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STOCK PURCHASE AGREEMENT

Purchase and Sale Agreement

STOCK PURCHASE AGREEMENT | Document Parties: AEROCARE HOLDINGS, INC | ARCADIA PRODUCTS, INC | BEACON RESPIRATORY SERVICES | GEORGIA, INC | LOVELL MEDICAL SUPPLY, INC | WINSTON-SALEM, INC You are currently viewing:
This Purchase and Sale Agreement involves

AEROCARE HOLDINGS, INC | ARCADIA PRODUCTS, INC | BEACON RESPIRATORY SERVICES | GEORGIA, INC | LOVELL MEDICAL SUPPLY, INC | WINSTON-SALEM, INC

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Title: STOCK PURCHASE AGREEMENT
Governing Law: Delaware     Date: 5/21/2009
Industry: Healthcare Facilities     Sector: Healthcare

STOCK PURCHASE AGREEMENT, Parties: aerocare holdings  inc , arcadia products  inc , beacon respiratory services , georgia  inc , lovell medical supply  inc , winston-salem  inc
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Exhibit 10.1

STOCK PURCHASE AGREEMENT

      THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is entered into as of the 16 th day of May, 2009 (the “Effective Date”), by and between ARCADIA PRODUCTS, INC. , a Delaware corporation (the “Stockholder”), and AEROCARE HOLDINGS, INC. , a Delaware corporation (the “Buyer”) (each a “Party” or collectively the “Parties”).

R E C I T A L S :

     A. The Stockholder is the record and beneficial owner of: (1) an aggregate of one thousand (1,000) shares (“Beacon/Georgia Shares”) of the common stock, $1.00 par value per share, of BEACON RESPIRATORY SERVICES OF GEORGIA, INC. , a Delaware corporation (“Beacon/Georgia”), constituting all of the issued and outstanding shares of capital stock of Beacon/Georgia as of the date of this Agreement; (2) an aggregate of ten thousand (10,000) shares (the “Lovell Shares”) of the common stock, $1.00 par value per share, of LOVELL MEDICAL SUPPLY, INC. , a North Carolina corporation (“Lovell”), constituting all of the issued and outstanding shares of capital stock of Lovell as of the date of this Agreement; and (3) an aggregate of one thousand (1,000) shares (the “Trinity Shares”) of the common stock, $0.01 par value per share, of TRINITY HEALTHCARE OF WINSTON-SALEM, INC. , a Georgia corporation (“Trinity”), constituting all of the issued and outstanding shares of capital stock of Trinity as of the date of this Agreement (the Beacon/Georgia Shares, Lovell Shares and Trinity Shares are sometimes herein referred to collectively as the “Shares”, and Beacon/Georgia, Lovell and Trinity are sometimes herein referred to collectively as the “Corporations” and individually as a “Corporation”).

     B. Beacon/Georgia conducts business operations in the States of Georgia and South Carolina, Lovell conducts business operations in the State of North Carolina, and Trinity conducts business operations in the States of Georgia and North Carolina, and each Corporation is engaged in the business of durable medical equipment and respiratory therapy (collectively, the “Business”).

     C. Stockholder desires to sell to Buyer, and Buyer desires to purchase from Stockholder, all of the Shares, upon the terms and conditions herein set forth.

      NOW, THEREFORE , in consideration of the mutual promises and conditions herein contained, the Parties hereto agree as follows:

     1.  Incorporation of Recitals . The Recitals made above are incorporated into and made part of this Agreement by this reference thereto.

     2.  Sale and Purchase of Shares . Subject to the terms and conditions of this Agreement, Stockholder hereby sells, transfers and assigns to Buyer, and Buyer hereby

 


 

purchases from Stockholder, all of the Shares. Stockholder hereby delivers to Buyer certificates evidencing the Shares duly endorsed to Buyer.

     3.  Purchase Price; Method of Payment; Contingent Cash Consideration; Reductions to Cash Consideration; Cash of the Corporations; Revenues and Proceeds from Payment of Receivables of the Corporations; Accounts Payable of the Corporations; Allocation of Purchase Price; Weekly Reconciliation; Etc.

          a. Purchase Price; Method of Payment; Wire Transfers to Certain Creditors . The total consideration from Buyer to Stockholder in exchange for the Shares is: (I) Four Million Two Hundred Seventy-Five Thousand Dollars ($4,275,000) in cash (the “Cash Consideration”), less the aggregate amounts set forth in Section 3.c hereof (if any), plus (II) Four Hundred Seventy-Five Thousand Dollars ($475,000) in cash, subject to offsets and reductions as set forth in Section 3.b hereof (the “Contingent Cash Consideration”) (the Cash Consideration and Contingent Cash Consideration are collectively referred to herein as the “Purchase Price”). The Cash Consideration, less the aggregate amounts set forth in Section 3.c hereof (if any) and less $1,173,527 (representing the aggregate amount to be wired to certain creditors of the Stockholder as described at the end of this Section 3.a), will be paid by Buyer to Stockholder on the Closing Date (or on the next banking day following the Closing Date if all documents contemplated to be executed at Closing were fully executed after 12:01 p.m., E.D.T., on the Closing Date) by wired funds to Stockholder’s account number as set forth on the Schedule of Wire Instructions attached hereto as Exhibit 3-A . The Contingent Cash Consideration shall be payable pursuant to the terms of Section 3.b hereof. The Stockholder requests and authorizes Buyer to redirect a portion of the Cash Consideration due at Closing to the following creditors of Stockholder in the following amounts: (1) $391,176 to Jana Master Fund, Ltd. pursuant to wire transfer instructions provided by Stockholder to Buyer on or before the Closing Date; and (2) $782,351 to Vicis Capital Master Fund pursuant to wire transfer instructions provided by Stockholder to Buyer on or before the Closing Date.

