Agreement and Plan of Merger, dated as of October 2, 2017, by and among EnteroMedics Inc., ReShape Medical, Inc., Nixon Subsidiary Inc., Nixon Subsidiary Holdings LLC and the ReShape Holder Committee

(e)                                  Use of Licensed IP.  Each member of Parent Group has valid written licenses in respect of all Licensed IP of sufficient scope to permit Parent to use such Licensed IP for such purposes as used by Parent Group in the conduct of their businesses as currently conducted.  To the Knowledge of Parent, no claim or proceeding relating to the ownership of Licensed IP is pending or has been threatened, except for any such claim or proceeding that, if adversely determined, would not adversely affect (A) the use or exploitation of such Licensed IP or (B) the distribution, provision, delivery or sale of any Parent Product.

(f)                                   No Infringement of Third Party IP Rights.  To the Knowledge of Parent, no member of Parent Group is infringing, misappropriating or otherwise violating, and has never infringed, misappropriated or otherwise violated, any Intellectual Property Right of any other Person.  Without limiting the generality of the foregoing: (i)  no infringement, misappropriation or similar claim or legal proceeding is pending or to the Knowledge of Parent, has been threatened against any member of Parent Group or, to the Knowledge of Parent, against any other Person who may be entitled to be indemnified, defended, held harmless or reimbursed by Parent with respect to such claim or legal proceeding; and (ii) no member of Parent Group has received any notice or other written communication (in writing or otherwise) (A) relating to any actual, alleged or suspected infringement, misappropriation or violation of any Intellectual Property Right of another Person, (B) inviting any member of Parent Group to license any Intellectual Property Rights of another Person, or (C) claiming that the Parent Product or the operation of the business of Parent constitutes unfair competition or trade practices under any Legal Requirements.

3.15                        Parent Contracts.

(a)                                 As of the date hereof, no member of Parent Group is a party to nor bound by any “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) with respect to Parent or any of its Subsidiaries that was required to be, but has not been, filed with the SEC with Parent’s Annual Report on Form 10-K for the year ended December 31, 2016, or any Parent SEC Documents filed after the date of filing of such Form 10-K until the date hereof (the “Parent Contracts”).

(b)                                 Each Parent Contract is valid and in full force and effect and is enforceable against the applicable member of Parent Group and by such member of Parent Group in accordance with its terms, subject to the Enforceability Limitations.  No member of Parent Group has violated or breached, or committed any default under, any Parent Contract, and, to the Knowledge of Parent, no other Person has violated or breached, or committed any default under, any such Parent Contract.  To the Knowledge of Parent, no event has occurred, and, to the Knowledge of Parent, no circumstance or condition exists, that (with or without notice or lapse of time) will, or could reasonably be expected to:  (i) result in a material violation or breach of any of the provisions of any Parent Contract; (ii) give any Person the right to declare a default or exercise any material remedy under any Parent Contract; (iii) give any Person the right to accelerate the maturity or performance of any Company Contract; or (iv) give any Person the right to cancel, terminate or modify any Parent Contract in a manner that would be material to the Company.  No member of Parent Group has received any written notice or other written communication regarding any actual or possible violation or breach of, or default under, any Parent Contract.  No member of Parent Group has waived any of its material rights under any Parent Contract.  No Person is renegotiating, or has a right pursuant to the terms of any Parent Contract to renegotiate, any amounts paid or payable to any member of Parent Group under any Parent Contract or any other material term or provision of any Parent Contract.  To the Knowledge of Parent, no Person has threatened to terminate or refuse to perform its obligations under any Parent Contract (regardless of whether such Person has the right to do so under such Contract).

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3.16                        Employee Benefit Plans. Except as would not have a Parent Material Adverse Effect, Parent and ERISA Affiliates have performed all obligations required to be performed by them under, and are in compliance with, the requirements prescribed by any and all applicable statutory or regulatory Legal Requirements, are not in default or violation of, and Parent has no Knowledge of any default or violation by any other party to, any Parent Employee Plan, and each Parent Employee Plan has been established and maintained, in all material respects, in accordance with its terms and in compliance with all applicable laws, statutes, orders, rules and regulations, including ERISA and the Code.  No member of Parent Group has any material liability under, and no Parent Employee Plan is or has ever been, a plan or arrangement that is, or intended to be, qualified under Section 401(a) of the Code.  No “prohibited transaction,” within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of ERISA, has occurred with respect to any Parent Employee Plan.  There are no actions, suits or claims pending or, to the Knowledge of Parent, threatened or reasonably anticipated (other than routine claims for benefits) against any Parent Employee Plan or against the assets of any Parent Employee Plan.  There are no audits, inquiries or proceedings pending or, to Parent’s Knowledge, threatened by the IRS, DOL, or any other Governmental Entity with respect to any Parent Employee Plan.  Neither Parent nor any ERISA Affiliate is subject to any material penalty or Tax with respect to any Parent Employee Plan under Section 502(i) of ERISA or Sections 4975 through 4980 of the Code.  Parent and ERISA Affiliates have timely made (or will make) all contributions and other payments required by and due under the terms of each Parent Employee Plan and/or pursuant to applicable Legal Requirements as of the Closing Date.  Neither Parent nor any ERISA Affiliate has ever maintained, established, sponsored, participated in, contributed to, or has any liability with respect to any Pension Plan subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of ERISA or Section 412 of the Code.  Neither Parent nor any ERISA Affiliate has ever maintained, established, sponsored, participated in, contributed to or has any liability with respect to any self-insured plan that provides benefits to employees (including any such plan pursuant to which a stop-loss policy or contract applies).  Each member of Parent Group is in compliance with all the written terms and conditions of its bonus, commission and other compensation plans and has paid any and all amounts required to be paid under such plans, including any and all bonuses and commissions (or pro rata portion thereof) that may have accrued or been earned through the calendar quarter preceding the Closing Date, and is not liable for any material payments, taxes or penalties for failure to comply with any of the terms or conditions of such plans or the laws governing such plans. Each Parent Employee Plan and Parent Contract, agreement or arrangement between a member of Parent Group and any Parent Employee, in each case, that is a “nonqualified deferred compensation plan” (as such term is defined in Section 409A) has been at all times since incorporation or other formation of each member of Parent Group in operational compliance with Section 409A and applicable guidance issued thereunder and at all times since incorporation or other formation of each member of Parent Group in documentary compliance with Section 409A and applicable guidance issued thereunder.  There is no Contract, agreement, plan or arrangement to which any member of Parent Group is a party, including the provisions of this Agreement, covering any Employee of Parent Group, which individually or collectively could require any member of Parent Group to pay a Tax gross up payment to, or otherwise indemnify or reimburse, any Parent Employee for Tax-related payments under Section 409A.  No issued and outstanding option to purchase or otherwise acquire Parent Common Stock (whether or not vested) or other stock right (as defined in U.S. Treasury Department regulation 1.409A-1(l)) held by or of any Person (w) has an exercise price that was less than the fair market value of the underlying equity as of the date such option or right was granted, (x) has any feature for the deferral of compensation other than the deferral of recognition of income until the later of exercise or disposition of such option or rights, or (y) has been granted after incorporation or other formation of each member of Parent Group, with respect to any class of stock of each member of Parent Group that is not “service recipient stock” (within the meaning of applicable regulations under Section 409A).  At no time has Parent or any ERISA Affiliate contributed to or been obligated to contribute to any multiemployer plan (as defined in Section 3(37) of ERISA).  Neither Parent nor any ERISA Affiliate has at any time ever maintained, established, sponsored, participated in or contributed to any multiple employer plan or to any

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plan described in Section 413 of the Code, a “funded welfare plan” within the meaning of Section 419 of the Code, or a Multiple Employer Welfare Arrangement, as defined under Section 3(40)(A) of ERISA (without regard to Section 514(b)(6)(B) of ERISA).  Neither Parent or ERISA Affiliate currently has, nor has it ever had, the obligation to maintain, establish, sponsor, participate in or contribute to any International Employee Plan.  No Parent Employee Plan or any agreement with any Employee of Parent Group provides, or reflects or represents any liability to provide, post-termination or retiree or post-employment life insurance, health or other employee welfare benefits to any person for any reason, except as may be required by COBRA or other applicable Legal Requirements, and no member of Parent Group has ever represented, promised or contracted (in written form) to any Employee of Parent Group (either individually or to Employees of Parent Group as a group) or any other person that such Employee(s) of Parent Group or other person would be provided with life insurance, health or other employee welfare benefits, except to the extent required by statute or other applicable Legal Requirements.

3.17                        Employment Matters.

(a)                                 Compliance with Employment Laws.  Each member of Parent Group is in material compliance with all applicable foreign, federal, state and local laws, rules and regulations respecting employment, employment practices, terms and conditions of employment, worker classification, tax withholding, social security contributions withholding, prohibited discrimination, working time, employee representation, equal employment, fair employment practices, meal and rest periods, immigration status, employee safety and health, wages (including overtime wages), compensation, and hours of work, and in each case, with respect to Employees:  (i) has withheld and reported all amounts required by law or by agreement to be withheld and reported with respect to wages, salaries and other payments to Employees, (ii) is not liable for any arrears of wages, severance pay or any Taxes or social security contributions or any penalty for failure to comply with any of the foregoing, and (iii) is not liable for any payment to any trust or other fund governed by or maintained by or on behalf of any Governmental Entity, with respect to unemployment compensation benefits, social security or other benefits or obligations for Employees (other than routine payments to be made in the normal course of business and consistent with past practice).  There are no material actions, suits, claims or administrative matters pending or, to Parent’s Knowledge, threatened or reasonably anticipated against any member of Parent Group or any of its Employees relating to any Employee or Parent Employee Plan.  There are no pending or, to Parent’s Knowledge, threatened or reasonably anticipated claims or actions against any member of Parent Group or any Parent Group trustee under any worker’s compensation policy or long-term disability policy.  No member of Parent Group is party to a conciliation agreement, consent decree or other agreement or order with any federal, state, or local agency or Governmental Entity with respect to employment practices.

(b)                                 Labor.  No strike, labor dispute, slowdown, concerted refusal to work overtime, or work stoppage or labor strike against any member of Parent Group is pending, or, to the Knowledge of Parent, threatened.  Parent has no Knowledge of any activities or proceedings of any labor union to organize any Employees of Parent Group.  To the Knowledge of Parent, there are no Actions, investigations, labor disputes or grievances pending against any member of Parent Group or, to the Knowledge of Parent, threatened relating to any labor matters involving any Employee, including charges of unfair labor practices.  No member of Parent Group has engaged in any unfair labor practices within the meaning of the National Labor Relations Act or similar Legal Requirement.  No member of Parent Group is not presently, nor has it been in the past, a party to, or bound by, any collective bargaining agreement, works council, union or similar contract with respect to Employees and no such agreement is being negotiated by Parent Group.

3.18                        Governmental Authorizations.  Each notification, consent, license, permit, grant or other authorization (a) pursuant to which Parent Group currently operates or which holds any interest in

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any of its properties, or (b) which is required for the operation of Parent Group’s business as currently conducted or is required for the holding of any such interest has been issued or granted to a member of Parent Group, as the case may be, except where failure to have such notification, consent, license, permit, grant or other authorization would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect (collectively, “Parent Authorizations”).  The Parent Authorizations are in full force and effect and constitute all Parent Authorizations required to permit Parent Group to operate or conduct their businesses or hold any interest in its properties or assets and none of the Parent Authorizations is subject to any term, provision, condition or limitation which may result in a material adverse change to, or terminate such Parent Authorizations by virtue of, the completion of the Merger.  Each member of Parent Group has been and is in material compliance with the terms and conditions of the Parent Authorizations applicable to it.

3.19                        Litigation.  Except as set forth in the Parent SEC Reports, there is no Action (or, to the Knowledge of the Company, investigations) of any nature pending or, to the Knowledge of Parent, threatened, against any member of Parent Group, their respective properties or assets (tangible or intangible) or any of their officers or directors (in their capacities as such).  No Governmental Entity has at any time challenged or questioned, in writing to any member of Parent Group, the legal right of Parent Group to conduct its operations as presently or previously conducted.  There is no Action (or, to the Knowledge of the Company, investigations) of any nature pending or, to the Knowledge of Parent, threatened, against any officer or director of any member of Parent Group who has a contractual right or a right pursuant to applicable Legal Requirements to indemnification from any member of Parent Group related to facts and circumstances existing prior to the Effective Time.  To the Knowledge of Parent, no event has occurred, and no circumstance or condition exists, that has resulted in, or that will or would reasonably be expected to result in, any material liability of any member of Parent Group to any current, former or alleged holder of securities of any member of Parent Group in such Person’s capacity (or alleged capacity) as a holder of such securities, whether related to the Mergers or otherwise.

