Document:

SCHEDULE TO EXHIBIT 10.22.1
 
 
WASHINGTON GROUP RETENTION AGREEMENTS

WITH NAMED EXECUTIVES
 
 
EACH DATED AS OF MARCH 14, 2001
 
George H. Juetten
Ambrose L. Schwallie
Thomas H. Zarges
 
 
DATED AS OF NOVEMBER 16, 2001
 
Stephen M. Johnson
 
NOTE:  Mr. Johnson’s Retention Agreement is identical in all materials terms to those entered into with Messrs Juetten, Schwallie and Zarges, with the exception that his Retention Bonus is prorated to allow for the time during early 2001 when he was not in the Company’s employ.  Mr. Johnson returned to the employ of the Company on November 12, 2001.SCHEDULE TO EXHIBIT 10.22.2
 
 
AMENDMENTS TO WGI RETENTION AGREEMENTS

WITH NAMED EXECUTIVES
 
 
EACH DATED AS OF AUGUST 20, 2002
 
Stephen M. Johnson
George H. Juetten
Ambrose L. Schwallie
Thomas H. Zarges
 
 
NOTE:  The Amendment to Mr. Johnson’s Retention Agreement is identical in all materials terms to those entered into with Messrs Juetten, Schwallie and Zarges, with the exception that his Retention Bonus is prorated to allow for the time during early 2001 when he was not in the Company’s employ.  Mr. Johnson returned to the employ of the Company on November 12, 2001.Exhibit
10.1

 

 

 

Director Compensation Table

 

 

 

	
  Elements of Compensation

  	
   

  	
  Current Director

  Compensation

  	
   

  	
  Approved by

  Board of

  Directors

  	
   

  
	
  Annual Retainer

  	
   

  	
  $

  	
  20,000

  	
   

  	
  $

  	
  40,000

  	
   

  
	
  Board Meeting Attendance Fee

  	
   

  	
  $

  	
  1,500

  	
   

  	
  $

  	
  1,500

  	
   

  
	
  Committee Chairman Retainer

  	
   

  	
  $

  	
  5,000

  	
   

  	
  $

  	
  10,000

  	
   

  
	
  Committee Meeting Attendance Fee

  	
   

  	
  $

  	
  1,000

  	
   

  	
  $

  	
  1,000

  	
   

  
	
  Restricted Stock Grant ($ Value Equivalent)

  	
   

  	
  $

  	
  50,000

  	
   

  	
  $

  	
  70,000

  	
   

  

 

Fees and grants to be paid at annual meeting,
May 18, 2005Exhibit
10.1

 

ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement (the “Agreement”) is entered into as of March 10,
2005, by and among Superior Medical Equipment, LLC, a Connecticut limited
liability company (“SME”), John Flynn, an individual and the owner of all
outstanding membership units of SME (“Owner”), (SME and Owner are hereinafter
collectively referred to as “Seller”), and dj Orthopedics, LLC, a Delaware
limited liability company (“Buyer”).

 

R
E  C  I  T  A  L  S

 

WHEREAS, SME is in the
business of selling and distributing orthopedic products and supplies directly
to patients and to physicians and other healthcare providers, and with respect
to products provided to patients, SME assumes responsibility for conducting the
billing and collection activity for such products from the patients and
applicable third party payors (the “Acquired Business”); and

 

WHEREAS, Buyer
manufactures, markets and sells products and services in the orthopedics market
and is interested in acquiring substantially all of the assets and operations
of the Acquired Business; and

 

WHEREAS,
pursuant to the terms and conditions of this Agreement, Buyer desires to
acquire, and Seller desires to sell, the assets and operations of the Acquired
Business.

 

A
G  R  E  E  M  E  N  T

 

NOW, THEREFORE, in
consideration of the mutual representations, warranties, covenants and
agreements contained herein, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

ARTICLE 1

PURCHASE AND SALE
OF ASSETS

 

1.1                                 Purchase
and Sale of Assets.  Subject to the
terms and conditions of this Agreement, at the Closing (as defined below)
Seller shall sell, transfer, convey, assign and deliver to Buyer, free and
clear of any and all liens, pledges, claims, security interests, encumbrances,
charges, restrictions or liabilities of any kind (other than liabilities
assumed pursuant to Section 1.3 hereof), and Buyer shall purchase, acquire
and accept from Seller, all of Seller’s right, title and interest in and to the
following properties and assets insofar as they are used in or relate to the
Acquired Business as of the Closing Date, (collectively, the “Purchased Assets”):

 

1

 

(a)                                  All
fixed assets owned by Seller, including but not limited to those items of
furniture, fixtures, computer and other equipment and other tangible assets
listed on Schedule 1.1(a);

 

(b)                                 Those
customer and vendor agreements, insurance and other third party payor contracts
and other contracts, licenses (including software licenses), leases and
agreements, whether oral or written, as listed or described on Schedule 1.1(b)
hereto (all such agreements and contracts being referred to herein as the “Contracts”),
to which Seller is a party and which Buyer has agreed to assume pursuant to Section 1.3
below, and any rights, advances or benefits associated therewith or deposits or
other prepayments made by Seller thereunder;

 

(c)                                  All
rights in and to the patents, patent applications, trademarks, trade names,
copyrights, and other proprietary intellectual property listed or described on Schedule 1.1(c)
hereto, as well all other trade secrets and know-how used in or related to the
Acquired Business (hereinafter the “Intellectual Property”);

 

(d)                                 All
inventories of products and supplies, whether located at Seller’s facility, at
locations of healthcare providers or at any other location, and any inventories
of work in progress and raw materials, including but not limited to those items
listed or described on Schedule 1.1(d) hereto to the extent that they
exist on the Closing Date (collectively, the “Inventory”);

 

(e)                                  All
accounts receivable, notes receivable and unbilled rights to payment in favor
of SME (other than sales commissions due SME), including but not limited to
those accounts receivable listed on Schedule 1.1(e) hereto to the extent
that they exist on the Closing Date, but excluding accounts receivable due from
Federal health care programs, and all rights to bill Federal health care
program payors for sales completed prior to the Closing Date (the “Excluded
Medicare Receivables”), (hereinafter, the “Accounts Receivable”);

 

(f)                                    All
claims, causes of action, choses in action, rights of recovery and rights of
set-off of any kind against any person, including without limitation any liens,
security interests, pledges or other rights to payment or to enforce payment in
connection with products delivered by SME on or prior to the Closing Date,
except with respect to the Excluded Medicare Receivables;

 

(g)                                 All
customer lists, supplier lists, sales files, business development information,
databases, price lists and pricing records and schedules, accounting records,
sales literature and general intangibles relating to the Acquired Business,
licenses to conduct the Acquired Business (to the extent transferable), and any
other books, documents, instruments and records used by the Seller to conduct
the Acquired Business (collectively, the “Other Assets”); and

 

2

 

(h)                                 All
goodwill and other intangible personal property of Seller associated with the
Acquired Business, including the name “Superior Medical Equipment”.

