exv10w3






EXHIBIT 10.3




ASSET PURCHASE AGREEMENT




     This Asset Purchase Agreement (the “Agreement”) is made and entered into this 30th day of May,
2008, between and among Texas Center for TCSD of Waco, LLC, a Texas limited liability company
(“Buyer”), and Sleep Center of Waco, Ltd., a Texas limited partnership (“Seller”).



     This Agreement contemplates a transaction in which Buyer will purchase substantially all of
the assets (and assume certain of the liabilities) of Seller.



     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 The following capitalized words and phrases have the stated meanings:



     “Accounts Receivable” means all rights to payment and accounts receivable owned or
held by Seller in connection with services provided on or after March 1, 2008 by Seller, together
with all interest, late charges, penalties, collection fees and other sums that may be due and
payable in connection with such rights to payment or accounts receivable.



     “Acquired Assets” means all right, title, and interest in and to all of the assets of
Seller including, without limitation, all of (a) the tangible personal property identified on
Schedule 1.1 attached hereto, (b) its Accounts Receivable, (c) its Intellectual Property, goodwill
associated therewith, licenses and sublicenses granted and obtained with respect thereto, and
rights thereunder, remedies against infringements thereof, and rights to protection of interests
therein under the laws of all jurisdictions, (d) to the extent assignable, its franchises,
approvals, permits, licenses, orders, registrations, certificates, variances, and similar rights
obtained from governments and governmental agencies, (e) the Seller Agreements and all rights
thereunder, (f) its phone numbers and e-mail addresses; (g) its web sites and the contents thereof,
and (h) its books, records, ledgers, files, documents, correspondence, lists, plats, engineering
plans, drawings, and specifications, creative materials, advertising and promotional materials,
studies, reports, and other printed or written materials relating in any way to the business of
Seller; provided, however, that the Acquired Assets shall not include (i) the charter,
qualifications to conduct business as a foreign limited partnership, arrangements with registered
agents relating to foreign qualifications, taxpayer and other identification numbers, seals, minute
books, transfer books, and other documents relating to the organization, maintenance, and existence
of Seller as a limited partnership, (ii) any of the rights of Seller under this Agreement (or under
any side agreement between Seller on the one hand and Buyer on the other hand entered into on or
after the date of this Agreement), or (iii) any of the Excluded Assets.



     “Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgated
under the Securities Exchange Act of 1934, as amended.



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     “Assumed Liabilities” means (a) all obligations of Seller under the Seller Agreements
either (i) to furnish goods, services and other non-Cash benefits to another party after the
Closing, or (ii) to pay for goods, services and other non-Cash benefits that another party will
furnish to it after the Closing, and (b) all Liabilities and obligations of Seller set forth in
Schedule 1.1(a) attached hereto.



     “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.



     “Buyer Indemnitees” has the meaning set forth in Section 7.1 below.



     “Closing” has the meaning set forth in Section 2.1(d) below.



     “Closing Date” has the meaning set forth in Section 2.1(d) below.



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



     “Confidential Information” means any information concerning the business and affairs
of Seller that is not already generally available to the public other than as a result of a breach
of this Agreement by Seller.



     “Damages” has the meaning set forth in Section 7.1 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 and local 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, transportation, 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.



     “Excluded Assets” means the assets listed on Schedule 1.1(b) attached hereto.



     “Financial Statements” has the meaning set forth in Section 3.7 below.



     “Graymark” means Graymark Healthcare, Inc., an Oklahoma corporation.



     “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-



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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 assignable computer software (including data
and related documentation), and (g) all copies and tangible embodiments thereof (in whatever form
or medium).




     “Knowledge of Seller” means the actual knowledge after reasonable investigation of
Seller and its general partner. .



     “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.



     “Material Adverse Effect” means, with respect to Seller, any change, event, violation,
inaccuracy, circumstance or effect that is materially adverse to the business, assets, liabilities,
financial condition, results of operations or prospects of Seller taken as a whole, other than as a
result of: (i) changes adversely affecting the United States economy (so long as Seller is not
disproportionately affected thereby); (ii) changes adversely affecting the industry in which Seller
operates (so long as Seller is not disproportionately affected thereby); (iii) the announcement or
pendency of the transactions contemplated by this Agreement; (iv) changes in laws; or (v) acts of
war or terrorism.



     “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 3.7 below.



     “Most Recent Fiscal Month End” has the meaning set forth in Section 3.7 below.



     “Most Recent Fiscal Year End” has the meaning set forth in Section 3.7 below.



     “Ordinary Course of Business” means the ordinary course of business consistent with
past custom and practice (including with respect to quantity and frequency).



     “PBGC” means the Pension Benefit Guaranty Corporation.



     “Permitted Encumbrances” means the Security Interests specifically identified in
Schedule 1.1(a) attached hereto as Security Interests affecting some or all of the Acquired Assets
and that will not be released/terminated prior to Closing.



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     “Person” means an individual, a partnership, a corporation, an association, a limited
liability company, 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.



     “Security Interest” means any mortgage, pledge, lien, encumbrance, charge or other
security interest of any kind or nature, other than liens for Taxes not yet due and payable.



     “Seller Agreements” means the agreements identified in Schedule 1.1(c) attached
hereto.



     “Seller Indemnitees” has the meaning set forth in Section 7.2 below.



     “Subsidiary” means any corporation with respect to which a specified Person (or a
Subsidiary thereof) owns a majority of the common stock or has the power to vote or direct the
voting of sufficient securities to elect a majority of the directors.



     “Tax” means any federal, state or local 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.



ARTICLE II

PURCHASE AND SALE OF ASSETS




     2.1 Basic Transaction.




     (a) Purchase and Sale of Assets. On and subject to the terms and conditions of
this Agreement, at the Closing, Buyer shall purchase from Seller, and Seller shall sell,
transfer, convey, and deliver to Buyer, free and clear of all Security Interests and
restrictions on transfer other than the Permitted Encumbrances, all of the Acquired Assets
for the consideration specified below in this Article II.




     (b) Delivery of Graymark Stock. Within five (5) days after the Closing Date,
Buyer will deliver to Seller that number of shares of Graymark common stock, par value
$0.0001 per share (the “Graymark Stock”), having an aggregate Agreed Value equal to: (i) the
sum of Nine Hundred Thousand Dollars ($900,000), minus (ii) the value of all Graymark Stock
delivered to Plano Sleep Center, LTD and Southlake Sleep Center, LTD. under that certain
Asset Purchase Agreement between Plano Sleep Center, LTD, Southlake Sleep Center, LTD and
Capital Sleep Management, LLC of even date herewith (the “Plano Agreement”). For purposes of
this Agreement, the “Agreed Value” per share of the Graymark Stock shall mean the average
closing price for the Graymark Stock as



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reported by the OTC Bulletin Board for the ten (10) consecutive trading days ending on
the third trading day immediately preceding the Closing Date. In addition, Graymark, shall
deliver to Seller options to purchase an additional amount of Graymark Stock equal to (i)
35,000 shares minus (ii) that number of optioned shares of Graymark Stock received by Plano
Sleep Center, LTD and Southlake Sleep Center, LTD under the Plano Agreement; the exercise
price for all such options shall be Five Dollars ($5.00) per share. Such options shall
expire if not exercised on or before the second anniversary of the Closing Date.




