ASSET PURCHASE AGREEMENT

EXHIBIT 10.1

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “ Agreement ”) is entered into this 30 ^th day of June, 2005 by and among Life Safe Services, LLC, a Missouri limited liability company (“ Buyer ”), STEN Corporation, a Minnesota corporation (“ STEN ”) and LifeSafe Services, Inc., a Minnesota Corporation (“ LifeSafe ”).

RECITALS:

A.

STEN through its wholly-owned subsidiary, LifeSafe, is engaged in the sale and servicing of the LifeSafe and Life Kit Product Lines, which are collectively referred to at times as the “Business.”

B.

The parties desire that STEN and LifeSafe sell to Buyer and that Buyer purchases from STEN and LifeSafe the assets of STEN related exclusively to the Business, which assets are described more fully hereinafter.

In consideration of and in reliance upon the representations, warranties, covenants, obligations and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1.

PURCHASE AND SALE OF ASSETS.

1.1

Purchased Assets.  Subject to the terms and conditions of this Agreement, STEN and LifeSafe agree to sell to Buyer at the Closing (as hereinafter defined), free of all liens, encumbrances, claims or other restrictions of any kind (except as described herein), and Buyer agrees to purchase from STEN and LifeSafe at the Closing, all of STEN’s and LifeSafe’s right, title, and interest in and to all of the properties, assets, and rights owned, used, exclusively by STEN and LifeSafe in connection with the Business, whether tangible or intangible, and such assets are listed on Schedule 1.1 ; and further including, without limitation, trade accounts receivable, equipment, inventory, work in process, books and records, permits and other governmental authorizations know-how, trade secrets, patents, copyrights and applications therefor, customer lists, any rights STEN has to the name “SOS International” and all variants thereof, and all of STEN’s and LifeSafe’s rights to the use of such name as a trademark, trade name or service mark, and all goodwill relating thereto; provided , however , that (i) STEN and LifeSafe shall not sell and Buyer shall not purchase the Excluded Assets described in Section 1.2, and (ii) as to contracts STEN and LifeSafe shall sell and Buyer shall purchase only those contracts of LifeSafe that are related exclusively to the Business and identified on Schedule 2.1(b) .  The assets to be purchased and sold pursuant to this Agreement are referred to as the “ Purchased Assets .”

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1.2

Excluded Assets.  Any other provision of this Agreement notwithstanding, the Purchased Assets shall not include the following properties, assets or rights, which are sometimes referred to collectively in this Agreement as the “ Excluded Assets ”: any rights of STEN or LifeSafe arising under this Agreement;

(a)

any cash, bank accounts, certificates of deposit and checks and drafts received but not yet collected of STEN or LifeSafe;

(b)

any prepaid expenses or deposits of STEN or LifeSafe, or tax refunds due or to become due to STEN or LifeSafe;

(c)

any securities held by STEN or LifeSafe (other than the Oxygen Therapy Institute, Inc. (“OTI”) common stock (the “OTI Common Stock”) owned by STEN or LifeSafe; and

(d)

any and all assets of STEN or LifeSafe that are not exclusively used by STEN or LifeSafe in the Business.

2.

LIABILITIES OF STEN.

2.1

Assumed Liabilities. Buyer agrees to assume on and as of the Closing Date (a) the accounts payable and promissory notes of STEN and LifeSafe, as applicable, related to the Business and incurred in the ordinary course of Business as of the Closing (the “ Assumed Accounts Payable ”), identified on Schedule 2.1(a ), and (b) the liabilities of STEN and LifeSafe, as applicable, existing as of the Closing under the contracts identified on Schedule 2.1(b) (the “ Assumed Contracts ,” and together with the Assumed Accounts Payable, are referred to as the “ Assumed Liabilities ”). From and after the Closing, Buyer shall pay, perform and discharge the Assumed Liabilities promptly when due in accordance with the respective terms thereof.

2.2

 Retained Liabilities. Buyer does not and shall not assume or become responsible for any liability or obligation of STEN or LifeSafe with respect to any accrued vacation or paid time off (determined as of Closing) owed by STEN or LifeSafe to employees of the Business or under the promissory notes reflecting the obligations of STEN and/or LifeSafe in favor of Lifekit, Inc. and Barry Medical Corporation.