          b. Contingent Cash Consideration . The Contingent Cash Consideration shall be held back by Buyer without interest, during the period commencing on the Closing Date and ending three hundred sixty (360) days after the Closing Date (the “Hold Back Period”), to secure all obligations of Stockholder to Buyer (whether such obligations are pursuant to this Agreement or pursuant to any other agreement between Buyer and Stockholder) , including but not limited to all of the obligations of Stockholder to Buyer set forth in: (A) Section 3.e hereof entitled Revenues and Proceeds from Payment of Receivables of the Corporations ; (B) Section 3.f hereof entitled Accounts Payable of the Corporations ; (C) Section 4 hereof entitled Right of Offset Against the Contingent Cash Consideration ; and (D) Section 13 hereof entitled Indemnification; Remedies .

               i.  Offset and Reduction of Contingent Cash Consideration in the Event of Default . In the event Stockholder fails to meet any of its obligations to Buyer under this Agreement, or otherwise is in default of any provision of this Agreement (each such failure is sometimes herein referred to as a “default” or an “event of default”), Buyer shall give written notice of the alleged default to Stockholder. Upon the passage of not less than thirty (30) days from receipt of said notice of alleged default from Buyer (unless during such thirty (30) day

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period, Buyer shall have received notice from Stockholder that Stockholder has elected to defend the dispute pertaining to an event of default involving a debt or liability), the Buyer may at any time thereafter wholly or partially make offset against and thereby reduce the amount of Contingent Cash Consideration payable to Stockholder hereunder. Notwithstanding the foregoing, in the case of a “Dispute” (as defined in Section 13 of this Agreement), the provisions of Section 13 of this Agreement applicable to a “Dispute” shall govern, and no offset and reduction against the Contingent Cash Consideration shall occur until the applicable “Dispute” is resolved in accordance with the provisions of Section 13 hereof.

               ii.  Partial Release and Final Release; Effect of Release of Contingent Cash Consideration . One Hundred Sixty Thousand Dollars ($160,000) of the Contingent Cash Consideration, less any amounts previously offset and reduced by Buyer pursuant to this Agreement, shall be released to Stockholder on or before that date which is one hundred twenty (120) days after the Closing Date (the “First Partial Release Date”), One Hundred Sixty Thousand Dollars ($160,000) of the Contingent Cash Consideration, less any amounts previously offset and reduced by Buyer pursuant to this Agreement, shall be released to Stockholder on or before that date which is two hundred forty (240) days after the Closing Date (the “Second Partial Release Date”), and the remaining Contingent Cash Consideration (not released to Stockholder on the First Partial Release Date or Second Partial Release Date), less any amounts previously offset and reduced by Buyer pursuant to this Agreement, shall be released to Stockholder on or before that date which is three hundred sixty (360) days after the Closing Date (the “Final Release Date”), provided, however, that notwithstanding anything contained in this Agreement to the contrary, the right of Buyer to make offset against and reduce the Contingent Cash Consideration shall extend past the First Partial Release Date, Second Partial Release Date and/or Final Release Date in the event: (i) a claim is in dispute at the time of the First Partial Release Date, Second Partial Release Date and/or Final Release Date and, in such instance, the Buyer’s right to make offset against and reduce the Contingent Cash Consideration shall not terminate until after the settlement of such claim or claims; or (ii) the Contingent Cash Consideration to be reduced pursuant to Section 4 of this Agreement has not been finally determined and, in such instance, the Buyer’s right to make offset against and reduce the Contingent Cash Consideration shall not terminate until such time as all calculations required by Section 4 hereof have been finally determined and all reductions of the Contingent Cash Consideration required by Section 4 hereof (if any) have been made. In the event the right of offset is extended past the First Partial Release Date, Second Partial Release Date and/or Final Release Date because a claim is in dispute, Contingent Cash Consideration having a value equal to that amount which is 130 percent of the amount of the claim asserted by Buyer shall continue to be held back by Buyer past the First Partial Release Date, Second Partial Release Date and/or Final Release Date until such claim is resolved.

          c. Reductions to Cash Consideration . The Cash Consideration to be delivered at Closing shall be reduced, dollar for dollar, by the aggregate amount of ZERO DOLLARS ($-0-), which amount Stockholder represents and warrants is sufficient to reduce the Corporations’ “Aggregate Existing Obligations” (as defined in Section 6.d hereof) to Zero Dollars ($-0-). Stockholder represents and warrants to Buyer that the following obligations, which otherwise would have reduced the amount of the Cash Consideration to be delivered at Closing, were satisfied by payment in full prior to the Closing Date: (A) $71,289.83,