     (c) Assumption of Liabilities. On and subject to the terms and conditions of
this Agreement, Buyer shall assume and become responsible for all of the Assumed Liabilities
at the Closing. Buyer will not assume or have any responsibility, however, with respect to
any other obligation or Liability of Seller not included within the definition of Assumed
Liabilities.




     (d) The Closing. Subject to and in accordance with the provisions of this
Agreement, the closing of the transactions contemplated by this Agreement (the “Closing”)
shall take place via fax or electronically transmitted signatures (with originals to be
delivered via overnight delivery), commencing at 9:00 a.m. local time on the third business
day following the satisfaction or waiver of all conditions to the obligations of the parties
to consummate the transactions contemplated hereby (other than conditions with respect to
actions the respective parties will take at the Closing itself), or at such other time and
place as Buyer and Seller may mutually determine (the “Closing Date”).




     (e) Deliveries at the Closing. At the Closing, (i) Seller will deliver to
Buyer the various certificates, instruments, and documents referred to in Section 8.1 below;
(ii) Buyer will deliver to Seller the various certificates, instruments, and documents
referred to in Section 8.2 below; (iii) Seller will execute, acknowledge (if appropriate),
and deliver to Buyer (A) a bill of sale in the form attached hereto as Exhibit “A”, and (B)
such other instruments of sale, transfer, conveyance, and assignment as Buyer and its
counsel reasonably may request; (iv) Buyer will execute, acknowledge (if appropriate), and
deliver to Seller (A) an assumption agreement in the form attached hereto as Exhibit “B” and
(B) such other instruments of assumption as Seller and its counsel reasonably may request;
and (v) Buyer will deliver to Seller the consideration specified in Section 2.1(b) above.



ARTICLE III

REPRESENTATIONS AND WARRANTIES CONCERNING

THE TRANSACTION




     Seller represents and warrants to Buyer that the statements contained in this Article III are
correct and complete as of the date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article III).



     3.1 Organization of Seller. Seller is a limited partnership duly organized, validly
existing, and in good standing under the laws of the State of Texas. Seller is not qualified or



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licensed to do business in any other jurisdiction. Attached hereto as Exhibit “C” are true,
accurate and complete copies of the currently effective Certificate of Limited Partnership and
Limited Partnership Agreement of Seller.




     3.2 Authorization of Transaction. Seller 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 Seller 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 as
limited by laws relating to the availability of specific performance, injunctive relief or other
equitable remedies.



     3.3 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 Seller is subject or any
provision of the Certificate of Limited Partnership or Limited Partnership Agreement of Seller 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
Seller 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 or lien of any kind upon any of its assets), in each case
excepting any such violation, conflict, breach or default which would not have a Material Adverse
Effect. Except as described in Schedule 3.3, Seller is not required to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any government, governmental
agency or other Person in order for the parties to consummate the transactions contemplated by this
Agreement (including the assignments and assumptions referred to in Section 2 above).



     3.4 Brokers’ Fees. Seller has no Liability or obligation to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement for which Buyer could become
liable or obligated or to which the Acquired Assets could become subject.



     3.5 Title to Assets. Except as described on Schedule 3.5, Seller has good and
marketable title to, or a valid leasehold interest in, all of 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, except for properties and assets disposed of in
the Ordinary Course of Business since the date of the Most Recent Balance Sheet. Without limiting
the generality of the foregoing, Seller has, or at Closing will have, good and marketable title to
all of the Acquired Assets owned by Seller, free and clear of any Security Interests (other than
the Permitted Encumbrances) or restrictions on transfer.



     3.6 Subsidiaries. Seller has no Subsidiaries. Except as described on Schedule 3.6,
Seller has no direct or indirect equity interest in any corporation, partnership, joint venture,
business association or other entity.



     3.7 Financial Statements. Seller has delivered to Buyer copies of the following
financial statements (collectively the “Financial Statements”) of Seller at Schedule 3.7:



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(i) unaudited balance sheets, statements of income, and statements of cash flows 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 consolidated balance sheet and statement of income (the “Most Recent Financial
Statements”) as of and for the three months ended March 31, 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 Seller as
of such dates and the results of operations of Seller for such periods, are true and correct in all
material respects and do not contain any misstatement of a material fact or omit to state any
material matter required to make such Financial Statements not misleading; provided, however, that
the Most Recent Financial Statements are subject to normal year-end adjustments and lack footnotes
and other presentation items.




     3.8 Events Subsequent to Most Recent Fiscal Year End. To the Knowledge of Seller,
since the Most Recent Fiscal Year End, there has not been any material adverse change in the
business, financial condition, operations, results of operations, or future prospects of Seller.
Without limiting the generality of the foregoing, since that date:




     (i) Seller 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;




     (ii) Seller 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;




     (iii) no party (including Seller) has accelerated, terminated, modified, or
canceled any material agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) to which Seller is a party or by which
it or any of its assets is bound;




     (iv) Seller has not imposed any Security Interest upon any of the Acquired
Assets;




     (v) Seller 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;




     (vi) Seller has not made any capital investment in, any loan to, or any
acquisition of the securities or assets of any other Person either involving more
than $5,000 or outside the Ordinary Course of Business;




     (vii) Seller has not granted any license or sublicense of any rights under or
with respect to any Intellectual Property;




     (viii) there has been no change made or authorized in the Certificate of
Limited Partnership or the limited partnership agreement of Seller;



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     (ix) Seller has not declared, set aside or paid any distribution to its
partners or redeemed, purchased or otherwise acquired any of its partnership
interests;




     (x) Seller has not experienced any material damage, destruction, or loss
(whether or not covered by insurance) to its property;




     (xi) Seller has not made any loan to, or entered into any other transaction
with, any of its partners or employees outside the Ordinary Course of Business;




     (xii) Seller 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);




     (xiii) there has not been any other occurrence, event, incident, action,
failure to act, or transaction involving Seller that would have a Material Adverse
Effect; and



     (xiv) Seller has not committed to any of the foregoing.



     3.9 Undisclosed Liabilities. Seller has no Liability (and there is no Basis for any
present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against Seller 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), (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 (iii) the Liabilities
identified on Schedule 3.9 attached hereto.



     3.10 Legal Compliance. Seller 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 Seller, threatened
against Seller alleging any failure so to comply.



     3.11 Tax Matters.




     (a) Seller has filed all Tax Returns that it was required to file. All such Tax
Returns were correct and complete in all respects. All Taxes owed by Seller (whether or not
shown on any Tax Return) have been paid or will be paid in accordance with the applicable
extensions. Except as described on Schedule 3.11, Seller 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 Seller does not file Tax Returns that it is or may
be subject to taxation by that jurisdiction. There are no Security Interests



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on any of the assets of Seller that arose in connection with any failure (or alleged
failure) to pay any Tax.




     (b) Seller 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,
partner, or other third party.




     (c) Seller has not waived any statute of limitations in respect of Taxes or agreed to
an extension of time with respect to a tax assessment or deficiency.




     (d) The unpaid Taxes of Seller (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 Seller in filing its Tax Returns.



     3.12 Real Property.




     (a) Seller does not own any real property.




