ASSIGNMENT AND ASSUMPTION
AGREEMENT
Assignment and
Assumption Agreement (as the same may be amended, supplemented or
otherwise modified from time to time, this “Assignment
and Assumption Agreement” ), dated as of
March 25, 2009 (the “ Effective Date
”), by and between Arcadia Products, Inc., a Delaware
corporation, Arcadia Home Health Products, Inc., a Delaware
corporation, O2 Plus, a California corporation, Lovell Medical
Supply, Inc., a North Carolina corporation, Arcadia Home Mideast,
Inc., a Delaware corporation, Beacon Respiratory Services of
Alabama, Inc., a Delaware corporation, Beacon Respiratory Services
of Georgia, Inc., a Delaware corporation, American Oxygen and
Medical Equipment, Inc., an Illinois corporation, Arcadia Home
Oxygen and Medical Equipment, Inc., a Michigan corporation, and
Trinity Healthcare of Winston-Salem, Inc., a Georgia corporation
(each, an “ Assignor ” and collectively,
the “Assignors” ), Arcadia Resources,
Inc., a Nevada corporation (“ Assignee
”), JANA Master Fund, Ltd. (“ JANA
”), Vicis Capital Master Fund (“ Vicis
”) and LSP Partners, LP (“ LSP ”).
JANA, Vicis and LSP are referred to herein sometimes individually
as a “ Secured Party ” and collectively
as “ Secured Parties. ”
A. This is the Assignment and Assumption
Agreement referred to in that certain Master Exchange Agreement
dated the Effective Date between Assignee, JANA, LSP and Vicis (the
“ Master Exchange Agreement
”).
B. Assignors and JANA are parties to that
certain Revolving Line of Credit and Security Agreement dated
March 31, 2008 (“ Revolving Line Agreement
”). Capitalized terms used in this Assignment and Assumption
Agreement and not otherwise defined shall have the same meanings
herein as are ascribed to them in the Revolving Line Agreement.
Pursuant to the Revolving Line Agreement, the Assignors executed
and delivered to JANA that certain Promissory Note dated
March 31, 2008, in the original principal amount of $5,000,000
(the “ Subsidiaries Note ”), which, as of
the Effective Date, had an unpaid balance of $5,510,210, comprised
of principal in the amount of $5,000,000 and accrued, unpaid
interest in the amount of $510,210. Also pursuant to the Revolving
Line Agreement, and to secure the indebtedness evidenced by the
Subsidiaries Note and the Assignors’ obligations under the
Revolving Line Agreement, the Assignors granted to JANA a security
interest in the Collateral.
C. Pursuant to the this Assignment and
Assumption Agreement, the Master Exchange Agreement and the
transactions contemplated thereby, on the Effective Date:
(i) the Assignors shall assign to Assignee, and Assignee shall
assume and agree to discharge, pay and perform in full, all of the
Assignors’ obligations under and the indebtedness evidenced
by the Subsidiaries Note; (ii) Assignee shall execute and
deliver to JANA a Promissory Note, dated the Effective Date, in the
original principal amount of $18,035,367 (“ New JANA
Note ”), which New JANA Note shall evidence certain
indebtedness owed by Assignee to JANA, including, without
limitation, the indebtedness evidenced by the Subsidiaries Note
assigned hereby; (iii) Assignee shall execute and deliver to
Vicis a Promissory Note, dated the Effective Date, in the original
principal amount of $7,882,407 (the “ Vicis
Note ”); (iv) Assignee shall execute and deliver
to LSP a Promissory Note, dated the Effective Date, in the original
principal amount of $1,000,000 (the “ LSP Note
”); and (v) JANA shall consent to the assignment and
assumption contemplated hereby.
NOW THEREFORE, for
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as
follows:
1. Assignment. Subject to the terms and
conditions set forth herein, the Assignors hereby sell and assign
to the Assignee, jointly and severally, BUT WITH FULL RECOURSE, and
the Assignee hereby assumes and agrees to discharge, pay and
perform in full, on and from and after the Effective Date, all of
the Assignors’ obligations under and the indebtedness
evidenced by the Subsidiaries Note.
2. Representations and Warranties. The Assignee
and each Assignor represents and warrants to the other that:
(i) it has full power and legal right to execute and deliver
this Assignment and Assumption Agreement and to perform the
provisions of this Assignment and Assumption Agreement;
(ii) the execution, delivery and performance of this
Assignment and Assumption Agreement have been authorized by all
action, corporate or otherwise, and do not violate any provisions
of its organizational documents or any contractual obligations or
requirement of law binding on it; and (iii) this Assignment
and Assumption Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.
Each Assignor further represents that (a) it is the legal
obligor of the obligations being assigned by it hereunder,
(b) the assignment does not violate any restrictions on
transfer, and (c) the assignment is otherwise effective and
rightful.
3. Consent to Assignment and Assumption/Assignors Not
Released. JANA hereby: (i) consents to the assignment
by the Assignors, jointly and severally WITH FULL RECOURSE, to the
Assignee, on the Effective Date, of all of the Assignors’
obligations under and the indebtedness evidenced by the
Subsidiaries Note; and (ii) consents to the assumption by the
Assignee and the Assignee’s agreement to discharge, pay and
perform in full, on and from and after the Effective Date, all of
the Assignors’ obligations under and the indebted
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