EXHIBIT 10.1
PURCHASE AGREEMENT
     This Purchase Agreement (the “Agreement”) is made and entered into
effective for all purposes as of the 1st day of June, 2008 (the “Closing Date”),
by and among SDC Holdings, LLC, an Oklahoma limited liability company (the
“Buyer”), and Christina Molfetta, individually and as Trustee of the Hannah
Friends Trust (collectively, the “Seller”).
     The Trust owns all of the outstanding equity interests of Nocturna Sleep
Center, LLC, a Nevada limited liability company (the “Company”).
     This Agreement contemplates a transaction in which the Buyer will purchase
from the Trust, and the Trust will sell to the Buyer, all of the outstanding
equity interests of the Company in return for cash.
     Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the parties agree as follows.
ARTICLE I — DEFINITIONS
     1.1 Definitions. For purposes of this Agreement, the following terms have
the meanings specified or referred to in this Article I:
     “Affiliate” has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
     “Basis” means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act or transaction that forms or could form the basis for any
specified consequence.
     “Business” means the diagnosis and treatment of sleep disorders and
disturbances including, without limitation, sleep apnea, narcolepsy, insomnia,
restless legs syndrome and parasomnias.
     “Buyer” has the meaning set forth in the preface above.
     “Buyer Indemnitees” has the meaning set forth in Section 7.2 below.
     “Closing” means the closing of the transactions contemplated by this
Agreement.
     “Closing Date” has the meaning set forth in the preface above.
     “Code” means the Internal Revenue Code of 1986, as amended.
     “Company” has the meaning set forth in the preface above.

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     “Confidential Information” means any information concerning the business
and affairs of the Company that is not already generally available to the
public.
     “Damages” has the meaning set forth in Section 7.2.
     “Disclosure Schedule” has the meaning set forth in Article IV below.
     “Environmental, Health and Safety Laws” means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.
     “Financial Statements” has the meaning set forth in Section 4.7 below.
     “Intellectual Property” means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
     “Interests” has the meaning set forth in Section 2.1 below.
     “Knowledge” means actual knowledge after reasonable investigation.
     “Liability” means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.

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     “Molfetta” means Christina Molfetta.
     “Most Recent Balance Sheet” means the balance sheet contained within the
Most Recent Financial Statements.
     “Most Recent Financial Statements” has the meaning set forth in Section 4.7
below.
     “Most Recent Fiscal Month End” has the meaning set forth in Section 4.7
below.
     “Most Recent Fiscal Year End” has the meaning set forth in Section 4.7
below.
     “Noncompete Term” has the meaning set forth in Section 6.5(a)(iv) below.
     “Ordinary Course of Business” means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
     “Person” means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a governmental entity (or any
department, agency, or political subdivision thereof) or any other entity of any
kind or nature.
     “Purchase Price” has the meaning set forth in Section 2.2 below.
     “Securities Act” means the Securities Act of 1933, as amended.
     “Securities Exchange Act” means the Securities Exchange Act of 1934, as
amended.
     “Security Interest” means any mortgage, pledge, lien, encumbrance, deed of
trust, charge, or other security interest, other than liens for Taxes not yet
due and payable.
     “Seller Indemnitees” has the meaning set forth in Section 7.3 below.
     “Seller” has the meaning set forth in the preface above.
     “Tax” means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
     “Tax Return” means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
     “Trust” means the Hannah Friends Trust.

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ARTICLE II — PURCHASE AND SALE OF INTERESTS
     2.1 Basic Transaction. On and subject to the terms and conditions of this
Agreement, the Buyer agrees to purchase from the Trust, and the Trust agrees to
sell to the Buyer, all of the equity interests in the Company (collectively, the
“Interests”) for the consideration specified below in this Article II.
     2.2 Purchase Price. The purchase price (“Purchase Price”) for the Interests
shall be $2,196,600.00, payable as follows:
     (i) $1,446,600 of the Purchase Price (the “Closing Date Payment”) shall be
paid in cash at the Closing by wire transfer in accordance with Seller’s written
instructions;
     (ii) $250,000 of the Purchase Price (the “Sierra Escrow Payment”) shall be
deposited with an escrow agent mutually agreed upon by the parties until such
time as written approval of the transfer of the Interests as contemplated herein
is delivered to the Buyer by Sierra Health and Life Insurance Company, Inc. and
its Affiliates (collectively, “Sierra”), at which time the Sierra Escrow
Payment, plus accrued interest, shall be paid to Seller by wire transfer in
accordance with Seller’s written instructions; and
     (iii) the remainder of the Purchase Price (the “Post-Closing Payment”)
shall be paid on the first anniversary of the Closing Date in cash by wire
transfer in accordance with Seller’s written instructions.
     2.3 Security. To secure the Buyer’s obligation to make the Post-Closing
Payment in a timely manner, the Buyer shall deliver to the Seller at the Closing
a letter of credit (the “Letter of Credit”) in the amount of $500,000 issued by
Valliance Bank in Oklahoma City, Oklahoma. The form of the Letter of Credit
shall be satisfactory to the Seller in her reasonable discretion. The parties
hereby acknowledge and agree that, subject to Section 7.5 hereof, the Letter of
Credit shall permit the Seller to draw against the Letter of Credit in the event
that the Post-Closing Payment is not made in accordance with the terms of
Section 2.2(iii).
     2.4 Deliveries at the Closing. At the Closing:
     (a) The Seller will deliver to the Buyer:
     (i) Releases in the form and substance as set forth in Exhibit “A” attached
hereto; and
     (ii) A payoff letter from Sunwest Bank agreeing to promptly release all
security interests held by Sunwest Bank in and to any assets of the Company upon
receipt of the funds necessary to pay in full the Company’s outstanding
obligations to Sunwest Bank.
     (b) The Buyer will deliver to the Trust the Closing Date Payment by wire
transfer in accordance with the Seller’s written instructions. The parties
acknowledge that