3.20                        Insurance.  There is no claim by Parent or any ERISA Affiliate pending under any insurance policies and fidelity bonds covering the assets, business, equipment, properties, operations, employees, officers and directors of Parent or any ERISA Affiliate as to which coverage has been denied by the underwriters of such policies or bonds.  In addition, there is no pending claim of which its total value (inclusive of defense expenses) would reasonably be expected to exceed the policy limits.  All premiums due and payable under all such policies and bonds have been paid and Parent and its ERISA Affiliates are otherwise in material compliance with the terms of such policies and bonds (or other policies and bonds providing substantially similar insurance coverage).  Parent does not have any Knowledge of threatened termination of, or premium increase with respect to, any of such policies.

3.21                        Compliance with Legal Requirements.

(a)                                 General.  Except as is not material in any case or in the aggregate, each member of Parent Group has complied with all Legal Requirements and is not in violation of any Legal Requirement.  Parent has not received any written notices of potential or actual violation with respect to, any applicable Legal Requirement.

(b)                                 Anticorruption Laws.  Neither Parent Group nor, the Knowledge of Parent, any director, officer, employee, distributor, reseller, consultant, agent or other third party acting on behalf of any member of Parent Group, has provided, attempted to provide, or authorized the provision of anything of value (including but not limited to payments, meals, entertainment, travel expenses or accommodations, or gifts), directly or indirectly, to any person, including a “foreign official”, as defined by the FCPA, which includes employees or officials working for state-owned or controlled entities, a foreign political party or candidate, any individual employed by or working on behalf of a public

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international organization, or any other person, for the purpose of illegally (i) obtaining or retaining business; (ii) influencing any act or decision of a foreign government official in their official capacity; (iii) inducing a foreign government official to do or omit to do any act in violation of their lawful duties; (iv) directing business to another; or (v) securing any advantage in violation of the FCPA or any applicable local, domestic, or international anticorruption laws.  Neither Parent Group, nor, to the Knowledge of Parent, any director, officer, employee or agents has used any corporate funds to maintain any off-the-books funds or engage in any off-the-books transactions nor has any of the before stated parties falsified any Parent Group documents.  No member of Parent Group has made any provisions to any person (including foreign government officials) that would constitute an illegal rebate, commercial bribe, influence payment, extortion, kickback, or other improper payment in violation of the FCPA or any other applicable anticorruption law.  Parent Group maintains sufficient internal controls and compliance programs to detect and prevent violations of anticorruption laws (including the FCPA), ensure its Books and Records are accurately maintained, and track any payments made to third parties and foreign government officials.  Parent Group has not conducted any internal or government-initiated investigation, or made a voluntary, directed, or involuntary disclosure to any governmental body or similar agency with respect to any alleged act or omission arising under or relating to any noncompliance with any anticorruption law, including the FCPA.

(c)                                  Environmental Laws.  Except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, (i) no member of Parent Group has released any Hazardous Material into the Environment, (ii) to the Knowledge of Parent, no Hazardous Materials are present in, on or under any real property, that any member of Parent Group has at any time owned, operated, or leased, and (iii) no member of Parent Group has transported, stored, used, manufactured, disposed of, released or exposed its employees or others to Hazardous Materials in violation of any applicable Environmental Legal Requirement.

(d)                                 Healthcare Laws.  Each member of Parent Group is in compliance in all material respects with all healthcare laws applicable to the operation of its business as currently conducted, including, without limitation, (i) any and all federal, state and local fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7(b)), the federal civil False Claims Act (31 U.S.C. § 3729 et seq.), the federal physician self-referral law (42 U.S.C. 1395nn et seq.) and the regulations promulgated pursuant to such statutes, and (ii) any and all federal, state and local laws and regulations relating to the billing or submission of claims, collection of accounts receivable, underwriting the cost of, or provision of management, marketing, business development and/or administrative services in connection with the Parent Products, in each case to the extent applicable to Parent.

(e)                                  Exclusion/Debarment. No member of Parent Group, nor any director, officer, employee, distributor, reseller, consultant, agent or other third party acting on behalf of Parent Group has ever been sanctioned or excluded or is currently subject to sanction or exclusion from participation in any federal or state health care program.  No member of Parent Group, nor any director, officer, employee, distributor, reseller, consultant, agent or other third party acting on behalf of Parent Group has ever been listed by any federal or state entity as excluded, debarred, suspended, or otherwise ineligible to participate in federal and/or state health care programs or been convicted (including a plea of nolo contendere) of any crime relating to any federal and/or state health care program.

3.22                        Regulatory Compliance.

(a)                                 Each member of Parent Group has obtained each federal, state, county, local or non U.S. Permit or an exemption therefrom that may be required by the FDA or any other Governmental Entities engaged in the regulation of the Parent Products, Parent Group’s business, and Parent Group’s

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manufacturing and other quality systems that is required for or has been applied for in operating Parent’s current business in any location in which it is currently operated, and all of such Permits are in full force and effect.  No member of Parent Group has received any written notice or communication with respect to Parent Group’s business from any Governmental Entity regarding (i) any material violation of applicable Legal Requirements or material adverse change in any Permit, or any failure to materially comply with any applicable Legal Requirement or any term or requirement of any Permits or (ii) any revocation, withdrawal, suspension, cancellation, or termination of any Permits.  To the Knowledge of Parent, no such Permit will be terminated or impaired, or will become terminable, in whole or in part, as a result of the consummation of the transactions contemplated by this Agreement.

(b)                                 The operation of Parent Group’s business, including the manufacture, import, export, testing, development, processing, packaging, labeling, storage, marketing, and distribution of all Parent Products, is and at all times during the three (3) years prior to the date of this Agreement, been in material compliance with all applicable Legal Requirements, Permits, Governmental Entities and orders including those administered by the FDA for products sold in the United States.  There is no actual or, to the Knowledge of Parent, threatened material action or investigation in respect of Parent Group’s business by the FDA or any other Governmental Entity which has jurisdiction over the operations, properties, products or processes of Parent Group or, to the Knowledge of Parent, by any third parties acting on their behalf.  Parent has no Knowledge that any Governmental Entity is considering such action or of any facts or circumstances that are likely to give rise to any such action or investigation.

(c)                                  During the three (3) year period ending on the Closing Date, no member of Parent Group has had any product or manufacturing site subject to a Governmental Entity (including FDA) shutdown or import or export prohibition, nor received any FDA Form 483 or other Governmental Entity notice of inspectional observations, “warning letters,” “untitled letters” or requests or requirements to make material changes to the operations of Parent Group’s business or the Parent Products, or similar correspondence or written notice from the FDA or other Governmental Entity in respect of Parent Group’s business and alleging or asserting material noncompliance with any applicable Legal Requirements, Permits or such requests or requirements of a Governmental Entity, and, to the Knowledge of Parent, neither the FDA nor any Governmental Entity is considering such action.  To the Knowledge of Parent, No vigilance report or medical device report is under investigation by any Governmental Entity with respect to the Parent Products or Parent Group’s business.

(d)                                 The manufacture of Parent Products by, or on behalf of, Parent Group is being conducted in compliance in all material respects with all applicable Legal Requirements including the FDA’s Quality System Regulation at 21 C.F.R. Part 820 for products sold in the United States, and the respective counterparts thereof promulgated by Governmental Entities in countries outside the United States.  Parent Group, and, to the Knowledge of Parent, any third party assembler, sterilizer or manufacturer of Parent Products is in material compliance with all applicable Legal Requirements and certifications currently held by Parent Group’s governing quality systems, manufacturing processes and all other quality standards, registration and listing requirements governing those third parties’ activities, including those set forth in 21 C.F.R. Part 807 and 21 C.F.R. Part 820 for products sold in the United States and all other similar applicable Legal Requirements.

3.23                        Interested Party Transactions.  No member of Parent Group is not a participant in a “transaction” with any “related person” that would be required to be disclosed by Parent under Item 404 of Regulation S-K promulgated by the SEC and that are not so disclosed. For purposes of this Section 3.23, the terms “related person” and “transaction” have the meanings given to such terms in Item 404 of Regulation S-K promulgated by the SEC.

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3.24                        Books and Records.  The minute books of Parent Group are complete and up-to-date in all material respects, and have been maintained in accordance with sound and prudent business practice.  The minutes of Parent Group contain true, correct and complete records of all actions taken, and summaries of all meetings held, by the respective stockholders and the Board of Directors (or similar governing body) of each member of Parent Group (and any committees thereof) since January 1, 2013, as the case may be.  Parent Group has made and kept Books and Records that are true, correct and complete in all material respects and accurately and fairly reflect, in all material respects, the business activities of Parent Group.  Parent Group has not engaged in any material transaction, maintained any bank account or used any corporate funds except as reflected in its normally maintained Books and Records.

3.25                        No Brokers. Neither Parent, Merger Sub, Sub LLC, nor any other member of Parent Group has incurred, nor will they incur, directly or indirectly, any liability for brokerage or finders’ fees or agents’ commissions, fees related to investment banking or similar advisory services or any similar charges in connection with the Agreement or any transaction contemplated hereby, other than pursuant to Parent’s engagement of Ladenburg Thalmann & Co. Inc. pursuant to an engagement letter Made Available to the Company, nor will the Company or the Surviving Corporation incur, directly or indirectly, any such liability based on arrangements made by or on behalf of Parent, Merger Sub or Sub LLC.

3.26                        Inspection; No Other Representations. Each of Parent, Merger Sub, and Sub LLC is an informed and sophisticated Person, and has engaged expert advisors experienced in the evaluation and acquisition of companies such as the Company, as contemplated hereunder.  Each of Parent, Merger Sub, and Sub LLC has undertaken such investigation and has been provided with and has evaluated such documents and information as it has deemed necessary to enable it to make an informed and intelligent decision with respect to the execution, delivery and performance of this Agreement, the Related Agreements and the transactions contemplated hereby and thereby.  Each of Parent, Merger Sub, and Sub LLC acknowledges that the Company has given Parent, Merger Sub, and Sub LLC complete and open access to the employees, documents, and facilities of the Company.  Without limiting the generality of the foregoing, each of Parent, Merger Sub, and Sub LLC acknowledges that neither the Company nor any of its Affiliates, nor any of their respective directors, officers, employees, stockholders, controlling persons, or agents, makes or has made any representation or warranty, either express or implied, as to the accuracy or completeness of any information relating to the Company, including with respect to (a) any projections, estimates or budgets delivered to or Made Available to Parent, Merger Sub, or Sub LLC of future revenues, future results of operations (or any component thereof), future cash flows or future financial condition (or any component thereof) of the Company, or the future business and operations of the Company or (b) any other information or documents Made Available to Parent, Merger Sub, or Sub LLC or its counsel, accountants or advisors with respect to the Company, or any of its businesses, assets, liabilities or operations, except as expressly set forth in Article II.

ARTICLE IV
ADDITIONAL AGREEMENTS

4.1                               Stockholder Approvals.

(a)                                 Requisite Company Stockholder Approval.  Immediately following the execution of this Agreement, the Company shall solicit written consent from all of its Stockholders in the form attached hereto as Exhibit B (the “Stockholder Written Consent”).  It is anticipated that, promptly after the execution of this Agreement, the Company will receive Stockholder Written Consents from Stockholders pursuant to the preceding solicitation that are sufficient to fully and irrevocably deliver the Requisite Company Stockholder Approval.  Promptly upon obtaining the Requisite Company Stockholder Approval, the Company shall prepare and, as soon as reasonably practicable, send to all Stockholders on

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the record date for the Stockholder Written Consents who did not execute a Stockholder Written Consent the notices required pursuant to Delaware Law and the California Code.  Such materials submitted to the Stockholders in connection with such Stockholder Written Consents shall be subject to reasonable review and comment by Parent and shall include an information statement regarding the Company, the terms of this Agreement and the Merger and the unanimous recommendation of the Company’s Board of Directors that the Stockholders not exercise their dissenters’ or appraisal rights in connection with the Merger (the “Information Statement”).  The parties shall update, amend and supplement the Information Statement from time to time as may be required by applicable Legal Requirements.  The Board of Directors of the Company shall not alter, modify, change or revoke the Company Recommendation.