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representing the amount owed by Stockholder and/or its affiliates to GMAC through the Effective Date; (B) $25,000.00, representing the final settlement obligation owed by Arcadia Resources, Inc. and/or its affiliates to Dargon Smith, Jr. and Sue Smith in settlement of Case Nos. 2008-CP-15-172 and 492 (collectively, the “Smith Cases”), each filed in the County of Colleton, State of South Carolina; and (C) $5,915.22, representing the final installments owed by Arcadia Resources, Inc. and/or its affiliates to Parelsu II, LLP under that certain letter agreement dated November 20, 2008, which letter agreement set forth the terms pertaining to the settlement of that certain lease dispute involving leased property having a street address of 416A Robertson Blvd., Walterboro, South Carolina 29488. Stockholder shall provide to Buyer, on or before the Closing Date, confirmation of the payment of such amounts (including, in the case of the GMAC payment, copies of the electronic receipts of such payments/payoffs to GMAC), and shall provide to Buyer post-Closing, a copy of the signed Release and Indemnification Agreement pertaining to the Smith Cases, promptly after such document has been executed by Dargon Smith, Jr. and Sue Smith.

Not later than that date which is ten (10) days from the Closing Date, Stockholder shall cause to be obtained from the following secured parties, and filed with the Secretary of State of Delaware for Beacon/Georgia, the Secretary of State of North Carolina for Lovell and the Secretary of State of Georgia for Trinity, Form UCC-3 Termination Statements terminating the following Form UCC-1 Financing Statements:

 

(1)

 

Form UCC-1 Financing Statement, filed on April 1, 2008, listing Jana Master Fund, Ltd as Secured Party and Beacon/Georgia as Debtor;

 

 

(2)

 

Form UCC-1 Financing Statement, filed on April 1, 2008, listing Jana Master Fund, Ltd as Secured Party and Lovell as Debtor; and

 

 

(3)

 

Form UCC-1 Financing Statement, filed on April 2, 2008, listing Jana Master Fund, Ltd as Secured Party and Trinity as Debtor.

Except for the above referenced UCC-1 Financing Statements of Jana Master Fund, Ltd., Stockholder is not aware of any other active UCC-1 Financing Statements imposing a lien on or otherwise encumbering any of the assets of the Corporations, nor has Stockholder or any of such Corporations authorized the filing of any UCC-1 Financing Statements from January 1, 2009 through the Closing Date which would impose a lien on or otherwise encumber any of the assets of the Corporations.

          d. Cash of the Corporations . Stockholder is entitled to the cash and cash balances of each Corporation pertaining to the operation of the Business through May 15, 2009 (the “Excluded Cash”), and Buyer is entitled to the cash and cash balances of each Corporation pertaining to the operation of the Business after May 15, 2009. In the event the Excluded Cash has not been reduced to Zero Dollars ($0) as of the Closing Date, the Buyer agrees to remit to Stockholder the remaining portion of the Excluded Cash. In the event the Excluded Cash is a negative amount for any reason (e.g., overdrafts, outstanding checks which have not cleared, etc.), the Stockholder shall immediately make payment to Buyer in such amount as will bring the negative balance back to Zero Dollars ($0).

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          e. Revenues and Proceeds from Payment of Receivables of the Corporations . Stockholder is entitled to all revenues and proceeds actually received by each Corporation on or before May 15, 2009 as a result of the payment of accounts receivable generated by each Corporation’s operation of its respective Business through May 15, 2009 (collectively, the “Excluded Accounts Receivable Proceeds”). Buyer, through each of the Corporations, is entitled to all revenues and proceeds received on and after May 16, 2009 as a result of the payment of accounts receivable generated by each Corporation’s operation of its respective Business (collectively, the “Included Accounts Receivable Proceeds”). Notwithstanding anything contained in this Agreement to the contrary, any Medicare refunds or recoupments pertaining to any Excluded Accounts Receivable Proceeds shall be the responsibility of Stockholder and its ultimate parent corporation, Arcadia Resources, Inc., a Nevada corporation, and their successors and assigns. Notwithstanding anything in this Agreement to the contrary, for a five (5) year period following the Closing Date, Stockholder indemnifies and holds each Corporation and the Buyer harmless from and against any and all such Medicare refunds or recoupments and from any other liabilities, obligations or claims of any kind pertaining to the Excluded Accounts Receivable Proceeds, and any business activity related thereto, and authorizes Buyer to make offset against the Contingent Cash Consideration in the event Buyer has a claim against Stockholder pursuant to this indemnification.

