Exhibit 10.2
ASSET PURCHASE AGREEMENT
By and among
Braden Partners, L.P.
As Buyer
and
American Oxygen and Medical Equipment, Inc. and Arcadia Home Oxygen and Medical
Equipment, Inc.
and
Arcadia Products, Inc., RKDA, Inc., and Arcadia Resources, Inc.
As Sellers

 

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TABLE OF CONTENTS

              Page  
ARTICLE I — PURCHASE AND SALE OF ASSETS
    1  
1.1. Purchased Assets
    1  
1.2. Excluded Assets
    2  
1.3. Assignment of Third Party Real Property Leases; Subletting
    3  
 
       
ARTICLE II — NON-ASSUMPTION OF LIABILITIES
    3  
2.1. Non-Assumption of Liabilities
    3  
2.2. Assumed Liabilities
    3  
2.3. Excluded Liabilities
    3  
 
       
ARTICLE III — PURCHASE PRICE
    3  
3.1. Purchase Price
    3  
3.2. Adjustment to Purchase Price
    4  
3.3. Disputes Regarding Final Purchase Price
    8  
3.4. Allocation of Consideration
    8  
3.5. Transfer Taxes
    9  
 
       
ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF THE SELLERS
    9  
4.1. Organization and Qualification
    9  
4.2. Subsidiaries
    9  
4.3. Authority Relative to this Agreement
    9  
4.4. Compliance of Transaction With Laws and Other Instruments
    10  
4.5. Title to Purchased Assets; Liens
    11  
4.6. Tax Matters
    11  
4.7. Absence of Undisclosed Liabilities
    12  
4.8. Inventory
    12  
4.9. Food and Drug
    12  
4.10. Contracts, Real Property Leases, and Commitments
    12  
4.11. Patients
    13  
4.12. Permits; Governmental Agreements
    14  
4.13. Environmental Matters
    14  
4.14. Health Care Compliance
    14  
4.15. Compliance with Applicable Law; Adverse Restriction
    15  
4.16. Litigation
    16  
4.17. Finder’s Fee
    17  
4.18. Solvency
    17  
4.19. No Material Adverse Change
    17  
 
       
ARTICLE V — REPRESENTATIONS AND WARRANTIES OF BRADEN
    17  
5.1. Organization; and Qualification
    17  
5.2. Authority Relative to this Agreement
    17  
5.3. Compliance of Transaction With Laws and Other Instruments
    18  
5.4. Finder’s Fee
    18  

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              Page  
ARTICLE VI — CERTAIN UNDERSTANDINGS AND AGREEMENTS
    18  
6.1. Expenses
    18  
6.2. Confidentiality
    18  
6.3. Further Assurances
    19  
6.4. Bulk Sales
    19  
6.5. Tax Returns
    19  
6.6. Reimbursement of Funds
    20  
6.7. Referrals
    20  
6.8. Rehired Employees
    20  
6.9. Patient Relationships
    21  
 
       
ARTICLE VII — CONDITIONS TO CLOSING
    21  
7.1. Conditions to Braden’s Obligations to Close
    21  
7.2. Conditions to the Sellers’ Obligations to Close
    21  
 
       
ARTICLE VIII — CLOSING DELIVERIES
    22  
8.1. Braden
    22  
8.2. Seller Entity
    22  
8.3. Joint Deliveries
    24  
 
       
ARTICLE IX — SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
    24  
9.1. Representations, etc.
    24  
9.2. Indemnification
    24  
9.3. Payment of Claims for Damages; Right of Setoff by Braden
    26  
9.4. Limitations on Indemnification
    26  
9.5. Notice; Defense of Claims
    26  
9.6. Sole Remedy
    27  
 
       
ARTICLE X — ARBITRATION
    27  
10.1. Arbitration Rules
    27  
10.2. Binding Effect of Arbitration
    28  
 
       
ARTICLE XI — MISCELLANEOUS PROVISIONS
    28  
11.1. Entire Agreement: Amendment
    28  
11.2. Assignment and Binding Effect
    28  
11.3. Waivers
    28  
11.4. Notices
    28  
11.5. Governing Law
    29  
11.6. No Third Party Beneficiaries
    29  
11.7. Counterparts; Execution
    29  
11.8. Effect of Headings
    29  
11.9. Severability
    30  
11.10. Construction; Complete Agreement
    30  
11.11. Certain Definitions
    30  
11.12. Schedules and Exhibits
    31  

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SCHEDULES
TITLE
4.1 Organization and Qualification
4.4 Compliance of Transaction With Laws and Other Instruments
4.5(a) Title to Purchased Assets; Liens
4.5(c) Title to Purchased Assets; Liens
4.6 Tax Matters
4.8 Inventory
4.10 Contracts, Real Property Leases, and Commitments
4.11(a) All Active Rental Patients
4.11(b) All Qualified Files
4.12 Permits; Governmental Agreements
4.14 Healthcare Compliance
4.16 Litigation
4.17 Finder’s Fee

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EXHIBITS
Exhibit A Form of Non-Compete Agreement
Exhibit B Form of Bill of Sale
Exhbit C Form of Sublease Agreement

iv

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ASSET PURCHASE AGREEMENT
     This ASSET PURCHASE AGREEMENT (this “Agreement”) is made as of this 19th
day of May, 2009 by and among Braden Partners, L.P., a California limited
partnership (“Braden”), American Oxygen and Medical Equipment, Inc., an Illinois
corporation, also doing business as Remedy Therapeutics; and Arcadia Home Oxygen
and Medical Equipment, Inc., a Michigan corporation, also doing business as
Arcadia H.O.M.E, (collectively, the “Seller Entity”), and Arcadia Products,
Inc., a Delaware corporation; RKDA, Inc, a Michigan corporation, and Arcadia
Resources, Inc., a Nevada corporation, as shareholders of Seller Entity (the
“Shareholders”). The Shareholders and the Seller Entity are referred to
collectively herein as the “Sellers.”
     Certain terms used herein and not defined shall have the meaning set forth
in Section 11.11 hereof.
RECITALS
     WHEREAS, the Seller Entity has been and is currently in the business of
providing oxygen, oxygen equipment, compressed oxygen products, nebulizers,
sleep therapy equipment, and respiratory and sleep therapy related products,
supplies and services in and around Illinois, Indiana and Kentucky (such
business shall be referred to herein as the “Business”);
     WHEREAS, Braden desires to purchase, and the Sellers desire to sell,
substantially all of the assets relating to the Business of the Seller Entity,
upon the terms and conditions hereof.
     NOW, THEREFORE, in consideration of the mutual promises herein made, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged,
     IT IS AGREED AS FOLLOWS:
ARTICLE I — PURCHASE AND SALE OF ASSETS
     1.1. Purchased Assets
     Subject to and upon the terms and conditions hereof, and in reliance upon
the representations, warranties, covenants and agreements made herein by each
party to the other, on the Closing Date (as defined in Article VIII), the
Sellers hereby agree to sell, transfer, assign, convey and deliver to Braden,
and Braden hereby agrees to purchase and acquire from the Sellers, wherever
located, free and clear of all liens, claims, encumbrances, charges, liabilities
or obligations of every kind and nature whatsoever (collectively, “Liens”), all
right, title and interest to and in all of the assets, properties and rights of
the Seller Entity of every nature, kind and description, tangible and
intangible, and any such assets of the Shareholders used in or directly related
to the Business, including confidentiality and non-compete agreements for the
benefit of Seller Entity, except to the extent that any such assets form a part
of the Excluded Assets as defined in Section 1.2 below, (collectively, the
“Purchased Assets”).

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     1.2. Excluded Assets
     Anything contained in this Agreement to the contrary notwithstanding, the
following rights, properties and assets (the “Excluded Assets”), shall be
retained by the Seller Entity and shall not be included in the Purchased Assets:
          (a) Cash. Cash or cash equivalents of the Seller Entity and all rights
of the Seller Entity to deposits, prepaid expenses, security deposits, prepaid
insurance, claims for refunds and rights to offset in respect thereof.
          (b) Bank Accounts. Bank accounts of the Seller Entity.
          (c) Accounts and Accounts Receivable. The accounts, accounts
receivable or notes receivable, whether or not current, arising out of the
Business for services provided prior to the Closing Date (the “Accounts
Receivable”).
          (d) Tax Refunds. All refunds and deposits of all federal, state, local
and foreign taxes due to any of the Sellers with respect to the Business for any
period.
          (e) Corporate Records. The Seller Entity’s corporate stock record
books, corporate record books containing minutes of meetings of the directors
and stockholders of the Seller Entity, and all other records related to the
Seller Entity’s corporate organization and capitalization, tax records and
returns, schedules of depreciation and financial statements; provided that, the
Seller Entity will retain all such records in accordance with its current record
keeping policies and shall, upon the request of Braden (which request shall
include, in reasonable detail, the reasons for requiring such information) and
upon reasonable advance notice, make such records available for Braden’s
inspection and copying during normal business hours.
          (f) Insurance. All insurance policies owned by Sellers and rights to
collect insurance proceeds under policies owned by Sellers.
          (g) Provider Numbers and Agreements. Medicare, Medicaid and all other
third party provider numbers and agreements.
          (h) Personnel Records. All personnel records that the Seller Entity is
required to retain in its possession and all rights in connection with the
assets of any employee benefit plans.
          (i) Written Materials. All stationery, purchase orders and sale order
forms, invoices, brochures, advertising materials and similar items.
          (j) Permits and Licenses. All permits and licenses of the Business.
          (k) Inactive Patients and Patient Files. Any patient or patient file
not listed on Schedule 4.11(a).