(b)                                 Parent Stockholder Approval. Parent agrees to use commercially reasonable efforts to call and hold a meeting of the stockholders of Parent to obtain the Parent Stockholder Approval (the “Parent Stockholder Meeting”) on or before December 31, 2017. If the Parent Stockholder Approval is not obtained at the Parent Stockholder Meeting, then Parent will use its commercially reasonable efforts to obtain the Parent Stockholder Approval at the next occurring annual meeting of the stockholders of Parent or, if such annual meeting is not scheduled to be held within six months after the Parent Stockholder Meeting, a special meeting of the stockholders of Parent to be held within six months after the Parent Stockholder Meeting.  Parent will hold an annual meeting or special meeting of its stockholders at least once every six months until Parent obtains the Parent Stockholder Approval. The Company acknowledges that, under the NASDAQ Stock Market Rules, the Parent Common Stock Payment Shares will not be entitled to vote on the conversion of the shares of Parent Preferred Stock Payment Shares into shares of Parent Common Stock. The Board of Directors of Parent will recommend to Parent’s stockholders approval of the Preferred Stock Conversion Proposal and cause the affirmative vote by Dr. Raj Nihalani of shares of Parent Common Stock over which he exercises voting authority pursuant to the voting agreement between Parent and Dr. Raj Nihalani, dated as of May 22, 2017.  In connection with any stockholder meeting at which the Preferred Stock Conversion Proposal is being presented to Parent’s stockholders, Parent will use its reasonable best efforts to obtain the Parent Stockholder Approval, including without limitation by issuing one or more news releases recommending that stockholders approve the Preferred Stock Conversion Proposal. Parent intends to call a special stockholders’ meeting for October 25, 2017 to approve the conversion of the conditional convertible preferred stock it issued in connection with the acquisition of BarioSurg, Inc. into 5,000,905 shares of Parent Common Stock, and will use its commercially reasonable efforts to obtain an affirmative stockholder vote of that proposal at the meeting.

4.2                               Third Party Expenses. Subject to Section 1.6(a), each party shall be responsible for its own expenses and costs that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement and the Related Agreements. The Company shall take all necessary action to ensure that no Third Party Expenses shall be incurred by the Company after the Closing Date without the express prior written consent of Parent.

4.3                               NASDAQ Listing of Parent Common Stock.  Promptly following the Closing Date, Parent shall apply to cause the Parent Common Stock Payment Shares and the Parent Common Stock to be issued upon conversion of the Parent Preferred Stock Payment Shares to be approved for listing on NASDAQ, subject to official notice of issuance.

4.4                               Reservation of Parent Common Stock; Issuance of Shares of Parent Common Stock.  For as long as any Parent Preferred Stock Payment Shares remain outstanding, Parent shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued Parent Common Stock or shares of Parent Common Stock held in treasury by Parent, for the purpose of effecting the conversion of the Parent Preferred Stock Payment Shares, the full number of shares of Parent Common Stock then issuable upon the conversion of all Parent Preferred Stock Payment Shares then

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outstanding. All shares of Parent Common Stock delivered upon conversion of the Parent Preferred Stock Payment Shares shall be newly issued shares or shares held in treasury by Parent, shall have been duly authorized and validly issued and shall be fully paid and nonassessable, and shall be free from preemptive rights and free of any Lien.

4.5                               Parent Board Members. For so long as the Parent Payment Shares represent at least 10% of the outstanding shares of Parent Common Stock (for this purpose treating as outstanding the shares of Parent Common Stock issuable upon conversion of the Parent Preferred Stock Payment Shares), Parent will nominate and use its commercially reasonable efforts to cause two (2) individuals designated by the Company Holder Committee (such members, the “Designated Directors”) to be elected to the Board of Directors of Parent.  Michael Y. Mashaal, M.D. shall be one of the Designated Directors, and, notwithstanding anything herein to the contrary, Parent shall cause him to be appointed to the Board of Directors of Parent at the Closing (and he will be added to the Class I of the Board of Directors).  The other Designated Director shall be designated by the Company Holder Committee after the Closing, and such individual must be reasonably acceptable to the then current members of the Board of Directors of Parent.  Parent shall use commercially reasonable efforts to cause such Designated Director to be appointed to the Board of Directors of Parent as promptly as practicable after the Closing and prior to any annual or special meeting of the stockholders of Parent.  If a Designated Director resigns, dies, is removed or is otherwise unable to serve on the Board of Directors of Parent, any replacement Designated Director shall be reasonably acceptable to the then current members of the Board of Directors; provided, however, that pursuant to the rules of the NASDAQ Stock Market the number of Designated Directors as a percentage of the overall number of directors on the Board of Directors of Parent may not exceed the number of shares constituting the outstanding Parent Payment Shares (for this purpose treating as outstanding the shares of Parent Common Stock issuable upon conversion of any Parent Preferred Stock Payment Shares, whether or not approved by Parent’s stockholders) as a percentage of Parent’s outstanding securities that are entitled to vote on election of directors. The Company Holder Committee will provide Parent with any information with respect to any Designated Director reasonably requested by Parent, including such information that may be required to be included in Parent’s proxy statement for any annual or special meeting of stockholders at which the election of such Designated Directors will be considered.  Immediately after the Closing, the Board of Directors of Parent will not exceed seven (7) directors.

4.6                               Payoff Letters; Release of Liens.

(a)                                 Payoff Letters. Prior to the Closing Date, the Company shall obtain from each bank creditor of the Company and deliver to Parent, an executed payoff letter, in form and substance reasonably acceptable to Parent, setting forth:  (i) the amounts required to pay off in full on the Closing Date, the Indebtedness owing to such creditor, if any, (including the outstanding principal, accrued and unpaid interest and prepayment and other penalties) and wire transfer information for such payment; (ii) upon payment of such amounts, a release of the Company; and (iii) the commitment of the creditor to release all Liens, if any, that the creditor may hold on any of the assets of the Company prior to the Closing Date (each, a “Payoff Letter”).

(b)                                 Release of Liens. Prior to the Closing, the Company shall file all agreements, instruments, certificates and other documents, in form and substance reasonably satisfactory to Parent, that are necessary or appropriate to effect the release of all Liens set forth in Section 4.6(b) of the Disclosure Schedule.

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4.7                               Indemnification; Advancement of Expenses; Exculpation and Insurance.

(a)                                 Parent shall cause the Surviving Corporation or Surviving LLC to honor the obligations with respect to all rights to indemnification, advancement of expenses and exculpation from liabilities for acts or omissions occurring at or prior to the Effective Time now existing in favor of the current or former directors or officers of the Company as provided in the Certificate of Incorporation, the Company Bylaws or any indemnification Contract between such directors or officers and the Company (in each case, as in effect on the date hereof), without further action, as of the Effective Time and such obligations shall survive the Merger and shall continue in full force and effect in accordance with their terms, it being understood that this Section 4.7 shall in no way limit the rights Parent or the Surviving Corporation may have pursuant to this Agreement (including pursuant to Article V) or otherwise.

(b)                                 In the event that the Surviving Corporation or Surviving LLC or any of its successors or assigns (i) consolidates with or merges into any other person and is not the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys substantially all its assets to any person, then, and in each such case, Parent shall cause proper provision to be made so that the successors and assigns of the Surviving Corporation or Surviving LLC shall expressly assume the obligations set forth in this Section 4.7 or Parent shall take such other action to ensure that the ability of the Surviving Corporation or Surviving LLC, legal and financial, to ensure such obligations will not be diminished.

(c)                                  Prior to the Closing, the Company shall obtain a prepaid (or “tail”) directors’ and officers’ liability insurance policy in respect of acts or omissions occurring at or prior to the Effective Time for six years from the Effective Time, covering each person currently covered by the Company’s directors’ and officers’ liability insurance policy (the “D&O Tail Policy”) (a complete and accurate copy of which has been heretofore Made Available to Parent).

(d)                                 The provisions of this Section 4.7 (i) are intended to be for the benefit of, and will be enforceable by, each current and former officer and director of the Company, his or her heirs, executors and Representatives (the “D&O Indemnified Parties”), it being expressly agreed that the D&O Indemnified Parties shall be express third party beneficiaries of this Section 4.7 and shall be entitled to enforce the covenants contained herein, (ii) are in addition to, and not in substitution for, any other rights to indemnification or contribution that any such person may have by contract or otherwise and (iii) shall not be terminated or modified in such a manner as to adversely affect any D&O Indemnified Party to whom this Section 4.7 applies, without the consent of such affected D&O Indemnified Party.

4.8                               Employee Benefits.

(a)                                 During the period commencing on the Closing Date and ending on the first anniversary of the Closing Date, Parent shall provide, or shall cause to be provided to each Employee who remains employed by the Surviving Corporation or Surviving LLC or is otherwise employed by Parent or any of its Affiliates (each a “Continuing Employee”) (1) base salary and annual bonus opportunities, which are no less favorable in the aggregate than those provided immediately prior to the Closing Date to each such Continuing Employee, and (2) employee benefits that are no less favorable in the aggregate than those provided to each such Continuing Employee immediately prior to the Closing Date.

(b)                                 In the event that the employment of any Continuing Employee who is classified as an exempt employee is terminated by Parent or one of its Subsidiaries without cause during the one-

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year period following the Closing Date, such Continuing Employee shall be entitled to receive the severance payments and benefits set forth on Schedule 4.8(b).

(c)                                  Parent shall pay or cause to be paid to (i) each Employee set forth in Section 1 of Schedule 4.8(c) a cash bonus in corresponding amount set forth thereon on or before the date that is six (6) months after the Closing Date and (ii) each Employee set forth in Section 2 of Schedule 4.8(c) a cash bonus in corresponding amount set forth thereon on the Closing Date (the aggregate of all such payments, the “Bonus Amount”).

(d)                                 Following the Closing, Parent shall use commercially reasonable efforts to (i) maintain the Company Employee Plans that are welfare plans existing as of the Closing, and, accordingly, shall thereby continue in full force and effect each such Company Employee Plan subject to the terms and conditions thereof, in each case, for the remainder of the benefit plan year during which the Closing Date occurs (“Closing Benefit Year”) and for each full benefit year after the Closing Benefit Year to the extent any Continuing Employee participates in a Company Employee Plan during such later benefit plan year, and (ii) arrange for each Continuing Employee to participate in any benefit plan, program, practice, policy or arrangement maintained by Parent or its Subsidiaries following the Closing Date (the “Parent Plans”) and after the Closing Benefit Year to the extent each such Continuing Employee does not participate in a Company Employee Plan. Following the Effective Time, solely to the extent that Continuing Employees are covered under Parent Plans, for all purposes, including eligibility to participate, vesting requirements and benefit accrual, contribution rates and matching amounts, each Continuing Employee’s service with the Company or its Subsidiaries (or predecessor employers for which Company or its Subsidiaries provide past service credit) shall be treated as service with Parent and/or any applicable Subsidiary of Parent; provided that such service shall not be recognized to the extent that such recognition would result in a duplication of benefits for the same period of service, for purposes of any frozen or discontinued Parent Plan or any frozen or discontinued portion of a Parent Plan or for purposes of benefit accrual under any defined benefit pension plan. Parent shall cause (i) such service to apply for purposes of satisfying any waiting periods or evidence of insurability requirements and (ii) each Parent Plan to waive pre-existing condition limitations for employees (and their beneficiaries and covered dependents) participating in such plan to the extent waived or not applicable under the applicable Company Employee Plan.

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(e)                                  Effective as of no later than the day immediately preceding the Closing Date, the Company shall terminate any and all Company Employee Plans intended to include a Code Section 401(k) arrangement (each, a “401(k) Plan”) (unless Parent provides written notice to the Company that such 401(k) plans shall not be terminated).  Unless Parent provides such written notice to the Company, no later than five Business Days prior to the Closing Date, the Company shall provide Parent with evidence that such Company Employee Plans have been terminated (effective as of no later than the day immediately preceding the Closing Date) pursuant to resolutions of the Board of Directors of the Company, as the case may be.

(f)                                   Notwithstanding the foregoing, nothing contained herein shall (i) be treated as an amendment of any particular Company Employee Plan, (ii) alter or limit the ability of Parent to amend, modify or terminate any Company Employee Plan, Parent Plan or any other benefit plan, program, agreement or arrangement, (iii) give any third party any right to enforce the provisions of this Section 4.8, (iv) obligate Parent, the Surviving Corporation or any of their Affiliates to (A) maintain any particular benefit plan or (B) retain the employment of any particular employee or (v) be deemed to confer upon any such individual or legal representative any rights under or with respect to any plan, program or arrangement described in or contemplated by this Agreement, and each such individual or legal representative shall be entitled to look only to the express terms of any such plan, program or arrangement for his or her rights thereunder.

