Document:

EX-10.11

 

Exhibit 10.11

Execution Copy

 

 

NRG ENERGY, INC.

Common Shares, Par Value $0.01 Per Share

UNDERWRITING AGREEMENT

 

 

 

 

August 8, 2006

 

 

UNDERWRITING AGREEMENT

          THIS UNDERWRITING AGREEMENT (this “Agreement”) is entered into as of August 8, 2006, by and
among NRG Energy, Inc. a Delaware corporation (the “Company”), Credit Suisse International
(“International”), Credit Suisse Capital LLC (“CS”) and Credit Suisse Securities (USA) LLC (“CSS”
and, together with International and CS, the “CS Purchasers”).

W I T N E S S E T H:

          WHEREAS, pursuant to (i) a Note Purchase Agreement, dated August 8, 2006 (the “Finance I Note
Purchase Agreement”), between International, CSS and NRG Common Stock Finance I, a Delaware limited
liability company and a wholly-owned subsidiary of the Company (“Finance I”), and (ii) a Note
Purchase Agreement, dated August 8, 2006 (the “Finance II Note Purchase Agreement” and, together
with the Finance I Note Purchase Agreement, the “Note Purchase Agreements”), between International,
CSS and NRG Common Stock Finance II, a Delaware limited liability company and a wholly-owned
subsidiary of the Company (“Finance II” and, together with Finance I, the “Finance Subsidiaries”),
International and CSS have agreed to purchase from each Finance Subsidiary, and each Finance
Subsidiary has agreed to sell to International and CSS, notes (the “Notes”) having the terms set
forth in the Note Purchase Agreements;

          WHEREAS, pursuant to (i) a Preferred Interest Purchase Agreement, dated August 8, 2006 (the
“Finance I Preferred Purchase Agreement”), between CS, CSS and Finance I, and (ii) a Preferred
Interest Purchase Agreement, dated August 8, 2006 (the “Finance II Preferred Purchase Agreement”
and, together with the Finance I Preferred Purchase Agreement, the “Preferred Purchase
Agreements”), between CS, CSS and Finance II, CS and CSS have agreed to purchase from each Finance
Subsidiary, and each Finance Subsidiary has agreed to sell to CS and CSS, preferred membership
interests (the “Preferred Interests”) on each date on which an extension of credit is made under
the applicable Note (the sale of Preferred Interests and Notes is referred to herein as, the
“Transactions”);

          WHEREAS, pursuant to (i) a Common Interest Purchase Agreement, dated August 8, 2006 (the
“Finance I Common Purchase Agreement”), between the Company and Finance I, and (ii) a Common
Interest Purchase Agreement, dated August 8, 2006 (the “Finance II Common Purchase Agreement” and,
together with the Finance I Common Purchase Agreement, the “Common Purchase Agreements”), between
the Company and Finance II, the Company has agreed to purchase from each Finance Subsidiary, and
each Finance Subsidiary has agreed to sell to the Company, common membership interests (the “Common
Interests”) on each date on which an extension of credit is made under the applicable Note;

          WHEREAS, each Finance Subsidiary will use the proceeds from extensions of credit under the
Note and from the issuance and sale of the Preferred Interests and Common Interests to purchase
shares of the Company’s common stock, par value $0.01 per share (“Common Stock”), in open market
transactions or privately negotiated transactions;

 

 

          WHEREAS, the shares of Common Stock purchased by each Finance Subsidiary (the “Collateral”)
will be pledged by such Finance Subsidiary to secure the obligations of such Finance Subsidiary
under its Note;

          WHEREAS, to hedge its equity exposure in relation to the Transactions, each CS Purchaser
anticipates (a) borrowing shares of Common Stock (the “Shares”) from one or more unrelated third
parties, (b) selling such Shares through CSS in connection with a registered public offering of
such Shares, and (c) repurchasing a lesser number of Shares in open market transactions (each in
the manner contemplated by the Goldman, Sachs & Co. no action letter (available October 9,
2003));

          WHEREAS, the Company has determined that it is in its the best interest to assist the CS
Purchasers in connection with a registered sale of the Shares as set forth herein; and

          WHEREAS, the Company has filed with the Securities and Exchange Commission (the “Commission”)
a registration statement, including a prospectus, on Form S-3 (File No. 333-130549), relating to
the registration of certain securities described therein, including the Shares;

          NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

          1.     Defined Terms.

     (a)     As used herein, the following terms have the following meanings:

          “Base Prospectus”: the prospectus included in the Registration Statement, effective December
21, 2005, in the form first used to confirm sales of Shares (or in the form first made available to
CSS by the Company to meet requests of purchasers pursuant to Rule 173 under the Securities Act).