          f. Accounts Payable of the Corporations . Stockholder hereby agrees, and Arcadia Resources, Inc. and RKDA, Inc. in their respective Guaranty Agreements shall be required to agree, that: (A) Stockholder, Arcadia Resources, Inc. and RKDA, Inc. shall be and hereby are jointly and severally liable for all of the accounts payable obligations of each of the Corporations (whether due and owing, not yet due and owing, billed or unbilled, accrued or not accrued or contingent or not contingent), pertaining to the operation of the Business through May 15, 2009, including but not limited to all of the accounts payable listed on the Schedule of Accounts Payable Data attached hereto as Exhibit 6-R , which Stockholder represents and warrants is an accurate and complete list of all of such accounts payable through the close of business on April 30, 2009, with respect to the A/P schedule through April 30, 2009 delivered by Stockholder to Buyer at Closing (the “April 30, 2009 A/P Schedule”), and an accurate and complete list of all of such accounts payable through the close of business on May 15, 2009, with respect to the A/P schedule through May 15, 2009 to be delivered by Stockholder to Buyer post-closing (the “May 15, 2009 A/P Schedule”) (collectively, the “Pre-Existing Accounts Payable Obligations”) and that Exhibit 6-R includes all of the accrued payroll of each of the Corporations through April 30, 2009 (with respect to the April 30, 2009 A/P Schedule) and through May 15, 2009 (with respect to the May 15, 2009 A/P Schedule), and all of the accrued vacation obligations of each of the Corporations through April 30, 2009 (with respect to the April 30, 2009 A/P Schedule) and May 15, 2009 (with respect to the May 15, 2009 A/P Schedule); and (B) Stockholder, Arcadia Resources, Inc. and RKDA, Inc. shall cause the Pre-Existing Accounts Payable Obligations (other than those disputed in good faith without any impact on the respective Businesses of the Corporations, which dispute status shall in no way alter the provisions of this Section 3.f which place sole responsibility for payment of any Pre-Existing Accounts Payable Obligations on Stockholder, Arcadia Resources, Inc. and RKDA, Inc., and not on Buyer) to be paid when due and shall, in any event, pay off and satisfy in full all of such Pre-Existing Accounts Payable Obligations no later than by that date which is ninety (90) days from the Closing Date, as to Pre-Existing Accounts Payable Obligations listed on Exhibit

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6-R , and by that date which is one-hundred ten (110) days from the Closing Date, as to Pre-Existing Accounts Payable Obligations not listed on Exhibit 6-R (that date which is one-hundred ten (110) days from the Closing Date is herein referred to as the “Final Date for A/P Payments”), provided, however, that any portion of the Pre-Existing Accounts Payable Obligations consisting of accrued payroll obligations through May 15, 2009, shall be paid in full by Stockholder or Stockholder’s ultimate parent corporation, Arcadia Resources, Inc., on or before June 15 2009, and any portion of the Pre-Existing Accounts Payable Obligations consisting of accrued vacation obligations through May 15, 2009, shall be paid in full by Stockholder or Stockholder’s ultimate parent corporation, Arcadia Resources, Inc. on or before June 15, 2009, such that all of the employees of each Corporation as of May 16, 2009 will have no accrued payroll owing to any of them by each such Corporation for periods before such date nor will have any accrued vacation owing to them by each such Corporation for periods before such date. In the event Stockholder, Arcadia Resources, Inc. and/or RKDA, Inc. fail to pay in full all Pre-Existing Accounts Payable Obligations by the Final Date for A/P Payments, Buyer shall have the right in the exercise of its sole discretion, but not the obligation, to pay any of the Pre-Existing Accounts Payable Obligations on behalf of Stockholder, Arcadia Resources, Inc. and RKDA, Inc. and make offset against the applicable portion of any Contingent Cash Consideration to be delivered by Buyer to Stockholder pursuant to Section 3.b hereof. In the event of such non-payment by Stockholder, Arcadia Resources, Inc. and/or RKDA, Inc. of all of the Pre-Existing Accounts Payable Obligations by the Final Date of A/P Payments, Buyer shall also have all other remedies set forth in this Agreement or under applicable law. Notwithstanding anything in this Agreement to the contrary, after the Final Date for A/P Payments, the Buyer shall at all times have the right to make written demand on the Stockholder to pay any Pre-Existing Accounts Payable Obligations which became known or arose after the Final Date for A/P Payments and, in such event, the Stockholder shall pay the Pre-Existing Accounts Payable Obligations within fifteen (15) business days from the date of receipt of such written demand and shall provide Buyer with such proof of payment as Buyer may reasonably request. Stockholder covenants and agrees to deliver the May 15, 2009 A/P Schedule to Buyer on or before May 31, 2009. Stockholder represents and warrants to Buyer that Stockholder is not aware of any accounts payable obligations incurred after April 30, 2009 through May 15, 2009, which are outside the ordinary course of business or which involve accounts payable obligations of a different type or category than those accounts payable obligations listed on the April 30, 2009 A/P Schedule. Stockholder has disclosed to Buyer that the April 30, 2009 A/P Schedule and the May 15, 2009 A/P Schedule may also include accounts payable data pertaining to business entities other than the Corporations due to the difficulty of separating out and segregating such data.

          g. Allocation of Purchase Price . The Purchase Price shall be allocated among the assets of each Corporation as set forth on Exhibit 3-G , which allocation shall be jointly prepared and agreed to by Buyer and Stockholder and attached to this Agreement no later than by June 30, 2009. It is agreed that the allocations under this Section will be binding on all parties for Federal, state, local and other tax purposes in connection with this sale, and will be consistently reflected by each Party on its tax returns. The Parties shall execute and attach hereto as Exhibit 3-H , not later than by June 30, 2009, any forms required by Section 338(h)(10) of the Internal Revenue Code, as amended, on the subject of the allocation of the Purchase Price among

