**Exhibit2.1**

** **

**ASSET PURCHASE AGREEMENT**

** **

 

**By and Between**

** **

 

**PATTERSON MEDICAL SUPPLY, INC.**

** **

**(Purchaser)**

** **

**And**

** **

**EMPI, INC.**

** **

**(Company)**

** **

 

**DATE:  June 12, 2009**

 

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**TABLE OF CONTENTS**

 
| ** **     | ** **                                                                                                        | **Page**   |
|----------------|-------------------------------------------------------------------------------------------------------------------|------------|
| ** **     | ** **                                                                                                        | ** ** |
| **ARTICLE  1** | **DEFINITIONS**                                                                                                   | **1**      |
| **ARTICLE  2** | **PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES**                                                                 | **9**      |
| 2.1            | Purchase of  Assets and Assumption of Liabilities                                                                 | 9          |
| 2.2            | Purchase Price                                                                                                    | 11         |
| 2.3            | Purchase Price  Adjustments                                                                                       | 11         |
| 2.4            | Calculation and  Payment of the Closing Date Purchase Price                                                       | 11         |
| 2.5            | Holdback                                                                                                          | 12         |
| 2.6            | Determination of  Purchase Price Adjustments; Closing Statement of Assets and Assumed  Liabilities; Final Payment | 13         |
| 2.7            | Closing and  Closing Deliveries                                                                                   | 16         |
| **ARTICLE  3** | **REPRESENTATIONS AND WARRANTIES OF THE COMPANY**                                                                 | **18**     |
| 3.1            | Organization                                                                                                      | 18         |
| 3.2            | Business and  Business Name                                                                                       | 18         |
| 3.3            | Due  Authorization                                                                                                | 18         |
| 3.4            | No Breach                                                                                                         | 18         |
| 3.5            | Clear Title                                                                                                       | 19         |
| 3.6            | Condition and  Sufficiency of Assets                                                                              | 19         |
| 3.7            | Litigation                                                                                                        | 19         |
| 3.8            | Labor Matters                                                                                                     | 20         |
| 3.9            | DEA Compliance                                                                                                    | 20         |
| 3.10           | Employee  Benefits                                                                                                | 20         |
| 3.11           | Income Statement  and Preliminary Statement of Assets and Assumed Liabilities                                     | 21         |
| 3.12           | Absence of  Certain Developments                                                                                  | 21         |
| 3.13           | Intellectual  Property                                                                                            | 23         |
| 3.14           | Compliance with  Laws                                                                                             | 24         |
| 3.15           | Operating  Contracts                                                                                              | 24         |
| 3.16           | Real Estate                                                                                                       | 25         |
| 3.17           | Books and  Records                                                                                                | 26         |
| 3.18           | Employees and  Employee Related Commitments                                                                       | 26         |
| 3.19           | Permits                                                                                                           | 27         |

 

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**TABLE OF CONTENTS**

(continued)

 
| ** **     | ** **                                          | **Page**   |
|----------------|-----------------------------------------------------|------------|
| ** **     | ** **                                          | ** ** |
| 3.20           | Insurance                                           | 27         |
| 3.21           | Brokers                                             | 27         |
| 3.22           | Environmental  Matters                              | 27         |
| 3.23           | Debt Instruments                                    | 28         |
| 3.24           | Customers and  Suppliers                            | 28         |
| 3.25           | Adequacy of  Properties                             | 28         |
| 3.26           | Absence of  Certain Business Practices              | 28         |
| 3.27           | Trade Regulation                                    | 28         |
| 3.28           | Inventories                                         | 29         |
| 3.29           | Certain  Arrangements                               | 29         |
| 3.30           | Tax Matters                                         | 29         |
| **ARTICLE  4** | **REPRESENTATIONS AND WARRANTIES OF THE PURCHASER** | **30**     |
| 4.1            | Organization                                        | 30         |
| 4.2            | Due  Authorization                                  | 30         |
| 4.3            | No Breach                                           | 31         |
| 4.4            | Brokers                                             | 31         |
| **ARTICLE  5** | **INDEMNIFICATION**                                 | **31**     |
| 5.1            | Indemnification  by the Company                     | 31         |
| 5.2            | Indemnification  by the Purchaser                   | 32         |
| 5.3            | Procedure for  Indemnification                      | 32         |
| 5.4            | Dispute  Resolution                                 | 34         |
| 5.5            | Effect of  Insurance                                | 35         |
| **ARTICLE  6** | **CERTAIN TAX MATTERS**                             | **36**     |
| 6.1            | Income and  Transfer Taxes                          | 36         |
| 6.2            | Non-foreign  Person Affidavit                       | 36         |
| 6.3            | Allocation of  Purchase Price                       | 36         |
| 6.4            | Post-Closing  Access and Cooperation                | 36         |
| **ARTICLE  7** | **PERFORMANCE FOLLOWING THE CLOSING DATE**          | **37**     |
| 7.1            | Further Acts and  Assurances                        | 37         |
| 7.2            | Non-Competition  Agreement                          | 37         |

 

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** **

**TABLE OF CONTENTS**

(continued)

 
| ** **     | ** **                                                            | **Page**   |
|----------------|-----------------------------------------------------------------------|------------|
| ** **     | ** **                                                            | ** ** |
| 7.3            | Non-Solicitation  Agreement                                           | 38         |
| 7.4            | Confidential  Information                                             | 38         |
| 7.5            | Reasonableness  of Covenants                                          | 38         |
| 7.6            | Injunctive  Relief                                                    | 38         |
| 7.7            | Blue Pencil  Doctrine                                                 | 39         |
| 7.8            | Employee  Retention                                                   | 39         |
| 7.9            | Consents                                                              | 40         |
| 7.10           | Inventory Count  and Pricing                                          | 40         |
| 7.11           | Employee  Restrictive Covenant Agreements                             | 41         |
| 7.12           | Excluded Trade  Payables                                              | 41         |
| 7.13           | New Operating  Contracts; Shoreview Call Center                       | 41         |
| **ARTICLE  8** | **MISCELLANEOUS**                                                     | **41**     |
| 8.1            | Survival of  Representations and Warranties, Covenants and Agreements | 41         |
| 8.2            | Preservation of  and Access to Records                                | 42         |
| 8.3            | Cooperation                                                           | 42         |
| 8.4            | Public  Announcements                                                 | 42         |
| 8.5            | Notices                                                               | 42         |
| 8.6            | Entire Agreement                                                      | 43         |
| 8.7            | Remedies                                                              | 43         |
| 8.8            | Amendments                                                            | 43         |
| 8.9            | Successors and  Assigns                                               | 43         |
| 8.10           | Fees and  Expenses                                                    | 43         |
| 8.11           | Governing Law  and Jurisdiction                                       | 44         |
| 8.12           | Counterparts and  Facsimile Signatures                                | 44         |
| 8.13           | Headings                                                              | 44         |
| 8.14           | Scope of  Agreement                                                   | 44         |
| 8.15           | Number and  Gender                                                    | 44         |
| 8.16           | Severability                                                          | 45         |
| 8.17           | Parties in  Interest                                                  | 45         |
| 8.18           | Waiver                                                                | 45         |
| 8.19           | Construction                                                          | 45         |
| 8.20           | Specific Performance                                                  | 45         |

 

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** **

**ASSET PURCHASE AGREEMENT**

** **

**THISASSET PURCHASE AGREEMENT** (this “**Agreement**”) ismade and entered into as of the 12th****day of June,2009, by and between PATTERSON MEDICAL SUPPLY, Inc., a Minnesotacorporation (the “**Purchaser**”), andEMPI, INC., a Minnesota corporation (the “**Company**”).

 

**RECITALS**

** **

A.            TheCompany operates a “Rehab Med + Equip” business under the name “RME” (the “**RME Division**”).

 

B.            TheRME Division is a distributor of rehabilitation products to the physicaltherapy, chiropractic and other rehabilitation markets primarily though acatalog.

 

C.            ThePurchaser desires to purchase and assume, as applicable, and the Companydesires to sell, transfer, convey, assign and deliver, as applicable, (i) certainassets of the RME Division pursuant to this Agreement, and (ii) certainliabilities and obligations of the Company directly arising from the operationof the RME Division pursuant to the purchase of such assets.

 

D.            Itis the intention of the parties hereto that, upon consummation of thetransactions contemplated by and pursuant to this Agreement, the Purchasershall own all of the assets of the Company associated with, utilized in and/ornecessary to the operation of the RME Division other than the Excluded Assets.

 

**AGREEMENT**

** **

In consideration of the foregoing Recitals and themutual promises contained in this Agreement, and other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged,the Purchaser and the Company agree as follows:

 

**ARTICLE1**

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**DEFINITIONS**

** **

For purposes of this Agreement, the following termshave the meanings specified:

 

“5*/28/09 Income Statement*”has the meaning set forth in Section 3.11 of this Agreement.

 

“*Affiliate*”when used in reference to a specified Person, means any Person that, directlyor indirectly, through one or more intermediaries, controls, or is controlledby, or is under common control with the specified Person.

 

“*Agreement*”has the meaning set forth in the introductory paragraph hereof.

 

“*AncillaryDocuments*” means the documents, instruments and agreements to beexecuted and/or delivered by the parties pursuant to this Agreement.

 

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“*Applicable Laws*”means any and all laws, ordinances, constitutions, regulations, statutes,treaties, rules, codes, and Injunctions adopted, enacted, implemented,promulgated, issued, entered or deemed applicable by or under the authority ofany Governmental Body having jurisdiction over a specified Person or any ofsuch Person’s properties or assets.

 

“*Assets*”has the meaning set forth in Section 2.1(a)(i) of this Agreement.

 

“*AssumedLiabilities*” has the meaning set forth in Section 2.1(b)(i) ofthis Agreement.

 

“*Base Amount*”has the meaning set forth in Section 2.2 of this Agreement.

 

“*Basket Amount*”has the meaning set forth in Section 5.1 of this Agreement.

 

“*Benefit Plan*”means any and all “employee benefit plans” (within the meaning of Section 3(3) ofERISA), stock option, restricted stock, stock purchase, stock appreciation,phantom stock or plan maintained, sponsored or participated in by the Company.

 

“*Business*”as used in this Agreement means the business operated by the Company as its RMEDivision that is being purchased by Purchaser pursuant to this Agreement whichis engaged in the purchase, marketing, sale (including telesales andtelemarketing) and/or distribution of rehabilitation products.

 

“*CFO Certificate”*has the meaning set forth in Section 2.6(a) of this Agreement.

 

“*Closing*”has the meaning set forth in Section 2.7(a) of this Agreement.

 

“*Closing Date*”has the meaning set forth in Section 2.7(a) of this Agreement.

 

“*Closing Date Net Assets”*hasthe meaning set forth in Section 2.6(a)(ii) of this Agreement.

 

“*Closing Date ExcludedTrade Payables*” has the meaning set forth in Section 2.6(a)(iii) ofthis Agreement.

 

“*Closing DatePurchase Price*” has the meaning set forth in Section 2.4(a) ofthis Agreement.

 

“*Closing Purchase PriceAdjustment”*has the meaning set forth in Section 2.6(a)(v) ofthis Agreement.

 

“*Closing Statement ofAssets and Assumed Liabilities”*has the meaning set forth in Section 2.6(a)(i) ofthis Agreement.

 

“*Code*”means the Internal Revenue Code of 1986, as amended, or rules and regulationsissued by the IRS pursuant to the Internal Revenue Code or any successor law.

 

“*Company*”has the meaning set forth in the introductory paragraph hereof.

 

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“*CompanyIndemnified Parties*” has the meaning set forth in Section 5.2of this Agreement.

 

“*ConfidentialInformation*” means any information or compilation of information notgenerally known to the public or the industry or which the Company has notdisclosed to third parties without a written obligation of confidentiality,which is proprietary to the Business, relating to the procedures, techniques,methods, concepts, ideas, affairs, products, processes and services of and withrespect to the Business, including, but not limited to, information relating tomarketing, merchandising, selling, research, development, manufacturing,purchasing, accounting, engineering, financing, costs, customers, plans,pricing, billing, needs of customers and products and services used bycustomers, all lists of customers and their addresses, prospects, sales calls,products, services, prices and the like as well as any specifications,formulas, plans, drawings, accounts or sales records, sales brochures, codebooks, manuals, trade secrets, knowledge, know-how, pricing strategies,operating costs, sales margins, methods of operations, invoices or statementsand the like; provided, however, that the term “ConfidentialInformation” shall not be deemed to include information which (i) becomesgenerally available to the public other than as a result of disclosure by theCompany, or (ii) becomes available to the applicable party on anon-confidential basis and without any breach of an agreement ofconfidentiality from a source other than the Company or the Purchaser.

 

“*Contract*”means any agreement, lease of non-Real Estate, license agreement (other than alicense granted by a Governmental Body), contract, consensual obligation,promise, commitment, arrangement, understanding or undertaking, (whetherwritten or oral and whether express or implied) of any type, nature ordescription that is legally binding but excluding leases of Leased RealEstate.  As used herein, the word “Contract”shall be limited in scope if modified by an adjective specifying the type ofcontract to which this Agreement or a Section hereof refers.

 

“*Controlled Group*”has the meaning set forth in Section 3.10(a) of this Agreement.

 

“*Controlled Person*”when used in reference to a specified Person, means any Person that is directlyor indirectly, through one or more intermediaries, controlled by a specifiedPerson.

 

“*Disclose*”means to reveal, deliver, divulge, disclose, publish, communicate, show orotherwise make known or available to any other Person, or in any way to copy,any of the Company’s Confidential Information.

 

“*Encumbrance*”means and includes:

 

(i)            withrespect to any personal property, any intangible property or any property otherthan real property, any security or other property interest or right, claim,lien, pledge, option, charge, security interest, contingent or conditionalsale, or other title claim or retention agreement or lease or use agreement inthe nature thereof, whether voluntarily incurred or arising by operation oflaw, and including any agreement to grant or submit to any of the foregoing inthe future; and

 

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(ii)           withrespect to any real property, any mortgage, lien, easement, interest,right-of-way, condemnation or eminent domain proceeding, encroachment, anybuilding, use or other form of restriction, encumbrance or other claim(including adverse or prescriptive) or right of third parties (includingGovernmental Bodies), any lease or sublease, boundary dispute, and agreementswith respect to any real property including: purchase, sale, right of firstrefusal, option, construction, building or property service, maintenance,property management, conditional or contingent sale, use or occupancy,franchise or concession, whether voluntarily incurred or arising by operationof law, and including any agreement to grant or submit to any of the foregoingin the future.

 

“*Environmental Laws*”means any and all Applicable Laws (i) regulating the use, treatment,generation, transportation, storage, control or disposal of any HazardousMaterial, including, but not limited to, the Comprehensive EnvironmentalResponse, Compensation and Liability Act (42 U.S.C. § 9601 etseq.)(“CERCLA”), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.),the Hazardous Materials Transportation Act (49 U.S.C. § 1801 etseq.),the Federal Water Pollution Control Act (33 U.S.C. § 1251 etseq.),the Clean Water Act (33 U.S.C. § 1251 etseq.), the Clean Air Act(42 U.S.C. § 7401 etseq.), the Toxic Substances Control Act (15U.S.C. § 2601 etseq.), and all state laws corollaries thereto,and/or (ii) relating to the protection of the environment and public orworker health and safety, all as existing, defined or interpreted as of theClosing Date.

 

“*ERISA*”means the Employee Retirement Income Security Act of 1974, as amended.

 

“*Employee RestrictiveCovenant Agreements*” shall have the meaning set forth in Section 3.15of this Agreement.

 

“*Estimated Excluded TradePayables*” means One Million Eight Hundred Thirty Seven ThousandSixty Five Dollars****($1,837,065),which is the Company’s good faith estimate of the trade accounts payableincurred by the Company with respect to the Business existing on the ClosingDate as set forth on **Exhibit A-3**hereto.