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     1.3. Assignment of Third Party Real Property Leases; Subletting
     Sellers will assign all rights and interests in the real property leases in
Peoria, Illinois and Jackson, Kentucky, as specified in Schedule 4.10, together
with office space, appurtances, fixtures and improvements on the leased
property, and will sublet the Business locations in Crystal Lake, Illinois and
Jacksonville, Illinois to Braden on a month-to-month basis at Seller’s cost for
a period not to exceed Seller’s present lease obligations on those locations.
Braden will not assume any other real property leases or obligations of Sellers;
provided however, Braden will be permitted access to Sellers’ Crown Point,
Indiana facility for the purpose of removing the Purchased Assets from the
premises through and including May 31, 2009.
ARTICLE II — NON-ASSUMPTION OF LIABILITIES
     2.1. Non-Assumption of Liabilities
     Other than with respect to the Assumed Liabilities (as defined in
Section 2.2 below), on the Closing Date Braden will not assume, agree to
perform, discharge or indemnify the Sellers against or otherwise have any
liability or obligation with respect to, any liability, debt, contract or
obligation of the Seller Entity.
     2.2. Assumed Liabilities
     Upon the sale and purchase of the Purchased Assets, Braden will assume only
the liabilities, responsibilities and obligations arising out of, resulting
from, or relating to the use and ownership of the Purchased Assets by Braden
after the Closing or the conduct of the Business by Braden after the Closing
(collectively, the “Assumed Liabilities”). The Assumed Liabilities shall
specifically not include any severance obligations of the Seller Entity or the
Shareholders with respect to any officers or employees of the Seller Entity
terminated in connection with the transactions contemplated hereby.
     2.3. Excluded Liabilities
     For purposes hereof the term “Excluded Liabilities” means any and all
liabilities, responsibilities and obligations not listed in Section 2.2.
ARTICLE III — PURCHASE PRICE
     3.1. Purchase Price
     In reliance on the representations and warranties of the Sellers contained
herein, and in consideration of the aforesaid sale, assignment, transfer and
delivery of the Purchased Assets, Braden shall pay to the Seller Entity in full
payment for the Purchased Assets and in full payment for the agreements of
Sellers herein and in the attached Exhibits, and subject to the provisions of
Sections 3.1 and 3.2, the amount of Four Million Dollars and No Cents
($4,000,000) (the “Purchase Price”). The Purchase Price is payable by Braden
(subject to Section 9.2 hereof) as follows:

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          (a) On the Closing Date, Braden will pay an amount equal to
seventy-five percent (75%) of the Purchase Price as the same may be adjusted
pursuant to Section 3.2 (a) (the “Closing Payment”) to the Seller Entity (or
directly to the Shareholders if so directed by the Seller Entity) by wire
transfer to an account or accounts designated by the Seller Entity.
          (b) Subject to any further adjustment made pursuant to the provisions
of Section 3.2 hereof, on the fifteenth (15th) day following the date that is
six (6) months after the Closing Date, (such day being the “Deferred
Disbursement Date”), Braden shall pay to the Seller Entity an additional amount
(“Adjusted Payment”) such that the total received by the Seller Entity,
including both the Adjusted Payment and the Closing Payment, shall equal ninety
percent (90%) of the Purchase Price subject to any adjustment(s) pursuant to the
provisions of Section 3.2(b).
          (c) On the fifteenth (15th) day following the date that is twelve
(12) months following the Closing Date (the “Final Disbursement Date”), Braden
shall pay to the Seller Entity by wire transfer an additional amount (“Final
Disbursement”) such that the total received by the Seller Entity shall be equal
to one hundred percent (100%) of the Purchase Price, subject to any
adjustment(s) pursuant to the provisions of Section 3.1(d) and 3.2 (b).
          (d) Notwithstanding anything herein to the contrary, Braden shall have
a right of setoff against any or all amounts owed by Braden to the Seller Entity
pursuant to this Section 3.1 with respect to any unpaid indemnity claims made
pursuant to Section 9.2 and subject to Section 9.3 hereof. In the event that
Braden shall have asserted against Sellers any claim(s) for indemnification
pursuant to Section 9.2 or 9.3 hereof and such claim(s) shall not have been
resolved prior to the Final Disbursement Date, then Braden’s obligation to make
such payment shall be deferred until resolution under Article X with respect to
such claims is reached, in an amount equal to the aggregate amount of all such
claims. Braden shall not be required to pay any interest on deferred payments.
Upon resolution under Article X of such claims, Braden shall pay to the Seller
Entity such amount of the deferred Purchase Price, as reduced by the
indemnification amount resolved to be due to Braden, if any, as a result of such
claims.
          (e) Braden and certain of the Sellers are parties to a Purchase and
Sale Agreement dated as of January 6, 2009 relating to Braden’s purchase of
assets of a separate business owned by certain of the Sellers and their
Affiliates (the “O2 Agreement”). Braden has asserted claims for indemnification
and adjustments to the purchase price under the O2 Agreement, which claims
certain of the Sellers and their Affiliates dispute. Braden agrees that it shall
not withhold or adjust amounts due to Sellers under this Agreement for claims
under the O2 Agreement. Notwithstanding the foregoing, Sellers agree that Braden
shall be entitled to withhold or adjust amounts due to Sellers under this
Agreement (i) for any binding and finally resolved or adjudicated claims arising
from the O2 Agreement, and (ii) subject to the limitations on claims set forth
in the O2 Agreement, including but not limited to the provisions of Section 9.4
thereof.
     3.2. Adjustment to Purchase Price
          (a) Adjustments to Closing Payment at Closing Date. The Closing
Payment shall be (i) reduced by the total of all amounts billed by Seller Entity
during the fifteen (15) days

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prior to the Closing Date in the ordinary course, representing payment to Braden
to render services on and after the Closing Date that have been billed in
advance by the Seller Entity; and (ii) increased by the total of any agreed
amounts representing payment to the Seller Entity for rendering services after
the Closing Date, but before Braden assumes operating responsibility. The Seller
Entity shall not bill for any Billing Cycles that commence on or after the
Closing Date. The adjustment referenced in Section 3.2(a)(i) above shall include
only amounts billed for recurring rental equipment during the current Billing
Cycle and shall not include any billings for prior services provided by Sellers.
In addition, the adjustment shall exclude any purchase conversions billed during
the fifteen (15) days prior to the Closing Date unless the patient is shown as
actively renting the purchased item on Schedules 4.11(a) or 4.11(b).
          (b) Adjustments at Deferred Disbursement Date. On the Deferred
Disbursement Date, the Purchase Price may, at Braden’s election, be adjusted if
the number of Oxygen Qualified Files and Sleep Qualified Files are fewer than
the number listed on Schedule 4.11(b).
          (i) Except as provided in Section 3.2(b)(iii), if the number of
Qualified Files meeting the standards included in their respective definitions
at Section 3.2 (c) as of the Deferred Disbursement Date is fewer than the number
of Qualified Files scheduled by Sellers in Schedule 4.11(b), the Purchase Price
shall be reduced by an amount equal to the total of: (i) the difference between
the number of Oxygen Qualified Files scheduled in 4.11(b) and the number of
actual Oxygen Qualified Files as of the Deferred Disbursement Date multiplied by
Two Thousand Five Hundred Dollars ($2500.00), plus (ii) the difference between
the number of Sleep Qualified Files in Schedule 4.11(b) and the number of actual
Sleep Qualified Files as of the Deferred Disbursement Date multiplied by Five
Hundred Dollars ($500.00); provided however that the Purchase Price will not be
adjusted unless the cumulative total amount of the adjustments relating to
Qualified Files in this Section 3.2(b)(i) and the adjustments relating to
equipment in Section 3.2 (b)(iv) is greater than One Hundred Thousand Dollars
($100,000) (“The Threshold”). In the event that the cumulative total amount of
adjustments relating to Qualified Files exceeds the Threshold, then the Purchase
Price will be reduced under this Section 3.2(b)(i) by the amount that such
adjustment relating to Qualified Files exceeds the Threshold.
          (ii) A Qualified File that is listed on Schedule 4.11(b) as both an
active Qualified Oxygen File and an active Qualified Sleep File will result in a
total adjustment of Three Thousand Dollars ($3,000) if the file fails to qualify
under the criteria for both oxygen and sleep rental services.
          (iii) In the event that Braden gives notice that the provisions of
Section 3.2(h) for an Enhanced Purchase Price Adjustment have been met, then the
Purchase Price adjustment reduction shall be calculated at the amounts of Five
Thousand Dollars ($5,000) for every Oxygen Qualified File transferred or
discontinued from service and One Thousand Dollars ($1,000) for each Sleep
Qualified File transferred or discontinued from service. Braden shall be
entitled to claim this “Enhanced Purchase Price Adjustment” reduction for each
transferred or discontinued Qualified File listed on Schedule 4.11(b) and for
each file listed on Schedule 4.11(a) that subsequently meets the criteria in
Section 3.2(c) after the Closing Date through the efforts of Braden.

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          (iv) Braden shall be entitled to reduce the Purchase Price for oxygen
concentrators and home fill systems that fail to conform to manufacturers’
specifications by the amounts of One Thousand Dollars ($1,000.00) for each
non-conforming home fill system and Four Hundred Dollars ($400.00) for each
non-conforming concentrator. A concentrator shall be deemed non-conforming only
if the non-conformity is such that Braden takes the unit out of service and
disposes of it. If Braden elects to reduce the Purchase Price for non-conforming
assets, Braden will document the make, model, and serial number of each
non-conforming home fill system or concentrator, describe the substandard
operating condition (including but not limited to accurate liter flow readings,
minimum purity, working alarms, warning lights and indicators operative and at a
reasonable decibel level, and breakage) and provide same to the Seller Entity on
a monthly basis. This Section 3.2(a)(iv) shall not apply to units on hand that
have been taken out of service and are properly tagged at the Closing Date as
awaiting disposal.
          (c) Certain Definitions. For the purposes of this Section 3.2, a
patient file included in the Purchased Assets is defined as a “Qualified File”
only if all of following conditions are met: (i) The patient file as and when
transferred by Seller Entity has complete paperwork necessary at the Closing
Date, including accurate patient contact and insurance information, valid orders
and prescriptions, valid pre-authorizations, wet ink initial and recertification
CMNs (if required), proof of physician visits, all relevant qualifying tests,
proof of patient adherence and other medical records necessary to support
billing to Medicare or the appropriate insurer, as determined by written
guidance from insurers; provided, however, such paperwork must be in the file or
available to Braden only if the paperwork is required by the applicable payor in
order to prove medical necessity for the equipment or services billed; (ii) on
the Closing Date the patient is actively served by the Seller Entity and is
using the equipment provided; and (iii) the patient is insurance-eligible and
executes a valid assignment of benefits in favor of Braden within three
(3) months of the Closing Date; and, (iv) the patient files, which meet all of
the above three requirements, must represent a patient that is on active and
billable service with Braden for at least three (3) Billing Cycles following the
Closing Date; provided however, that any patient file meeting all of the above
requirements that is billed by Braden, and for which Braden receives at least
one (1) Billing Cycle, but subsequently becomes ineligible due to death or
residence in a long term care facility or hospital, is a Qualified File. In
determining whether a patient file is a Qualified File, Braden is entitled to
rely upon its billing experience from the Closing Date to the Deferred
Disbursement Date; provided however, that Braden will submit only those claims
to insurers that are, in Braden’s sole discretion, adequately supported by
medical necessity and required documentation and for which the beneficiary has
agreed to an assignment of insurance benefits to Braden. With respect to
qualifying tests referenced in Subsection 3.2(c)(i), a patient file will be
considered “Qualified” unless Braden determines that the qualifying tests are
not contained in the file, the qualifying test (or other similar information in
the patient notes) cannot be obtained from the physician or testing entity after
reasonable diligence to obtain such information, and the patient fails to
qualify after subsequent retesting. A patient shall be deemed to have failed to
qualify if, after exercising commercially reasonable efforts, Braden is unable
to perform retesting for any reason, including a physician’s refusal to order
the test, a patient’s refusal to be tested, a patient’s relocation, or death.
With respect to valid order and prescriptions referenced in Subsection
3.2(c)(i), a patient file will be considered