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the assets of each of the Corporations, and Buyer shall allocate the Purchase Price among the assets of each Corporation in accordance with such forms.

          h. Weekly Reconciliation; Progress Updates on A/P Payoffs . Commencing during the week of May 18, 2009, and weekly thereafter or on such other periodic basis as the parties hereto shall agree, and for so long as is reasonably necessary to accomplish the objectives set forth in this subsection, a representative of the Buyer and representative of the Stockholder shall meet on such basis as they shall decide (whether in person, telephonically or electronically via e-mail) in an effort to reconcile the various obligations of the parties under this Agreement, including without limitation, the allocation of cash in the Corporation, the distribution of proceeds from accounts receivable, the status of payoffs of accounts payable, the settlement and proper allocation of pre-Closing and post-Closing expenses (such as rent and similar expenses), including expenses paid by one party which should properly be allocated to the other party, adjustments for the underpayment of any liabilities which should have been paid in full at Closing, etc. Such representatives may establish whatever procedures and worksheets for such reconciliation as they may reasonably determine. The Stockholder shall prepare and submit to Buyer, on those dates which are thirty (30), sixty (60), ninety (90) and one hundred ten (110) days from the Closing Date, a detailed written status update on the progress made to date in the payment of all of the accounts payable required to be paid off pursuant to Section 3.f hereof (each, an “A/P Status Report”). Stockholder covenants and agrees that each A/P Status Report will confirm to Buyer that Stockholder, Arcadia Resources, Inc. and RKDA, Inc. have been diligent in their efforts to pay off such accounts payable and that such obligated entities have made a reasonable effort to cause such accounts payable to be paid off on a timely basis.

          i. Rossville Billing Center Transition . The terms and conditions set forth on that certain List of Agreements Pertaining to the Rossville Billing Center Transition, attached hereto as Exhibit 3-I , have been agreed to by Stockholder and Buyer, and all of such terms and conditions are hereby incorporated into this Agreement by this reference thereto and made a part hereof. All references to “Arcadia” on Exhibit 3-I shall refer to Stockholder and/or Arcadia Resources, Inc. (as the context shall require or permit), and Stockholder represents to Buyer that Stockholder is the tenant under the current lease pertaining to the Rossville, Indiana Billing Center location, and that Arcadia Resources, Inc. is the current employer of the billing center personnel but has authorized Stockholder to enter into the terms set forth on Exhibit 3-I on its behalf.

          j. Assignment of Rights . Stockholder acknowledges that Stockholder entered into certain material agreements with certain employees of the Corporations rather than have the applicable Corporation enter into such agreements. Stockholder hereby assigns any and all rights (but not obligations) which Stockholder has under any and all employment agreements, confidentiality agreements, non-competition agreements, non-solicitation agreements and any other agreements containing restrictive covenants, which pertain to any current or former employees of any of the three Corporations, including but not limited to that certain Non-Competition Agreement dated as of August 25, 2006, by and among the Stockholder and Darian Byrd a/k/a Herbert Darian Byrd, Jerry Lovell, Donald H. Martinat III, Kathryn Martinat, Harvey Arrington, Jean Arrington a/k/a Imogene Arrington, Randall Strickland and Tonda Strickland (the “2006 Non-Compete Agreement”). Stockholder represents and warrants to Buyer that the

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2006 Non-Compete Agreement is in full force and effect based on the form of such document as of August 25, 2006, that the 2006 Non-Compete Agreement has not been amended or previously assigned, and that the scope of the restrictive covenants set forth in the 2006 Non-Compete Agreement have not been limited or reduced in scope or duration.

          k. Reimbursement of Rent at Winston-Salem Location . After the Closing, Stockholder plans to continue to use, for a short period, a portion of the space at the Winston-Salem, North Carolina, location of a Corporation. In exchange for such use, Stockholder agrees to pay Buyer the sum of One Thousand Dollars ($1,000) per month (prorated for periods which are less than a full month), with such amount due when rent is due under the applicable Winston-Salem lease agreement. Either party may terminate this arrangement by providing written notice to the other party.

          l. CPAP Supply Inventory . Stockholder represents to Buyer that one of the Corporations maintains CPAP supply inventory (segregated by location) at its Winston-Salem, North Carolina location, including CPAP supply inventory segregated for locations of the Stockholder in the Midwest region of the United States (the “Midwest CPAP Supply Inventory”). On or before the close of business on the Closing Date, Stockholder shall notify Buyer in writing or by e-mail whether or not it has further need for any of the Midwest CPAP Supply Inventory after the Closing Date. If Stockholder discloses to Buyer that it no longer has a need for any of the Midwest CPAP Supply Inventory after the Closing Date (or if Stockholder fails to notify Buyer in writing or by e-mail of such need before the close of business on the Closing Date), the Midwest CPAP Supply Inventory shall be deemed to be owned solely by Buyer as of the Closing Date for no additional consideration. If Stockholder discloses to Buyer before the close of business on the Closing Date that Stockholder has a further need for CPAP supplies, then Buyer agrees to continue to ship CPAP supplies to Stockholder’s Midwest locations (out of the segregated Midwest CPAP Supply Inventory) as Stockholder shall request, at no cost to Stockholder except for related shipping costs, until the earlier of the following dates: (A) the date on which the segregated Midwest CPAP Supply Inventory runs out; or (B) May 31, 2009. After May 31, 2009, Buyer may, in the exercise of its sole discretion, continue to honor Stockholder requests for CPAP supplies but, if Buyer agrees to ship out any CPAP supplies for Stockholder after May 31, 2009, Stockholder agrees to pay Buyer an amount equal to the fair cost of such CPAP supplies plus related shipping costs.