 

“*Excluded Assets*”has the meaning set forth in Section 2.1(a)(ii) of this Agreement.

 

“*ExcludedLiabilities*” has the meaning set forth in Section 2.1(b)(ii) ofthis Agreement.

 

“*Excluded Trade Payables*”means the actual trade accounts payable incurred by the Company with respect tothe Business existing on the Closing Date.

 

“*Excluded Trade PayablesAdjustment*” has the meaning set forth in Section 2.3 of thisAgreement.

 

“*Final Order”*means an action or decision of theGovernmental Body as to which (i) no request for a stay is pending, nostay is in effect, and any deadline for filing such request that may bedesignated by statute or regulation has passed, (ii) no petition forrehearing or reconsideration or application for review is pending and the timefor the filing of such petition or application has passed, (iii) theGovernmental Body does not have the action or decision under reconsideration onits own motion and the time within which it may effect such reconsideration haspassed, and (iv) no judicial appeal is pending or in effect and anydeadline for filing any such appeal that may be designated by statute or rule haspassed.

 

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“*GAAP*”means generally accepted accounting principles in the United States.

 

“*Governmental Body*”means any:

 

(i)            nation,state, county, city, town, village, district or other jurisdiction of anynature;

 

(ii)           federal,state, local, municipal, foreign or other government;

 

(iii)          governmentalor quasi-governmental authority of any nature (including any governmentalagency, branch, board, commission, department, instrumentality, office or otherentity, and any court or other tribunal);

 

(iv)          multi-nationalorganization or body; and/or

 

(v)           bodyexercising, or entitled or purporting to exercise, any administrative,executive, judicial, legislative, police, regulatory or taxing authority orpower of any nature.

 

“*HazardousMaterials*” means any and all (i) toxic or hazardous pollutants,contaminants, chemicals, wastes, materials or substances listed or identifiedin, or regulated by, any Environmental Law, and (ii) any of the following,whether or not included in the foregoing: polychlorinated biphenyls, asbestos in any form or condition,urea-formaldehyde, petroleum, including crude oil or any fraction thereof,natural gas, natural gas liquids, liquefied natural gas, synthetic gas usablefor fuel or mixtures thereof, nuclear fuels or materials, chemical wastes, radioactivematerials and explosives.

 

“*Holdback”* hasthe meaning set forth in Section 2.5(a) of this Agreement.

 

“*Holdback Claim”*has the meaning set forth in Section 2.5(c) of this Agreement.

 

“*Holdback Interest Rate”*has the meaning set forth in Section 2.5(d) of this Agreement.

 

“*Holdback Termination Date”*has the meaning set forth in Section 2.5(a) of this Agreement.

 

“*Indemnified Party*”has the meaning set forth in Section 5.3 of this Agreement.

 

“*Indemnifying Party*”has the meaning set forth in Section 5.3 of this Agreement.

 

“*Injunction*”means any and all writs, rulings, awards, directives, injunctions (whethertemporary, preliminary or permanent), judgments, decrees or orders (whetherexecutive, judicial or otherwise) adopted, enacted, implemented, promulgated,issued, entered or deemed applicable by or under the authority of anyGovernmental Body.

 

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“*IntellectualProperty*” means any and all (i) inventions (whether patentableor unpatentable and whether or not reduced to practice), all improvementsthereto, and all patents, patent applications and patent disclosures, togetherwith all reissuances, continuations, continuations in part, revisions,extensions and reexaminations thereof; (ii) trademarks, service marks,trade dress, logos, trade names, assumed names and corporate names, togetherwith all translations, adaptations, derivations and combinations thereof andincluding all goodwill associated therewith, and all applications,registrations and renewals in connection therewith; (iii) copyrightableworks, all copyrights and all applications, registrations and renewals inconnection therewith; (iv) mask works and all applications, registrationsand renewals in connection therewith; (v) trade secrets and confidentialbusiness information (including ideas, research and development, know-how,technology, formulas, compositions, manufacturing and production processes andtechniques, technical data, designs, drawings, specifications, customer andsupplier lists, pricing and cost information and business and marketing plansand proposals); (vi) computer software (including data and relatedsoftware program documentation in computer-readable and hard-copy forms); (vii) otherintellectual property and proprietary rights of any kind, nature ordescription, including web sites, web site domain names and other e-commerceassets and resources of any kind or nature; and (viii) copies of tangibleembodiments thereof (in whatever form or medium).

 

“*IRS*”means the United States Internal Revenue Service.

 

“*Knowledge*”or “*Best Knowledge*” means that anindividual will be deemed to have “Knowledge” of a particular fact or othermatter if such individual is aware of such fact or other matter, or could havebecome aware in the course of a reasonable investigation of the fact or othermatter; provided, however, that Knowledge by the Company of aparticular fact or other matter shall mean the knowledge of Allen Hughes, BarryHix or William King.

 

“*Leased Real Estate*”has the meaning set forth in Section 3.16 of this Agreement.

 

“*Liability*”or “*Liabilities*” means any andall debts, liabilities and/or obligations of any type, nature or description(whether known or unknown, asserted or unasserted, secured or unsecured,absolute or contingent, accrued or unaccrued, liquidated or unliquidated andwhether due or to become due).

 

“*Loss*”or “*Losses*” has the meaning setforth in Section 5.1 of this Agreement.

 

“*Material AdverseEffect*” or “*Material AdverseChange*” means, in connection with any Person, any event, change oreffect that is materially adverse, individually or in the aggregate, to thecondition (financial or otherwise), properties, Assets, Liabilities, revenues,income, business, operations, results of operations of such Person, taken as awhole; provided, however, the foregoing shall not be deemed toinclude any event, change or effect which arises with respect to (i) conditionsof change that are primarily the result of the national economy whereby theeffect or change is generally universal upon businesses as a whole or within anindustry as a whole, or (ii) uniformly applied legislative or judicialApplicable Laws or Final Orders that have general applicability to business asa whole or an industry as a whole.

 

“*Net Asset Adjustment”*has the meaning set forth in Section 2.3 of this Agreement.

 

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“*Net Asset Threshold Amount*”means Three Million Nine Hundred Sixty One Thousand Five Hundred Dollars($3,961,500), which is the minimum amount of Net Assets to be delivered to thePurchaser by the Company at and upon the Closing, as set forth on thePreliminary Statement of Assets and Assumed Liabilities.

 

“*Net Assets*”has the meaning set forth in Section 2.3 of this Agreement.

 

“*OperatingContracts*” has the meaning set forth in Section 3.15 of thisAgreement.

 

“*Ordinary Course ofBusiness*” means an action taken by a Person only if such action isconsistent with the past practices of such Person and is taken in the ordinarycourse of the normal day-to-day operations of such Person.

 

“*Permits*”means all right, title and interest in and to any permits, licenses,certificates, filings, authorizations, approvals, or other indicia of authority(and any pending applications for approval or renewal of a Permit), to own,construct, operate, sell, inventory, disburse or maintain any asset or conductany business as issued by any Governmental Body.

 

“*PermittedEncumbrances*” means such minor Encumbrances, charges andimperfections which do not, individually or in the aggregate detract from, inany material way, the value or use of any Asset, or otherwise interfere with,in any material way, the quiet enjoyment of any Asset under any lease orleasehold interest.

 

“*Person*”means any individual, corporation (including any non-profit corporation),general, limited or limited liability partnership, limited liability company,joint venture, estate, trust, association, organization, or other entity orGovernmental Body.

 

“*Preliminary Statement ofAssets and Assumed Liabilities”* has the meaning set forth in Section 3.11(b) ofthis Agreement.

 

“*Proceeding*”means any suit, litigation, arbitration, hearing, audit, investigation or otheraction (whether civil, criminal, administrative or investigative) commenced, brought,conducted, or heard by or before, or otherwise involving, any Governmental Bodyor arbitrator. “*Purchase Price*”has the meaning set forth in Section 2.2 of this Agreement.

 

“*Purchase Price Adjustments*”has the meaning set forth in Section 2.3 of this Agreement.

 

“*Purchaser*”has the meaning set forth in the introductory paragraph hereof.

 

“*PurchaserIndemnified Parties*” has the meaning set forth in Section 5.1of this Agreement.

 

“*Real Estate*”has the meaning set forth in Section 3.16 of this Agreement.

 

“*Related Person*”or “*Related Persons*” means, withrespect to a particular individual:

 

(i)            eachother member of such individual’s Family (as hereafter defined); and

 

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(ii)           anyControlled Person of one or more members of such individual’s Family.

 

With respect to a specified Person other than anindividual:

 

(i)            anyControlled Person of such specified Person; and

 

(ii)           eachPerson that serves as a director, governor, officer, manager, employee, generalpartner, executor or trustee of such specified Person (or in a similarcapacity).  For purposes of thisdefinition, the “*Family*”of an individual includes (i) such individual, (ii) the individual’sspouse, (iii) any lineal ancestor or lineal descendant of the individual,or (iv) a trust for the benefit of any of the foregoing.

 

“*RME Division*”has the meaning set forth in the Recitals to this Agreement.

 

“*Schedules*”has the meaning set forth in the introductory paragraph to Article 3 ofthis Agreement. “*Tax*” or “*Taxes*” means any and all net income, grossincome, gross revenue, gross receipts, net receipts, ad valorem, franchise,profits, transfer, sales, use, social security, employment, unemployment,disability, license, withholding, payroll, privilege, excise, value-added,severance, stamp, occupation, property, customs, duties, real estate and/orother taxes, assessments, levies, fees or charges of any kind whatsoeverimposed by any Governmental Body, together with any interest or penaltyrelating thereto.

 

“*Tax Return*”or “*Tax Returns*” means anyreturn, declaration, report, claim for refund or information return orstatement relating to Taxes, including, without limitation, any schedule orattachment thereto, any amendment thereof, and any estimated report orstatement.

 

“*Third Party*”means a person not a party to this Agreement, excluding any Related Person.

 

“*Threatened*”means a claim, Proceeding, dispute, action, or other matter will be deemed tohave been “Threatened” if any demand or statement has been made in writing, orany notice has been given in writing that would lead a reasonably prudentPerson to conclude that such a claim, Proceeding, dispute, action, or othermatter will, with substantial certainty, be asserted, commenced, taken orotherwise pursued in the future; provided, however, that theforegoing shall not include customer billing disputes in the Ordinary Course ofBusiness.

 

“*TransactionalExpenses*” has the meaning set forth in Section 8.10 of thisAgreement.

 

“*Use*”means to appropriate any of the Company’s Confidential Information arisingfrom, in connection with or incident to the Business for the benefit of oneselfor any other Person other than the Business.

 

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** **

**ARTICLE2**

** **

**PURCHASEOF ASSETS; ASSUMPTION OF LIABILITIES**

** **

**2.1         ****Purchase of Assets and Assumption ofLiabilities**.  In reliance upon the representations,warranties and covenants contained in this Agreement as of the date hereof andon the Closing Date, the Purchaser agrees to (i) purchase the Assets (asdefined below) from the Company and (ii) assume the Assumed Liabilities(as defined below), in each case on the terms and conditions set forth in thisAgreement.  The sale, transfer,conveyance, assignment and delivery of the Assets by the Company shall convey (x) goodand valid title to the Assets that are tangible assets, (y) all of theCompany’s interests in and to the Assets that are intangible assets, and (z) goodand valid title to the tangible portion and valid and enforceable interests inand to the intangible portion of the Assets that are mixed assets, free andclear of any and all Encumbrances, except for the Assumed Liabilities and thePermitted Encumbrances.

 

(a)           Assets.

 

(i)            Assets.  The Purchaser will purchase or assume, as applicable,all right, title and interest in and to all of the following assets of theBusiness as operated by the Company (collectively, the **“Assets”**):(A) inventory and supplies, (B) property, equipment and othertangible personal property as set forth on **Schedule 2.1(a)(i)(B)**,(C) deposits as set forth on **Schedule 2.1(a)(i)(C)**,(D) prepaid expenses as set forth on **Schedule 2.1(a)(i)(D)**,(E) the Company’s right to use the name **“RME”**and any other names under which the Business conducts its businesses and operations,(F) those rights and interest in Intellectual Property and otherintangible assets, including trade secrets, licenses, goodwill, and thecorporate, assumed and trade names of the Company (and all derivatives thereof)used exclusively in the Business and as set forth on **Schedule 2.1(a)(i)(F)**, (G) allof the Company’s Permits to the extent transferable as set forth by sitelocation and jurisdictional issuance on **Schedule 2.1(a)(i)(G)**,(H) the Company’s rights and benefits of and under the Operating Contractsand Leased Real Estate leases as set forth on **Schedule 2.1(a)(i)(H)**, and (I) the documents,books and records (financial or otherwise) relating solely to the Business,whether in tangible or intangible form, including ledgers, files, correspondence,lists, customer information, pricing and billing information, human resourcepolicies, procedures manuals and the like, creative materials, advertising andpromotional materials, studies, reports and other printed, written orelectronic materials.

 

(ii)           Excluded Assets.  Notwithstanding anything to the contrarycontained in Section 2.1(a) of this Agreement, the following assetsof the Company (the “**Excluded Assets**”)are not part of the sale and purchase contemplated hereunder, are excluded fromthe Assets, shall remain the property of the Company after the Closing andshall not be purchased or assumed by the Purchaser:  (A) cash and cash equivalents, (B) accountsreceivable, (C) deferred income Taxes and credits of the Company, (D) ownershipof insurance policies of the Company, (E) any claims and actions by theCompany against the officers and directors of the Company which arise from themanagement or operation of the 

 

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Business prior to or on the Closing Date, (F) allof the Company’s Permits not set forth on **Schedule 2.1(a)(i)(G)**,(G) the Contracts and Leased Real Estate leases set forth on **Schedule 3.15** that are to beeither terminated at and upon the Closing or retained by the Company, (H) theCompany’s Tax returns and associated workpapers, and all claims for refunds ofTaxes and other fees and charges of a Governmental Body, (I) any shares ofcapital stock of the Company, (J) the corporate charter of the Company, (K) theCompany’s qualifications to conduct business, arrangements with registeredagents, taxpayer and other identification numbers, seals, minute books, stocktransfer books, and other documents relating to the organization, maintenanceand existence of the Company, (L) those assets listed on **Schedule 2.1(a)(ii)(L)**, (M) any asset of the Companynot used in the Business, and (N) any rights of the Company under thisAgreement and the Ancillary Documents.

 

(b)           Liabilities.

 

(i)            Assumed Liabilities.  The Purchaser will assume the Liabilities ofthe Company which arise from the operation of the Business as follows:  (A) the obligations of the Company underthe Operating Contracts and Leased Real Estate lease as set forth on **Schedule 2.1(a)(i)(H)**, except forany breach, defaults or non-current amounts owing under or arising pursuant tosuch Operating Contracts and Leased Real Estate lease on or prior to theClosing Date and (B) the obligations of the Company under any Permittransferred to the Purchaser as set forth on **Schedule 2.1(a)(i)(G)**, except for any breach, defaultor violation of Applicable Law arising pursuant to such Permit which has as itsbasis any event, act, occurrence or omission on or before the Closing Date; provided,however, that the Assumed Liabilities shall not include the ExcludedLiabilities (the “**Assumed Liabilities**”).