 

1.2                                 Consideration.
 In consideration for the sale,
assignment, transfer and delivery of the Purchased Assets, Buyer shall do the
following, subject to possible adjustment as provided in Section 1.6
below:

 

(a)                                  Pay
SME in readily available funds at the Closing pursuant to wire transfer
instructions provided by Seller to Buyer prior to the Closing Date the sum of
$3,150,000, less the aggregate amount of the Excluded Medicare Receivables;

 

(b)                                 Assume
the Assumed Liabilities (defined below in Section 1.3);

 

(c)                                  Pay
SME an additional sum of $500,000, plus interest at the annual rate of 4%, in
readily available funds on the date that is twelve months after the Closing
Date, provided that such sum shall be subject to downward adjustment as
follows:  (i) there shall be deducted
from such sum the amount, if any, required to cover any claims or losses coming
within Seller’s indemnification obligations pursuant to Section 6.2
hereof; and (ii) there shall be deducted from such sum the amount, if any,
required to satisfy Seller’s guarantee of the collection of the Accounts
Receivable provided in Section 1.5 below; and

 

(d)                                 Pay
SME an additional sum of up to $500,000 in readily available funds, less any
deductions described in clause (i) or (ii) in Section 1.2(c) above that
could not be satisfied out of the payment described in Section 1.2(c),
(hereinafter the “Earn-out”), based on the following performance objectives
applied to the Acquired Business:  (i) if
the “gross billings” (as hereinafter defined) of the “Credited New Business”
(as hereinafter defined) for Buyer’s twelve fiscal months commencing on March 6,
2005 (the “ New Billings”) exceed the gross billings of the “Credited Base
Business” (as hereinafter defined) for the one-year period ending March 5,
2005 (the “Base Billings”) by 10% or more, then SME shall be paid the entire
Earn-out; (ii) if the New Billings exceed the Base Billings by more than zero
but less than 10%, the amount paid as the Earn-out shall be the same proportion
of the full Earn-out as the percentage excess of New Billings over Base
Billings bears to 10%; and (iii) if the New Billings do not exceed the Base
Billings, no part of the Earn-out will be paid. 
For purposes of calculating the Earn-out, the term “gross billings”
shall mean the average selling price per product charged by SME in the year
ending on the Closing Date, before contractual allowances and adjustments, and
for those products sold by Buyer after the Closing but not by SME before the
Closing, ‘gross billings” shall mean the average selling price per product,
before contractual allowances and adjustments, charged by Buyer.  “Credited Base Business” shall mean total
gross billings of $3,437,226.  “Credited
New Business” shall mean the total gross billings for products sold by Buyer
through all stock and bill customers in Connecticut and the one stock and bill
customer shown on Schedule 2.13 located in Rhode Island plus the gross
billings on insurance billing business of Buyer with physicians in Connecticut
and

 

3

 

physicians associated
with the Rhode Island stock and bill customer on Schedule 2.13.  Billings associated with bone growth
stimulation products shall not be included in Credited Base Business or
Credited New Business.  An example of the
calculation of the Earn-out is attached as Exhibit A hereto.  Buyer shall maintain separate records of
Credited New Business, and Buyer will determine the Earn-out from those records
and the records of Seller for the period before Closing, all on a consistent
basis.  The Earn-out will be calculated
and paid, if applicable, within 30 days following the end of the twelve fiscal
month period following the Closing Date. 
Buyer shall also pay Seller interest on the Earn-out at the annual rate
of 4% if Buyer does not pay the Earn-out within 10 business days of the
agreement of Buyer and Seller on the amount of the Earn-out.  If the parties are unable to agree on the
calculation of the Earn-out in whole or in part, they shall submit such
disagreement to arbitration pursuant to Section 6.5(b) hereof; provided
that if such disagreement pertains to a portion but not all of such Earn-out, the
portion that the parties agree has been earned shall be paid and only the
disputed portion shall be submitted to arbitration.

 

(e)                                  Pay
SME the additional amount of $50,000 in readily available funds if the New
Billings exceed the Base Billings (each as defined above in clause (d)) by 5%
or more.  This amount shall be paid, if
earned, at the same time and in the same manner as the amount in clause (d)
above is paid.

 

(f)                                    Pay
SME the additional amount of $35,000 in readily available funds if, by the date
that is six months after the Closing Date, 65% of the inventory then stocked at
the facilities of the customers of SME identified on Schedule 2.13 hereof
are products of Buyer.  This amount shall
be paid, if earned, within 30 days of the close of said six-month period.

 

1.3                                 Assumption
of Liabilities.  Buyer agrees to
assume all obligations to be performed after the Closing under the Contracts
set forth on Schedule 1.1(b) hereto, and except for said obligations under
the Contracts, Buyer expressly does not, and shall not, assume or be deemed to
assume, under this Agreement or otherwise by reason of the transactions
contemplated hereby, any of the liabilities, obligations or commitments of
Seller of any nature whatsoever, whenever arising and whether relating to the
Acquired Business or otherwise.

 

1.4                                 Consents
of Third Parties.  Notwithstanding
anything to the contrary in this Agreement, this Agreement shall not constitute
an assignment or attempted assignment of any agreement (including without
limitation any third party payor contracts), license, instrument or other asset
or property (“Consent Matters”) if the attempted assignment thereof, without
the consent, approval or waiver of a third party or entity (including an agency
or operation of the Federal or a State government), would constitute a breach
thereof or a violation of any law or regulation, unless and until such consent,
approval or waiver has been granted. 
Seller covenants and agrees that in any such case the beneficial
interests of Seller in and to any Consent Matter shall in any event pass at the
Closing to Buyer, and Seller and Buyer covenant and agree that, from and after
the Closing, (a) Seller will hold any and all such Consent Matters in trust for
the

 

4

 

benefit of Buyer, its
successors and assigns, (b) Seller and Buyer will use their respective
reasonable efforts, in cooperation with one another, to obtain and secure all
consents that may be necessary to effect a full and valid transfer of the same
as soon as reasonably possible, and (c) Seller will cooperate with Buyer in any
assignment, subcontract or other reasonable arrangement designed to provide for
Buyer the benefits of and under any Consent Matter.  Buyer agrees to make all payments required to
be made with respect to such Consent Matter and to assume all liabilities or
other obligations arising from and after the Closing Date with respect thereto
except as a result of Seller’s negligence or willful misconduct, regardless of
whether any such consent, approval or waiver has been obtained.

