ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT dated as of May 19, 2005, is by and between MOMS PHARMACY, INC., a California corporation ( “Buyer” ), and ORIS MEDICAL SYSTEMS, INC., a Washington corporation ( “Seller” ).

A.   Seller is the licensee under a Distribution and License Agreement effective as of March 1, 2005 with Ground Zero Software, Inc. ( “Ground Zero” ), a copy of which is attached hereto as Exhibit A (the “Ground Zero Agreement” ), relating to, among other things, a computer software program known as LabTracker - HIV™ ( “LabTracker” ), and has developed and owns or uses other intellectual property, including the Oris System.

B.   Buyer desires to purchase and Seller desires to sell, transfer and deliver to Buyer Seller’s right title and interest in and to the Ground Zero Agreement and certain intellectual property, and Buyer desires to have an option to purchase and Seller desires to grant to Buyer an option to purchase certain other assets of Seller, on the terms and conditions set forth in this Agreement.

The parties agree as follows:

The terms defined in this Article I, whenever used herein (including the schedules hereto, unless otherwise defined therein), shall have the following meanings:

1.1    “ 1934 Act ” shall have the meaning set forth in Section 2.3(c)(ii) of this Agreement.

1.2    “ Accounting ” shall have the meaning set forth in Section 2.4.

1.3    “ Acquired Assets ” shall mean all of Seller’s right, title and interest in and to the Space Lease, the Intellectual Property and all related goodwill, customer lists, books, records, files and other information in tangible form specifically pertaining to any of the Intellectual Property.

1.4    “ Affiliate ” shall mean any Person that directly or indirectly controls or owns, is controlled by or owned by or is under common control or ownership with another Person.

1.5    “ Allion ” shall mean Allion Healthcare, Inc., a Delaware corporation.

1.6    “ Assets ” shall mean the Acquired Assets and, to the extent Buyer exercises the Option, the Option Assets.

1.7    “ Business Day ” shall mean any day other than a Saturday, Sunday or other day on which banks are closed or are authorized to be closed in New York, New York.

1.8    “ Buyer Claimant ” shall have the meaning set forth in Section 8.2 of this Agreement.

1.9    “ Change in Control ” shall have the meaning set forth in Section 2.3(c)(ii) of this Agreement.

1.10    “ Closing Date ” shall have the meaning set forth in Section 3.1 of this Agreement.

1.11    “ Closing ” shall mean the closing of the purchase and sale of the Assets, as contemplated by this Agreement.

1.12    “ Code ” shall mean the Internal Revenue Code of 1986, as amended.

1.13    “ Contract ” shall have the meaning set forth in Section 4.9 of this Agreement.

1.14    “ Earnout Payment ” shall have the meaning set forth in Section 2.2(b) of this Agreement.

1.15    “ Earnout Period ” shall mean the period beginning on the Closing Date and continuing until the earlier of the date that is forty (40) months thereafter, the date that the Maximum Earnout Payment is made, or the date that the payment under Section 2.3(a) or 2.3(b)(ii)   is made.

1.16    “ Employee Benefit Plan ” means any “employee benefit plan” within the meaning of Section 3(3) of ERISA, and any other bonus, profit sharing, compensation, pension, severance, deferred compensation, fringe benefit, insurance, welfare, medical, post-retirement health or welfare benefit, medical reimbursement, health, life, stock option, stock purchase, tuition refund, service award, company car, scholarship, relocation, disability, accident, sick pay, sick leave, vacation, termination, individual employment, executive compensation, incentive, bonus, commission, payroll practices, retention or other plan, agreement, policy, trust fund or arrangement, whether written or unwritten, and whether maintained, sponsored or contributed to by Seller or any entity that would be deemed a “single employer” with Seller under Section 414(b), (c), (m) or (o) of the Code or Section 4001(a)(14) of ERISA (an “ERISA Affiliate”) on behalf of any of the current, former or retired employees of Seller or its beneficiaries or with respect to which Seller or any ERISA Affiliate has or has had any obligation on behalf of any such employee or beneficiary. 