 

(ii)           Excluded Liabilities.  The Purchaser shall not assume the followingLiabilities of the Company:  anyLiability arising from, in connection with or incident to (A) tradeaccounts payable incurred by the Company prior to or on the Closing Date,including but not limited to the Excluded Trade Payables, (B) any amountowed by the Business at Closing to any Affiliate or Related Person, other thanobligations under the Leased Real Estate lease, (C) any TransactionalExpenses paid by or relating to the Company, (D) any Tax Liability of orincurred by or in respect of the Company, any Related Person or Third Party, orthe Assets which has as its basis any event, act, occurrence or omission on orbefore the Closing Date, (E) any Taxes, fees or penalties as described in Section 6.1of this Agreement, (F) any Liability arising from, incident to or inconnection with an Excluded Asset, (G) any breach, defaults, or violationsof Contracts or Applicable Law which has as its or their basis any event, act,occurrence or omission prior to the Closing Date, (H) claims by current orformer employees of the Company employed in the Business which have as theirbasis any event, act, occurrence or omission of or by the Company, (I) anyProceeding having as its basis any event, act, occurrence or omission occurringprior to the Closing Date, (J) any Liability arising from, in connectionwith or incident to any 

 

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Benefit Plan, any breach of fiduciary duty under anyBenefit Plan, any prohibited transaction under the Code or ERISA and any COBRALiability which, in each case, has as its basis an event, act, occurrence oromission prior to the Closing Date, (K) any claim which arises from, inconnection with or incident to any products liability claim that in any wayarises from, without limitation, products sold, or distributed by theBusiness  on or prior to the ClosingDate, (L) obligations associated with employees of the Company who areemployed by the Business, including vacation and personal time off and salescommissions accrued to and through the date of Closing, and (M) anyLiability that does not directly arise from the ownership of the Assets oroperation of the Business and is not an Assumed Liability (the “**Excluded Liabilities**”).

 

**2.2          Purchase Price. **The purchase price for the Assets and the assumptionof the Assumed Liabilities shall be the aggregate of Twenty-One Million Dollars($21,000,000) plus the Estimated Excluded Trade Payables (the “**Base Amount**”), plus or minus the Closing Purchase PriceAdjustments, if any (collectively, the “**Purchase Price**”).

 

**2.3          Purchase Price Adjustments**. The “**Net Asset Adjustment**” shall be equal to the amount by which the Assetsminus the Assumed Liabilities (the “**NetAssets**”), each as reported on the Closing Statement of Assets andAssumed Liabilities, does not equal the Net Asset Threshold Amount.  The “**Excluded Trade PayablesAdjustment**” shall be equal to the difference between the Closing DateExcluded Trade Payables and the Estimated Excluded Trade Payables.  The aggregate amount of the Net AssetAdjustment and the Excluded Trade Payables Adjustment shall be the “**Closing****Purchase Price Adjustments**.”

 

**2.4         ****Calculation and Payment of the ClosingDate Purchase Price**.

 

(a)           Calculation of the Closing DatePurchase Price.  The Purchase Priceto be paid to the Company on the Closing Date is the Base Amount lessthe Holdback (the “**Closing Date PurchasePrice**”).  The Closing DatePurchase Price shall be subject to the Purchase Price adjustments defined anddescribed in Section 2.6.

 

(b)           Payment of the Closing DatePurchase Price.  The Closing DatePurchase Price shall be remitted to the Company at and upon the Closing by wiretransfer of immediately available funds to an account designated in writing bythe Company at least three (3) business days prior to the Closing Date.

 

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**2.5          Holdback**.

 

(a)           Holdbackof the Purchase Price.  At theClosing, the Purchaser shall retain One Million Dollars ($1,000,000) of theBase Amount to secure the due performance and payment of the indemnificationobligations of the Company and any Closing Purchase Price Adjustment untilfifteen (15) months following the Closing Date (the “**Holdback**”).  The Holdback is subject to the covenants(including all procedures) set forth in the provisions of this Section 2.5.  Subject to the provisions of Section 2.5(c) below,the Holdback shall terminate fifteen (15) months following the Closing Date(the “**Holdback Termination Date**”).

 

(b)           Deductions from the Holdback.  In the event that Purchaser reasonablydetermines after diligent, thorough and good faith inquiry that indemnificationby the Company is required under Article 6 after applying the limitationson such indemnification set forth in Article 6, or if it is determinedthat any Closing Purchase Price Adjustment is owed to the Purchaser under Section 2.6,the Purchaser shall deliver written notice thereof to the Company, which noticeshall contain a statement reasonably describing the nature of theindemnification obligation or objection to the CFO Certificate pursuant to theprocedures in Section 2.6, as applicable, the identity of the Person(including the Purchaser) by whom it is being asserted, and the amount assertedas Losses as a result thereof or the Closing Purchase Price Adjustment, asapplicable (the “**Holdback Claim**”).  If the Company does not notify the Purchaserin writing that it disputes the Holdback Claim within thirty (30) days afterthe delivery of written notice of Loss(es) by the Purchaser of anindemnification claim, or if it is determined that a Closing Purchase PriceAdjustment is owed to Purchaser pursuant to Section 2.6, then thePurchaser shall have the right to deduct from the Holdback the full amount ofthe Holdback Claim (or the Closing Purchase Price Adjustment determined per Section 2.6)and such amount shall not be payable to the Company.  The Purchaser shall from time to time, priorto the final determination of a given Holdback Claim, amend the notice of suchHoldback Claim to reflect any material change in the amount of Loss or Lossesasserted and the Company shall have the same rights to dispute such  amendments as are reflected above.  The Purchaser shall deliver to the Companycopies of all material documentation relating to the Holdback Claim, including(as applicable) any pleadings and amended pleadings filed in connection withany such Holdback Claim, and will provide the Company and its counsel with suchfurther information concerning the Holdback Claim as the Company or suchcounsel may reasonably request.  If theCompany disputes an Article 6 indemnification Holdback Claim in writingwithin thirty (30) days after the delivery of written notice by the Purchaser,such dispute shall be resolved in the manner set forth in Section 5.4 ofthis Agreement.

 

(c)           Holdback Fund Termination.  On the Holdback Termination Date, the Purchasershall promptly, and in any event no later than five (5) days after theHoldback Termination Date, pay over to the Company the remaining amount of theHoldback, plus interest thereon pursuant to the provisions of Section 2.5(d),

 

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less any Unresolved Holdback Claims.  The Holdback shall not be terminated withrespect to timely noticed Holdback Claims by the Purchaser, if any, whichremain unresolved at the Holdback Termination Date (“**UnresolvedHoldback Claims**”).  In theevent that one or more Holdback Claims remains disputed on and after theHoldback Termination Date, the Purchaser shall retain the disputed amount ofthe Holdback Claim(s) until the Holdback Claim is either (i) resolvedby the Purchaser and the Company, or (ii) there is an order of a court ofcompetent jurisdiction that the amount of the Holdback Claim (and any otheramount) shall be paid by the Purchaser to the Company.

 

(d)           Interest on Holdback.  On the Holdback Termination Date, thePurchaser shall pay to the Company interest on the amount of the remainingamount of the Holdback that is not subject to an Unresolved Holdback Claimaccruing from and after the Closing Date at the rate of three percent (3%) perannum (the “**Holdback Interest Rate**”); provided,however, that if the Holdback shall remain in effect after the HoldbackTermination Date as a result of any Unresolved Holdback Claims, then thePurchaser shall pay to the Company interest at the Holdback Interest Rateaccruing from and after the Closing Date on the amount of the Holdback on thedate of final settlement or determination of any such Unresolved HoldbackClaims.  No interest will accrue or bepayable on any amount of the Holdback retained by Purchaser due to a valid HoldbackClaim.

 

**2.6          Determination of Purchase PriceAdjustments; Closing Statement of Assets and Assumed Liabilities; Final Payment**.

 

(a)           Promptlyfollowing the Closing Date (but in any event within thirty (30) days after theClosing Date), the Company shall cause to be prepared and delivered to thePurchaser a certification by the Company’s Chief Financial Officer (the “**CFO Certificate**”). ** **  The CFO Certificate shall include:

 

(i)              A statement (the “**Closing Statement of Assets and Assumed Liabilities”**)prepared in accordance with Section 2.6(c) of this Agreement;

 

(ii)           A calculation of the Net AssetAdjustment, if any, by comparison of the (x) Net Assets of the Company atthe close of business on the Closing Date (the “**Closing DateNet Assets**”) as calculated on the Closing Statement of Assets andAssumed Liabilities, and (y) Net Asset Threshold Amount;

 

(1)           In the event that the Closing DateNet Assets are less than the Net Asset Threshold Amount, then the PurchasePrice is decreased by the amount of the difference between the Closing Date NetAssets and the Net Asset Threshold Amount. The foregoing decrease to the Purchase Price shall be summarized andcomputed as due to the Purchaser;

 

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(2)           In the event that the Closing DateNet Assets exceed the Net Asset Threshold Amount, then the Purchase Price isincreased by the amount of the difference between the Closing Date Net Assetsand the Net Asset Threshold Amount.  Theforegoing increase to the Purchase Price shall be summarized and computed asdue to the Company;

 

(iii)          A calculation of the Excluded TradePayables Adjustment, if any, by comparison of the (x) Excluded TradePayables of the Company at the close of business on the Closing Date (“**Closing Date Excluded Trade Payables**”), and (y) EstimatedExcluded Trade Payables;

 

(1)           In the event that the Closing DateExcluded Trade Payables are less than the Estimated Excluded Trade Payables,then the Purchase Price is decreased by the amount of the difference betweenthe Closing Date Excluded Trade Payables and the Estimated Excluded TradePayables.  The foregoing decrease to thePurchase Price shall be summarized and computed as due to the Purchaser;

 

(2)           In the event that the Closing DateExcluded Trade Payables exceed the Estimated Excluded Trade Payables, then thePurchase Price is increased by the amount of the difference between the ClosingDate Excluded Trade Payables and the Estimated Excluded Trade Payables.  The foregoing increase to the Purchase Priceshall be summarized and computed as due to the Company;

 

(iv)          The increase or decrease, if any, tothe Purchase Price determined pursuant to subsections (a)(ii) and (a)(iii) aboveshall be summarized and computed in the aggregate as either an amount (A) dueto the Purchaser, or (B) due to the Company, with interest thereoncomputed in accordance with Section 2.6(g), and shall be paid to theapplicable party by wire transfer within ten (10) business days of thedetermination of the net increase or decrease, if any;

 

(v)           The aggregate net amount determinedpursuant to subsections (a)(ii) and (a)(iii) above shall be the “**Closing Purchase Price Adjustment**”;

 

(vi)          A statement that the Closing DateExcluded Trade Payables amount is true and correct and determined in accordancewith GAAP consistently applied;

 

(vii)         Copies of all supplementary documents,work papers, and other data relating to the CFO Certificate; and

 

(viii)        Such other supplementary evidence as thePurchaser may reasonably require either prior to or after delivery of the CFOCertificate, including the evidence described in this Section 2.6 below.

 

(b)           In connection with the preparation ofthe Closing Statement of Assets and Assumed Liabilities and all other mattersarising under the CFO Certificate, each of the Purchaser and the Company shallafford the other party and their respective representatives complete access tothe books, records, 

 

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personnel and facilities of or pertaining to theBusiness to prepare the CFO Certificate and to review such information as isnecessary or desirable to confirm the accuracy of the Closing Statement ofAssets and Assumed Liabilities and all other statements arising under the CFOCertificate.

 

(c)           The Closing Statement of Assets andAssumed Liabilities shall include only the Assets and the Assumed Liabilitiesand shall be prepared in accordance with GAAP. The CFO Certificate shall state that the Closing Statement of Assets andAssumed Liabilities is in accordance with GAAP and without giving effect to theconsummation of the transactions contemplated hereby; provided, however, thatthe Closing Statement of Assets and Assumed Liabilities shall be prepared inconformity with GAAP year-end audit accrual and estimation principles such thatall pro-rata adjustments, accruals, reserves, allowances and similar year-endadjustments are prepared for and included in the Closing Statement of Assetsand Assumed Liabilities, as if the Closing Statement of Assets and AssumedLiabilities were a year-end statement; provided, further, that in the event anyaccounting matter is not treated in conformity with GAAP in the Company’shistorical financial statements relating to the Business, whether or notconsistently applied in such non-conforming manner, the standard required byGAAP shall be followed regardless of materiality.  The inventories and supplies of the Businessshall be priced in accordance with the provisions of Section 7.10 of thisAgreement.  The expense of thepreparation of the Closing Statement of Assets and Assumed Liabilities shall beborne by the Company.

 

The parties hereby agree that the Closing Statement ofAssets and Assumed Liabilities shall be adjusted so that the Closing Statementof Assets and Assumed Liabilities shall not reflect:

 

(i)            accruals for the expenses associatedwith the preparation of the Closing Statement of Assets and AssumedLiabilities;

 

(ii)           accruals for Transactional Expenses;

 

(iii)          accruals for income Taxes arising fromoperating and other income of the Business;

 

(iv)          any Excluded Assets; nor

 

(v)           any Excluded Liabilities.

 

(d)           The itemized calculations required bythe paragraphs of this Section 2.6 shall be presented and calculated inaccordance with **Exhibit A-2**hereto.

 

(e)           If the Purchaser concludes that anymatter reported in the CFO Certificate is not accurate, the Purchaser shall,within thirty (30) days after its receipt of the CFO Certificate (the “**Response Period**”), deliver to the Company awritten statement setting forth a specific description of each of itsobjections 

 

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and each of any discrepancies believed to exist.  If no notice of any objections ordiscrepancies is given by the Purchaser within the Response Period, then thecalculations set forth in the CFO Certificate shall be controlling for allpurposes of this Agreement, and the Purchaser or the Company, as the case maybe, shall pay the other the amount which it is obligated to pay in accordancewith the CFO Certificate pursuant to Section 2.6(g) below.

 

(f)            The Purchaser and the Company shalluse good faith efforts to jointly resolve the properly noticed objections anddiscrepancies within fifteen (15) days of the receipt of the Purchaser’swritten statement of objections and discrepancies, which resolution, ifachieved, shall be fully and completely binding upon the parties and notsubject to further review, appeal, or dispute. If the Purchaser and the Company are unable to resolve the objectionsand discrepancies to their mutual satisfaction within such fifteen (15) dayperiod, then such dispute shall be resolved in the manner set forth in Section 5.4of this Agreement.

 

(g)           Within five (5) days followingthe earlier to occur of (i) any failure to object to the CFO Certificate withinthe Response Period, or (ii) resolution of the dispute pursuant to Section 5.4of this Agreement, if the Purchaser is determined to owe an amount to theCompany, the Purchaser shall pay such amount in cash to the Company, and if theCompany is determined to owe an amount to the Purchaser, the Company shall paysuch amount in cash to the Purchaser. All amounts owed by the Purchaser or the Company to the other inaccordance with this Section 2.6 shall be paid by certified or bankcashier’s check or by wire transfer of immediately available funds withinterest computed thereon from the Closing Date at the prime rate announced by,and charged on the Closing Date by, US Bank National Association, Minneapolis,Minnesota.

 

**2.7         ****Closing and ClosingDeliveries**.

 

(a)           Closing and Closing Date.  The closing of the transactions contemplatedby this Agreement (the “**Closing**”)is held on the date hereof at the offices of Briggs and Morgan, ProfessionalAssociation, 2200 IDS Center, Minneapolis, Minnesota, 55402 and shall beeffective as of the close of business on such day.  Such date is referred to in this Agreement asthe “**Closing Date**.”