4.9                               Tax Matters.

(a)                                 From and after the Closing Date, unless Parent agrees to waive any rights it may have to indemnification pursuant to Section 5.2 with respect to all matters relating to or arising from such actions, Parent and its Affiliates shall not, and shall not cause or permit the Company to, (i) amend any Tax Return of the Company with respect to any Tax period ending on or before the Closing Date or enter into any voluntary disclosure agreement, engage in any voluntary compliance procedures or make any other similar voluntary contact with any Governmental Entity with respect to any Tax period ending on or before the Closing Date, or (ii) waive the statute of limitations or extend the period for assessment or collection of Tax for any Tax period ending on or before the Closing Date.

(b)                                 All transfer, documentary, sales, use, stamp, registration, value added and other similar Taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with the consummation of the transactions contemplated by this Agreement shall be borne and paid by Parent. The party responsible under applicable Legal Requirements for submitting payment of such Taxes to the applicable Governmental Entity shall file all necessary Tax Returns and other documentation with respect to all such Taxes and fees. If required by applicable Legal Requirements, Parent or the Company shall join in the execution of any such Tax Returns and other documentation.

ARTICLE V
POST-CLOSING INDEMNIFICATION; COMPANY HOLDER COMMITTEE

5.1                               Survival of Representations and Warranties.  The representations and warranties set forth in Article II and Article III of this Agreement shall survive until 11:59 p.m. Minnesota time on the date that is eighteen (18) months following the Closing Date; provided, however, that the Company Fundamental Representations and the Parent Fundamental Representations shall survive until 11:59 p.m. Minnesota time on the date that is thirty-six (36) months following the Closing Date (the applicable date of expiration, “Expiration Date”); and provided, further, that all representations and warranties shall survive beyond the Expiration Date specified above with respect to any inaccuracy therein or breach thereof if a claim is made hereunder prior to the expiration of the Expiration Date for such representation

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and warranty, in which case such representation and warranty shall survive as to such claim until such claim has been finally resolved.

5.2                               Indemnification of Parent.

(a)                                 From and after and by virtue of the Merger, subject to the terms of this Article V, the Company Holders agree to severally, but not jointly, indemnify and hold harmless Parent and its officers, directors, affiliates, employees, agents and representatives, including the Surviving Corporation (each, a “Parent Indemnified Party” and collectively, the “Parent Indemnified Parties”), from and against all out-of-pocket losses from liabilities, damages, deficiencies, Taxes, costs, interest, awards, judgments, and expenses, including reasonable attorneys’ and consultants’ fees and expenses and including any such reasonable expenses paid in connection with investigating, defending against or settling any of the foregoing, but excluding diminution in value or punitive damages, except for any punitive damages actually paid to a third party in respect of a Third Party Claim or with respect to a claim of fraud to the extent actually awarded by an arbitrator or court of competent jurisdiction and actually paid to a Governmental Entity or other third party (hereinafter individually a “Loss” and collectively “Losses”) paid by the Parent Indemnified Parties, or any of them (including the Surviving Corporation) (regardless of whether or not such Losses relate to any third party claims), directly or indirectly, resulting from, or arising out of any of the following:

(i)             any breach of or inaccuracy in, as of the date hereof, a representation or warranty of the Company set forth in this Agreement, without giving effect to any qualifications based on the word “material” or similar phrases (including “Company Material Adverse Effect”) limiting the scope of such representation or warranty;

(ii)          any failure by the Company to perform or comply with any of its covenants or agreements set forth in this Agreement;

(iii)       the matters set forth on Exhibit E;

(iv)      any payment in respect of any Dissenting Shares in excess of the consideration that otherwise would have been payable in respect of such shares in accordance with this Agreement, and any other Losses paid in respect of any Dissenting Shares, including all attorneys’ and consultants’ fees, costs and expenses and including any such fees, costs and expenses paid in connection with investigating, defending against or settling any action or proceeding in respect of Dissenting Shares; and

(v)         any inaccuracy or omission in the Spreadsheet, including any amounts set forth therein that are paid to a Person in excess of the amounts that such Person is entitled to receive pursuant to the terms of this Agreement and any amounts that a Person was entitled to receive pursuant to the terms of this Agreement that were omitted from the Spreadsheet.

(b)                                 Any payments made to a Parent Indemnified Party pursuant to any indemnification obligations under this Article V will be treated as adjustments to the Merger Consideration for Tax purposes and such agreed treatment will govern for purposes of this Agreement, unless otherwise required by applicable Legal Requirements.

5.3                               Indemnification of Securityholders.

(a)                                 From and after and by virtue of the Merger, subject to the terms of this Article V, Parent agrees to indemnify and hold harmless each Company Holder and such Company Holder’s

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respective officers, directors, affiliates, employees, agents and representatives (each, a “Securityholder Indemnified Party” and collectively, the “Securityholder Indemnified Parties”), from and against all Losses paid by the Securityholder Indemnified Parties, or any of them (regardless of whether or not such Losses relate to any third party claims), directly or indirectly, resulting from, or arising out of any of the following:

(i)             any breach of or inaccuracy in, as of the date hereof, a representation or warranty of Parent, Merger Sub or Sub LLC set forth in this Agreement, without giving effect to any qualifications based on the word “material” or similar phrases (including “Parent Material Adverse Effect”) limiting the scope of such representation or warranty; and

(ii)          any failure by Parent, Merger Sub or Sub LLC to perform or comply with any of its covenants or agreements set forth in this Agreement.

5.4                               Limitations.

(a)                                 Except in the case of fraud and indemnification claims for breaches of or inaccuracies in the Company Fundamental Representations, the Parent Indemnified Parties, as a group, may not recover any Losses pursuant to an indemnification claim under Section 5.2(a)(i) and Section 5.2(a)(ii) unless and until the Parent Indemnified Parties, as a group, shall have paid at least $400,000 in Losses in the aggregate (the “Threshold Amount”), in which case the Parent Indemnified Parties shall be entitled to recover all such Losses, including such amounts as comprised any portion of such Threshold Amount; provided, however, that no indemnification claim under Section 5.2(a)(i) or Section 5.2(a)(ii) asserting Losses (including any Losses arising out of the same or any series of related facts and circumstances) in an amount equal to or less than $25,000 will count toward the calculation of the Threshold Amount.  For the avoidance of doubt, the Threshold Amount shall not apply to indemnification claims under clause (iii), (iv), or (v) of Section 5.2.

(b)                                 Except in the case of fraud or indemnification claims for breaches of or inaccuracies in the Company Fundamental Representations, the Parent Indemnified Parties’ sole and exclusive source of recovery for indemnification claims under Section 5.2(a)(i), Section 5.2(a)(ii) and Section 5.2(a)(iii) shall be recourse against the Escrow Shares, as set forth in Sections 5.5(b) through (d).

(c)                                  In the case of any claim of fraud or indemnification claim under Section 5.2(a) that is not limited to recourse against the Escrow Shares, subject to Section 5.5(a), the Parent Indemnified Parties shall be entitled to bring indemnification claims against the Company Holders for the portion of any Loss for which indemnification is not satisfied by the Escrow Shares (an “Excess Loss”), and each Company Holder shall be liable for their Pro Rata Portion of the Excess Losses (including, for the avoidance of doubt, subject to Section 5.5(a), paying to Parent an amount in cash equal to such Company Holder’s Pro Rata Portion of the Excess Loss), in respect of such indemnification claim; provided, however, that liability of a Company Holder for all claims of fraud and indemnification claims under Section 5.2(a) shall be limited, in the aggregate, to the aggregate value of the Parent Payment Shares actually received by such Company Holder pursuant to Section 1.6, including the Escrow Shares (it being understood that, for these purposes, each Parent Preferred Stock Payment Share shall be valued at the Parent Convertible Preferred Stock Liquidation Preference and each Parent Common Stock Payment Share shall be valued at the Closing Per Common Share Value); provided, further, however, that that the foregoing shall not limit the liability of a Company Holder who has committed fraud with respect to such fraud.

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(d)                                 Except in the case of fraud and indemnification claims for breaches of or inaccuracies in the Parent Fundamental Representations, the Securityholder Indemnified Parties, as a group, may not recover any Losses pursuant to an indemnification claim under Section 5.3 unless and until the Securityholder Indemnified Parties, as a group, shall have paid Losses in the aggregate that exceed the Threshold Amount, in which case the Securityholder Indemnified Parties shall be entitled to recover all such Losses, including such amounts as comprised any portion of such Threshold Amount; provided, however, that no indemnification claim asserting Losses (including any Losses arising out of the same or any series of related facts and circumstances) in an amount equal to or less than $25,000 will count toward the calculation of the Threshold Amount.

(e)                                  Except in the case of fraud or indemnification claims for breaches of or inaccuracies in the Parent Fundamental Representations, the liability of Parent for indemnification claims under Section 5.3 shall be limited, in the aggregate, to $6,000,000.

(f)                                   In the case of indemnification claims for breaches of or inaccuracies in the Parent Fundamental Representations, the aggregate liability of Parent for such indemnification claims shall be limited to the aggregate value of the Parent Payment Shares actually received by the Company Holders pursuant to Section 1.6, including the Escrow Shares (it being understood that, for these purposes, each Parent Preferred Stock Payment Share shall be valued at the Parent Convertible Preferred Stock Liquidation Preference and each Parent Common Stock Payment Share shall be valued at the Closing Per Common Share Value).

(g)                                  Except for a claim of fraud, (i) no Indemnified Party shall be required to show reliance on any representation, warranty, certificate or other agreement in order for such Indemnified Party to be entitled to indemnification, compensation or reimbursement hereunder, and (ii) no Indemnified Party shall be permitted to assert, and no Indemnifying Party shall have any liability for, any indemnification claim asserting Losses (including any Losses arising out of the same or any series of related facts and circumstances) in an amount equal to or less than $25,000.

(h)                                 No Company Holder shall have any right of contribution, indemnification or right of advancement from the Surviving Corporation, Surviving LLC or Parent with respect to any Loss for which the Parent Indemnified Parties is entitled to indemnification under Section 5.2(a).

(i)                                     The obligations of the Indemnifying Parties to indemnify any Indemnified Party for any Loss hereunder shall be reduced by the amount of any insurance proceeds, indemnification payments, contribution payments, reimbursements or other payments actually received by the Indemnified Parties in respect of such Losses or any of the events or circumstances giving rise to such Losses, in each case, net of any costs or expenses incurred in obtaining such insurance, indemnification, contribution or reimbursement, including any increases in insurance premiums resulting from any insurance recovery), and, to the extent any such amounts are received after satisfaction of an indemnification claim against the Indemnifying Parties (or the Escrow Fund), the Indemnified Party shall promptly pay or cause to be paid to the Indemnifying Parties the aggregate amount so received (each Company Holder being entitled to their Pro Rata Portion of such amounts).

(j)                                    Notwithstanding anything to the contrary set forth herein, no Indemnified Party shall be entitled to indemnification for any Losses based on or arising out of the same set of facts or circumstances under more than one claim for indemnification hereunder, regardless of whether such facts or circumstances would give rise to multiple claims for indemnification hereunder.

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5.5                               Order of Recovery; Release of Escrow Fund.

(a)                                 Subject to the other terms of this Article V, including the limitations of Section 5.4, all claims for indemnification by Parent Indemnified Parties under Section 5.2 shall be satisfied first, out of the Escrow Shares by causing the Escrow Agent to transfer to Parent an appropriate number of shares of Escrow Shares (or any Parent Common Shares resulting from any conversion thereof) determined based on the Parent Convertible Preferred Stock Liquidation Preference (or, in the case of Parent Common Shares resulting from any conversion thereof, that amount equal to (i) the Parent Convertible Preferred Stock Liquidation Preference, divided by (ii) one hundred (100)), second, by causing the Company Holders to forfeit to Parent an appropriate number of Parent Preferred Stock Payment Shares (or any Parent Common Shares resulting from any conversion thereof) determined based on the Parent Convertible Preferred Stock Liquidation Preference (or, in the case of Parent Common Shares resulting from any conversion thereof, that amount equal to (i) the Parent Convertible Preferred Stock Liquidation Preference, divided by (ii) one hundred (100)), third, by causing the Company Holders to forfeit to Parent an appropriate number of Parent Common Stock Payment Shares determined based upon the Closing Per Common Share Value, and fourth, by seeking a cash payment from the Company Holders.