     (b) Schedule 3.12(b) lists and describes briefly all real property leased by Seller.
Seller has not subleased any real property. Correct and complete copies of each of the
leases listed in Schedule 3.12(b) (as amended to date) are attached hereto as Exhibit “D”.
Except as described on Schedule 3.12(b), with respect to each such lease:




     (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) Seller 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;



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     (viii) there are no pending or, to the Knowledge of Seller, threatened
condemnation proceedings, lawsuits, or administrative actions relating to the
parcel, or other matters affecting adversely the use, occupancy or value, or the
marketability of title, thereof; and




     (ix) there are no parties (other than Seller) in possession of the parcel of
real property.



     3.13 Intellectual Property.




     (a) Seller does not own any Intellectual Property.




     (b) To the Knowledge of Seller, Seller has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property rights of
third parties. Seller has never received any charge, complaint, claim, demand or notice
alleging any such interference, infringement, misappropriation, or violation (including any
claim that Seller must license or refrain from using any Intellectual Property rights of any
third party). To the Knowledge of Seller, no third party has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any Intellectual Property rights
of Seller.




     (c) Schedule 3.13(c) identifies each item of Intellectual Property that any third party
owns and that Seller uses pursuant to license, sublicense, agreement or permission. Seller
has delivered to Buyer correct and complete copies of all such licenses, sublicenses,
agreements and permissions (as amended to date).




     (d) To the Knowledge of Seller, Seller 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.



     3.14 Tangible Assets. Seller 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. The parties acknowledge and agree that all tangible Acquired
Assets are being conveyed to Buyer “AS IS, WHERE IS,” and Seller makes any representation or
warranty regarding the merchantability or fitness for a particular purpose of any tangible Acquired
Asset.



     3.15 Contracts. Schedule 3.15 lists the following contracts and other agreements to
which Seller is a party or is bound:




     (i) any agreement (or group of related agreements) for the lease of personal
property to or from any Person;




     (ii) 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;



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     (iii) any agreement concerning a partnership or joint venture;




     (iv) 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;




     (v) any agreement concerning confidentiality or noncompetition;




     (vi) any agreement involving any of the partners of Sellers and/or their
respective Affiliates;




     (vii) any profit sharing, deferred compensation, severance or other plan or
arrangement for the benefit of its current or former officers and/or employees;




     (viii) any collective bargaining agreement;




     (ix) any agreement for the employment of any individual on a full-time,
part-time, consulting or other basis;




     (x) any agreement under which it has advanced or loaned any amount to any
Person;




     (xi) 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 Seller; or




     (xii) any other agreement (or group of related agreements) the performance of
which involves consideration in excess of $5,000.00.


A correct and complete copy of each written agreement listed in Schedule 3.15 (as amended to date)
and a written summary setting forth the terms and conditions of each oral agreement referred to in
Schedule 3.15 is attached hereto as Exhibit “E”. With respect to each of the Seller Agreements,
except as set forth in Schedule 3.15: (A) the Seller Agreement is legal, valid, binding,
enforceable and in full force and effect; (B) the Seller Agreement 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) 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 Seller Agreement; and (D) no party has
repudiated any provision of the Seller Agreement.




     3.16 Litigation. Schedule 3.16 sets forth each instance in which Seller (i) is
subject to any outstanding injunction, judgment, order, decree, ruling, or charge, or (ii) is a
party or, to the Knowledge of 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 or local jurisdiction or before any arbitrator.



     3.17 Employees. To the Knowledge of Seller, no executive, key employee or group of
employees has any plans to terminate employment with Seller. Seller is not a party to or bound



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by any collective bargaining agreement, nor has Seller experienced any strikes, grievances,
claims of unfair labor practices, or other collective bargaining disputes. Seller has not
committed any unfair labor practice. To the Knowledge of Seller, no organizational effort is
presently being made or threatened by or on behalf of any labor union with respect to employees of
Seller.




     3.18 ERISA Compliance. Schedule 3.18 identifies each and every employee benefit plan,
including each employee pension benefit plan and employee welfare benefit plan (as such terms are
defined in ERISA), which is currently maintained by Seller.



     With respect to such plans the following apply:




     (a) Each such employee benefit plan complies in form and in operation in all respects
with the applicable requirements of ERISA, the Code and all other applicable laws.




     (b) All required reports and descriptions including Forms 5500, the summary annual
reports and summary plan descriptions have been filed or distributed appropriately with
respect to each such employee benefit plan.




     (c) The requirements of Part VI of Subtitle B of Title I of ERISA and of Code Section
4980B have been met with respect to each such employee benefit plan which is an employee
welfare benefit plan.




     (d) All contributions including all employer contributions and employee salary
reduction contributions which are due have been paid to each such employee benefit plan
which is an employee pension benefit plan and all contributions for any period ending on or
before the Closing Date which are not yet due have been paid to each such employee pension
benefit plan or accrued in accordance with the past customs and practice of Seller. All
premiums or other payments for all periods ending on or before the Closing Date have been
paid with respect to each such employee benefit plan which is an employee welfare benefit
plan.




     (e) Each employee benefit plan which is an employee pension plan meets the requirements
for qualification under Code Section 401(a).




     (f) The market value of assets of each such employee benefit plan which is an employee
pension benefit plan other than a multi-employer plan equals or exceeds the present value of
all vested and nonvested liabilities thereunder determined in accordance with PBGC’s
methods, factors and assumptions applicable to the employee pension benefit plan terminating
on the date for determination.




     (g) Seller has delivered to Buyer correct and complete copies of all plan documents,
summary plan descriptions, the most recent determination letter received from the Internal
Revenue Service, the most recent Form 5500 annual report and all related trust agreements,
insurance contracts and other funding agreements which implement each such employee benefit
plan.



12









 






     (h) With respect to each employee benefit plan that Seller maintains or ever has
maintained or to which Seller contributes, ever has contributed, or ever has been required
to contribute:




     (A) No such employee benefit plan which is an employee pension benefit plan
(other than any multiemployer plan) has been completely or partially terminated or
been the subject of a reportable event as to which notices would be required to be
filed with the PBGC. No proceeding by the PBGC to terminate any such employee
pension benefit plan (other than any multiemployer plan) has been instituted or, to
the Knowledge of Seller, is threatened.




     (B) There have been no prohibited transactions with respect to any such
employee benefit plan. No fiduciary has any liability for material breach of
fiduciary duty or any other material failure to act or comply in connection with the
administration or investment of the assets of any such employee benefit plan. No
action, suit, proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any such employee benefit plan
(other than routine claims for benefits) is pending or, to the Knowledge of Seller,
is threatened.




     (C) Seller has not incurred any material 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) to
the PBGC (other than PBGC premium payments) or otherwise under Title IV of ERISA
(including any withdrawal liability) or under the Code with respect to any such
employee benefit plan which is an employee pension benefit plan.




     (i) Seller has not ever contributed to, and has not ever been required to contribute
to, any multiemployer plan, and has no material 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
withdrawal Liability, under any multiemployer plan.




     (j) Seller has not ever maintained or contributed to, and has not ever been required to
contribute to any employee welfare benefit plan providing medical, health, or life insurance
or other welfare-type benefits for current or future retired or terminated employees, their
spouses, or their dependents (other than in accordance with Code Section 4980B).



     3.19 Environment, Health, and Safety.




     (a) Seller 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 Seller alleging any failure so
to comply. Without limiting the generality of the preceding sentence, Seller has obtained
and been in compliance in all material respects with all of the terms



13









 







and conditions of all permits, licenses, and other authorizations which are required
under, and has complied with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables which are contained in,
all Environmental, Health, and Safety Laws.