          m. Pitney Bowes Postage Metering Equipment . Stockholder has disclosed to Buyer that Stockholder or a Corporation may be obligated under three (3) lease arrangements involving Pitney Bowes postage metering equipment (the “Pitney Bowes Equipment”) located at the Smyrna, Georgia location (lease with fixed term), Huntersville, North Carolina location (month to month lease), and Winston-Salem, North Carolina location (month to month lease). Within thirty (30) days following the Closing Date, Buyer shall evaluate its needs regarding the Pitney Bowes Equipment and, if Buyer determines it has no need for the Pitney Bowes Equipment at a particular location, Buyer will notify Stockholder of that fact and Stockholder shall retrieve the applicable Pitney Bowes Equipment and assume any related lease obligations or, in the case of the month to month leases, shall have Buyer return the applicable Pitney Bowes Equipment to Pitney Bowes at Stockholder’s expense. In the event Buyer decides to keep any

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Pitney Bowes Equipment, Buyer shall assume the related lease obligations and agrees to execute any documents required to reflect such assumption.

     4.  Right of Offset Against the Contingent Cash Consideration . In addition to any other rights of offset or reduction set forth in this Agreement, in the event that: (i) any of the Corporations have any debts or liabilities of any kind as of the Effective Date, other than the debts and liabilities of each such Corporation described on, and not in excess of the dollar amounts listed on, the Schedule of Liabilities attached hereto as Exhibit 6-D (the “Liabilities Deficiency”), or (ii) any of the Corporations have, since January 31, 2009, made expenditures or incurred obligations or liabilities, except in the ordinary course of business; discharged or satisfied any liens or encumbrances, except in the ordinary course of business; declared or made any payment or distribution (excluding inter-company cash transactions in the ordinary course of business) to Stockholder or purchased or redeemed any of its common capital stock or agreed to do so; mortgaged, pledged or subjected to lien or encumbrance any of its assets; sold or transferred any assets, except in the ordinary course of business; suffered any damage or loss (whether or not covered by insurance), materially affecting its properties; waived any rights of substantial value; or entered into any transaction other than in the ordinary course of business (the “Subsequent Event Deficiency”), or (iii) any debts, liabilities or obligations of any nature (whether absolute, accrued, contingent or otherwise) (the “Obligations”), other than those subject to subsections (i) and (ii) of this Section 4, become known, are uncovered or arise after the Effective Date, which Obligations pertain to any actions, omissions, debts, liabilities or obligations of any of the Corporations or Stockholder, created or arising on or before the Effective Date (said Obligations are hereinafter referred to as the “Contingent Liability”) (a Liabilities Deficiency, Subsequent Event Deficiency or Contingent Liability is sometimes herein referred to as a “Claim”); then, and in any of such events, Buyer shall have the right, during the Hold Back Period (or after the Hold Back Period if permitted under Section 3.b.ii hereof), to make offset against the Contingent Cash Consideration in accordance with the terms and conditions of Section 3.b hereof, in amounts from time to time equal to any Liabilities Deficiency, Subsequent Event Deficiency or Contingent Liability which becomes known, is uncovered or arises during the three hundred sixty (360) day period after the Closing Date (subject, however, in the event of a “Dispute”, to the provisions of Section 13 hereof applicable to a “Dispute”). During the three hundred sixty (360) day period following the Closing Date, in the event Buyer makes written request to Stockholder hereunder for Stockholder to pay any Liabilities Deficiency, Subsequent Event Deficiency or Contingent Liability, and Stockholder fails to make the requested payment within thirty (30) days from the date of such written request (said thirty (30) day period hereinafter referred to as the “Notice Period”), Buyer shall have the right to make offset against and reduce the Contingent Cash Consideration, in accordance with the terms and conditions of Section 3.b hereof, in amounts from time to time equal to the amount of any Liabilities Deficiency, Subsequent Event Deficiency or Contingent Liability which becomes known, is uncovered or arises during the three hundred sixty (360) day period following the Closing Date (subject, however, in the case of a “Dispute”, to the provisions of Section 13 hereof applicable to a “Dispute”), and Stockholder agrees to allow Buyer to make offset against and reduce the Contingent Cash Consideration as provided in this Agreement. Except as provided in Section 3.b.ii hereof, Buyer’s right of offset against the Contingent Cash Consideration shall terminate on that date which is three hundred sixty (360) days from the Closing Date; provided, however, that notwithstanding anything contained in this Agreement to