 

1.5                                 Accounts
Receivable.  The parties agree to
cooperate in the collection of the Accounts Receivable assigned to Buyer
hereunder and in the billing and collection of the Excluded Medicare
Receivables retained by Seller.  Seller
shall promptly remit to Buyer any payments received on such Accounts Receivable
after the Closing Date.  Buyer agrees to
provide reasonable assistance to Seller in the processing and collecting of the
Excluded Medicare Receivables.  Seller
agrees to guarantee the payment in full of the “net” Accounts Receivable (which
shall equal 75% of the gross amount of such receivables at Closing) over an
initial, aggregate threshold of $25,000. 
If any portion of such net Accounts Receivable remains unpaid twelve
months after the Closing Date, Seller shall pay Buyer (or suffer the reduction
in the additional payments described in Section 1.2 (c) and (d), at Seller’s
election) at such time the total amount remaining unpaid on such net Accounts
Receivable in excess of $25,000.  Buyer
agrees to provide notice to Seller of such unpaid amount and copies of its
records showing the unpaid balance on such Accounts Receivable.

 

1.6                                 Purchase
Price Adjustment.  Both parties
recognize that each has relied on the financial statements described in Section 2.9
in agreeing to the purchase price for the Purchased Assets, in particular the
total current asset figure (less cash) of $627,140.28 shown in SME’s balance
sheet at December 31, 2004 (“December 31 Assets”).  Accordingly, the parties agree that the
purchase price set forth in Section 1.2 hereof shall be increased by the
amount by which the total current assets of SME (less cash) as of the Closing
Date are more than $50,000 in excess of the December 31 Assets, and said
purchase price shall be decreased by the amount by which the total current
assets of SME (less cash) as of the Closing Date are more than $50,000 less
than the December 31 Assets.  If SME’s
total current assets (less cash) on the Closing Date are no more than $50,000
higher or lower than the December 31 Assets, no adjustment will be made to
the purchase price hereunder.  Seller
shall calculate said assets of SME on the Closing Date and shall provide Buyer
with such calculation within 20 days following the Closing.  Buyer shall accept such calculation or
provide Seller with requested changes within 20 days of Seller’s delivery of
such calculation.  If Buyer requests
changes, the parties will promptly meet to seek agreement on the
calculation.  If such calculation shows
that the purchase price is increased, Buyer shall pay Seller such increase
within 10 days of agreement on said calculation, and if such calculation shows
that the purchase price is decreased, Seller shall pay Buyer such decrease
within 10 days of agreement on said calculation.  If the parties are unable to agree on such
calculation, the disagreement will be resolved through the dispute resolution
procedure described in Section 6.5(b) hereof.

 

5

 

1.7                                 Allocation
of Purchase Price.  Schedule 1.7
hereto sets forth the parties’ agreement on the allocation of the purchase
price under this Agreement among the Purchased Assets.  Each party agrees to follow such allocation
in all reports and returns filed with applicable taxing authorities.

 

ARTICLE 2

 

REPRESENTATIONS
AND WARRANTIES

OF THE SELLER

 

The Seller represents and
warrants to the Buyer as follows:

 

2.1                                 Organization
and Good Standing.  SME is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Connecticut. 
SME is duly qualified to transact business and is in good standing in
every jurisdiction in which the character of its business makes such qualification
necessary, except for where the failure to be so qualified would not have a
material adverse effect on SME or its business, assets, properties, prospects,
financial condition or results of operations (a “Material Adverse Effect”), all
of which jurisdictions are listed on Schedule 2.1 attached hereto.  SME has all necessary power and authority,
including all necessary licenses and permits, to carry on its business as it is
now being conducted, and to own or lease and operate its properties and assets.

 

2.2                                 Authorization
and Approvals.  SME has all requisite
power and authority to enter into this Agreement and to perform its obligations
hereunder.  This Agreement has been duly
executed and delivered by the Seller and constitutes the legal, valid and
binding obligation of Seller, enforceable in accordance with its terms, except
as may be limited by bankruptcy, reorganization, insolvency, moratorium or
other laws relating to or affecting the enforcement of creditors’ rights and
remedies generally; and except as enforcement may be limited by general
principles of equity.  This Agreement has
been, or will be prior to the Closing Date, duly and validly authorized by and
approved by all requisite action on the part of SME and its members.  Owner is the sole member of SME and no other
person or entity has any equity interest in SME of any nature whatsoever or any
option, warrant or other right to acquire any such equity interest or any right
or power to direct the voting of any outstanding equity interest.  No further approvals or consents by, or
filings with, any federal, state, municipal, foreign or other court or
governmental or administrative body, agency or other third party is required in
connection with the execution and delivery by the Seller of this Agreement, or
the consummation by the Seller of the transactions contemplated hereby, except
for those which, if not obtained, would not have a material adverse impact on
the ability of Buyer to carry on the Acquired Business as currently conducted
or the ability of the Seller to execute and deliver this Agreement or to
consummate the transactions contemplated hereby.

 

2.3                                 No
Conflicts.  Except as set forth on Schedule 2.3
attached hereto, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (a) violate any
provision of the charter, operating agreement, Bylaws or similar corporate
organization agreement of SME, (b) violate, or be in conflict with, or
constitute a

 

6

 

default (or other event
which, with the giving of notice or lapse of time or both, would constitute a
default) under, or give rise to any right of termination, cancellation or
acceleration under any of the terms, conditions or provisions of any material
lease, license, promissory note, contract, agreement, mortgage, deed of trust
or other instrument or document to which the Seller is a party or by which the
Seller or any of SME’s properties or assets may be bound, (c) to the knowledge
of the Seller, violate any order, writ, injunction, decree, law, statute,
rule or regulation of any court or governmental authority applicable to
SME or any of its properties or assets or (d) to the knowledge of the Seller,
give rise to a declaration or imposition of any claim, lien, charge, security
interest or encumbrance of any nature whatsoever upon any of the assets of SME.

 

2.4                                 Taxes.  SME has paid or caused to be paid within the
time and in the manner prescribed by law all Federal, state and local taxes of
any type, including without limitation, income, franchise, gross receipts,
sales or property taxes, payable or due from and owed by SME for all periods
ending on or prior to the date hereof except for taxes which are accrued but
not yet due and payable.  SME has
collected all sales, use and value added taxes required to be collected, and
has remitted, or will remit on a timely basis, such amounts to the appropriate
governmental authorities and has furnished properly completed exemption
certificates for all exempt transactions. 
SME has properly withheld income and social security or other similar
taxes and paid payroll taxes with respect to all persons properly characterized
as employees for federal, state or local tax purposes.  None of the assets of SME are subject to any
liens in respect of taxes (other than for current taxes not yet due and
payable).