     (b) Seller has no Liability (and Seller 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 Seller 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) To the Knowledge of Seller, all properties and equipment used in the business of
Seller have been free of asbestos, PCB’s, methylene chloride, trichloroethylene,
1,2-trans-dichloroethylene, dioxins, dibenzofurans, and other hazardous substances or
wastes.




     (d) To the Knowledge of Seller, following the Closing, no material capital expenditures
shall be required by Buyer to insure compliance with any Environmental, Health and Safety
Law. To the Knowledge of Seller, there is no pending audit by any federal, state, or local
governmental authority with respect to the storage, burial, release, transportation, or
disposal of hazardous substances or wastes by Seller; or relating to the facilities of
Seller. Seller does not have any agreement or arrangement with any foreign, federal, state,
or local governmental authority or any other third party relating to any such environmental
matter or environmental cleanup.




     (e) Seller has delivered to Buyer true and complete copies and results of any reports,
studies, analyses, tests or monitorings possessed or initiated by Seller pertaining to
hazardous materials or hazardous activities in, on or under any facility owned, leased or
operated by Seller or concerning compliance by Seller with Environmental, Health, and Safety
Laws.



     3.20 Certain Business Relationships With Seller. Except as described in Schedule
3.20, none of the partners of Seller or any of their Affiliates has been involved in any business
arrangement or relationship with Seller within the past twelve months, and none of the partners of
Seller or any of their Affiliates owns any asset, tangible or intangible, which is used in the
business of Seller.



     3.21 Assumed Liabilities. All Liabilities of Seller to be assumed by Buyer hereunder
have arisen in the Ordinary Course of Business, are bona fide and are properly recorded on the
books of Seller.



     3.22 Partners. Schedule 3.22 identifies each of the partners of Seller and their
respective ownership interests in Seller, and no other Person currently has the right to acquire
any additional equity interests of Seller.



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     3.23 Personnel. Schedule 3.23 lists all employees of Seller and their respective
rates of compensation.



     3.24 Powers of Attorney. Except as described on Schedule 3.24, there are no
outstanding powers of attorney executed on behalf of Seller.



     3.25 Insurance. Seller has been covered during the past three (3) years by insurance
in scope and amount customary and reasonable for the business in which it has engaged during the
aforementioned period.



     3.26 Disclosure. The representations and warranties contained in this Article III 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 III not misleading.



     3.27 Consents. Except as provided in Schedule 3.3, no consent, approval or
authorization of, or registration or filing with, any Person is required in connection with the
execution and delivery of this Agreement by Seller or for the consummation by Seller of the
transactions contemplated hereby.



ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER




     Buyer represents and warrants to Seller that the statements contained in this Article IV are
correct and complete as of the date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article IV).



     4.1 Organization. Buyer is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Oklahoma.



     4.2 Authorization of Transaction. Buyer and Graymark each 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 Buyer and Graymark, 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.



     4.3 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 Buyer or Graymark or any of
their respective assets is subject or any provision of the organizational documents of Buyer or
Graymark 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 Buyer or Graymark is a party or by which it is bound or to which any of its assets is
subject. Neither Buyer nor Graymark is required to give any notice to, make any filing with, or



15









 




obtain any authorization, consent, or approval of any government or governmental agency in
order for the parties to consummate the transactions contemplated by this Agreement.




     4.4 Brokers’ Fees. 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 Seller could become liable or obligated.



     4.5 Valid Issuance of Graymark Stock. The shares of Graymark Stock to be delivered to
Seller at Closing have been duly authorized and, upon issuance thereof in accordance with the terms
of this Agreement, will be validly issued, fully paid and non-assessable.



     4.6 Acknowledgements by Buyer. Buyer hereby acknowledges that, since March 1, 2008,
it has been managing the day-to-day operations of the sleep diagnostic facility owned by Seller.
Buyer further acknowledges that it has had an opportunity to ask questions of and receive answers
from representatives of Seller concerning the Acquired Assets and the businesses and operations of
Seller. Notwithstanding anything to the contrary herein, no such answers, information or
disclosures provided by any representative of Seller shall be deemed to amend or supplement the
representations and warranties made by Seller herein or prevent or cure any misrepresentation,
breach of warranty or breach of covenant by Seller.



ARTICLE V

PRECLOSING COVENANTS




     5.1 Covenants. The parties agree as follows with respect to the period between the
execution of this Agreement and the Closing:




     (a) General. Each of the parties will use commercially reasonable efforts to
take all action and to do all things necessary, proper, or advisable in order to consummate
and make effective the transactions contemplated by this Agreement (including satisfaction,
but not waiver, of the closing conditions set forth in Article VIII below).




     (b) Notices and Consents. Seller will give any notices to third parties, and
Seller will use its best efforts to obtain any third party consents, that Buyer reasonably
may request in connection with the matters referred to in Section 3.3 above.




     (c) Operation of Business. Seller will not engage in any practice, take any
action, or enter into any transaction outside the Ordinary Course of Business. Buyer will
cause Capital Sleep Management, LLC to operate the sleep disorder facility of Seller in
accordance with the terms of the management agreement entered into between Seller and
Capital Sleep Management, LLC.




     (d) Preservation of Business. Seller shall keep its business and properties
substantially intact, including its present operations, physical facilities, working
conditions and relationships with lessors, licensors, suppliers, customers and employees.




     (e) Notice of Developments. Each party will give prompt written notice to the
other parties of any material adverse development causing a breach of any of such party’s
own representations and warranties (or any other party’s representations and



16









 







warranties) in Articles III and IV above. No disclosure by any party pursuant to this
Section 5.1(e), however, shall be deemed to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant.




     (f) Exclusivity. During the term of this Agreement, Seller will not (i)
solicit, initiate, or encourage the submission of any proposal or offer from any Person
relating to the acquisition of any securities, or any substantial portion of the assets, of
Seller (including any acquisition structured as a merger, consolidation or share exchange)
or (ii) participate in any discussions or negotiations regarding, furnish any information
with respect to, assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. Seller will notify Buyer
immediately if any Person makes any proposal, offer, inquiry, or contact with respect to any
of the foregoing.



ARTICLE VI

COVENANTS




     Seller hereby covenants and promises to Buyer and, where expressly stated, Buyer hereby
covenants and promises to Seller, the following:



     6.1 Employees. Buyer shall have no obligation to make an offer of employment to any
employee of Seller. Notwithstanding the preceding sentence, any employee of Seller hired by Buyer
shall become an employee of Buyer under Buyer’s plans and practices, and shall be subject to the
terms and conditions of Buyer’s plans, including the terms of eligibility. At or prior to the
Closing, Seller shall pay to its employees all amounts owing to such employees for earned vacation
and sick leave in accordance with Seller’s current policies. Buyer shall not assume and shall not
be obligated to continue or assume any employee benefit plan or any other type of employee benefit
or compensation plan or arrangement or any employer payroll policy or practice established,
maintained, or contributed to by Seller. Buyer is not a “successor employer” with respect to any
employee benefit plan of Seller. Buyer and Seller agree that the provisions of this Section 6.1
are solely between and for the benefit of Buyer and Seller and do not inure to the benefit of, or
confer rights upon, any third party, including any employee of Buyer or Seller.