(b)                                 On the date that is twelve (12) months following the Closing Date (the “First Escrow Expiration Date”), the Company Holders shall be entitled to receive 50% of the Escrow Shares then-held by the Escrow Agent; provided, however, that the Escrow Agent shall retain, and not release, a sufficient number of Escrow Shares necessary to satisfy any unresolved claims for indemnification made by Parent Indemnified Parties prior to the First Escrow Expiration Date determined based upon the Parent Convertible Preferred Stock Liquidation Preference (the “First Expiration Date Distribution Amount”).  On or before the date that is ten (10) Business Days after the First Escrow Expiration Date, Parent and the Company Holder Committee shall deliver a joint written instruction to the Escrow Agent to release to the Company Holders that number of Escrow Shares equal to the First Expiration Date Distribution Amount, with each Company Holder to receive his, her, or its Pro Rata Portion of the First Expiration Date Distribution Amount.

(c)                                  On the date that is eighteen (18) months following the Closing Date (the “Second Escrow Expiration Date”), the Company Holders shall be entitled to receive all Escrow Shares then-remaining in the Escrow Fund; provided, however, that the Escrow Agent shall retain, and not release, a sufficient number of Escrow Shares necessary to satisfy any unresolved claims for indemnification made by Parent Indemnified Parties prior to the Second Escrow Expiration Date determined based upon the Parent Convertible Preferred Stock Liquidation Preference (the “Second Expiration Date Distribution Amount”). On or before the date that is ten (10) Business Days after the Second Escrow Expiration Date, Parent and the Company Holder Committee shall deliver a joint written instruction to the Escrow Agent to release to the Company Holders that number of Escrow Shares equal to the Second Expiration Date Distribution Amount, with each Company Holder to receive his, her, or its Pro Rata Portion of the Second Expiration Date Distribution Amount.

(d)                                 Once all claims for indemnification made by Parent Indemnified Parties shall have been resolved and the appropriate amount of Escrow Shares shall have been delivered to Parent, the Company Holders shall be entitled to all Escrow Shares then-remaining in the Escrow Fund (the “Final Distribution Amount”). On or before the date that is ten (10) Business Days after such final resolution and delivery, Parent and the Company Holder Committee shall deliver a joint written instruction to the Escrow Agent to release to the Company Holders that number of Escrow Shares equal to the Final Distribution Amount, with each Company Holder to receive his, her, or its Pro Rata Portion of the Final Distribution Amount.

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5.6                               Indemnification Claim Procedures.

(a)                                 Subject to the limitations set forth in this Article V, if an Indemnified Party wishes to make an indemnification claim under this Article V, such Indemnified Party shall deliver a written notice (an “Indemnification Claim Notice”) to the Indemnifying Party and the Company Holder Committee (with a copy to the Escrow Agent) (i) stating that an Indemnified Party has paid Losses, and (ii) specifying in reasonable detail the individual items of such Losses, the date each such item paid and, if applicable, the nature of the misrepresentation, breach of warranty or covenant to which such item is related.  Indemnified Party may update an Indemnification Claim Notice from time to time to reflect any new information discovered with respect to the claim set forth in such Indemnification Claim Notice.

(b)                                 If the Indemnifying Party or, if applicable, the Company Holder Committee, shall not object in writing within the 30-day period after receipt of an Indemnification Claim Notice by delivery of a written notice of objection containing a reasonably detailed description of the facts and circumstances supporting an objection to the applicable indemnification claim (an “Indemnification Claim Objection Notice”), such failure to so object shall be an irrevocable acknowledgment by the Indemnifying Party that the Indemnified Party is entitled to the full amount of the claim for Losses set forth in such Indemnification Claim Notice.

(c)                                  In the event that the Indemnifying Party or, if applicable, the Company Holder Committee, shall deliver an Indemnification Claim Objection Notice in accordance with Section 5.6(b) within thirty (30) days after delivery of such Indemnification Claim Notice, the Indemnifying Party or, if applicable, the Company Holder Committee, and Indemnified Party shall attempt in good faith to agree upon the rights of the respective parties with respect to each of such claims.  If Indemnifying Party or, if applicable, the Company Holder Committee, and Indemnified Party should so agree, a memorandum setting forth such agreement shall be prepared and signed by both parties and, in the case of an indemnification claim to be recovered from the Escrow Shares, shall be furnished to the Escrow Agent along with a joint written instruction to release to the Indemnified Party that number of Escrow Shares set forth in such signed memorandum.  The Escrow Agent shall be entitled to rely on any such memorandum and joint written instruction and make distributions of the Escrow Shares in accordance with the terms thereof.

(d)                                 If no such agreement can be reached after good faith negotiation and prior to thirty (30) days after delivery of an Indemnification Claim Objection Notice, either Parent or the Company Holder Committee may commence litigation in accordance with the provisions of Section 6.12 and Section 6.13.

5.7                               Third Party Claims.

(a)                                 In the event Parent becomes aware of a third party claim (a “Third Party Claim”) which Parent reasonably believes may result in a demand for indemnification pursuant to this Article V, Parent shall notify the Company Holder Committee of such claim, and the Company Holder Committee shall have the right to defend against the Third Party Claim provided that (i) the Company Holder Committee notifies Parent in writing within 15 days after Parent has given notice of the Third Party Claim that Indemnifying Parties will indemnify Parent Indemnified Parties from and against the entirety of any Losses the Parent Indemnified Parties may pay resulting from, arising out of, relating to, in the nature of or caused by the Third Party Claim, (ii) the Third Party Claim involves only money damages and does not seek an injunction or other equitable relief, and (iii) the Company Holder Committee conducts the defense of the Third Party Claim actively and diligently.

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(b)                                 So long as the Company Holder Committee is conducting the defense of the Third Party Claim in accordance with Section 5.7(a), the Company Holder Committee will (A) keep Parent apprised of all material developments, including settlement offers, with respect to the Third Party Claim and permit Parent Indemnified Parties to participate (at their sole cost and expense) in the defense of the Third Party Claim, (B) the Indemnifying Parties will not be responsible for any attorney’s fees or other expenses paid or incurred by the Parent Indemnified Parties regarding the Third Party Claim, and (C) the Company Holder Committee shall have the right to settle such Third Party Claim provided the settlement involves only money damages and does not include an injunction or other equitable relief.

(c)                                  If Parent conducts the defense of any such claim, whether by reason that the Company Holder Committee chooses not to conduct the defense of such Third Party Claim or by reason that the Company Holder Committee fails to qualify to conduct such defense in accordance with Section 5.7, Parent shall have the right in its sole discretion to conduct the defense of, and to settle, any such claim; provided, however, that (i) except with the consent of the Company Holder Committee, no settlement of any Third Party Claim with third party claimants shall be determinative of the amount of Losses the Parent Indemnified Parties are entitled to recover pursuant to the indemnification provisions of Article V relating to such matter, and (ii) the Company Holder Committee shall be permitted to participate (at the sole cost and expense of the Company Holders) in the defense of such Third Party Claim and Parent will consult with the Company Holder Committee in respect of all material developments and decisions, including settlement offers, with respect to such Third Party Claim.  In the event that the Company Holder Committee has consented to any such settlement, the Indemnifying Parties shall not have any power or authority to object under any provision of this Article V to the amount of any claim by Parent pursuant to Section 5.7 with respect to such settlement.

5.8                               Sole Remedy.

(a)                                 The indemnification rights set forth in this Article V shall be the sole and exclusive remedy of the Indemnified Parties from and after the Effective Time for any claims arising under, related to, or in connection with this Agreement and the transactions contemplated hereby, including claims of any inaccuracy in or breach of any representation, warranty or covenant in this Agreement; provided, however, that (i) this Section 5.8 shall not be deemed a waiver by any party of any right to specific performance or injunctive relief and (ii) nothing in this Agreement shall limit the liability of an Indemnifying Party (and this Article V shall not be the sole and exclusive remedy in respect of such Indemnifying Party) in connection with claims based on fraud committed by such Indemnifying Party regardless of the capacity in which such Indemnifying Party committed such fraud.

(b)                                 Nothing in this Agreement shall limit the right of any Indemnified Party to pursue remedies under any Related Agreement against the parties thereto.

5.9                               Company Holder Committee.

(a)                                 By virtue of the adoption of this Agreement and approval of the Merger by the Stockholders, each Company Holder shall be deemed to have agreed to appoint HealthCor Partners Fund II, L.P. and Endeavour Medtech GP Limited, as members of the Company Holder Committee, to act as its agent and attorney-in-fact for and on behalf of the Company Holder to give and receive notices and communications in respect of indemnification claims under this Agreement to be recovered against the Escrow Shares, to authorize payment to any Parent Indemnified Party from the Escrow Shares in satisfaction of any indemnification claims hereunder by any Parent Indemnified Party, to object to such payments, to agree to, negotiate, enter into settlements and compromises of, and demand arbitration and comply with orders of courts and awards of arbitrators with respect to any such indemnification claims, to assert, negotiate, enter into settlements and compromises of, and demand arbitration and comply with

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orders of courts and awards of arbitrators with respect to, any such indemnification claim by any Parent Indemnified Party hereunder against any Company Holder or by any such Company Holder against any Parent Indemnified Party or any dispute between any Parent Indemnified Party and any such Company Holder, in each case relating to this Agreement or the Transactions, and to take all other actions that are either (i) necessary or appropriate in the judgment of the Company Holder Committee for the accomplishment of the foregoing or (ii) specifically mandated by the terms of this Agreement. No member of the Company Holder Committee may be removed unless Company Holders representing Pro Rata Portions greater than 66% in the aggregate agree to such removal and to the identity of the substituted member.  Notwithstanding the foregoing, in the event of a resignation of any member of the Company Holder Committee or other vacancy in any position on the Company Holder Committee, such vacancy may be filled by Company Holders representing Pro Rata Portions greater than 50% in the aggregate.  The Company Holder Committee must notify Parent in writing of any change in the composition of the Company Holder Committee at least 30 days prior to such change. No bond shall be required of any member of the Company Holder Committee, and no member of the Company Holder Committee shall receive any compensation for its services.  Notices or communications to or from the Company Holder Committee shall constitute notice to or from the Indemnifying Parties.

(b)                                 No member of the Company Holder Committee shall be liable for any act done or omitted hereunder as a member of the Company Holder Committee while acting in good faith and in the exercise of reasonable judgment.  The Company Holders shall indemnify each member of the Company Holder Committee and hold each member of the Company Holder Committee harmless against any and all Losses arising out of or in connection with the acceptance or administration of the Company Holder Committee’s duties hereunder, including the reasonable fees and expenses of any legal counsel retained by the Company Holder Committee and any amounts required to be paid by the Company Holder Committee to the Escrow Agent pursuant to the Escrow Agreement (“Company Holder Committee Expenses”).

(c)                                  All decisions, acts, consents or instructions of the Company Holder Committee must be approved by a majority of the members of the Company Holder Committee. A decision, act, consent or instruction of the Company Holder Committee, including an amendment, extension or waiver of this Agreement pursuant to Section 6.2 or Section 6.3, shall constitute a decision of the Indemnifying Parties and shall be final, conclusive and binding upon the Indemnifying Parties; and the Escrow Agent and Parent may rely upon any such decision, act, consent or instruction of the Company Holder Committee as being the decision, act, consent or instruction of the Indemnifying Parties.  The Escrow Agent and Parent are hereby relieved from any liability to any person for any acts done by them in accordance with such decision, act, consent or instruction of the Company Holder Committee.

ARTICLE VI
GENERAL PROVISIONS

6.1                               Certain Interpretations. When a reference is made in this Agreement to an Annex, Exhibit or Schedule, such reference shall be to an Annex, Schedule or Exhibit to this Agreement unless otherwise indicated.  When a reference is made in this Agreement to an Article or a Section, such reference shall be to an Article or a Section of this Agreement unless otherwise indicated.  The word “material” when used in Article III of this Agreement to qualify the representations and warranties of Parent, Merger Sub and Sub LLC shall mean material to the Parent Group taken as a whole. The words “include,” “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation.”  The words “hereof,” “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  The word “or” is used in the inclusive sense of “and/or.”  The terms “or,” “any” and “either” are not exclusive.  When used herein, the words “to the extent” shall be deemed to be followed by the

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words “but only to the extent.”  “Writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form.  References to any statute, rule or regulation shall be deemed to refer to such statute, rule or regulation as amended or supplemented from time to time, including through the promulgation of applicable rules or regulations.  References to any Contract are to that Contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof; provided that with respect to any Contract listed on any Schedules hereto, all such amendments, modifications or supplements must also be listed in the appropriate Schedule.  References to any Person include the successors and permitted assignees of that Person.  References from or through any date mean, unless otherwise specified, from and including or through and including, respectively.  References to one gender include all genders.  All references in this Agreement to “$” or dollars shall mean U.S. denominated dollars.  The table of contents and headings set forth in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

6.2                               Amendment.  This Agreement may be amended by the parties hereto at any time by execution of an instrument in writing signed on behalf of the party against whom enforcement is sought.  For purposes of this Section 6.2, the Company Holders are deemed to have agreed that any amendment of this Agreement signed by the Company Holder Committee shall be binding upon and effective against the Company Holders whether or not they have signed such amendment.

