Document:

Exhibit 10.26

                   FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT

     THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT ("Amendment") is made and
entered into as of the 6th day of July, 2001, by and among OrthoLogic Corp., a
Delaware corporation ("OrthoLogic"), OrthoLogic Canada Ltd., a Canada
corporation ("OrthoCanada"; and together with OrthoLogic, "Seller"), OrthoRehab,
Inc., a Delaware corporation ("OrthoRehab") and 2002819 Ontario Limited, a
Canada Corporation ("RehabCanada;" and together with OrthoRehab, "Purchaser").

                                   WITNESSETH:

     WHEREAS, pursuant to the Asset Purchase Agreement dated as of May 8, 2001
by and between Seller and Purchaser (the "Agreement"), the Seller agreed to sell
and the Purchaser agreed to purchase substantially all of the Seller's assets
relating exclusively to the Division Business (as defined therein);

     WHEREAS, the Parties desire to make certain amendments to the Agreement.

     WHEREAS, capitalized terms used herein without definition shall have the
meanings ascribed to such terms in the Agreement.

     NOW, THEREFORE, in consideration of the mutual agreements and covenants
hereinafter set forth, the parties hereby agree to the following amendments to
the Agreement:

A. SCHEDULE 1.2(d) LEASED PREMISES

     Schedule 1.2(d) of the Agreement is hereby deleted in its entirety and
replaced with SCHEDULE 1.2(D) annexed hereto.

B. SCHEDULE 1.2(i) CONTRACTS

     Schedule 1.2(i) of the Agreement is hereby deleted in its entirety and
replaced with SCHEDULE 1.2(i) annexed hereto.

C. SCHEDULE 1.2(k) INTELLECTUAL PROPERTY

     Schedule 1.2(k) of the Agreement is hereby deleted in its entirety and
replaced with SCHEDULE 1.2(k) annexed hereto.

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D. SCHEDULE 2.2(a)/(b) ASSUMED LIABILITIES

     Schedule 2.2(a)/(b) of the Agreement is hereby deleted in its entirety and
replaced with SCHEDULE 2.2(a)/(Bb annexed hereto.

E. SCHEDULE 2.2(c) LIABILITIES AND OBLIGATIONS OF SELLER

     Schedule 2.2(c) of the Agreement is hereby deleted in its entirety and
replaced with SCHEDULE 2.2(c) annexed hereto.

F. SECTION 2.1 AGREEMENT TO ASSUME

     Section 2.1 of the Agreement is amended by deleting the text therefrom in
its entirety and substituting therefor the following:

"2.1 AGREEMENT TO ASSUME. At the Closing (as herein defined), Purchaser shall
assume and agree to discharge and perform when due, the liabilities and
obligations of Seller with respect to the Division Business which are described
in Section 2.2 (the "Assumed Liabilities"); provided, however, that all Assumed
Liabilities referred to in Section 2.2(a) and 2.2(b) shall be specifically
listed on SCHEDULE 2.2(a)/(b), shall not exceed $2,000,000. To the extent that
the Schedules required by Section 2.2 require amendment due to changes in such
liabilities and obligation in the Ordinary Course of Business as of the Closing
the parties shall mutually amend such Schedules to provide for such changes on
the Closing Date, and such amendments shall be deemed to be a part of this
Agreement and incorporated herein by reference. All liabilities and obligations
of Seller enumerated in Section 2.3 are collectively referred to herein" as
"Excluded Liabilities." Seller shall remain liable for the Excluded Liabilities.

G. SECTION 3.3 MANNER OF PAYMENT OF THE PURCHASE PRICE

     Section 3.3 of the Agreement is amended by deleting the text therefrom in
its entirety and substituting therefor the following:

"3.3 MANNER OF PAYMENT OF THE PURCHASE PRICE. At the Closing:

     (a) Purchaser shall assume the Assumed Liabilities;

     (b) Purchaser shall pay $12,000,000 (the "Cash Portion") to Seller, by wire
transfer to such account as Seller shall designate by written notice delivered
to Purchaser on or prior to the Closing Date; and

     (c) ON THE DATE WHICH IS 390 DAYS AFTER THE CLOSING DATE, PURCHASER SHALL
PAY AN ADDITIONAL CONTINGENT PAYMENT EQUAL TO THE LESSER OF (i) ANY AMOUNTS
COLLECTED BY PURCHASER FROM THE PURCHASED RECEIVABLES IN EXCESS OF 50% OF THE
NET PURCHASED RECEIVABLES AMOUNT, OR (ii) $2,500,000 (THE "CONTINGENT PAYMENT

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AMOUNT"), PROVIDED THAT SELLER SHALL USE ITS BEST EFFORTS TO ENSURE THAT THE NET
PURCHASED RECEIVABLES ARE EQUAL TO OR GREATER THAN $5,000,000.

