ASSET PURCHASE AGREEMENT

Asset Purchase Agreement

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PAINCARE HOLDINGS INC | PAINCARE SURGERY CENTERS III, INC., | LESTER A. ZUCKERMAN, M.D.

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Title: ASSET PURCHASE AGREEMENT
Governing Law: Florida Date: 6/29/2006
Industry: HTHFAC Law Firm: McDermott Will & Emery LLP; Crowell & Moring, LLP

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EXHIBIT 10.02

ASSET PURCHASE AGREEMENT

BY AND AMONG

PAINCARE HOLDINGS, INC., PAINCARE SURGERY CENTERS III, INC.,

CENTER FOR PAIN MANAGEMENT ASC, LLC,
AND ITS

MEMBERS

Dated as of September 26, 2005

TABLE OF CONTENTS

				Page


1.	PURCHASE AND SALE OF ASSETS			1
	1.1	Assets to be Transferred		1
	1.2	Excluded Assets		4

2.	ASSUMPTION OF LIABILITIES			4
	2.1	Liabilities to be Assumed		4
	2.2	Liabilities Not to be Assumed		5
	2.3	Taxes Arising from Transaction		5
	2.4	Income and Franchise Taxes		5
	2.5	Product, Medical Malpractice and Service Liability		5
	2.6	Litigation Matters		5
	2.7	Infringements		5
	2.8	Transaction Expenses		5
	2.9	Liability For Breach		5
	2.10	Liabilities to Affiliates		6
	2.11	Violation of Laws or Orders		6

3.	PURCHASE PRICE - PAYMENT			6
	3.1	Purchase Price Consideration		6
	3.2	Closing Consideration		6
	3.3	Payment of Closing Consideration		6
	3.4	Closing Time Adjustments		7
	3.5	Promissory Note and Guaranty		9
	3.6	Allocation of Purchase Price		9
	3.7	Escrow Agreement and Transition Management Services		9

4.	REPRESENTATIONS AND WARRANTIES OF SELLERS			10
	4.1	Organization; Authority		10
	4.2	No Violation		10
	4.3	Appraisal Reports		11
	4.4	Compliance With Laws and Orders		11
	4.5	Title to and Condition of Properties		12
	4.6	Insurance		13
	4.7	Contracts and Commitments		14
	4.8	Employee Benefit Plans		16
	4.9	Intellectual Property		16
	4.10	Product Warranty and Product Liability		16
	4.11	Assets Necessary to Business		17
	4.12	No Brokers or Finders		17
	4.13	Financial Statements		17
	4.14	Conduct Since Date of Recent Balance Sheet		17
	4.15	Company and Affiliates		18

MIA 300140-7.064049.0030			-i-

TABLE OF CONTENTS
(continued)
			Page


	4.16	Liabilities	18
	4.17	Accounts Receivable	19
	4.18	Environmental Matters	19
	4.19	Personnel	20
	4.20	Bank Accounts	21
	4.21	Tax Matters	21
	4.22	Litigation	22
	4.23	Health Care Compliance	22
	4.24	Fraud and Abuse	22
	4.25	Rates and Reimbursement Policies	23
	4.26	Medical Staff	23
	4.27	Medical Providers	24
	4.28	Third-party Payors	25
	4.29	Disclosure	25
	4.30	Corporate Practice or Fee Splitting	25
	4.31	Staff Privileges	25
	4.32	Securities Representation	25
	4.33	HIPAA	27
	4.34	Improper and Other Payments	27
	4.35	Medical Waste	27
	4.36	Transfer of Custody of Patient Medical Records	28
	4.37	Certain Representations with respect to the Centers	28

5.	REPRESENTATIONS AND WARRANTIES OF THE PURCHASER		28
	5.1	Organization of PainCare and Subsidiary	29
	5.2	Authorization of Transaction	29
	5.3	PainCare Shares	29
	5.4	No Conflicts; Consents	29
	5.5	Consents	30
	5.6	Brokers	30
	5.7	Full Disclosure	30

6.	RESTRICTIVE COVENANTS		30
	6.1	Restricted Period	30
	6.2	Confidentiality, Press Releases, and Public Announcements	32
	6.3	Bulk Sales Compliance	33

7.	FURTHER COVENANTS OF SELLERS		33
	7.1	Access to Information and Records	33
	7.2	Maintain Organization	33
	7.3	No Breach	33
	7.4	Maintenance of Insurance	33

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TABLE OF CONTENTS
(continued)
			Page


	7.5	Consents	33
	7.6	Other Action	33
	7.7	Disclosure	34

8.	CONDITIONS PRECEDENT TO PURCHASER’S OBLIGATIONS		34
	8.1	Representations and Warranties True on the Closing Time	34
	8.2	Compliance With Agreement	34
	8.3	Absence of Litigation	34

9.	CONDITIONS PRECEDENT TO SELLERS’ OBLIGATIONS		35
	9.1	Representations and Warranties True on the Closing Time	35
	9.2	Compliance With Agreement	35

10.	CLOSING		35
	10.1	Closing	35
	10.2	Documents to be Delivered by the Sellers	36
	10.3	Documents to be Delivered by the Purchaser	37