 

(b)           Documents to be Delivered by theCompany.  At the Closing, the Companyshall execute, where necessary or appropriate, and deliver to the Purchasereach and all of the following:

 

(i)            An Assignment and AssumptionAgreement executed by the Company;

 

(ii)           A Bill of Sale executed by theCompany;

 

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(iii)          A copy of the duly adopted resolutionsof the Board of Directors of the Company, certified by an officer of theCompany approving this Agreement and authorizing the execution and delivery ofthis Agreement by the Company, including the Ancillary Documents to be executedand/or delivered by the Company pursuant hereto, and the consummation of thetransactions contemplated hereby and thereby;

 

(iv)          Delivery and assignment of any and alldocuments relating to Permits which by their terms are assignable;

 

(v)           The Company shall execute and deliverto the Purchaser in blank (without completing the buyer insert) the assignmentprovision of all vehicle, equipment and other personal property titlecertificates (or reasonably acceptable transfer documentation which will beaccepted by applicable Governmental Bodies and Third Parties, where applicable)with a detailed list thereto (organized by the Company site location)describing (A) the vehicle, equipment or personal property, (B) thevehicle, equipment or personal property identification number, and (C) thestate issuing the title certificate;

 

(vi)          A Certificate of good standing for theCompany dated within five (5) days prior to the Closing Date issued by theSecretary of State of Minnesota****;

 

(vii)         If required by Applicable Law, anon-foreign person affidavit duly executed by the Company;

 

(viii)        UCC-3 releases of all Encumbrances onthe Assets by any financial institutions or other lenders of the Company;

 

(ix)           All consents set forth in **Schedule 7.9** approving the transferof any Asset or the assumption of any Assumed Liability required by the termsof any Contract or Permit (without charge to the Purchaser or material changeto the terms of the Contract or Permit); and

 

(x)            Such other documents and items asare reasonably necessary or appropriate to effect the consummation of thetransactions contemplated hereby or which may be customary under local law.

 

(c)           Documents to be Delivered by thePurchaser.  At the Closing, thePurchaser shall execute, where necessary or appropriate, and deliver to theCompany each and all of the following:

 

(i)            Payment of the Closing Date PurchasePrice pursuant to and determined in accordance with Section 2.4 hereof;

 

(ii)           A copy of the duly adoptedresolutions of the Board of Directors of the Purchaser certified by an officerof the Purchaser approving this Agreement and authorizing the execution anddelivery of this Agreement, including the Ancillary Documents to be executedand/or delivered by the Purchaser pursuant hereto, and the consummation of thetransactions contemplated hereby and thereby;

 

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(iii)          The Assignment and AssumptionAgreement executed by the Purchaser; and

 

(iv)          Such other documents and items as arereasonably necessary or appropriate to effect the consummation of thetransactions contemplated hereby or which may be customary under local law.

 

**ARTICLE3REPRESENTATIONS AND WARRANTIES OF THE COMPANY**

** **

As an inducement to the Purchaser to enter into thisAgreement and to consummate the transactions contemplated hereby, the Companyrepresents and warrants to the Purchaser that each and all of the followingrepresentations and warranties (as modified by the Schedules to this Agreement(the “**Schedules**”)) are true andcorrect as of the date hereof.  The Schedulesshall be arranged in paragraphs generally corresponding to the sections andsubsections contained in this Article 3 and shall be presented in a mannerthat is reasonably contemplated to provide the disclosures requested by thePurchaser.

 

**3.1         ****Organization**. The Company is a corporation duly incorporated, legally existing and ingood standing under the laws of the State of Minnesota.  The Company has all requisite power andauthority to own, operate and lease its properties and assets and to conduct theBusiness as it is now being conducted. The Company is duly qualified to transact business as a foreigncorporation and is in good standing under the laws of every state orjurisdiction in which the nature of its activities or of its properties owned, leasedor operated makes such qualification necessary and in which the failure to beso qualified could reasonably be expected to have a Material Adverse Effect onthe Business.

 

**3.2         ****Business and Business Name**. Except as set forth in **Schedule 3.2**,the Company operates the Business as a distinct division of the Company and noother division or subsidiary of the Company owns, holds, utilizes or requiresthe Assets in its operations.  TheCompany has not registered or filed to do business in lieu of its statutoryname as “RME” in any jurisdiction.

 

**3.3         ****Due Authorization**. The execution, delivery and performance of this Agreement and theAncillary Documents including the documents, instruments and agreements to beexecuted and/or delivered by the Company pursuant to this Agreement, and theconsummation of the transactions contemplated hereby and thereby have been dulyand validly authorized by all necessary action. This Agreement and the Ancillary Documents to be executed and/ordelivered by the Company pursuant to this Agreement have been duly and validlyauthorized, executed and delivered by the Company and the obligations of theCompany hereunder and thereunder are or will be upon such execution anddelivery valid, legally binding and enforceable against the Company inaccordance with their respective terms.

 

**3.4         ****No Breach**. The Company has full power and authority to sell, assign, transfer,convey and deliver to the Purchaser the Assets to be sold hereunder.  The Company has full power and authority tootherwise perform its obligations under this Agreement and the AncillaryDocuments to be executed and/or delivered pursuant hereto.  The execution and delivery of this 

 

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Agreement, including theAncillary Documents and the consummation of the transactions contemplatedhereby and thereby will not:  (i) violateany provision of the Articles of Incorporation or Bylaws of the Company, (ii) violateany Applicable Laws or Injunction applicable to the Company, (iii) exceptas provided in **Schedule 3.4**hereto, require any filing with, Permit from, authorization, consent orapproval of, or the giving of any notice to, any Person, (iv) except asprovided in **Schedule 3.4**hereto, result in a violation or breach of, or constitute (with or without duenotice or lapse of time or both) a default (or give another party any rights oftermination, cancellation or acceleration) under any of the terms, conditionsor provisions of any note, bond, mortgage, indenture, license, franchise,Permit (including, but not limited to, any Permits, approvals or authorizationsof any Governmental Body), Leased Real Estate lease, Benefit Plan or otherContract to which the Company is a party, or by which it or any of itsproperties or assets may be bound, or (v) result in the creation orimposition of any Encumbrance on any of the Assets.

 

**3.5         ****Clear Title**. On the Closing Date, (i) the Company holds good and valid title toall of the Assets that are tangible assets, (ii) all of the Company’sinterests in and to the Assets that are intangible assets are valid andenforceable, (iii) the Company holds good and valid title to the tangibleportion and valid and enforceable interests in the intangible portion of theAssets that are mixed assets, (iv) the Company holds valid and enforceableleasehold interests in all Leased Real Estate and all leased non-real estateAssets, and (v) the Assets and leasehold interests are free and clear ofany and all Encumbrances, except for the Permitted Encumbrances, of any kind,nature and description whatsoever.  Thesale of the Assets is a permitted disposition under the Company’s CreditAgreement, dated as of November 20, 2007, between the Company, CreditSuisse and the other lenders party thereto (“Credit Agreement”), and pursuantto the provisions of the Credit Agreement the Assets were transferred to thePurchaser at the Closing free and clear of any and all security interests orother liens held by Credit Suisse or any other party under the Credit Agreementor under any agreements entered into in connection with the Credit Agreement.

 

**3.6         ****Condition and Sufficiency of Assets**. The Assets constituting property, plant, equipment and other personalproperty (i) have in all material respects been properly maintained and (ii) arein all material respects in good operating condition and repair, subject onlyto ordinary wear and tear.  Except forthe Excluded Assets, the Assets are all of the assets that have been used inthe Business.  Except as set forth on **Schedule 2.1(a)(ii)(L)**, the Assetsare all of the assets used to operate and necessary or required to operate theBusiness in the Ordinary Course of Business.

 

**3.7         ****Litigation**. There is no pending Proceeding with respect to the Business:

 

(a)           that has been commenced by or servedupon the Company or of which the Company has Knowledge; or

 

(b)           to the Company’s Knowledge, that, asof the date of execution of this Agreement and the Closing Date, challenges, orthat will have the effect of preventing, delaying, making illegal, or otherwiseinterfering with, any of the transactions contemplated hereby.

 

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Except as described in **Schedule 3.7** hereto, to theKnowledge of the Company, no such Proceeding has been Threatened.  Except as provided in **Schedule 3.7** hereto, to theKnowledge of the Company, the Company is not a party to or subject to theprovisions of any Injunction which could, individually or in the aggregate,reasonably be expected to impair the ability of the Company to consummate thetransactions contemplated hereby.

 

**3.8         ****Labor Matters**. The Company has never been a party to any collective bargainingagreement or other labor Contract with respect to the Business.  There has never been, and there is notpresently pending or existing, and to the Company’s Knowledge there is notThreatened with respect to the Business, (i) any strike, slowdown,walkout, picketing, work stoppage, labor arbitration or other Proceeding inrespect of the grievance of any Company employee, (ii) any application orcomplaint filed by any Company employee or union with the National LaborRelations Board, or any comparable Governmental Body, (iii) anyorganizational activity or other labor dispute against or affecting theCompany, and no application for certification of a collective bargainingagreement is pending or, to the Company’s Knowledge, is Threatened.  There is no lockout of any employees by theCompany and no such action is contemplated by the Company.  There is no allegation, charge, complaint or Proceedingpending or, to the Company’s Knowledge, Threatened by any Person against theCompany or any of its current or former officers, directors or employees withrespect to the Business relating to employment, equal employment opportunity,discrimination, harassment, wrongful discharge, unfair labor practices,immigration, wages, hours, benefits, collective bargaining, the payment ofsocial security or similar Taxes, occupational safety and health or plantclosing.

 

**3.9         ****DEA Compliance**.  With respect to the Business, the Company (i) hasnot stored, shipped or maintained any controlled substances inventory and (ii) hasnot had any facilities registered under the Controlled Substances Act or theControlled Substances Import and Export Act.

 

**3.10       ****Employee Benefits**.

 

(a)           **BenefitPlans**.  Except as described in**Schedule 3.10** hereto,the Company does not maintain or contribute to any Benefit Plans with respectto the Business.  Without limiting thegenerality of the foregoing provision of this Section, except as described in **Schedule 3.10** hereto, there are nopension plans, welfare plans or employee benefit plans qualified under Section 401(a) ofthe Code to which the Company is required to contribute with respect to theBusiness.  The Company does not and willnot have any unfunded Liability for services rendered prior to the Closing Dateunder any Benefit Plans with respect to the Business.  The Company is not in default under anyBenefit Plan.  Except Neither theCompany, nor any Person now or formerly part of a controlled group with theCompany, within the meaning of Section 412(c)(11)(B)(ii) of the Code(the “**Controlled Group**”),maintains or has ever maintained a “defined benefit plan,” as defined in Section 3(35)of ERISA, that is subject to Section 412 of the Code and Section 302of ERISA.  Neither the Company nor anyother member of its Controlled Group contributes to or has, or could reasonablybe expected to have, any Liability (including but not limited to withdrawalLiability) with respect to any multi-employer plan (as defined in Section 4064(a) ofERISA or 

 

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Section 4001(a)(3) of ERISA).  Other than claims for benefits in theOrdinary Course of Business, there are no actions, suits, disputes, arbitrationsor other material claims pending or, to the Company’s Knowledge, Threatenedwith respect to any Benefit Plan.

 

(b)           **OtherPlans**.  None of the BenefitPlans maintained by the Company for the benefit of employees of the Businessprovides health care or any other non-pension benefits to any employees aftertheir employment is terminated (other than as required by part six of subtitleB of title I of ERISA).

 

**3.11       ****Income Statement and PreliminaryStatement of Assets and Assumed Liabilities**.

 

(a)           **Income Statement**.Attached as **Exhibit A-1** hereto is theunaudited income statement of the Business for the twelve months ended May 28,2009 (the “**5/28/09 Income Statement**”). The5/28/09 Income Statement is true and correct in all material respects andfairly presents the results of operations for the period covered in accordancewith GAAP applied by the Company on a consistent basis throughout the periodcovered thereby and on a basis consistent with that of prior years and periods,subject to year end adjustments and lack footnotes and other requiredpresentation items.

 

(b)           **Preliminary Statement ofAssets and Assumed Liabilities.**Attached as **Exhibit A-2**hereto is a statement of the Assets and Assumed Liabilities dated as of January 24,2009 (the “**Preliminary Statement of Assets and AssumedLiabilities**”). The Preliminary Statement of Assets and AssumedLiabilities is true and correct in all material respects and fairly presentsthe Assets and Assumed Liabilities as of its date.

 

**3.12       ****Absence of Certain Developments**. Except for the transactions contemplated by this Agreement or asotherwise set forth on **Schedule 3.12**hereto, since January 24, 2009, the Company has conducted the Businessonly in the Ordinary Course of Business and with respect to the Business hasnot:

 

(a)           Sold, leased, assigned or otherwisetransferred any material properties or assets, or disposed of or permitted tolapse any rights in any Permit or Intellectual Property owned or used by theCompany in the Business, other than in the usual and Ordinary Course ofBusiness, or organized any new business entity or acquired any equitysecurities, assets, properties, or business of any Person or any equity orownership interest in any business or merged with or into or consolidated withany other Person;

 

(b)           Suffered, sustained or incurred anymaterial Loss or waived or released any material right or claim, whether or notin the Ordinary Course of Business;

 

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(c)           Suffered, sustained or incurred any material damage,destruction or casualty loss to any material properties or assets, whether ornot covered by insurance;

 

(d)           Engaged in any transaction not in the Ordinary Courseof Business;

 

(e)           Subjected any of the Assets to any Encumbrance,whether or not in the Ordinary Course of Business, except for PermittedEncumbrances;

 

(f)            Issued any note, bond or other debt security, created,incurred or assumed any indebtedness for borrowed money or capitalized lease obligationor otherwise incurred any material Liability, except current Liabilitiesincurred in the Ordinary Course of Business;

 

(g)           Accelerated or requested early payment of accountsreceivable of the Business; increased the salary, wage or other compensation orlevel of benefits payable or to become payable by the Company to any of itsofficers, directors, employees or agents employed or engaged with respect tothe Business other than in the Ordinary Course of Business;

 

(h)           Loaned money to any Person or guaranteed any loan toor Liability of any Person, whether or not in the Ordinary Course of Business;

 

(i)            Except as described in the Schedules hereto, amendedor terminated any of the Operating Contracts (as hereinafter defined), exceptin the Ordinary Course of Business;

 

(j)            Suffered, sustained or incurred any Material AdverseChange;

 

(k)           Received notice from any customer, supplier, vendor,Governmental Body or any other Person which would, with substantial certainty,give rise to or result in a Material Adverse Effect on the Business;

 

(l)            Delayed or postponed the payment of accounts payableor other Liabilities;

 

(m)          Entered into any employment Contract or collectivebargaining agreement, written or oral, or modified the terms of any existingsuch Contract or agreement or adopted, amended, modified or terminated anyBenefit Plan for the benefit of any of the Company’s directors, officers andemployees who are employed in the Business;

 

(n)           Entered into any Contract to do any of the foregoing.

 

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**3.13****       ****Intellectual Property**.

 

(a)           For purposes of this Agreement, “**IntellectualProperty Rights**” means rights and interests in IntellectualProperty.

 

(b)           **Schedule 3.13** to this Agreement lists all trademarksand applications therefor, servicemarks and applications therefore, tradenames,copyright registrations and applications therefor, patents, patent applicationsand unfiled disclosures that are related to or used in connection with theBusiness (the “**Registered Intellectual Property**”).  Except as set forth on **Schedule 3.13**:(i) trademark applications, servicemark applications, copyrightregistrations, and patent applications within the Registered IntellectualProperty are in compliance with all legal requirements, (ii) all issuedtrademarks, servicemarks, copyright registrations and patents constitutingRegistered Intellectual Property are valid and enforceable, (iii) no (A) trademarkor servicemark constituting Registered Intellectual Property has been or is nowinvolved in any cancellation Proceeding and, to the Knowledge of the Company,no action or Proceeding is Threatened with respect to such trademarks by anyThird Party contesting the Company’s rights to same, and (B) no copyrighthas been or is now being contested by any Third Party, and no action orProceeding is Threatened with respect to such copyright by any Third Party, and(iv) no patent or patent application constituting Registered IntellectualProperty is the subject of any interference, reissue, re-examination,opposition or any other Proceeding contesting the Company’s rights tosame.  The Company exclusively owns, orhas the right to exclusive use pursuant to a written license or agreement, allIntellectual Property Rights related to or used in the Business.

 

(c)           The Company has taken commercially reasonable steps toprotect its Intellectual Property Rights used in or related to the Business.