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3.

PURCHASE PRICE. AMOUNT. The aggregate consideration for the Purchased Assets shall consist of the payment by Buyer of an amount (the “ Purchase Price ”) equal to Three Million One Hundred Fifty Thousand Dollars ($3,150,000), plus the Assumed Liabilities. The Purchase Price shall be reduced, on a dollar-for-dollar basis in the event that the Working Capital of the Business on June 30, 2005, is less than Seven Hundred Thirty Thousand Dollars ($730,000).  For purposes hereof, “Working Capital” shall be defined as (x) the current accounts receivable of the Business as of the Closing (that is, such accounts receivable that are not greater than one hundred twenty (120) days old), plus (y) the value as of the Closing of the inventory of the Business as reflected on Schedule 3.1 and less (z) the trade payables of the Business as of the Closing. The calculation of such Working Capital amount shall be made as of a date forty-five (45) days after the Closing.  Accounts receivable of the Business that is greater than 120 days, and not included in the Working Capital calculation above, that is collected by Buyer within such forty-five (45) day period shall be added back into the Working Capital for purposes of the adjustment to the Purchase Price referenced immediately above.

3.1

Payment.  Subject to the terms and conditions of this Agreement, at the Closing, Buyer will assume the Assumed Liabilities and pay the Purchase Price to STEN as follows:

(a)

Two Million Four Hundred Fifty Thousand ($2,450,000) shall be paid by means of a wire transfer of immediately available funds to an account designated by STEN; and

(b)

Seven Hundred Thousand ($700,000) shall be paid pursuant to a promissory note in favor of STEN, as more fully described on the form of promissory note (the “ Promissory Note ”) attached hereto as Schedule 3.2(b)(i) , which shall be subordinate to Bremen Bank and Trust Company, Buyer’s primary financing source and shall be personally guaranteed by Patrick Hoene and Christine Hoene, respectively, pursuant to the form of personal guaranty (the “ Personal Guaranty ”) attached hereto as Schedule 3.2 (b)(ii) .  The terms of the Promissory Note shall be as follows:  (i) annual interest calculated at 7.25%, paid monthly; (ii) interest only payments the first twelve months; (iii) months 13-42, principal and interest payments based on sixty month amortization, with balloon payment of all outstanding principal and interest at end of month 42.

If there shall be an adjustment to the Purchase Price under Section 3.1 of this Agreement, STEN shall pay to Buyer such adjustment amount within fifteen (15) days of the parties’ determination of such adjustment amount in cash by means of a check or a wire transfer of immediately available funds to an account designated by Buyer.

3.2

Allocation of Purchase Price.  The fair market values of the Purchased Assets and the allocation of the Purchase Price among the Purchased Assets, for purposes of Section 1060 of the Internal Revenue Code of 1986 and the regulations thereunder, are as set forth on Schedule 3.3 attached hereto and Buyer and STEN and LifeSafe agree to be bound by such fair market value determination and allocation and to complete their respective tax returns accordingly.

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4.

REPRESENTATIONS AND WARRANTIES OF STEN AND LIFESAFE    STEN hereby represents and warrants to Buyer that the following statements contained in this Section 4 are true and correct at and as of the date of this Agreement and as of the Closing Date:

4.1

Organization, Authority and Enforceability. Each of STEN and LifeSafe is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Minnesota.  The execution and delivery by STEN and LifeSafe of this Agreement and all other instruments and documents to be executed and delivered by STEN and/or LifeSafe, in connection herewith, and the consummation by STEN and LifeSafe of the transactions contemplated herein and therein, have been duly and validly authorized by STEN and LifeSafe, respectively.  This Agreement has been duly and validly executed and delivered by STEN and LifeSafe and constitutes the valid and binding obligation of each of STEN and LifeSafe, enforceable against them, respectively, in accordance with its terms.  When duly and validly executed and delivered by STEN and LifeSafe, the other instruments and documents to be executed and delivered by STEN and LifeSafe in connection herewith will constitute valid and binding obligations of STEN and LifeSafe enforceable in accordance with their respective terms.  