11.	POST-CLOSING COVENANTS		37
	11.1	General	37
	11.2	Option Agreement	38
	11.3	Tax Returns	38
	11.4	Transition	38
	11.5	Litigation Support	38

12.	REGISTRATION		38

13.	SURVIVAL AND INDEMNIFICATION		38
	13.1	Survival of Representations and Warranties	38
	13.2	Indemnification Provisions for the Benefit of PainCare and the
		Subsidiary	39
	13.3	Indemnification Provisions for the Benefit of the Sellers	39
	13.4	Matters Involving Third Parties	39
	13.5	Limitation	40

14.	MISCELLANEOUS		41
	14.1	Disclosure Schedules	41
	14.2	Assignment; Parties in Interest	41
	14.3	Notice	41
	14.4	Entire Agreement	42
	14.5	Counterparts	42

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TABLE OF CONTENTS
(continued)
			Page


	14.6	Headings	43
	14.7	Governing Law; Jurisdiction	43
	14.8	Attorneys’ Fees	43
	14.9	Amendments and Waivers	43
	14.10	Severability	43
	14.11	Expenses	43
	14.12	Further Assurances	43
	14.13	Construction	44
	14.14	Survival	44
	14.15	Incorporation of Exhibits and Schedules	44

15.	DEFINITIONS		44

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ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is entered into effective the 26th day of September, 2005 (the “Execution Date”), by and among MARK H. COLEMAN, M.D. (“Dr. Coleman”), PRABAAL DEY, M.D. (“Dr. Dey”), MARC A. LOEV, M.D. (“Dr. Loev”), LESTER A. ZUCKERMAN, M.D. (“Dr. Zuckerman”), CENTER FOR PAIN MANAGEMENT ASC, LLC, a Maryland limited liability company (the “Company”), PAINCARE HOLDINGS, INC., a Florida corporation (“PainCare”) and its wholly owned subsidiary, PAINCARE SURGERY CENTERS III, INC., a Florida corporation (the “Subsidiary”). Dr. Dey, Dr. Loev, Dr. Coleman and Dr. Zuckerman are sometimes referred to herein as the “Members.” The Company and the Members are sometimes referred to herein as the “Sellers” and PainCare and the Subsidiary are sometimes referred to herein as the “Purchaser.” The Purchaser and the Sellers are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

W I T N E S S E T H:

A. The Company owns and operates four (4) Medicare certified and state licensed ambulatory surgical centers that are located at the following locations: (i) 11921 Rockville Pike, Suite 505, Rockville, Maryland 20852; (ii) 3901 Greenspring Avenue, Suite 304, Baltimore, Maryland 21211; (iii) 1150 Professional Court, Suite L, Hagerstown, Maryland 21740; and (iv) 305 Hospital Drive, Suite 304, Glen Burnie, Maryland 21061 (collectively, the “Centers”).

B. The Company desires to sell and the Purchaser desires to buy substantially all of the assets, properties, rights, and claims of the Company and the Centers, which assets, properties, rights and claims shall collectively be referred to herein as the “Business.”

C. The Members own one hundred percent (100%) of the total issued and outstanding membership interests of the Company, free and clear of any and all Liens (as defined in Section 4.5(a) below).

NOW THEREFORE, in consideration of the mutual promises and covenants herein contained and the sum of ten dollars ($10.00) and other good and valuable consideration paid by the Purchaser to the Company, the receipt and sufficiency of which are hereby acknowledged by the Company, it is mutually covenanted and agreed by the parties hereto as follows:

1. PURCHASE AND SALE OF ASSETS

1.1 Assets to be Transferred. Subject to the terms and conditions of this Agreement, on the Closing Time (as defined in Section 10.1 below), and except as otherwise stated, the Subsidiary shall purchase, and the Company shall sell, transfer,

convey, assign, and deliver to Subsidiary, all of the Company’s Business rights, claims and assets (of every kind, nature, character and description, whether real, personal or mixed, tangible or intangible, accrued, contingent or otherwise, and wherever situated other than the Excluded Assets specified in Section 1.2 below) which are used, held for use or acquired or developed for use by the Company in the Business, or developed in the course of conducting the Business or by Persons employed by the Company in the Business (collectively the “Purchased Assets”), free and clear of any and all Liens other than those Liens set forth on Disclosure Schedule 4.5(a) . The Purchased Assets shall include, without limitation, all the following assets or rights of the Company, to the extent so used, held, acquired or developed in the Business:

(a) Cash and Cash Equivalents and Accounts Receivable. All cash, cash equivalents, and the Accounts Receivable of the Company as of the Closing Time, including without limitation those described in Disclosure Schedule 1.1(a);

(b) Personal Property. All of the Company’s rights in, to and under all, instruments, equipment, furniture, machinery and other items of tangible personal property including, without limitation, the personal property leases described in the Disclosure Schedule 1.1(b);

(c) Inventory. All inventories including, without limitation, supplies, merchandise and durable medical equipment, together with related packaging and delivery materials (collectively the “Inventory”);