 

(d)           All of the Company’s employees that have participatedin the development of the Intellectual Property Rights related to or used inthe Business have entered into valid, binding, legal and enforceable employeeagreements with the Company assigning all right, title and interest inIntellectual Property Rights created within the scope of their employment to theCompany.  No Third Party consultants orcontractors have participated in the development of the Intellectual PropertyRights related to or used in the Business. The Company owns all of the right, title and interest of its employeesand Third Party contractors and consultants to the Intellectual Property Rightsin the Assets.

 

(e)           The Company’s operation and conduct of the Businessdoes not infringe upon, or otherwise violate the rights of any Third Party withrespect to any Intellectual Property Rights, (ii) no Proceedings have beeninstituted or Threatened, nor has any claim been made, nor is there any basisfor any such claims to be Threatened or made against the Company alleging anysuch infringement or violation.

 

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(f)            To the Knowledge of the Company, no Third Party hasinfringed upon or misappropriated, or diluted or otherwise violated anyIntellectual Property Rights or otherwise used in or related to the Business,and no such claims have been brought against any Third Party by the Company.

 

(g)           With respect to each item of transferred IntellectualProperty and Intellectual Property Rights related to or used in the Business, (i) theCompany owns all such items free and clear of any security interest, (ii) theitem is not subject to any outstanding Injunction, judgment, order, decree,ruling or charge, (iii) no Proceeding, claim or demand, or to theKnowledge of the Company, any investigation, is pending or is Threatened whichchallenges the legality, validity, enforceability, use or ownership of theitem, and there is no reasonable basis therefor, and (iv) the Company hasnot agreed to indemnify any Person for or against any infringement ormisappropriation with respect to the item.

 

**3.14****       ****Compliance with Laws**. The Business has been operated, and the Company is in compliance in allmaterial respects with the requirements of all Applicable Laws to which theCompany is subject.  The Company has notreceived any notice of, and the Company has no Knowledge of, any violation of amaterial nature of any Applicable Laws respecting the Company.

 

**3.15****       ****Operating Contracts**. Except as disclosed in **Schedule 3.15**,and except with respect to Contracts that have been fully performed as of thedate hereof and have no further force or effect, the Company is not a party toany oral or written Contract with respect to the Business.  **Schedule 3.15**sets forth all of the Contracts required or necessary to operate the Businessas it has been operated by the Company, including all non-competition,non-solicitation and other agreements containing similar restrictive covenantswith employees of the Business on the Closing Date, and all such agreementsentered into with any former employee of the Business who is associated with anyIntellectual Property of the Company whose restrictive covenants have not yetexpired (the “**Employee Restrictive Covenant Agreements**”).  All of the Contracts listed on **Schedule 3.15** hereto arereferred to in this Agreement as the “**OperatingContracts**.”  All of theOperating Contracts were made in the Ordinary Course of Business, and, to theCompany’s Knowledge, are valid, binding and currently in full force andeffect.  The Company is not in defaultunder any of the Operating Contracts, and, to the Company’s Knowledge, no eventhas occurred which, through the passage of time or the giving of notice, orboth, would constitute a default by the Company or give rise to a right oftermination or cancellation by another party under any of the OperatingContracts, or cause the acceleration of any Liability of the Company, or resultin the creation of any Encumbrance upon any of the Assets.  To the Company’s Knowledge, no other party isin default under any of the Operating Contracts.  The covenants of the employees of theCompany, including without limitation any non-competition and non-solicitationcovenants, under the agreements set forth on **Schedule2.1(a)(i)(H)**, remain in full force and effect and have not andwill not be terminated at or prior to the Closing Date or otherwise terminateat the time such employees’ employment with the Company terminates.  Except as described on **Schedule 3.15** hereto, none of theOperating Contracts have been canceled, terminated, amended or modified.  Except as provided in **Schedule 3.4** hereto, theconsummation of the transactions contemplated hereby will not require theconsent or approval of any Person under any of the Operating Contracts.

 

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**3.16****       ****Real Estate**. With respect to the Business, the Company owns no real property otherthan the leasehold interests described in **Schedule 3.16**(section (a) of such Schedule shall describe all leasehold interests withrespect to Related Person lessors and section (b) of such Schedule shalldescribe all leasehold interests with respect to unrelated party lessors)attached hereto with respect to each parcel of real estate leased by theCompany in connection with the operation of the Business (the “**Leased Real Estate**” or the “**Real Estate**”):

 

(a)           **Schedule 3.16** contains a complete and accurate listingand description (including the parties, term, expiration date(s), address, anddescription of the leased premises) of each written or oral lease regardingLeased Real Estate which is not likewise described on **Schedule 3.16** hereto;

 

(b)           To the Knowledge of the Company, there are no publicimprovements affecting any parcel of Leased Real Estate, including, but notlimited to, water, sewer, sidewalk, street, alley, curbing, landscaping orrelated improvements, which have been commenced and/or completed and for whichan assessment has not been levied or, to the Company’s Knowledge, which may belevied after the date of this Agreement and, in each case which would becomethe obligation of the Purchaser by, upon or pursuant to assumption of theLeased Real Estate;

 

(c)           To the Company’s Knowledge, there are no condemnationProceedings pending or Threatened with respect to all or any part of any parcelof Leased Real Estate;

 

(d)           To the Company’s Knowledge, there are no existingconditions which, under Applicable Laws in effect prior to or as of the ClosingDate, would require repair, alteration or correction of any parcel of RealEstate and there are no conditions that could give rise to the same, in eachcase which would become the obligation of the Purchaser by, upon or pursuant toassumption of the Leased Real Estate;

 

(e)           To the Company’s Knowledge (a) there are noexisting structural, mechanical or other defects of material significance inany of the buildings, improvements, fixtures and equipment, including the roof,heating, ventilating, air conditioning, electrical, plumbing and sanitarydisposal systems, located on any parcel of Real Estate which would become theobligation of the Purchaser by, upon or pursuant to assumption of the LeasedReal Estate, and (b) all such buildings, improvements, fixtures andequipment, including the roof, heating, ventilating, air conditioning,electrical, plumbing and sanitary disposal systems for which the Company iscurrently responsible, will be until the Closing Date, maintained in goodrepair, working order and condition, ordinary wear and tear excepted;

 

(f)            The Company has not received any notice, and theCompany has no Knowledge that, the improvements on each parcel of Real Estateand the Company’s use thereof in the Business does not or may not comply in all

 

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material respects with any and all building, zoning,subdivision, traffic, parking, land use, occupancy, health and other ApplicableLaws pertaining to the Real Estate or to the development, construction,management, use and operations of the improvements thereon;

 

(g)           To the Knowledge of the Company, the improvementslocated on each parcel of Real Estate for which the Purchaser would haveresponsibility under any Leased Real Estate lease, including fences, drivewaysand other structures occupied, used or claimed by the Company, are whollywithin the boundary lines of such parcels of Real Estate and such improvementsand the Company’s present uses thereof do not in any material respect infringeor encroach upon the rights of any other Person; and

 

(h)           To the Knowledge of the Company, the Company has alloperating Permits necessary for the operation of the Business on the LeasedReal Estate, and all such Permits are current. To the Knowledge of the Company, the Company has all easements, oraccess through public utility easements, on to private property, constructionpermits, highway crossing licenses and permits (and other similar licenses andpermits) and right-of-way-licenses reasonably necessary to conduct theBusiness.

 

**3.17****       ****Books and Records**. All of the Company’s books of account and other financial and corporaterecords relating to the Business have been made available to the Purchaser andits representatives.  Such books ofaccount and records are current, complete, true and correct in all materialrespects.  The books and records of theCompany relating to the Business fairly reflect the transactions relating tothe Business or to which the Assets or the Assumed Liabilities relate, and suchbooks and records of the Company relating to the Business are and have beenproperly kept and maintained in accordance with sound business practices.

 

**3.18****       ****Employees and Employee RelatedCommitments**.

 

(a)           **Schedule 3.18** hereto contains a true and correct listof the names, positions and annual salary rates as of the Closing Date, of allpresent employees of the Company that are employed in the operations of theBusiness (including those on furlough, leave, disability (short or long-term)or layoff of any kind, which status shall be noted on **Schedule3.18**).  None of theemployees has informed the Company that he/she intends to terminate employmentwith the Company.  **Schedule 3.18** also sets forth adescription of any written Contract, other than the Benefit Plans described on **Schedule 3.10** hereto, with respectto the conditions of employment of all of the Company’s employees that areemployed in the operation of the Business. Other than Allen Hughes and William King, who are parties to theemployment agreements set forth on **Schedule 3.15**,all employees are employed on an “at will” basis.

 

(b)           Except as set forth in **Schedule 3.18**,the consummation of the transactions described in this Agreement, in and ofthemselves, will not entitle any current or former employee of the Company toseverance pay, 

 

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unemployment compensation or any other payment, oraccelerate the time of payment or vesting, or increase the amount ofcompensation due to any such employee or former employee.

 

(c)           No employee of the Company has, in the course andscope of employment with the Company in the Business, been exposed to anyHazardous Materials in such a manner as to be harmed thereby (whether such harmis now known to exist or will be discovered in the future).

 

**3.19****       ****Permits**. Except as set forth in **Schedule 3.19**,the Company has obtained all Permits of each and every Governmental Body havingjurisdiction over the Company or any of the Assets to operate and carry on theBusiness as it is now being conducted. All such Permits are listed on **Schedule 3.19**hereto.

 

**3.20****       ****Insurance**. The Company has maintained and will continue to maintain until theClosing Date the insurance described in **Schedule 3.20**,which insurance covers the Company’s tangible real and personal property andassets, whether owned or leased, against loss or damage by fire or othercasualty, including each and all of the Assets. All such insurance is in full force on the date of this Agreement and iscarried with insurers licensed in the states affected by such policies.  The Company has promptly and adequatelynotified the Company’s insurance carriers of any and all claims known to theCompany with respect to the operations, products or services of the Businessfor which the Company is insured.  TheCompany has not been refused any insurance coverage by any insurance carrier towhich it has applied for insurance during the past three (3) years.

 

**3.21****       ****Brokers**. The Company has not employed or engaged any broker, finder, agent,banker or Third Party, nor have they otherwise dealt with anyone purporting toact in the capacity of a finder or broker in connection with the transactionscontemplated hereby.  No commissions,finder’s fees or like charges have been or will be incurred by the Company thatare chargeable to the Business or against the Assets in connection with theexecution and delivery of this Agreement or the consummation of the transactionscontemplated hereby.  Any suchcommissions, finders’ fees or like charges shall be directly chargeable to theCompany as contemplated by the terms of this Agreement.

 

**3.22****       ****Environmental Matters**.  With respectto the Business the Company (i) has transported, stored, and/or disposedof any Hazardous Materials handled by the Company in compliance with allEnvironmental Laws, (ii) has operated the Business with all Permitsrequired under Environmental Law, and the Leased Real Estate operated by theCompany is not subject to an environmental claim, (iii) does not haveKnowledge that the Leased Real Estate has been or is being used as a landfillor a storage or dumping area for any Hazardous Materials, (iv) does nothave Knowledge of any investigation, notice, Proceeding or order affecting theBusiness concerning any environmental condition or environmental claim, and (v) hasno Knowledge that asbestos, polychlorinated biphenyls or urea formaldehyde hasbeen placed, stored or located on the Leased Real Estate.

 

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**3.23****       ****Debt Instruments**.   Except for the Guaranty by the Company setforth on **Schedule 3.23** andexcept for the security interests which will automatically be released atClosing as set forth on **Schedule 3.23**,the Company has nomortgages, indentures, notes, guarantees or other obligations for or relatingto borrowed money, purchase money debt (including conditional sales contractand capital leases) or covenants not to compete for which the Company is primarilyor secondarily obligated with respect to the Business or which Encumber in anyway the Assets.

 

**3.24****       ****Customers and Suppliers**.  **Schedule 3.24** sets forth a full andcomplete listing of the suppliers and other vendors to the Business.  To the Knowledge of the Company no materialcustomer or a group of customers of the Business has notified the Company thatat any time on or after January 24, 2009, the customer intends toterminate, cancel, limit or modify the customer’s business relationship withthe Company.  No vendor, supplier,dealer, representative or consultant of the Company which is material to theBusiness’s operations has notified the Company after January 24, 2009 thatit intends to terminate, cancel, limit or modify its business relationship withthe Company in any material respect.

 

**3.25****       ****Adequacy of Properties**. The Company owns, leases or otherwise has adequate rights to use alltangible and intangible personal property necessary for the conduct of theBusiness in the manner in which the Business is presently being conducted withno conflict with or infringement of the rights of others, and none of suchproperty or the Company’s rights thereto is subject to any proceeding pending,or to the Best Knowledge of the Company, Threatened, which may result in therevocation, termination, supervision, cancellation or adverse modification ofany such property.

 

**3.26****       ****Absence of Certain Business Practices**. Neither the Company nor any Person acting on its behalf has, directly orindirectly, within the past six (6) years given or agreed to give any giftor similar benefit to any customer, supplier, governmental employee or otherPerson who is or may be in a position to help or hinder the Business of theCompany (or assist the Company in connection with any actual or proposedtransaction) which (i) might subject the Company to any damage or penaltyin any civil, criminal or governmental litigation or Proceeding, (ii) ifnot given in the past, might have had an adverse effect on the financialcondition, Business or results of operations of the Company, or (iii) ifnot continued in the future, might adversely affect the financial condition,Business or operations of the Company or which might subject the Company tosuit or penalty in any private or governmental litigation or Proceedings.

 

**3.27****       ****Trade Regulation**. In the five (5) years ended on the Closing Date (a) all of theprices charged by the Company in connection with the marketing, sale ordistribution of any products or services of the Business have been in compliancewith all Applicable Laws, and (b) no claims have been communicated or, tothe Knowledge of the Company, threatened in writing against the Company relatedto the Business with respect to wrongful termination of any dealer, distributoror any other marketing entity, discriminatory pricing, price fixing, unfaircompetition, false advertising, or any other violation of any Applicable Lawsrelating to anti-competitive practices or unfair trade practices of any kind,and to the Company’s Knowledge, no specific situation, set of facts, oroccurrence provides any basis for any such claim against the Company withrespect to the operation of the Business.

 

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**3.28****       ****Inventories**.

 

(a)           All inventories of the Business are of good, usableand merchantable quality in all material respects, subject to reserves forobsolete or discontinued items;

 

(b)           All inventories of the Business are of such quality asto meet the usual and customary quality control standards of the Business andany applicable quality control standards of any applicable Governmental Body;

 

(c)           All inventories of the Business that are finishedgoods are saleable as current inventories in the Ordinary Course of Business;

 

(d)           All inventories of the Business are recorded on thefinancial records at the lower of cost or market, as required by GAAP;

 

(e)           The Company has maintained the levels of inventory,materials and supplies used in the Business consistent with past practice andsuch levels of inventory are sufficient at and upon the Closing to properlyfulfill all purchase orders of inventory for customers of the Business existingon the Closing Date and for a reasonable transition period following theClosing;  and

 

(f)            All inventory reserves are sufficient to absorb anyexpenses chargeable to such reserve for obsolescence, salability, and otherreserve based factors.

 

**Schedule 3.28**lists the location of all such inventories. The Company has followed all Company policies with respect to excess andobsolete inventory.

 

**3.29****       ****Certain Arrangements**.  **Schedule 3.29** sets forth a true andcomplete list of all benefits, credits, services, discounts, payments or otherarrangements made by the Company and any of its Affiliates for the benefit ofthe Business, including management information systems, (support, maintenance,central reporting, disaster recovery and related planning), accounting andfinance (including payroll processing, cash management and software support),purchasing and supplies, human resources, insurance and risk management, andsimilar arrangements that will not be transferred to the Purchaser pursuant tothe transactions contemplated hereby.

 

**3.30****       ****Tax Matters**.

 

(a)           Tax Returns.  The Companyhas timely filed, or caused to be timely filed, or will timely file or cause tobe timely filed with the appropriate taxing authorities, all Tax Returns thatare required to be filed by, or with respect to, the Company on or prior to theClosing Date.  The Returns have accuratelyreflected and will accurately reflect all Liability for Taxes of the Companyfor the periods covered thereby.