 

2.5                                 Fixed
Assets.  The fixed assets set forth
on Schedule 1.1(a) hereto are in good operating condition and repair,
normal wear and tear excepted, and are adequate for
the uses to which they are being put. 
None of such fixed assets is in need of maintenance or repairs, except
for ordinary, routine maintenance and repairs.

 

7

 

2.6                                 Contracts.  Schedule 1.1(b) hereto contains a
complete, current and correct list of all material contracts, commitments,
obligations or agreements of SME, whether written or oral, formal or informal,
relating to the Acquired Business. 
Except as noted on Schedule 1.1(b), no consent or approval of a
party to any Contract or, to the knowledge of the Seller, any third party,
including without limitation, any state or Federal government or agency
thereof, is required in connection with the consummation of the transactions
contemplated in this Agreement.  To the
knowledge of the Seller, no event has occurred which would constitute a default
(or any event which, with the giving of notice or lapse of time or both, would
constitute a default) under any term or provision of any of the Contracts and
thereby allow a party thereto to terminate or claim damages therefor.  Each of the Contracts is in full force and
effect and is the legal, valid and binding obligation of SME and, to the
knowledge of the Seller, of the other parties thereto, enforceable in
accordance with its terms, except as may be limited by bankruptcy,
reorganization, insolvency, moratorium or other laws relating to or affecting
the enforcement of creditors’ rights and remedies generally and except as
enforcement may be limited by general principles of equity.  The Seller is not a party to any Contract
that restricts Seller, or after the Closing Date Buyer, from carrying on the
Acquired Business or any part thereof, or from competing in any line of
business with any person, corporation or entity, except for the non-compete
agreements provided in section 4.3(i).

 

2.7                                 Inventory.  All inventory of the Acquired Business, as of
a date within fivedays of the Closing Date, whether constituting finished
goods, work in progress or raw material is shown on Schedule 1.1(d).  All of such inventory is usable and saleable
in the ordinary course of business within a reasonable period of time, unless
shown on Schedule 1.1(d) as subject to a reserve for inventory reasonably
anticipated to be or become excess or obsolete.

 

2.8                                 Assets.  Except as set forth on Schedule 2.8, SME
has good, valid and marketable title to all Purchased Assets.  All such assets are free and clear of title
defects or objections, liens, claims, charges, pledges, security interests,
easements, title retention agreements or other encumbrances of any kind or
nature whatsoever, except for liens, taxes and assessments not yet due and
liens of landlords, warehousemen, mechanics and materialmen arising by law or
in the ordinary course of business that do not materially adversely affect the
Purchased Assets or the operation of the Acquired Business.  All of the Purchased Assets are used and
useful in the Acquired Business, and the Purchased Assets constitute all of the
assets and properties used by Seller in the Acquired Business.  Seller uses no other material asset or
property in the conduct of the Acquired Business that is not included in the
Purchased Assets.

 

2.9                                 Financial
Statements.  Seller has delivered to
Buyer the following financial statements of SME, all of which are attached to
this Agreement as Schedule 2.9: 
income statement for the year ended December 31, 2004 and balance
sheet (“Balance Sheet”) at December 31, 2004, (all of such financial
statements are collectively referred to herein as the “Financial Statements”).  The Financial Statements (i) have been
prepared in good faith from the books and records of the Seller, and (ii)
fairly present the financial condition and results of operations of SME as of
the date and for the period indicated therein.  The Balance Sheet accurately reflects all
liabilities, obligations and commitments of any nature (whether absolute,
accrued, contingent or otherwise and whether matured or unmatured) of the
Seller except (a)

 

8

 

liabilities, obligations
or commitments incurred since the date of the Balance Sheet in the ordinary
course of business and consistent with past practice and (b) other liabilities
or obligations not required to be shown on a balance sheet prepared in accordance
such accounting principles.  Neither SME
nor its assets or properties are bound by or subject to any such liabilities,
obligations or commitments that are not reflected on the Financial Statements
other than as shown on Schedule 2.9, except for any such liabilities,
obligations or commitments that would not, individually or in the aggregate,
have a Material Adverse Effect.

 

2.10                           Intellectual
Property.

 

(a)                                  Schedule 1.1(c)
hereto sets forth a complete list of all registered (and material unregistered)
trademarks, trade names, patents, patent applications and invention disclosures
which are, have been or are presently planned to be used in the Acquired
Business (the “Intellectual Property”). 
Except as set forth on Schedule 1.1(c), (i) each of the items of Intellectual
Property is valid and registered in the name of SME on the Principal Register
of the United States Patent and Trademark Office and in the foreign countries
indicated thereon, (ii) the Seller has no knowledge of any infringement by
others, (iii) to Seller’s knowledge, the continued use of such items in the
Acquired Business will not result in any infringement of the rights of others,
(iv) SME is the sole legal owner of such items in all jurisdictions in which
SME uses, has used or plans to use any such item and Seller has no knowledge of
any claim by any other person that such person is the legal owner of such item;
and (v) SME has not granted any license or right to use any Intellectual
Property to any other person.

 

(b)                                 The Intellectual Property and other items of
proprietary intellectual property listed or described on Schedule 1.1(c)
constitute all such intellectual property used by SME in the conduct of the
Acquired Business and there is no other intellectual property of SME or, to
Seller’s knowledge, of a third party required to conduct of the Acquired
Business in the manner in which it is now conducted or proposed to be conducted
by SME.

 

(c)                                  There
are no material agreements requiring SME to make payments or provide any
consideration for, or restricting the SME’s right to use, any intellectual
property rights of third parties in the Acquired Business.

 

2.11                           Accounts
Receivable.  The Accounts Receivable
shown in Schedule 1.1(e) hereto constitute all of the accounts receivable
of the Acquired Business as of a date that is no more than five days before the
Closing Date, and represent bona  fide sales actually made or
services actually performed on or prior to such date in the ordinary course of
business of SME and consistent with past practices.  To Seller’s knowledge, there is no contest,
claim or right of set-off contained in any oral or written agreement with any
account debtor relating to the amount or validity of any Account Receivable, or any other Account Receivable created after
the date mentioned above.  The Accounts
Receivable are valid and collectible in the ordinary
course of business.

 

2.12                           Licenses
and Permits.  Schedule 2.12
attached hereto contains a complete, current and correct list of all
governmental licenses, permits, franchises, rights and privileges, if any,

 

9

 

necessary for or material
to the present conduct of the Acquired Business (the “Licenses”).  SME possesses all such Licenses, and each of
the Licenses is in full force and effect. 
There are no pending or, to the best knowledge of the Seller, threatened
claims or proceedings challenging the validity of or seeking to revoke or
discontinue, any of the Licenses.