          “Daily Notional Number of Shares”: has the meaning set forth in the Note Purchase Agreements.

          “Exchange Act”: Securities Exchange Act of 1934, as amended.

          “Existing Debt Documents”: the Credit Agreement, dated February 2, 2006, among the Company,
the lenders from time to time party hereto, Morgan Stanley Senior Funding, Inc. and Citigroup
Global Markets Inc., as joint lead book runners, joint lead arrangers and as co-documentation
agents, Morgan Stanley Senior Funding, Inc., as administrative agent, Morgan Stanley & Co.
Incorporated, as collateral agent, and Citigroup Global Markets Inc., as syndication agent, and the
Indentures, each dated February 2, 2006, between the Company, the Guarantors named therein, and Law
Debenture Trust Company of New York, governing the Company’s 7.250% Senior Notes due 2014 and
7.375% Senior Notes due 2016, in each case as amended or supplemented from time to time.

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          “free writing prospectus”: has the meaning set forth in Rule 405 under the Securities Act.

          “Investor Rights Agreement”: the Investor Rights Agreement, dated as of February 2, 2006, by
and among the Company and certain stockholders of the Company.

          “Prospectus”: the Base Prospectus, as supplemented by the prospectus supplement specifically
relating to the Shares in the form first used to confirm sales of the Shares (or in the form first
made available to CSS by the Company to meet requests of Purchasers pursuant to Rule 173 under the
Securities Act). For purposes of this definition, information contained in a form of prospectus
(including a prospectus supplement) that is deemed retroactively to be a part of the Registration
Statement pursuant to Rule 430B shall be considered to be included in the Prospectus as of the
actual time that form of prospectus (including a prospectus supplement) is filed with the
Commission pursuant to Rule 424(b) under the Securities Act.

          “Purchase Agreements”: the Note Purchase Agreements, the Preferred Purchase Agreements and the
Common Purchase Agreements.

          “Reference Period”: has the meaning set forth in the Note Purchase Agreements.

          “Registration Statement”: the registration statement on Form S-3 (File No. 333-130549), as
fined with the Securities and Exchange Commission on December 21, 2005 and, as amended to the date
of this Agreement (for purposes of this definition, information contained in a form of prospectus
or prospectus supplement that is deemed retroactively to be a part of the Registration Statement
pursuant to Rule 430B shall be considered to be included in the Registration Statement as of the
time specified in Rule 430B).

          “Sale
Date”: any Exchange Business Day (as defined in the Note Purchase Agreements) on which
the Daily Notional Number of Shares under a Note Purchase Agreement is greater than zero.

          “Securities Act”: the Securities Act of 1933, as amended.

          “Structuring Fee”: the fee payable to CSS pursuant to the Fee Letter dated August 8, 2006,
between the Company and CSS.

          “Time of Sale Prospectus”: the Base Prospectus and the preliminary prospectus, if any,
together with the free writing prospectuses, if any, as of each applicable Sale Date.

     (b)     Other Definitional Provisions:

                             (i)     As used herein, the terms “Registration Statement,” “preliminary prospectus,” “Time
of Sale Prospectus” and Prospectus shall include the documents, if any, incorporated by reference
therein. The terms “supplement” and “amendment” and “amend” as used in this Agreement with respect
to the Registration Statement, the Base Prospectus, the Time of Sale Prospectus, the preliminary
prospectus, if any, or any free writing prospectus shall include all documents subsequently filed
by the Company with the Commission pursuant to the Exchange Act, that are incorporated by reference
therein. If the Company has filed an
abbreviated registration statement to register additional Shares pursuant to Rule 462(b) under
the Securities Act (the “Rule 462 Registration Statement”), then any reference herein to the term
“Registration Statement” shall be deemed to include such Rule 462 Registration Statement.

