, the\nexecution, delivery and performance of this Agreement, and the consummation of\nthe transactions contemplated hereby, will not require the consent of any Person\n(other than approval of the transactions contemplated by this Agreement by the\nPAS Shareholders) pursuant to, or result in the termination or impairment of,\nany material item described in the foregoing.\n\n       Section 3.19 POWERS OF ATTORNEY. Except as disclosed in the PAS\nDisclosure Schedule, neither PAS nor any PAS Subsidiary has any powers of\nattorney or comparable delegations of authority outstanding in connection with\nits businesses, and none of such delegations of authority would not be revocable\nby PAS or any PAS Subsidiary following the Effective Date.\n\n       Section 3.20 BANK ACCOUNTS; DEPOSITS. Except as disclosed in the PAS\nDisclosure Schedule, neither PAS nor any PAS Subsidiary has any bank accounts or\nsafe deposit boxes or credit arrangements under which PAS or any PAS Subsidiary\nmay incur liability, and except as disclosed in the PAS Disclosure Schedule, as\nof the date specified therein, there are no Persons presently authorized to draw\nthereon, have access thereto or be able to obtain credit therewith.\n\n       Section 3.21 PRODUCT LIABILITY; INSURANCE.\n\n       (a) The PAS Disclosure Schedule sets forth all claims involving or\nrelating to, or involving one or more allegations of, product liability for\ninjury, death or damage to persons or property which are pending or threatened\nor known to PAS's actual knowledge against PAS or any PAS Subsidiary with\nrespect to products sold or otherwise transferred by PAS or any PAS Subsidiary\nor any predecessor of any of them. Such Schedule also sets forth, for each of\nthe last five (5) fiscal years of PAS and each PAS Subsidiary and for the\ninterim period ended on the date hereof, the aggregate amount of product\nliability claims paid by or on behalf of PAS and any PAS Subsidiary. Neither PAS\nnor any PAS Subsidiary has extended to its customers any product warranties,\nindemnifications or guarantees except as set forth on the PAS Disclosure\nSchedule.\n\n       (b) The PAS Disclosure Schedule sets forth a complete and correct list of\nall insurance policies (including, without limitation, policies of life, fire,\ntheft, casualty, product liability, workmen's compensation, business\ninterruption, employee fidelity and other casualty and liability insurance) and\nfidelity bonds covering the assets, business or employees of PAS and each PAS\nSubsidiary (complete and correct copies of which have been made available to\nUSSC) together with the annual premiums payable with respect thereto. Except as\nset forth in the PAS Disclosure Schedule, there are no claims pending under any\nof said policies or bonds or disputed with underwriters, and all premiums due\nand payable have been paid. Except as set forth in the PAS Disclosure Schedule,\nthere are no pending or threatened terminations with \n\n\n                                       25\n\n\nrespect to any of such policies and bonds and PAS and each PAS Subsidiary is in\ncompliance with all conditions contained therein. Neither PAS nor any PAS\nSubsidiary has been denied any insurance coverage which any of them has\nrequested or made any material reductions or change in the scope or nature of\nand of their respective insurance coverage. All such policies and bonds are in\nfull force and effect.\n\n       Section 3.22 EMPLOYEE BENEFIT PLANS.\n\n       (a) The PAS Disclosure Schedule sets forth a complete and correct list of\neach Employee Pension Benefit Plan, as defined in Section 3(2) of ERISA, which\n(i) is subject to any provision of ERISA, and (ii) was at any time maintained,\nadministered or contributed to by PAS or any PAS Subsidiaries and covered any\nemployee or former employee of PAS or any PAS Subsidiaries or under which PAS or\nany PAS Subsidiaries has any liability. Complete and correct copies of such\nplans (and, if applicable, related trust agreements) and all amendments thereto\nand written interpretations thereof have been furnished to USSC together with\nthe three most recent annual reports (Form 5500 including, if applicable,\nSchedule B thereto) prepared in connection with any such plan. Such plans are\nhereinafter referred to collectively as the \"Employee Plans.\"\n\n       (b) Neither PAS nor any PAS Subsidiary contributes to or otherwise\nparticipates in and has never contributed to or otherwise participated in any\nEmployee Plan that is or has been subject to Title IV of ERISA. Neither PAS nor\nany PAS Subsidiary has engaged in any \"prohibited transaction\" as defined in\nSection 406 of ERISA or Section 4975 of the Code, nor has a \"prohibited\ntransaction\" occurred with respect to any Employee Plan or any other employee\nbenefit plan or arrangement contributed to by PAS or any PAS Subsidiary which is\ncovered by Title I of ERISA. Neither PAS nor any PAS Subsidiary has incurred any\nliability under Title IV of ERISA which could become a liability of USSC after\nthe Effective Date.\n\n       (c) Each of the Employee Plans which is intended to be qualified under\nSection 401(a) of the Code (a \"Qualified Plan\") is so qualified and has been so\nqualified during the period from its adoption to date, and each trust forming a\npart thereof is exempt from tax pursuant to Section 501(a) of the Code. USSC has\nbeen furnished with copies of the most recent Internal Revenue Service\ndetermination letters with respect to any such Employee Plans. Requests for\ndetermination letters with respect to certain amendments necessary to bring such\nqualified Employee Plans into compliance with the Tax Equity and Fiscal\nResponsibility Act of 1982, the Deficit Reduction Act of 1984 and the Retirement\nEquity Act of 1984 were timely submitted and have been received. All amendments\nto the qualified Employee Plans which are required by the Code and regulations\nand rulings promulgated thereunder to be effective prior to the Effective Date,\nare required to comply with ERISA, the Tax Reform Act of 1986 or any other\nprovisions of law or are necessary to reflect the currently applicable terms (as\nof the Effective Date) of such qualified Employee Plans or of any collective\nbargaining agreement pursuant to which such qualified Employee Plans were\nestablished shall have been adopted by PAS and any PAS Subsidiaries in a form\napproved in writing by USSC, which approval shall not be unreasonably withheld,\nand filed with the Internal Revenue Service on or about the Effective Date, or\nwill be so filed as soon as is reasonably practicable thereafter. Each of the\nEmployee Plans has been maintained in compliance with its terms and with the\nrequirements \n\n\n                                       26\n\n\nprescribed by any and all statutes, orders, rules and regulations, including but\nnot limited to ERISA and the Code, which are applicable to such Employee Plans\nand nothing has occurred since the adoption of the Qualified Plans which\nresulted or, after due inquiry, could result in the imposition of any penalties\non such Qualified Plans or the sponsors, fiduciaries or administrators thereof,\nincluding any actions taken pursuant to this Agreement.\n\n       (d) To PAS' actual knowledge, there is no contract, agreement, plan or\narrangement covering any employee or former employee of PAS or any PAS\nSubsidiary that, individually or collectively, could give rise to the payment of\nany amount that would not be deductible by reason of Section 280G or Section\n162(a)(1) of the Code.\n\n       (e) The PAS Disclosure Schedule sets forth a complete and correct list of\neach employment, severance or other similar contract, arrangement or policy and\neach plan or arrangement (written or oral) providing for insurance coverage\n(including any self-insured arrangements), workers' compensation, disability\nbenefits, supplemental unemployment benefits, medical benefits, dental benefits,\nvacation benefits, retirement benefits or for deferred compensation, profit\nsharing, bonuses, stock options, stock appreciation or other forms of incentive\ncompensation or post-retirement insurance, compensation or benefits which (i) is\nnot an Employee Plan, (ii) is entered into, maintained or contributed to, as the\ncase may be, by PAS, or any PAS Subsidiary and (iii) covers any employee or\nformer employee of PAS, any PAS Subsidiary or any predecessor of any of them.\nCopies or descriptions of such contracts, plans and arrangements have been\npreviously furnished to USSC together with copies of funding vehicles and\npolicies and the most recent annual report on Form 5500, if applicable. Such\ncontracts, plans and arrangements are hereinafter referred to collectively as\nthe \"Benefit Arrangements.\" Each of the Benefit Arrangements has in all material\nrespects been maintained in compliance with its terms and to meet any applicable\nrequirements for favorable tax treatment under the Code and comply with the\nrequirements prescribed by any and all statutes, orders, rules and regulations\nwhich are applicable to such Benefit Arrangements.\n\n       (f) Neither PAS nor any PAS Subsidiary has any liability in respect of\npost-retirement health and medical benefits for retired employees of PAS or any\nPAS Subsidiary.\n\n       (g) Except as specifically set forth in the PAS Disclosure Schedule, (i)\nPAS and any PAS Subsidiaries have made all payments required by each Employee\nPlan and Benefit Arrangement, any related trusts, any collective bargaining\nagreement or by law to be made to each Employee Plan and Benefit Arrangement\n(including all insurance premiums or intercompany charges with respect to each\nEmployee Plan and Benefit Arrangement) with respect to all periods through the\nEffective Date, including, without limitation, payments for a pro rata share\nwith respect to any period including the Effective Date, based on the number of\ndays in such period to the total number of days in the plan year, and all\namounts properly accrued to date as liabilities of PAS, and any PAS Subsidiaries\nunder or with respect to each Employee Plan or Benefit Arrangement for the\ncurrent plan years have been recorded on the books of PAS, and any PAS\nSubsidiaries; (ii) there are no actions, suits, arbitrations or claims pending\n(other than routine claims for benefits) or threatened, against any Employee\nPlan or Benefit Arrangement, its administrators, trustees or other fiduciaries,\nor against the Shareholder, PAS or any PAS Subsidiaries or against the assets of\nany Employee Plan or \n\n\n                                       27\n\n\nBenefit Arrangement; (iii) no Employee Plan providing retirement benefits for\nemployees or former employees of PAS and any PAS Subsidiary has been terminated;\n(iv) no Employee Plan is under audit by either the Internal Revenue Service or\nthe U.S. Department of Labor; and (v) consummation of the transactions\ncontemplated by this Agreement will not give rise to any liability of PAS or any\nPAS Subsidiary for severance pay or termination pay solely by reason of such\ntransactions.\n\n       (h) Except as disclosed in the PAS Disclosure Schedule, there has not\nbeen, and prior to or on the Effective Date there will not be, any amendment to,\nwritten interpretation or announcement (whether or not written) by PAS or any\nPAS Subsidiaries relating to, or change in employee participation or coverage\nunder, any Employee Plans or Benefit Arrangements which would increase\nmaterially the expense of maintaining such Employee Plans or Benefit\nArrangements above the level of the expense incurred in respect thereof for the\nperiod ending December 31, 1995.