 

2.13                           Customer
and Supplier Relationships.  Schedule 2.13
identifies all customers of the Acquired Business and suppliers of the Acquired
Business that transacted at least $25,000 of business with SME in 2004.  Except for the transaction contemplated by
this Agreement, Seller has received no notice nor is in possession of any
actual knowledge which might reasonably indicate that any of the current
customers, subcontractors or suppliers of the Acquired Business intends to
cease retaining, purchasing from, selling to or dealing with SME in the manner
in which such transactions have previously occurred, nor has the Seller
received any notice or is in possession of any actual knowledge which might
reasonably lead it to believe that any current customer, subcontractor or
supplier of the Acquired Business intends to alter in any respect the amount of
such retention, purchases or sales or the extent of dealings with the SME or
would alter in any respect any such retention, purchases, sales or dealings in
the event of the consummation of the transactions contemplated hereby.  SME is current and in full compliance in all
material respects with its obligations to its customers, suppliers and
subcontractors of the Acquired Business.

 

2.14                           Compliance
With Laws.

 

(a)                                  Seller has conducted the Acquired Business in
compliance with, and is not in violation of, applicable laws, statutes,
ordinances, rules, regulations, orders and other requirements of all national
governmental authorities, and of all territories, states, municipalities and
other political subdivisions and agencies thereof, having jurisdiction over the
SME and its business, including without limitation all such laws, regulations,
ordinances and requirements relating to insurance, environment, antitrust,
consumer protection, labor and employment, zoning and land use, immigration, health,
and occupational safety, except where the failure to be in compliance would not
have a Material Adverse Effect.  The
Seller has not received any written notification of any asserted present or
past failure by SME to comply with any laws, statutes, ordinances, rules,
regulations, orders or other requirements, the failure of which would have a
Material Adverse Effect.

 

(b)                                 Without
limiting the generality of the foregoing subsection (a), Seller has not,
directly or indirectly, offered, paid, solicited or received any payment or
other remuneration which was not legal to offer, pay, solicit or receive under
applicable Federal and state statutes or regulations, including without
limitation “fraud and abuse” or “anti-kickback” laws, nor has Seller engaged in
any other conduct that would violate these laws or Federal or state false
claims acts.  SME has not for any reason
lost its right or authorization, or otherwise failed to be eligible, to
participate in Medicaid or Medicare or other Federal health care programs or to
accept assignments or rights to reimbursements under regulations of a Federal
health care program, or had its right to receive reimbursements under Federal
health care program regulations suspended.  There is no investigation, order, decree or
agreement in existence or pending regarding SME’s sales, marketing,
contracting, pricing, billing or other financial practices with respect to
Federal

 

10

 

health care
programs or regarding compliance with applicable Federal health care program
statutes or regulations.  SME is
currently in compliance with all applicable provisions of the Health Insurance
Portability and Accountability Act of 1996 and regulations thereunder.

 

2.15                           Litigation.

 

(a)                                  There
is no pending or, to the best knowledge of the Seller, threatened action, suit,
arbitration proceeding, investigation or inquiry before any court or
governmental or administrative body or agency, or any private arbitration
tribunal, against, relating to or affecting the Acquired Business, or the
transactions contemplated by this Agreement, nor to the best knowledge of the
Seller, are there any facts or circumstances which could reasonably lead to or
provide the basis for any such threatened action, suit, arbitration proceeding,
investigation or inquiry.

 

(b)                                 There
is not in effect any order, judgment or decree of any court or governmental or
administrative body or agency enjoining, barring, suspending, prohibiting or
otherwise limiting Seller or any officer, director or employee of SME from
conducting or engaging in any aspect of the Acquired Business, or requiring
Seller or any officer, director or employee of SME to take certain action with
respect to any aspect of the Acquired Business.

 

(c)                                  SME
is not in violation of or in default under any order, judgment, writ,
injunction or decree of any court or governmental or administrative body or
agency.

 

2.16                           Brokers
and Finders.  Seller has not engaged
or authorized any broker, finder, investment banker or other third party to act
on its behalf, directly or indirectly, as a broker, finder, investment banker
or in any other like capacity in connection with this Agreement or the
transactions contemplated hereby, nor has Seller consented to or acquiesced in
anyone so acting.  Seller knows of no
claim for compensation from any such broker, finder, investment banker or other
third party for so acting on behalf of Seller or any basis for such a claim.

 

2.17                           Product
Liability and Warranties.  Schedule 2.17
sets forth the policies of product liability insurance maintained by SME and
covering the products of the Acquired Business, including the insurer, policy
limits, deductibles and term.  Each
product of the Acquired Business sold, or delivered by SME has been marketed
and sold in conformity in all material respects with all applicable contractual
commitments and all express and implied warranties.  Seller does not have any knowledge of the
existence or of any liability (and, to the knowledge of the Seller, there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand giving rise to any
liability) for replacement or repair thereof or other damages in connection
therewith.  No product or service of the
Acquired Business sold, or delivered by the Seller is subject to any guaranty,
warranty, or other indemnity beyond the applicable standard terms and
conditions of sale of SME or the manufacturer of the product.

 

2.18                           Absence
of Certain Changes.  Since December 31,
2004, Seller has conducted the Acquired Business in the ordinary course
consistent with past practice and, except as disclosed in Schedule 2.18,
there has not been:

 

11

 

(a)                                  any event, occurrence or development of a
state of circumstances or facts relating to the Purchased Assets or the
Acquired Business which, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect;

 

(b)                                 any sale, lease, license or other disposition
of any assets or properties of the Acquired Business, other than in the
ordinary course of business consistent with past practices;

 

(c)                                  any creation or assumption by Seller of
any lien, encumbrance or other charge on any of the Purchased Assets;

 

(d)                                 any material condemnation, seizure,
damage, destruction or other casualty loss (whether or not covered by
insurance) affecting any of the Purchased Assets;

 

(e)                                  any material change or notice of pending
material change in the level or nature of business to be done with SME by any
customer or supplier of the Acquired Business except for the transactions
contemplated by this Agreement;

 

(f)                                    any notice of default or any other claim,
allegation or other assertion that SME has been or will be in breach or violation
of any provision of any contract, agreement or instrument to which SME is a
party and which is included in the Purchased Assets or the Assumed Liabilities;
or

 

(g)                                 any
material increase in the compensation of any of SME’s employees or in the
benefits delivered or to be delivered under any employee benefit plan or
program or any creation of a new plan or program designed to provide
compensation or benefits to SME’s employees.