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the contrary, the rights of offset shall extend past the First Partial Release Date, Second Partial Release Date and/or Final Release Date (the “Applicable Release Date”) in the event a Claim is in dispute at the time of the Applicable Release Date and, in such instance, the right of offset shall not terminate until after the settlement of such Claim or Claims. In the event the right of offset is extended past the Applicable Release Date because a Claim is in dispute, that amount of Contingent Cash Consideration equal to the amount of such claim, plus a reserve equal to 30% of the amount of such Claim, shall continue to be held back by Buyer past the Applicable Release Date until such Claim is resolved, with the remaining Contingent Cash Consideration released to Buyer within fifteen (15) days after the Applicable Release Date. Subject to Section 13 hereof, Buyer shall be entitled to reimbursement from Stockholder of the amount of any reasonable legal fees and expenses (including court costs and the costs of appeal) incurred by Buyer to enforce the collection of amounts owed Buyer by Stockholder hereunder, provided Buyer is the prevailing party in any such collection action; however, if Stockholder is the prevailing party in any such collection action, Stockholder shall be entitled to reimbursement from Buyer of the amount of any reasonable legal fees and expenses (including court costs and the costs of appeal) incurred by Stockholder to defend itself in such collection action.

     5.  Effective Date; Closing Date . The effective date for the transactions contemplated under this Agreement will be 12:01 a.m. on May 16, 2009 (the “Effective Date”); however, subject to the terms of this Agreement, the actual closing of the transactions contemplated under this Agreement shall take place on May 18, 2009, unless extended by written agreement of the Parties. The date upon which such Closing shall occur is hereinafter referred to as the “Closing” or “Closing Date.” Closing shall take place at such place or in such a manner as may be agreed upon by the Parties.

     6.  Representations and Warranties by Stockholder . Stockholder represents and warrants to Buyer that each of the following representations and warranties is true and correct as of the Effective Date and again as of the Closing Date, and is made with the full understanding that such representations and warranties constitute material inducement to Buyer to enter into the transactions contemplated hereby:

          a. Organization of the Corporations; Qualification; Power and Authority . Beacon/Georgia is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, Lovell is a corporation duly organized, validly existing and in good standing under the laws of the State of North Carolina, and Trinity is a corporation duly organized, validly existing and in good standing under the laws of the State of Georgia, with each such Corporation having all requisite corporate power and authority to carry on its business as presently conducted. Beacon/Georgia is registered or qualified to do business in the States of Georgia and South Carolina and in all other jurisdictions where the nature of Beacon/Georgia’s business requires such registration or qualification, Lovell is registered or qualified to do business in all other jurisdictions where the nature of Lovell’s business requires such registration or qualification, and Trinity is registered or qualified to do business in the States of North Carolina and South Carolina and in all other jurisdictions where the nature of Trinity’s business requires such registration or qualification, except where failure of any such Corporation to be so qualified would not have a material adverse affect on the Business or on such Corporation’s business, assets, results of operations, prospects or condition (financial or otherwise).

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Stockholder warrants and represents that Trinity is not registered to do business in the State of South Carolina and that Trinity is not obligated to the State of South Carolina. None of the Corporations are in default under any provisions of their respective Articles of Incorporation, as amended, or their respective By-laws, as amended. None of the Corporations have subsidiaries nor has any direct or indirect equity interest in any other firm, corporation or business enterprise. A complete listing of the Officers and Directors of each Corporation is attached hereto as Exhibit 6-A .

          b. Capitalization and Long Term Indebtedness .

               i. Beacon/Georgia is authorized by its Articles of Incorporation to issue one thousand (1,000) shares of common stock, $1.00 par value per share, of which all one thousand (1,000) shares are duly and validly issued and outstanding, fully paid, and nonassessable. Lovell is authorized by its Articles of Incorporation to issue one hundred thousand (100,000) shares of common stock, $1.00 par value per share, of which ten thousand (10,000) shares are duly and validly issued and outstanding, fully paid, and nonassessable. Trinity is authorized by its Articles of Incorporation to issue one million (1,000,000) shares of common stock, $0.01 par value per share, of which one thousand (1,000) shares are duly and validly issued and outstanding, fully paid, and nonassessable. As to each Corporation, there are no shares of any other class of stock authorized, issued or outstanding nor are any unissued shares committed to any party by any Corporation. None of the Corporations has authorized or established any stock appreciation, phantom stock, profit participation or similar rights or plans with respect to any Corporation. None of the Corporations has authorized or issued any class of preferred stock or any other class of common capital stock, nor has any authority to issue any other capital stock, preferred stock or other securities.

               ii. None of the Corporations are in any default or violation of any provision of its outstanding long term or short-term indebtedness.

               iii. There are no outstanding options, warrants, purchase rights, subscription rights, conversion rights, exchange rights or other contracts, commitments or agreements of any character relating to the issuance of capital stock or other securities of any of the Corporations.

               iv. All FICA and Federal and state withholding tax deposits have been timely and fully reported and paid by each Corporation.

               v. Except as set forth in Exhibit 6-B , as to each Corporation, there are no outstanding or unpaid loans or other obligations to or from stockholders, directors or officers or, except for compensation paid by such Corporation to employees in the ordinary course of business, to or from employees of such Corporation.

               vi. Except as set forth in Exhibit 6-B , none of the Corporations has made any payments, dividends or other distributions to Stockholder or any other affiliate between January 31, 2009 and the Closing Date.