\n\n       Section 3.23 EMPLOYEES.\n\n       (a) The PAS Disclosure Schedule lists each salaried employee and sales\nrepresentative of PAS and each PAS Subsidiary, his or her current position,\nsalary, commission and general compensation arrangement. Except for agreements,\ncomplete and accurate copies of which have been delivered to USSC, neither PAS\nnor any PAS Subsidiary is a party to any consulting or employment agreement\n(other than at will employment agreements or agreements with the principal\npurpose of providing for the confidentiality of PAS's and each PAS Subsidiary's\nproprietary information and prosecution of patent claims) with individual\nconsultants or employees (including officers and directors).\n\n       (b) There are no current compensation, pension or benefit arrangements,\nwhether written or oral, between PAS or any PAS Subsidiary, on the one hand, and\nany former employees of any of them, on the other hand. Prior to the Effective\nDate, USSC shall have received a list of the names and addresses of each former\nemployee of PAS and every PAS Subsidiary and each other person currently covered\nwith respect to any of them under any Benefit Arrangement under the Consolidated\nOmnibus Budget Reconciliation Act (\"COBRA\") together with the expiration date of\nall COBRA rights for each such covered person.\n\n       Section 3.24 LABOR MATTERS. PAS and each PAS Subsidiary is in compliance\nwith all currently applicable laws and regulations respecting employment and\nemployment practices, discrimination in employment, verification of immigration\nstatus, terms and conditions of employment, wages and hours and occupational\nsafety and health, and is not engaged in any unfair labor practice.\n\n       Section 3.25 DISTRIBUTORS, VENDORS AND CUSTOMERS.\n\n       (a) The PAS Disclosure Schedule contains a true and correct copy of each\ndistributorship, agency or similar agreement involving or related to past,\npresent or future products of PAS or to which PAS is a party or by which it is\notherwise bound (\"Distributorship Agreements\"). Other than the Distributorship\nAgreements, there is no agreement, option, right \n\n\n                                       28\n\n\nor binding understanding under which any person has an option or other right to\nenter into a distribution, agency or similar agreement with PAS or involving or\nrelated to any of PAS's present or future products or to extend the term of any\nof the Distributorship Agreements.\n\n       (b) The PAS Disclosure Schedule contains a true and complete list of the\nnames and addresses of vendors who have supplied PAS with products, parts,\ncomponents and subassemblies for products in the one (1) year preceding the\nClosing Date (collectively, the \"Vendors\") and a description in reasonable\ndetail of the components supplied by each of the Vendors to PAS.\n\n       (c) The PAS Disclosure Schedule contains a true and complete list of the\nnames and address and sales history of customers during the past one (1) year of\nPAS other than Distributors (collectively, the \"Customers\") and on the Closing\nDate contain a true and complete list of open purchase orders as of the Closing\nDate (\"Open Purchase Orders\").\n\n       Section 3.26 TAXES. Except as set forth in the PAS Disclosure Schedule,\n\n       (a) All Tax returns, statements, reports and forms (including estimated\nTax returns and reports and information returns and reports) required to be\nfiled with any Taxing Authority with respect to any Taxable period ending on or\nbefore the Effective Date, by or on behalf of PAS and any PAS Subsidiary\n(collectively, the \"PAS Returns\"), have been or will be filed when due\n(including any extensions of such due date), and all amounts shown due thereon\non or before the Effective Date hereof have been or will be paid when due. The\nDecember Balance Sheet (i) fully accrues all actual and contingent liabilities\nfor Taxes with respect to all periods through December 31, 1996, and neither PAS\nor any PAS Subsidiary has and none of them will incur any Tax liability in\nexcess of the amount reflected on the December Balance Sheet with respect to\nsuch periods, and (ii) properly accrues in full all liabilities for Taxes\npayable after December 31, 1996 with respect to all transactions and events\noccurring on or prior to such date.\n\n       (b) Adequate provision has been and will be made on the Financial\nStatements for all Tax liabilities existing on or before the Effective Date. PAS\nand each PAS Subsidiary has withheld and paid when due to the applicable\nfinancial institution or Taxing Authority all amounts required to be withheld.\nPAS has not granted any extension or waiver of the limitation period applicable\nto any PAS Returns.\n\n       (c) There is no claim, audit, Action now pending or (to the actual\nknowledge of PAS) threatened against or with respect to PAS or any PAS\nSubsidiary in respect of any Tax or assessment. No notice of deficiency or\nsimilar document of any Tax Authority has been received by PAS or any PAS\nSubsidiary and there are no liabilities for Taxes (including liabilities for\ninterest, additions to tax and penalties thereon and related expenses) with\nrespect to the issues that have been raised (and are currently pending) by any\nTax Authority that could, if determined adversely to PAS or any PAS Subsidiary,\nadversely affect the liability of PAS or any PAS Subsidiary for Taxes. Neither\nPAS, any PAS Subsidiary nor any other person on behalf of PAS or any PAS\nSubsidiary has entered into nor will any of them enter into any agreement or\nconsent pursuant to Section 341(f) of the Code. There are no liens for Taxes\n\n\n                                       29\n\n\nupon the assets of PAS or any PAS Subsidiary except liens for current Taxes not\nyet due. Neither PAS nor any PAS Subsidiary is subject to withholding of any\n\"United States real property interest\" with respect to any transaction\ncontemplated hereby and neither PAS nor any PAS Subsidiary owns any interest in\nreal property except as disclosed.\n\n       (d) Other than pursuant to this Agreement, neither PAS nor any PAS\nSubsidiary is a party to or bound by (or will prior to the Effective Date become\na party to or bound by) any Tax sharing agreement.\n\n       Section 3.27 PERMITS AND LICENSES.\n\n       (a) The PAS Disclosure Schedule contains a complete and correct copy of\n(i) each pending application or registration for Governmental Approval and each\nGovernmental Approval held by PAS to import, export, store, market and sell PAS\nproducts, and (ii) the most recent report by or on behalf of the FDA or any\nother Governmental Body involving or relating to any facility inspection of PAS\nfacilities. Except as disclosed in the PAS Disclosure Schedule, (i) PAS and each\nPAS Subsidiary possess such Governmental Approvals from all Governmental Bodies\nincluding, without limitation, all FDA Approvals necessary to permit the\noperation of their businesses in the manner as the same are currently conducted,\nand to operate, own or occupy their respective properties, (ii) there have been\nno product recalls, field corrective activity, medical device reports, warning\nletters or administrative actions by the FDA or any other Governmental Body, and\n(iii) to the actual knowledge of PAS (aa) there is no administrative action\npending or threatened for the revocation of any such Governmental Approval and\n(bb) assuming the obtaining of the authorizations, consents, approvals and other\nactions listed in the PAS Disclosure Schedule, no Governmental Approval by any\nGovernmental Body having jurisdiction over the operation of PAS's businesses of\nany PAS Subsidiary's businesses, whether in whole or in part, will be revoked,\nor become ineffective or subject to revocation, as a consequence of the\ntransactions contemplated by this Agreement.\n\n       (b) Except as disclosed in the PAS Disclosure Schedule, to the actual\nknowledge of PAS and the Control Persons, the suppliers of products, parts,\ncomponents and subassemblies to PAS and PAS Subsidiaries and the distributors,\nwholesalers, retailers of PAS Products possess such Governmental Approvals from\nall Governmental Bodies necessary to permit the operation of their businesses in\nthe manner as currently conducted, and to operate, own or occupy their\nrespective properties.\n\n       Section 3.28 MINUTE BOOKS. The minute books of PAS and each PAS\nSubsidiary, as previously made available to USSC, contain complete and accurate\nrecords of all meetings and accurately reflect all other corporate action of the\nshareholders and board of directors of PAS and of each PAS Subsidiary, as the\ncase may be.\n\n       Section 3.29 BROKERS. Except for UBS Securities LLC which has been\nengaged to render a \"fairness\" opinion to the Board of Directors of PAS, neither\nPAS, nor any PAS Subsidiary nor any of the Control Persons have employed any\ninvestment banker, broker or finder which might be entitled to a fee or other\nremuneration upon consummation of the transactions contemplated hereby.\n\n\n                                       30\n\n\n       Section 3.30 IMPROPER PAYMENTS. Neither PAS nor any PAS Subsidiary, nor\nany of their respective officers and agents, have made any illegal or improper\npayments to, or provided any illegal or improper benefit or inducement for, any\ngovernmental official, supplier, customer or other person, in an attempt to\ninfluence any such person to take or to refrain from taking any action relating\nto PAS or any PAS Subsidiary. Customary holiday gifts of nominal value made to\nsuppliers or customers are not to be deemed illegal or improper for purposes of\nthis Section 3.30.\n\n       Section 3.31 COMPLETENESS OF DISCLOSURE. No representation or warranty of\nPAS made in this Agreement and no document furnished or to be furnished by PAS\npursuant to this Agreement or in connection with the transactions contemplated\nhereby knowingly contains or will knowingly contain any untrue statement of a\nmaterial fact or knowingly omits to state a material fact necessary to make the\nstatements contained herein or therein not materially misleading.\n\n       Section 3.32 SURVIVAL. The representations and warranties contained in\nthis Article III shall survive Closing for a period of one (1) year.\n\n                                   ARTICLE IV\n\n            REPRESENTATIONS AND WARRANTIES OF USSC AND TRANSITORY SUB\n\n       USSC and Transitory Sub hereby jointly and severally represent and\nwarrant to PAS and the Control Shareholders and shall be deemed to so represent\nand warrant on and as of the Effective Date, except as disclosed in a document\nreferring specifically to the representations and warranties in this Agreement\nwhich reasonably identifies the basis for any exception to a representation and\nwarranty in this Agreement (the \"USSC Disclosure Schedule\"):\n\n       Section 4.01 ORGANIZATION; AUTHORITY AND APPROVAL. USSC and Transitory\nSub are each corporations duly organized, validly existing and in good standing\nunder the laws of the State of Delaware and Delaware, respectively. USSC and\nTransitory Sub each have the corporate power to execute, deliver and perform\nthis Agreement and to consummate the transactions contemplated hereby. This\nAgreement constitutes the valid and binding agreement of USSC and Transitory\nSub, enforceable against each of them in accordance with its terms subject to\nbankruptcy laws affecting creditors' rights generally and to the discretion of a\ncourt to grant equitable relief.