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“Qualified” provided the necessary information is set forth in an appropriate
document within the file, including a valid CMN. “Wet ink” CMNs are required
only where the applicable payor does not accept facsimile CMNs as a basis for
billing patient services.
          (d) For purposes of the Purchase Price Adjustment only, a patient file
being served by the Seller Entity or by Braden is defined as an “Oxygen
Qualified File” only if all of the requirements of 3.2(c) are met, and the file
represents a medically necessary and appropriate presently active rental of an
oxygen concentrator or liquid oxygen system and related oxygen equipment and
supplies listed on Schedule 4.11(b) as producing insurance-paid reimbursement at
a monthly allowable rental rate in an amount equal to no less than One Hundred
and Forty Five Dollars ($145.00) per month at rental rates for each Billing
Cycle specified in 3.2(c)(iv).
          (e) For purposes of the Purchase Price Adjustment only, a patient file
being served by the Seller Entity or by Braden is defined as a “Sleep Qualified
File” only if all of the requirements of 3.2(c) are met, and the file represents
a medically necessary and appropriately documented presently active rental of a
sleep blower unit device for each Billing Cycle specified in 3.2(c)(iv).
          (f) On or before the date that is Ninety (90) days after the Closing
Date, Braden shall provide a report of Qualified Files listed on
Schedule 4.11(b) that have not conformed to the requirements of Section 3.2(c),
together with a brief identification of the deficient paperwork. Braden agrees
to provide Sellers with an updated report on a monthly basis thereafter until
Braden elects to provide notice of a claim to adjust the Purchase Price under
this Section 3.2, which claim may be made at any time before the Final
Disbursement Date. For each such claimed adjustment, Braden shall provide a
specific reason or reasons it has determined that such file fails to conform to
the requirements of Section 3.2 (c).
          (g) Notwithstanding the foregoing, if Braden establishes that the
failure of a file to meet the requirements of Section 3.2 (c) is the result of a
separate and independent breach of a specific representation or warranty in this
Agreement, Braden may pursue its remedies for that file under the
indemnification provisions of Article IX upon proof of actual losses, which
shall not be determined by reference to or limted by the agreed adjustments to
Purchase Price for Oxygen Qualified Files and Sleep Qualified Files. For any
file that Braden determines it will not accept a Purchase Price adjustment as
the sole recourse for such failure, Braden shall notify Sellers to that effect
no later than sixty (60) days after determining that the patient file is not an
“Oxygen Qualified File” or a “Sleep Qualified File” or on the Deferred
Disbursement Date, whichever is later. Braden shall be bound by that election
and shall not be entitled to any Purchase Price adjustment for that file. If
Braden agrees to accept an adjustment of the Purchase Price pursuant to this
Section 3.2 and Seller agrees to the adjustment, such adjustment shall be the
sole recourse under this Agreement for losses suffered as the result of the
failure of any patient file to meet the definitions of a Qualified File under
Section 3.2(c).
          (h) Braden is entitled to the enhanced Purchase Price adjustments for
Qualified Files as set forth in Section 3.2 (b)(iii) or for any file that meets
the criteria in Section 3.2(c) at any time after the Closing Date through the
efforts of Braden if: (i) any employee who was actively employed by Seller
Entity as of May 1, 2009 fails to continue employment with Braden following the
Closing Date, and (ii) the employee enters into any direct or indirect

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relationship with a competitor of Braden’s following the Closing Date and before
the applicable disbursement date, and (iii) active rentals scheduled by Seller
Entity on Schedule 4.11 (a) are transferred from service with Braden to service
with such competitor of Braden. A direct or indirect relationship shall include,
but is not limited to, any relationship defined as a financial relationship
under the Stark Law. For purposes of establishing a causal connection between
the acts of the employee and the transfer of active rentals to a competitor,
Braden may proffer evidence of: (i) specific acts by the employee or persons
associated with the employee, or (ii) a pattern of patients who transfer service
as the result of physician orders, physician recommendations, or patient
requests that are unexplained, inadequately explained, or commercially unusual,
or (iii) patient-verified affidavits concerning the reason for the transfer, or
(iv) other reliable evidence, or (v) a combination of any of the above. The
Enhanced Purchase Price Adjustment shall apply only to those files that are
transferred or discontinued as the result of the pattern of activity addressed
in this Section 3.2(h); provided however, that if Braden provides credible
evidence of a relationship and a pattern of transferral of patient files, then
the Enhanced Purchase Price Adjustment shall apply to all similarly discontinued
or transferred files.
     3.3. Disputes Regarding Final Purchase Price
     If Seller disputes the calculation of the Purchase Price, Sellers shall
give timely written notice to Braden no later than thirty (30) calendar days
following the Final Disbursement Date (the “Dispute Notice”), which Dispute
Notice shall specify the reasons for such disagreement, the amount of any
adjustments that are necessary in Sellers’ judgment for the computation of the
Purchase Price and the basis for Sellers’ suggested adjustment. If the parties
resolve their differences over the disputed items in accordance with the
foregoing procedures, the final determination of the Purchase Price as
determined by the preceding sentence shall be the amount agreed upon. If Sellers
and Braden are unable to resolve the disputed matters outstanding within the
thirty (30) day period following Braden’s receipt of the Dispute Notice, all
disputed matters not so resolved shall be submitted to arbitration in accordance
with the provisions of Article X of this Agreement.
     3.4. Allocation of Consideration
     Braden shall allocate the Purchase Price (and all other capital costs)
among the Purchased Assets applying the Purchase Price to goodwill to the extent
allowable consistent with generally accepted accounting principles and deliver a
written copy thereof to Sellers within ninety-five (95) days of the Closing
Date. Such allocation shall be made in accordance with the provisions of
Section 1060 of the Internal Revenue Code of 1986, as amended (the “Code”), and
shall be binding upon Braden and Sellers for all purposes (including financial
accounting purposes, financial and regulatory reporting purposes and Tax
purposes). Each of the parties agrees to file appropriate documents with the IRS
under Section 1060 of the Code reflecting the foregoing. Notwithstanding any
allocation of the Purchase Price made by the parties hereto pursuant to this
Agreement or any other agreement delivered pursuant hereto, Braden shall be
entitled to recover the full amount of any damages incurred from any breach of
the non-compete agreement by and among Braden and the Sellers (the “Non-Compete
Agreement”) attached hereto as Exhibit A in

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accordance with the terms therein without reference to the amount allocated
thereto by the parties.
     3.5. Transfer Taxes
     Braden hereby waives compliance by the Sellers with the bulk sales laws of
any country or state, it being expressly understood and agreed that this
Section 3.5 shall not be deemed an admission or acknowledgment that any such law
is applicable to the transactions contemplated by this Agreement. Sellers shall
be solely responsible for payment of any bulk sales taxes, if any, that are
assessed against Sellers or Braden, in addition to any California State taxes
due as the result of sales and operations prior to the Closing Date. The parties
shall cooperate with each other to the extent reasonably requested and legally
permitted to minimize any such Sales Tax.
ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF THE SELLERS
     In order to induce Braden to enter into this Agreement, the Sellers jointly
and severally make the following representations and warranties to Braden, which
will be true and complete as written on the Closing Date, subject to the
exceptions as are specifically disclosed in the disclosure schedules delivered
by the Sellers on or before the Closing Date:
     4.1. Organization and Qualification
The Seller Entity is a corporation duly organized, validly existing and, except
as set forth in Schedule 4.1, in good standing under the laws of the
jurisdiction of its incorporation. The Seller Entity has all requisite corporate
power and corporate authority to own, lease and operate its properties and to
carry on its business as now being conducted . The Seller Entity is duly
qualified to conduct its affairs in each jurisdiction in which it operates,
except where such nonqualification would not reasonably be expected to have a
material adverse effect. The Seller Entity has delivered to Braden complete and
correct copies of its Articles of Incorporation and Bylaws, or applicable
governing documents, in each case as amended to the date hereof.
     4.2. Subsidiaries
With the exception of the subsidiary or Affiliate relationship between any
corporations constituting the Seller Entity, the Seller Entity does not hold,
directly or indirectly, any equity, partnership, joint venture, membership or
other interest in or control over any Person or legally cognizable entity.
     4.3. Authority Relative to this Agreement
          (a) The Seller Entity has all requisite right, corporate power and
corporate authority to execute, enter into and deliver this Agreement and any
agreement or document contemplated hereby, and to consummate the transactions
contemplated hereby. The Shareholders have full right, legal authority, and
legal power to enter into this Agreement and each agreement, document and
instrument to be executed and delivered by or on behalf of him or her pursuant
to this Agreement and to carry out the transactions contemplated hereby and
thereby.