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approximately $246,400.00 of the Closing Date Payment will be paid to Sunwest
Bank to satisfy the Company’s outstanding obligations to Sunwest Bank. The Buyer
will also deliver to the Seller a guaranty executed by Graymark in favor of the
Sellers, which guaranty will be in the form attached hereto as Exhibit “B”.
     (c) The Trust will deliver to the Buyer an assignment of the Interests in
the form attached hereto as Exhibit “C”.
ARTICLE III — REPRESENTATIONS AND WARRANTIES
CONCERNING THE TRANSACTION
     Molfetta and the Trust jointly and severally represent and warrant to the
Buyer that the statements contained in this Article III are correct and complete
as of the date of this Agreement.
     3.1 Authorization of Transaction. Each of Molfetta and the Trust has full
power and authority to execute and deliver this Agreement and to perform its
respective obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of Molfetta and the Trust, enforceable against each
of them in accordance with its terms and conditions, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors’ rights generally or by general
equitable principles. Neither Molfetta nor the Trust need give any notice to,
make any filing with, or obtain any authorization, consent or approval of any
government or governmental agency in order to consummate the transactions
contemplated by this Agreement.
     3.2 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which either Molfetta or the Trust is subject,
or (ii) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument or other arrangement to which either Molfetta or the Trust
is a party or by which either is bound or to which any of their respective
assets is subject.
     3.3 Brokers’ Fees. Neither Molfetta nor the Trust has any Liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement for which the Company
or the Buyer could become liable or obligated.
     3.4 Interests. The Trust holds of record and owns beneficially all of the
outstanding equity interests in the Company, free and clear of any restrictions
on transfer (other than any restrictions under the Securities Act and state
securities laws), Taxes, Security Interests, options, warrants, purchase rights,
contracts, commitments, equities, claims and other encumbrances of any kind.
Neither Molfetta nor the Trust is a party to any option, warrant, purchase
right, or other contract or commitment that could require the Trust to sell,
transfer, or otherwise dispose of any Interests (other than this Agreement). The
Trust is not a party to any voting trust, proxy, or other agreement or
understanding with respect to the voting of any Interests.

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     3.5 Trust Agreement. Attached hereto as Schedule 3.5 is a true and correct
copy of the trust agreement for the Trust, as amended to date. Molfetta is
currently the sole trustee of the Trust.
ARTICLE IV — REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY
     Molfetta and the Trust jointly and severally represent and warrant to the
Buyer that the statements contained in this Article IV are correct and complete
as of the date of this Agreement, except as set forth in the disclosure schedule
delivered by the Seller to the Buyer on the date hereof and initialed by the
parties (the “Disclosure Schedule”). Nothing in the Disclosure Schedule shall be
deemed adequate to disclose an exception to a representation or warranty made
herein, however, unless the Disclosure Schedule identifies the exception with
particularity and describes the relevant facts. The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Article IV.
     4.1 Organization, Qualification, and Corporate Power. The Company is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Nevada. The Company has full power and authority
necessary to carry on the business in which it is engaged and in which it
presently proposes to engage and to own and use the properties owned and used by
it. Section 4.1 of the Disclosure Schedule lists the managers of the Company.
The Seller has delivered to the Buyer correct and complete copies of the
articles of organization and the operating agreement of the Company (as amended
to date). The minute books (containing the records of meetings of the members
and the managers) and the unit record books of the Company are correct and
complete. The Company is not in default under or in violation of any provision
of its articles of organization or its operating agreement.
     4.2 Capitalization. All of the issued and outstanding equity interests of
the Company are held of record by the Trust. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
the Company to issue, sell, or otherwise cause to become outstanding any other
equity interests. There are no outstanding or authorized interest appreciation,
phantom interests, profit participation, or similar rights with respect to the
Company. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the Interests of the Company.
     4.3 Noncontravention. Except as described in Section 4.3 of the Disclosure
Schedule, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which the Company is subject or any provision of the articles of
organization or the operating agreement of the Company, or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, note,
mortgage, indenture, deed of trust, instrument or other arrangement to which the
Company is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Security Interest upon any of its
assets). The Company is not required to

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give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any Person in order for the parties to consummate the
transactions contemplated by this Agreement.
     Notwithstanding the foregoing, Buyer acknowledges receipt from Seller of
copies of all the managed care contracts identified in Section 4.14 of the
Disclosure Schedule (the “Managed Care Contracts”), has reviewed the Managed
Care Contracts and has made its own determination as to the extent to which
notice must be given to and/or consent must be obtained from the other
contracting parties to the Managed Care Contracts in connection with Buyer’s
purchase of the Interests. The parties further acknowledge and agree that Buyer
has instructed that Seller give notice of Buyer’s purchase of the Interests to
(i) PacifiCare, and (ii) Sierra Health & Life Insurance Company, Inc. and its
Affiliates, that Seller has given notice of Buyer’s purchase of the Interests to
such parties and that any failure of Seller to give any further notice to and/or
obtain the consent of any party to any Managed Care Contract shall not be
considered to be a breach of this Agreement.
     Buyer and Seller further acknowledge that any of the Managed Care Contracts
may be terminated for any reason by any party at any time and that any such
termination is outside the control of Seller. Accordingly, Buyer and Seller
agree that any termination and/or modification of any Managed Care Contract
subsequent to the Closing Date shall not affect the Purchase Price or the amount
of the Post-Closing Payment and shall not be considered to be a breach of this
Agreement by Seller, or a breach of any representation, warranty or covenant
made by Seller herein.
     4.4 Brokers’ Fees. The Company has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
     4.5 Title to Assets. Except as described in Section 4.5 of the Disclosure
Schedule and further excepting properties and assets disposed of in the Ordinary
Course of Business since the date of the Most Recent Balance Sheet, the Company
has good and marketable title to, or a valid leasehold interest in, the
properties and assets used by it, located on its premises, or shown on the Most
Recent Balance Sheet or acquired after the date thereof, free and clear of all
Security Interests.
     4.6 Subsidiaries. The Company has no direct or indirect equity interest in
any corporation, partnership, joint venture, business association or other
entity.
     4.7 Financial Statements. Attached hereto as Exhibit “D” are the following
financial statements (collectively the “Financial Statements”) of the Company:
(i) unaudited balance sheets and statements of income and cash flow as of and
for the fiscal years ended December 31, 2006, and December 31, 2007 (the “Most
Recent Fiscal Year End”); and (ii) an unaudited balance sheet and statement of
income (the “Most Recent Financial Statements”) as of and for the four
(4) months ended April 30, 2008 (the “Most Recent Fiscal Month End”). The
Financial Statements (including the notes thereto) have been prepared on a
consistent basis throughout the periods covered thereby, present fairly the
financial condition of the Company as of such dates and the results of
operations of the Company for such periods, are correct and complete in all
material respects, and are consistent with the books and records of the Company
(which books

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and records are correct and complete in all material respects); provided,
however, that the Most Recent Financial Statements are subject to normal
year-end adjustments (which will not be material individually or in the
aggregate) and lack footnotes and other presentation items.
     4.8 Events Subsequent to Most Recent Fiscal Year End. Since December 31,
2007, there has not been any material adverse change in the business, financial
condition, operations, results of operations, or future prospects of the
Company. Without limiting the generality of the foregoing, except as disclosed
in Section 4.8 of the Disclosure Schedule, since that date:
     (a) the Company has not sold, leased, transferred, or assigned any of its
assets, tangible or intangible, other than for a fair consideration in the
Ordinary Course of Business;
     (b) the Company has not entered into any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses)
either involving more than $5,000 or outside the Ordinary Course of Business;
     (c) no party (including the Company) has accelerated, terminated, modified,
or cancelled any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) to which the Company is a party or
by which it or any of its assets is bound;
     (d) the Company has not imposed any Security Interest upon any of its
assets, tangible or intangible;
     (e) the Company has not made any capital expenditure (or series of related
capital expenditures) either involving more than $5,000 or outside the Ordinary
Course of Business;
     (f) the Company has not made any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person;
     (g) the Company has not issued any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any indebtedness for borrowed money or
capitalized lease obligation;
     (h) the Company has not delayed or postponed the payment of accounts
payable or other Liabilities;
     (i) the Company has not cancelled, compromised, waived, or released any
right or claim (or series of related rights and claims) outside the Ordinary
Course of Business;
     (j) the Company has not granted any license or sublicense of any rights
under or with respect to any Intellectual Property;
     (k) there has been no change made or authorized in the articles of
organization or the operating agreement of the Company;