     6.2 Miscellaneous. Seller shall retain liability for and Seller shall indemnify and
hold Buyer harmless against:




     (A) All claims asserted by third persons for breach of contract, tort,
infringement, violation of law, or other conduct occurring on or before the Closing
Date in connection with the business of Seller; and




     (B) All claims relating to compliance by Seller with the applicable provisions
of ERISA, the Code and other applicable laws.



     6.3 Due Diligence Investigation. For the purpose of permitting Buyer and its
representatives to conduct a due diligence review (the “Diligence Review”) of Seller, Seller shall
afford Buyer and its representatives full and complete access to the books and records, financial
statements, Tax Returns, facilities, employees and such other information of Seller as Buyer may



17









 




reasonably request to evaluate the business, operations, properties, assets, Liabilities and
prospects of Seller. In connection with the Diligence Review, representatives of Buyer shall be
entitled to consult with representatives, officers and employees of Seller. The Diligence Review
and any such consultations shall be conducted in a manner not to unreasonably interfere with the
operation of the business of Seller.




     6.4 Confidentiality. Any non-public information furnished to or obtained by Buyer
from Seller or any of its partners, officers, employees, attorneys, accountants or authorized
representatives in connection with the Diligence Review pursuant to Section 6.3 hereof shall be
considered “Evaluation Material.” Evaluation Material shall not include public information or
non-public information obtained by Buyer or its Affiliates or representatives from a third party
who is lawfully in possession of such information and who has the legal right to transmit such
information. In the event that the transactions contemplated by this Agreement are not
consummated, Buyer (i) agrees to return to Seller all written evaluation materials and copies
thereof furnished by Seller to Buyer, (ii) agrees to destroy all documents, notes and other work
product derived from the Evaluation Material, and (iii) agrees to promptly confirm in writing to
Seller the fact of such destruction. Except as otherwise required by law, Buyer agrees to keep the
Evaluation Material confidential, not to use the Evaluation Material for any purpose other than to
the extent contemplated hereby, or permit any such Evaluation Material to be made available to
third parties other than its designated representatives or agents who Buyer will direct to maintain
the Evaluation Material confidential. The obligations of Buyer under the provisions of this
Section 6.4 shall survive for a period of three (3) years after the date of any termination of this
Agreement.



     6.5 Confidential Information. Seller will treat and hold as such all of the
Confidential Information, refraining from using any of the Confidential Information except in
connection with this Agreement, and, following the Closing, will deliver promptly to Buyer or
destroy, at the request and option of Buyer, all tangible embodiments (and all copies) of the
Confidential Information which are in its possession. In the event that 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, Seller will notify Buyer promptly of the request or requirement so that
Buyer may seek an appropriate protective order or waive compliance with the provisions of this
Section 6.5. If, in the absence of a protective order or the receipt of a waiver hereunder, Seller
is, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal or
governmental agency or else stand libel for contempt, Seller may disclose the Confidential
Information to the tribunal or governmental agency; provided, however, that Seller shall use
commercially reasonable efforts to obtain, at the request and expense of Buyer, an order or other
assurance that confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as Buyer shall designate.



     6.6 Continued Existence of Sellers. Seller hereby covenants and agrees that it shall
not dissolve or otherwise terminate its existence as a limited partnership for at least one (1)
year after the Closing Date.



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     6.7 Survivability. The provisions of this Article VI shall survive the Closing Date;
provided, however, that in the event that the transactions contemplated hereby are consummated,
Buyer’s obligations under Section 6.4 shall terminate as of the Closing Date.



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 one (1) year. 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 Seller,
the Buyer or any of their respective partners, officers, employees, affiliates, controlling
persons, agents or representatives based upon, directly or indirectly, any of the representations,
warranties, covenants or agreements contained herein after the first anniversary of the Closing
Date. 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 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 Seller. Subject to the terms and conditions set forth herein,
Seller shall indemnify and hold harmless Buyer and its members, managers, officers, employees,
attorneys, accountants, 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”) 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
Seller herein; or




     (ii) Any breach or nonperformance (partial or total) of any covenant or
agreement of Seller contained herein.



     7.3 Indemnification by Buyer. Subject to the terms and conditions set forth herein,
Buyer shall indemnify and hold harmless Seller and its partners, officers, employees, attorneys,
accountants and other agents and Affiliates (collectively, the “Seller Indemnitees”) in respect of
any Damages 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 Buyer
herein; or




     (ii) Any breach or nonperformance (partial or total) of any covenant or
agreement of Buyer contained herein.



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     7.4 Third Party Indemnification. The obligation of Seller to indemnify the Buyer
Indemnitees under Section 7.2 hereof and the obligation 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:




     (i) 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.




     (ii) 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 Limitations. Notwithstanding anything to the contrary in this Article VII, in no
event shall the liability for indemnification of any Seller pursuant to Section 7.2 exceed the
aggregate Agreed Value of the Graymark Stock delivered to such Seller pursuant to Section 2.1(b)
hereof. For example, and as an illustration only, in the event the aggregate Agreed Value of the
Graymark Stock delivered to Seller is $200,000, Seller’s maximum liability for indemnification
pursuant to Section 7.2 would be $200,000.



ARTICLE VIII

CLOSING CONDITIONS




     8.1 Conditions to the Obligations of Buyer. Each and every obligation of Buyer
hereunder shall be subject to the satisfaction, as of Closing, of each of the following conditions,
each of which can be waived by Buyer, but only in writing:




     (a) All of the representations and warranties of Seller set forth in Article III above
shall be true and correct as of the date hereof and shall be deemed to have been made again
at Closing and shall then be true and correct;



20









 






     (b) Seller shall have procured all of the third party consents specified in Section
5.1(b) above;




     (c) Each of the covenants and other obligations of Seller to be performed by Seller on
or before Closing pursuant to the terms hereof shall have been duly performed and complied
with in all material respects;




     (d) No action, suit, or proceeding shall be pending before any court or governmental
agency or before any arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (i) prevent consummation of any of the transactions contemplated by
this Agreement, (ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation, or (iii) affect adversely the right of Buyer to own the
Acquired Assets and to operate the former business of Seller;




     (e) Seller shall have delivered to Buyer a certificate, in form reasonably satisfactory
to Buyer, to the effect that each of the conditions specified above in Section 8.1(a)-(d)
has been satisfied in all respects with respect to Seller;




     (f) Buyer and its representatives shall have been provided full and complete access to
the books and records, financial statements, Tax Returns, facilities, employees and such
other information of Seller as Buyer may have reasonably requested to evaluate the business,
operations, properties, assets, Liabilities and prospects of Seller. If, in its sole
discretion, Buyer decides for any reason not to proceed with the transactions contemplated
hereby, then Buyer may terminate this Agreement by giving notice thereof to Seller on or
prior to the Closing Date;




     (g) (i) Each of the Persons listed on Schedule 8.1(g)(i) shall have executed and
delivered to Buyer a release in the form attached hereto as Exhibit “F” releasing Seller
from any and all claims that such Person may have against Seller as of the Closing Date;




     (h) All actions to be taken by Seller in connection with consummation of the
transactions contemplated hereby and all certificates, instruments, and other documents
required to effect the transactions contemplated hereby are reasonably satisfactory in form
and substance to Buyer;




     (i) Icon Sleep Texas, LP (“Icon”) shall have executed and delivered to Buyer an
agreement in form and substance satisfactory to Buyer in its sole discretion indemnifying
Buyer against any inaccuracy in or breach of any of the representations and warranties made
by Seller in Sections 3.2, 3.3, 3.4 and/or the second sentence of Section 3.5 hereof;