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          (b) The execution, delivery and performance by the Seller Entity of
this Agreement and each agreement, document and instrument contemplated hereby
have been duly authorized by all necessary action of the Seller Entity and the
Shareholders.
          (c) This Agreement, and all agreements or documents contemplated
hereby, have been duly executed and delivered by the Seller Entity and the
Shareholders and the obligations imposed on the Seller Entity and the
Shareholders by this Agreement, or by any agreement or document contemplated
hereby, constitute the valid and binding obligations and agreements of the
Seller Entity and the Shareholders, respectively, enforceable against the Seller
Entity or the Shareholders, as the case may be, in accordance with its terms,
except: (i) that such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors rights; and (ii) that the remedy of specific performance,
and injunctive and other forms of equitable relief, may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefore may be brought.
          (d) None of the Shareholders has exercised or has the right to
exercise any shareholder dissenter rights as provided under applicable state law
and none of the Shareholders has any claim against Braden in connection with the
transactions contemplated by this Agreement and the Exhibits hereto.
     4.4. Compliance of Transaction With Laws and Other Instruments
The execution, delivery and performance by Sellers of this Agreement, and the
other agreements and documents contemplated hereby and the performance and
consummation of the transactions contemplated hereby by Sellers:
          (a) do not require on behalf of the Seller Entity or the Shareholders
any approval, consent, order or authorization of or registration, declaration or
filing with, any governmental agency, court, or other authority federal, state,
local or otherwise (a “Governmental Authority”) which has not been obtained and
which is not in full force and effect as of the date hereof;
          (b) does not and will not conflict with, or result in a breach or
violation of any provision of the Articles of Incorporation or Bylaws, or any
applicable governing documents, of the Sellers;
          (c) does not and will not result in a violation of any law,
regulation, statute, ordinance, rule, judgment, writ, injunction, license,
permit, order or decree of any Governmental Authority to which the Seller
Entity, the Shareholders or the Purchased Assets are subject, the effect of
which would be adverse to the Purchased Assets or require the Sellers to obtain
any approval, consent or waiver of, or make any filing with, any Person
(governmental or otherwise) that has not been obtained or made;
          (d) does not and will not result in the creation or imposition of any
Lien on any of the Purchased Assets; and

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          (e) except as indicated on Schedule 4.4, does not and will not require
the approval, consent or waiver of, or filing with any party to, violate or
conflict with or result in a breach of, or constitute a default or acceleration
of or give rise to a right of termination (or an event which with notice or
lapse of time or both would become a default) under, any provision of any
contract, indenture, mortgage, lease, agreement or other instrument directly or
indirectly associated with or related to the Purchased Assets and to which the
Seller Entity or the Shareholders are a party or by which the Purchased Assets
or the Seller Entity is subject.
     4.5. Title to Purchased Assets; Liens
          (a) Except as specifically disclosed in Schedule 4.5(a), the Sellers
have good and (if applicable) marketable title to all of the Purchased Assets.
The Sellers will sell and transfer the Purchased Assets to Braden free and clear
of all Liens, including, without limitation, Liens for Taxes. Except as set
forth on Schedule 4.5(a), none of the Purchased Assets is subject to any Liens
except for (i) Liens for Taxes not yet due and payable and (ii) Liens arising by
operation of law which could not be expected to materially affect the value or
use of the Purchased Assets. Except as set forth on Schedule 4.5(a), the
Purchased Assets are subject to no restrictions with respect to the
transferability thereof and the Purchased Assets may be lawfully transferred to
Braden without the consent of any third party.
          (b) Condition of Purchased Assets. The Purchased Assets are in good
and lawful working condition, excepting ordinary wear and tear.
          (c) Customer Information. Except as disclosed on Schedule 4.5(c), the
Seller Entity has not sold or otherwise released for distribution any of its
customer files and other customer information relating to any of the current
customers of the Seller Entity including, but not limited to, patient lists,
marketing and pricing information and customer and referral source information
(the “Customer Information”), and transfer of the Customer Information by Seller
Entity to Braden does not constitute a violation of the Seller Entity’s
obligations to any Person. To the Seller’s Knowledge, and except as set forth on
Schedule 4.5(c), no Person other than the Seller Entity possesses any claims or
rights with respect to use of the Customer Information, as it has been
maintained in confidence and in accordance with applicable state laws and the
Health Insurance Portability and Accountability Act of 1996 or regulations
thereunder, (known as “HIPAA”).
     4.6. Tax Matters
          (a) All Taxes owed by Seller Entity (whether or not shown on any
Return) have been paid in full when due and all amounts required to be withheld
by Seller Entity as of the Closing Date for Taxes or otherwise, have been
withheld and paid when due or will be paid when due to the appropriate agency or
authority or which are not yet delinquent or are being contested in good faith.
          (b) Except as set forth on Schedule 4.6, neither the Internal Revenue
Service nor any other governmental authority is now asserting or, to the
Knowledge of Sellers, threatening to assert against the Seller Entity any
deficiency or claim for additional Taxes. No claim has ever been made by an
authority in a jurisdiction where the Seller Entity does not file

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reports and returns that the Seller Entity is or may be subject to taxation by
that jurisdiction. There are no security interests on any of the assets of the
Seller Entity that arose in connection with any failure (or alleged failure) to
pay any Taxes. The Seller Entity has never entered into a closing agreement
pursuant to Section 7121 of the Code.
          (c) The Seller Entity does not own nor has ever owned a direct or
indirect interest in any trust, partnership, corporation or other entity and
therefore Buyer is not acquiring from any of the Sellers an interest in any
entity. The Seller Entity is not a party to any tax sharing agreement.
     4.7. Absence of Undisclosed Liabilities
The Seller Entity has not been notified (in writing, verbally, electronically,
or otherwise) and has no Knowledge of any material liability, claim, deficiency,
guarantee, or obligation (absolute, accrued, contingent or otherwise) that would
or may in the future have an adverse effect upon the Purchased Assets. The
Seller Entity has not been notified (in writing, verbally, electronically, or
otherwise) and has no Knowledge of any intended reduction in the present level
of the Business after the Closing as a result of this Agreement and the
transactions contemplated hereby.
     4.8. Inventory
The inventory of the Seller Entity was acquired in the ordinary course of the
Business and, except as set forth on Schedule 4.8, within the past one hundred
and fifty (150) days has not been distributed to locations not included in the
Business.
     4.9. Food and Drug
To its Knowledge, the Seller Entity and all of the products and services which
it imports, distributes, or provides are, and have at all times been, in
compliance with the Food, Drug and Cosmetic Act and all regulations promulgated
there under by the United States Food and Drug Administration.
     4.10. Contracts, Real Property Leases, and Commitments
          (a) All contracts, real property leases, and legally binding
commitments that are related and material to the Business to which any Seller
Entity is a party are described in Schedule 4.10 and true and complete copies of
such have been delivered to Braden.
          (b) To Seller’s Knowledge, no party to any contract described in
Schedule 4.10 is in material default under any such contracts andthere are no
conditions or facts which with notice or passage of time, or both, would
constitute a default.
          (c) No Seller has given any power of attorney that is currently in
effect, to any Person for any purpose whatsoever in connection or associated
with or in any way affecting any of the Purchased Assets, except pursuant to
this Agreement or documents required hereby.
          (d) All rental payments on the contracts, real property leases, and
legally binding commitments that are due and payable as of the Closing Date have
been paid by Seller

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Entity, together with any interest, penalties, maintenance charges and
assessments pertaining thereto. Seller Entity has obtained all necessary
consents to the assignment of all contracts, real property leases, and
commitments that are required for assignment to Braden.
     4.11. Patients
          (a) Schedule 4.11(a) lists substantially all of the active rental and
sleep supply patients of the Seller Entity being served by the Seller Entity as
of May 8, 2009. For each patient, Schedule 4.11(a) lists the name and account
number of the patient, all residential addresses for the patient, the equipment,
medications, products or services currently supplied by the Seller Entity to
such patient on a sale or rental basis, and the primary payor.
          (b) Schedule 4.11(b) lists those active rental patients that are
Qualified Files of the Seller Entity as of May 8, 2009. For each patient,
Schedule 4.11(b) lists the name and account number of the patient, the
equipment, medications, products or services currently supplied by the Seller
Entity to such patient on a sale or rental basis, and the primary payor.
          (c) Seller Entity acknowledges and agrees that Braden does not accept
service responsibility for any rental patients of the Seller Entity unless the
patients, the rental equipment, and the reimbursement status are accurately
scheduled on 4.11(a).
          (d) For each Medicare patient (and any other patient insured pursuant
to a capped rental program for oxygen services) on Schedules 4.11(a) and
4.11(b), the schedule lists the correct date on which the patient began service
and the total number of months that the patient has been on service since
January 1, 2006 with any supplier, including suppliers other than the Seller
Entity, and the number of months remaining before the patient’s insurance
benefits for oxygen are capped.
          (e) All billings by the Seller Entity in respect of the patients
identified on Schedules 4.11(a) and 4.11(b): (i) arose from valid, medically
necessary sales or rentals in the ordinary course of business; (ii) relate to
equipment or products provided to patients covered under the Medicare, Medicaid,
private insurance program, or private pay, and each such patient is qualified
under such programs to receive such products or services; and (iii) were
prepared and submitted by the Seller Entity with all materially complete and
correct prescriptions, certificates of medical necessity, forms, supporting
medical documents, test results and other information necessary to receive
payment with respect to each such billing in conformity with all applicable
legal requirements.
          (f) Except as set forth on Schedule 4.11(f), as of the Closing Date,
no patient identified on Schedule 4.11(a) has been qualified to receive oxygen
from the Seller Entity by any Affiliate (as defined in Section 11.11) of the
Seller Entity, or to the Knowledge of the Sellers, any other Affiliate of the
Shareholders. Except as set forth on Schedule 4.11(f), all patients listed on
Schedule 4.11(a) have been qualified by Persons who do not have a financial
relationship (including but not limited to compensation or ownership
relationship) with the Seller Entity or any Seller and who are appropriately
licensed or certified to qualify patients under the applicable payor’s
requirements.

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     4.12. Permits; Governmental Agreements
     Schedule 4.12 sets forth a complete and accurate list of licenses held by
the Seller Entity. All licenses are valid and in full force and effect and
enforceable. Except as set forth on Schedule 4.12, no such license requires the
consent of, or a filing with, the permitting or licensing authority with respect
to the transactions contemplated by this Agreement.
     4.13. Environmental Matters
          (a) To the Knowledge of Sellers, (i) the Seller Entity has obtained
all permits, licenses and other authorizations (collectively, the “Environmental
Approvals”) which are required to be maintained by it in its ownership of the
Purchased Assets under all federal, state, and applicable local laws,
regulations, rules and ordinances relating to pollution or protection of the
environment and health and safety, and all provisions contained in any
regulation, code, order, decree, judgment, injunction, legally enforceable
notice or demand letter issued, entered, promulgated or approved under such
laws, regulations, rules and ordinances (collectively, the “Environmental
Laws”); (ii) all Environmental Approvals obtained by the Seller Entity (if any)
are in effect; (iii) no appeal nor any other action is pending to revoke any
such Environmental Approvals (if any); and (iv) the Seller Entity is in material
compliance with all terms and conditions of all of such Environmental Approvals
(if any) and has not received a notice from any authority that it is not in such
compliance. To the Knowledge of Sellers, the Seller Entity is and has been in
compliance in all material respects with all Environmental Laws.
          (b) Sellers are not in possession of any environmental studies or
reports relating to the Seller Entity.
          (c) The Seller Entity has not received any notice from any former or
existing employee that such former or existing employee has been exposed through
such employee’s employment by the Seller Entity to any hazardous substance above
levels approved by governmental authority or applicable law.
          (d) To the Knowledge of Sellers, neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will require any notice, environmental audit or other action of the Seller
Entity or of any of the other parties hereto pursuant to any Environmental Law
or regulation applicable to the Seller Entity or any of their facilities.
     4.14. Health Care Compliance
     Except as set forth at Schedule 4.14, there are no claims, statements and
other matters (including, but not limited to, all correspondence or
communications with governmental agencies, intermediaries or carriers)
concerning or relating to any federal or state government funded health care
program that involves, relates to, or alleges: (i) any violation with respect to
any activity, practice or policy of the Seller Entity; or (ii) any violation
with respect to any claim for payment or reimbursement made by the Seller
Entity, or any payment or reimbursement paid to the Seller Entity. The Seller
Entity is not currently subject to any outstanding audit by any such government
agency, intermediary or carrier.