 

(b)           Payment of Taxes.  All Taxes andTax Liabilities of or with respect to the Company for all taxable years orperiods that end on or before the Closing Date and, with respect to any taxableyear or period beginning before and ending after the Closing Date, the portionof such taxable year or period ending on the day immediately preceding theClosing Date have been timely paid.

 

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(c)           Other Tax Matters.  Except as setforth in **Schedule 3.30**:

 

(i)            all Taxes which the Company  is (or has been) required by law to withholdor collect have been duly withheld or collected, and have been timely paid overto the proper authorities to the extent due and payable.

 

(ii)           the Company is not a “United States real propertyholding corporation” within the meaning of Section 897(c)(2) of theCode.

 

(iii)          there are no Tax sharing, allocation, indemnificationor similar agreements in effect as between the Company or any predecessor orAffiliate thereof and any other party under which the Purchaser or the Companyor any of its subsidiaries could be liable for any Taxes or other claims of anyPerson.

 

(iv)          the Company has not applied for, been granted, oragreed to any accounting method change for which it will be required to takeinto account any adjustment under Section 481 of the Code or any similarprovision of the Code or the corresponding Tax laws of any nation, state orlocality.

 

(v)           no election under Section 341(f) of the Codehas been made or shall be made prior to the Closing Date to treat the Companyas a consenting corporation, as defined in Section 341 of the Code.

** **

**ARTICLE 4REPRESENTATIONS AND WARRANTIES OF THE PURCHASER**

** **

As an inducement for the Company to enter into thisAgreement and consummate the transactions contemplated hereby, the Purchaserhereby represents and warrants to the Company that each and all of thefollowing representations and warranties are true and correct as of the datehereof.

 

**4.1****         ****Organization**. The Purchaser is a corporation duly organized, legally existing and ingood standing under the laws of the State of Minnesota, and has all requisitepower and authority, corporate and otherwise, to own, operate and lease itsproperties and assets and to conduct its business as it is now being conducted.

 

**4.2****         ****Due Authorization**. The execution, delivery and performance of this Agreement, including theAncillary Documents to be executed and/or delivered by the Purchaser pursuantto this Agreement, and the consummation of the transactions contemplated herebyand thereby have been duly and validly authorized by all necessary corporateaction on the part of the Purchaser. This Agreement and the Ancillary Documents to be executed and/ordelivered by the Purchaser pursuant to this Agreement have been duly andvalidly authorized, executed and delivered by the Purchaser and the respectiveobligations of the Purchaser hereunder and thereunder are or will be valid,legally binding and enforceable against the Purchaser in accordance with theirrespective terms.

 

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**4.3****         ****No Breach**. The Purchaser has full power and authority, corporate and otherwise, toperform its obligations under this Agreement and the Ancillary Documents to beexecuted by the Purchaser pursuant hereto. The execution and delivery of this Agreement, including the AncillaryDocuments to be executed by the Purchaser pursuant to this Agreement, and theconsummation of the transactions contemplated hereby and thereby will not: (i) violateany provision of the Articles of Incorporation or Bylaws (or comparablegoverning documents or instruments) of the Purchaser, (ii) violate anyApplicable Laws or Injunction applicable to the Purchaser, (iii) requireany filing with, Permit from, authorization, consent or approval of, or thegiving of any notice to, any Person, (iv) result in a violation or breachof, or constitute (with or without due notice or lapse of time or both) adefault (or give another party any rights of termination, cancellation oracceleration) under, any of the terms, conditions or provisions of any note,bond, mortgage, indenture, license, franchise, Permit (including, but notlimited to, any Permits, appeals or authorizations of any Governmental Body),lease or other Contract to which the Purchaser is a party, or by which it orany of its assets or properties.

 

**4.4****         ****Brokers**. The Purchaser has not employed or engaged any broker, finder, agent,investment banker or Third Party nor have either of them otherwise dealt withanyone purporting to act in the capacity of a finder or broker, in connectionwith the transactions contemplated hereby.

 

**ARTICLE 5**

** **

**INDEMNIFICATION**

** **

**5.1****         ****Indemnification by the Company**. The Company hereby covenants and agrees to indemnify and hold thePurchaser and its respective officers, directors, employees, Affiliates,shareholders and agents, and each of their respective heirs, personalrepresentatives, successors and assigns (the “**PurchaserIndemnified Parties**”), harmless from, against and in respect of anyand all losses, costs, expenses (including without limitation, reasonableattorneys’ fees and disbursements of counsel), Liabilities, damages (excludingincidental, consequential or punitive damages), fines, penalties, charges,assessments, judgments, settlements, claims, causes of action and otherobligations of any nature whatsoever (individually, a “**Loss**” and collectively, “**Losses**”) that any of them may at any time,directly or indirectly, suffer, sustain, incur or become subject to, to theextent arising out of, based upon or resulting from or on account of each ofthe following:

 

(a)           the breach or falsity of any representation orwarranty made by the Company in this Agreement, including the AncillaryDocuments to be executed and/or delivered by the Company pursuant hereto andthereto; or

 

(b)           the breach of any covenant or agreement made by theCompany in this Agreement, including the Ancillary Documents to be executedand/or delivered by the Company; or

 

(c)           any and all Excluded Liabilities; or

 

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(d)           any claim by any shareholder of the Company or anyRelated Persons of the Company relating to the Business except with respect toa right under this Agreement or any Ancillary Document; or

 

(e)           any claim by any lessor under a Leased Real Estatelease with respect to any period prior to the Closing.

 

Provided, however, that theCompany shall not be required to provide such indemnification for a Loss orLosses resulting from a breach or falsity of any representation and warranty inthis Agreement or any Ancillary Document unless and until the PurchaserIndemnified Parties shall have sustained aggregate Losses as a result of one ormore such breaches or falsities of Fifty Thousand Dollars ($50,000) (the “**Basket Amount**”) (and then only for claimswhich in the aggregate, when combined with all other claims for Losses resultin Losses which exceed the Basket Amount).

 

Notwithstanding the foregoing, any Loss or aggregate Losses withrespect to Section 5.1(a) above to be indemnified in excess of theBasket Amount by the Company to the Purchaser Indemnified Parties hereundershall not exceed the Purchase Price.

 

**5.2****         ****Indemnification by the Purchaser**. The Purchaser covenants and agrees to defend, indemnify and hold theCompany (individually and collectively), and its officers, directors,employees, Affiliates, shareholders, agents, and each of their respectiveheirs, personal representatives, successors and assigns (the “**Company Indemnified Parties**”), harmlessfrom, against and in respect of any and all Losses that any of them may at anytime, directly or indirectly, suffer, sustain, incur or become subject to, tothe extent arising out of, based upon or resulting from or on account of eachor all of the following:

 

(a)           the breach or falsity of any representation or warrantymade by the Purchaser in this Agreement, including the Ancillary Documents tobe executed and/or delivered by the Purchaser pursuant hereto and thereto; or

 

(b)           the breach of any covenant or agreement made by thePurchaser in this Agreement, including the Ancillary Documents to be executedand/or delivered by the Purchaser pursuant hereto or thereto; or

 

(c)           any Assumed Liabilities.

 

**5.3****         ****Procedure for Indemnification**. In the event any of the Purchaser Indemnified Parties or the CompanyIndemnified Parties intends to seek indemnification pursuant to the provisionsof Sections 6.1 or 6.2 hereof (the “**IndemnifiedParty**”), the Indemnified Party shall promptly give notice hereunderto the other party (the “**Indemnifying Party**”)after obtaining written notice of any claim, investigation, or the service of asummons or other initial or continuing legal or administrative process orProceeding in any action instituted against the Indemnified Party as to whichrecovery or other action may be sought against the Indemnified Party because ofthe indemnification provided for in Section 5.1 or 5.2 hereof, and, ifsuch indemnity shall arise from the claim of a Third Party, the IndemnifiedParty shall permit the Indemnifying Party to assume the defense of any such claimand any litigation resulting from such claim; provided, however,that the Indemnified Party shall not be required to permit such an 

 

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assumption of the defenseof any claim or Proceeding which, if not first paid, discharged or otherwisecomplied with, would result in a material interruption or disruption of thebusiness of the Indemnified Party, or any material part thereof.  Notwithstanding the foregoing, the right toindemnification hereunder shall not be affected by any failure of theIndemnified Party to give such notice (or by delay by the Indemnified Party ingiving such notice) unless, and then only to the extent that, the rights andremedies of the Indemnifying Party shall have been prejudiced as a result ofthe failure to give, or delay in giving, such notice.  Failure by the Indemnifying Party to notifythe Indemnified Party of its election to defend any such claim or action by aThird Party within twenty (20) days after notice thereof shall have been givento the Indemnifying Party shall be deemed a waiver by the Indemnifying Party ofits right to defend such claim or action.

 

If the Indemnifying Party assumes the defense of such claim,investigation or Proceeding resulting therefrom, the obligations of theIndemnifying Party hereunder as to such claim, investigation or Proceedingshall include taking all steps necessary in the defense or settlement of suchclaim, investigation or Proceeding and holding the Indemnified Party harmlessfrom and against any and all Losses arising from, in connection with orincident to any settlement approved by the Indemnifying Party or any judgmententered in connection with such claim, investigation or Proceeding (subject tothe remaining Basket Amount, if any, and indemnification limits set forth inthis Agreement), except where, and only to the extent that, the IndemnifyingParty has been prejudiced by the actions or omissions of the IndemnifiedParty.  The Indemnifying Party shall not,in the defense of such claim or any Proceeding resulting therefrom, consent toentry of any judgment (other than a judgment of dismissal on the merits withoutcosts) except with the written consent of the Indemnified Party (which consentshall not be unreasonably withheld, delayed or conditioned) or enter into anysettlement (except with the written consent of the Indemnified Party, whichconsent shall not be unreasonably withheld, delayed or conditioned) unless (i) thereis no finding or admission of any violation of Applicable Law and no materialeffect on any claims that could reasonably be expected to be made against theIndemnified Party, (ii) the sole relief provided is monetary damages thatare paid in full for Losses, and (iii) the settlement shall include thegiving by the claimant or the plaintiff to the Indemnified Party a release fromall Liability in respect to such claim or litigation.

 

If the Indemnifying Party assumes the defense of such claim,investigation or Proceeding resulting therefrom, the Indemnified Party shall beentitled to participate in the defense of the claim, but solely by observationand comment to the Indemnifying Party, and the counsel selected by theIndemnified Party shall not appear on its behalf in any Proceeding arisinghereunder.  The Indemnified Party shallbear the fees and expenses of any additional counsel retained by it toparticipate in its defense unless any of the following shall apply: (i) theemployment of such counsel shall have been authorized in writing by theIndemnifying Party, or (ii) the Indemnifying Party’s legal counsel shalladvise the Indemnifying Party in writing, with a copy to the Indemnified Party,that there is a conflict of interest that would make it inappropriate underapplicable standards of professional conduct to have common counsel.  If clause (i) or (ii) in theimmediately preceding sentence is applicable, then the Indemnified Party mayemploy separate counsel at the expense of the Indemnifying Party to representthe Indemnified Party, but in no event shall the Indemnifying Party beobligated to pay the costs and expenses of more than one such separate counselfor any one complaint, claim, action or Proceeding in any one jurisdiction.

 

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If the Indemnifying Party does not assume the defense of any such claimby a Third Party or litigation resulting therefrom after receipt of notice fromthe Indemnified Party, the Indemnified Party may defend against such claim orlitigation in such manner as it reasonably deems appropriate, and unless theIndemnifying Party shall deposit with the Indemnified Party a sum equivalent tothe total amount demanded in such claim or litigation plus the IndemnifiedParty’s estimate of the cost (including attorneys’ fees) of defending the same,the Indemnified Party may settle such claim or Proceeding on such terms as itmay reasonably deem appropriate and the Indemnifying Party shall, subject toits defenses and the applicability of any remaining Basket Amount, promptlyreimburse the Indemnified Party for the amount of such settlement and for allreasonable costs (including attorneys’ fees), expenses and damages incurred bythe Indemnified Party in connection with the defense against or settlement ofsuch claim, investigation or litigation, or if any such claim or litigation isnot so settled, the Indemnifying Party shall, subject to its defenses and theapplicability of any remaining Basket Amount provided for in Section 5.1hereof, promptly reimburse the Indemnified Party for the amount of any finalnonappealable judgment rendered with respect to any claim by a Third Party insuch litigation and for all costs (including attorneys’ fees), expenses anddamage incurred by the Indemnified Party in connection with the defense againstsuch claim or litigation, whether or not resulting from, arising out of, orincurred with respect to, the act of a Third Party.

 

Each party shall cooperate in good faith and in all respects with eachIndemnifying Party and its representatives (including without limitation itscounsel) in the investigation, negotiation, settlement, trial and/or defense ofany Proceedings (and any appeal arising therefrom) or any claim.  The parties shall cooperate with each otherin any notifications to and information requests of any insurers.  No individual representative of any Person,or their respective Affiliates shall be personally liable for any Loss orLosses under this Agreement, except as specifically agreed to by saidindividual representative.

 

**5.4****         ****Dispute Resolution**. In the event a dispute arises under this Agreement, except with respectto equitable remedies pursued under this Agreement, such disputes shall beresolved in the manner set forth in this Section 5.4.

 

(a)           If a dispute arises under this Agreement, includingany question regarding the existence, validity, interpretation or terminationhereof, which is not described as an exception in this Section 5.4, thePurchaser and the Company may invoke the dispute resolution procedure set forthin this Section 5.4 by giving written notice to the other party.  The parties shall enter into discussionsconcerning this dispute.  If the disputeis not resolved as a result of such discussion in ten (10) days, anattempt will be made to resolve the matter by a formal nonbinding mediationwith an independent neutral mediator agreed to by the parties.  If the parties cannot agree on a mediatorwithin a period of ten (10) days after expiration of the ten (10) dayperiod for resolution by discussion, then either party may apply to any courtof competent jurisdiction for appointment of a mediator, which appointmentshall be binding and nonappealable.  Uponcommencement of the mediation process, the parties shall promptly communicatewith respect to a procedure and schedule for the conduct of the Proceeding andfor the exchange of documents and other information related to thedispute.  The mediation process shall bedeemed ended if the dispute has not been resolved within thirty (30) days afterappointment of the mediator.

 

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(b)           Any claim, dispute or other matter in question betweenthe parties to this Agreement arising out of or relating to this Agreementwhich is not resolved by mediation in accordance with Section 5.4(a) withinthirty (30) days after appointment of mediator may be filed as a cause ofaction in a legal proceeding in a court of general jurisdiction in Minneapolis,Minnesota or in any United States District Court having jurisdiction inMinneapolis, Minnesota.

 

(c)           The Company and the Purchaser agree and consent thatany legal action, suit or Proceeding seeking to enforce this Section 5.4shall be instituted and adjudicated solely and exclusively in any court ofgeneral jurisdiction in Minneapolis, Minnesota or in the United States DistrictCourt having jurisdiction in Minneapolis, Minnesota****andthe Company and the Purchaser each agree that venue will be proper in suchcourts and waive any objection which they may have now or hereafter to thevenue of any such suit, action or Proceeding in such courts, and irrevocablyconsent and agree to the jurisdiction of said courts in any such suit, actionor Proceeding.  The Company and thePurchaser further agree to accept and acknowledge service of any and allprocess which may be served in any such suit, action or Proceeding in saidcourts, and also agree that service of process or notice upon them shall bedeemed in every respect effective service of process or notice upon them, inany suit, action, Proceeding or arbitration demand, if given or made: (i) accordingto Applicable Law, (ii) by a Person over the age of eighteen whopersonally serves such notice or service of process on the Company or thePurchaser, as the case may be, or (iii) by certified mail, return receiptrequested, mailed to the Company and the Purchaser, as the case may be, attheir respective addresses set forth in this Agreement.