6.3                               Waiver.  Parent, on the one hand, and the Company (if prior to the Closing) and the Company Holder Committee, on the other hand, may, to the extent permitted under any applicable Legal Requirements, (a) extend the time for the performance of any of the obligations of the other party hereto, (b) waive any inaccuracies in the representations and warranties made to such party set forth herein or in any document delivered pursuant hereto, and (c) waive compliance with any of the covenants, agreements or conditions for the benefit of such party set forth herein.  Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party.  For purposes of this Section 6.3, the Company Holders are deemed to have agreed that any extension or waiver signed by the Company Holder Committee shall be binding upon and effective against all Company Holders whether or not they have signed such extension or waiver.

6.4                               Assignment.  This Agreement shall not be assigned by operation of law or otherwise, except that Parent may assign its rights and delegate its obligations hereunder to its Affiliates as long as Parent remains ultimately liable for all of Parent’s obligations hereunder.

6.5                               Notices.  All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial messenger or courier service, or mailed by registered or certified mail (return receipt requested) or sent via e-mail to the parties at the following addresses (or at such other address for a party as shall be specified by like notice or, if specifically provided for elsewhere in this Agreement, by email); provided, however, that notices sent by mail will not be deemed given until received:

(a)                                 if to Parent, Merger Sub or Sub LLC, to:

EnteroMedics Inc.
                                                2800 Patton Road

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St. Paul, Minnesota 55113
Attention: Dan W. Gladney
Email: ***@***

with a copy (which shall not constitute notice) to:

Fox Rothschild LLP
                                                                                                                                                222 South Ninth Street, Suite 2000
                                                                                                                                                Minneapolis, Minnesota 55402
                                                                                                                                                Attention:  Bruce A. Machmeier and Brett R. Hanson
                                                                                                                                                Email: ***@***

             ***@***

(b)                                 if to the Company Holder Committee, to:

HealthCor Partners Fund II, L.P.
c/o HealthCor Partners Management, LP
Attn:  Mike Mashaal
152 West 57th Street, 43rd Floor
New York, New York  10019
Email: ***@***

and

Endeavour Medtech GP Limited
c/o Ipes (Guernsey) Limited

Attn:  James Nicolle
1 Royal Plaza, Royal Avenue
St. Peter Port
Guernsey, GY1 2HL

Channel Islands

with a copy (which shall not constitute notice) to:

Endeavour Vision S.A.
Attn: Bernard Vogel
6 rue Croix d’Or
1204 Geneva
Switzerland
Email: ***@***
            ***@***
            ***@***

with a copy (which shall not constitute notice) to:

Wilson Sonsini Goodrich & Rosati

One Market Plaza

Spear Tower, Suite 3300

San Francisco, California 94105

Attention: Robert T. Ishii
Email: ***@***

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6.6                               Confidentiality.  Each of the parties hereto hereby agrees that the information obtained pursuant to the negotiation and execution of this Agreement or the effectuation of the Transactions, shall be governed by the terms of the confidentiality agreement dated as of July 22, 2017, between the Company and Parent.

6.7                               Public Disclosure.  Except as required by Legal Requirements, neither the Company nor any of its Representatives shall issue any statement or communication to any third party (other than its agents that are bound by confidentiality restrictions) regarding the subject matter of this Agreement or the Transactions, including, if applicable, the termination of this Agreement and the reasons therefor, without the consent of Parent, which consent shall not be unreasonably withheld.

6.8                               Entire Agreement.  This Agreement, Annex A hereto, the Exhibits and Schedules hereto, the Disclosure Schedule, the Related Agreements, and the documents and instruments and other agreements among the parties hereto referenced herein constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings both written and oral, among the parties with respect to the subject matter hereof, and are not intended to confer upon any other person any rights or remedies hereunder other than as expressly set forth in Sections 4.7 and 6.9, and Article V.

6.9                               No Third Party Beneficiaries.  Nothing in this Agreement is intended to, or shall be construed to, confer upon any other person any rights or remedies hereunder, except for (a) the Indemnified Parties under Article V, and (b) the D&O Indemnified Parties under Section 4.7, and such provisions are intended to be for the benefit of, and will be enforceable by, each of the Indemnified Parties and D&O Indemnified Parties, as applicable, each of whom is an express third party beneficiary thereof and shall be entitled to enforce the covenants contained therein.

6.10                        Specific Performance and Other Remedies.

(a)                                 The parties to this Agreement agree that, in the event of any breach or threatened breach by the other party or parties hereto, Parent, any Stockholder or the Company Holder Committee of any covenant, obligation or other agreement set forth in this Agreement, (i) each party shall be entitled, without any proof of actual damages (and in addition to any other remedy that may be available to it), to a decree or order of specific performance or mandamus to enforce the observance and performance of such covenant, obligation or other agreement and an injunction preventing or restraining such breach or threatened breach, and (ii) no party hereto shall be required to provide or post any bond or other security or collateral in connection with any such decree, order or injunction or in connection with any related action or legal proceeding.

(b)                                 Any and all remedies herein expressly conferred herein upon a party hereto shall be deemed to be cumulative with, and not exclusive of, any other remedy conferred hereby, or by law or in equity upon such party, and the exercise by a party hereto of any one remedy will not preclude the exercise of any other remedy.

(c)                                  The liability of any Person under Article V will be in addition to, and not exclusive of, any other liability that such Person may have at law or in equity based on such Person’s fraudulent acts or omissions.  Notwithstanding anything to the contrary set forth in this Agreement, none of the provisions set forth in this Agreement, including the provisions set forth in Article V, shall be deemed a waiver by any party to this Agreement of any right or remedy which such party may have at law or in equity based on any other Person’s fraudulent acts or omissions, nor will any such provisions limit, or be deemed to limit (i) the amounts of recovery sought or awarded in any such claim for fraud, (ii) the

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time period during which a claim for fraud may be brought or (iii) the recourse which any such party may seek against another Person with respect to a claim for fraud.

6.11                        Severability.  In the event that any provision of this Agreement or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto.  The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

6.12                        Governing Law.  This Agreement and all claims, causes of action (whether in contract, tort or statute) or other matter that may be based upon, arise out of, or relate to this Agreement, or the execution or performance of this Agreement (including any claim or cause of action based upon, arising out of, or related to any representation or warranty made in or in connection with this Agreement) the Mergers or the other Transactions or matters contemplated herein (“Relevant Matters”), shall be governed by, construed and enforced in accordance with the internal laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof, including its statute of limitations.

6.13                        Exclusive Jurisdiction.  Each of the parties hereto irrevocably consents to the exclusive jurisdiction and venue of the Delaware Court of Chancery in connection with any and all Relevant Matters (or, only if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any federal court within the state of Delaware).  Each party agrees not to commence any legal proceedings related to any Relevant Matter except in the Delaware Court of Chancery (or, only if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, in any federal court within the state of Delaware).  By execution and delivery of this Agreement, each party hereto and the Stockholders irrevocably and unconditionally submits to the exclusive jurisdiction of such courts and to the appellate courts therefrom solely for the purposes of disputes in connection with Relevant Matters and not as a general submission to such jurisdiction or with respect to any other dispute, matter or claim whatsoever.  The parties hereto and the Stockholders irrevocably consent to the service of process out of any of the aforementioned courts in any such action or proceeding by the delivery of copies thereof by overnight courier to the address for such party to which notices are deliverable hereunder.  Any such service of process shall be effective upon delivery.  Nothing herein shall affect the right to serve process in any other manner permitted by applicable law.  The parties hereto and the Company Holders hereby waive any right to stay or dismiss any action or proceeding in connection with any Relevant Matter brought before the foregoing courts on the basis of (i) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason, or that it or any of its property is immune from the above-described legal process, (ii) that such action or proceeding is brought in an inconvenient forum, that venue for the action or proceeding is improper or that this Agreement may not be enforced in or by such courts, or (iii) any other defense that would hinder or delay the levy, execution or collection of any amount to which any party hereto is entitled pursuant to any final judgment of any court having jurisdiction.

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6.14                        Counterparts.  This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.  The exchange of a fully executed Agreement (in counterparts or otherwise) by electronic transmission in .PDF format or by facsimile shall be sufficient to bind the parties to the terms and conditions of this Agreement.

6.15                        Legal Representation.

(a)                                 Wilson Sonsini Goodrich & Rosati (“WSGR”) has acted as counsel for the Company Holders, the Company (prior to and including the Effective Time) and the Company Holder Committee (collectively, the “Company Parties”) in connection with this Agreement, the Related Agreements, and the transactions contemplated hereby and thereby (the “Acquisition Engagement”) and, in that connection, not as counsel for any other Person, including, Parent, Merger Sub, Sub LLC, the Surviving Corporation, the Surviving LLC or any of their respective Affiliates (the “Parent Parties”).  Only the Company Parties shall be considered clients of WSGR with respect to the Acquisition Engagement.  If the Company Holder Committee so desires, WSGR shall be permitted, without the need for any future waiver or consent, to represent any of the Company Holders or the Company Holder Committee after the Closing in connection with any matter related to this Agreement, the Related Agreements, any other transaction documents, and the transactions or any matter contemplated hereby and thereby or any disagreement or dispute relating to any of the foregoing, and may, in connection therewith, represent the Representatives and Affiliates of the Company Holders and the Company Holder Committee, in any of the foregoing cases including, without limitation, in any action, dispute, litigation or other adversary proceeding against, with or involving the Parent Parties.

(b)                                 To the extent that communications between a Company Party, on the one hand, and WSGR, on the other hand, relate to the Acquisition Engagement, such communication shall be deemed to be attorney-client confidences that belong solely to the Company Holder Committee, for and on behalf of the Company Holders. Neither Parent nor any of the other Parent Parties shall have access to (and Parent and the Surviving Corporation hereby waives, on behalf of each Parent Party, any right of access it may otherwise have with respect to) any such communications or the files or work product of WSGR, to the extent that they relate to the Acquisition Engagement, whether or not the Closing occurs. Without limiting the generality of the foregoing, Parent and the Surviving Corporation acknowledges and agrees, for itself and on behalf of the Parent Parties, upon and after the Closing: (i) the Company Holder Committee, for and on behalf of the Company Holders, and WSGR shall be the sole holders of the attorney-client privilege of the Company Parties with respect to the Acquisition Engagement, and neither Parent nor any of the other Parent Parties shall be a holder thereof; (ii) to the extent that files or work product of WSGR in respect of the Acquisition Engagement constitute property of a client of WSGR, only the Company Holder Committee, for and on behalf of the Company Holders, shall hold such property rights of any Company Parties and have the right to waive or modify such property rights; and (iii) WSGR shall have no duty whatsoever to reveal or disclose any such attorney-client communications, files or work product to Parent, the Surviving Corporation or any of the Parent Parties, by reason of any attorney-client relationship between WSGR and the Company Parties or otherwise; provided that, to the extent any communication is both related and unrelated to the Acquisition Engagement, WSGR shall provide (and the Company Holder Committee, for and on behalf of the other Company Parties, shall instruct WSGR to provide) appropriately redacted versions of such communications, files or work product to Parent or the Parent Parties.  Notwithstanding the foregoing, in the event that a dispute arises between any of the Parent Parties, on the one hand, and any of the Company Parties, on the other hand, concerning the matters contemplated in this Agreement, the Related Agreements, or any other transaction document, Parent and the Surviving Corporation, for itself and on behalf of the other Parent Parties and their respective Affiliates, agrees that the Parent Parties and their respective Affiliates shall not offer into

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evidence or otherwise attempt to use or assert the foregoing attorney-client communications, files or work product against the Company Holder Committee or the Company Holders.