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     (l) the Company has not issued, sold, or otherwise disposed of any equity
interests of the Company, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any equity
interests of the Company;
     (m) except as described in Section 4.26 and Section 4.28 herein, the
Company has not declared, set aside, or paid any distribution to its members
(whether in cash or in kind) or redeemed, purchased, or otherwise acquired any
of its equity interests;
     (n) the Company has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to its property;
     (o) the Company has not made any loan to, or entered into any other
transaction with, any of its members, managers or employees outside the Ordinary
Course of Business;
     (p) the Company has not entered into any employment contract or collective
bargaining agreement, written or oral, or modified the terms of any existing
such contract or agreement;
     (q) the Company has not granted any increase in the base compensation of
any of its employees outside the Ordinary Course of Business;
     (r) the Company has not adopted, amended, modified, or terminated any
bonus, profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its employees (or taken any such action
with respect to any other employee benefit plan);
     (s) the Company has not made any other change in employment terms for any
of its employees outside the Ordinary Course of Business;
     (t) the Company has not made or pledged to make any charitable or other
capital contribution outside the Ordinary Course of Business;
     (u) there has not been any other material occurrence, event, incident,
action, failure to act, or transaction outside the Ordinary Course of Business
involving the Company; and
     (v) the Company has not committed to any of the foregoing.
     4.9 Undisclosed Liabilities. The Company has no Liability (and there is no
Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against the Company giving
rise to any Liability), except for (i) Liabilities set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto), and (ii)
Liabilities which have arisen after the Most Recent Fiscal Month End in the
Ordinary Course of Business (none of which results from, arises out of, relates
to, is in the nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement or violation of law, and which

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Liabilities will not, individually or in the aggregate, have a material adverse
effect upon the business, properties or condition (financial or otherwise) of
the Company).
     4.10 Legal Compliance. The Company has complied in all material respects
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings and charges thereunder) of
federal, state, local and foreign governments (and all agencies thereof), and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand or notice has been filed or commenced or, to the Knowledge of the Seller,
threatened against the Company alleging any failure so to comply.
     4.11 Tax Matters.
     (a) The Company has filed in accordance with applicable law all Tax Returns
required to be filed by it. All such Tax Returns were correct and complete in
all respects. All Taxes owed by the Company (whether or not shown on any Tax
Return) have been paid. The Company currently is not the beneficiary of any
extension of time within which to file any Tax Return. No claim has ever been
made by an authority in a jurisdiction where the Company does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction. There are
no Security Interests on any of the assets of the Company that arose in
connection with any failure (or alleged failure) to pay any Tax.
     (b) The Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, member, or other third party.
     (c) The Company has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency.
     (d) The unpaid Taxes of the Company (i) did not, as of the Most Recent
Fiscal Month End, exceed the reserve for Tax Liability (rather than any reserve
for deferred Taxes established to reflect timing differences between book and
tax income) set forth on the face of the Most Recent Balance Sheet (rather than
in any notes thereto), and (ii) do not exceed that reserve as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of the Company in filing its Tax Returns.
     (e) For purposes of Federal income tax, Seller will be responsible for and
will report all income, loss and deduction relating to the operations of the
Company conducted before the Closing Date and Buyer will be responsible for and
will report all income, loss and deduction relating to the operations of the
Company conducted on the Closing Date and thereafter. Except as otherwise
provided in this Section 4.11(e), Buyer agrees to indemnify and hold harmless
the Seller for any and all tax liabilities (including penalties and interest)
incurred by the Seller, including, without limitation, employment tax
liabilities, that relate to operations of the Company conducted after the
Closing.
     4.12 Real Property.
     (a) The Company does not own any real property.

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     (b) Schedule 4.12(b) of the Disclosure Schedule lists and describes briefly
all real property leased by the Company. Except as described on
Schedule 4.12(b), the Company has not subleased any real property. The Company
has delivered to Buyer correct and complete copies of the leases listed in
Schedule 4.12(b) (as amended to date). With respect to each lease listed in
Schedule 4.12(b):
     (i) the lease is legal, valid, binding, enforceable and in full force and
effect;
     (ii) the lease will continue to be legal, valid, binding, enforceable and
in full force and effect on identical terms following the consummation of the
transactions contemplated hereby;
     (iii) no party to the lease is in breach or default, and no event has
occurred which, with notice or lapse of time, would constitute a breach or
default or permit termination, modification, or acceleration thereunder;
     (iv) no party to the lease has repudiated any provision thereof;
     (v) there are no disputes, oral agreements, or forbearance programs in
effect as to the lease;
     (vi) the Company has not assigned, transferred, conveyed, mortgaged, deeded
in trust, or encumbered any interest in the leasehold;
     (vii) all facilities leased thereunder are supplied with utilities and
other services necessary for the operation of said facilities;
     (viii) there are no pending or, to the Knowledge of the Seller, threatened
condemnation proceedings, lawsuits, or administrative actions relating to the
leased premises, or other matters affecting adversely the use, occupancy, value,
or the marketability of title thereof; and
     (ix) there are no parties (other than the Company) in possession of the
leased premises (or any portion thereof).
     4.13 Intellectual Property.
     (a) The Company owns or has the right to use pursuant to license,
sublicense or agreement all Intellectual Property (including, without
limitation, the trademark “Nocturna”) necessary or desirable for the operation
of its business as presently conducted and as presently proposed to be
conducted. Each item of Intellectual Property owned or used by the Company
immediately prior to the Closing hereunder will be owned or available for use by
the Company on identical terms and conditions immediately subsequent to the
Closing hereunder. The Company has taken all necessary and desirable action to
maintain and protect each item of Intellectual Property that it owns or uses.