1.17    “ Encumbrance ” shall mean any lien, charge, encumbrance, option, right of first refusal, security interest, easement, obligation or claim or other third party right of any kind.

1.18    “ Environment ” shall mean any surface or subsurface physical medium or natural resource, including, air, land, soil, surface waters, ground waters, stream and river sediments, and biota.

1.19    “ Environmental Laws ” shall mean any federal, state, local or foreign law, rule, regulation, ordinance, code, order or judgment (including the common law and any judicial or administrative interpretations, guidances, directives or opinions) relating to the injury to, or the pollution or protection of human health and safety or the Environment.

1.20    “ Environmental Liabilities ” shall mean any claims, judgments, damages (including punitive damages), losses, penalties, fines, liabilities, encumbrances, liens, violations, costs and expenses (including attorneys and consultants fees) of investigation, remediation or defense of any matter relating to human health, safety or the Environment of whatever kind or nature by any party, entity or authority, (a) which are incurred as a result of (i) the existence of Hazardous Substances in, on, under, at or emanating from any real property presently or formerly owned or operated by Seller or any of its Affiliates, (ii) the offsite transportation, treatment, storage or disposal of Hazardous Substances generated by Seller or any of its Affiliates, or (iii) the violation of any Environmental Laws or (b) which arise under the Environmental Laws.

1.21    “ Equipment ” shall mean all items of machinery, equipment, computers, tools, parts, furniture and fixtures set forth on Schedule 4.6 and all other items of machinery, equipment, computers, tools, parts, furniture and fixtures owned by Seller.

1.22    “ ERISA Affiliate ” shall have the meaning set forth in the definition of “Employee Benefit Plan”.

1.23    “ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder.

1.24    “ Excluded Assets ” shall have the meaning set forth in Section 2.1(b) of this Agreement.

1.25    “ Excluded Liabilities ” shall have the meaning set forth in Section 2.1(c) of this Agreement.

1.26    “ GE ” shall have the meaning set forth in Section 9.7 of this Agreement.

1.27    “ Ground Zero Agreement ” shall have the meaning set forth in Recital A.

1.28    “ Ground Zero Payment ” shall mean (a) twenty-five (25%) of any Earnout Payment due to Seller for Slots filled through University California San Diego, Garden State Infectious Disease Associates, Fresno Community Medical Center, Wellspring Medical Group, University of Miami Medical Center, and University of South Florida Medical Center; and (b) except as stated in (a), fifteen percent (15%) of any Earnout Payment due to Seller hereunder.

1.29    “ Hazardous Discharge ” shall mean any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, migrating, disposing or dumping (including the movement of any material through or in air, soil, surface or groundwater) of Hazardous Substances, whether on, off, under or from the Real Property or any other real property owned, operated, leased or used at any time by Seller or its predecessors.

1.30    “ Hazardous Substances ” shall mean petroleum, petroleum products, petroleum-derived substances, radioactive materials, hazardous wastes, polychlorinated biphenyls, lead based paint, urea formaldehyde, asbestos or any materials containing asbestos, and any materials, wastes or substances regulated or defined as or included in the definition of “hazardous substances,”“hazardous materials,”“hazardous constituents,”“toxic substances,”“pollutants,”“contaminants” or any similar denomination intended to classify substances by reason of toxicity, carcinogenicity, ignitability, corrosivity or reactivity under any Environmental Laws.

1.31    “ HIPAA ” shall have the meaning set forth in Section 4.9 of this Agreement.

1.32    “ Included Liabilities ” shall have the meaning set forth in Section 2.1(a)(ii) of this Agreement.

1.33    “ Indemnitee ” and “ Indemnitor ” shall have the meanings set forth in Section 8.4(a) of this Agreement.