4.2

No Conflicts. The execution and delivery by STEN and LifeSafe of this Agreement and any other instrument or document to be executed and delivered by STEN or LifeSafe in connection herewith, the consummation by STEN and LifeSafe of the transactions contemplated hereby or thereby, and compliance by STEN or LifeSafe with any of the provisions hereof or thereof, will not (a) conflict with or result in a breach of any provision of STEN’s or LifeSafe’s Article of Incorporation or By-Laws, or (b) result in a default (or give rise to any right of termination, cancellation, or acceleration) under the provisions of any agreement, note, lien, mortgage, indenture, lease, or other instrument or obligation by which STEN or LifeSafe, or any of the Purchased Assets may be bound wherein such default, termination, cancellation, or acceleration would have a material adverse effect on the business, assets, properties, operations or condition, taken as a whole (a “ Material Adverse Effect ”), of LifeSafe.

4.3

Consents, Approvals. Except as set forth on Schedule 4.3 , no consent of, approval of, or filing with any governmental authority or any other person is required in connection with the execution and delivery by STEN or LifeSafe of this Agreement or any other instrument or document to be executed and delivered by STEN or LifeSafe in connection herewith, or the consummation by STEN or LifeSafe of any of the transactions contemplated hereby or thereby, other than any such consents the failure to obtain which would not have a Material Adverse Effect on STEN or LifeSafe.

4.4

Title to Purchased Assets. At the Closing, Buyer will receive good and marketable title to all of the Purchased Assets free and clear of all liens and encumbrances, other than any liens or encumbrances which may be placed thereon by actions of Buyer.

4.5

Compliance with Laws. STEN and LifeSafe are in compliance, in all material respects, with all applicable laws relating to the Business and possesses all material permits, licenses and authorizations from any governmental authority which are required under any applicable law with respect to the operation of the Business as presently conducted.

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4.6

No Litigation. Except as disclosed on Schedule 4.6 , there is no claim, litigation, investigation or proceeding pending or, to the knowledge of STEN or LifeSafe, threatened against STEN, LifeSafe, or OTI, in connection with the Business. Except as disclosed on Schedule 4.6 , there are no pending or, to the knowledge of STEN, LifeSafe, threatened controversies, grievances or claims by any employees or former employees of LifeSafe with respect to their employment, benefits or working conditions, or any of the OTI franchises.

4.7

Taxes. All taxes returns, reports and declarations (hereinafter collectively, “ Tax Returns ”) required by any governmental authority to be filed in connection with the properties, business, income or net worth of LifeSafe have been timely filed, and such returns are correct and complete in all material respects.  All taxes due in connection with the properties, business, income or net worth of LifeSafe has been paid, other than any tax which is not yet due or which, if due, is not yet delinquent or is being contested in good faith and which (in the case of any tax which is due) is disclosed on Schedule 4.7 , and such taxes will be paid by LifeSafe.  There are no tax claims, audits or proceedings pending in connection with the properties, business, income or net worth of LifeSafe, and, to the knowledge of STEN or LifeSafe, there are no such threatened claims, audits or proceedings.

4.8

Labor Matters. There are no existing or, to the knowledge of STEN or LifeSafe, threatened labor disputes or disturbances which materially adversely affect the Business or the future prospects of the Business.

4.9

Employee Benefits. Neither STEN nor LifeSafe maintains or contributes to any employee welfare benefit plan or pension benefit plan with respect to which Buyer will have any liability after the Closing.  

4.10

Environmental. LifeSafe has complied with, and LifeSafe’s operation of the Business and use and ownership of the Purchased Assets are in compliance with, all federal, state and local statutes, laws, ordinances, rules, regulations and orders relating to the protection of human health and safety, natural resources or the environment, including, but not limited to, air pollution, water pollution, noise control, on-site or off-site hazardous substance discharge, disposal or recovery, toxic or hazardous substances, training, information and warning provisions relating to toxic or hazardous substances, and employee safety relating to its business or the Purchased Assets (collectively the " Environmental Laws "), and, since November 26, 2003 no notice of violation of any Environmental Laws or of any permit, license or other authorization relating thereto has been received by STEN or LifeSafe.  To the knowledge of STEN and LifeSafe, no hazardous substances have ever been buried, spilled, leaked, discharged, emitted, generated, stored, used or released by LifeSafe, and to the knowledge of STEN or LifeSafe, no hazardous substances are now present, in, on or under any real estate presently or formerly used in the Business except for immaterial quantities stored or used by Life Safe in the ordinary course of its business and in accordance with applicable Environmental Laws.