\n\n       Section 4.02 NO CONFLICT. The execution, delivery and performance of this\nAgreement by USSC and Transitory Sub does not, and the consummation by USSC and\nTransitory Sub of the transactions contemplated hereby will not, (i) violate or\nconflict with their respective certificates of incorporation or by-laws, (ii)\nassuming satisfaction of the matters referred to in the following clause (iii)\nof this Section 4.02, violate or conflict with any law or governmental\nregulation or any judicial, administrative or arbitration order, award,\njudgment, writ, injunction \n\n\n                                       31\n\n\nor decree, currently applicable to USSC or Transitory Sub or any agreement or\ninstrument, or currently applicable award, judgment or decree, to which USSC or\nTransitory Sub is a party or by which each is bound, or (iii) require any filing\nby USSC or Transitory Sub with, or authorization, approval, consent or other\naction by any governmental agency or other regulatory body, except, with respect\nto the matters listed in the USSC Disclosure Schedule, (iv) except as disclosed\nin the USSC Disclosure Schedule, violate or conflict with, result in a breach\nof, constitute a default under (whether with notice or the lapse of time or\nboth), or give rise to a right of termination or to accelerate or permit the\nacceleration of the performance required by any Lien, loan arrangement, lease or\nother agreement or instrument to which USSC or Transitory Sub is a party or by\nwhich USSC or Transitory Sub or any of their respective assets is bound; or (v)\nresult in the creation of any Lien upon the assets of PAS under any such Lien,\nloan arrangement, lease, agreement or instrument, which violation, conflict,\nfailure to take action or obtain consent, approval or authorization, breach,\ntermination, acceleration, default or Lien specified in the foregoing clauses\n(ii) through (v) would be likely to have a Material Adverse Effect on the\nbusiness and operations, properties, assets, liabilities, commitments, earnings,\nfinancial condition or results of operations of USSC or Transitory Sub.\n\n       Section 4.03 BROKERS. Neither USSC nor Transitory Sub have employed any\ninvestment banker, broker or finder which might be entitled to a fee or other\nremuneration upon consummation of the transactions contemplated hereby, except\nas set forth in the USSC Disclosure Schedule.\n\n       Section 4.04 CAPITALIZATION. The authorized capital stock of USSC\nconsists of 250,000,000 shares of USSC Common Stock and 2,000,000 shares of USSC\nPreferred Stock, par value $5.00. As of September 30, l996, there were\n70,864,716 shares of USSC Common Stock outstanding. As of September 30, l996,\n15,907,048 shares of USSC Common Stock were subject to issuance upon the\nexercise of outstanding stock options. As of September 30, 1996, 8,082,996\nshares of USSC Common Stock were held by USSC in its treasury. As of September\n30, l996, 8,870,000 Depository Shares, each representing 1\/50th interests in\nshares of USSC Series A Preferred Stock were outstanding. As of the date hereof,\nthe authorized capital stock of Transitory Sub consists of one hundred (100)\nshares of Common Stock, no par value, all of which are validly issued, fully\npaid and non assessable and owned by USSC. Other than as set forth in the fourth\nsentence of this Section 4.05 or pursuant to employee stock plans, there are\noutstanding no subscriptions, options, warrants or other agreements, or\nconversion, exchange or other rights of any kind other than this Agreement\nentitling any Person to purchase or otherwise acquire shares of USSC Common\nStock or Preferred Stock and no such stock is reserved for issuance for any\npurpose. There are no agreements, commitments or restrictions to which USSC is a\nparty or of which USSC is aware relating to ownership or voting of USSC Common\nStock or Preferred Stock.\n\n       Section 4.05 SEC DOCUMENTS; USSC FINANCIAL STATEMENTS. USSC has furnished\nPAS with a true and complete copy of each annual, quarterly and other report,\nregistration statement (without exhibits), including any prospectuses or\nprospectus supplement (other than with respect to each employee stock plan) and\ndefinitive proxy statement filed by USSC with the SEC since December 31, 1995\n(the \"USSC SEC Documents\"), which are all the documents (other than preliminary\nmaterial) that USSC was required to file with the SEC since such date. \n\n\n                                       32\n\n\nAs of their respective filing dates, the USSC SEC Documents complied in all\nmaterial respects with the requirements of the Exchange Act or the Securities\nAct, as the case may be, and none of the USSC SEC Documents contained any untrue\nstatement of a material fact or omitted to state a material fact required to be\nstated therein or necessary to make the statements made therein, in light of the\ncircumstances in which they were made, not misleading. The financial statements\nof USSC included in the USSC SEC Documents (the \"USSC Financial Statements\")\ncomply as to form in all material respects with applicable accounting\nrequirements and with the published rules and regulations of the SEC with\nrespect thereto, have been prepared in conformity with generally accepted\naccounting principles consistently applied (except as may be indicated in the\nnotes thereto or, in the case of unaudited statements, as permitted by the rules\nand regulations of the SEC) and present fairly, in all material respects, the\nfinancial position of USSC and its consolidated subsidiaries at the dates\nthereof and the consolidated results of their operations and cash flows for the\nperiods then ended (subject, in the case of unaudited statements, to normal,\nrecurring audit adjustments).\n\n       Section 4.06 NO MATERIAL ADVERSE CHANGE. Since December 31, 1995, and\nexcept as disclosed in USSC SEC Documents, USSC and Transitory Sub have\nconducted their respective businesses in the ordinary course and there has not\noccurred any Change in the Business Condition of USSC that has a Material\nAdverse Effect on USSC and its consolidated subsidiaries taken as a whole.\n\n                                    ARTICLE V\n\n                                COVENANTS OF PAS\n\n       Section 5.01 SHAREHOLDER APPROVAL. Promptly following the execution of\nthis Agreement, PAS shall prepare a proxy statement and shall solicit the\nwritten consent of the shareholders of PAS to approve this Agreement, the filing\nof the Certificate of Merger and the transactions contemplated hereby and\nthereby by means of an offering memorandum, or, if necessary, an amendment to\nthe Articles of Incorporation and\/or By Laws if required to effect the\nauthorization, issuance and delivery of the Non Consummation Equity as\ncontemplated by this Agreement.\n\n       Section 5.02 CONDUCT OF BUSINESS. (a) Except as may be necessary or\nappropriate to consummate the transactions contemplated by this Agreement from\nthe date hereof until the Effective Date and, except as consented to in writing\nby USSC, PAS will not from the date hereof until the Effective Date, except in\nthe ordinary course of its business consistent with past practice, without the\nprior written consent of USSC:\n\n       (1) commence or conduct any new business (i.e., other than the design,\ndevelopment, manufacture and marketing of balloon expandable martensitic nitinol\nstents and balloon angioplasty catheters, and balloon catheter radiation\nproducts, for use in the treatment of coronary artery disease and\nbrachytherapy);\n\n       (2) enter into or amend in any respect any plan, contract, license, lease\nor agreement, \n\n\n                                       33\n\n\nother than the negotiation and entering into of an exclusive supply agreement\n(the \"Proposed Supply Agreement\") with a major radiopharmaceutical supplier,\nprovided the Proposed Supply Agreement includes research and funding by such\nradiopharmaceutical supplier for PAS's balloon catheter beta radiation products\nand provided USSC is kept advised of negotiations thereof and including the\nterms being discussed, provided with a copy of the final form of the Proposed\nSupply Agreement prior to signing thereof as far in advance as is reasonably\npossible, and further provided that USSC consents to the Proposed Supply\nAgreement, which consent shall not be unreasonably withheld;\n\n       (3) issue any of its capital stock (other than upon the exercise of\noptions or warrants outstanding as of the date hereof, or the issuance of\noptions to the extent contemplated by Section 3.17(g)), declare or pay any\ndividend on, or make any other distribution with respect to, its capital stock,\nor repurchase, redeem or otherwise acquire any of its capital stock;\n\n       (4) make any payment or incur any liability to any Shareholder or any\nAffiliate of any Shareholder, or effect any other transaction with any\nShareholder or any of its Affiliates, except as set forth in Section 3.03 of the\nPAS Disclosure Schedule delivered to USSC on or prior to the date hereof;\n\n       (5) merge or consolidate with any other corporation or acquire any assets\nor business of any Person (other than a merger or consolidation approved by USSC\nor any Affiliate thereof following exercise of the Option under the Stock Option\nAgreement);\n\n       (6) make any change in its Articles of Incorporation or By Laws;\n\n       (7) purchase or acquire any assets, other than equipment to be owned by\nPAS and to be used in the ordinary course of PAS's business consistent with\nPAS's past practices, provided that each item of equipment shall cost less than\nTwenty Thousand Dollars ($20,000); or sell, lease or otherwise dispose of any\nassets, inventory or property;\n\n       (8) incur, or perform, pay or otherwise discharge, any obligation or\nliability (absolute or contingent), (i) other than in the ordinary course of\nbusiness consistent with past practices, except that the total operating\nexpenses of PAS on a consolidated basis shall not exceed Seven Hundred and Fifty\nThousand Dollars ($750,000) per month, or (ii) other than as may be necessary or\nappropriate to consummate the transactions contemplated by this Agreement;\n\n       (9) pay any fees to any director or officer, provided that PAS may\ncontinue to pay fees to any directors in accordance with PAS's past practice and\nPAS may continue to pay officers at the existing level of their salaries and\nfringe benefits, except as set forth in Section 3.03 of the PAS Disclosure\nSchedule delivered to USSC on or prior to the date hereof;\n\n       (10) issue any subscription, option or warrant to purchase, or other\nright to purchase or otherwise acquire, PAS capital stock, any security or other\ninstrument convertible into any class of PAS Capital Stock or any PAS subsidiary\nSecurity, other than the grant of options on PAS capital stock to individual\nconsultants and employees in connection with the hiring of such consultants and\nemployees, provided that such stock options shall be in amount and on \n\n\n                                       34\n\n\nterms and conditions consistent with PAS's past practices, and PAS shall advise\nUSSC of the details of each such issuance as far in advance as is reasonably\npracticable;\n\n       (11) grant any discounts for prompt payment of receivables or for volume\npurchases, other than in accordance with PAS's past practices, or fail to pay\nwhen due the full amount of payables and other amounts owed by PAS (except if\ncontested by PAS in good faith by appropriate proceedings), other than in\naccordance with PAS's past practices;\n\n       (12) take any other action which would result in a Material Adverse\nEffect on PAS; or\n\n       (13) commit itself to do any of the foregoing.