 

**5.5****         ****Effect of Insurance**. An Indemnified Party who has a right to make a claim under any policy ofinsurance with respect to an indemnified claim made by the Indemnified Partyshall make such claim on a prompt and competent basis in the manner required bythe insurance carrier.  The IndemnifiedParty shall promptly and diligently pursue such claim and shall cooperate fullywith the insurance carrier and the Indemnifying Party in the prosecution of theclaim or claims.  In the event anIndemnified Party receives insurance proceeds with respect to Losses for whichthe Indemnified Party has made an indemnification claim prior to the date onwhich the Indemnifying Party is required pursuant to this Article 6 to paysuch indemnification claim, the indemnification claim shall be reduced by anamount equal to such insurance proceeds received by the Indemnified Party lessall reasonable out-of-pocket costs incurred by the Indemnified Party in itspursuit of such insurance proceeds.  Ifsuch insurance proceeds are received by the Indemnified Party after the date onwhich the Indemnifying Party is required pursuant to this Article 6 to paysuch indemnification claim, the Indemnified Party shall, no later than five (5) daysafter the receipt of such insurance proceeds, reimburse the Indemnifying Partyin an amount equal to such insurance proceeds (but in no event in an amountgreater than the Losses theretofore paid to the Indemnified Party by theIndemnifying Party) less all reasonable out-of-pocket costs incurred by theIndemnified Party in obtaining such insurance proceeds.  In either case, the Indemnifying Party shallcompensate the Indemnified Party for all costs incurred by the IndemnifiedParty subsequent to either the reduction of any indemnification claim asprovided above, or the delivery of any such insurance proceeds to theIndemnifying Party as provided above, as the case may be, as a result of anysuch insurance, including, but not limited to, retrospective premiumadjustments, experience-based premium adjustments (whether 

 

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retroactive orprospective) and indemnification or surety obligations of the Indemnified Partyto any insurer.  A claim for such costsshall be made by an Indemnified Party by delivery of a written notice to theIndemnifying Party requesting compensation and specifying this Section 5.5as the basis on which compensation for such costs is sought, and theIndemnifying Party shall pay such costs no later than thirty (30) days afterreceiving the written notice requesting such compensation.  Notwithstanding the foregoing, except to theextent set forth in the first two sentences of this Section 5.5, theIndemnified Party is not required to pursue a recovery from an insurer as aprecondition to the Indemnifying Party’s obligation to pay any indemnificationclaim as required by this Article 6, and the Indemnifying Party shall notbe entitled to delay any payment beyond the respective payment dates for anyindemnification claims referred to in this Article 6 for the purpose ofawaiting receipt of insurance proceeds or credits therefor as provided herein.

 

**ARTICLE6CERTAIN TAX MATTERS**

** **

**6.1****         ****Income and Transfer Taxes.**  All income,transfer, registration, sales and use, excise, franchise and similar Taxes andfees of any kind (including all penalties and interest) which arise from, inconnection with or are imposed incident to the sale of the Assets or any othertransaction that occurs pursuant to this Agreement shall be borne and timelypaid (without penalty or distraint) solely by the Company.

 

**6.2****         ****Non-foreign Person Affidavit**.  The Companyshall furnish to the Purchaser on or before the Closing Date a non-foreignPerson affidavit if and as required by Section 1445 of the Code.

 

**6.3****         ****Allocation of Purchase Price**.  The Companyand the Purchaser have determined the fair market value of the Assets, and haveallocated such values to the Purchase Price among the Assets as required by Section 1060of the Code and the Treasury Regulations (and all applicable state ApplicableLaws) thereunder in connection with the transactions contemplated by thisAgreement.  Such allocation and fairmarket values are set forth on **Schedule 6.3**hereto, but are subject to change based on the final calculation of thePurchase Price.  The Purchaser and theCompany, as appropriate, shall file an Asset Acquisition Statement on Form 8594and/or all other comparable state or local Tax forms (which conforms with theparties’ allocation) with their federal and state income Tax Returns for theTax year in which the Closing occurs and shall contemporaneously provide theother party with a copy of the form being filed.  Each party agrees not to assert, inconnection with any Tax Return, claim, audit or similar Proceeding, anyallocation of the Purchase Price which contradicts the allocation and fairmarket values determined by the parties hereunder, subject to any changes occasionedby the final calculation of the Purchase Price.

 

**6.4****         ****Post-Closing Access and Cooperation**.  From andafter the Closing Date, the Purchaser agrees to permit the Company to havereasonable access, during normal business hours, to the Company’s books and records,to the extent that such books and records relate to a pre-Closing period, andpersonnel, for the purpose of enabling the Company to:  (i) prepare Tax Returns of the Company, (ii) investigateor contest any Tax matter, and (iii) evaluate any claim forindemnification made by the Purchaser.

 

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** **

**ARTICLE 7PERFORMANCE FOLLOWING THE CLOSING DATE**

** **

The following covenants and agreements are to be performed after theClosing by the parties and shall continue in effect for the periodsrespectively indicated or, where no indication is made, until performed:

 

**7.1****         ****Further Acts and Assurances**. The parties agree that, at any time and from time to time, on and afterthe Closing Date, upon the reasonable request of the other party, they will door cause to be done all such further acts and things and execute, acknowledgeand deliver, or cause to be executed, acknowledged and delivered any and allpapers, documents, instruments, agreements, assignments, transfers, assurancesand conveyances as may be necessary or desirable to carry out and give effectto the provisions and intent of this Agreement. In addition, from and after the Closing Date, the Purchaser and theCompany will afford to the other and their respective attorneys, accountantsand other representatives access, during normal business hours, to suchpersonnel, books and records relating to the Business as may reasonably berequired in connection with the preparation of financial information, thefiling of Tax Returns and the operation of the Business, and will cooperate inall reasonable respects in connection with claims and Proceeding asserted by oragainst third parties, relating to or arising from the transactionscontemplated hereby.  In furtherance of,but not in limitation of the foregoing, the Company shall promptly provide atthe Purchaser’s request any and all consents and other instruments anddocuments which allow the use of the “RME” Company name, or any derivativethereof, in all jurisdictions where the Company is registered and/or licensedto do business in order to facilitate the Purchaser’s filings in suchjurisdiction for the purpose of conducting the Business therein.

 

**7.2****         ****Non-Competition Agreement.** During the period of thirty-six (36) months from and after the ClosingDate, the Company, on behalf of itself, its Related Persons and any CompanyControlled Person, covenants and agrees that it and they will not, without thePurchaser’s prior written consent, which may be withheld or given in its solediscretion, directly or indirectly, or individually or collectively within theUnited States of America, lend any material credit, advice or assistance, orengage in any activity or act in any manner, including but not limited to, asan individual, owner, sole proprietor, founder, associate, promoter, partner,joint venturer, shareholder (other than as a less than one percent (1%)shareholder of a publicly traded corporation), officer, director, trustee,manager, employer, employee, licensor, licensee, principal, agent, salesman,broker, representative, consultant, advisor, investor or otherwise for thepurpose of establishing, operating or managing any business or entity that isengaged in****the business of distributing rehabilitation productsdirectly to clinics, hospitals and other healthcare providers in the physicaltherapy, chiropractic and other rehabilitation market (the “Market”) primarilythrough a catalog; provided, however, this covenant shall not prevent theCompany or its Affiliates from providing their products to the Market in thesame manner that such products were being provided to the Market on the ClosingDate outside the Business as conducted by the RME Division.

 

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**7.3****         ****Non-Solicitation Agreement**. During the period of thirty-six (36) months from and after the ClosingDate, the Company, on behalf of itself, its Related Persons and each of itsControlled Persons, covenant and agree that it and they will not, whether forits or their own account or for the account of any other Person, directly orindirectly interfere with the Purchaser’s relationship with or endeavor todivert or entice away from the Purchaser any Person who at any time during theterm of such Person’s affiliation with the Company or the Purchaser is anemployee, vendor, supplier or customer of the Purchaser.  The foregoing shall not apply to employees,vendors, suppliers or customers who have not, at the time of any solicitation,had such a relationship for at least a period of six (6) months witheither the Purchaser or the Business.

 

**7.4****         ****Confidential Information**. The Company understands and agrees that the Business of the Company isbased upon specialized work and that it has, along with its shareholders,directors, officers, agents, Related Persons and/or Controlled Persons,received, had access to and/or contributed to Confidential Information.  Except as may be necessary or desirable (i) fordefense of a Loss or conducting or participating in a Proceeding in accordancewith Sections 5.1, 5.3 or 5.4 hereof, (ii) in enforcing the Company’srights under this Agreement or any Ancillary Document, (iii) for thepurpose of filing any report with any Governmental Body, or (iv) inconnection with advice sought from an attorney, accountant or similarprofessional, the Company agrees that at all times from and after the ClosingDate, it, and its officers, directors, shareholders, agents, Related Personsand/or Controlled Persons, shall keep secret all such Confidential Informationand that it and they will not directly or indirectly Use or Disclose the sameto any Person without first obtaining the written consent of the Purchaser,which consent may be withheld or given in the Purchaser’s sole discretion.  At any time the Purchaser may so request, theCompany and its officers, directors, shareholders, agents, Related Personsand/or Controlled Persons, shall turn over to the Purchaser all ConfidentialInformation compiled by or delivered to such Persons, including copies thereof,in their possession, it being agreed that the same and all informationcontained therein are at all times the exclusive property of thePurchaser.  Notwithstanding theforegoing, the Company and its Related Persons and any Company ControlledPersons may Use or Disclose Confidential Information in the conduct of theirrespective businesses so long as such businesses are operated consistent withthe Company’s obligations under Section 7.2 of this Agreement, but only tothe extent and for such purposes that such Confidential Information was used inthe conduct of such businesses prior to the Closing.

 

**7.5****         ****Reasonableness of Covenants**. The Company, on behalf of itself, its trustees, officers, directors,shareholders, agents, Related Persons and/or Controlled Persons, acknowledgeand agree that the geographic scope and period of duration of the restrictivecovenants contained in Sections 8.2 and 8.3 of this Agreement are both fair andreasonable and that the interests sought to be protected by the Purchaser arelegitimate business interests entitled to be protected.  The Company further acknowledges and agreesthat the Purchaser would not have purchased the Assets from the Companypursuant to this Agreement unless the Company agreed to the covenants containedin such Sections.

 

**7.6****         ****Injunctive Relief**. The parties agree that the remedy of damages at law for the breach byany party of any of the covenants contained in Sections 7.1, 7.2 and 7.3is an inadequate remedy.  In recognitionof the irreparable harm that a violation by (i) the Company 

 

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and/or its officers,directors, shareholders, Related Persons or Affiliates, of any of thecovenants, agreements or obligations arising under Sections 7.1, 7.2 and7.3 would cause the Purchaser, and (ii) the Purchaser or their officersand directors of any of the covenants, agreements or obligations arising under Section 7.1,would cause the Company, (x) the Company, and (y) the Purchaser, eachagree on behalf of themselves and their respective trustees, officers,directors, shareholders, agents, Related Persons and Affiliates, that inaddition to any other remedies or relief afforded by law, an Injunction againstany actual or Threatened violation or violations may be issued against itand/or them and every other Person concerned thereby, without the necessity ofposting bond, it being the understanding of the parties that both damages andInjunction shall be proper modes of relief and are not to be consideredalternative remedies.

 

**7.7****         ****Blue Pencil Doctrine**. In the event that any of the restrictive covenants contained in this Article shallbe found by a court of competent jurisdiction to be unreasonable by reason ofits extending for too great a period of time or over too great a geographicarea or by reason of its being too extensive in any other respect, then suchrestrictive covenant shall be deemed modified to the minimum extent necessaryto make it reasonable and enforceable under the circumstances.

 

**7.8****         ****Employee Retention**. Except as provided in this Section 7.8, the Purchaser will offeremployment to all employees of the Business set forth on **Schedule 3.18** as at-willemployees, at substantially the same salary as previously provided by theCompany, and will employ such employees, provided that each such employeeagrees to be so hired.  It is understoodthat the employment of the employees of the Company that accept the Purchaser’soffer of employment will not commence until immediately following the close ofbusiness on the Closing Date, except that the employment of individuals onfurlough or layoff, receiving disability (short-term or long-term) benefits oran approved leave of absence on the Closing Date will become effective as ofthe date they present themselves for work with the Purchaser immediately uponthe termination of such status or discontinue receiving disability benefits,respectively; provided, that nothing herein shall require the Purchaserto employ any employee who does not report for work before or at the conclusionof an authorized short-term disability leave of absence or other authorizedleave of absence, provided, further, that a leave of absenceshall be considered to be “Authorized” if it is authorized by law or wasauthorized by the Company pursuant to the Company’s disability leave of absenceor other leave of absence policies.  Anyemployee that falls within the immediately preceding sentence is so indicatedon **Schedule 7.8**.

 

The Purchaser shall provide to the Company’s employees the benefitplans and other employee benefits that are provided to the Purchaser’semployees from time to time

 

The Purchaser shall credit all former employees of the Company whobecome employees of the Purchaser, for the purpose of medical, dental, healthand life insurance, any 401(k) plan, any Employee Stock Ownership Plan(for purposes of eligibility but not vesting), paid time off and the Purchaser’sseverance plan with all of their prior service/employment time with theCompany.  Nothing in this Section 7.8is intended to create, or shall create or confer, any rights or remedies uponany Person other than the Purchaser or the Company, nor shall this Section 7.8create any right of employment for any employee of the Company.

 

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**7.9****         ****Consents**. After the Closing Date, the Company and the Purchaser will cooperate andwill each use commercially reasonable efforts to obtain any consents listed on **Schedule 3.4** that are not obtainedprior to the Closing Date.  Anything tothe contrary notwithstanding, this Agreement shall not operate to assign anyContract, or any claim, right or benefit arising thereunder or resultingtherefrom, if an attempted assignment thereof, without the consent of a ThirdParty thereto, would constitute a breach, default or other contraventionthereof or in any way adversely affect the rights of the Company or thePurchaser thereunder.  In the event thata consent required to assign any Contract or Permit is not obtained on or priorto the Closing Date, then, subject always to the terms of the applicableContract or Permit and to the extent permitted by Applicable Law, the partieswill use commercially reasonable efforts to (i) provide to the Purchaserthe benefits of the applicable Contract to the extent related to the Business, (ii) relievethe Company to the extent possible, of the performance obligations of theapplicable Contracts and Permits, (iii) cooperate in any reasonable andlawful arrangement designed to provide the benefits to the Purchaser, includingentering into subcontracts for performance, and (iv) enforce at therequest of the Purchaser and for the account of the Purchaser any rights of theCompany arising from any such Contract or Permit (including the right to electto terminate such Contract in accordance with the terms thereof upon therequest of the Purchaser).

 

In addition to theconsents required under this Section 7.9, promptly on and after the datehereof, the Company shall make best reasonable commercial efforts to obtainlandlord/lessor estoppel certificates from each of the landlords/lessors of theLeased Real Estate as disclosed in **Schedule 3.16**.  Such estoppel certificates shall include (i) theparties to the Leased Real Estate lease, (ii) the dates of commencementand termination of the Leased Real Estate lease, (iii) a complete andaccurate description of any extension, option or expansion terms, (iv) thedate of last payment under the Leased Real Estate lease and confirmation thatall such payments under such lease have been paid in full to the date of theestoppel certificate, (v) confirmation that no additional rents, costs,charges or assessments are accruing and/or due under such lease, and (vi) astatement by the landlord/lessor that there are no breaches, defaults or otheroccurrences or events by either party under such lease as of the date of theestoppel certificate.