(c)                                  Without limitation of the foregoing, any other communication between a Company Party, on the one hand, and any Representative of a Company Party (other than WSGR) or any other third person (other than a Parent Party and its Affiliates), prior to the Closing and relating to the Acquisition Engagement shall be deemed confidential information of the Company Holders, and from and after the Closing, such communications shall be deemed to be confidential information that belong solely to the Company Holder Committee, for and on behalf of the Company Holders.  Prior to the Closing, the Company shall be entitled to transfer possession of such communications (including any tangible and intangible copies of such communications) to the Company Holder Committee.  Notwithstanding the foregoing, in the event that a dispute arises between any of the Parent Parties, on the one hand, and any of the Company Parties, on the other hand, concerning the matters contemplated in this Agreement, the Related Agreements, or any other transaction document, Parent and the Surviving Corporation, for itself and on behalf of the other Parent Parties and their respective Affiliates, agrees that the Parent Parties and their respective Affiliates shall not offer into evidence or otherwise attempt to use or assert the foregoing communications against the Company Holder Committee or the Company Holders.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, Parent, Merger Sub, Sub LLC, the Company, and the Company Holder Committee have caused this Agreement and Plan of Merger to be executed as of the date first written above.

[Signature Page to Agreement and Plan of Merger]

IN WITNESS WHEREOF, Parent, Merger Sub, Sub LLC, the Company, and the Company Holder Committee have caused this Agreement and Plan of Merger to be executed as of the date first written above.

[Signature Page to Agreement and Plan of Merger]

IN WITNESS WHEREOF, Parent, Merger Sub, Sub LLC, the Company, and the Company Holder Committee have caused this Agreement and Plan of Merger to be executed as of the date first written above.

[Signature Page to Agreement and Plan of Merger]

IN WITNESS WHEREOF, Parent, Merger Sub, Sub LLC, the Company, and the Company Holder Committee have caused this Agreement and Plan of Merger to be executed as of the date first written above.

[Signature Page to Agreement and Plan of Merger]

ANNEX A

CERTAIN DEFINED TERMS

“2005 Plan” shall mean the Company’s 2005 Stock Incentive Plan, as amended.

“2015 Plan” shall mean the Company’s 2015 Stock Incentive Plan, as amended.

“Action” shall mean any action, suit, claim, complaint, litigation, audit, proceeding, arbitration or other similar action or dispute.

“Affiliate” of any Person shall mean another Person that directly or indirectly through one of more intermediaries controls, is controlled by or is under common control with, such first Person.

“Business Day” shall mean each day that is not a Saturday, Sunday or other day on which banking institutions located in Minneapolis, Minnesota or San Francisco, California are authorized or obligated by law or executive order to close.

“Carveout Participant” shall mean an Employee of the Company designated by the Board of Directors of the Company to receive a Carveout Payment and who is set forth on the Spreadsheet.

“Certificate of Designation” means the Certificate of Designation of Preferences, Rights and Limitations of Parent Convertible Preferred Stock in the form attached hereto as Exhibit C.

“Closing Per Common Share Value” means $1.8619.

“COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Company Capital Stock” shall mean the Company Common Stock, the Company Preferred Stock and any other shares of capital stock, if any, of the Company, taken together.

“Company Common Stock” shall mean shares of common stock, par value $0.0001 per share, of the Company.

“Company Convertible Notes” shall mean those Subordinated Convertible Promissory Notes issued by the Company pursuant to that certain Note Purchase Agreement, dated as of January 31, 2017, by and among the Company and each of the investors party thereto.

“Company Employee Plan” shall mean any material plan, program, policy, practice, contract, agreement or other arrangement providing for compensation, severance, change of control, termination pay, deferred compensation, performance awards, equity or equity-related awards, welfare benefits, health benefits or medical insurance, retirement benefits, fringe benefits or other employee benefits or remuneration of any kind, whether written, unwritten or otherwise, funded or unfunded, including each “employee benefit plan,” within the meaning of Section 3(3) of ERISA (each, an “Employee Plan”) which is maintained, contributed to or required to be contributed to by the Company or any ERISA Affiliate for the benefit of any Employee, or with respect to which the Company or any ERISA Affiliate has or may have any liability or obligation, including any International Employee Plan.

“Company Fundamental Representations” shall mean the representations and warranties set forth in Section 2.1 (Organization and Good Standing), Section 2.2 (Authority and Enforceability), Section 2.4(a) (No Conflicts — Charter Documents), and Section 2.5 (Company Capital Structure).

“Company Holders” shall mean the Stockholders and holders of Company Convertible Notes.

“Company IP” shall mean any and all Intellectual Property Rights and Intellectual Property that are owned by or exclusively licensed by, or purported to be owned by or exclusively licensed by, the Company.

“Company IP Contracts” shall mean the Out-Licenses and the In-Licenses.

“Company Material Adverse Effect” shall mean any change, event, violation, inaccuracy, circumstance or effect (any such item, an “Effect”), individually or when taken together with all other Effects that have occurred prior to the date of determination of the occurrence of the Company Material Adverse Effect, that is or is reasonably likely to (i) materially impede the authority of the Company to consummate the Transactions in accordance with the terms hereof and Legal Requirements, or (ii) be materially adverse to the business, assets (including intangible assets), liabilities, capitalization, financial condition or results of operations of the Company taken as a whole, provided, however, that in no event shall any Effect resulting from any of the following, either alone or in combination, be taken into account in determining whether there has been a Company Material Adverse Effect under either clause (i) or clause (ii): (a) any change in the general economic or geopolitical conditions or capital or financial markets generally, (b) any change in economic conditions or other developments generally affecting industries in which the Company conducts business, (c) any change in Legal Requirements, (d) any change in GAAP, (e) the failure of the Company to meet any financial forecast, projection, estimate, prediction or models (but not the underlying cause of such failure), (f) any Effect resulting from the announcement or pendency of the Merger or any action taken or not taken as expressly contemplated by this Agreement or any Related Agreement, or (g) conditions caused by any outbreak, escalations, hostilities, acts of terrorism, war (whether or not declared), calamity, or act of God, unless, in the case of clauses (a) through (d) and clause (g), such Effect disproportionately affects the Company relative to other companies in the Company’s industry.

“Company Options” shall mean all issued and outstanding options to purchase or otherwise acquire Company Common Stock (whether or not vested) held by any Person.

“Company Preferred Stock” shall mean the Company Series D Preferred Stock, the Company Series C Preferred Stock, the Company Series B Preferred Stock, the Company Series A Preferred Stock, and the Company Series S Preferred Stock, taken together.

“Company Product” shall mean each product or service,  including the Company’s saline-filled gastric balloon products, owned, made, marketed, distributed, made available, imported, licensed or sold by or for the Company as of the Closing or during the period of two (2) years immediately prior to the Closing, and any product or service currently under development by or for the Company.

“Company Warrants” shall mean all issued and outstanding warrants to purchase or otherwise acquire Company Capital Stock (whether or not vested) held by any Person.

“Contract” shall mean any contract, mortgage, indenture, lease, license, covenant, plan, insurance policy or other agreement, instrument, arrangement, understanding or commitment, Permit, concession, franchise or license.

“Delaware Law” shall mean the General Corporation Law of the State of Delaware.

“DOL” shall mean the United States Department of Labor.

“Employee” shall mean any current or former employee of the Company or Parent Group, as applicable, or any of their respective ERISA Affiliates.

“Employee Agreement” shall mean each material management, employment, severance, separation, settlement, consulting, contractor, relocation, change of control, retention, bonus, repatriation, expatriation, loan, visa, work permit or other agreement, or contract (including, any offer letter or any agreement providing for acceleration of Company Options or any other agreement providing for compensation or benefits) between the Company or any ERISA Affiliate, as applicable, and any Employee.

“Environment” shall mean the indoor and outdoor environment including ambient air, surface water, groundwater, land surface or subsurface strata, and natural resources.

“Environmental Legal Requirement” shall mean any Legal Requirement pertaining to pollution, protection of human health or the Environment, or which regulates Hazardous Materials and Hazardous Materials Activities.

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

“ERISA Affiliate” shall mean any other Person under common control with the Company or Parent, as applicable, or that, together with the Company or Parent, as applicable, could be deemed a “single employer” within the meaning of Section 4001(b)(1) of ERISA or within the meaning of Section 414(b), (c), (m) or (o) of the Code, and the regulations issued thereunder.

“Escrow Agent” shall mean the escrow agent designated under the Escrow Agreement or another institution acceptable to Parent and the Company Holder Committee, and any successor escrow agent appointed pursuant to the Escrow Agreement.

“Escrow Agreement” shall mean the Escrow Agreement executed and delivered concurrently herewith and attached hereto as Exhibit D.

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

“Governmental Entity” shall mean any court, administrative agency or commission or other federal, state, county, local or other foreign governmental authority, instrumentality, agency or commission.

“Hazardous Material” shall mean any substance that is regulated by any applicable Environmental Legal Requirement as radioactive, toxic, or hazardous including PCBs, asbestos, petroleum, and urea-formaldehyde and all substances listed as hazardous substances pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, or defined as a hazardous waste pursuant to the United States Resource Conservation and Recovery Act of 1976, as amended, and the regulations promulgated pursuant to said laws.

“HIPAA” shall mean the Health Insurance Portability and Accountability Act of 1996, as amended.

“Indebtedness” of any Person shall mean, without duplication:  (i) all liabilities of such Person for borrowed money, whether current or funded, secured or unsecured, all obligations evidenced by bonds, debentures, notes or similar instruments, and all liabilities in respect of mandatorily redeemable or purchasable share capital or securities convertible into share capital; (ii) all liabilities of such Person for the deferred purchase price of property or services, which are required to be classified and accounted for under GAAP as liabilities; (iii) all liabilities of such Person in respect of any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which are, and to the extent, required to be classified and accounted for under GAAP as capital leases; (iv) all liabilities of such Person evidenced by any letter of credit or similar credit transaction entered into for the purpose of securing any lease deposit; (v) all liabilities of such Person for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction securing obligations of a type described in clauses (i), (ii) or (iii) above to the extent of the obligation secured; (vi) all guarantees by such Person of any liabilities of a third party of a nature similar to the types of liabilities described in clauses (i), (ii), (iii) or (v) above, to the extent of the obligation guaranteed; and (vii) all interest, fees, change of control payments, prepayment premiums and other expenses owed with respect to the indebtedness referred to in clauses (i) through (vi) above.

“Indemnified Party” shall mean, as applicable, the Securityholder Indemnified Parties and the Parent Indemnified Parties, respectively, with respect to their indemnification rights under Article V.

“Indemnifying Party” shall mean, as applicable, the Company Holders and Parent, respectively, with respect to their indemnification obligations under Article V.

“Intellectual Property” shall mean databases, data collections, diagrams, formulae, inventions (whether or not patentable), logos, designs, marks (including brand names, product names, logos, and slogans), methods, processes, proprietary information, protocols, schematics, specifications, software, techniques, URLs, web sites, works of authorship (including written, audio and visual materials) and other forms of technology (whether or not embodied in any tangible form and including all tangible embodiments of the foregoing).

“Intellectual Property Rights” shall mean all rights of the following types, which may exist or be created under the laws of any jurisdiction in the world whether registered or unregistered:  (i) rights associated with works of authorship, including exclusive exploitation rights, copyrights, copyright registrations and applications therefor, and moral rights (“Copyrights”); (ii) rights in trademarks, business names, trade names, logos, common law trademarks and service marks and trademark and service mark registrations, and related goodwill and applications therefor (“Trademarks”); (iii) trade secret rights and all other rights in confidential business or technical information (“Trade Secrets”); (iv) patent, invention disclosures, industrial design property rights, and applications therefor (including patents issuing on such applications), together with all continuations, continuations-in-part, reissues, renewals, reexaminations, provisionals, divisionals, substitutions, extensions or revisions thereof, any foreign counterparts or equivalents of any of the foregoing and any other patents, applications or extensions that claim priority to or through any of the foregoing (“Patents”); (v) any know-how, trade secret, proprietary invention, discovery, data, information, process, method, technique, material, technology, result or other know-how, whether or not patentable, and all other non-public confidential or proprietary information (“Know-How”), (vi) domain names, uniform resource locators, other names and locators associated with the Internet, and applications or registrations therefor (“Domain Names”); (vii) all rights in databases and data collections; (viii) other proprietary rights in Intellectual Property; and (ix) any similar or equivalent rights to any of the foregoing.