\n\n       (b) PAS shall prepare and deliver to USSC within ten (10) business days\nafter each month end an unaudited balance sheet, a statement of income and cash\nflows and detail of general and administrative expenses of PAS for the\nimmediately preceding calendar month during the period from the date hereof\nthrough the Effective Date.\n\n       Section 5.03 ACCESS. PAS will (a) afford promptly to USSC and its\nauthorized representatives reasonable access from the date hereof until the\nEffective Date, during normal business hours and with at least 24 hours advance\nnotice, to its properties, books, records, employees and auditors (and their\nwork papers), and (b) furnish to USSC such additional financial and data and\nother information relating to PAS as it may reasonably request.\n\n       Section 5.04 REVIEW OF BOOKS AND RECORDS. Prior to the Effective Date,\n(a) PAS will cause PAS's accountants to make available to USSC's attorneys,\noutside auditors and internal audit department (USSC's internal audit department\nalternatively referred to as the \"Auditors\"), such books, records, work papers\nand other information as the Auditors may deem necessary to advise USSC with\nrespect to the Financial Statements, and (b) make its books and records\navailable for inspection by the Auditors upon notice at all reasonable times.\n\n       Section 5.05 NO ENCUMBRANCES. PAS will not encumber or permit to be\nencumbered any PAS asset; PAS will not enter into any transaction or make any\ncommitment relating to the assets and business of PAS except in the ordinary\ncourse of PAS's business consistent with its past practices.\n\n       Section 5.06 CONSENTS; REGULATORY APPROVAL. PAS will take all such\ncommercially reasonable actions as may be necessary to obtain all approvals or\nconsents from third Persons or regulatory or governmental agencies necessary or\nadvisable in order to permit the consummation of the transactions contemplated\nin this Agreement. Without limiting the foregoing, PAS will cooperate with USSC\nin connection with the preparation of any filing required by the HSR Act.\n\n       Section 5.07 COMMERCIALLY REASONABLE EFFORTS. PAS will use commercially\nreasonable efforts to cause the conditions set forth in Section 7.01 to be\nsatisfied as soon as practicable after the date hereof.\n\n\n                                       35\n\n\n       Section 5.08 CONFIDENTIALITY. PAS shall hold all information provided to\nby or on behalf of USSC (and any information derived therefrom, or reflecting\nany such information, prepared by or on behalf of USSC) relating to USSC in\nconfidence and will not for a period of the later of three (3) years after\ntermination of this Agreement or the Effective Date disclose any such\ninformation other than to directors, officers, employees and agents of PAS who\nneed to know such information for the purposes of the transactions contemplated\nby this Agreement and as required in connection with making any regulatory\napplication or complying with any other applicable Laws. Upon any termination of\nthis Agreement, PAS shall promptly return to USSC all such information and will\ndestroy any such information prepared by any of them or on their behalf,\nincluding any copies of such information. This Section 5.08 shall not apply to:\n(i) information now or hereafter in the public domain through no fault of PAS,\n(ii) information which PAS knew (and was not restricted from disclosing or\nusing) and can be shown to have existed before USSC first disclosed to PAS in\nconnection with the transactions contemplated herein, (iii) information obtained\nfrom a source other than USSC, provided such source was not at the time it\nfurnished such information bound by confidentiality obligations for the benefit\nof USSC and had authorization to disclose same, (iv) information independently\ndeveloped by PAS without using USSC proprietary information, and (v) compliance\nwith any applicable Law by PAS of any of the foregoing.\n\n       Section 5.09 INCONSISTENT ACTIVITIES. Unless and until this Agreement has\nbeen terminated pursuant to the terms hereof, PAS will not, except to the extent\nrequired to do so to meet its fiduciary obligations but only provided PAS has\nreceived a legal opinion of its counsel that it is so required, to (aa)\nentertain any Acquisition Proposal, (bb) directly or indirectly take any action\nto seek, initiate or encourage any offer from, or negotiate or enter into any\nagreement or understanding with, any Person to acquire all or any portion of the\nbusiness or any capital stock of PAS whether by merger, purchase, purchase of\nassets or other similar transaction, or (cc) disclose (other than to USSC or its\nagents) any information not customarily disclosed in the ordinary course of\nbusiness or legally required to be disclosed concerning the business, properties\nor assets of PAS.\n\n       (b) PAS will orally notify USSC immediately, followed by prompt written\nnotice, of any Acquisition Proposal or any offer from any Person (other than\nUSSC) to acquire any shares of PAS Capital Stock, to merge or consolidate with\nPAS or to acquire otherwise any significant portion of the assets of PAS or any\nindication from any Person that it or another Person is considering making such\nan offer.\n\n       Section 5.10 STOCK TRANSFER TAX; TRANSFER TAXES; WITHHOLDING TAXES ON PAS\nOPTIONS. Prior to the Effective Date PAS shall withhold and remit on a timely\nbasis any and all payroll and withholding taxes required to be withheld in\nconnection with the exercise of the PAS Options by any Person who is or at any\ntime was an employee or officer of PAS.\n\n       Section 5.11 QUARTERLY FINANCIAL INFORMATION. On or before the Effective\nDate, PAS shall have delivered to USSC an unaudited balance sheet of PAS as of\neach of the calendar quarters commencing after December 31, l996 and ending on\nthe close of business on the day immediately preceding the Effective Date\n(collectively, the \"Interim Period Financial \n\n\n                                       36\n\n\nStatements\") together with a certification by the President &amp; Chief Executive\nOfficer of PAS that to the best of his knowledge each of the same present fairly\nthe financial condition and results of operating of PAS as of the dates set\nforth therein.\n\n       Section 5.12 SHAREHOLDER QUESTIONNAIRE. Prior to the Effective Date PAS\nshall obtain and make, and cause to be obtained and made from and by each\nShareholder, the information and representations set forth in the\nQuestionnaire\/Accredited Investor Certification attached hereto as EXHIBIT C\n(the \"Certification\"), the terms of which are incorporated within this\nAgreement.\n\n       Section 5.13 LIMITATION ON BORROWING. Neither PAS nor any PAS Subsidiary\nshall incur, assume or guarantee any indebtedness or liability for or in respect\nof borrowed money or any commitment to do the same, except lease of equipment in\nthe ordinary course of business and with a capital value not to exceed Fifty\nThousand Dollars ($50,000).\n\n       Section 5.14 OWNERSHIP PERCENTAGE CERTIFICATE. At the Effective Time, or,\nif applicable, at the Option Exercise Date under the Stock Option Agreement, PAS\nshall prepare and deliver to USSC a Certificate of the Chief Financial Officer\nof PAS setting forth the Ownership Percentage, as of such time or date, of each\nholder of PAS Capital Stock.\n\n       Section 5.15 PAS SUPPLEMENTAL DISCLOSURE SCHEDULE. Prior to or promptly\nfollowing execution of this Agreement, PAS shall deliver to USSC an updated\nversion of the Disclosure Schedule (\"the \"PAS Supplemental Disclosure Schedule\")\nwhich shall thereafter be incorporated into the PAS Disclosure Schedule.\n\n                                   ARTICLE VI\n\n                      COVENANTS OF USSC AND TRANSITORY SUB\n\n       USSC and Transitory Sub each agree as follows:\n\n       6.01 REGISTRATION PROCEDURES AND EXPENSES. USSC shall;\n\n              (a) file with the SEC as soon as reasonably practicable a shelf\nregistration statement under the Act on Form S-3 or on another form which is\nappropriate to register the resale of the USSC Common Stock pursuant to Rule 415\nunder the Act;\n\n              (b) use commercially reasonable best efforts, subject to receipt\nof necessary information from and as to the Shareholders, to cause such\nRegistration Statement to become effective as promptly after filing as\npracticable;\n\n              (c) prepare and file with the SEC such amendments and supplements\nto such Registration Statement and the prospectus used in connection therewith\nand take such other steps as may be necessary to keep such Registration\nStatement continuously effective (and current in all material respects subject\nto Section 6.02) until the earlier to occur of (i) such time as all the USSC\nCommon Stock has been sold pursuant thereto or otherwise, or (ii) the date on\nwhich all Shareholders \n\n\n                                       37\n\n\nare permitted to publicly resell such USSC Common Stock under Rule 144(k) under\nthe Act, as the same may be amended from time to time, or any successor\nregulation or comparable provision under the Act relating to the resale of\nrestricted or Rule 145(a) securities;\n\n              (d) prior to the filing with the SEC of a Registration Statement,\nincluding any amendments or supplements thereto, provide the Shareholders'\nAgent, and one counsel for the Shareholders, the reasonable opportunity to\nparticipate in the preparation of such Registration Statement;\n\n              (e) furnish to the Shareholders' Agent with respect to the USSC\nCommon Stock registered on the Registration Statement (and to each sales or\nplacement agent or each underwriter, if any, of such USSC Common Stock) copies\nof the Registration Statement and any amendments or supplements thereto, and\nsuch number of copies of prospectuses and any amendments or supplement thereto\nin conformity with the requirements of the Act as the Shareholders' Agent may\nreasonably request, in order to facilitate the public sale or other disposition\nof all or any of the USSC Common Stock by the Shareholders; provided, however,\nthat the obligation of the Company to deliver copies of prospectuses to the\nShareholders' Agent on behalf of the Shareholders shall be subject to the\nreceipt by the Company of reasonable assurances from the Shareholders' Agent\nand\/or the Shareholders that the Shareholders will comply with the applicable\nprovisions of the Act and of such other securities laws as may be applicable in\nconnection with any use of such prospectuses;\n\n              (f) promptly notify the Shareholders' Agent (A) when such\nRegistration Statement, any prospectus included therein or any amendment or\nsupplement to any of the foregoing has been filed and, with respect to such\nRegistration Statement or any post-effective amendment thereto, when