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                             (ii)     As used herein, the words “hereof,” “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

          2.     Representations and Warranties of the Company.   The Company represents and warrants
to, and agrees with, CSS and each CS Purchaser that, on the date hereof and at all times during the
Reference Period (subject to the notice provisions of Section 6(d)):

          (a)     The Registration Statement has become effective; no stop order suspending
the effectiveness of the Registration Statement is in effect, and no proceedings for such
purpose are pending before, or to the knowledge of the Company, threatened by the
Commission. The Company is a well-known seasoned issuer (as defined in Rule 405 under the
Securities Act) eligible to use the Registration Statement as an automatic shelf
registration statement, and the Company has not received notice that the Commission objects
to the use of the Registration Statement as an automatic shelf registration statement
pursuant to Rule 401(g)(2) of the Securities Act.

          (b)     (i) Each document, if any, filed or to be filed pursuant to the Exchange Act
and incorporated by reference in the Time of Sale Prospectus or the Prospectus complied or
will during the Reference Period comply when so filed in all material respects with the
Exchange Act and the applicable rules and regulations of the Commission thereunder, (ii)
each part of the Registration Statement, when such part became effective, did not contain,
and each such part, as amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, (iii) the Registration Statement
does not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not misleading,
(iv) the Registration Statement and the Prospectus comply, and as amended or supplemented,
if applicable, will comply at all times during the Reference Period in all material respects
with the Securities Act and the applicable rules and regulations of the Commission
thereunder, (v) the Time of Sale Prospectus does not, and at the time of each sale of the
Shares on a Sale Date, the Time of Sale Prospectus, as then amended or supplemented by the
Company, if applicable, will not, contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading and (vi) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not at any time during the
Reference Period contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and warranties set forth in
this paragraph do not apply to statements or omissions in the Registration Statement, the
Time of Sale Prospectus or the Prospectus, each as amended or supplemented, based upon information relating to CSS furnished to
the Company in writing by CSS.

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          (c)     The Company is not an “ineligible issuer” in connection with the offering
pursuant to Rules 164, 405 and 433 under the Securities Act. Each free writing prospectus
that the Company is required to file pursuant to Rule 433(d) under the Securities Act has
been, or will be filed with the Commission in accordance with the requirements of the
Securities Act and the applicable rules and regulations of the Commission thereunder. Each
free writing prospectus that the Company has filed, or is required to file, pursuant to Rule
433(d) under the Securities Act or that was prepared by or on behalf of or used or referred
to by the Company complies or will at all times during the Reference Period comply in all
material respects with the requirements of the Securities Act and the applicable rules and
regulations of the Commission thereunder. Except for the free writing prospectuses, if any,
identified in Schedule I hereto, and electronic road shows, if any, each furnished to you
before first use, the Company has not prepared, used or referred to, and will not, without
your prior consent, prepare, use or refer to, any free writing prospectus.

          (d)     The Company has been duly incorporated, is validly existing as a corporation
in good standing under the laws of the state of Delaware, has the corporate power and
authority to own its property and to conduct its business as described in the Time of Sale
Prospectus, Prospectus and Registration Statement and is duly qualified to transact business
and is in good standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except (i) to the extent that
the failure to be so qualified or be in good standing would not have a material adverse
effect on the business or result of operations of the Company and its subsidiaries, taken as
a whole (a “Material Adverse Effect”), and (ii) for jurisdictions not recognizing the legal
concepts of good standing or qualification.