     (j) All Security Interests (other than the Permitted Encumbrances) affecting the
Acquired Assets (or any of them) shall have been terminated;



21









 






     (k) Buyer have entered into a Real Estate Lease Agreement with Waco Sleep Properties I,
LP covering the premises located at 7106 Sanger Avenue, Waco, Texas on terms satisfactory to
Buyer in its sole discretion;




     (l) Charles Willis, II, M.D. (“Willis”) shall have assigned to Buyer all of his right,
title and interest in and to that certain Lease Agreement, dated October 18, 2005, between
Willis and Court Square Leasing Corporation (“CSL”), Buyer shall have assumed all
obligations and liabilities of Willis arising or accruing under such Lease Agreement from
and after the Closing Date, and CSL shall have consented in writing to such assignment and
assumption;




     (m) Willis shall have assigned to Buyer all of his right, title and interest in and to
that certain Lease Agreement, dated December 18, 2005, between Willis and US Express Leasing
(“US Express”), Buyer shall have assumed all obligations and liabilities of Willis arising
or accruing under such Lease Agreement from and after the Closing Date, and US Express shall
have consented in writing to such assignment and assumption;




     (n) Icon shall have transferred to Buyer, free and clear of any Security Interests, all
of the assets identified on Schedule 8.1(n) for a purchase price of $1,100,000. Such
transfer shall be evidenced by a Bill of Sale executed by Icon in favor of Buyer in form and
substance satisfactory to Buyer in its reasonable discretion;




     (o) FMB Medical Equipment LLC (“FMB”) shall have transferred to Buyer, free and clear
of any Security Interests, all of the assets identified on Schedule 8.1(o) for a purchase
price of $340,000. Such transfer shall be evidenced by a Bill of Sale executed by FMB in
favor of Buyer in form and substance satisfactory to Buyer in its reasonable discretion; and




     (p) The transactions contemplated by the Plano Agreement shall have been consummated
prior to or contemporaneous with the Closing.



     8.2 Conditions to the Obligations of Seller. Each and every obligation of Seller
hereunder shall be subject to the satisfaction, as of Closing, of each of the following conditions,
each of which can be waived by Seller, but only in writing:




     (a) All of the representations and warranties of Buyer set forth in Article IV above
shall be true and correct as of the date hereof and shall be deemed to have been made again
at Closing and shall then be true and correct;




     (b) Each of the covenants and other obligations of Buyer to be performed by it on or
before Closing pursuant to the terms hereof shall have been duly performed and complied with
in all material respects;




     (c) No action, suit, or proceeding shall be pending before any court or governmental
agency or before any arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (i) prevent consummation of any of the transactions contemplated by
this Agreement or (ii) cause any of the transactions



22









 







contemplated by this Agreement to be rescinded following consummation (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect);




     (d) Buyer shall have delivered to Seller a certificate, in form reasonably satisfactory
to Seller, to the effect that each of the conditions specified above in Section 8.2(a)-(c)
has been satisfied in all respects; and




     (e) All actions to be taken by Buyer in connection with consummation of the
transactions contemplated hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby are reasonably
satisfactory in form and substance to Seller.



ARTICLE IX

TERMINATION




     9.1 Mutual Consent. This Agreement may be terminated by the mutual written consent of
Buyer and Seller.



     9.2 By Buyer.




     (a) Default. This Agreement may be terminated by Buyer if a material default
shall be made by Seller in the observance of or in the due and timely performance by Seller
of any of the agreements or covenants of Seller herein contained, or if there shall have
been a material breach by Seller of any of the warranties and representations of Seller
herein contained, or if the conditions of this Agreement to be complied with or performed by
Seller at or before Closing shall not have been complied with or performed at the time
required for such compliance or performance and such non-compliance or non-performance shall
not have been waived by Buyer.




     (b) Due Diligence Review. Buyer may terminate this Agreement in accordance
with the terms of Section 8.1(f).



     9.3 By Seller. This Agreement may be terminated by Seller if a material default shall
be made by Buyer in the observance of or in the due and timely performance by Buyer of any of the
agreements or covenants of Buyer herein contained, or if there shall have been a material breach by
Buyer of any of the warranties and representations of Buyer herein contained, or if the conditions
of this Agreement to be complied with or performed by Buyer at or before Closing shall not have
been complied with or performed at the time required for such compliance or performance and such
non-compliance or non-performance shall not have been waived by Seller.



     9.4 Effect of Termination. If this Agreement is terminated pursuant to Section 9.1,
9.2 or 9.3 above, all rights and obligations of the parties hereunder shall terminate without any
liability to any other party hereto; provided, however, that if the basis of termination is a
material breach or default by Buyer, on the one hand, or Seller, on the other hand, of one or more
of the provisions of this Agreement, the party or parties then in breach or default shall be liable
to the nonbreaching party or parties for all damages resulting from such breach or default; and
further provided, however, that Buyer’s obligation to treat Evaluation Material in a confidential
manner, as set forth in Section 6.4 above, shall survive any such termination.



23









 





ARTICLE X

FEDERAL SECURITIES LAWS




     10.1 Unregistered Stock. Seller hereby acknowledges that the shares of Graymark Stock
to be delivered to it pursuant to this Agreement will not be registered (referred to sometimes
herein as “Unregistered Stock”) under the Securities Act of 1933, as amended (the “Act”), or any
other securities law. Accordingly, such Unregistered Stock is not freely transferable except as
permitted under various exemptions contained in the Act and the rules and regulations of the U.S.
Securities and Exchange Commission interpreting said Act. Seller therefore covenants, warrants and
represents that none of the shares of Graymark Stock issued to it in accordance with this Agreement
will be offered, sold, assigned, pledged, hypothecated, transferred or otherwise disposed of except
after full compliance with all of the applicable provisions of the Act and the rules and
regulations of the Securities and Exchange Commission and all applicable state securities laws.



     10.2 Legend. All Unregistered Stock issued in accordance with this Agreement shall
bear the following legend (or a legend substantially similar thereto):




THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY
OTHER SECURITIES LAW, AND NO REOFFER, SALE, TRANSFER, PLEDGE OR
OTHER DISPOSITION THEREOF MAY BE MADE UNLESS, IN THE WRITTEN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER, SUCH TRANSACTION
WILL NOT REQUIRE REGISTRATION UNDER THE ACT OR ANY OTHER SECURITIES
LAW.