H. SECTION 11.2 RIGHT TO TERMINATE

     Section 11.2 of the Agreement is amended by deleting the text therefrom in
its entirety and substituting therefor the following:

"11.2 RIGHT TO TERMINATE. This Agreement and the transactions contemplated
hereby may be terminated at any time prior to the Closing by prompt notice given
in accordance with Section 13.4:

(a)      by the mutual written consent of Purchaser and Seller; or

         (b) by either of such parties if the Closing shall not have occurred at
or before 11:59 p.m. Eastern Standard Time on July 11, 2001 (the "Outside
Date"), provided, however, that the right to terminate this Agreement under this
Section 11.2(b) shall not be available to any party whose breach of
representation or warranty or failure to fulfill any of its obligations under
this Agreement has been the cause of or resulted in the failure of the Closing
to occur on or prior to the aforesaid date."

I.       REAFFIRMATION AND CONFIRMATION OF AGREEMENT

         Except as otherwise set forth in this Amendment, the Agreement is
ratified and confirmed in all respects.

J.       COUNTERPARTS

         This Amendment may be executed in more that one counterpart, each of
which together shall constitute one and the same instrument.

         [REMAINDER OF PAGE INTENTIONALLY BLANK/SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, the parties have executed this Amendment on the date
first above written.

SELLER:

ORTHOLOGIC CORP.                            ORTHOLOGIC CANADA LTD.

By: /s/ Thomas R. Trotter                   By: /s/ Thomas R. Trotter
    -------------------------------             --------------------------------
Name: Thomas R. Trotter                     Name: Thomas R. Trotter
Title: President and CEO                          Title: President and CEO

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PURCHASER:

ORTHOREHAB, INC.                            2002819 ONTARIO LIMITED

By: /s/ Michael A. Rusnak                   By: /s/ Michael A. Rusnak
    -------------------------------             --------------------------------
    Name: Michael A. Rusnak                     Name: Michael A. Rusnak
    Title: Chief Executive Officer              Title: Vice-President

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                                                                    EXHIBIT 10.1

                                PROMISSORY NOTE

$6,800,000.00                                                      July 15, 2002

        The undersigned U.S. Medical Development, Inc., a Nevada corporation
("USMD"), promises to pay to the order of Endocare, Inc., a Delaware corporation
("Endocare" or any subsequent holder(s) hereof are referred to generically as
"Holder"), at 201 Technology Drive, Irvine, CA 92618 or at such other place as
the Holder may from time to time designate in writing, the principal sum of SIX
MILLION EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS ($6,800,000.00).

        1. Interest. This promissory note shall bear interest at the Prime Rate,
plus one percent (1%). "Prime Rate" means the varying rate of interest per annum
quoted by Wells Fargo Bank, N.A., from time to time as its prime commercial rate
of interest, with adjustments in the varying rate to be made on the same day as
any change in such prime commercial rate.

        2. Payments.

            (a) USMD shall pay Holder the entire principal balance hereof plus
all accrued but unpaid interest in one lump sum on September 30, 2002.

            (b) USMD shall have the right to prepay this Note at any time, in
whole or in part, without premium or penalty.

        3. Event of Default.

            (a) Any one or more of the following shall constitute an "Event of
Default" hereunder, if not cured within the "cure period" defined below:

                (i) USMD fails to pay make payment of principal or interest on
        this Note when due;

                (ii) USMD shall admit its inability to pay its debts as they
        mature, or shall make an assignment for the benefit of its creditors;

                (iii) a proceeding in bankruptcy or for the reorganization of
        USMD or the readjustment of any of its debts under the United States
        Bankruptcy Code, or under any other laws, whether state or federal, for
        the relief of debtors, now or hereafter existing, shall be commenced by
        USMD or shall be commenced against USMD and not be dismissed within 60
        days; or

                (vi) a receiver or trustee shall be appointed for USMD or for
        any substantial part of its assets, or any proceeding shall be
        instituted for the dissolution or the full or partial liquidation of
        USMD and not be dismissed within 60 days.

            (b) The "cure period" is thirty (30) days after Endocare gives USMD
written notice of a default under (a) (i) above. There is no cure period for a
default under (a) (ii), (iii), or (iv).

            (c) Upon the occurrence of an Event of Default, the Holder of this
Note may elect to accelerate this Note in its entirety including principal and
interest then accrued, whereupon, without notice, presentation or demand, all of
the same shall at once become due and payable. USMD agrees to

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pay all costs of collection, including, but not limited to, reasonable
attorney's fees, professional fees, and court costs incurred by the Holder as a
result of any Event of Default.