 

2.19                           Employees.  Schedule 2.19 contains a true and
accurate list of all of SME’s employees, their titles, hire dates and current
annual compensation.  Such schedule also
contains a description of the principal terms of each employee benefit program
maintained by SME, including without limitation incentive bonus programs,
commission arrangements, equity option or purchase programs, medical, dental,
vision, life and disability insurance plans, vacation and other leave plans,
severance pay plans and other fringe benefit plans or programs.  SME has complied with the terms and
conditions of each such employee benefit plan and program and with all material
requirements of Federal and state law and regulations relating to such employee
benefit plans and programs.

 

ARTICLE 3

 

REPRESENTATIONS
AND WARRANTIES

OF BUYER

 

Buyer represents and warrants to the Seller as follows:

 

12

 

3.1                                 Organization
and Power.  Buyer is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware, and has all requisite power and authority to
own, lease and operate its properties, and to carry on its business, as such is
now being conducted.

 

3.2                                 Authorization
and Enforceability of Agreements. 
Buyer has all requisite power and authority to enter into this Agreement
and to perform its obligations hereunder. 
This Agreement has been duly executed and delivered by Buyer and
constitutes the legal, valid and binding obligation of Buyer, enforceable in
accordance with its terms, except as may be limited by bankruptcy,
reorganization, insolvency, moratorium or other laws relating to or affecting
the enforcement of creditors’ rights and remedies generally and except as
enforcement may be limited by general principles of equity.  This Agreement been duly
and validly authorized by and approved by all requisite corporate action on the
part of Buyer.  No further
approvals or consents by, or filings with, any federal, state, municipal,
foreign or other court or governmental or administrative body, agency or other
third party is required in connection with the execution and delivery by Buyer
of this Agreement or the consummation by Buyer of the transactions contemplated
hereby, except for those which, if not obtained, would not have a material
adverse impact on the ability of Buyer to execute and deliver this Agreement,
or to consummate the transactions contemplated hereby.

 

3.3                                 No
Conflicts.  Neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby will (a) violate any provisions of the charter or Bylaws of
Buyer, (b) violate, or be in conflict with, or constitute a 

 

default (or other event
which, with the giving of notice or lapse of time or both, would constitute a
default) under, or give rise to any right of termination, cancellation or
acceleration under any of the terms, conditions or provisions of any material
lease, license, promissory note, contract, agreement, mortgage, deed of trust
or other instrument or document to which Buyer is a party or by which Buyer or
any of its properties or assets may be bound, (c) violate any order, writ,
injunction, decree, law, statute, rule or regulation of any court or
governmental authority applicable to Buyer or any of its properties or assets
or (d) give rise to a declaration or imposition of any claim, lien, charge,
security interest or encumbrance of any nature whatsoever upon any of the
assets of Buyer’s businesses.

 

3.4                                 Brokers
and Finders.  Buyer has not engaged
or authorized any broker, finder, investment banker or other third party to act
on behalf of Buyer, directly or indirectly, as a broker, finder, investment
banker or in any other like capacity in connection with this Agreement or the
transactions contemplated hereby, or consented to or acquiesced in anyone so
acting, and Buyer does not know of any claim for compensation from any such
broker, finder, investment banker or other third party for so acting on behalf
of Buyer or of any basis for such a claim.

 

13

 

ARTICLE 4

 

CLOSING

 

4.1                                 Closing.  The actions and deliveries described below in
this Article 4 shall be deemed the “Closing” of the transactions
contemplated by this Agreement and the date on which such actions and
deliveries occur shall be the “Closing Date”.

 

4.2                                 Actions
and Deliveries of Seller.  At the
Closing, Seller shall take the following actions and deliver the following
documents:

 

(a)                                  Closing
Certificate.  Seller shall deliver a
certificate, dated the Closing Date, from Owner, stating that each of the
representations and warranties of Seller contained in Article 2 hereof and
in any schedule, exhibit or other document delivered hereunder is true and
correct;

 

(b)                                 Employment
Agreement.  Owner shall execute and
deliver to Buyer an Employment Agreement in such form and containing such terms
and conditions as said parties shall agree;

 

(c)                                  Assignment
and Assumption Agreement.  Seller shall
execute and deliver to Buyer an Assignment and Assumption Agreement in such
form and containing such terms and conditions as said parties shall agree that
assigns the Contracts to Buyer and provides for the assumption by Buyer of the
Assumed Liabilities, all as provided herein;

 

(d)                                 Bill of Sale.  Seller shall execute and deliver
to Buyer a Bill of Sale in such form as the parties shall agree that conveys
all of Seller’s right, title and interest to the Purchased Assets to Buyer as
provided for in this Agreement;

 

(d)                                 Consents.  Seller shall deliver, or have
previously delivered, such consents and approvals of third parties to the transactions
contemplated hereunder as Buyer shall have requested;

 

(e)                                  Patent
and Trademark Assignments.  Seller
shall execute and deliver to Buyer patent and trademark assignments in such
form as Buyer deems reasonably acceptable relating to the patents and
trademarks included within the Purchased Assets;

 

(f)                                    Absence
of Liens.  Seller shall deliver to
Buyer a UCC search report dated as of a recent date issued by the appropriate
state and county officials in Connecticut indicating that there are no filings
under the Uniform Commercial Code on file in such state or with such counties
that name SME as debtor or otherwise indicating any lien on the Purchased
Assets, except for (i) the liens which Buyer has approved, in its sole
discretion, and (ii) liens with respect to which Seller has delivered releases
duly executed by the lender or other creditor which is the holder of such lien;

 

(g)                                 Legal Opinion.  Seller shall deliver the opinion
of its counsel, Winters & Forte, with respect to the matters addressed in Sections
2.1, 2.2, 2.3 and 2.15 hereof, in form reasonably satisfactory to Buyer.

 

14

 

4.3                                 Actions
and Deliveries of Buyer.  At the
Closing, Buyer shall take the following actions and deliver the following documents
and consideration:

 

(a)                                  Closing
Certificate.  Buyer shall deliver a
certificate, dated the Closing Date, from an authorized officer of Buyer,
stating that each of the representations and warranties of Buyer contained in Article 3
hereof and in any schedule, exhibit or other document delivered hereunder is
true and correct;

 

(b)                                 Employment
Agreement.  Buyer shall execute and
deliver to Owner an Employment Agreement in such form and containing such terms
and conditions as said parties shall agree;

 

(c)                                  Assignment
and Assumption Agreement.  Buyer shall
execute and deliver to Seller an Assignment and Assumption Agreement in such
form and containing such terms and conditions as said parties shall agree that
assigns the Contracts to Buyer and provides for the assumption by Buyer of the
Assumed Liabilities, all as provided herein; and

 

(d)                                 Initial
Purchase Price.  Buyer shall deliver
to Seller by wire transfer the initial portion of the purchase price provided
for in Section 1.2(a) hereof.