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     (b) The Company has not interfered with, infringed upon, misappropriated or
otherwise come into conflict with any Intellectual Property rights of third
parties, and neither the Company nor the Seller has ever received any charge,
complaint, claim, demand or notice alleging any such interference, infringement,
misappropriation or violation (including any claim that the Company must license
or refrain from using any Intellectual Property rights of any third party). To
the Knowledge of the Seller, no third party has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property
rights of the Company.
     (c) Section 4.13(c) of the Disclosure Schedule identifies each patent or
registration which has been issued to the Company with respect to any of its
Intellectual Property, identifies each pending patent application or application
for registration which the Company has made with respect to any of its
Intellectual Property, and identifies each license, agreement or other
permission which the Company has granted to any third party with respect to any
of its Intellectual Property (together with any exceptions). The Seller has
delivered to the Buyer correct and complete copies of all such patents,
registrations, applications, licenses, agreements and permissions (as amended to
date) and has made available to the Buyer correct and complete copies of all
other written documentation evidencing ownership and prosecution (if applicable)
of each such item. Section 4.13(c) of the Disclosure Schedule also identifies
each trade name or unregistered trademark used by the Company in connection with
its business. With respect to each item of Intellectual Property required to be
identified in Section 4.13(c) of the Disclosure Schedule:
     (i) the Company possesses all right, title and interest in and to the item,
free and clear of any Security Interest, license or other restriction;
     (ii) the item is not subject to any outstanding injunction, judgment,
order, decree, ruling or charge;
     (iii) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand is pending or, to the Knowledge of the Seller, is
threatened which challenges the legality, validity, enforceability, use or
ownership of the item; and
     (iv) the Company has never agreed to indemnify any Person for or against
any interference, infringement, misappropriation, or other conflict with respect
to the item.
     (d) The only items of Intellectual Property that any third party owns and
that the Company uses pursuant to license, sublicense or agreement are
off-the-shelf computer software programs.
     (e) To the Knowledge of the Seller, the Company will not interfere with,
infringe upon, misappropriate, or otherwise come into conflict with any
Intellectual Property rights of third parties as a result of the continued
operation of its business as presently conducted and as presently proposed to be
conducted.

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     4.14 Contracts. Schedule 4.14 of the Disclosure Schedule lists the
following contracts and other agreements to which the Company is a party or is
bound:
     (i) any agreement pursuant to which the Company provides or has agreed to
provide sleep disorder or disturbance services to or for the benefit of any
Person;
     (ii) any agreement (or group of related agreements), for the lease of
personal property to or from any Person;
     (iii) any agreement (or group of related agreements) for the purchase or
sale of raw materials, commodities, supplies, products or other personal
property, or for the furnishing or receipt of services;
     (iv) any agreement concerning a partnership or joint venture;
     (v) any agreement (or group of related agreements) under which it has
created, incurred, assumed or guaranteed any indebtedness for borrowed money, or
any capitalized lease obligation;
     (vi) any agreement concerning confidentiality or noncompetition;
     (vii) any agreement involving Molfetta, the Trust and/or any of their
respective Affiliates or relatives;
     (viii) any profit sharing, deferred compensation, severance or other plan
or arrangement for the benefit of its current or former officers and/or
employees;
     (ix) any collective bargaining agreement;
     (x) any agreement for the employment of any individual on a full-time,
part-time, consulting or other basis;
     (xi) any agreement under which it has advanced or loaned any amount to any
Person;
     (xii) any agreement under which the consequences of a default or
termination could have an adverse effect on the business, financial condition,
operations, results of operations or future prospects of the Company; or
     (xiii) any other agreement (or group of related agreements) the performance
of which involves consideration in excess of $5,000.00.
The Company has delivered to Buyer a correct and complete copy of each written
agreement listed in Schedule 4.14 (as amended to date) and a written summary
setting forth the terms and conditions of each oral agreement referred to in
Schedule 4.14. With respect to each such agreement: (A) the agreement is legal,
valid, binding, enforceable and in full force and effect; (B) the agreement will
continue to be legal, valid, binding, enforceable and in full force and

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effect on identical terms following the consummation of the transactions
contemplated hereby; (C) no party is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or
default, or permit termination, modification or acceleration, under the
agreement; and (D) no party has repudiated any provision of the agreement.
     4.15 Tangible Assets. The Company owns or leases all buildings, machinery,
equipment and other tangible assets necessary for the conduct of its business as
presently conducted and as presently proposed to be conducted.
     4.16 Accounts Receivable. Except as disclosed in Section 4.16 of the
Disclosure Schedule, all accounts receivable of the Company are reflected
properly on its books and records, are valid receivables subject to no setoffs
or counterclaims and are current and collectible. Seller shall not be entitled
to any of the accounts receivable of the Company collected after the Closing
Date. Seller shall promptly deliver to the Buyer any payments of accounts
receivable of the Company received by Seller after the Closing Date.
     4.17 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Company.
     4.18 Insurance. Section 4.18 of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including policies
providing property, casualty, liability and workers’ compensation coverage and
bond and surety arrangements) to which the Company has been a party, a named
insured, or otherwise the beneficiary of coverage at any time within the past
two (2) years:
     (a) the name, address and telephone number of the agent;
     (b) the name of the insurer, the name of the policyholder and the name of
each covered insured;
     (c) the policy number and the period of coverage;
     (d) the scope (including an indication of whether the coverage was on a
claims made, occurrence, or other basis) and amount (including a description of
how deductibles and ceilings are calculated and operate) of coverage;
     (e) a summary of the loss experience under each policy; and
     (f) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable and in full force and effect; (B) the policy will continue
to be legal, valid, binding, enforceable and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby; (C) neither the Company nor any other party to the policy is in breach
or default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination, modification
or acceleration, under the policy; and (D) no party to

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the policy has repudiated any provision thereof. The Seller has no reason to
believe that any such insurance policy will not be renewed upon the expiration
thereof at premiums substantially equivalent to those currently being paid,
except for changes in such premiums applicable to insureds similarly situated.
The Company has been covered during the past seven (7) years by insurance in
scope and amount customary and reasonable for the business in which it has
engaged during the aforementioned period. Section 4.18 of the Disclosure
Schedule describes any self-insurance arrangements affecting the Company.
     4.19 Litigation. Section 4.19 of the Disclosure Schedule sets forth each
instance in which the Company (i) is subject to any outstanding injunction,
judgment, order, decree, ruling or charge or (ii) is a party or, to the
Knowledge of the Seller, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local or foreign
jurisdiction or before any arbitrator. None of the actions, suits, proceedings,
hearings, and investigations set forth in Section 4.19 of the Disclosure
Schedule could result in any material adverse change in the business, financial
condition, operations, results of operations or future prospects of the Company.
     There are no existing violations of federal, state or local laws,
ordinances, rules, regulations or orders by the Company which materially and
adversely affect the business of the Company or the possession, use, occupancy
or operation of any of its facilities or other property.
     4.20 Employees. To the Knowledge of the Seller, no executive, key employee
or group of employees has any plans to terminate employment with the Company.
The Company is not a party to or bound by any collective bargaining agreement,
nor has it experienced any strikes, grievances, claims of unfair labor practices
or other collective bargaining disputes. The Company has not committed any
unfair labor practice. The Seller has no Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of the Company.
     4.21 ERISA Compliance. The Company has not maintained at any time in the
five (5) year period ending with the Closing Date any employee benefit plan,
including any employee pension benefit plan or employee welfare benefit plan (as
such terms are defined in ERISA).
     4.22 Guaranties. The Company is not a guarantor or otherwise liable for any
Liability or obligation (including indebtedness) of any other Person.
     4.23 Environment, Health, and Safety.
     (a) The Company has complied in all material respects with all
Environmental, Health, and Safety Laws, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand or notice has been
filed or commenced against the Company alleging any failure so to comply.
Without limiting the generality of the preceding sentence, the Company has
obtained and been in compliance in all materials respects with all of the terms
and conditions of all permits, licenses, and other authorizations which are
required under, and has complied in all material respects with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,