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     The Seller Entity is not engaged in termination proceedings as to its
participation in the Medicare program, any state Medicaid program, or any other
Federal Health Care Program, nor has the Seller Entity received any notice
(written, verbal, electronic, or otherwise) that its current participation in
any such programs is subject to any contest, termination or suspension as a
result of alleged violations or non-compliance with participation requirements.
There is no pending or threatened proceeding or investigation involving
participation by the Seller Entity, in the Medicare program, any state Medicaid
program, or any other Federal Health Care Program. Except for non-material,
routine overpayments that have been promptly reconciled, the Seller Entity has
not received reimbursement in excess of the actual amounts provided by law or
contract. The Seller Entity has provided services and is in compliance with 42
C.F.R 424.57 (known as the “Medicare Supplier Standards”). The Seller Entity has
always been and is currently in compliance in all material respects with
applicable rules and regulations in effect governing reimbursement under in the
Medicare program, state Medicaid programs, and all other Federal Health Care
Programs.
     4.15. Compliance with Applicable Law; Adverse Restriction
          (a) General. The Seller Entity has not materially violated, and the
Seller Entity is in material compliance with, all applicable statutes, laws,
rulings, ordinances, rules, requirements, decrees, orders or regulations of any
foreign, federal, state or local government and any other governmental
department or agency, and any judgment, decision, decree or order of any court
or governmental agency, department or authority affecting the Purchased Assets
(“Laws”). The Seller Entity has not received any notice to the effect that, or
otherwise been advised that, any Seller is not in compliance with any such
statutes, regulations, rules, judgments decrees, orders, ordinances or other
Laws.
          (b) Billing. With respect to the Purchased Assets, the Seller Entity
has fully complied with all Medicare program Laws (and all comparable state
Laws), including, without limitation, the Centers for Medicare and Medicaid
Services, pertinent Durable Medical Equipment Medicare Administrative Carriers,
or other applicable directives relating to the manner in which paperwork must be
obtained and maintained, including but not limited to prohibiting home health
care providers from completing certificates of medical necessity (“CMNs”) on
behalf of physicians or non-physician clinicians. All CMNs for the Seller
Entity’s patients included in the Purchased Assets contain the date and original
signature of the patient’s treating physician or a non-physician clinician
involved in the care of the patient who is authorized to sign CMNs under the
applicable Medicare program Laws. No employee, contingent worker or agent of the
Seller Entity has amended, annotated, or altered a CMN included in the Purchased
Assets in any way after that CMN has been executed by an ordering physician or
clinician. The Seller Entity has submitted claims related to the Purchased
Assets to third party payors, including Medicare, Medicaid, and other government
and private health care plans in accordance with all applicable Laws and
regulations. All documents signed by patients signifying receipt of equipment
are properly signed and dated by the patient or by an authorized representative.
The Seller Entity has not submitted any claims for payment to Medicare,
Medicaid, or any third party payor with a date of service on or after the
Closing Date. Dates of service provided by Seller Entity to Braden for use in
billing each of the Qualified Files and Purchased Assets are accurate.

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          (c) Self-Referral Laws. The Seller Entity has not submitted any claim
in connection with any referrals which violated any applicable self-referral
Law, including the Federal Ethics in Patient Referrals Act, 42 U.S.C. § 1395nn
(known as the “Stark Statute”), or any applicable state self-referral law.
          (d) False Claim Act. The Seller Entity has not submitted any claim for
payment to any payor source, either governmental or nongovernmental, that would
subject the Seller Entity to any liability under any false claim or fraud Laws,
including, without limitation, 31 U.S.C. § 3729-33 (known as the “Federal False
Claim Act”), or any other applicable federal or state false claim or fraud law.
          (e) Gratuitous Payments. Neither the Seller Entity nor any authorized
agent acting on behalf of or for the benefit of the Seller Entity, has directly
or indirectly (i) offered or paid any remuneration, in cash or in kind, to, or
made any financial arrangements with, any past or present patients, past or
present suppliers, contractors or third party payors of the Seller Entity in
order to obtain business or payments from such Persons, other than entertainment
activities in the ordinary and lawful course of business, (ii) given or agreed
to give, or is aware that there has been made or that there is any agreement to
make, any gift or gratuitous payment of any kind, nature or description (whether
in money, property or services) to any customer or potential customer, supplier
or potential supplier, contractors, third party payor or any other Person other
than in connection with promotional or entertainment expenses in the ordinary
and lawful course of business, (iii) made or agreed to make, or is aware that
there has been made or that there is any agreement to make, any contribution,
payment or gift of funds or property to, or for the private use of, any
governmental official, employee or agent where either the contribution, payment
or gift is or was illegal under any Laws under which such payment, contribution
or gift was made, (iv) established or maintained any unrecorded fund or asset
for any purpose or made any false or artificial entries on any of its books or
records for any reason, (v) made, or agreed to make, or is aware that there has
been made or that there is any agreement to make, any payment to any Person with
the intention or understanding that any part of such payment would be used for
any purpose other than that described in the documents supporting such payment,
or (vi) paid or offered to pay any illegal remuneration for any referral in
violation of any applicable anti-kickback Laws, including 42 U.S.C. §
1320a-7b(b) (known as “Federal Health Care Programs Anti-Kickback Statute”) or
any applicable state anti-kickback law.
     4.16. Litigation
     Except as set forth in Schedule 4.16, there are no claims, actions, suits,
proceedings, or to the Knowledge of Sellers, any audits or investigations
pending or threatened nor any unsatisfied judgments or outstanding orders,
injunctions, decrees, stipulations or awards (whether rendered by a court or
administrative agency or by arbitration) against the Shareholders, against the
Seller Entity (or any shareholder, officer, director or employee of the Seller
Entity) and relating to the Purchased Assets, against the Purchased Assets at
law, in equity or otherwise, in, before, or by, any Governmental Authority,
intermediary or carrier including, without limitation: (i) concerning or
relating to any federal or state government funded health care program that
involves, refers or relates to, or alleges that such agencies, intermediaries or
carriers suspect any irregularities in any activity, practice or policy of the
Seller Entity, any claim for payment or reimbursement made by the Seller Entity,
or any payment or reimbursement paid to the Seller Entity or (ii)

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seeking to restrain, enjoin, rescind, prevent or change the transactions
contemplated hereby or questioning the validity or legality of any such
transactions of this Agreement or seeking damages in connection with any of such
transactions.
     4.17. Finder’s Fee
     Except as set forth on Schedule 4.17, no Seller has incurred or become
liable for any broker’s commission or finder’s fee relating to or in connection
with the transactions contemplated by this Agreement, and the Sellers have not
otherwise dealt with any brokers or finders in connection herewith.
     4.18. Solvency
     No insolvency proceedings of any character, including without limitation,
bankruptcy, receivership, reorganization, composition, or arrangement with
creditors, voluntary or involuntary, affecting the Seller Entity or any of the
Purchased Assets are pending, or, to the Knowledge of Sellers, threatened; nor
has the Seller Entity made any assignment for the benefit of creditors, or taken
any action in contemplation thereof, or taken any action that would constitute
the basis for the institution of any such insolvency proceedings.
     4.19. No Material Adverse Change
     Since due diligence and to the Seller’s Knowledge there has been no event,
change or occurrence which change or occurrence has caused a material adverse
effect on the Business taken as a whole..
ARTICLE V — REPRESENTATIONS AND WARRANTIES OF BRADEN
     In order to induce Sellers to enter into this Agreement, Braden makes the
following representations and warranties to Sellers, which are true and complete
as written on the Closing Date:
     5.1. Organization; and Qualification
Braden is a limited partnership duly organized, validly existing and in good
standing under the laws of the State of California.
     5.2. Authority Relative to this Agreement
Braden has all requisite power and authority to enter into this Agreement, and
any agreement or document contemplated hereby, and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement,
and any agreement or document contemplated hereby, and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of Braden and no other action on the part of Braden or its
partners is required in connection herewith. This Agreement, and all agreements
or documents contemplated hereby, have been duly executed and delivered by
Braden and the obligations

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imposed on Braden by this Agreement, or by any agreement or document
contemplated hereby, constitute the valid and binding obligations and agreements
of Braden, enforceable against Braden in accordance with its terms except:
(i) that such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors rights; and (ii) that the remedy of specific performance,
and injunctive and other forms of equitable relief, may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefore may be brought.
     5.3. Compliance of Transaction With Laws and Other Instruments
     The execution, delivery and performance by Braden of this Agreement, and
the other agreements and documents contemplated hereby and the performance and
consummation of the transactions contemplated hereby by Braden:
          (a) do not require on behalf of Braden any approval, consent, order or
authorization of or registration, declaration or filing with, any Governmental
Authority which has not been obtained and which is not in full force and effect
as of the date hereof;
          (b) does not and will not conflict with, or result in a breach or
violation of any provision of the applicable governing documents of Braden;
          (c) does not and will not require Braden to obtain any approval,
consent or waiver of, or make any filing with, any Person (governmental or
otherwise) that has not been obtained or made.
     5.4. Finder’s Fee
     Braden has not incurred or become liable for any broker’s commission or
finder’s fee relating to or in connection with the transactions contemplated by
this Agreement, and Braden has not otherwise dealt with any brokers or finders
in connection herewith.
ARTICLE VI — CERTAIN UNDERSTANDINGS AND AGREEMENTS
     6.1. Expenses
     Braden and the Sellers shall each pay their respective costs incurred in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
including, without limitation, the fees of their respective attorneys,
accountants, and investment bankers.
     6.2. Confidentiality
     Sellers and Braden shall maintain as confidential this Agreement and the
terms of this Agreement, as well as all records, correspondence, memoranda,
writings, documents and instruments arising out of, or relating thereto or made
in connection therewith (hereinafter collectively referred to as “Confidential
Information”). The Confidential Information will not be disclosed to any third
party except representatives who need access to the information in order to
complete the transactions contemplated hereby. In addition, Sellers and Braden
agree not to