1.34    “ Initial Payment ” shall have the meaning set forth in Section 2.2(a) of this Agreement.

1.35    “ Intellectual Property ” means (a) all United States and foreign patents and pending patent applications, trademarks, service marks and trade names held by Oris, including the marks and patents described on Schedule 4.8 of this Agreement, and copyrights, and registrations and pending applications, computer programs and software, research and development, know-how, inventions and other proprietary processes and information of any kind owned or licensed by Oris, and all software necessary or desirable to run Equipment owned or licensed by Oris, all as set forth on Schedule 4.8 of this Agreement; (b) all copies and tangible embodiments of the foregoing; and (c) the right to sue for misappropriation or infringement of any of the foregoing occurring after the Closing.

1.36    “ IPO ” means an underwritten public offering of any shares of Allion’s common stock resulting in aggregate proceeds to Allion in excess of $25 million.

1.37    “ IRS ” shall mean the Internal Revenue Service.

1.38    “ LabTracker ” shall have the meaning set forth in Recital A.

1.39    “ Losses ” shall have the meaning set forth in Section 8.2 of this Agreement.

1.40    “ Material Adverse Effect ” shall mean any material adverse effect, individually or in the aggregate, on the condition (financial or otherwise), business, assets, operations of Seller or the Assets.

1.41    “ Maximum Earnout Payment ” shall have the meaning set forth in Section 2.2(b).

1.42    “ Multiemployer Plan ” shall have the meaning set forth in Section 4.11(c).

1.43    “ Multiple Employer Plan ” shall have the meaning set forth in Section 4.11(c).

1.44    “ Option Assets ” shall mean all of Seller’s right, title and interest in and to all of its assets and properties, whether tangible or intangible, other than the Acquired Assets, and including, without limitation, the Contracts, the Equipment, inventory, supplies, packaging and shipping materials, tenant improvements, manufacturers warranties and all other information pertaining to the Option Assets.

1.45    “ Option ” shall mean Buyer’s right to, at the Closing, acquire any or all of the Options Assets, for no additional consideration paid to Seller or any other Person, upon ten (10) Business Days’ prior written notice to Seller at any time prior to the Closing of the identity of the particular Option Assets as to which Buyer has determined to exercise the Option.

1.46    “ Oris System ” shall mean the electronic prescribing system known as the “Oris System”, which system is comprised of hardware, software and firmware components.

1.47    “ Person ” shall mean any natural person, corporation, professional corporation, limited or limited liability partnership, general partnership, joint venture, association, joint-stock company, limited liability company, company, trust, bank, trust company, land trust, business trust or other organization, whether or not a legal entity, and any governmental unit or agency or political subdivision thereof.

1.48    “ Projected Future Earnout Payments ” shall have the meaning set forth in Section 2.3(c)(i) of this Agreement.

1.49    “ Purchase Price ” shall have the meaning set forth in Section 2.2(b) of this Agreement.

1.50    “ Quarterly Slots ” shall have the meaning set forth in Section 2.2(c)(i) of this Agreement.

1.51    “ Real Property ” shall mean the real property leased pursuant to the Space Lease.

1.52    “ Related Party ” shall have the meaning set forth in Section 4.13 of this Agreement.

1.53    “ Restricted Period ” and “ Restricted Territory” shall have the meanings set forth in Section 7.1 of this Agreement.

1.54    “Seller Claimant ” shall have the meaning set forth in Section 8.3 of this Agreement.

1.55    “ Signing Shareholders ” shall have the meaning set forth in Section 4.2 of this Agreement.

1.56    “ Slot(s) ” shall mean any natural person who is or has been a patient of a physician customer of Buyer and/or Affiliates on or after the date hereof where the physician customer is or has utilized LabTracker and/or the Oris System and such patient has chosen to have his/her prescription filled by Buyer or an Affiliate of Buyer. “Slots” shall include each individual who has ceased to be a patient of a customer of Buyer for as long as that individual’s prescription continues to be refilled by any wholesale, retail or internet pharmacy operated or owned by Buyer or an Affiliate of Buyer (not taking into consideration such natural persons that have ceased utilizing a pharmacy owned or operated by Allion on the date as of which the number of Slots is calculated).