the same\nhas become effective, (B) of any comments which may relate to the Shareholders\nby the SEC or any request by the SEC for amendments or supplements to such\nRegistration Statement or prospectus or for additional information, (C) of the\nissuance by the SEC of any stop order suspending the effectiveness of such\nRegistration Statement or the initiation or threatening of any proceedings for\nthat purpose, or (D) of the receipt by the Company of any notification with\nrespect to the suspension of the qualification of the USSC Common Stock for sale\nin any jurisdiction or the initiation or threatening of any proceeding for such\npurpose;\n\n              (g) cooperate with the Shareholders to facilitate the timely\npreparation and delivery of certificates representing USSC Common Stock sold\nunder the Registration Statement, which certificates shall not bear any\nrestrictive legends;\n\n              (j) bear all expenses in connection with the procedures in\nparagraphs (a) through (j) of this Section 6.01 and the registration of the USSC\nCommon Stock on such Registration Statement and the satisfaction of the blue sky\nlaws of such states, but (except as may otherwise be agreed) excluding the fees\nand expenses of legal counsel to the Shareholders in connection with the\nprocedures in paragraphs (a) through (j) of this Section 6.01 unless otherwise\nagreed, and excluding underwriting discounts and selling Commissions and\nexpenses which shall be borne by the Shareholders;\n\n              (k) otherwise use its reasonable best efforts to comply with all\napplicable rules and regulations of the SEC; and\n\n\n                                       38\n\n\n              (l) use its reasonable best efforts to list the USSC Common Stock\ncovered by such Registration Statement on the New York Stock Exchange;\n\n       6.02 TEMPORARY CESSATION OF OFFERS AND SALES BY SHAREHOLDERS. PAS\nacknowledges that there may be times when the Company may be required to suspend\nthe use of the prospectus forming part of the Registration Statement (including\nforegoing a request that the Registration Statement become effective) until such\ntime as an amendment to the Registration Statement has been filed by the Company\nand declared effective by the SEC, until the prospectus is supplemented or\namended to comply with the Act, or until such time as the Company has filed an\nappropriate report with the SEC pursuant to the Exchange Act, but only if\npursuant to advice of counsel (i) the filing of a registration statement would\nrequire the premature disclosure of information, the disclosure of which could\nhave an adverse effect on the business or operations of the Company, or would in\nthe good faith opinion of the Company not be in the Company's best interests at\nsuch time, or (ii) the Company then is unable to comply with the requirements of\nthe SEC relating to such registration or to resale of the USSC Common Stock,\nprovided, however, that the Company shall use its reasonable best efforts to\nmake such disclosure, or remedy such noncompliance including removal of any stop\norder, as the case may be, at the earliest practical date that the Company\nbelieves to be in the Company's best interests. Each of the Shareholders hereby\ncovenants that it will not sell any USSC Common Stock pursuant to said\nprospectus during the period commencing at the time at which the Company gives\nthe Shareholders' Agent notice of the suspension of the use of said prospectus\nand ending at the time the Company gives the Shareholders' Agent notice that the\nShareholders may thereafter effect sales pursuant to said prospectus, as the\nsame may have been supplemented or amended.\n\n       Section 6.03 CONSENTS; REGULATORY APPROVAL. USSC and Transitory Sub will\ncooperate with PAS in obtaining the consents referred to in Section 7.01(f),\nprovided that such cooperation shall not be deemed to constitute an agreement by\nUSSC or Transitory Sub to guarantee or otherwise assume any liability with\nrespect to any such agreement or other agreement. USSC will take all such\ncommercially reasonable actions as may be necessary to obtain all approvals or\nconsents from third Persons or regulatory or governmental agencies necessary or\nadvisable in order to permit the consummation of the transactions contemplated\nby this Agreement. Without limiting the foregoing, USSC will cooperate with PAS\nin connection with the preparation of any filing required by the HSR Act.\n\n       Section 6.04 CONFIDENTIALITY. Each of USSC and Transitory Sub shall hold\nall information provided to either of them by or on behalf of PAS (and any\ninformation derived therefrom, or reflecting any such information, prepared by\nor on behalf of PAS) relating to PAS in confidence and will not, in the event of\ntermination of this Agreement, for a period of the later of three (3) years\nafter termination of this Agreement disclose any such information other than to\ndirectors, officers, employees and agents of USSC or Transitory Sub who need to\nknow such information for the purposes of the transactions contemplated by this\nAgreement and as required in connection with making any regulatory application\nor complying with any other applicable Laws. Upon any termination of this\nAgreement, USSC and Transitory Sub shall promptly return to PAS all such\ninformation and will destroy any such information prepared by any of them or on\ntheir behalf, including any copies of such information. This Section 6.04 shall\nnot apply to: (i) information now or hereafter in the public domain through no\nfault of USSC or Transitory Sub, \n\n\n                                       39\n\n\n(ii) information which USSC or Transitory Sub knew (and was not restricted from\ndisclosing or using) and can be shown to have existed before PAS first disclosed\nto USSC or Transitory Sub in connection with the transactions contemplated\nherein, (iii) information obtained from a source other than PAS, provided such\nsource was not at the time it furnished such information bound by\nconfidentiality obligations for the benefit of PAS and had authorization to\ndisclose same, (iv) information independently developed by USSC or Transitory\nSub without using PAS proprietary information, and (v) compliance with any\napplicable Law by USSC or PAS of any of the foregoing.\n\n       Section 6.05 ACCOUNTING AND TAX TREATMENT. USSC agrees that the\ntransactions contemplated by this Agreement including, but not limited to, the\ntransfer by USSC of the USSC Common Stock on the Effective Date pursuant to the\nterms of this Agreement shall be accounted for by USSC and shall be treated by\nUSSC for tax purposes as involving a non taxable purchase of shares and that the\npositions, elections and methods taken or reflected in all Federal, state or\nlocal tax returns in respect of the transactions contemplated by this Agreement\nshall reflect or be consistent with the foregoing; provided that USSC shall not\nbe required to accord such treatment to the transaction if 1) USSC does not\nacquire control of PAS, within the meaning of Section 368(c) of the Code, in the\ntransactions contemplated by this Agreement, or 2) there is a final\ndetermination that the transactions contemplated by this Agreement do not\nconstitute a reorganization within the meaning of Section 368 of the Code. A\nfinal determination shall mean a determination by the Internal Revenue Service\ninvolving at least Five Hundred Thousand Dollars ($500,000) in income Taxes or\nany decision by a court having jurisdiction over the matter, which determination\nor decision may no longer be appealed. Notwithstanding the foregoing or anything\nelse in this Agreement to the contrary, USSC does not represent, warrant or\nguarantee that the transactions contemplated by this Agreement shall be treated\nby any taxing authority as involving a non taxable transaction. USSC shall\nprovide to PAS the representations set forth on attached EXHIBIT G on or prior\nto the Effective Date.\n\n       Section 6.06 PAYMENT OF TAXES. Following the Effective Date, USSC shall\ncause PAS promptly to pay to the proper taxing authorities the amount of any\nwithholding taxes withheld by PAS in connection with the exercise of the PAS\nOptions.\n\n       Section 6.07 COMMERCIALLY REASONABLE EFFORTS. USSC will use commercially\nreasonable efforts to cause the conditions set forth in Section 7.02 to be\nsatisfied as soon as practicable after the date hereof.\n\n       Section 6.08 DEVELOPMENT AND MARKETING OF PAS TECHNOLOGY. USSC shall\ndetermine in its best business judgment the appropriate business levels to\ndevelop and market the current PAS technology. In the event the Proposed Supply\nAgreement referenced in Section 5.02 above is not executed, or if the research\nand development funding by such radiopharmaceutical supplier is less than Two\nMillion Dollars ($2,000,000), then, in such event, during the twenty four (24)\nmonth period commencing on the Effective Date, USSC shall make available funding\nof research and development by, or on behalf of, USSC and\/or PAS, for PAS\nballoon catheter beta radiation products during the two year period following\nUSSC consummation of the Merger in accordance with the terms of this Agreement\nan amount equal to (x) Two Million Dollars ($2,000,000), less (y) the dollar\namount, if any, of funds provided by the radiopharmaceutical \n\n\n                                       40\n\n\nsupplier under the Proposed Supply Agreement for research and development of PAS\nballoon catheter beta radiation products.\n\n       Section 6.09 NON-HIRING; NON DISPARAGEMENT. During the period between the\nsigning of this Agreement and the end of the Option Period (unless and until\nUSSC shall have exercised the Option), USSC shall not (a) except as permitted by\nSection 7.01 below, solicit for hire any PAS employee, or (b) intentionally\ndisparage any PAS product.\n\n       Section 6.10 SUBSEQUENT SEC DOCUMENTS. USSC shall deliver to PAS as soon\nas practicable after the filing thereof, a copy of any report, registration\nstatement or other document which USSC has filed with the SEC.\n\n                                   ARTICLE VII\n\n                              CONDITIONS TO MERGER\n\n       Section 7.01 CONDITIONS TO THE OBLIGATIONS OF USSC. The obligations of\nUSSC to proceed with the Merger contemplated hereby are subject to the\nsatisfaction at or prior to the Effective Date of all of the following\nconditions, any one or more of which may be waived, in whole or in part, by\nUSSC:\n\n       (a) COMPLIANCE. PAS and the Control Shareholders shall have complied with\neach of their covenants and agreements contained herein and in the Stock Option\nAgreement and, except as affected by any action contemplated by or permitted\nunder this Agreement or the Stock Option Agreement, or as consented to in\nwriting by USSC, each of the representations and warranties of PAS contained\nherein and of the Shareholders (as that term is defined in the Stock Option\nAgreement) contained in the Stock Option Agreement shall be true and correct in\nall material respects with the same force and effect as if made as of the\nEffective Date.