        4. Non-Recourse Debt. This Note is given by USMD to Endocare to fund
payment for the Interests which are pledged as security for this Note pursuant
to that certain Pledge Agreement, dated as of July 15, 2002, between Endocare
and USMD (the "Pledge Agreement"). Endocare's sole remedy upon the occurrence of
an Event of Default shall be to exercise its rights against the Interests under
the Pledge Agreement. THIS NOTE IS NON-RECOURSE DEBT OF USMD WHICH, IF NOT PAID
IN FULL, SHALL BE DISCHARGED AND SATISFIED SOLELY BY THE EXERCISE OF REMEDIES
PROVIDED FOR IN THE PLEDGE AGREEMENT. NO PERSONAL OR DEFICIENCY JUDGMENT, ORDER
OR EXECUTION ENTERED OR ISSUED IN ANY SUIT, ACTION OR PROCEEDING, WHETHER LEGAL
OR EQUITABLE, UNDER THIS NOTE SHALL BE TAKEN AGAINST USMD OR ANY PERSON
AFFILIATED WITH USMD FOR THE PURPOSE OF OBTAINING SATISFACTION AND PAYMENT OF
THE DEBT EVIDENCED BY THE NOTE, FROM ANY ASSET OR PROPERTY OTHER THAN THE
COLLATERAL SECURITY PROVIDED UNDER THE PLEDGE AGREEMENT. NOTWITHSTANDING THE
FOREGOING, THIS NOTE SHALL BE WITH FULL RECOURSE TO USMD SOLELY TO THE EXTENT OF
THE BREACH OF USMD'S REPRESENTATIONS, WARRANTIES AND COVENANTS UNDER THE PLEDGE
AGREEMENT.

        5. Confidentiality. The parties acknowledge and agree that they are
currently negotiating the potential acquisition of USMD by Endocare pursuant to
the terms of that certain letter of intent dated April 3, 2002 between Endocare
and U.S. Therapies, L.L.C. (the predecessor of USMD) (the "Letter of Intent").
The extension of credit hereunder is part of a series of transactions relating
to the potential acquisition, and, therefore, both Endocare and USMD explicitly
acknowledge and agree that the terms of this Note, the Pledge Agreement and all
related documentation constitute Confidential Information (as defined in the
Letter of Intent) and are subject to the restrictions on disclosure contained in
Section 5 of Part 2 of the Letter of Intent.

        6. Miscellaneous.

            (a) This Note is intended as a contract under and shall be construed
and enforceable in accordance with the laws of the State of California.

            (b) Presentment for payment, demand, protest and notice of demand,
protest and nonpayment and all other notices other than as set forth herein are
hereby waived by USMD. No course of dealing between USMD and the Holder, nor
delay or failure on the part of the Holder to exercise or enforce any right or
remedy provided for herein or otherwise available to the Holder, including,
without limitation, failure to accelerate the debt evidenced hereby by reason of
default hereunder, acceptance of a past due installment, or indulgences granted
from time to time shall be construed (i) as a novation of this Note or as a
reinstatement of the indebtedness evidenced hereby or as a waiver of such right
of acceleration or of the right of Holder thereafter to insist upon strict
compliance with the terms of this Note, or (ii) to prevent the exercise of such
right of acceleration or any other right granted hereunder or by the laws of the
State of California or Texas. USMD hereby expressly waives the benefit of any
statute or rule of law or equity now provided, or which may hereafter be
provided, which would produce a result contrary to or in conflict with the
foregoing.

            (c) No extension of time for the payment of this Note or any
installment due hereunder, made by agreement with any person now or hereafter
liable for the payment of this Note, shall operate to release, discharge,
modify, change or affect the original liability of USMD under this Note, either
in whole or in part unless Holder agrees otherwise in writing.

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            (d) This Note may not be modified orally, but only in writing,
signed by the party against whom enforcement of any waiver, change, modification
or discharge is sought.

            (e) This Note may not be assigned without the written consent of
Endocare.

            (f) Wherever possible, each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Note shall be prohibited by or invalid under such
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Note.

            (g) As used herein the terms "USMD" and "Endocare" shall be deemed
to include their respective heirs, successors, legal representatives and
assigns, whether by voluntary action of the parties or by operation of law.

        IN WITNESS WHEREOF, this Note is executed and delivered as of the date
first above written.

                                            U.S. Medical Development, Inc.

                                            By:   /s/ John M. House
                                                --------------------------------
                                            Name: John M. House, M.D.
                                            Title: President

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