          (e)     Each domestic subsidiary of the Company has been duly organized, is validly
existing in good standing under the laws of the jurisdiction of its organization, has the
power and authority to own its property and to conduct its business as described in the Time
of Sale Prospectus, Prospectus and Registration Statement and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification, except (i) to the
extent that the failure to be so qualified or be in good standing would not have a Material
Adverse Effect on the Company and its subsidiaries, taken as a whole, and (ii) for
jurisdictions not recognizing the legal concepts of good standing or qualification. Except
as set forth in the Registration Statement, Time of Sale Prospectus and Prospectus, all of
the issued shares of capital stock, or equity interests, as applicable of each subsidiary of
the Company have been duly and validly authorized and issued, are fully paid and
non-assessable and (except (i) for directors’ qualifying share or foreign national
qualifying capital stock, and (ii) as pledged to secure indebtedness of the Company and/or
its subsidiaries pursuant to credit facilities, indentures and other instruments evidencing
indebtedness as set forth in the Exchange Act Reports of the Company, Registration
Statement, Time of Sale Prospectus and Prospectus and existing
on the date hereof) are owned directly by the Company, free and clear of all liens,
encumbrances, equities or claims.

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          (f)     This Agreement has been duly authorized, executed and delivered by the
Company.

          (g)     The authorized capital stock of the Company conforms as to legal matters to
the description thereof contained in each of the Time of Sale Prospectus, the Prospectus,
and the Registration Statement.

          (h)     The shares of Common Stock outstanding prior to each issuance of the Shares
have been duly authorized and are validly issued, fully paid and non-assessable.

          (i)     The Shares have been duly authorized and, when issued and delivered in
accordance with the terms of this Agreement, against payment of the consideration set forth
herein will be validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar rights.

          (j)     The execution and delivery by the Company of, and the performance by the
Company of its obligations under, this Agreement, the consummation of the transactions
contemplated by this Agreement and the Purchase Agreements, and the use of the proceeds from
each extension of credit under the Note and the issuance and sale of the Preferred Interests
and Common Interests will not contravene (i) any provision of the amended and restated
certificate of incorporation or the amended and restated by-laws of the Company, (ii) or any
agreement or other instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, (iii) or any applicable law
(including Regulation M promulgated under the Securities Act) or judgment, order or decree
of any governmental body, agency or court having jurisdiction over the Company or any
subsidiary except that, in the case of clauses (ii) and (iii), for any contravention that
would not have a Material Adverse Effect on the Company. No consent, approval,
authorization or order of, or qualification with, any governmental body or agency is
required for the performance by the Company of its obligations under this Agreement,
consummation of the transactions contemplated by this Agreement and the Purchase Agreements,
or the use of the proceeds from each extension of credit under the Note and the issuance and
sale of the Preferred Interests and Common Interests, except (x) for such consents,
approvals, authorizations, orders or qualifications that have been obtained or where failure
to do so would not have a Material Adverse Effect on the Company and (y) for the
registration of the Shares under the Securities Act and such as may be required by the
securities or Blue Sky laws of the various states in connection with the offer and sale of
the Shares. The Company is not aware of any change to the position of the Commission set
forth in the Goldman, Sachs & Co. no action letter (available October 9, 2003).

          (k)     There has not occurred any material adverse change, or any development
involving a prospective material adverse change, in the condition, financial or otherwise,
or in the earnings, business or operations of the Company and its subsidiaries, taken as a
whole, from that set forth in the Time of Sale Prospectus, the Prospectus, and the
Registration Statement.

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          (l)     There are no legal or governmental proceedings pending or, to the knowledge
of the Company, threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its subsidiaries is subject other than
proceedings that are disclosed or described in all material respects in the Registration
Statement, Time of Sale Prospectus, or the Prospectus and proceedings that are not expected
to have a Material Adverse Effect, and there are no statutes, regulations, contracts or
other documents that are required to be described in the Registration Statement, Time of
Sale Prospectus, or the Prospectus or to be filed as exhibits to the Registration Statement
that are not described in all material respects or filed, or incorporated by reference as
required.

          (m)     Each preliminary prospectus supplement, if any, filed pursuant to Rule 424
under the Securities Act, complied when so filed in all material respects with the
Securities Act and the applicable rules and regulations of the Commission thereunder.

          (n)     The Company is not, and after giving effect to the offering and sale of the
Shares and the application of the proceeds thereof as described in the Prospectus will not
be, required to register as an “investment company” as such term is defined in the
Investment Company Act of 1940, as amended.