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disclose any Confidential Information to any person or entity except (i) as
required by Laws or the applicable rules of any securities exchange, (ii) in
compliance with any court or administrative order only after reasonable attempts
to obtain confidential treatment for such information or (iii) to such party’s
attorneys, accountants or similar advisors under obligation to maintain the
confidentiality of such information. Pursuant to the preceding sentence in this
Section 6.2, Braden agree to hold in confidence such Confidential Information
before Closing. Further, except for the initial press release which shall be
coordinated between Sellers and Braden, or as required by Laws or court order,
all notices to third parties and all other publicity concerning this Agreement
and the transactions contemplated hereby, including all press releases and
similar public announcements and communications, shall be coordinated and
planned by Braden after the Closing subject to the prior written approval of
Sellers, and after the Closing Sellers shall not take any such action or
disclose the Confidential Information except as set forth in the first paragraph
of this Section 6.2 or without the prior written approval of Braden.
     6.3. Further Assurances
     At and after the Closing, and without any further consideration, each of
the parties hereto will, as soon as practicable after the request of the other
parties hereto, execute and deliver to the requesting party all such further
assignments, assurances and other documents and provide such information as such
party may reasonably request in order to effect the transfer of the Purchased
Assets, and the Assumed Liabilities to Braden or in order for Braden properly to
perform its billing and collection functions or to prepare its tax returns or
other documents or reports required to be filed with governmental authorities or
its financial statements. Each party further agrees that, after the Closing, it
shall provide reasonable cooperation and assistance to the other party with
respect to any matters, disputes, suits or claims by or against any Person not a
party to this Agreement; provided, however, that in connection with the
cooperation and assistance furnished by a party under this sentence, the party
receiving such cooperation and assistance shall reimburse the other party for
any reasonable out-of-pocket expenses incurred in connection therewith.
     6.4. Bulk Sales
     The Seller Entity shall be solely responsible for complying with the
applicable bulk sales laws of any jurisdiction in which the Seller Entity
conducts business, and any bulk sales taxes due as a result of the transaction
shall be the sole responsibility of Sellers. Notwithstanding the foregoing,
Sellers shall not be required to open a Bulk Sales Escrow, but the failure to do
so shall not adversely affect Braden Indemnified Parties’ rights to require
indemnification under paragraph 9.2(a)(iv).
     6.5. Tax Returns
     The Sellers shall: (i) be responsible for and pay when due all of the
Sellers’ Taxes attributable to or levied or imposed upon the Purchased Assets
relating or pertaining to the period (or that portion of any period) ending on
or prior to the Closing Date and (ii) all Taxes attributable to, levied or
imposed upon, or incurred in connection with the conduct of the Business prior
to the Closing Date. The Sellers shall continue to timely file within the time
period for filing, or any extension granted with respect thereto, all of the
Sellers’ Tax Returns

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required to be filed in connection with the Purchased Assets or the conduct of
the Business prior to the Closing Date and any portion of any such Tax Returns
connected therewith shall be true and correct and completed in accordance with
applicable laws.
     6.6. Reimbursement of Funds
     From time to time after the Closing, Braden or the Sellers may receive
funds that rightfully belong to the other party. Each party hereto agrees to
promptly deliver to the proper party all such funds received in error.
     6.7. Referrals
     The parties acknowledge that there is no understanding, agreement, or
commitment between Braden and Sellers under which the Seller Entity or the
Shareholders, or any Affiliate of either of them, is required or expected to
refer, recommend or arrange for patients to receive services or items from
Braden.
     6.8. Rehired Employees
          (a) Braden may extend offers of employment to certain employees of the
Seller Entity (such Employees are hereinafter referred to as the “Rehired
Employees”), which offers shall be on terms and conditions that Braden shall
determine in its sole discretion. The Seller Entity shall terminate the
employment of the Rehired Employees on the Closing Date and shall cooperate with
and use its commercially reasonable efforts to assist Braden in its efforts to
secure satisfactory employment with those employees of the Seller Entity to whom
Braden shall make offers of employment.
          (b) The Seller Entity hereby irrevocably and unconditionally agrees
not to sue, and releases, absolves and discharges, each Rehired Employee from
and against any non-competition, non-solicitation, confidentiality, or
non-disclosure agreement related to such Rehired Employees’ employment by the
Seller Entity. Upon the request of Braden, the Seller Entity shall provide each
Rehired Employee with written documentation evidencing such release.
          (c) Nothing contained in this Agreement shall confer upon any Rehired
Employee any right with respect to continuance of employment by Braden, nor
shall anything herein interfere with the right of Braden to terminate the
employment of any Rehired Employee at any time, with or without cause, or
restrict Braden in the exercise of its independent business judgment in
modifying any of the terms and conditions of the employment of the Rehired
Employees. The Seller Entity shall be solely responsible for any and all wages,
vacations, holidays, union check-off dues, bereavement pay, jury duty pay,
disability income, supplemental unemployment benefits, personal or sick leave
pay, payroll expenses whether due or accumulated but unpaid, owing to its
employees and independent contractors in respect of any periods prior to the
Closing Date.
          (d) Notwithstanding any other provision in this Section, if Mary
Reynolds or Mariam Weber become employed by a competitor of Braden’s in the
Business in the states of Illinois, Indiana, or the Commonwealth of Kentucky
before the Deferred Disbursement Date without having first been terminated
without cause by Braden, then Braden shall be entitled to

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withhold $60,000 for each such instance from the payment due to the Seller
Entities on the Deferred Distribution Date. This reduction shall only apply if
the employee has been offered employment that does not require she agree to a
covenant not to compete before the Deferred Disbursement Date. If Mary Reynolds
does not accept employment with Braden, and Braden subsequently employs her as a
consultant in addition to one or more full-time sales representatives, then
Braden shall be entitled to withhold $40,000 from the payment due to the Sellers
on the Deferred Distribution Date.
     6.9. Patient Relationships
     After the Closing, Braden shall use its commercially reasonable efforts to
continue and maintain those patient relationships of the Seller Entities
existing prior to Closing which pertain to the Purchased Assets. Braden shall
use its commercially reasonable efforts to ensure that (i) all Oxygen Qualified
Files and Sleep Qualified Files remain Qualified Files through and including the
Deferred Disbursement Date; and (ii) to the extent Braden determines that any
patient file lacks paperwork or documentation necessary to make it an Oxygen
Qualified or Sleep Qualified File, Braden will make commercially reasonable
efforts to cure such deficiencies until Braden gives notice of an adjustment to
Purchase Price pursuant to Section 3.2(f).
ARTICLE VII — CONDITIONS TO CLOSING
     7.1. Conditions to Braden’s Obligations to Close
     Braden’s obligation to consummate this Agreement and the transactions
contemplated hereby is subject to fulfillment, or express written waiver by
Braden, prior to or at the Closing, of the following conditions precedent:
          (a) Representations and Warranties. The representations and warranties
made by the Sellers in this Agreement shall be true and correct in all material
respects as of and at the Closing Date. The Sellers shall also have performed
and complied with all of their respective covenants and obligations under this
Agreement which are to be performed or complied with by them prior to or on the
Closing Date.
          (b) Seller Consents. All consents listed, or required to be listed, on
Schedule 4.4 shall have been obtained by Sellers and evidence thereof delivered
to Braden.
          (c) Closing Deliveries. The Sellers shall have delivered to Braden the
closing deliveries listed in Section 8.2 hereof.
     7.2. Conditions to the Sellers’ Obligations to Close
     The Sellers’ obligation to consummate this Agreement and the transactions
contemplated hereby is subject to fulfillment, or express written waiver by the
Seller Entity, prior to or at the Closing, of the following conditions
precedent:

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          (a) Representations and Warranties. The representations and warranties
made by Braden in this Agreement shall be true and correct in all material
respects as of and at the Closing Date with the same force and effect as though
said representations and warranties had been again made on the Closing Date.
Braden shall also have performed and complied with all of its covenants and
obligations under this Agreement which are to be performed or complied with by
it prior to or on the Closing Date.
          (b) Braden Consents. The execution, delivery and performance and
consummation of the transactions contemplated hereby do not require on behalf of
Braden any approval or consent by its General Partner or Limited Partnership
interests that has not been obtained.
          (c) Closing Deliveries. Braden shall have delivered to Sellers the
closing deliveries listed in Section 8.1 hereof.
ARTICLE VIII — CLOSING DELIVERIES
     The closing of the transactions contemplated hereby (the “Closing”) shall
take place on May 18, 2009, or such other date mutually agreed upon among the
parties (the “Closing Date”).
     8.1. Braden
     On or before the Closing Date, the Braden shall deliver to Sellers the
Seller Entity:
          (a) the Closing Payment.
          (b) A certificate from Braden, in form and substance satisfactory to
Sellers, certifying (i) that attached thereto is a complete and correct copy of
resolutions of the partnership authorizing Braden’s execution and delivery of
this Agreement, and that such resolutions have not been amended or modified in
any respect and remain in full force and effect as of the date thereof,
(ii) that the Persons named therein are all of the duly elected, qualified and
acting officers of Braden and that set forth therein is a genuine signature or
true facsimile thereof of each such officer, and (iii) that attached thereto is
a complete and correct certificate, dated not more than thirty (30) days prior
to the Closing Date, of the Secretary of State of the State of the jurisdiction
in which Braden is registered, confirming the legal existence and good standing
of Braden.
          (c) A certificate signed by an authorized officer of Braden to the
effect that the statements contained in Section 7.2(a) are true and correct.
     8.2. Seller Entity
     On or before the Closing Date, the Seller Entity shall deliver to Braden:
          (a) A certificate from the Seller Entity, in form and substance
satisfactory to Braden, of the Secretary or Assistant Secretary of the Seller
Entity, certifying that (i) attached thereto are complete and correct copies of
the Articles of Incorporation and Bylaws, or applicable governing documents, of
the Seller Entity, both as amended to date, (ii) that attached