1.57    “ Space Lease ” means that certain space lease by and between Seller, as tenant, and Janez Properties, as landlord, to be entered into prior to the Closing.

1.58    “ Taxes ” (or “Tax” where the context requires) shall mean all federal, state, local, foreign or other taxes, duties, or similar charges (including, without limitation, income (whether net or gross), profits, premium, estimated, excise, sales, use, environmental (including taxes under Code Section 59A), occupancy, franchise, license, value added stamp, windfall profits, social security, gross receipts, franchise, ad valorem, severance, capital levy, production, transfer, gains, withholding, occupation, employment and payroll related and property taxes, alternative or add-on, minimum or estimated, import and export duties and other governmental charges and assessments) imposed by any taxing or governmental authority on or payable by Seller or any other party with respect to the income, operations, products, assets or properties of Seller, whether attributable to statutory or nonstatutory rules and whether or not measured in whole or in part by net income, and including interest, additions to tax or interest, and penalties with respect thereto, and including expenses associated with contesting any proposed adjustment related to any of the foregoing.

2.1       Purchase of the Assets . 

(a)    Upon the terms and subject to the conditions hereof, and upon the basis of the agreements, representations and warranties contained in, and the schedules to, this Agreement:

(i)    At the Closing, Seller shall sell, transfer, assign, convey and deliver to Buyer, and Buyer shall purchase and acquire from Seller the Assets, free and clear of all Encumbrances; and

(ii)    At the Closing, Seller shall assign, and Buyer shall assume and agree to perform, pay and discharge all obligations under or associated with the Assets which accrues on or after the Closing Date, except the Excluded Liabilities (the “Included Liabilities” ).

(b)    Notwithstanding anything contained in this Agreement, Seller shall not sell, transfer, assign, convey or deliver to Buyer, and Buyer shall not purchase or acquire from Seller, any of the assets of Seller listed on Schedule 2.1(b) (the “Excluded Assets” ).

(c)    Except as set forth in Section 2.1(a)(ii) above, Buyer shall not be required to assume, pay, fulfill, perform or otherwise discharge any liabilities or obligations of Seller, including of Seller’s business, of any kind whatsoever (the “Excluded Liabilities” ), and Seller shall pay, fulfill, perform and discharge such Excluded Liabilities. The Excluded Liabilities include, without limitation:

(i)    Legal, accounting, brokerage, finder’s fees, Taxes or other expenses incurred by Seller or any Affiliate, including, without limitation, in connection with this Agreement or the consummation of the transactions contemplated hereby;

(ii)    Any intercompany debt or other liability or obligation of any nature between Seller and any past or present Related Party of Seller;

(iii)    Liabilities or obligations incurred by Seller or any Affiliate of Seller after the Closing;

(iv)    Any obligation or liability relating to any litigation or any claim arising out of any dispute, the elements of which occurred prior to the Closing, whether or not listed on any schedule hereto and regardless of whether accruing prior to or subsequent to the Closing;

(v)    Any liability for any Taxes accrued to or incurred by Seller or any Affiliate of Seller or relating to operations, products or assets of Seller or any Affiliate of Seller or arising as a consequence of the transactions contemplated hereby;

(vi)    Any liability or costs (including, without limitation, costs of remediation) arising out of or relating to a Hazardous Discharge or the release, discharge or disposal of any solid wastes or the handling, storage, use, transportation or disposal of any of the foregoing, as these terms are defined by the Environmental Laws in, on, under or from facilities of Seller at any time prior to the Closing, regardless of whether such liability or costs arise before or after Closing and whether or not in breach of any representation or warranty under this Agreement; provided that this Section shall not create any liability for Seller that does not exist under the Environmental Laws;