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obligations, schedules and timetables which are contained in, all Environmental,
Health, and Safety Laws.
     (b) The Company has no Liability (and the Company has not ever handled or
disposed of any substance, arranged for the disposal of any substance, exposed
any employee or other individual to any substance or condition, or owned or
operated any property or facility in any manner, that could form the Basis for
any present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against the Company giving rise to any Liability) for
damage to any site, location or body of water (surface or subsurface), for any
illness of or personal injury to any employee or other individual, or for any
reason under any Environmental, Health, and Safety Law.
     (c) All properties and equipment used in the business of the Company have
been free of asbestos, PCB’s, methylene chloride, trichloroethylene,
1,2-trans-dichloroethylene, dioxins, dibenzofurans and other hazardous
substances or wastes.
     (d) The Company has never transferred or disposed of, or contracted for the
transportation or disposal of, any hazardous waste, hazardous substance,
infectious or medical waste, radioactive waste or sewage sludge in violation of
any Environmental, Health, and Safety Law.
     (e) Following the Closing, no material capital expenditures shall be
required by the Company to insure compliance with any Environmental, Health and
Safety Law. There is no pending audit known to the Seller by any federal, state,
or local governmental authority with respect to groundwater, soil, or air
monitoring; the storage, burial, release, transportation, or disposal of
hazardous substances or wastes; or relating to the facilities of the Company.
The Company does not have any agreement or arrangement with any federal, state,
or local governmental authority or any other third party relating to any such
environmental matter or environmental cleanup.
     (f) The Seller has delivered to Buyer true and complete copies and results
of any reports, studies, analyses, tests or monitorings possessed or initiated
by the Seller or the Company pertaining to hazardous materials or hazardous
activities in, on, or under any facility owned, leased or operated by the
Company, or concerning compliance by the Company, or any other Person for whose
conduct the Company is or may be held responsible, with Environmental, Health,
and Safety Laws.
     4.24 Certain Business Relationships with the Company. Except as described
in Section 4.24 of the Disclosure Schedule, none of Molfetta, the Trust and
their respective Affiliates and relatives has been involved in any business
arrangement or relationship with the Company within the past twelve months, and
none of Molfetta, the Trust and their respective Affiliates and relatives owns
any asset, tangible or intangible, which is used in the business of the Company.
     4.25 Permits, Licenses, Etc. The Company holds or possesses all permits,
licenses, approvals, authorizations, applications, franchises, certificates and
similar such items and rights (collectively, the “Authorizations”) necessary for
the operation of the business of the Company.

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Each of the Authorizations is valid and in full force and effect, and neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will cause the termination of, or interfere in
any respect with, the Company’s operation under any such Authorizations.
     4.26 Material Assets. Section 4.26 of the Disclosure Schedule lists and
briefly describes all the material tangible assets comprising a part of or used
or useful in the business of the Company including, without limitation,
identification of each vehicle by description and serial number, identification
of portable units, machinery and equipment by type and amount and a general
description of parts, supplies and inventory. Buyer and Seller acknowledge and
agree that prior to the Closing Seller has taken title to that certain 2007
Nissan Armada vehicle (the “Vehicle”) previously owned by the Company and that
the Vehicle is not currently an asset of the Company. Buyer and Seller further
agree that Seller’s taking of title to the Vehicle shall not affect the Purchase
Price for the Interests as provided in Section 2.2 and shall not be considered a
default under any provision of this Agreement.
     4.27 Personnel. Section 4.27 of the Disclosure Schedule lists all employees
of the Company (by type or classification) and their respective rates of
compensation (including the portions thereof attributable to bonuses or other
extraordinary compensation).
     4.28 Bank Accounts. Section 4.28 of the Disclosure Schedule lists, as of
the date hereof:
     (i) the name of each bank in which the Company has accounts or safe deposit
boxes;
     (ii) the names in which the accounts or boxes are held;
     (iii) the type of account; and
     (iv) the name of each Person authorized to draw thereon or have access
thereto.
     Buyer and Seller agree that all accounts of the Company listed in
Section 4.28 of the Disclosure Schedule shall be the property of the Seller
following the Closing and that this Agreement does not confer any rights
whatsoever to the Buyer over such accounts. After the Closing Date, Seller will
not use the name “Nocturna” in connection with any such account.
     4.29 Accounts Payable. All accounts payable and other Liabilities of the
Company have arisen in the Ordinary Course of Business and are reflected
properly on the Company’s books and records. None of the accounts payable of the
Company is past due. Seller shall be responsible for payroll expenses up to and
including the Closing Date and shall make appropriate arrangements for the
payment such expenses. Buyer and Seller acknowledge and agree that Seller has
satisfied her obligations for payment of the accounts payable of the Company and
that Seller shall not be liable for any account payable or other expense of the
Company arising in the ordinary course of the business of the Company that comes
due after the Closing Date whether or not such account payable relates to
operations of the Company conducted before the Closing Date.

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     4.30 Settlement Agreement. In June 2005, Molfetta and the Company entered
into a Settlement Agreement and Release with Nevada Sleep Diagnostics, Inc.,
Joyce Mistrella and Nocturna 2004, LLC. Sellers have previously delivered to the
Buyer a true and correct copy of such Settlement Agreement and Release, as
amended to date. Except as disclosed in Schedule 4.30 of the Disclosure
Schedule, Molfetta and the Company have each complied with all applicable
provisions of the Settlement Agreement and Release and no claim has ever been
made by any other party thereto alleging any failure to comply by Molfetta or
the Company.
     4.31 Disclosure. The representations and warranties contained in this
Article IV do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Article IV not misleading.
ARTICLE V — REPRESENTATIONS AND WARRANTIES OF THE BUYER
     The Buyer represents and warrants to the Seller that the statements
contained in this Article V are correct and complete as of the date of this
Agreement.
     5.1 Organization of the Buyer. The Buyer is a limited liability company
duly organized, validly existing, and in good standing under the laws of the
State of Oklahoma.
     5.2 Authorization of Transaction. The Buyer has full power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of the
Buyer, enforceable in accordance with its terms and conditions, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors’ rights
generally or by general equitable principles.
     5.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any provision of
its Articles of Organization or operating agreement or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which the Buyer is a party or by which it is bound or to
which any of its assets is subject. The Buyer is not required to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order to consummate the transactions
contemplated by this Agreement.
     5.4 Brokers’ Fees. The Buyer has no Liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement for which the Seller could become liable or
obligated.
     5.5 Investment. The Buyer is not acquiring the Interests with a view to or
for sale in connection with any distribution thereof within the meaning of the
Securities Act.