\n\n       (b) SHAREHOLDER LIST AND SHAREHOLDER APPROVAL. PAS shall have provided\nUSSC with a list on the Effective Date containing the full names, addresses and\npercentage ownership in PAS capital stock held by all PAS Shareholders, which\nlist shall be certified by the Secretary of PAS; and this Agreement and the\nfiling of the Certificate of Merger shall have been approved by the shareholder\nvotes necessary for mergers under PAS's Articles of Incorporation and by the\naffirmative vote of the holders of at least Ninety Percent (90%) of the\nAggregate PAS Common Stock Equivalents, and, additionally, there shall be less\nthan Five Percent (5%) Dissenting Shares which shall have exercised their\ndissenters rights under applicable Law.\n\n       (c) REGULATION D EXEMPTION. An exemption from registration under the Act\nsatisfactory to the Company in the opinion of counsel to USSC shall be available\nto the Company pursuant to Section 4(2) of the Act, the SEC's Regulation D\npursuant to the Act, or is otherwise available in the opinion of counsel to\nUSSC; All Shareholders shall be \"Accredited Investors\" as defined in the SEC's\nRegulation D, or shall be sophisticated investors and consent to the appointment\nof a purchaser representative to advise such Shareholder with respect to the\nMerger and the investment decision with respect to USSC Common Stock.\n\n\n                                       41\n\n\n       (d) OFFICER'S CERTIFICATE. USSC shall have received a certificate from\nthe President &amp; Chief Executive Officer of PAS that, to the best of his\nknowledge and belief, the conditions set forth in Section 7.01 have been\nfulfilled and accomplished.\n\n       (e) LEGAL OPINIONS. USSC shall have received an opinion of Brobeck,\nPhleger &amp; Harrison, counsel to PAS, dated the Effective Date, substantially in\nthe form of EXHIBIT D-1 attached hereto. USSC shall have received a duly\nexecuted questionnaire in the form of EXHIBIT C from each Shareholder.\n\n       (f) CONSENTS, APPROVALS, ETC. OBTAINED. PAS shall have given any and all\nrequired notices of the transactions contemplated by this Agreement, and shall\nhave obtained any and all written consents required for the transactions\ncontemplated by this Agreement, pursuant to its Articles of Incorporation and\nBylaws and pursuant to each material contract, loan, or agreement, plan, policy,\nlease, permit, license and other document or instrument specified in any Exhibit\nor Schedule hereto as requiring such notice or consent, which shall be at the\nexisting terms and conditions. No terminations or defaults shall have occurred\nor be threatened, by reason of this Agreement or the transactions contemplated\nhereby, pursuant to any material contract, loan, agreement, plan, policy, lease,\npermit, license or any other document or instrument specified in any Exhibit or\nSchedule attached hereto that could have a Material Adverse Effect on PAS. PAS\nshall have transmitted to USSC copies of all documents executed by PAS in\nconnection with the obtaining of required consents, or giving of required\nnotices.\n\n       (g) PROFESSIONAL FEES. On or prior to the Effective Date, all existing\nagreements between PAS and any consultant or advisor thereof shall have been\nterminated and without any payment due, other than as permitted by Section 3.14\nabove. PAS shall provide to USSC on the Effective Date satisfactory evidence of\nsame including, without limitation, final bills marked as such by Wilson,\nSonsini Goodrich &amp; Rosati; Venture Law Group; Brobeck, Phleger &amp; Harrison;\nBurns, Doane, Swecker &amp; Mathis, L.L.P.; and Coopers &amp; Lybrand, L.L.P. and any\nother provider of financial, legal and accounting services set forth in the PAS\nDisclosure Schedule.\n\n       (h) OTHER DOCUMENTS. USSC shall have received all documents and\ninformation it may reasonably request relating to this transaction, each in form\nand substance reasonably satisfactory to USSC but same shall not be deemed in\nsatisfaction of or a substitute for the representations, warranties and\nindemnities of PAS and the Control Shareholders hereunder. USSC shall also have\nreceived PAS's books and records as described in Section 5.13(b).\n\n       (i) CHANGE IN CONDITION. There shall have been no Material Adverse Effect\non PAS or USSC since the date of this Agreement.\n\n       (j) FINANCIAL STATEMENTS. USSC shall have the Interim Period Financial\nStatements provided for in Section 5.18, together with a certificate of the\nPresident of PAS that to the best of his knowledge each of same present fairly\nthe financial condition of PAS as of the dates set forth therein.\n\n       (k) RESIGNATIONS. USSC and Transitory Sub shall have received the\nresignations \n\n\n                                       42\n\n\n(including a waiver of any claim for directors fees or other claims against PAS)\neffective as of the Effective Date, of each director and officer of PAS and each\nPAS Subsidiary.\n\n       (l) EMPLOYEES. USSC shall have entered into such employment and\nconsulting arrangements or agreed upon terms of employment with key PAS\nemployees (a list of which PAS employees USSC has provided to PAS prior to the\nentering into of this Agreement) as USSC shall deem necessary or appropriate in\nits discretion, provided that the foregoing shall not be deemed to require any\nsuch Persons to agree to any such arrangements or terms with USSC and any such\narrangement or terms shall be upon the mutual agreement of USSC and such key PAS\nemployee.\n\n       (m) INVENTORS. USSC shall have received the Inventor Support Agreement in\nthe form set forth in EXHIBIT E from Robert Hess and PAS shall have used its\ncommercially reasonable efforts to obtain the signatures of the other\nindividuals whose names are set forth on such exhibit.\n\n       (n) TEST RESULTS. USSC shall have received and, on or prior to August 1,\nl997, shall have determined in its sole and absolute discretion that it is\nsatisfied with the results of PAS's clinical studies with respect to PAS's new\nbumblebee stent technology.\n\n       (o) CALMEDICA. Calmedica, L.L.C. (\"Calmedica\") shall have executed and\ndelivered the patent assignments and otherwise complied with that certain Patent\nAssignment Agreement by and among PAS, Calmedica and USSC dated the date hereof\nattached hereto as EXHIBIT B.\n\n       (p) USSC. USSC shall have determined, in its sole and absolute\ndiscretion, to proceed with the Merger contemplated by this Agreement.\n\n       Section 7.02 CONDITIONS TO THE OBLIGATIONS OF PAS. The obligations of PAS\nto proceed with the Merger contemplated hereby are subject to the satisfaction\nat or prior to the Effective Date of all of the following conditions, any one or\nmore of which may be waived, in whole or in part, by PAS:\n\n       (a) COMPLIANCE. USSC shall have complied with each of its covenants and\nagreements contained herein and, except as affected by any action contemplated\nby or permitted under this Agreement, each of the representations and warranties\nof USSC contained in Article IV hereof shall be true and correct in all material\nrespects at and as of the Effective Date as if made at and as of the Effective\nDate.\n\n       (b) OFFICER'S CERTIFICATE. PAS shall have received a certificate, dated\nthe Effective Date, signed by an authorized officer of each of USSC and\nTransitory Sub certifying that, to the best of his knowledge and belief, all of\nthe conditions set forth in Section 7.02 have been fulfilled and accomplished.\n\n       (c) LEGAL OPINIONS. PAS shall have received an opinion of Thomas R.\nBremer, Esq., Senior Vice President and General Counsel to USSC, dated the\nEffective Date, substantially in the form of EXHIBIT D-2 attached hereto.\n\n       (d) CONSENTS, APPROVALS, ETC. OBTAINED. USSC shall have given any and all\nrequired notices of the transactions contemplated by this Agreement, and shall\nhave obtained any and all \n\n\n                                       43\n\n\nwritten consents required for the transactions contemplated by this Agreement,\npursuant to its Certificate of Incorporation and Bylaws and pursuant to each\nmaterial contract, loan, or agreement, plan, policy, lease, permit, license and\nother document or instrument specified in any exhibit or schedule hereto as\nrequiring such notice or consent, which shall be at the existing terms and\nconditions. No terminations or defaults shall have occurred or be threatened, by\nreason of this Agreement or the transactions contemplated hereby, pursuant to\nany material contract, loan, agreement, plan, policy, lease, permit, license or\nany other document or instrument specified in any Exhibit or Schedule attached\nhereto. USSC shall have transmitted to PAS copies of all documents executed by\nUSSC in connection with the obtaining of required consents, or giving of\nrequired notices.\n\n       (e) PAYMENT OF PROFESSIONAL FEES. USSC shall make a capital contribution\nto PAS which shall be used to pay the Professional Fees.\n\n       (f) REGISTRATION OF USSC COMMON STOCK. At or prior to the Effective Time,\nUSSC shall have filed a registration statement under the Act registering for\nresale by the holders thereof the Aggregate Initial USSC Stock and such\nregistration statement shall have become effective and such registration\nstatement shall be effective as of the Effective Time.\n\n       (g) EXHIBIT G REPRESENTATIONS LETTER. At or prior to the Effective Time,\nUSSC shall have provided PAS with a letter containing the representations set\nforth on Exhibit G.\n\n       Section 7.03 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective\nobligations of each party to proceed with the Merger are subject to the\nsatisfaction or waiver, where permissible, on or prior to the Effective Date (a)\nany Governmental Body having jurisdiction, to the extent required by Law, shall\nhave consented to or approved the consummation of the transactions contemplated\nby this Agreement and the applicable period of time necessary under the HSR Act\nbefore such transaction can be consummated shall have expired, and (b) there\nshall not be in effect (i) any Action, judgment, decree or order issued by, or\npending before any Federal or state court or Governmental Body having\njurisdiction, or (ii) any Law, enacted or promulgated by any Governmental Body\nhaving jurisdiction, that in either case of (i) or (ii) restrains, prohibits the\nconsummation of the transactions contemplated by this Agreement or makes such\nconsummation illegal; provided, that, any party hereto may contest or appeal any\nsuch judgment, decree, order or the applicability of any such Law, at its own\nexpense, and upon notice from such party to the other parties of such contest or\nappeal, the Outside Date shall be automatically extended from day-to-day (for a\nperiod not to exceed sixty (60) days) until the final disposition of such\ncontest or appeal.\n\n                                  ARTICLE VIII\n\n                                   TERMINATION\n\n       Section 8.01 GROUNDS FOR TERMINATION. This Agreement may be terminated at\nany time prior to the Merger:\n\n\n                                       44\n\n\n              (i) by the mutual written agreement of all of the parties hereto;\n\n              (ii) by PAS, USSC or Transitory Sub if consummation of the\ntransactions contemplated hereby would violate any non-appealable final order,\ndecree or judgment of any Governmental Body having competent jurisdiction;\n\n              (iii) by PAS, on the one hand, or USSC or Transitory Sub, on the\nother hand, if there has been a material misrepresentation or material breach of\nwarranty or covenant on the part of PAS, on the one hand, or USSC and Transitory\nSub, on the other hand, as the case may be;\n\n              (iv) by USSC or Transitory Sub if a Material Adverse Effect on the\nBusiness Condition of PAS has occurred.