4.11

Condition. Except as set forth on Schedule 4.11 , to the knowledge of STEN and LifeSafe, the tangible assets included among the Purchased Assets are in good operating condition, normal wear and tear excepted.  

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4.12

Payment Obligations of Customers. Any accounts receivable in the Purchased Assets have arisen in the normal course of the operation of the Business, constitute valid and binding obligations arising from sales actually made or services actually performed.  To the knowledge of STEN and LifeSafe, none of such accounts receivable is subject to any valid contest, claim or right of setoff other than returns, discounts or credits in the ordinary course of business.

4.13

Assumed Contracts .  To the knowledge of STEN and LifeSafe, each of the Assumed Contracts is in full force and the same is a legal, binding and enforceable obligation of or against each party thereto.  Each party to each Assumed Contract has substantially performed all obligations required to be performed by it to date, and are not in default in any material respect, under any of the Assumed Contracts.  STEN and LifeSafe have made, or shall make available to Buyer, upon request, true and correct copies of all Assumed Contracts, including all amendments thereto.

4.14

Intellectual Property Rights . Except as set forth on Schedule 4.14 , LifeSafe owns or possesses, is licensed under, or otherwise has lawful access to, all patents, trade secrets, know-how, other confidential information, trademarks, service marks, copyrights, mask works, trade names, logos and other intellectual property, whether registered or unregistered, necessary for the lawful conduct of the Business as now conducted, and to the knowledge of STEN or LifeSafe, without any infringement of or conflict with the industrial or intellectual property rights of others.  To the knowledge of STEN or LifeSafe, there is no unauthorized use or disclosure or misappropriation of any of its intellectual property.

(a)

To the knowledge of STEN or LifeSafe (i) none of the intellectual properties owned or used by LifeSafe in the Business is invalid or unenforceable (whether due to the existence of prior art, inequitable conduct such as patent fraud or misuse, prior use or creation, abandonment or otherwise), (ii) any payments to governmental agencies required to maintain the effectiveness of any patents or any registered intellectual properties have not been timely paid.  Except as set forth in Schedule 4.14 , since November 26, 2003, LifeSafe has not received any communication from any person or entity containing any express or implied allegation that LifeSafe is or may be infringing any of such person’s or entity’s intellectual property, and (ii) is not currently evaluating any intellectual property of another person or entity (and has not conducted any such evaluations in the past three years (3) years) to determine whether a license thereof is necessary or desirable or whether such intellectual property may otherwise have a material effect on LifeSafe’s existing or planned business, products or services.  

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4.15

Licenses and Permits .   Schedule 4.15 hereto correctly describes all material licenses and permits granted to or by LifeSafe in connection with the operation of the Business as it is currently being conducted.  LifeSafe has all material licenses and permits required by law or otherwise necessary for the proper operation of the Business as it is currently being conducted.  All licenses and permits granted to LifeSafe are in full force and effect, and no action to terminate, withdraw, not renew or materially limit or otherwise change any such license or permit is pending or to the knowledge of STEN has been threatened by any governmental agency or other party.  STEN and LifeSafe have made available to Buyer true and correct copies of all such licenses and permits.  

4.16

Brokers and Finders .  No broker, finder or other person or entity acting in a similar capacity has participated on behalf of STEN or LifeSafe or any of STEN’s or LifeSafe’s stockholders in bringing about the transactions contemplated herein, rendered any services with respect thereto, or been in any way involved therewith.

4.17

No Other Warranties .  Except as expressly provided herein, each of the Purchased Assets will be sold and transferred to Buyer at the Closing “AS-IS,” “WHERE-IS” and “WITH ALL FAULTS” as of the Closing.  STEN and LifeSafe make and have made no representations or warranties of any kind whatsoever with respect to the Purchased Assets, the  Assumed Liabilities