     10.3 Securities Law Representations. As of the Closing Date, Seller hereby makes the
following representations and warranties to and for the benefit of Buyer and Graymark:




     (a) Seller has been provided with the various filings described in Schedule 10.3, and
has been provided as much time and opportunity as it deemed appropriate to review and study
such information and to consult with Buyer and Graymark regarding the merits and risks of
the transactions contemplated by this Agreement;




     (b) Seller has had adequate opportunity to ask questions of and receive answers from
representatives of Buyer and Graymark concerning any and all matters pertaining to Buyer and
Graymark and the transactions contemplated by this Agreement which it deemed appropriate;




     (c) Seller is the true party in interest and is not acquiring any of the Graymark Stock
for the benefit of any other Person; provided, however, that Seller intends to transfer its
shares of Graymark Stock to certain partners and creditors in part to satisfy certain
obligations, subject to and in accordance with subsection (e) below;



24









 






     (d) The Graymark Stock being acquired hereunder by Seller is being acquired for its own
account for investment, and is not being acquired with a view to resale, redistribution,
subdivision or fractionalization thereof; provided, however, that Seller intends to transfer
its shares of Graymark Stock to certain partners and creditors in part to satisfy certain
obligations, subject to and in accordance with subsection (e) below;




     (e) Prior to any transfer or assignment of shares of Graymark Stock to any of its
partners or creditors as contemplated in this Agreement, Seller shall cause to be delivered
(i) to each of its assignees, with each assignee’s written confirmation of receipt, the
various filings described in Schedule 10.3(e) and as supplemented with all additional
reports filed by Graymark with the U.S. Securities and Exchange Commission following the
Closing Date, and (ii) to Graymark written representations of the assignee that the assignee
qualifies as an “accredited investor” as defined in Rule 501(a) of Regulation D as
promulgated by the U.S. Securities and Exchange Commission in effect at the time of the
assignment of the Graymark Stock and representations substantially the same as those set
forth in subsections (a), (b), (c) and (d) above and subsections (f) and (g) below. Any
assignment of any of the Graymark Stock shall require the consent of Graymark, which consent
shall not be unreasonably withheld when all conditions of transfer or assignment set forth
herein are complied with or waived in writing by Graymark;




     (f) Seller has such knowledge and experience in financial and business matters and
investments in general that it is capable of evaluating the merits and risks of the
ownership of the Graymark Stock by it; and




     (g) Seller understands that the Graymark Stock that it will receive cannot be readily
sold without compliance with applicable state and federal securities laws.



     10.4 Piggyback Registrations.




     (a) Right to Piggyback. In the event shares of common stock of Graymark are to
be registered by Graymark under the Securities Act of 1933, as amended (the “Securities
Act”), within twelve months after the Closing Date, and the form of registration
statement to be used permits the inclusion of the Graymark Stock therein (a “Piggyback
Registration”), Graymark will give prompt written notice to Seller of its intention to
effect such a registration and will include in such registration, subject to the provisions
of Section 10.4(b), all Graymark Stock with respect to which Graymark has received a written
request from Seller for inclusion therein within twenty-one (21) days after Graymark’s
notice has been given. Graymark shall pay all registration expenses for such Piggyback
Registration. This Section 10.4 shall not apply to a registration effected solely to
implement an employee benefit plan or to any other form or type of registration which does
not permit inclusion of Graymark Stock, including without limitation Form S-4 and Form S-8.




     (b) Priority on Registrations. If a Piggyback Registration is an underwritten
offering and the managing underwriters advise Graymark in writing that in their opinion the
number of securities requested to be included in such offering creates a substantial risk
that the price per share of Common Stock will be reduced or that the number of



25









 







securities requested to be included is greater than the underwriters are prepared to
sell, Graymark will include in such registration prior to the Graymark Stock, the securities
proposed to be sold by Graymark and by any other person granted registration rights senior
to the Graymark Stock. Graymark will then include in such registration the Graymark Stock
requested to be included in such registration which in the opinion of such underwriters can
be sold in such offering without creating such a risk or exceeding such number. Nothing in
this Agreement shall prohibit Graymark from granting registration rights senior to the
rights granted herein with respect to the Graymark Stock. In the event that a Piggyback
Registration for which Graymark gives notice under Section 10.4(a) is for holders of
Graymark’s securities other than the Seller and is pursuant to the exercise by such other
holders of demand registration rights granted to them after the date hereof, then Seller
shall not be entitled to sell shares in such Piggyback Registration except with the consent
of (and subject to such limitations and restrictions as are imposed by) such other holders.




     (c) Indemnification. Graymark agrees to indemnify, to the fullest extent
permitted by law, Seller, or any assignee of the Graymark Stock hereunder, against all
losses, claims, damages, liabilities and expenses (including without limitation reasonable
and customary attorneys’ fees) caused by any untrue or alleged untrue statement of a
material fact contained in any registration statement, prospectus or preliminary prospectus
or any amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained in any information
furnished in writing to Graymark by Seller, or any Seller assignee of the Graymark Stock
hereunder, expressly for use therein or by Seller’s or assignee’s failure to deliver a copy
of the prospectus or any amendments or supplements thereto. In connection with any
registration statement in which Seller, or any Seller assignee of the Graymark Stock
hereunder, is participating, Seller, or assignee of the Graymark Stock hereunder, severally,
but not jointly, shall indemnify Graymark, its affiliates, officers, directors and each
person who controls Graymark (within the meaning of the Securities Act), insofar as and to
the extent that losses, claims, damages, liabilities, and expenses (including without
limitation reasonable and customary attorneys’ fees) are caused by any untrue statement of a
material fact contained in the registration statement, prospectus or preliminary prospectus
or any amendment or supplement thereto or any omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, but only to the
extent that such untrue statement or omission is contained in any information or affidavit
so furnished in writing by Seller, or such assignee of the Graymark Stock hereunder,
expressly for use therein.



ARTICLE XI

MISCELLANEOUS




     11.1 Press Releases and Public Announcements. The parties agree that Buyer and/or
Graymark may issue a press release or make other disclosure of this Agreement at such times and in
the manner which they believe is necessary or appropriate. Prior to issuing any such press release
or other disclosure, Buyer shall first advise Seller. Seller shall not make any press release or
other public disclosure of this transaction without the prior written consent of Buyer.



26









 





     11.2 No Third Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any Person other than the parties hereto and their respective successors and
permitted assigns.



     11.3 Entire Agreement. This Agreement (including the documents referred to herein)
constitutes the entire agreement between the parties and supersedes any prior understandings,
agreements, or representations by or between the parties, written or oral, to the extent they
related in any way to the subject matter hereof including, without limitation, that certain letter
agreement, dated as of January 24, 2008, between Sleep Development Group, LP and Graymark.



     11.4 Succession and Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties named herein and their respective successors and permitted assigns. No
party may assign either this Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of the other parties hereto; provided, however, that 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 Buyer nonetheless shall remain responsible for the performance of all of its
obligations hereunder).



     11.5 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.



     11.6 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.



     11.7 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, and (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:

	 	Sleep Center of Waco, Ltd.
	 

	 	620 E. Southlake Blvd.
	 

	 	Southlake, Texas 76092
	 

	 	Attn: Thomas Whitaker
	 
	 	 
	              Copy to:

	 	Law Offices of Bert Starr
	 

	 	2701 N. Dallas Parkway, Ste 540
	 

	 	Plano, Texas 75093
	 

	 	Attn: Bert Starr
	 
	 	 
	              If to Buyer:

	 	SDC Holdings, LLC
	 

	 	305 N. Bryant
	 

	 	Edmond, OK 73034
	 

	 	Attn: Vahid Salalati






27









 






	 	 	 
	              Copy to:

	 	Hartzog Conger Cason & Neville
	 

	 	1600 Bank of Oklahoma Plaza
	 

	 	201 Robert S. Kerr
	 

	 	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.




     11.8 Governing Law. This Agreement shall be governed by and construed in accordance
with the domestic laws of the State of Texas 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 Texas.



     11.9 Amendments and Waivers. No amendment of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by each of the parties hereto. 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.



     11.10 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.



     11.11 Expenses. Buyer and Seller will each bear its own costs and expenses (including
legal fees and expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.



     11.12 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.