(vii)    Any liability or obligation to employees, government agencies or other third parties in connection with any option plan, pension plan, other ERISA plan or other Employee Benefit Plan, and any health, dental or life insurance benefits, whether or not insured and whether or not disclosed on any schedule hereto;

(viii)    Any liability or obligation under any contract or commitment that is not a Contract assigned to Buyer hereunder, or any default by Seller in respect of such contract or other commitment or obligation of Seller;

(ix)    Any liability or obligation to employees in the nature of accrued payroll, vacation, holiday or sick pay, worker’s compensation relating to the period prior to the Closing, whether or not listed on any schedule hereto and regardless of whether accruing prior or subsequent to the Closing; and

(x)    Any trade debt, accounts payable, notes payable and bank debts.

2.2       Purchase Price .

(a)    At the Closing Date, in consideration for the Assets, Buyer shall: (i) pay to Seller an amount in cash equal to Nine Hundred Thousand Dollars ($900,000) (the “Initial Payment” ); and (ii) Seller shall pay fifteen percent (15%) of the Initial Payment less deductions for direct out of pocket expenses of Seller related to the transactions contemplated by this Agreement to Ground Zero. On the date hereof, Buyer shall pay to Seller One Hundred Thousand Dollars ($100,000) and Seller shall pay fifteen percent (15%) of such payment less deductions for direct out of pocket expenses of Seller related to the transactions contemplated by this Agreement to Ground Zero.

(b)    In addition, in consideration for the Assets, Buyer shall pay to Seller an amount equal to (i) (A) One Thousand Dollars ($1,000) multiplied by (B) (x) the number of Slots during the Earnout Period, minus (y) the number of Slots immediately prior to the date hereof, minus (ii) the Ground Zero Payment (the “Earnout Payment” and, together with the Initial Payment, the “Purchase Price” ), payable at such times as specified in Section 2.2(c), up to a maximum earnout payment of Forty Million Dollars ($40,000,000) less the cumulative Ground Zero Payments (the “Maximum Earnout Payment” ).

(c)    The Earnout Payments shall be paid as follows:

(i)    Within ten (10) days after the end of each calendar quarter, commencing with the first full calendar quarter immediately following the date hereof, the Buyer shall calculate the aggregate number of Slots on such date minus the number of Slots immediately prior to the date hereof (the “Quarterly Slots” ).

(ii)    Within fifteen (15) days after the end of each such calendar quarter, Buyer shall pay to Seller a portion of the Earnout Payment equal to an amount determined by multiplying One Thousand Dollars ($1,000) by the number of Quarterly Slots, less (A) any Earnout Payments previously made by Buyer to Seller and less (B) the currently owed Ground Zero Payment.

(iii)    Buyer and Seller acknowledge that it is their intent to pay the Earnout Payment based on the increase in the aggregate number of Slots from quarter end to quarter end during the Earnout Period and up to a maximum of the Maximum Earnout Payment.

(iv)    Subject to Section 2.2(b)(v), the Earnout Payments shall be made by Buyer in readily available U.S. dollars, by check or by wire transfer.

(v)    If Buyer would like to pay part of any Earnout Payment in Allion’s common stock, Buyer shall notify the payee of such Earnout Payment in stock at least five (5) Business Days before the stock grant. Further, Buyer may only pay up to a maximum of eighty (80%) of any Earnout Payment in Allion’s common stock and only if the following conditions are met:

(A)    Allion’s stock is regularly traded on Nasdaq or a U.S. national securities exchange;

(B)    Allion’s stock is valued as the amount of the closing price of Allion’s stock on Nasdaq or a U.S. national securities exchange for the immediately preceding Business Day prior to the date that such stock is granted as partial payment of the Earnout Payment;

(C)    The common stock of Allion granted as part of the Earnout Payment is freely negotiable and tradable on Nasdaq or a U.S. national securities exchange, except during the period from the date of the IPO until one hundred eighty one (181) calendar days thereafter.