 

4.4                                 Simultaneous
Transactions.  All transactions to be
effectuated at the Closing shall be deemed to have taken place simultaneously,
and no such transaction shall be deemed to have been completed until all
transactions are completed and all documents delivered.

 

ARTICLE 5

 

CERTAIN OTHER
COVENANTS AND AGREEMENTS

 

5.1                                 Delivery
of Books and Records.  At the
Closing, Seller will deliver to Buyer all original contracts, books and records
that are directly and solely related to the Purchased Assets and Assumed
Liabilities, together with complete copies of all other documents or software
relating to the Acquired Business which are requested by Buyer.

 

5.2                                 Cooperation
and Further Assurance.                                             After
the Closing, the parties shall cooperate in good faith to facilitate the
transfer of the Purchased Assets and the Acquired Business in the manner
contemplated hereunder with minimum disruption for the parties.  In particular, each party will execute such
further documents and instruments as the other may reasonably request to
reflect the transactions contemplated hereunder and to vest in Buyer full title
to the Purchased Assets.

 

5.3                                 Transfer
Taxes.  All sales, use, transfer,
stamp, conveyance, or other similar taxes, duties, excises or governmental
charges imposed by any governmental authority, domestic or

 

15

 

foreign, with respect to the sale or transfer of the
Purchased Assets shall be borne entirely by Seller.

 

5.4                                 Transaction
Expenses.  Each party shall pay its
own expenses incident to preparing for, entering into and carrying out this
Agreement and the transactions contemplated hereby.

 

5.5                                 Superior
Medical Equipment Name.  Seller
agrees that it will, no later than five business days following the Closing, change its corporate name in the State of
Connecticut and any other state in which it is qualified to do business to
delete any reference to the name “Superior Medical Equipment” or any variation
thereof.

 

5.6                                 Bulk
Sales.  Buyer hereby waives
compliance by Seller with the provisions of any applicable state bulk transfer
statutes and Seller covenants and agrees to pay and discharge when due all
undisputed claims of creditors asserted against Buyer or any affiliate thereof
by reason of any failure of Seller to comply, and to indemnify Buyer and any
affiliate thereof fully in respect thereof, which indemnity shall survive the
Closing and shall not be subject to the limitations of Sections 6.1 and
6.4.  Notwithstanding the provisions of Section 7.5
hereof, Connecticut law will govern as to the necessity for bulk sales
compliance.

 

5.7                                 Non-compete
and Nonsolicitation.  In
consideration of the purchase price paid by Buyer hereunder and the other
covenants and agreements contained herein, Owner and SME hereby agree, for a
period of five (5) years following the Closing Date, that neither he nor it
shall, directly or indirectly, use or disclose any confidential information or
trade secrets of the Acquired Business or engage directly, or indirectly as the
owner, stockholder, partner or agent or in any other capacity or manner
whatsoever for a competitor of the Buyer, or any affiliate of the Buyer, in any
business activity related to the Acquired Business, as currently engaged in, or
as proposed to be engaged in, within the State of Connecticut or within the
United States.  Owner and SME further
agree and covenant that neither he nor it shall solicit, divert or attempt to
divert from the Buyer any business of, any customer of, or any employee of the
Buyer or any former employee having been employed by the Buyer within the
previous year.  This non-compete and
nonsolicitation covenant and agreement shall be binding on Owner and SME and
their successors and assigns.  Owner’s
and SME’s obligations under this Section 5.7 shall survive the Closing and
continue for the full duration of the five-year period mentioned above and
shall not be subject to the limitations on liability set forth in section 6.4
below.

 

ARTICLE 6

 

SURVIVAL OF
REPRESENTATIONS, WARRANTIES,

COVENANTS AND RELATED AGREEMENTS; INDEMNIFICATION

 

6.1                                 Survivability
Period.  The warranties and
representations made by the Seller, or by Buyer, in this Agreement or in any
document, certificate, schedule or instrument delivered in connection
herewith shall survive the Closing and shall continue in effect, notwithstanding
any investigation by or on behalf of any party, for twelve (12) months
following the Closing, except

 

16

 

that representations and
warranties set forth in Sections 2.4 and 2.8 shall survive the Closing in
accordance with applicable statute of limitations (the “Liability Period”).

 

6.2                                 Indemnity
by the Seller.  The Seller shall
indemnify and hold harmless, Buyer and the officers, directors, agents,
affiliates and representatives of Buyer or any of them (the “Buyer Indemnitees”)
from and against, and shall reimburse the Buyer Indemnitees for any loss,
liability, damage or expense, including reasonable attorneys’ fees and costs of
investigation incurred as a result thereof, that the Buyer Indemnitees shall
incur or suffer (collectively “Buyer’s Recoverable Losses”), arising out of or
resulting from (a) a breach or default by Seller of or under (i) any
representation or warranty contained in Article 2 hereof; (ii) any
agreement or covenant under or pursuant to this Agreement; (iii) any
document, certificate, schedule or instrument delivered by or on behalf of
the Seller pursuant hereto, or (b) the use or possession of the Purchased
Assets, or the operation of the Acquired Business, on or before the Closing
Date (other than the Assumed Liabilities).

 

6.3                                 Indemnity
by Buyer.  Buyer shall indemnify and
hold harmless the Seller and the officers, directors, agents, affiliates and
representatives of SME or any of them (the “Seller Indemnitees”) from and against,
and shall reimburse the Seller Indemnitees for any loss, liability, damage or
expense, including reasonable attorneys’ fees and cost of investigation
incurred as a result thereof, that the Seller Indemnities shall incur or suffer
(collectively, “Seller’s Recoverable Losses”) resulting from (a) a breach or
default by Buyer of or under (i) any representation or warranty contained in Article 3
hereof; (ii) any agreement or covenant under or pursuant to this Agreement; or
(iii) any document, certificate, schedule or instrument delivered by or on
behalf of Buyer in connection herewith, or (b) the use or possession of the
Purchased Assets, or the operation of the Acquired Business, after the Closing
Date.

 

6.4                                 Limitations
on Liability.  Seller shall not be obligated
for Buyer’s Recoverable Losses under section 6.2(a) above unless and until
such losses, individually, or in the aggregate, shall have exceeded $50,000, in
which case such liability shall be for the full amount of such losses.  Additionally, Seller shall not be obligated
for Buyer’s Recoverable Losses under section 6.2(a) above to the extent
such losses exceed, in the aggregate, the consideration paid by Buyer pursuant
to Section 1.2 hereof.