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ARTICLE VI — POST-CLOSING COVENANTS
     The parties agree as follows with respect to the period following the
Closing:
     6.1 General. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other party reasonably may
request, all at the sole cost and expense of the requesting party (unless the
requesting party is entitled to indemnification therefor under Article VII
below). The Seller acknowledges and agrees that from and after the Closing the
Buyer will be entitled to possession of all documents, books, records (including
Tax records), agreements, and financial data of any sort relating to the
Company.
     6.2 Litigation Support. In the event and for so long as the Company is
actively contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand in connection with any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act or transaction on or prior
to the Closing Date involving the Company, Molfetta will (i) cooperate with the
Company, the Buyer and their respective counsel in the contest or defense, and
(ii) provide such testimony and access to her books and records as shall be
necessary in connection with the contest or defense, all at the sole cost and
expense of the Company (unless the Buyer is entitled to indemnification therefor
under Article VII below).
     6.3 Transition. The Seller will not take any action that is designed or
intended to have the effect of discouraging any distributor, lessor, licensor,
customer, supplier or other business associate of the Company from maintaining
the same business relationships with the Company after the Closing as it
maintained with the Company prior to the Closing. The Seller will refer all
customer inquiries relating to the business of the Company to the Company or the
Buyer from and after the Closing.
     6.4 Confidentiality. The Seller will treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential Information
except in connection with this Agreement or its employment by the Company. In
the event that the Seller is requested or required (by oral question or request
for information or documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand or similar process) to disclose any Confidential
Information, the Seller will notify the Buyer promptly of the request or
requirement so that the Buyer may seek an appropriate protective order or waive
compliance with the provisions of this Section 6.4. If, in the absence of a
protective order or the receipt of a waiver hereunder, the Seller is, on the
advice of counsel, compelled to disclose any Confidential Information to any
tribunal or else stand liable for contempt, the Seller may disclose the
Confidential Information to the tribunal; provided, however, that the Seller
shall use reasonable efforts to obtain, at the reasonable request of the Buyer,
an order or other assurance that confidential treatment will be accorded to such
portion of the Confidential Information required to be disclosed as the Buyer
shall designate. The foregoing provisions shall not apply to any Confidential
Information which is generally available to the public immediately prior to the
time of disclosure. The obligations of the Seller under the provisions of this
Section 6.4 shall survive for a period of three (3) years after the Closing
Date.

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     6.5 Covenant Not to Compete.
     (a)(i) During the Noncompete Term, neither Molfetta nor the Trust shall
carry on or engage or participate in any business substantially the same as or
in competition with the Business.
     (ii) The prohibition appearing in subsection (a)(i) above shall extend
throughout the State of Nevada.
     (iii) The phrase “carry on or engage or participate in any business
substantially the same as or in competition with the Business” shall include,
without limitation, doing any of the following — listed acts with the intent of
profit, production of income or any type of remuneration in whatever form
whether direct or indirect to Molfetta or the Trust or a member of Molfetta’s
immediate family: (A) carrying on or engaging in any such business as the
principal, or on her or its own account, or solely or jointly with others as a
director, officer, agent, employee, independent contractor, manager, consultant
or partner (general or limited), shareholder or holder of an equity security
(except that Molfetta and/or the Trust may own up to 3% of the equity securities
or securities convertible into equity securities of any corporation or other
entity the securities of which are traded on a national stock exchange or listed
on the National Association of Securities Dealers Automated Quotation System and
may make personal real estate related investments) or otherwise; (B) lending
credit or money for the purpose of establishing or operating any such business;
(C) giving advice to any other Person engaging in any such business; (D) lending
or consenting to the use of her or its name or reputation to be used in any such
business; or (E) allowing her or its skill, knowledge or experience to be used
in any such business.
     (iv) “Noncompete Term” shall mean that period commencing with the Closing
Date and ending three (3) years later; provided, however, that the duration of
the Noncompete Term shall be extended by and for the duration of any period
during which either Molfetta or the Trust is in violation of this
Section 6.5(a).
     (b) During the two (2) year period immediately following the Closing Date,
neither Molfetta nor the Trust shall, either on its own account or directly or
indirectly in conjunction with or on behalf of any Person, call upon or solicit
any employee of the Company or the Buyer for the purpose or with the intent of
enticing that employee from or out of the employ of the Company or the Buyer, as
the case may be, for any reason whatsoever.
     (c) It is the desired intent of the parties that the provisions of this
Section 6.5 be enforced to the fullest extent permissible under the laws and
public policies of Nevada and any other applicable jurisdiction. Accordingly, to
the extent that any covenant hereunder or a portion thereof shall be adjudicated
to be invalid or unenforceable, this Section 6.5 shall be reformed such that the
restrictions imposed upon Molfetta and the Trust are no greater than would
otherwise be permissible under applicable law.

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Moreover, each provision of this Section 6.5 is intended to be severable; and in
the event that any one or more of the provisions contained in this Section 6.5
shall for any reason be adjudicated to be invalid or enforceable and incapable
of reformation in accordance with the terms of the preceding sentence, the same
shall not affect the validity or enforceability of any other provision of this
Section 6.5, but this Section 6.5 shall be construed as if such invalid or
unenforceable (and nonreformable) provision had not been contained herein.
     (d) Molfetta and the Trust hereby acknowledge and agree that, in the event
of a prospective or actual breach of any of the provisions of this Section 6.5
by it, damages would not be an adequate remedy to compensate the Company and the
Buyer for the loss of goodwill and other harm to the business of the Company. In
the event of a threatened or actual breach of any of the provisions of this
Section 6.5 by either Molfetta or the Trust, the parties agree that the Buyer or
the Company shall be entitled, if it so elects, to a temporary restraining order
and to temporary and permanent injunctive relief to prevent or terminate such
anticipated or actual breach, in each case without the necessity of a bond. In
addition, the Buyer and the Company shall each be entitled to such damages as it
can show it sustained by reason of such threatened or actual breach. Nothing in
this Section 6.5 shall be construed to limit in any way the remedies of the
Buyer or the Company for a breach of the covenants contained in this
Section 6.5. The Buyer and the Company shall have the right to inform any person
that they reasonably believe to be, or to be contemplating, participating with
either Molfetta or the Trust or receiving from Molfetta or the Trust assistance
in violation of the terms of this Section 6.5 and the rights of the Buyer and
the Company hereunder, that participation by any such Person with Molfetta
and/or the Trust in activities in violation of this Section 6.5 may give rise to
claims by the Buyer and/or the Company against such Person.
     6.6 Employer Identification Number. The Company’s employer identification
number is 43-2062521 (the “Existing EIN”). After the Closing Date, the Buyer
will not report any payroll, for federal or state employment tax purposes, using
the Existing EIN. Buyer acknowledges and agrees that the employees of the
Company shall be treated as employees of the Buyer beginning on the day
following the Closing Date and thereafter for all purposes, including payroll
and employment tax purposes. In addition, the Company shall use commercially
reasonable efforts to begin using Buyer’s employer identification number with
respect to each of the Managed Care Contracts to which the Company is a party on
the Closing Date within nine (9) months after the Closing. Notwithstanding
anything to the contrary in the preceding sentence, the Company shall not be
obligated to use or attempt to use Buyer’s employer identification number with
respect to any such Managed Care Contract if Buyer has reasonable grounds to
believe that such use, or notice of Buyer’s employer identification number would
have a material adverse effect upon the Company’s ability to maintain the
existing terms of such Managed Care Contract. To the extent that any income
earned after the Closing Date under a Managed Care Contract is included on a
Form 1099 issued using the Existing EIN, Buyer shall prepare and file with the
Internal Revenue Service a nominee Form 1099 which reattributes all such
post-Closing income to Buyer’s employer identification number. Upon receipt of a
request from Molfetta on or after March 1 of any calendar year, Buyer shall
provide Molfetta with copies of all 1099’s it received for the previous calendar
year which referenced the Existing EIN, and all nominee Forms 1099 filed by
Buyer pursuant to the preceding sentence. In