\n\n              (v) by PAS if a Material Adverse Effect on the Business Condition\nof USSC has occurred;\n\n              (vi) by either USSC or PAS if the Merger shall not have occurred\non or prior to September 30, l997; or\n\n              (vii) by USSC if, within one (1) business day following delivery\nto USSC of the PAS Supplemental Disclosure Schedule, USSC shall have determined\nit no longer wishes to proceed with the transactions contemplated by this\nAgreement.\n\nAny party desiring to terminate this Agreement pursuant to any of the foregoing\nclauses (ii) through (vi) shall give five (5) business days notice of such\ntermination to each of the other parties.\n\n       Section 8.02 EFFECT OF TERMINATION.\n\n       (a) If this Agreement is terminated as permitted by Section 8.01, such\ntermination shall be without liability of any party (or any shareholders,\ndirector, officer, employee, agent, consultant or representative of any party)\nto the other parties to this Agreement; provided that if such termination shall\nresult from the failure of a party to fulfill a condition to the performance of\nthe obligations to one of the other parties or to perform any covenants of such\nparty under this Agreement or from a breach by such party of this Agreement,\nsuch party shall be fully liable for any and all damages, costs and expenses\nsustained or incurred by the other party or parties as a result of such failure\nor breach except that if such termination shall result from a breach.\n\n       (b) Without limiting Section 8.02(a) above or USSC's remedies, in the\nevent USSC shall in its discretion terminate this Agreement under Section\n8.01(iii) at any time prior to the Effective Date then, in such event, PAS shall\npromptly, but in no event later than six (6) months after such termination,\nrepay to USSC the entire amount of the Advance. If the aforesaid repayment is\nnot made by PAS to USSC within such six (6) month period, then PAS shall\nautomatically and without further notice be deemed in default of this Agreement\nand, in such event and without limitation of USSC's remedies for such default,\nsuch unpaid amount shall be repayable by PAS with interest due thereon (until\nthe full amount of such unpaid amount (plus all accrued Default \n\n\n                                       45\n\n\nInterest due thereon in accordance with this Section 8.02(b)) is paid to USSC,\nwhich rate of interest shall be the rate of interest which is the highest rate\nof interest permitted by applicable Law (\"Default Interest\").\n\n       (c) If the Merger is not consummated in accordance with this Agreement\nfor any reason other than due to termination by USSC under Section 8.01(iii),\nthen, in such event and in lieu of repayment to USSC by PAS of the Advance, PAS\nshall promptly issue and deliver to USSC, without further consideration or other\npayment being due, the Non-Consummation Equity, as that term is defined in\nEXHIBIT 8.02.\n\n       (d) The provisions of this Section 8.02 and Sections 5.08 and 6.04 and\nshall survive any termination hereof.\n\n                                   ARTICLE IX\n\n              EXTENT AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES\n\n       Section 9.01 SURVIVAL; REMEDY FOR BREACH.\n\n       The representations and warranties of PAS contained in this Agreement or\nin any certificate or other writing delivered pursuant hereto or in connection\nherewith shall survive the Effective Date for a period equal to one (1) year.\n\n                                    ARTICLE X\n\n                                  MISCELLANEOUS\n\n       Section 10.01 NOTICES. Any notices or other communications required or\npermitted hereunder shall be sufficiently given if sent by recognized overnight\ncourier service, prepaid, or by registered or certified mail return receipt\nrequested, postage paid as follows, and any such notice or communication shall\nbe deemed to have been given as of the date so mailed or sent:\n\nTo USSC and Transitory Sub:        United States Surgical Corporation\n                                   150 Glover Avenue\n                                   Norwalk, CT 06856\n                                   Attention: Thomas R. Bremer\n                                   Senior Vice President and General Counsel\n\nTo PAS prior to the                Progressive Angioplasty Systems, Inc.\nEffective Date:                    1350 Willow Road, Suite 201\n                                   Menlo Park, CA  94025\n                                   Attn.: Robert Hess\n\nWith a copy to:                    Brobeck, Phleger &amp; Harrison\n\n\n                                       46\n\n\n                                   Two Embarcadero Place\n                                   2200 Geng Road\n                                   Palo Alto, CA  94303\n                                   Attn.: J. Stephan Dolezalek, Esq.\n                                          Faye H. Russell, Esq.\n\n       Section 10.02 CERTAIN EXPENSES AND COSTS. All legal and other expenses\nincurred in connection with the transactions contemplated by this Agreement,\nshall be paid by the party incurring such expenses, except as set forth in\nSection 7.02(e).\n\n       Section 10.03 BINDING EFFECT; SUCCESSORS AND ASSIGNS; NO THIRD PARTY\nBENEFIT. This Agreement shall be binding upon and shall inure to the benefit of\nthe parties and their respective successors and assigns; provided, however, that\nneither this Agreement nor any right hereunder may be assigned by any party\nwithout the consent of the other party. Except as otherwise set forth herein,\nnothing in this Agreement, expressed or implied, is intended to confer on any\nPerson other than the parties hereto or their respective successors and valid\nassigns any rights, remedies, obligations, or liabilities under or by reason of\nthis Agreement.\n\n       Section 10.04 ENTIRE AGREEMENT; AMENDMENT. This Agreement, including the\nSchedules and Exhibits hereto, embodies the entire agreement of the parties\nhereto with respect to the subject matter hereof and supersedes all prior\nagreements and understandings, oral or written, with respect thereto, which\nshall continue in full force and effect. This Agreement may be amended, and any\nprovision hereof waived, but only in writing signed by the parties hereto.\n\n       Section 10.05 FURTHER ASSURANCES. PAS, USSC and Transitory Sub each\nagree, prior to and after the Effective Date, to cooperate with the other and to\nexecute and deliver such other documents, certificates, agreements and other\nwritings and to take such other actions as may be necessary or desirable in\norder to implement expeditiously the transactions contemplated by this\nAgreement.\n\n       Section 10.06 GOVERNING LAW. This Agreement shall be governed by and\nconstrued under and in accordance with the laws of the State of Delaware without\ngiving effect to principals of conflict of law.\n\n       Section 10.07 CONSENT TO JURISDICTION. Each of the parties hereby\nirrevocably agrees that any Action arising out of this Agreement may be brought\nagainst all or any of them in any competent court of the State of Delaware or in\nany competent court of the United States located within the State of Delaware.\nService of process with respect to any such Action may be made upon it by\ncertified first class mail, postage pre-paid, sent to the addressees set forth\nin Section 10.01 above, and that any such service of process shall be taken as\nvalid personal service upon it effective five (5) days after mailing as\naforesaid, whether or not such party shall then be a resident of, or doing, or\nany time shall have done, business within the State of Delaware.\n\n       Section 10.08 SEVERABILITY. The invalidity or unenforceability of any\nparagraph or provision of this document shall not affect the validity or\nenforceability of any one or more of the other paragraphs or provisions. If any\nprovision of this Agreement is held to be unenforceable for \n\n\n                                       47\n\n\nany reason, it shall be adjusted rather than voided, in order to achieve the\nintent of the parties to the extent possible. In that event, all other\nprovisions of this Agreement shall be deemed valid and enforceable to the\nfullest extent.\n\n       Section 10.09 SPECIFIC PERFORMANCE. PAS acknowledges that USSC will have\nno adequate remedy at law if PAS fails to perform any of its obligations\nhereunder, and that in such event, USSC will have the right, in addition to any\nother remedies it may have, to specific performance of this Agreement.\n\n       Section 10.10 PUBLIC ANNOUNCEMENTS. PAS and USSC shall cooperate with\neach other in the preparation and the timing of a press release and other public\nstatements concerning this Agreement and the transactions contemplated hereby\nprovided, however, that nothing set forth hereinabove shall prevent or limit\nUSSC from issuing press releases or making public statements as its counsel\nshall reasonably determine are required by applicable Law or the rules,\nregulations, guidelines or interpretations of any national securities exchange\non which USSC's securities are listed. PAS shall not issue such press release,\nor make any public announcement, comment or statement concerning this\ntransaction or any aspects of this Agreement without first advising and\nreceiving the written consent of USSC and Transitory Sub in advance.\n\n       Section 10.11 WAIVER. No waiver by a party, express or implied, of any\nbreach of any term, condition, or obligation of this Agreement shall be\nconstrued as a waiver of any subsequent breach of any term, condition, or\nobligation of this Agreement, whether of the same or different nature.\n\n       Section 10.12 COUNTERPARTS. This Agreement may be executed in one or more\ncounterparts, all of which shall be considered one and the same agreement and\nshall become effective when one or more counterparts have been signed by each of\nthe parties and delivered to USSC.\n\n       Section 10.13 CAPTIONS. The captions and headings used herein and in the\nExhibits and Schedules hereto are intended and shall for all purposes be deemed\nto be for convenience of reference only and shall be of no force or effect\nwhatsoever in the construction or interpretation of this Agreement.\n\n\n                                       48\n\n\n              IN WITNESS WHEREOF, the parties hereto have executed this\nAgreement as of the date and year first written above.\n\n\n                              UNITED STATES SURGICAL CORPORATION\n                \n                \n                              By: _______________________________\n                              Name: _____________________________\n                              Title: ______________________________\n                \n                              Address:    150 Glover Avenue\n                                          Norwalk, Connecticut  06856\n                \n                \n                              USSC DEL MEDICAL, INC.\n                \n                \n                              By:_______________________________\n                                    Thomas R. Bremer\n                                     President\n                \n                              Address:    150 Glover Avenue\n                                          Norwalk, Connecticut  06856\n                \n                \n                              PROGRESSIVE ANGIOPLASTY SYSTEMS, INC.