 

6.5                                 Claims
for Indemnification; Disputes

 

(a)                                  Claims
for Indemnification.  Any party
hereto shall give Seller or Buyer, as the case may be (the “Indemnitor”),
written notice (the “Claim Notice”) of any claim (including the receipt of any
demand) or the commencement of any action with respect to which indemnity may
be sought (the “Claim” or the “Claims). 
The Claim Notice shall state (i) the aggregate amount of Buyer’s
Recoverable Losses or Seller’s Recoverable Losses (in either case, “Recoverable
Losses”) as to which indemnification is being sought (which amount may be
estimated and updated from time to time), (ii) the components of the
amount of Recoverable Losses for which indemnification is being sought (which
components may be estimated and updated from time to time); and (iii) the
specific grounds upon which the Claim for indemnification is being made.  The right to indemnification for a Claim
shall be deemed to be

 

17

 

accepted by the
Indemnitor unless, within 30 days after the Indemnitor’s receipt of the Claim Notice,
the Indemnitor shall notify the claimant in writing that it objects to the
right to indemnification with respect to the Claim.

 

(b)                                 Resolution
of Disputes.  The parties shall
undertake in good faith to meet or to have their representatives promptly meet
and attempt to resolve all disputes regarding indemnification.  If the parties are unable to resolve such
disputes within 20 days, the resolution of the disputes shall be referred to
and settled by arbitration to be held in San Diego, California, if the
arbitration is brought by Seller, or in Hartford, Connecticut, if the
arbitration is brought by Buyer, and conducted in accordance with the then
current Commercial Arbitration Rules of the American Arbitration Association.  Judgment upon the award may be entered in any
court of competent jurisdiction or application may be made to such court for a
judicial acceptance of the award and an order of enforcement, as the case may
be.  The successful or prevailing party
shall be entitled to recover all attorneys’ fees, expert witness fees and other
costs incurred in such action, in addition to any other relief to which it may
be entitled.

 

ARTICLE 7

 

GENERAL PROVISIONS

 

7.1                                 Entire
Agreement; Modifications; Waiver. 
This Agreement and the agreements ancillary hereto, supersede any and
all agreements heretofore made, written or oral, relating to the subject matter
hereof, and constitute the entire agreement of the parties relating to the
subject matter hereof.  This Agreement may
be amended only by an instrument in writing signed by Buyer and Seller.  Inspection of documents or the receipt of
information pursuant to this Agreement shall not constitute a waiver of any
representation, warranty, covenant or condition hereunder.  No waiver shall be binding unless executed in
writing by the party making such waiver.

 

7.2                                 Severability.  If any clause or provision of this Agreement
shall be held invalid or unenforceable by the final determination of a court of
competent jurisdiction, and all appeals therefrom shall have failed or the time
for such appeals shall have expired, such clause or provision shall be deemed
eliminated from this Agreement but the remaining provisions shall nevertheless
be given full force and effect.

 

7.3                                 Successors
and Assigns.  Neither
party hereto may assign or transfer all or a portion of its rights or
obligations under this Agreement without the prior written consent of the other
party.  Subject to the foregoing,
this Agreement shall be binding upon and inure to the benefit of each of the
parties hereto, and their respective successors and assigns.

 

7.4                                 Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.

 

18

 

7.5                                 Governing
Law.  This Agreement shall be
construed and interpreted in accordance with the internal substantive laws of
the State of California.

 

7.6                                 Notices.  All notices required or desired to be given
hereunder shall be given in writing and signed by the party so giving notice,
and shall be effective when personally delivered, one business day after
transmission if sent by facsimile or other overnight delivery service and
appropriate confirmation is received, or five (5) days after being
deposited in the United States mail, as certified or registered mail, return
receipt requested, first class postage and fees prepaid, addressed as set forth
below.  Any party from time to time may
change such party’s address for giving notice by giving notice thereof in the
manner outlined above:

 

	
   

  	
  If to Buyer:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  dj Orthopedics, LLC

  	
   

  
	
   

  	
  2985 Scott Street

  	
   

  
	
   

  	
  Vista, California 92081

  	
   

  
	
   

  	
  Attention:

  	
  Donald M. Roberts

  
	
   

  	
  Facsimile:

  	
  (760) 734-3536

  
	
   

  	
   

  	
   

  
	
   

  	
  If to the Seller:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Mr. John F. Flynn

  	
   

  
	
   

  	
  49 High Ridge

  	
   

  
	
   

  	
  Pawcatuck, CT 06379

  	
   

  
	
   

  	
  Facsimile: (860)
  599-0544

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  David Wayne Winters,
  Esq.

  	
   

  
	
   

  	
  315 Highland Avenue

  	
   

  
	
   

  	
  Cheshire, CT 06410

  	
   

  
	
   

  	
  Facsimile: (203)
  271-1222

  	
   

  
					

 

7.7                                 Recitals,
Schedules and Exhibits.  The recitals,
schedules and exhibits to this Agreement are incorporated herein and, by this
reference, made a part hereof as if fully set forth at length herein.

 

7.8                                 Section Headings.  The section headings used herein are
inserted for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.

 

19

 

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

 

 

	
   

  	
  DJ ORTHOPEDICS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Donald M. Roberts

  	
   

  
	
   

  	
   

  	
  Name:

  	
      Donald
  M. Roberts

  	
   

  
	
   

  	
   

  	
  Title:

  	
        VP
  and General Counsel

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  “Buyer”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  John Flynn

  	
   

  
	
   

  	
   

  	
  John
  Flynn

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  “Owner”

  
	
   

  	
   

  	
   

  
	
   

  	
  SUPERIOR MEDICAL
  EQUIPMENT, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John Flynn

  	
   

  
	
   

  	
   

  	
  Name:

  	
      John
  Flynn

  	
   

  
	
   

  	
   

  	
  Title:

  	
        Member

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  “SME”

  
							

 

20

 

List of
Schedules

 

	
  1.1(a)

  	
   

  	
  Fixed Assets

  
	
  1.1(b)

  	
   

  	
  Contracts

  
	
  1.1(c)

  	
   

  	
  Intellectual Property

  
	
  1.1(d)

  	
   

  	
  Inventory

  
	
  1.1(e)

  	
   

  	
  Accounts Receivable

  
	
  1.7

  	
   

  	
  Allocation of Purchase
  Price

  
	
  2.1

  	
   

  	
  Foreign Qualifications

  
	
  2.3

  	
   

  	
  No Conflicts

  
	
  2.8

  	
   

  	
  Assets

  
	
  2.9

  	
   

  	
  Financial Statements

  
	
  2.12

  	
   

  	
  Licenses and Permits

  
	
  2.13

  	
   

  	
  Customers and Suppliers

  
	
  2.17

  	
   

  	
  Product Liability
  Insurance

  
	
  2.18

  	
   

  	
  Absence of Certain
  Changes

  
	
  2.19

  	
   

  	
  Employees

  

 

21

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00080-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00080-of-00352.parquet"}], [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00080-of-00352.parquet"}], [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00080-of-00352.parquet"}]]