ASSIGNMENT AND ASSUMPTION AGREEMENT
Exhibit
10.5
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, Xxxxxx 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”), XXXX Master Fund, Ltd.
(“XXXX”), Vicis Capital Master Fund (“Vicis”) and LSP Partners, LP (“LSP”). XXXX, Vicis and LSP
are referred to herein sometimes individually as a “Secured Party” and collectively as “Secured
Parties.”
RECITALS
A. This is the Assignment and Assumption Agreement referred to in that certain Master Exchange
Agreement dated the Effective Date between Assignee, XXXX, LSP and Vicis (the “Master Exchange
Agreement”).
B. Assignors and XXXX 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 XXXX 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 XXXX 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 XXXX a Promissory Note, dated the Effective Date, in the original
principal amount of $18,035,367 (“New XXXX Note”), which New XXXX Note shall evidence certain
indebtedness owed by Assignee to XXXX, 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) XXXX 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. XXXX 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 indebtedness evidenced by the Subsidiaries Note. The
Assignors and the Assignee acknowledge and agree that JANA’s consent described herein does not and
shall not be deemed to constitute a release of the Assignors or any of them from or with respect to
any of the obligations under the Revolving Credit Line Agreement or the indebtedness evidenced by
the Subsidiaries Note and, to the extent that the Assignee fails to discharge, pay and perform in
full and when due any of the obligations under the Revolving Credit Line Agreement or any of the
indebtedness evidenced by the Subsidiaries Note (collectively, the “Assumed Obligations”), XXXX
shall have full recourse against the Assignors for such indebtedness. The parties acknowledge and
agree that from and after the Effective Date there shall be no additional advances under the
Revolving Credit Line or Subsidiaries Note.
4. Grant of Security Interest/Commitment to Release Security Interest.
(a) The Assignors, jointly and severally, and the Assignee, hereby PLEDGE, ASSIGN and GRANT a
security interest in all of the Assignors’, individually and collectively, and Assignee’s, right,
title and interest in and to the Collateral: (i) to XXXX, to secure the prompt and complete
payment and performance of the New XXXX Note; (ii) to Vicis, to secure the prompt and complete
payment and performance of the Vicis Note; and (iii) to LSP, to secure the prompt and complete
payment and performance of the LSP Note. Any and all proceeds of any Collateral received by any
Secured Party shall be applied to the indebtedness owed by the Assignee to each of the Secured
Parties on a pro rata basis (based on the then outstanding
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amount of unpaid principal and accrued unpaid interest evidenced by the New XXXX Note, the
Vicis Note and the LSP Note).
(b) Each of the New XXXX Note, Vicis Note and LSP Note (each, a “Note”) expressly contemplates
that from and after the Effective Date the Assignee will complete Business Line Sales (as such term
is defined in each Note) and other sales of assets of the Assignors outside of the ordinary course
of business. Each Secured Party agrees that so long as the Net Proceeds (as such term is defined
in each Note) paid to or received by the Assignee in connection with any Business Line Sale or
other sale of assets outside of the ordinary course of business are applied strictly in accordance
with Section 8 of each Note, it will release its security interests and liens in and to so much of
the Collateral as is included in such Business Line Sale or other sale of assets outside of the
ordinary course of business (the “Released Collateral”), and cause any effective Uniform Commercial
Code financing statements to be partially terminated and take any other actions necessary to
release or terminate any interest it may have with respect to any of the Released Collateral.
Excepting only Released Collateral, the security interests in the remaining Collateral will remain
in full force and effect.
5. Obligations Absolute. The obligations of each Assignor hereunder (including, without
limitation, with respect to the indebtedness evidenced by the Subsidiaries Note) are independent of
the Assumed Obligations, and a separate action or actions may be brought and prosecuted against any
Assignor to enforce such obligations, irrespective of whether any action is brought against Arcadia
or any other Assignor (each, a “Transaction Party”) or whether any such party is joined in any such
action or actions. The liability of each Assignor hereunder shall be irrevocable, absolute and
unconditional irrespective of, and each Assignor hereby irrevocably waives any defenses it may now
or hereafter have in any way relating to, any or all of the following: (a) any lack of validity or
enforceability of the New Xxxx Note, the Vicis Note, or the LSP Note or any other agreement
executed in connection therewith or any agreement or instrument relating thereto (each of the
foregoing, a “Transaction Document”); (b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Assumed Obligations, or any other amendment or waiver of or
any consent to departure from any Transaction Document, including, without limitation, any increase
in the Assumed Obligations resulting from the extension of additional credit to any Transaction
Party or otherwise; (c) any taking, exchange, release or non-perfection of any Collateral, or any
taking, release or amendment or waiver of or consent to departure from any other guaranty, for all
or any of the Assumed Obligations; (d) any change, restructuring or termination of the corporate,
limited liability company or partnership structure or existence of any Transaction Party; or (e)
any other circumstance (including any statute of limitations) or any existence of or reliance on
any representation by Xxxx, Vicis or LSP that might otherwise constitute a defense available to, or
a discharge of, any Transaction Party or any other guarantor or surety. This Agreement shall
continue to be effective or be reinstated, as the case may be, if at any time any payment of any of
the Assumed Obligations is rescinded or must otherwise be returned by Xxxx, Vicis, LSP or any other
Person upon the insolvency, bankruptcy or reorganization of Arcadia or any Assignor or otherwise,
all as though such payment had not been made.