\n                \n                \n                              By:________________________________\n                              Name: Robert Hess\n                              Title: President &amp; Chief Executive Officer\n                \n                              Address:    1350 Willow Road, Suite 201\n                                          Menlo Park, California  94025\n\n\n                                       49\n\n\nPAS Disclosure Schedule\n\nUSSC Disclosure Schedule\n\n      EXHIBIT                       DESCRIPTION\n      -------                       -----------\n         A                               Certificate of Merger\n         B                               Calmedica Agreement\n         C                               Certification\n         D-1                        Attorney Opinion - Sellers\n         D-2                        Attorney Opinion - USSC\n         E                               Inventors Support Agreement\n         F                               [Intentionally Omitted]\n         G                               Representation Letter\n         H                               [Intentionally Omitted]\n\n         2.07                       Milestone Consideration\n         2.08                       Earn Out Consideration\n         2.09                       Extraordinary Transaction\n         8.02                       Non Consummation Equity\n\n\n                                       50\n\n\n                                                                    EXHIBIT 8.02\n\n                             NON CONSUMMATION EQUITY\n\nThe term \"Non Consummation Equity\" shall mean a new Series C, PAS convertible\npreferred stock which shall have the following rights, preferences, privileges\nand limitations:\n\n       RIGHTS, PREFERENCES AND PRIVILEGES\n\n       1. Fully paid, nonassessable, free and clear of all liens, non callable ,\nno mandatory redemption or mandatory conversion, and anti-dilution protections\nPARI PASSU with all other equity holders.\n\n       2. All of such shares shall be issuable to USSC in accordance with the\nprovisions of Section 8.02(c) of the Agreement.\n\n       3. DIVIDENDS: The holders may receive non cumulative dividends when and\nas declared by the Board of Directors at a rate of Seven Percent (7%) of the\nliquidation preference per share per annum.\n\n       4. LIQUIDATION: In the event of liquidation, dissolution or winding up of\nPAS, the holders of Series C are entitled to an aggregate distribution in\npreference to the common stockholders of Fifteen Million Dollars ($15,000,000)\npro rata among such holders. Any remaining assets available for distribution\nwould be distributed to the holders of Series A, Series B and Series C\nconvertible preferred stock and common stock pro rata based on the number of\ncommon stock held, calculated on a fully converted basis.\n\n       5. CONVERSION: Each share of Series C convertible preferred stock is\nconvertible at the sole option of the holder thereof, at any time, into such\nnumber of shares of common stock as shall give such holder twelve and one half\npercent (12.5%) of PAS common stock on a fully diluted basis calculated as of\nthe date such Series C convertible preferred stock is issued to USSC. Conversion\nrights become automatic upon the occurrence of any one or more of the following\nevents (collectively, \"Conversion Right Events\"):\n\n       (a) in connection with the offering or sale, of PAS equity or debt\nsecurities pursuant to a registration statement under the Securities Act of\n1933, as (in which event converted Non Consummation Equity shall have\nregistration, resale and other rights and privileges as least as favorable as\nthe holders of the Series A and Series B convertible preferred stock of PAS);\n\n       (b) when new shareholder(s) who, alone or in concert with another,\ndirectly, or indirectly, acquires in a single or series of related transactions\nforty percent (40%) or more of the voting stock of PAS; and\n\n       (c) upon the sale or other transfer of all or substantially all of the\nbusiness or assets or of PAS or the cessation or winding up of all or\nsubstantially all of the business of PAS.\n\n       PAS shall notify USSC in writing with as much notice as is reasonably\npossible under the circumstances as to the occurrence or expected occurrence of\nany one or more of the Conversion Rights Events.\n\n\n                                       51\n\n\n       5. VOTING: Unless and until converted (except upon the occurrence of a\nDefault Event),\n          (a) no voting rights or powers to cast vote for directors; and\n          (b) no right to vote as a class on an Extraordinary Transaction.\n\n       6. INFORMATION: Subject to standard confidentiality provisions, the\nholders of Series C convertible preferred stock shall have the right to advance\nnotice of, and attendance at, PAS board meetings and to receive a copy of all\ndocuments provided to PAS board members; a\n\n\n                                       52\n\n\n                                                                    EXHIBIT 2.07\n\n                             MILESTONE CONSIDERATION\n\nMILESTONE                                          AGGREGATE MILESTONE AMOUNT\n---------                                          --------------------------\n\n1. USSC\/PAS begin IDE clinical trial\nfor Stent*                                      One Million Dollars ($1,000,000)\n\n2. USSC\/PAS completion of clinical trial\nfor FDA Pre-Market Approval of Stent*           Two Million Dollars ($2,000,000)\n\n3. USSC\/ PAS submission\nof Pre-Market Approval to FDA for Stent*        Two Million Dollars ($2,000,000)\n\n4. FDA approval of USSC\/PAS application\nfor Pre-Market Approval of Stent*,\n provided such approval shall occur\nno later than year 2000                   Thirteen Million Dollars ($13,000,000)\n\n5. Ownership and validity of\nHess Radiation Patent** has not been\nsuccessfully challenged by a third party\nprior to January 1, l999                        Two Million Dollars ($2,000,000)\n\n6. USSC\/PAS commencement\nof IDE clinical trial with\nPAS Radiation Product***                        Two Million Dollars ($2,000,000)\n\n7. USSC\/PAS submission\nfor FDA Pre-Market Approval\nof PAS Radiation Product***                   Three Million Dollars ($3,000,000)\n\n8. FDA approval of USSC\/PAS application\nfor Pre-Market Approval\nof PAS Radiation Product***                   Eight Million Dollars ($8,000,000)\n\n9. USSC\/PAS commercial release\nin the United States of High Pressure\nand Spiral Wrap Products****                    Two Million Dollars ($2,000,000)\n\n10. USSC\/PAS submission to Japanese\nregulatory authorities for Japanese\nequivalent of FDA Pre-Market Approval\nfor Stent*                                      One Million Dollars ($1,000,000)\n\n11. Japanese Regulatory authority approval\n\n\n                                       53\n\n\nof USSC\/PAS application for Japanese\nequivalent of FDA Pre-Market Approval\nfor Stent*                Two Million Five Hundred Thousand Dollars ($2,500,000)\n\nDEFINITIONS\n\n       For purposes of this Exhibit 2.07 the following definitions shall apply:\n\n1. Stent*: The term \"Stent\" shall mean PAS's bumblebee stent, or other PAS stent\nat USSC's discretion, in either case based on PAS's current nitinol technology\nas of the date of this Agreement.\n\n2. PAS Radiation Product**: The term \"PAS Radiation Product\" shall mean a local\nradiation delivery catheter that delivers beta radiation directly to the\narterial wall via the balloon on the catheter.\n\n3, Hess Radiation Patent***: The term \"Hess Radiation Patent\" shall mean (a)\nU.S. Patent number 5,411,466 entitled \"Apparatus for Restenosis Treatment\"\nissued on May 2, 1995, or (b) U.S. Patent number 5,302,168 entitled \"Method and\nApparatus for Restenosis Treatment\" issued on April 12, 1994.\n\n4. High Pressure and Spiral Wrap Products****: The term \"High Pressure Product\"\nshall mean a coronary angioplasty catheter utilizing \"high pressure\" balloon\nmaterial that is not polyethylene (PE) and is designed for dilation of rigid\nlesions and stainless steel stents. The term \"Spiral Wrap Product\" shall mean a\nwrap that covers the balloon portion of the coronary angioplasty catheter that\nprovides an ultra-low profile to the balloon and protects the balloon material.\n\n\n                                       54\n\n\n                                                                    EXHIBIT 2.08\n\n                             EARN OUT CONSIDERATION\n\n       Earn Out shall be based upon cumulative Net Sales (defined below) of\nProducts (defined below) during the Earn Out Period, up to a maximum of Fifty\nMillion Dollars ($50,000,000) based upon the following formula:\n\nCUMULATIVE NET SALES                         EARN OUT PERCENTAGE\n--------------------                         -------------------\n$0 through $100 million                       Six Percent (6%)\n$100,000,001 through $250 million             Eight Percent (8%)\ngreater than $250 million                     Ten Percent (10%)\n\nMaximum Total                                 $50 million\n\n\"Net Sales\" means gross sales of the Products billed and shipped by USSC, PAS or\ntheir respective Subsidiaries, Affiliates, Sublicensees or permitted assignees,\nless allowances and discounts actually allowed (other than advertising\nallowances, or fees or commissions to salesmen or sales representatives),\nreturns, invoices written off as uncollectible, billed taxes and customs duties\npaid by USSC, costs of insurance and transportation, freight and transit\ninsurance, and shall not include samples or demonstration materials or any sales\nto USSC employees for any reason other than resale. The term \"Net Sales\" shall\nnot include sales between the Parties, sales by independent distributors or\nsales between USSC or PAS and its Affiliates, Sublicensees (defined below) or\npermitted assignees.\n\n       \"Products\" means catheters, stents and radiation products principally\nembodying PAS's proprietary technology as of the date of this Agreement\n\n       \"Sublicensee\" means any Person to whom USSC or PAS, as the case may be,\ngrants a sublicense to manufacture or sell a Product.\n\n\n                                       55\n\n\n                                                                    EXHIBIT 2.09\n\n                            EXTRAORDINARY TRANSACTION\n\nArterial Vascular Engineering Incorporated\n\nBoston Scientific Corporation\n\nC.R. Bard Incorporated\n\nGuidant Corporation\n\nJohnson &amp; Johnson Incorporated\n\nMedtronic Incorporated\n\nPfizer Incorporated\n\n\n                                       56\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[9133],"corporate_contracts_industries":[9452],"corporate_contracts_types":[9622,9626],"class_list":["post-43139","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-tyco-international-ltd","corporate_contracts_industries-manufacturing__conglomerates","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43139","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43139"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43139"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43139"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43139"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}