2.3       Buy-Out .

(a)    If there is a Change in Control at any time prior to the twenty four (24) month anniversary of the date hereof and the number of Slots is less than fifteen thousand (15,000), Buyer shall pay the Earnout Payment contemporaneously with the Change in Control, in an amount equal to Fifteen Million Dollars ($15,000,000) less any Earnout Payments made by Buyer to Seller prior to the date of the Change in Control.

(b)    If there is a Change in Control at any time prior to the twenty four (24) month anniversary of the date hereof and the number of Slots is equal or greater than fifteen thousand (15,000); or there is a Change in Control on or after the twenty four (24) month anniversary date of the date hereof, then either of following shall apply, at the Buyer’s sole and absolute discretion (provided, however that either of (i) or (ii) must be chosen by Buyer):

(i)    (A) Buyer’s rights and obligations under this Agreement shall be assumed by Allion, Buyer’s acquirer, Buyer’s successor or other party resulting from a Change in Control and the Agreement shall be otherwise continued even after any Change in Control (by operation of law or otherwise) for the duration of the full Earnout Period; and (B) the historical budgeted amounts provided to the Assets and Seller’s business acquired hereunder shall be maintained at substantially the same level for the duration of the full Earnout Period; or

(ii)    As of the date of the Change in Control, Buyer shall pay Seller an amount equal to fifty percent (50%) of the Projected Future Earnout Payments; provided that in no event shall the payment under this Section exceed the Maximum Earnout Payment.

(c)    For purposes of this Agreement:

(i)    “Projected Future Earnout Payments” shall mean (A) the aggregate number of Slots as of the date of the Change in Control, divided by (B) the number of full and partial months from the date hereof through the date of the Change in Control (the “Accrued Months”), multiplied by (C) the difference of forty (40) minus the Accrued Months.

(ii)    “Change in Control” shall mean: (A) a complete liquidation or dissolution of Buyer or the sale or other disposition of all or substantially all of the Assets (in one transaction or a series of related transactions), except where Allion or another wholly-owned subsidiary of Allion is the resulting owner of the Assets; (B) the acquisition (or series of related acquisitions) by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “1934 Act”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 50% or more of either of (I) the then outstanding shares of common stock of Allion or (II) the combined voting power of the then outstanding voting securities of Allion entitled to vote generally in the election of directors; (C) a reorganization, merger or consolidation involving Buyer or Allion (whether or not Buyer or Allion is the surviving entity), in each case unless the result is that the holders of Allion’s outstanding securities immediately prior to the consummation of such transaction hold voting securities in excess of fifty percent (50%) of the voting power of Allion or the surviving or resulting entity, as the case may be or the resulting entity is another wholly-owned subsidiary of Allion.

2.4       Accounting . Each Earnout Payment or Buy-Out Payment shall be accompanied with a true and accurate accounting of the calculations to be performed by Buyer pursuant to this Article II, all amounts due Ground Zero and Seller (and/or Seller’s shareholders) (the “Accounting” ). The Accounting shall be signed by the chief financial officer of Buyer or Allion certifying that the Accounting is true and accurate.

2.5       Allocation of Purchase Price . The Purchase Price for the Assets shall be allocated for federal, state, local and foreign tax purposes by each party among the Assets as mutually agreed upon by Buyer and Seller and set forth as Exhibit 2.5. For all pertinent tax purposes, each party hereto shall report the purchase and sale provided for, and with the characterization given these transactions in this Agreement, to taxing authorities on a basis consistent with such allocation, and each party agrees not to take a position inconsistent with such allocation. After the Closing, Seller and Buyer each shall timely file form 8594 with the IRS detailing this allocation. Any future adjustments to this allocation shall be agreed upon by the parties.