“International Employee Plan” shall mean each Company Employee Plan or Employee Agreement that has been adopted or maintained by the Company or any ERISA Affiliate, whether

formally or informally,  or with respect to which the Company or any ERISA Affiliate will or may have any liability, with respect to Employees who perform services outside the United States.

“IRS” shall mean the United States Internal Revenue Service.

“Knowledge” or “Known” shall mean, with respect to the Company, the actual knowledge of Michael Mangano, John Lehmann, M.D., Mary Lou Mooney, Bob Haggerty or Amy Scott, and with respect to Parent, the actual knowledge of Dan W. Gladney, Scott P. Youngstrom, Peter DeLange, Paul Hickey, or Nick Ansari, provided that if any employee that is a direct report of any such person would reasonably be expected to have knowledge of the particular matter subject to the applicable knowledge qualification, such person shall make a reasonable inquiry of such direct report with respect to such matter.

“Legal Requirement” shall mean any applicable U.S. or non-U.S. federal, state, local or other constitution, law, statute, ordinance, rule, regulation, or common law, or any legally binding Order, in any case issued, enacted, adopted, promulgated, implemented or otherwise put into legal effect by or under the authority of any Governmental Entity.

“Licensed IP” shall mean (a) all Intellectual Property Rights and Intellectual Property incorporated into, or used in the development, manufacture or distribution of, the Company Products or Parent Products, as applicable; and (b) all other Intellectual Property Rights and Intellectual Property used or held for use in the conduct of the business of the Company or Parent Group, as applicable, in each case that are not owned by, or purported to be owned by, the Company or Parent Group, as applicable.

“Lien” shall mean any lien, pledge, charge, claim, mortgage, security interest or other similar encumbrance of any kind or character whatsoever, other than, in the case of Intellectual Property or Intellectual Property Rights, non-exclusive licenses and similar rights or authorizations.

“Made Available” shall mean (i) with respect to the Company, that the Company has posted such materials to the virtual data room hosted by ShareFile or otherwise made available to Parent and its representatives during the negotiation of this Agreement, and (ii) with respect to Parent, that Parent has posted such materials to the virtual data room hosted by Intralinks or otherwise made available to the Company and its representatives during the negotiation of this Agreement.

“Optionholder” shall mean any holder of a Company Option immediately prior to the Effective Time.

“Order” shall mean any order, judgment, injunction, ruling, edict, or other decree, whether temporary, preliminary or permanent, enacted, issued, promulgated, enforced or entered by any Governmental Entity or duly appointed arbitrator or panel of arbitrators.

“Parent Convertible Preferred Stock” means Parent’s series C convertible preferred stock, par value $0.01 per share, with the rights, preferences, powers and privileges specified in the Certificate of Designation.

“Parent Common Stock” means Parent’s common stock, par value $0.01 per share.

“Parent Convertible Preferred Stock Liquidation Preference” means, with respect to a share of Parent Convertible Preferred Stock, that amount equal to (i) $274.8774 plus (ii) all accrued but unpaid dividends thereon.

“Parent Employee Plan” shall mean any Employee Plan which is maintained, contributed to or required to be contributed to by Parent or any ERISA Affiliate for the benefit of any Employee, or with respect to which Parent or any ERISA Affiliate has or may have any liability or obligation.

“Parent Fundamental Representations” shall mean the representations and warranties set forth in Section 3.1 (Organization and Good Standing), Section 3.2 (Authority and Enforceability), Section 3.4(a) (No Conflicts — Charter Documents), Section 3.5 (Valid Issuance of Parent Payment Shares), Section 3.6 (Capitalization), and Section 3.8 (Merger Sub; Sub LLC).

“Parent Group” shall mean Parent and each of its Subsidiaries.

“Parent IP” shall mean any and all Intellectual Property Rights and Intellectual Property that are owned by or exclusively licensed by, or purported to be owned by or exclusively licensed by, any member of Parent Group.

“Parent Material Adverse Effect” shall mean any Effect, individually or when taken together with all other Effects that have occurred prior to the date of determination of the occurrence of the Parent Material Adverse Effect, that is or is reasonably likely to (i) materially impede the authority of Parent to consummate the Transactions in accordance with the terms hereof and Legal Requirements, or (ii) be materially adverse to the business, assets (including intangible assets), liabilities, capitalization, financial condition or results of operations of Parent Group taken as a whole, provided, however, that in no event shall any Effect resulting from any of the following, either alone or in combination, be taken into account in determining whether there has been a Parent Material Adverse Effect under either clause (i) or clause (ii): (a) any change in the general economic or geopolitical conditions or capital or financial markets generally, (b) any change in economic conditions or other developments generally affecting industries in which Parent Group conducts business, (c) any change in Legal Requirements, (d) any change in GAAP, (e) the failure of Parent Group to meet any financial forecast, projection, estimate, prediction or models (but not the underlying cause of such failure), (f) any Effect resulting from the announcement or pendency of the Merger or any action taken or not taken as expressly contemplated by this Agreement or any Related Agreement, or (g) conditions caused by any outbreak, escalations, hostilities, acts of terrorism, war (whether or not declared), calamity, or act of God, unless, in the case of clauses (a) through (d) and clause (g), such Effect disproportionately affects Parent Group relative to other companies in Parent Group’s industry.

“Parent Product” shall mean each product or service owned, made, marketed, distributed, made available, imported, licensed or sold by or for Parent Group as of the Closing or during the period of two (2) years immediately prior to Parent Group, and any product or service currently under development by or for Parent Group.

“Parent SEC Reports” means all publicly available forms, reports, statements, certificates and other documents filed with or furnished to the SEC by Parent since January 1, 2016 (excluding any disclosures set forth in any section of a Parent SEC Report entitled “Risk Factors” or “Forward-Looking Statements” or any other disclosures included in such filings to the extent that they are forward-looking in nature).

“Pension Plan” shall mean each Company Employee Plan that is an “employee pension benefit plan,” within the meaning of Section 3(2) of ERISA.

“Per Note Consideration” shall mean with respect to each Company Convertible Note a number of Parent Common Stock Payment Shares and Parent Preferred Stock Payment Shares having an aggregate value equal to (i) 3, multiplied by (ii) the sum of (a) the outstanding principal amount thereof,

plus (b) any unpaid interest thereon, in each case, which amounts shall be calculated pursuant to the formulas utilized in the Spreadsheet (it being understood that, for these purposes, each Parent Payment Share shall be valued pursuant to the formulas utilized in the Spreadsheet).

“Per Share Consideration” shall mean with respect to each class or series of Company Capital Stock a number of Parent Common Stock Payment Shares and Parent Preferred Stock Payment Shares for such class or series of Company Capital Stock calculated as set forth in Article IV, Section 2(c)(iii) of the Certificate of Incorporation of the Company, which amounts shall be calculated pursuant to the formulas utilized in the Spreadsheet.

“Permits” shall mean all permits, licenses, easements, variances, exemptions, consents, certificates, authorizations, registrations, orders and other approvals from Governmental Entities that are material to the operation of the business of the Company or Parent, as applicable, and its Subsidiaries taken as a whole as currently conducted.

“Permitted Encumbrances” means any and all (a) Liens for Taxes not yet due or payable or for Taxes that the Company or Parent Group, as applicable, is contesting in good faith through appropriate proceedings in a timely manner, in each case for which reserves have been established in accordance with GAAP and shown on the Current Balance Sheet, with respect to the Company, or the most recent balance sheet included in the Parent Financials, with respect to Parent Group, (b) Liens of landlords, carriers, warehousemen, workmen, repairmen, mechanics, materialmen and similar liens arising in the ordinary course of business and not incurred in connection with the borrowing of money, (c) restrictions, easements, covenants, reservations, rights of way or other similar matters of title, or other Liens to the Leased Real Property or Parent Leased Real Property, as applicable, of record, (d) zoning ordinances, restrictions, prohibitions and other requirements or Liens imposed by any Governmental Entity, and (e) Liens that do not materially interfere with the conduct of the business of the Company or Parent Group, as applicable.

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

“Plans” shall mean the 2005 Plan and the 2015 Plan.

“Pro Rata Portion” shall mean with respect to each Company Holder, an amount equal to the quotient obtained by dividing (x) the aggregate value of the Parent Payment Shares payable pursuant to Section 1.6 in respect of the shares of Company Capital Stock, Company Options, Company Warrants and Company Convertible Notes owned by such Company Holder as of immediately prior to the Effective Time, by (y) the aggregate value number of Parent Payment Shares payable to all Company Holders pursuant to Section 1.6 in respect of Company Capital Stock, Company Options, Company Warrants and Company Convertible Notes outstanding as of immediately prior to the Effective Time (it being understood that, for these purposes, each Parent Payment Share shall be valued pursuant to the formulas utilized in the Spreadsheet).

“Registered IP” shall mean all Intellectual Property Rights that are registered, filed, or issued under the authority of, with or by any Governmental Entity, including all patents, registered copyrights, and registered trademarks, business names and Domain Names, and all applications for any of the foregoing.

“Related Agreements” shall mean the Escrow Agreement, the Voting and Standstill Agreements and all other agreements and certificates entered into by the Company or any of the Company Holders in connection with the Transactions.

“Representatives” means, with respect to any Person, such Person’s Affiliates and its and their respective directors, officers, agents, employees, consultants, professional advisers (including attorneys, accountants and financial advisors), securityholders, and financing sources.

“Stockholder” shall mean any holder of any Company Capital Stock as of immediately prior to the Effective Time.

“Subsidiary” shall mean, with respect to any Person, any corporation, limited liability company, partnership, association, joint venture or other business entity of which such Person owns, directly or indirectly, more than fifty percent (50%) of the stock or other equity interest entitled to vote on the election of the members of the board of directors or similar governing body.

“Tax” shall mean (i) any income, gains, capital gains, alternative or add-on minimum tax, gross income, estimated, gross receipts, sales, use, ad valorem, value added, transfer, franchise, capital stock, profits, license, registration, withholding, payroll, social security (or equivalent), employment, unemployment, disability, excise, severance, stamp, occupation, premium, property (real, tangible or intangible), environmental or windfall profit tax, custom duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or any penalty, addition to tax or additional amount (whether disputed or not) imposed by any Governmental Entity responsible for the imposition of any such tax (domestic or foreign), (ii) any liability for the payment of any amounts of the type described in clause (i) of this sentence as a result of being a member of an affiliated, consolidated, combined, unitary, aggregate or similar group for any taxable period, and (iii) any liability for the payment of any amounts of the type described in clause (i) or (ii) of this sentence as a result of being a transferee of or successor to any Person or as a result of any express or implied obligation to assume such Taxes or to indemnify any other Person, including by operation of law.

“Tax Return” shall mean any return (including any information return), report, statement, declaration, estimate, schedule, notice, notification, form, election, certificate or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Entity in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Legal Requirement relating to any Tax, including any amendment thereof or attachment thereto.

“Third Party Expenses” shall mean, without duplication, all fees and expenses incurred by or on behalf of the Company in connection with this Agreement, the Merger and the other Transactions, including (i) all legal, accounting, financial advisory, consulting, finders and all other fees and expenses of third parties incurred by the Company in connection with the negotiation and effectuation of the terms and conditions of this Agreement, all other agreements, instruments and other documents referenced herein or contemplated hereby, the Merger and the other Transactions, (ii) any termination, pre-payment, balloon or similar fees or payments (including penalties) of the Company resulting from the early termination of outstanding Indebtedness in connection with the consummation of the Merger and the other Transactions, (iii) any bonus or severance payments to Employees at the Closing based on the occurrence of the Transaction (other than severance payments related to both (x) the termination of employment of Employees after the Closing and (y) the occurrence of the Transaction), change-in-control payments or similar payment obligations of the Company that become due or payable at Closing in connection with the consummation of the Merger and the other Transactions, including any related Transaction Payroll Taxes and Tax gross-up payments accrued as of the Closing, (iv) the Expense Fund

Amount, (v) 50% of that portion of the Bonus Amount payable to all Employees other than Michael Mangano plus 100% of that portion of the Bonus Amount payable to Michael Mangano, and (vi) the premium for and other costs of the D&O Tail Policy, including any broker fees and other costs and expenses incurred in connection therewith.

“Transaction Payroll Taxes” shall mean all employer portion payroll or employment Taxes incurred in connection with any bonuses, option cashouts or other compensatory payments in connection with the Transactions, whether payable by Parent, the Company or their respective Affiliates.

“Warrantholder” shall mean any holder of a Company Warrant immediately prior to the Effective Time.

INDEX OF DEFINED TERMS

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