(d) Books and Records. All books and records of the Company, including without limitation, all credit records, payroll records, computer records, computer programs, contracts, agreements, operating manuals, schedules of assets, correspondence, books of account, files, papers, books and all other public and confidential business records but excluding the Company’s corporate minute books and tax records (together the “Business Records”), whether such Business Records are in hard copy form or are electronically or magnetically stored;

(e) Intellectual Property. The Company’s interest in all of its Intellectual Property. As used herein, the term “Intellectual Property” shall mean and include: (i) all trademark rights, business identifiers, trade dress, logos, service marks, trade names and brand names, all registrations thereof and applications therefore and all goodwill associated with the foregoing; (ii) all copyrights, copyright registrations and copyright applications, and all other rights associated with the foregoing and the underlying works of authorship; (iii) all patents and patent applications, and all international proprietary rights associated therewith; (iv) all contracts or agreements granting any right, title, license or privilege under the intellectual property rights of any third party; (v) all inventions, mask works and mask work registrations, know-how, discoveries, improvements, designs, trade secrets, shop and royalty rights, employee covenants and agreements respecting intellectual property and non-competition and all other types of intellectual property; (vi) all computer software (including all data and related documentation); (vii) all other proprietary rights; (viii) all copies and tangible

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embodiments of the foregoing (in whatever form or medium); and (ix) all claims for infringement or breach of any of the foregoing;

(f) Contracts. All of the Company’s rights in, to and under all contracts, agreements, license agreements, purchase orders and sales orders (hereinafter “Contracts”) of the Company as it relates to the Business (third party payors, licenses, etc.). To the extent that any Contract for which assignment to Subsidiary is provided herein is not assignable without the consent of another party, this Agreement shall not constitute an assignment or an attempted assignment thereof if such assignment or attempted assignment would constitute a breach thereof. The Sellers and the Purchaser agree to use their reasonable best efforts (without any requirement on the part of the Purchaser to pay any money or agree to any change in the terms of any such Contract) to obtain the consent of such other Party to the assignment of any such Contract to the Subsidiary in all cases in which such consent is or may be required for such assignment. If any such consent shall not be obtained prior to the Closing Time, the Sellers agree to cooperate with the Purchaser in any reasonable arrangement designed to provide for the Purchaser the benefits intended to be assigned to Subsidiary under the relevant Contract, including enforcement at the cost and for the account of the Purchaser of any and all rights of the Sellers against the other Party thereto arising out of the breach or cancellation thereof by such other Party or otherwise. If and to the extent that such arrangement cannot be made, the Purchaser, upon notice to the Sellers, shall have no obligation pursuant to Section 2.1 or otherwise with respect to any such Contract and any such Contract shall not be deemed to be a Purchased Asset hereunder;

(g) Computer Software. To the extent transferable by the Company, all computer programs and other software, documentation and related property and information of the Company;

(h) Licenses; Permits. To the extent transferable by the Company, all franchises, licenses, permits, certificates, approvals and other governmental authorizations necessary to own and operate any of the Purchased Assets, a complete and correct list of which is set forth in the Disclosure Schedule 1.1(h) (the “Licenses”);

(i) General Intangibles. All causes of action arising out of occurrences before or after the Closing Time, and other intangible rights and assets;

(j) Telephone Numbers. All of the Company’s right, title and interest in, to and under all telephone numbers used in connection with its Business, including all extensions thereto;

(k) Warranties. All rights in, to and under all representations, warranties, covenants and guaranties made or provided by third parties to or for the benefit of the Company with respect to any of the Purchased Assets;

(l) Prepaids. All of the Company’s prepaid expenses, prepaid insurance, deposits and other similar items (“Prepaid Items”);

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(m) Leasehold Improvements. All rights, titles and interests in, to and under all structures, fixtures, landings, constructions in progress, improvements, betterments, installations, and additions constructed or located on or attached or affixed to the leasehold estates conferred on the Company under or by virtue of, all real property lease and sublease agreements (such real property lease and sublease agreements are hereinafter referred to as “Real Property Leases” which are described on the Disclosure Schedule 1.1(m));

(n) Patient Information. All of the patient lists, ledgers and information (“Patient Information”) relating to past and current patients of Seller (a “Patient” or the “Patients”);

(o) Other Assets. All other tangible and intangible assets, properties, rights, and claims in, to or arising from the business of the Business; and

(p) Facility Agreements. All of the Company’s and Business’ contracts, agreements and understandings (collectively, the “Facility Agreements”) with any party regarding the provision of ambulatory surgical services to patients, including without limitation, all the Facility Agreements with health maintenance organizations, preferred provider organizations, third-party payors, independent practice associations, physician hospital organizations, management services organizations, employers, labor unions, hospitals, clinics, ambulatory surgery centers, and Medicare and Medicaid intermediaries, (a copy of each of the Facility Agreements has been provided to Purchaser and is described on the Disclosure Schedule 1.1(p)) .

1.2 Excluded Assets. “Excluded Assets” shall mean those assets listed on the Disclosure Schedule 1.2.

2. ASSUMPTION OF L