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6. Miscellaneous.
(a) Section headings have been inserted herein for convenience only and shall not be construed
to be a part hereof.
(b) This Assignment and Assumption Agreement may be executed in any number of separate
counterparts, including counterparts by facsimile and all of said counterparts taken together shall
be deemed to constitute one and the same agreement. It shall not be necessary in making proof of
this Assignment and Assumption Agreement to produce or account for more than one counterpart signed
by the party to be charged.
(c) Every provision of this Assignment and Assumption Agreement is intended to be severable,
and if any term or provision hereof shall be invalid, illegal or unenforceable for any reason, the
validity, legality and enforceability of the remaining provisions hereof shall not be affected or
impaired thereby, and any invalidity, illegality or unenforceability in any jurisdiction shall not
affect the validity, legality or enforceability of any such term or provision in any other
jurisdiction.
(d) This Assignment and Assumption Agreement shall be binding upon and inure to the benefit of
XXXX, LSP, Vicis, the Assignors and the Assignee.
(e) THIS ASSIGNMENT AND ASSUMPTION AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES) AND DECISIONS OF THE STATE
OF NEW YORK.
(f) This Assignment and Assumption Agreement shall become effective on the Effective Date.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Assumption Agreement to
be duly executed and delivered by their proper and duly authorized officers as of the day and year
first above written.
| XXXX | ASSIGNORS: | ||||||||
| XXXX MASTER FUND, LTD. | ARCADIA HOME HEALTH PRODUCTS, INC. | ||||||||
| By: Its Investment Advisor, XXXX Partners LLC | By: | /s/ Xxxxxx X. Xxxxxxxxxx | |||||||
| Xxxxxx Xxxxxxxxxx, President | |||||||||
| By: | /s/ Xxxx Xxxxxxx | ||||||||
| Xxxx Xxxxxxx, Partner | AMERICAN OXYGEN AND MEDICAL EQUIPMENT, INC. | ||||||||
| VICIS CAPITAL MASTER FUND | By: | /s/ Xxxxxx X. Xxxxxxxxxx | |||||||
| Xxxxxx Xxxxxxxxxx, President | |||||||||
| By: | /s/ Xxxxx X. Xxxxxx | ||||||||
| Printed: | Xxxxx X. Xxxxxx | BEACON RESPIRATORY SERVICES OF GEORGIA, INC. | |||||||
| Title: | Chief Financial Officer | ||||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxxx | ||||||||
| LSP PARTNERS, LP | Xxxxxx Xxxxxxxxxx, President | ||||||||
| By: | /s/ Xxxxx Xxxxxxx, General Partner | BEACON RESPIRATORY SERVICES OF ALABAMA, INC. | |||||||
| Printed: | Xxxxx Xxxxxxx | ||||||||
| Title: | Partner | By: | /s/ Xxxxxx X. Xxxxxxxxxx | ||||||
| Xxxxxx Xxxxxxxxxx, President | |||||||||
| ASSIGNEE: | |||||||||
| XXXXXX MEDICAL SUPPLY, INC. | |||||||||
| ARCADIA RESOURCES, INC. | |||||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxxx | ||||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxxx | Xxxxxx Xxxxxxxxxx, President | |||||||
| Xxxxxx Xxxxxxxxxx, President | |||||||||
| TRINITY HEALTHCARE OF WINSTON-SALEM, INC. | |||||||||
| ASSIGNORS: | |||||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxxx | ||||||||
| ARCADIA PRODUCTS, INC. | Xxxxxx Xxxxxxxxxx, President | ||||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxxx | ||||||||
| Xxxxxx Xxxxxxxxxx, President | |||||||||
| O2 PLUS | |||||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxxx | ||||||||
| Xxxxxx Xxxxxxxxxx, President | |||||||||
| ARCADIA HOME MIDEAST, INC. | ||||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxxx | |||||||
| Xxxxxx Xxxxxxxxxx, President | ||||||||
| ARCADIA HOME OXYGEN AND MEDICAL EQUIPMENT, INC. | ||||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxxx | |||||||
| Xxxxxx Xxxxxxxxxx, President | ||||||||