     11.13 Incorporation of Exhibits and Schedules. The Exhibits and Schedules identified
in this Agreement are incorporated herein by reference and made a part hereof.



     11.14 Litigation Expense. In any action brought by a party hereto to enforce the
obligations of any other party hereto, the prevailing party shall be entitled to collect from the
other parties to such action such party’s reasonable attorneys’ and accountants’ fees, court costs
and other expenses incidental to such litigation.



28









 





     11.15 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.



     11.16 Payment of Sales Taxes. Buyer agrees that it shall be responsible for, pay and
discharge all sales and/or excise taxes, if any, imposed by the State of Texas or any other county
or municipal taxing authority on the transactions to be performed pursuant to this Agreement
including, without limitation, the sale of furniture, fixtures and equipment. At the Closing,
Buyer shall remit to Seller all such amounts believed to be owed with regard to the sale of the
Acquired Assets. Should Seller be assessed any additional or other amounts of sales taxes or
assessments not collected from Buyer at the Closing, Seller shall notify Buyer of said assessment
and Buyer shall have the opportunity to contest and defend such additional assessments. If it is
ultimately determined that any additional sales and/or excise taxes are required to be paid in
connection with the transactions contemplated herein, then Buyer shall immediately pay such taxes.



     11.17 Completion of Schedules and Exhibits. The parties acknowledge that certain of
the Schedules and the Exhibits to this Agreement have not been prepared as of the date of this
Agreement. The parties will cooperate with each other in preparing such Schedules and Exhibits
following the execution of this Agreement. All final Schedules and Exhibits must be in a form
satisfactory to Buyer in its sole discretion.



*****




29









 








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



	 	 	 	 	 
	BUYER: 	TCSD OF WACO, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	SELLER: 	SLEEP CENTER OF WACO, LTD., a Texas

limited partnership



By: Waco SC, LLC, its General Partner

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



30









 






	 	 	 	 	 



JOINDER BY GRAYMARK HEALTHCARE, INC.





     Graymark Healthcare, Inc., an Oklahoma corporation and the sole member of Texas Center for
TCSD of Waco, LLC, hereby joins in this Asset Purchase Agreement for the sole purpose of
guaranteeing the delivery of the Graymark Stock pursuant to Section 2.1(b) thereof.



     Dated
this ___ day of May, 2008.



	 	 	 	 	 
	 	GRAYMARK HEALTHCARE, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



31









 






	 	 	 	 	 



EXHIBIT “A”




BILL OF SALE





     This Bill of Sale is executed and delivered pursuant to that certain Asset Purchase Agreement,
dated as of                     , 2008 (the “Agreement”), between and among                                         , an
Oklahoma limited liability company (“Buyer”), and Sleep Center of Waco, Ltd., a Texas limited
partnership (“Seller”). Terms defined in the Agreement and not otherwise defined herein are used
herein with the meanings so defined.



     For good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:



     1. Seller hereby SELLS, CONVEYS, TRANSFERS, ASSIGNS and DELIVERS to Buyer, and Buyer hereby
purchases and acquires from Seller, all of the assets described on Schedule 1 attached hereto (the
“Assets”) (and all assignable warranties and guarantees, if any, express or implied, in connection
with the Assets to the extent transferable) free and clear of all claims, liens, Security Interests
and other encumbrances of any kind or nature other than the Permitted Encumbrances. Seller shall
cooperate with Buyer, its successors and assigns in securing the performance of any warrantor or
guarantor under any warranty, guarantee, or other agreement assigned to the Buyer pursuant to this
Bill of Sale or any work that the Buyer, its successors or assigns believe in good faith should be
performed by any warrantor or guarantor pursuant to such warranties or guarantees.



     2. THIS BILL OF SALE IS EXECUTED PURSUANT TO THE AGREEMENT, AND THE TERMS AND CONDITIONS OF
THE AGREEMENT, INCLUDING THE REPRESENTATIONS AND WARRANTIES CONCERNING THE ASSETS CONVEYED HEREBY,
APPLY TO THIS BILL OF SALE AS IF FULLY INCORPORATED HEREIN. THE ASSETS ARE TRANSFERRED AND SOLD
SUBJECT TO AND WITH THE BENEFIT OF ALL THE REPRESENTATIONS, WARRANTIES AND COVENANTS CONTAINED IN
THE AGREEMENT.



     3. This Bill of Sale is made without assumption of any Liabilities, obligations or debts of
Seller, except as expressly provided in the Agreement or the Assumption Agreement executed
contemporaneously herewith.



     4. At any time or from time to time after the date hereof, Seller shall execute and deliver or
cause to be executed and delivered to the Buyer, its successors and assigns such other instruments
and take or cause to be taken such other actions as may reasonably be requested in order to carry
out the intent and purposes of the Agreement and this Bill of Sale and to more effectively vest
title to the Assets and all warranties and guarantees related to the Assets in the Buyer and its
successors and assigns.



     5. The parties acknowledge and agree that all tangible Assets are being conveyed to Buyer “AS
IS, WHERE IS,” and Seller makes no representation or warranty regarding the merchantability or
fitness for a particular purpose of any tangible Asset.



32









 





     IN WITNESS WHEREOF, Seller has caused this instrument to be executed by its duly authorized
officer this ___ day of                                         , 2008.



	 	 	 	 	 
	 	SLEEP CENTER OF WACO, LTD.



By: Waco SC, LLC, its General Partner

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



33









 






	 	 	 	 	 



SCHEDULE 1




[INSERT TO COME]




34









 





EXHIBIT “B”




ASSUMPTION AGREEMENT





     THIS ASSUMPTION AGREEMENT (the “Assumption Agreement”), between                                         , a Texas
limited liability company (“Buyer”), and Sleep Center of Waco, Ltd., a Texas limited partnership
(“Seller”) is executed and delivered this ___ day of                     , 2008, pursuant to that
certain Asset Purchase Agreement, dated May ___, 2008 (the “Agreement”) between and among Seller
and Buyer.



WITNESSETH:




     WHEREAS, pursuant to the terms of the Agreement, Seller has agreed to sell to Buyer, and Buyer
has agreed to purchase from Seller, certain of the assets of Seller and certain of the liabilities
of Seller on the terms and subject to the conditions set forth therein.



     NOW, THEREFORE, in consideration of the premises and the transactions contemplated by the
Agreement, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree
as follows:



     1. Capitalized terms used but not defined herein shall have the respective meanings assigned
thereto in the Agreement.



     2. Buyer does hereby assume, and agrees to perform, pay and discharge all of the Assumed
Liabilities and agrees to indemnify, defend and hold Seller harmless from and against any and all
Damages arising from the failure of Buyer to perform, pay or discharge any of the Assumed
Liabilities.



     3. Seller and Buyer agree that this Assumption Agreement is subject to the terms and
conditions of the Agreement and that, notwithstanding anything contained herein to the contrary,
this Assumption Agreement shall not be deemed to limit or extinguish any obligation of Buyer or
Seller under the Agreement, all of which obligations shall survive the delivery of this Assumption
Agreement in accordance with the terms of the Agreement.



     4. This Assumption Agreement shall be governed by and construed and interpreted in accordance
with the laws of the State of Oklahoma.



35









 





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



	 	 	 	 	 
	SELLER: 	SLEEP CENTER OF WACO, LTD., a Texas

limited partnership



By: Waco SC, LLC, its General Partner

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	BUYER: 	TCSD OF WACO, LP

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




36