2.6       Nonassignable Contracts . To the extent that the assignment of any Contract to be assigned to Buyer pursuant to this Agreement shall require the consent of any other Person, this Agreement shall not constitute a contract to assign the same if an attempted assignment would constitute a breach thereof. Seller shall use all reasonable efforts, and Buyer shall cooperate where appropriate, to obtain any consent necessary to any such assignment where such consent is requested by Buyer. If any such consent is not obtained, Seller shall cooperate with Buyer in any reasonable arrangement designed to provide for Buyer the benefit, monetary or otherwise, of the Contracts, including enforcement of any and all rights of Seller or Seller’s business against the other party thereto arising out of a breach or cancellation thereof by such other party or otherwise.

3.1       The Closing . Subject to the terms and conditions of this Agreement, the Closing shall occur on the third Business Day after the consummation of an IPO (the “Closing Date” ), at the offices of Buyer’s counsel, Nixon Peabody LLP, 990 Stewart Avenue, Garden City, New York and Seller’s counsel, Hooper, Lundy & Bookman, Inc., 1875 Century Park East, Los Angeles, California, with such coordination as is necessary to facilitate a remote closing. The parties agree that the Closing may occur upon faxed signatures with originals to be provided as soon as practicable thereafter.

3.2       Obligations of Seller . At the Closing, Seller shall deliver to Buyer the following:

(a)    A bill of sale, in the form attached hereto as Exhibit 3.2(a), duly executed by Seller.

(b)    Copies of the resolutions of the Board of Directors and shareholders of Seller certified by the secretary or assistant secretary of Seller, which resolutions shall approve and authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby and which shall be attached hereto as Exhibit 3.2(b);

(c)    All consents to the assignment to Buyer of the Space Lease, in the form of Exhibit 3.2(c)(i), and the Ground Zero Agreement, in the form of Exhibit 9.6, and such other consents as may be mutually agreed upon by the parties prior to the Closing and attached hereto as Exhibit 3.2(c)(ii);

(d)    The independent contractor agreement between Pat Iantorno and Buyer, in form mutually satisfactory to such parties and in the form attached hereto as Exhibit 3.2(d);

(e)    The independent contractor agreement between Linda Lyon and Buyer, in form mutually satisfactory to such parties and in the form attached hereto as Exhibit 3.2(e);

(f)    The severance agreement by and among James Holden, Seller and Buyer, attached hereto as Exhibit 3.2(f);

(g)    Such other instruments of assignment and conveyance as may be necessary or appropriate to fully and effectively transfer to Buyer the Assets; and

(h)    All of the other documents and instruments required to be delivered by Seller.

3.3       Obligations of Buyer .  At the Closing, Buyer shall deliver to Seller the following:

(a)    The Initial Payment;

(b)    Copies of the resolutions of the Board of Directors of Buyer certified by the secretary or assistant secretary of Seller, which resolutions shall approve and authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, attached hereto as Exhibit 3.3(b);

(c)    The independent contractor agreement between Pat Iantorno and Buyer, in form mutually satisfactory to such parties and in the form attached hereto as Exhibit 3.2(d);

(d)    The independent contractor agreement between Linda Lyon and Buyer, in form mutually satisfactory to such parties and in the form attached hereto as Exhibit 3.2(e);

(e)    The severance agreement by and among James Holden, Seller and Buyer, attached hereto as Exhibit 3.2(f); and

(f)    All of the other documents and instruments required to be delivered by Buyer.

Seller hereby represents and warrants to Buyer, with such qualifications and limitations as set forth in the Disclosure Schedules, as of the date hereof and as of the Closing, as follows:

4.1      Organization and Qualification . Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Washington, with full corporate power and authority to own, lease and operate its properties and assets and to conduct its business as it is now being conducted.