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thereto is a complete and correct copy of resolutions adopted by the Board of
Directors of the Seller Entity, and if necessary, the shareholders of the Seller
Entity, authorizing the Seller Entity’s execution and delivery of this
Agreement, and that such resolutions have not been amended or modified in any
respect and remain in full force and effect as of the date thereof, (iii) that
the Persons named therein are all of the duly elected, qualified and acting
directors and officers of the Seller Entity and that set forth therein is a
genuine signature or true facsimile thereof of each such director and officer,
(iv) that attached thereto is a complete and correct certificate, dated not more
than thirty (30) days prior to the Closing Date, of the Secretary of State of
the State of the jurisdiction in which the Seller Entity is incorporated,
confirming the legal existence and good standing of the Seller Entity, and
(v) attached thereto are complete and correct certificates, dated not more than
thirty (30) days prior to the Closing Date, of the Secretaries of State in each
jurisdiction in which the Seller Entity conducts business, confirming the Seller
Entity’s good standing and authority to do business in each such jurisdiction.
          (b) A certificate signed by an authorized officer of the Seller Entity
and by the Shareholders to the effect that the statements contained in
Section 7.1(a) are true and correct.
          (c) Original copies of all business records representing the patient
files included in the Purchased Assets.
          (d) Seller Entity and Sellers’ non-competes in substantially the form
of Exhibit A attached hereto.
          (e) A Bill of Sale in substantially the form of Exhibit B attached
hereto.
          (f) All required landlord consents to the assignment of the real
property leases for Peoria, IL and Jackson, KY.
          (g) All required landlord consents to the subletting of the real
property leases for Crystal Lake, IL and Jacksonville, IL.
          (h) Sublease Agreements for Crystal Lake, IL and for Jacksonville, IL
in substantially the form of Exhibit C attached hereto.
          (i) Documents evidencing title to and warranties for the Purchased
Assets (and any and all keys, cards, codes, devices, or things necessary to
access any of the Purchased Assets), which shall be surrendered upon request to
Braden’s representatives.
          (j) Uniform Commercial Code termination statements, lease termination
statements, releases and any other documents necessary to evidence that all of
the Purchased Assets are being sold, conveyed, transferred, assigned and
delivered to Braden free and clear of all Liens or, in the alternative and in
the sole discretion of Braden, applicable payoff letters, together with payment
instructions, such that Braden may pay a portion of the Purchase Price directly
to the holder of any such Liens.
          (k) Such other instruments or documents of sale, assignment or
conveyance of the Purchased Assets to consummate the transactions contemplated
by this Agreement as are reasonably requested by Braden.

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     8.3. Joint Deliveries
     At the Closing, Braden, the Seller Entity and the Shareholders shall
execute and deliver the Non-Compete Agreement in the form attached hereto as
Exhibit A.
ARTICLE IX — SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
     9.1. Representations, etc.
     It is the express intention and agreement of the parties to this Agreement
that all representations, and warranties made by Braden and the Seller Entity
and Shareholders in this Agreement or in any document or instrument delivered by
Braden or the Seller Entity and Shareholders pursuant to the provisions of this
Agreement at or in connection with the Closing, shall survive the Closing for a
period of one (1) year and that all agreements and covenants of the parties
shall survive until fully performed except that:
          (a) All representations, covenants and agreements of the Seller Entity
and Shareholders in Section 4.6 or otherwise relating to Tax obligations of the
Seller Entity with respect to any period (or that portion of any period) ending
on or prior to the Closing Date (“Tax Matters”) shall survive the Closing until
the expiration of all applicable statutes of limitations plus any extensions or
waivers granted or imposed with respect thereto;
          (b) All representations, covenants and agreements of the Seller Entity
and Shareholders in Section 4.15 and 4.16 or otherwise relating to compliance
with the law with respect to any period (or that portion of any period) ending
on or prior or the Closing Date shall survive the Closing for a period of three
(3) years from the Closing Date.
          (c) The covenants and agreements of the Sellers set forth in the
certain Non-Compete Agreement shall survive the Closing for a period of five
(5) years from the Closing Date as more fully set forth therein.
     The right of either party to recover Damages (as defined in Section 9.2) on
any claim shall not be affected by the termination of any representations or
warranties as set forth above, provided that (i) notice of any Damages
(including the amount of any such Damages) as a result of such claim has been
given by the indemnified party to the indemnifying party prior to such
termination, and (ii) the right of one party to recover any Damages that are
caused by fraud or intentional misrepresentation until claims are barred by the
applicable provisions of Law.
     9.2. Indemnification
          (a) By Sellers. From and after the Closing, and subject to the
provisions of Section 3.2(g), the Seller Entity and the Shareholders shall
jointly and severally indemnify and hold Braden, its affiliates, members,
partners, shareholders, officers, directors, employees, agents, and
representatives (collectively, the “Braden Indemnified Parties”) harmless, from
and against any liability, loss, expense, claim, lien or other damage including,
without limitation, attorney’s fees and expenses (all of the foregoing items for
purposes of this Agreement are referred to as “Damages”), resulting from,
arising out of or incurred with respect to:

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          (i) any breach of any representation, warranty, covenant or agreement
by the Sellers contained herein, including the Non-Compete Agreement or in any
certificate, Schedule or Exhibit delivered pursuant hereto;
          (ii) any and all liabilities of the Sellers (other than the Assumed
Liabilities) arising out of the Seller Entity’s or Shareholders’ conduct prior
to the Closing;
          (iii) any failure of the Sellers to comply in all respects with the
“bulk sales” or “bulk transfer” laws of any jurisdiction in connection with the
transactions contemplated hereby; and
          (iv) any liability of Seller for Taxes, including without limitation,
Taxes of any Person pursuant to Treasury Regulations Section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contact or otherwise.
The foregoing shall not be interpreted to require Sellers to indemnify the
Braden Indemnified Parties, from and against any Damages resulting from, arising
out of, or incurred with respect to Sellers’ conduct occurring as a result of
Braden’s breach of this Agreement.
          (b) By Braden. From and after the Closing, Braden shall indemnify and
hold the Seller Entity and Shareholders and their respective affiliates,
shareholders, directors, officers, employees, agents, and representatives
(collectively, the “Seller Indemnified Parties”) harmless, from and against any
Damages resulting from, arising out of or incurred with respect to:
          (i) Any breach of any representation, warranty, covenant or agreement
by Braden contained herein or in any certificate, Schedule or Exhibit delivered
pursuant hereto;
          (ii) any and all liabilities of Braden arising out of Braden’s conduct
prior to the Closing; and
          (iii) the assertion against Sellers, the Purchased Assets or the
Business of any Damages created by or attributable to any and all liabilities of
Braden arising out of Braden’s conduct or the operation of the Business or
ownership of the Purchased Assets subsequent to Closing.
The foregoing shall not be interpreted to require Braden to indemnify the Seller
Indemnified Parties from and against any Damages resulting from, arising our of,
or incurred with respect to Braden’s conduct occurring as a result of the Seller
Entity’s or the Shareholders’ breach of this Agreement.

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     9.3. Payment of Claims for Damages; Right of Setoff by Braden

  (a)   Payment of claims for Damages shall be paid to the claimant in cash in
the amount to which the claimant may become entitled by reason of the provisions
of this Article IX within fifteen (15) days after such amount is finally
determined by either mutual agreement of the parties or pursuant to the dispute
resolution process set forth in Article X; provided, however, Braden
acknowledges and agrees that no payment to any Braden Indemnified Parties for
any claims for indemnification under Section 9.2(a)(i) shall be made prior to
the date on which the Purchase Price has been finally determined in accordance
with the provisions of Section 3.2 and 3.3, it being acknowledged that the
aggregate liability for such claims are subject to the provisions of Section 9.5
and cannot be measured until the Purchase Price is finally determined. Except as
provided in Section 3.1(e), and in addition to any and all other rights and
remedies that may be available to it at law or in equity, Braden shall have the
right to apply any or all of the amount of any and all claims it may have
against the Seller Entity and/or the Shareholders (including, but not limited
to, any and all claims arising under Article X and/or Section 9.2 of this
Agreement) against any payments it may owe to the Seller Entity and/or the
Shareholders pursuant to Article III of this Agreement.

     9.4. Limitations on Indemnification
     Notwithstanding anything herein to the contrary, the aggregate liability of
all Sellers for indemnification claims under Section 9.2(a)(i) shall not exceed
the Purchase Price paid by Braden (as adjusted pursuant to Section 3.2);
provided, however, that the limitations of indemnification in this sentence
shall not apply and shall not relieve Sellers of any liability in the case of
fraud or intentional misrepresentation, by any Seller under this Agreement or in
any certificate, Schedule or Exhibit delivered pursuant hereto.
     9.5. Notice; Defense of Claims
     An indemnified party may make claims for indemnification hereunder by
giving written notice thereof to the indemnifying party within the period in
which indemnification claims can be made hereunder. If indemnification is sought
for a claim or liability asserted by a third party, the indemnified party shall
also give written notice thereof to the indemnifying party promptly after it
receives notice of the claim or liability being asserted, but the failure to do
so shall not relieve the indemnifying party from any liability except to the
extent that it is prejudiced by the failure or delay in giving such notice. Such
notice shall summarize the bases for the claim for indemnification and any claim
or liability being asserted by the third party. Within 20 days after receiving
such notice the indemnifying party shall give written notice to the indemnified
party stating whether it disputes the claim for indemnification and whether it
will defend against any third party claim or liability at its own cost and
expense. If the indemnifying party fails to give notice that it disputes an
indemnification claim within 20 days after receipt of notice thereof, it shall
be deemed to have accepted and agreed to the claim, which shall become
immediately due and payable. The indemnifying party shall be entitled to direct
the defense against a third party claim or liability with counsel selected by it
(subject to the consent of the indemnified party, which consent shall not be
unreasonably withheld) as long as the indemnifying party is conducting a good
faith and diligent defense. The indemnified party shall at all times have the