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addition, notwithstanding anything to the contrary herein, if either Buyer or
one of its Affiliates ceases to own at least 51% of the outstanding equity
interests of the Company, the Company shall promptly cease using the Existing
EIN for any purpose.
     6.7 Continued Service of Molfetta. Commencing on the Closing Date and
continuing for sixty (60) days thereafter, Molfetta shall personally provide up
to forty (40) hours per week of consulting services to the Company as requested
by the Company; thereafter and until the first anniversary of the Closing Date,
Molfetta shall personally provide up to five (5) hours per week of consulting
services to the Company, as requested by the Company.
ARTICLE VII — INDEMNIFICATION
     7.1 Survival of Representations and Warranties. All of the representations
and warranties of the parties contained in this Agreement shall survive the
closing of the transactions contemplated herein for a period of three (3) years.
The parties intend to shorten the statute of limitations and agree that no
claims or causes of action of any kind may be brought against the Seller, the
Buyer or any of their respective managers, members, employees, affiliates,
controlling persons, agents or representatives based upon, directly or
indirectly, any of the representations, warranties, covenants or agreements
contained herein after the third anniversary of the date hereof. This
Section 7.1 shall not limit any covenant or agreement of the parties which
contemplates performance after the Closing including, without limitation, the
covenants and agreements set forth in Sections 2.2(ii) and (iii) and Article VI
hereof, it being understood that all such covenants and agreements contemplating
performance after the Closing shall survive until the expiration of the
applicable statute of limitations.
     7.2 Indemnification by Molfetta and the Trust. Subject to the terms and
conditions set forth herein, Molfetta and the Trust shall jointly and severally
indemnify and hold harmless the Buyer and its members, managers, employees and
other agents and Affiliates (collectively, the “Buyer Indemnitees”) in respect
of any and all damages, losses, liabilities, payments, obligations, penalties,
claims, litigation, demands, defenses, judgments, suits, proceedings, costs,
disbursements or expenses (including, without limitation, reasonable fees,
disbursements and expenses of attorneys, accountants and other professional
advisors) of any kind or nature whatsoever (collectively “Damages”) asserted
against or incurred by any Buyer Indemnitee as a result of, in connection with
or arising out of:
     (i) Any inaccuracy in or breach of any representation or warranty made by
Molfetta and/or the Trust herein; or
     (ii) Any breach or nonperformance (partial or total) of any covenant or
agreement of Molfetta and/or the Trust contained herein.
     7.3 Indemnification by Buyer. Subject to the terms and conditions set forth
herein, the Buyer shall indemnify and hold harmless Molfetta and the Trust and
their respective agents and Affiliates (collectively, the “Seller Indemnitees”)
in respect of any Damages asserted against or incurred by any Seller Indemnitee
as a result of, in connection with or arising out of:
     (i) Any inaccuracy in or breach of any representation or warranty made by
the Buyer herein; or

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     (ii) Any breach or nonperformance (partial or total) of any covenant or
agreement of the Buyer contained herein; or
     (iii) The Company’s use of the Existing EIN after the Closing; or
     (iv) The Company’s failure to satisfy any obligations under any lease
described in Section 4.12 of the Disclosure Schedule at any time following the
Closing Date.
     7.4 Third Party Indemnification. The obligations of Molfetta and the Trust
to indemnify the Buyer Indemnitee under Section 7.2 and the obligations of the
Buyer to indemnify the Seller Indemnitees under Section 7.3 hereof, in each case
resulting from the assertion of liability by a third party (each, as the case
may be, a “Claim”), shall be further subject to the following terms and
conditions:
     (a) Any party against whom any Claim is asserted shall give the party (or
the parties) required to provide indemnity hereunder written notice of such
Claim promptly after learning of such Claim, and the indemnifying party may, at
its option, undertake the defense thereof with counsel chosen by it but
reasonably satisfactory to the indemnified party. Failure to give prompt notice
of a Claim hereunder shall not affect the indemnifying party’s obligations under
this Section 7.4, except to the extent the indemnifying party is materially
prejudiced by such failure to give prompt notice. If the indemnifying party,
within thirty (30) days after notice of any such Claim, or such shorter period
as is reasonably required, fails to assume the defense of such Claim, the Buyer
Indemnitee or the Seller Indemnitee, as the case may be (each, an “Indemnitee”),
against whom such Claim has been made shall have the right, but shall not be
obligated, to undertake the defense, compromise or settlement of such Claim on
behalf and for the account and risk, and at the expense, of the indemnifying
party.
     (b) Anything in this Section 7.4 to the contrary notwithstanding, the
indemnifying party shall not enter into any settlement or compromise of any
action, suit or proceeding or consent to the entry of any judgment (A) which
does not include as an unconditional term thereof the delivery by the claimant
or plaintiff to the Indemnitee of a written release from all liability in
respect of such action, suit or proceeding, or (B) for other than monetary
damages without the prior written consent of the Indemnitee, which consent shall
not be unreasonably withheld.
     7.5 Buyer’s Right of Setoff. The parties hereby agree that any Damages
suffered by the Buyer (or any other Buyer Indemnitee) for which the Buyer
Indemnitees are entitled to be indemnified by Molfetta and the Trust pursuant to
Section 7.2 shall be subject to setoff against the Post-Closing Payment,
provided that Buyer shall be deemed to have waived its right of setoff with
respect to any particular Damages suffered by the Buyer (or any other Buyer
Indemnitee) unless Buyer delivers written notice (the “Notice”) of such Damages
to Seller within thirty (30) days after Buyer’s discovery of such Damages. Such
notice shall include a description in reasonable detail of the basis for the
indemnification claim, a good-faith estimate of the total amount of Damages
incurred or to be incurred by the Buyer Indemnitee, the name of the claimant, a
copy of the demand or other evidence of the claim and any other relevant