4.2      Authority . Seller has all requisite corporate power and authority to execute and deliver this Agreement and all documents, certificates, agreements, instruments and writings related hereto to which it is a party and to perform, carry out and consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action on the part of Seller. This Agreement has been duly and validly executed and delivered by Seller and each shareholder of Seller who is a signatory hereto (representing each shareholder of Seller who is of legal age to sign a binding agreement under applicable law) (each, a “Signing Shareholder” ) and, assuming due and valid execution by Buyer, this Agreement constitutes a legal, valid and binding obligation of Seller and each Signing Shareholder, enforceable against Seller and each Signing Shareholder in accordance with its terms subject to (a) applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting creditors’ rights generally from time to time in effect and (b) limitations on the enforcement of equitable remedies.

4.3    No Breach . Neither the execution and delivery by Seller of this Agreement nor the consummation by Seller of the transactions contemplated hereby will: (a) violate any provision of the articles of organization or bylaws of Seller; (b) conflict with, result in a breach of or constitute a default (or an event which, with or without notice, lapse of time or both, would constitute a default) under the Contracts or any other material agreement, document, certificate or other instrument to which Seller is a party or by which Seller or any of its properties or assets (including the Assets) is subject or bound (except for any Contracts which require consent to assignment to Buyer); (c) result in the creation of, or give any party the right to create, any Encumbrance upon any of the Assets; (d) conflict with, violate, result in a breach of or constitute a default under any judgment, decree, order or process of any court or governmental authority; (e), to Seller’s knowledge, conflict with or violate any material statute, law or regulation applicable to Seller or any of the Assets; or (f), to Seller’s knowledge, require Seller to obtain any authorization, consent, approval or waiver from, or to make any filing with, any governmental or regulatory authority.

4.4    Absence Of Liabilities; Books and Records . Seller has no liabilities (whether accrued, unmatured, contingent or otherwise, and whether due or to become due), except for (a) performance obligations under executory contracts, (b) liabilities incurred in the ordinary course of business and (c) liabilities that have not been incurred in the ordinary course of business, but are not, individually or in the aggregate, materially adverse to the condition (financial or otherwise), business, assets, operations or prospects of Seller’s business. Seller has no knowledge of any basis for the assertion against Seller of any liability or loss contingency that would have a Material Adverse Effect. The books and records of Seller are accurate and complete in all material respects and have been maintained in accordance with good business practices.

4.5    Absence of Certain Changes or Events . Since December 31, 2004: Seller’s business has been conducted and the Assets have been acquired and operated only in the ordinary and usual course consistent with past practice; neither Seller’s business nor the Assets have suffered any event or condition that has had a Material Adverse Effect; and Seller has no knowledge of any event or condition that has occurred or would reasonably be expected to occur that would reasonably be expected to result in a Material Adverse Effect.

4.6    Assets . Seller has good and freely transferable title to all of the owned Assets, free and clear of all Encumbrances, and has the complete and unrestricted power and right to sell and transfer the owned Assets to Buyer in accordance with the terms hereof, subject to any consents listed on the Disclosure Schedule. Schedule 4.6 sets forth a complete and accurate list of all items of Equipment. The Assets constitute all of the properties and assets used by Seller in connection with the operation of Seller’s business.

4.7    Real Property . Seller does not own any real property and no real property is involved in this transaction. Schedule 4.7 sets forth an accurate and complete list of all leases of Real Property used by Seller in connection with Seller’s business. Seller has peaceful possession of the Real Property and has no other interest in real property in connection with Seller’s business.

4.8    Intellectual Property . Seller owns the Oris System, including, without limitation, all patents, trademarks, service marks, trade names and copyrights, in each case registered or unregistered, inventions, know-how, trade secrets and other intellectual property rights that are part of the Assets. The only intellectual property owned by Oris is the Oris System, which is licensed to various licensees. No Oris System infringes any rights owned or held by any other person. There is no pending or, to the knowledge of Seller, threatened claim or litigation against Seller or Seller’s business contesting its right exclusively to use any Oris System. To the