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          c. Financial Statements . Stockholder has furnished Buyer with balance sheets of each Corporation (collectively, the “Balance Sheets”) dated December 31, 2008, January 31, 2009, February 28, 2009, and March 31, 2009 (the March 31, 2009 date is sometimes herein referred to as the “Last Balance Sheet Date”), and the related statements of income for each Corporation (collectively, the “Income Statements”) for the periods ended December 31, 2008, January 31, 2009, February 28, 2009, and March 31, 2009, copies of which are attached hereto as Exhibit 6-C (the Balance Sheets and Income Statements are collectively referred to herein as the “Financial Statements”). The Financial Statements: (i) are in accordance with the books and records of each such Corporation; (ii) fairly represent the financial condition of each such Corporation at such dates and the results of its operations for the periods specified; (iii) were prepared on a basis consistent with prior accounting periods; (iv) with respect to all contracts and commitments of each such Corporation, reflect adequate reserves for all reasonably anticipated losses and costs in excess of anticipated income; and (v) with respect to the Balance Sheets, disclose all of the debts, liabilities and obligations of any nature (whether absolute, accrued, contingent, or otherwise) of each such Corporation at the Last Balance Sheet Date and include the appropriate reserves for all taxes and other accrued liabilities, except that certain contingent liabilities, if not disclosed on the Balance Sheets, shall be considered to be disclosed pursuant to this subsection, if disclosed on an Exhibit to this Agreement. The Stockholder covenants and agrees to deliver to Buyer, post-Closing, the balance sheet of each Corporation and the related statement of income of each Corporation for the month ended April 30, 2009, and for the period commencing on May 1, 2009 and ending on May 15, 2009, promptly following completion of such financial statements by Stockholder, but in no event later than May 31, 2009 for the April 30, 2009 financial statements and in no event later than June 15, 2009 for the May 15, 2009 financial statements.

          d. Aggregate Existing Obligations . All of the debts, liabilities and obligations of each of the Corporations are listed on the Schedule of Liabilities attached hereto as Exhibit 6-D and such schedule accurately reflects all of such Corporations’ “Aggregate Existing Obligations” (as hereinafter defined) as of the Effective Date. The term “Aggregate Existing Obligations” shall mean and refer to all of such Corporations’ debts, liabilities and obligations of any nature (whether absolute, accrued, contingent, or otherwise) on the Effective Date, including but not limited to any and all accounts payable, trade payables, lease obligations, indebtedness for borrowed money, accrued interest, contractual obligations, etc. By way of illustration and not limitation, Stockholder represents and warrants that those obligations set forth in Section 3.c hereof have been paid in full prior to the Closing Date. Except for those accounts payable listed in Exhibit 6-R (which Stockholder, Arcadia Resources, Inc. and RKDA, Inc. are responsible for and obligated to pay in full pursuant to Section 3.f hereof or under the applicable Guaranty Agreement), Stockholder warrants and represents that the aggregate amount of the Aggregate Existing Obligations is not in excess of Zero Dollars ($-0-) as of the Effective Date. The Stockholder acknowledges that the purchase price for the Shares is based on the accuracy of Stockholder’ representations and warranties contained in this Agreement, including but not limited to the Stockholder’ representations and warranties contained in this subsection 6.d.

          e. Undisclosed Liabilities . None of the Corporations has any debt, liability or obligation of any kind (and, to the knowledge of Stockholder, there are no facts in existence as of the Closing Date that could reasonably be expected to result in any present or future action,

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suit, proceeding, hearing, investigation, charge, complaint, claim or demand against any of the Corporations that would give rise to any debt, liability or obligation), whether accrued, absolute, contingent or otherwise, including without limitation, any liability or obligation on account of taxes or any governmental charge or penalty, interest or fine, except liabilities incurred after May 15, 2009 in the ordinary course of business that did not, individually or in the aggregate, have a material adverse effect on the Business, assets, results of operations, prospects or condition (financial or otherwise) of any Corporation as of the Closing Date. By way of illustration and not limitation, Stockholder and not Buyer nor any of the Corporations shall be fully liable for any debt, liability or obligations (whether lease obligations or otherwise) arising from or related in any way to the closing of business locations of the Corporations on or before the Effective Date, including but not limited to those prior business locations (now closed) of: (1) Beacon/Georgia located in Atlanta, Georgia; (2) Lovell located in Statesville, North Carolina, and 496 North Main Street, Mount Airy, North Carolina; and (3) Trinity located at 3918 West Point Boulevard, Winston-Salem, North Carolina, 116 North Old Statesville Road, Suite B, Huntersville, North Carolina, 1165 Allgood Road, Marietta, Georgia, 541 Historic Highway 441, Demorest, Georgia, and 221A Pat Haralson Memorial Drive, Blairsville, Georgia.

          f. Title to the Shares . Stockholder owns good, absolute and marketable title to, and all beneficial interest in, the Shares, which represent all of the issued and outstanding capital stock of each of the Corporations. Such Shares are (i) validly issued, fully paid and nonassessable, (ii) free and clear of any liens, claims and encumbrances, with no defects in title, w


 
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