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information relating to the claim. Within fifteen (15) days of Seller’s receipt
of the Notice, Seller shall in a writing delivered to Buyer either accept or
dispute the claim disclosed in the Notice. If Seller fails to accept or dispute
in writing the claim disclosed in the Notice within such fifteen (15) day
period, Seller shall be deemed to have accepted such claim. Claims accepted by
Seller shall be subject to Buyer’s right of setoff against the Post-Closing
Payment. Claims disputed by Seller shall not be subject to Buyer’s right of
setoff against the Post-Closing Payment unless and until Seller’s liability for
the disputed claim is determined either by the mutual agreement of Buyer and
Seller or by a neutral, third-party arbitrator; provided, however, that, in the
event Seller disputes any such claim, the amount of Damages alleged in good
faith by Buyer to be subject to Buyer’s right of setoff shall be held in escrow
by a third party selected by the parties until Seller’s liability for the
disputed claim is determined as described above. In the event the Buyer asserts
its right of setoff hereunder, no more than the amount of Damages alleged in
good faith to be subject to such right of setoff shall be retained by the Buyer
and the remainder of the Post-Closing Payment (the “Post-Setoff Amount”) shall
be disbursed in accordance with Section 2.2(iii) on the first anniversary of the
Closing Date. In the event the Buyer fails to disburse the Post-Setoff Amount to
the Trust on the first anniversary of the Closing Date, the Seller may pursue
any and all remedies available to Seller at law, in equity or otherwise.
ARTICLE VIII — MISCELLANEOUS
     8.1 Press Releases and Public Announcements. The Seller shall not, and the
Seller shall not permit or cause the Company to, make any press release or other
public disclosure of this transaction without the prior written consent of the
Buyer. Without the prior written consent of the Seller, the Buyer shall not,
prior to the Closing, make any press release or other public disclosure of this
transaction; provided, however, that nothing contained in this Section 8.1 shall
prohibit the Buyer from issuing a press release or making other disclosure of
the transactions contemplated by this Agreement if required to do so by
applicable law.
     8.2 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements, or representations by or among the parties
hereto, written or oral, to the extent they related in any way to the subject
matter hereof including, without limitation, that certain letter agreement,
dated March 6, 2008, between Graymark Healthcare, Inc., Sleep Disorder Centers,
LLC and the Seller.
     8.3 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective heirs,
personal representatives, successors and permitted assigns. No party may assign
either this Agreement or any of his or its rights, interests, or obligations
hereunder without the prior written approval of the other parties hereto;
provided, however, that the Buyer may (i) assign any or all of its rights and
interests hereunder to one or more of its Affiliates, and (ii) designate one or
more of its Affiliates to perform its obligations hereunder (in any or all of
which cases the Buyer nonetheless shall remain responsible for the performance
of all of its obligations hereunder).
     8.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.

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     8.5 Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
     8.6 Notices. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given (i) if served
personally, on the day of such service, or (ii) if mailed by certified or
registered mail (return receipt requested), on the second business day after
mailing, or (iii) if transmitted by recognized overnight carrier, on the next
business day after tender to the carrier. Such communications shall be sent to
the following addresses:

     
If to Seller:
  Christina Molfetta
2246 Driftwood Tide Avenue
Henderson, NV 89052
 
   
Copy to:
  McDonald Carano Wilson, LLP
2300 West Sahara Avenue, Suite 1000
Las Vegas, NV 89102
 
   
 
  Attn: Cody R. Noble
 
   
If to Buyer:
  SDC Holdings, LLC
305 N. Bryant
Edmond, OK 73034
Attn: Vahid Salalati
 
   
Copy to:
  Hartzog Conger Cason & Neville
1600 Bank of Oklahoma Plaza
201 Robert S. Kerr Ave.
Oklahoma City, OK 73102
Attn: Steven C. Davis and John D. Robertson

Any party may change the address to which notices, requests, demands, claims and
other communications hereunder are to be delivered by giving the other parties
notice in the manner herein set forth.
     8.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Nevada without giving effect
to any choice or conflict of law provision or rule that would cause the
application of the laws of any jurisdiction other than the State of Nevada.
     8.8 Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by the Buyer and
the Seller. No waiver by any party of any default, misrepresentation or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.

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     8.9 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
     8.10 Expenses. Each of the parties hereto will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby. The Seller represents,
warrants and covenants that the Company has not borne and will not bear any of
the Seller’s costs and expenses (including any of its legal fees and expenses)
in connection with this Agreement or any of the transactions contemplated
hereby.
     8.11 Construction. The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word “including” shall mean including without limitation. The parties intend
that each representation, warranty and covenant contained herein shall have
independent significance.
     8.12 Incorporation of Exhibits and Disclosure Schedule. The Exhibits
identified in this Agreement and the Disclosure Schedule are incorporated herein
by reference and made a part hereof.
     8.13 Submission to Jurisdiction. In the event any party hereto institutes
any legal action in connection with any matter contained herein, that legal
action shall be instituted only in the District Court of Clark County, Nevada,
if in state court, and if in federal court, then in the United States District
Court for the District of Nevada, sitting in Las Vegas, Nevada. Each party
hereto irrevocably waives any objection which it may have at any time to the
venue of any suit, action or proceeding arising out of or relating to this
Agreement brought in any such court and, further, irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. Each party hereto irrevocably waives the right
to object, with respect to any suit, action or proceeding brought in any such
court, that such court does not have jurisdiction over such party.
     8.14 Specific Performance. Each of the parties acknowledges and agrees that
the other party will be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the parties agrees that the other
party shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof, in addition to any other remedy to which it may
be entitled, at law or in equity.
     8.15 Litigation Expense. In any action brought by a party hereto to enforce
the obligations of the other party hereto, the prevailing party shall be
entitled to collect from the

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other party to such action such party’s reasonable attorneys’ and accountants’
fees, court costs and other expenses incidental to such litigation.
     8.16 Negation of Third-Party Beneficiaries. Nothing contained in this
Agreement, express or implied, is intended to confer upon any person, other than
the parties hereto and their respective successors and permitted assigns, any
rights or remedies under or by reason of this Agreement, nor is anything in this
Agreement intended to relieve or discharge any obligations or Liability of any
third person to any party to this Agreement.
     8.17 Allocation of Purchase Price. The parties hereby agree that the
Purchase Price shall be allocated in accordance with Exhibit “E”.
[SIGNATURE PAGE TO FOLLOW]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

                  BUYER:   SDC HOLDINGS, LLC    
 
                    By:   /S/ VAHID SALALATI                  
 
      Name:
Title:   Vahid Salalati
President    
 
                TRUST:   THE HANNAH FRIENDS TRUST    
 
                    By:   /S/ CHRISTINA MOLFETTA                          
Christina Molfetta, Trustee    
 
                MOLFETTA:   /S/ CHRISTINA MOLFETTA                   Christina
Molfetta    

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