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right to fully participate in the defense of a third party claim or liability at
its own expense directly or through counsel; provided, however, that if the
named parties to the action or proceeding include both the indemnifying party
and the indemnified party and the indemnified party is advised that
representation of both parties by the same counsel would be inappropriate under
applicable standards of professional conduct, the indemnified party may engage
separate counsel at the expense of the indemnifying party. If no such notice of
intent to dispute and defend a third party claim or liability is given by the
indemnifying party, or if such good faith and diligent defense is not being or
ceases to be conducted by the indemnifying party, the indemnified party shall
have the right, at the expense of the indemnifying party, to undertake the
defense of such claim or liability (with counsel selected by the indemnified
party), and to compromise or settle it, exercising reasonable business judgment.
If the third party claim or liability is one that by its nature cannot be
defended solely by the indemnifying party, then the indemnified party shall make
available such information and assistance as the indemnifying party may
reasonably request and shall cooperate with the indemnifying party in such
defense, at the expense of the indemnifying party.
     9.6. Sole Remedy
     The right to indemnification under this Article IX, subject to all the
terms, conditions and limitations hereof, shall constitute the sole and
exclusive right and remedy available to any party hereto for any actual or
threatened breach of this Agreement and for any violation of laws in connection
with the transactions provided for in this Agreement and none of the parties
hereto shall initiate or maintain any legal action at law or in equity against
any other party hereto which is directly or indirectly related to any breach or
threatened breach of this Agreement or for any violation of laws in connection
with the transactions provided for in this Agreement.
ARTICLE X — ARBITRATION
     10.1. Arbitration Rules
     Any and all disputes, controversies or claims whether of law or fact and of
any nature whatsoever arising from or respecting this Agreement, including
claims for indemnity between the parties hereto, that are not resolved by the
parties hereto other than any disputes, controversies or claims related to the
Non-Compete Agreement shall be decided by arbitration in accordance with this
Article X or otherwise by the Arbitration Rules then in effect of the American
Arbitration Association (the “Arbitration Rules”), or as otherwise agreed
between the parties. Unless otherwise agreed to in writing, the arbitration
shall be held in Novato, California. Reasonable written notice of the time and
place of arbitration shall be given to all parties to such arbitration and their
legal counsel as shall be required by Law, in which case such Persons or their
authorized representatives shall have the right to attend and/or participate in
all the arbitration hearings in such manner as the law shall require. The
arbitrator shall be selected in accordance with the Arbitration Rules. The
arbitrator shall use his or her best efforts to render a decision on the matter
submitted to him or her pursuant hereto within sixty (60) days following such
person’s appointment. The parties to the arbitration shall equally bear the fees
and expenses of the arbitrator and each party shall bear its own attorney fees.

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     10.2. Binding Effect of Arbitration
     The arbitrator shall be able to decree any and all relief of an equitable
nature, including but not limited to such relief as a temporary restraining
order, a temporary and/or a permanent injunction, and shall also be able to
award damages. The final decision of the arbitrator shall constitute a
conclusive determination of the matter in question, shall be binding upon the
parties hereto and shall not be contested by any of them. The decree or judgment
of an award rendered by the arbitrator may be entered in any court having
jurisdiction thereof.
ARTICLE XI — MISCELLANEOUS PROVISIONS
     11.1. Entire Agreement: Amendment
     This Agreement (including the Exhibits hereto), contains the entire
agreement among the parties hereto and supersedes all prior oral or written
agreements, promises, representations, commitments or understandings with
respect to the matters provided for therein. This Agreement may be modified or
amended only by a writing duly executed by Braden, the Seller Entity, and the
Shareholders, which modification or amendment shall be binding upon all of the
parties hereto.
     11.2. Assignment and Binding Effect
     This Agreement and the rights and obligations of any party hereunder may
not be assigned by any party without the prior written consent of the other
parties hereto. All covenants, agreements, statements, representations and
indemnities in this Agreement by and on behalf of any of the parties hereto
shall bind and inure to the benefit of their respective heirs, successors and
permitted assigns of the parties hereto.
     11.3. Waivers
     No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a continuing waiver, and no waiver shall be binding unless
executed in writing by the party making the waiver.
     11.4. Notices
     All notices, demands or other communications which may be or are required
to be given by any party to any other party pursuant to this Agreement, shall be
in writing and shall be mailed by certified mail, return receipt requested,
postage prepaid, or transmitted by hand delivery, national overnight express,
telegram or facsimile transmission (with a copy sent via certified mail within
two business days), addressed as follows:

     
If to Braden:
  with a copy (which shall not constitute notice) to:
 
   
Braden Partners, L.P.
  Carolyn J. McElroy, Esquire
88 Rowland Way, Suite 300
  88 Rowland Way, Suite 300
Novato, California 94945
  Novato, California 94945
 
   
Attn: Mr. Peter B. Kelly
  Phone No: (301) 765-1911
 
  Fax No: (240) 644-6226

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Phone No: (415) 893-1518
   
Fax No: (415) 893-1527
   
 
   
If to the Seller Entity or Shareholders:
   
 
   
Arcadia Resources, Inc.
  Arcadia Resources, Inc.
9229 Delegates Row, Ste. 260
  9229 Delegates Row, Ste. 260
Indianapolis, IN 46240
  Indianapolis, IN 46240
Attn: Marvin R. Richardson, President
  Attn: General Counsel
 
   
Phone No: (317) 569-8234
  Phone No: (317) 569-8234
Fax No: (317) 575-6195
  Fax No: (317) 575-6195

until such time as either party notifies the other of a change of address. Each
notice or other communication which shall be mailed, delivered or transmitted in
the manner described above shall be deemed sufficiently given and received for
all purposes at such time as it is delivered to the addressee (with the return
receipt, the delivery receipt, or the affidavit of messenger or telecopy
transmission log being deemed conclusive evidence of such delivery) or at such
time as delivery is refused by the addressee upon presentation.
     11.5. Governing Law
     This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware without regard to the conflict of laws provisions
thereof.
     11.6. No Third Party Beneficiaries
     This Agreement is intended for the sole and exclusive benefit of the
parties hereto, and no third party or Person is intended as a third party
beneficiary of this Agreement or any part hereof in any respect (including, but
not limited to, any employee or contingent worker of the Seller Entity or any
former Seller Entity employee or contingent worker), and no third party or
Person shall obtain any rights, claims, benefits or privileges under or by
virtue of this Agreement whatsoever.
     11.7. Counterparts; Execution
     To facilitate execution, this Agreement may be executed in as many
counterparts as may be required, and each such counterpart hereof shall be
deemed to be an original instrument, but all such counterparts together shall
constitute but a single agreement. This Agreement shall be deemed to have been
executed at the time when and location at which the last signature of any of the
parties is affixed hereto or to any counterpart hereof.
     11.8. Effect of Headings
     The section headings herein are for convenience only and shall not affect
the construction or interpretation of this Agreement.

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     11.9. Severability
     The parties agree that if any provisions of this Agreement shall under any
circumstances be deemed invalid or inoperative, the Agreement shall be construed
with the invalid or inoperative provision deleted and the rights and obligations
of the parties shall be construed and enforced accordingly.
     11.10. Construction; Complete Agreement
     Regardless of whether the parties are or have been represented by counsel
in connection with the negotiation and drafting of this Agreement, no principle
of resolving ambiguities against the drafter shall apply in construing any of
the terms hereof. This Agreement and exhibits hereto contain the full and
complete agreement of among the parties hereto with respect to the subject
matter hereof and supersedes any prior agreements or understandings between the
parties.
     11.11. Certain Definitions
          (a) For purposes of this Agreement, the term “Affiliate” shall mean,
with respect to any Person (as hereinafter defined), any other Person
controlling, controlled by, or under common control with such Person. For
purposes of the foregoing definition, a “Person” shall be deemed to “control”
another Person if that Person has the direct or indirect ability to direct or
cause the direction of the management and policies of the “controlled” Person,
through ownership of equity securities, by contract (including any management
agreement), or otherwise, and shall be deemed to exist with respect to any
entity as to which the Person in control owns, directly or indirectly, 20% or
more of the outstanding voting rights. With respect to a trust, “Affiliate”
shall include the trustee and any direct or indirect beneficiary of such trust.
          (b) For purposes of this Agreement, “Billing Cycle” shall mean the
interval of time between permissible period rental fees for durable medical
equipment and services, commencing with the first day of any interval in which a
patient or insurer may be charged a periodic rental fee for durable medical
equipment and services.
          (c) For purposes of this Agreement, an individual will be deemed to
have “Knowledge” of a particular fact or other matter if: (i) such individual is
actually aware of such fact or other matter, or (ii) a prudent individual could
be expected to discover or otherwise become aware of such fact or other matter
by the exercise of reasonable diligence with regard to the matter. A Person
(other than an individual) will be deemed to have Knowledge of a particular fact
or other matter if any individual who is serving as a director or officer of
such Person (or in any similar managerial or supervisory capacity) (i) is, or at
any time was, actually aware of such fact or other matter, or (ii) a prudent
individual could be expected to discover or otherwise become aware of such fact
or other matter by the exercise of reasonable diligence with regard to the
matter.
          (d) For purposes of this Agreement, a “Person” shall mean any
individual, corporation, Limited Liability Company, partnership, government,
government entity, or any other entity whatsoever.

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          (e) For purposes of this Agreement, “Taxes” and “Tax” shall mean all
taxes and any tax, including without limitation, all foreign, federal, state,
county and local income, sales, employment, profit, payroll, use, trade,
capital, occupation, property, excise, value-added, unitary, withholding, stamp,
transfer, registration, recordation, license, taxes measured on or imposed by
net worth, and other taxes, levies, imposts, duties, governmental obligations,
deficiencies and assessments, together with all interest, penalties and
additions imposed with respect thereto and including any transferee or secondary
liability for Taxes and any liability in respect of Taxes as a result of being a
member of any affiliated, consolidated, combined or unitary group
          (f) For purposes of any payment or disbursement made under this
Agreement, “day” and “days” shall mean any day and days when banks in San
Francisco are open for business.
     11.12. Schedules and Exhibits
     The schedules and exhibits referred to herein are attached hereto, made a
part of, and incorporated into this Agreement by this reference.
[Signature page follows]

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     IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement,
or caused this Agreement to be executed on its behalf, as of the date first
above written.

     
BRADEN PARTNERS, L.P.
   
 
   
/s/ Peter Kelly
   
 
   
By, its President: Peter B. Kelly
   
 
   
ARCADIA HOME OXYGEN AND
   
     MEDIAL EQUIPMENT, INC.
     
/s/ Marvin R. Richardson
   
 
   
By, its President: Marvin R. Richardson
   
 
   
AMERICAN OXYGEN AND MEDICAL
   
    EQUIPMENT, INC.
   
 
   
/s/ Marvin R. Richardson
   
 
   
By, its President: Marvin R. Richardson
   
 
   
THE SHAREHOLDERS:
   
 
   
ARCADIA PRODUCTS, INC.
   
 
   
/s/ Marvin R. Richardson
   
 
   
By, its President: Marvin R. Richardson
   
 
   
RKDA, INC.
   
 
   
/s/ Marvin R. Richardson
   
 
   
By, its President: Marvin R. Richardson
   
 
   
ARCADIA RESOURCES, INC.
   
 
   
/s/ Marvin R. Richardson
   
 
   
By, its President & CEO: Marvin R. Richardson
   

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