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Asset Purchase Agreement

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (the ?Agreement?) is made as of this 6^th day of March, 2008 by and between CHAD Therapeutics, Inc., a California corporation (?CHAD?) and Respironics, Inc., a Delaware corporation (?Purchaser?).

W I T N E S S E T H:

WHEREAS, the parties hereto desire that CHAD sell to Purchaser, and that Purchaser purchase from CHAD in accordance with the terms and conditions of this Agreement substantially all of the assets of the Total O₂ Delivery System, including the OMNI-5 In-Home Filling System, OMNI-2 In-Home Filling System, Omni Fill technology and CHAD Post Valve patent (the ?Total O₂ Product?) and CHAD?s business related thereto (the ?Business?) as further detailed herein; and

WHEREAS, the parties hereto desire to set forth certain representations, warranties and covenants made by each to the other as an inducement to the consummation of the transactions contemplated herein and certain additional agreements related thereto.

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

ARTICLE I
PURCHASE AND SALE OF PURCHASED ASSETS

1.1 Assets to be Acquired. Subject to and upon the terms and conditions set forth herein, Purchaser agrees to purchase from CHAD, and CHAD agrees to sell, transfer, convey and assign to Purchaser, free and clear of all Encumbrances (as defined herein) of any kind or nature whatsoever, the assets set forth on Schedule 1.1 and CHAD?s rights under the licenses set forth on Schedule 1.1 (collectively, the ?Purchased Assets?), for the Purchase Price specified in Section 2.1. The Purchased Assets do not include, and CHAD is not selling, assigning, transferring, conveying or delivering, and Purchaser is not purchasing, acquiring or accepting from CHAD, any of the assets, properties or rights except as set forth on Schedule 1.1 (collectively, the ?Excluded Assets?). The transfer of the Purchased Assets pursuant to this Agreement shall not include the assumption of any liability or obligation of any kind, character or description (?Liability?) related to the Purchased Assets unless Purchaser expressly assumes that Liability pursuant to Section 2.2(a).

1.2 Conveyance of Assets. The conveyance, transfer and delivery of the Purchased Assets shall be made by CHAD and accepted by Purchaser as of the Closing Date, conditioned upon the satisfaction of the following:

(a) CHAD shall execute and deliver to Purchaser a bill of sale in the form of Exhibit 1.2(a) attached hereto and made a part hereof (the ?Bill of Sale?);

(b) CHAD and Purchaser shall execute and deliver an Assignment and Assumption Agreement in the form of Exhibit 1.2(b) attached hereto and made a part hereof (the ?Assignment and Assumption Agreement?) with respect to the Assumed Liabilities and Assigned Contracts (each as hereinafter defined);

(c) CHAD shall execute and deliver to Purchaser an assignment to Purchaser of the Purchased Intellectual Property (as defined in Schedule 1.1) in the form of Exhibit 1.2(c) attached hereto and made a part hereof (?Intellectual Property Assignment?);

(d) CHAD shall deliver to Purchaser the notices to, and consents and approvals of third parties listed on Schedule 1.2(d);

(e) CHAD shall deliver to Purchaser a certificate, dated as of the Closing Date, in form and substance reasonably satisfactory to Purchaser, of the Secretary of Purchaser certifying (i) that attached thereto is a complete and correct copy of the Articles of Incorporation of CHAD, as amended to date, (ii) that attached thereto is a complete and correct copy of the Bylaws of CHAD, as amended to date, and (iii) that attached thereto is a complete and correct copy of resolutions adopted by the board of directors of CHAD, authorizing the execution, delivery and performance of this Agreement and all other agreements executed in connection herewith by CHAD and the transfer of the Purchased Assets to Purchaser hereunder, and that such resolutions, approvals and consents have not been amended or modified in any respect and remain in full force and effect as of the date thereof;

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