 

**7.10****       ****Inventory Count and Pricing**.  Within one (1) businessday after the Closing Date, the Company will coordinate and take, incooperation with the Purchaser, a physical count of the trade inventory, of theBusiness.  The Purchaser shall afford theCompany and their representatives reasonable access to the books, records,personnel and facilities pertaining to the trade inventory in order to take theinventory count.  Such inventory countwill be taken in accordance with generally accepted standards and will beconsistent with the Company’s past procedures and practices, which proceduresand practices were planned with due care and are reasonably sufficient to producea proper count of such inventory and supplies. Promptly following completion of the physical count and prior to thecompletion of the Closing Statement of Assets and Assumed Liabilities, theCompany will properly and with due care verify the inventory and supply countand shall price the inventory and supplies counted in accordance with GAAPconsistently applied.  The Purchasershall have the right to observe and participate in the verification of thecount and the pricing of the inventory and supplies of the Business.  The foregoing procedures and calculationsshall be the basis for inclusion in the Closing Statement of Assets and AssumedLiabilities.

 

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**7.11****       ****Employee Restrictive Covenant Agreements**.  With respectto any agreement or arrangement between the Company and any current or formeremployee of the Company that is not transferred to Purchaser on the ClosingDate, the Company shall upon and at the request of the Purchaser (i) transferany such agreement to Purchaser promptly upon such request pursuant to anassignment and assumption agreement reasonably acceptable to the parties,and/or (ii) enforce the applicable agreement, or provisions thereof, onbehalf and at the expense of the Purchaser, it being understood and agreed thatthe enforcement covenant herein (A) is an essential term of thisAgreement, (B) is required by the Purchaser as a material inducement bythe Company for Purchaser’s execution and delivery of, and the considerationpaid by the Purchaser pursuant to, this Agreement, and (C) withoutlimitation, is enforceable by Purchaser through equitable remedies.

 

**7.12****       ****Excluded Trade Payables**.  From andafter the Closing Date, the Company shall pay and otherwise satisfy all of itsobligations with respect to the Excluded Trade Payables in accordance withtheir terms, and in no event shall the Company delay or postpone the payment ofany Excluded Trade Payables, other than in connection with the Company’s goodfaith dispute of any Excluded Trade Payables.

 

**7.13****       ****New Operating Contracts; Shoreview Call Center**. From and after the Closing Date, the Company will cooperate with thePurchaser in order to (i) facilitate the execution of agreements betweenthe Purchaser and those customers to the Contracts identified in **Schedule 7.13**, in order to providethe Purchaser with the benefits of those Contracts as they relate to theBusiness and (ii) transition customer calls related to the Business fromthe Company’s call center in Shoreview, Minnesota to the Purchaser’s callcenter in Bolingbrook, Illinois.

 

**ARTICLE8MISCELLANEOUS**

** **

**8.1****         ****Survival of Representations andWarranties, Covenants and Agreements**.  Each of therepresentations and warranties of the parties contained in this Agreement andin any exhibit, Schedule, certificate, instrument or document delivered by oron behalf of any of the parties hereto pursuant to this Agreement and thetransactions contemplated hereby shall survive the Closing of the transactionscontemplated hereby and any investigation made by the parties or their agentsfor a period of fifteen (15) months after the Closing, after which no claim forindemnification for any misrepresentation, or for the breach or falsity of anyrepresentation or warranty under this Agreement or any Ancillary Document, maybe brought, and no action with respect thereto may be commenced, and no partyshall have any Liability or obligation with respect thereto, unless (i) theIndemnified Party gave written notice to the Indemnifying Party specifying withparticularity the misrepresentation or a breach of representation or warrantyclaimed on or before the expiration of such period, (ii) the claim relatesto a breach of any representations or warranties contained in Sections 3.10,3.22, 3.26, 3.27, or 3.30 in which case the right to indemnification shallsurvive until the expiration of the applicable statute of limitations, or (iii)  theclaim relates to any representation or warranty in Sections 3.5, in which casethe representation or warranty shall indefinitely survive the Closing.  The covenants and agreements arising from,incident to or in connection with this Agreement shall survive the Closingindefinitely, until such covenants and agreements are fully satisfied andrequire no performance or forbearance, or the rights of a party hereto expireon a specific date by the terms hereof.

 

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**8.2****         ****Preservation of and Access to Records**. The Purchaser shall preserve all books and records of the Companytransferred as part of the Assets for a period of six (6) years after theClosing Date; provided, however, the Purchaser may destroy anypart or parts of such records upon obtaining written consent of the Company forsuch destruction, which consent shall not be unreasonably withheld, delayed orconditioned.  Such records shall be madeavailable to the Company and its representatives at all reasonable times duringnormal business hours of the Purchaser during said six-year period with theright at its expense to make abstracts from and copies thereof.

 

**8.3****         ****Cooperation**. The parties hereto shall cooperate with each other in all respects,including using commercially reasonable efforts to assist each other insatisfying the conditions precedent to their respective obligations under thisAgreement, to the end that the transactions contemplated hereby will beconsummated.

 

**8.4****         ****Public Announcements**. The timing and content of all public announcements relating to theexecution of this Agreement and the consummation of the transactionscontemplated hereby shall be approved by both the Purchaser and the Companyprior to the release of such public announcements, and each party agrees tocooperate with the other party as appropriate to comply with all ApplicableLaws; provided, however, in the event that Purchaser is requiredby any Applicable Law or exchange rule to release a public announcement,Purchaser shall have an absolute right to do so without the consent of theCompany.

 

**8.5****         ****Notices**. All notices, demands and other communications provided for hereundershall be in writing and shall be given by personal delivery, via facsimiletransmission (receipt telephonically confirmed), by nationally recognizedovernight courier (prepaid), or by certified or registered first class mail,postage prepaid, return receipt requested, sent to each party, at its/hisaddress as set forth below or at such other address or in such other manner asmay be designated by such party in written notice to each of the otherparties.  All such notices, demands andcommunications shall be effective when personally delivered, one (1) businessday after delivery to the overnight courier, upon telephone confirmation offacsimile transmission or upon receipt after dispatch by mail to the party towhom the same is so given or made:

 
| If to Purchaser:    | Patterson Medical Supply, Inc.                                     |                 |
|---------------------|-------------------------------------------------------------------------|----------------------|
|                | 1031 Mendota Heights Road                                               |                 |
|                | St. Paul, Minnesota 55120                                               |
|                | Attention:                                                              | R. Stephen Armstrong |
|                |                                                                    | Matthew L. Levitt    |
|                |                                                                    |
| With a copy to:     | Briggs and  Morgan, Professional Association                            |
|                | 2200 IDS Center                                                         |                 |
|                | 80 South Eighth  Street                                                 |                 |
|                | Minneapolis, MN  55402                                                  |
|                | Attention:         Michael J. Grimes |
|                |                                                                    |
| If to the  Company: | Empi, Inc.                                                         |                 |
|                | c/o DJO, LLC                                                            |                 |
|                | 1430 Decision Street                                                    |                 |
|                | Vista, CA 92081                                                         |                 |
|                | Attention: General Counsel                                              |                 |
|                     |                                                                         |                      |  |

 

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**8.6****         ****Entire Agreement**. This Agreement, including the documents, instruments, and agreements tobe executed by the parties pursuant hereto, contains the entire agreement ofthe parties hereto and supersedes all prior or contemporaneous agreements andunderstandings, oral or written, between the parties hereto with respect to thesubject matter hereof.

 

**8.7****         ****Remedies**. The respective indemnification obligations of the parties set forth in Article 9of this Agreement are the exclusive remedies of the parties and theirsuccessors, assigns, heirs, beneficiaries or others seeking to claim by,through, or on behalf of a party, under this Agreement or any AncillaryDocument, and no other remedy or remedies, whether arising under any ApplicableLaw, common law or otherwise, may be used, asserted or prosecuted in connectionwith this Agreement or any Ancillary Document and any transaction, occurrence,or omission arising from, in connection with or otherwise based upon thisAgreement or any Ancillary Document; provided, however, that allequitable remedies and assertions of fraud and/or intentional misrepresentationshall remain available and shall not require an election of remedies.

 

**8.8****         ****Amendments**. No purported amendment, modification or waiver of any provision of thisAgreement or any of the documents, instruments or agreements to be executed bythe parties pursuant hereto shall be effective unless in a writing specificallyreferring to this Agreement and signed by all of the parties hereto.

 

**8.9****         ****Successors and Assigns**. This Agreement shall be binding upon and inure to the benefit of theparties hereto and their respective heirs, personal representatives, successorsand permitted assigns but, except as hereinafter provided in this Section,nothing in this Agreement is to be construed as an authorization or right ofany party to assign its rights or delegate its duties under this Agreementwithout the prior written consent of the other parties hereto.  Notwithstanding the foregoing, in its solediscretion, the Purchaser may assign its rights in and/or delegate theirrespective duties under this Agreement to an Affiliate.  In the event of such an assignment of rightsand/or delegation of duties, all references to the Purchaser or the Company, asapplicable to the assignment, in this Agreement shall also be deemed to bereferences to the Person to which this Agreement is assigned; provided that nosuch assignment and/or delegation shall relieve the assignor of any of itsduties or obligations hereunder or under any Ancillary Document.

 

**8.10****       ****Fees and Expenses**. Each party hereto shall pay their own fees and expenses incurred in connectionwith negotiating and preparing this Agreement and consummating the transactionscontemplated hereby, including but not limited to fees and disbursements oftheir respective attorneys, accountants and investment bankers.  If the transaction is consummated, all feesand expenses, including legal, accounting, investment banking, broker’s andfinder’s fees and expenses incurred by the Company in connection with thistransaction (the “**Transactional Expenses**”)shall be deemed expenses of the Company and shall be borne by the Company.

 

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**8.11****       ****Governing Law and Jurisdiction**. This Agreement, including the documents, instruments and agreements tobe executed and/or delivered by the parties pursuant hereto, shall beconstrued, governed by and enforced in accordance with the internal laws of theState of Minnesota, without giving effect to the principles of comity orconflicts of laws thereof.  The Companyand the Purchaser agree and consent that any legal action, suit or Proceedingseeking to enforce any provision of this Agreement shall be instituted andadjudicated solely and exclusively in any court of general jurisdiction inMinnesota, or in the United States District Court having jurisdiction inMinnesota and the Company and the Purchaser agree that venue will be proper insuch courts and waive any objection which they may have now or hereafter to thevenue of any such suit, action or Proceeding in such courts, and each herebyirrevocably consents and agrees to the jurisdiction of said courts in any suchsuit, action or Proceeding.  The Companyand the Purchaser further agree to accept and acknowledge service of any andall process which may be served in any such suit, action or Proceeding in saidcourts, and also agree that service of process or notice upon them shall bedeemed in every respect effective service of process or notice upon them, inany suit, action, Proceeding, if given or made (i) according to ApplicableLaw, (ii) by a Person over the age of 18 who personally served such noticeor service of process on the Company or the Purchaser, as the case may be, or (iii) bycertified mail, return receipt requested, mailed to the Company or thePurchaser, as the case may be, at their respective addresses set forth in thisAgreement.

 

**8.12****       ****Counterparts and Facsimile Signatures**. This Agreement may be executed in two or more counterparts, each ofwhich shall be deemed an original but all of which together shall constituteone and the same Agreement.  The counterpartsof this Agreement and all Ancillary Documents may be executed and delivered byfacsimile or other electronic signature by any of the parties to any otherparty and the receiving party may rely on the receipt of such document soexecuted and delivered by facsimile as if the original had been received.

 

**8.13****       ****Headings**. The headings of the articles, sections and subsections of this Agreementare intended for the convenience of the parties only and shall in no way beheld to explain, modify, construe, limit, amplify or aid in the interpretationof the provisions hereof.  The terms “thisAgreement,” “hereof,” “herein,” “hereunder,” “hereto” and similar expressionsrefer to this Agreement as a whole and not to any particular article, section,subsection or other portion hereof and include the Schedules and Exhibitshereto and any Ancillary Document executed and/or delivered by the partiespursuant hereto.

 

**8.14****       ****Scope of Agreement**. Unless the context otherwise requires, all references in this Agreementor in any Schedule or Exhibit hereto, to the assets, properties,operations, business, financial statements, employees, books and records,accounts receivable, accounts payable, Contracts or other attributes of theBusiness of the Company shall mean such items or attributes as they are usedin, apply to, or relate to the Business of the Company.

 

**8.15****       ****Number and Gender**. Unless the context otherwise requires, words importing the singularnumber shall include the plural and vice versa and words importing the use ofany gender shall include all genders.

 

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**8.16****       ****Severability**. In the event that any provision of this Agreement is declared or held byany court of competent jurisdiction to be invalid or unenforceable, suchprovision shall be severable from, and such invalidity or unenforceabilityshall not be construed to have any effect on, the remaining provisions of thisAgreement, unless such invalid or unenforceable provision goes to the essenceof this Agreement, in which case the entire Agreement may be declared invalidand not binding upon any of the parties.

 

**8.17****       ****Parties in Interest**. Nothing expressed or implied in this Agreement is intended or shall beconstrued to confer any rights or remedies under or by reason of this Agreementupon any Person other than the Company and the Purchaser and their respectiveheirs, personal representatives, successors and permitted assigns.  Nothing in this Agreement is intended torelieve or discharge the Liabilities of any third Person to the Purchaser orthe Company.

 

**8.18****       ****Waiver**.  The terms,conditions, warranties, representations and indemnities contained in thisAgreement, including the documents, instruments and agreements executed and/ordelivered by the parties pursuant hereto, may be waived only by a writteninstrument executed by the party waiving compliance.  Any such waiver shall only be effective inthe specific instance and for the specific purpose for which it was given and shallnot be deemed a waiver of any other provision hereof or of the same breach ordefault upon any recurrence thereof.  Nofailure on the part of a party hereto to exercise and no delay in exercisingany right hereunder shall operate as a waiver thereof nor shall any single orpartial exercise of any right hereunder preclude any other or further exercisethereof or the exercise of any other right.

 

**8.19****       ****Construction**. The parties have participated jointly in the negotiation and drafting ofthis Agreement.  In the event anambiguity or question of intent or interpretation arises, this Agreement shallbe construed as if drafted jointly by the parties and no presumption or burdenof proof shall arise favoring or disfavoring any party by virtue of theauthorship of any of the provisions of this Agreement.  The words “including,” “include” or “includes”****shall mean including withoutlimitation.  The parties intend that eachrepresentation, warranty and covenant contained herein shall have independentsignificance.  If any party has breachedany representation, warranty or covenant contained herein in any respect, thefact that there exists another representation, warranty or covenant relating tothe same subject matter (regardless of the relative levels of specificity)which the party has not breached shall not detract from or mitigate the factthat the party is in breach of the first representation, warranty or covenant.

 

**8.20****       ****Specific Performance**. The parties hereto agree that irreparable damage would occur in theevent that any of the provisions of this Agreement were not performed inaccordance with their specific terms or were otherwise breached.  It is accordingly agreed that the partiesshall be entitled to injunctive relief to prevent breaches of this Agreementand to enforce specifically the terms and provisions hereof in any court of theUnited States or any state having jurisdiction, this being in addition to anyother remedy to which they are entitled at law or in equity.

 

**[SIGNATUREPAGE FOLLOWS]**

 

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**INWITNESS WHEREOF**,the parties hereto have caused this Agreement to be executed by duly authorizedrepresentatives as of the day, month and year first above written.

 
| **COMPANY:**   | ** **                | **PURCHASER:**                      |
|----------------|---------------------------|-------------------------------------|
|           |                      |                                |
| **EMPI, INC.** | ** **                | **PATTERSON  MEDICAL SUPPLY, INC.** |
|           |                      |                                |
|           |                      |                                |
| By:            | /s/ VICKIE L.  Capps      |                                | By: | /s/ ROYCE S.  ARMSTRONG |
| Its:           | Executive Vice  President |                                | Its: | Vice President |

 

**[SIGNATUREPAGE TO ASSET PURCHASE AGREEMENT]**

 

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