          (o)     Except as set forth in the Registration Statement, the Time of Sale
Prospectus, or Prospectus, each subsidiary of the Company that is subject to regulation as a
“public utility” as such term is defined in the Federal Power Act (“FPA”) has an order from
the Federal Energy Regulatory Commission, not subject to any pending challenge,
investigation, complaint, or other proceeding (other than generic proceedings generally
applicable in the industry) (i) authorizing such subsidiary to engage in wholesale sales of
electricity and, to the extent permitted under its market-based rate tariff, other
transactions at market-based rates and (y) granting such waivers and blanket authorizations
as are customarily granted to entities with market-based rate authority, including blanket
authorizations to issue securities and to assume liabilities pursuant to Section 204 of the
FPA.

          (p)     With respect to any subsidiary that purports to own a “Qualifying Facility”
(“QF”) as defined under the Public Utility Regulatory Policies Act and the current rules and
regulations promulgated thereunder (“PURPA”), such facility is a QF under PURPA.

          (q)     Except as disclosed in the Registration Statement, the Time of Sale
Prospectus, or Prospectus, and except for such matters as would not, individually or in the
aggregate, result in a Material Adverse Effect, the Company or any of its subsidiaries (1)
are conducting and have conducted their businesses, operations and facilities in compliance
with Environmental Laws (as defined below); (2) have duly obtained, possess, maintain in
full force and effect, and have fulfilled and performed all of their obligations under any
and all permits, licenses or registrations required under Environmental Law; (3) have not
received any notice from a governmental authority or
any other third party alleging any violation of Environmental Law or liability
thereunder; (4) are not subject to any pending or, to the best knowledge of the Company or
any of its subsidiaries, threatened claim in writing or other legal proceeding under any
Environmental Laws against the Company or any of its subsidiaries; and (5) do not have
knowledge of any applicable Environmental Laws, or any unsatisfied conditions in an
Environmental Permit, that, individually or in the aggregate, can reasonably be expected to
require any material capital expenditures for either the installation of new pollution
control equipment, or a switch in a project’s fuel or any other material modification of
current operations in order to maintain the Company’s or the subsidiaries’ compliance with
Environmental Law.

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As used in this paragraph, “Environmental Laws” means any and all
applicable foreign, federal, state and local laws and regulations, or any enforceable
administrative or judicial interpretation thereof, relating to pollution or the protection
of human health or the environment, including, without limitation, those relating to (i)
emissions, discharges or releases of Hazardous Substances into ambient air, surface water,
groundwater or land, (ii) the generation, manufacture, processing, distribution, use,
treatment, storage, disposal, release, transport or handling of, or exposure to, Hazardous
Substances, (iii) the protection of wildlife or endangered or threatened species, or (iv)
the investigation, remediation or cleanup of any Hazardous Substances. As used in this
paragraph, “Hazardous Substances” means pollutants, contaminants, hazardous substances,
materials or wastes, petroleum, petroleum products and their breakdown constituents, or any
other chemical substance regulated under Environmental Laws.

          (r)     Except as described in the Time of Sale Prospectus, the Prospectus, and the
Registration Statement, the Company has not sold, issued or distributed any shares of Common
Stock during the six-month period preceding the date hereof, including any sales pursuant to
Rule 144A under, or Regulation D or S of, the Securities Act, other than shares issued
pursuant to employee benefit plans, qualified stock option plans or other employee
compensation plans or pursuant to outstanding options, rights or warrants.

          (s)     Each Finance Subsidiary (i) has been duly designated as, and is, an
“Unrestricted Subsidiary” under the Existing Debt Documents, and (ii) at all times since its
formation complied with the covenants set forth in Sections 6(k)(ii) and 6(k)(iii) as if
such covenant had been applicable to such Finance Subsidiary on and after its date of
formation. The representations and warranties of the Company’s subsidiaries contained in
the Purchase Agreements are correct; the Company and its subsidiaries have complied with
each of its covenants in each of the Purchase Agreements; and, no default or event of
default exists under any of the Purchase Agreements.

          (t)     The Company is eligible to use free writing prospectuses in connection with
this offering pursuant to Rules 164 and 433 under the Securities Act; any free writing
prospectus that the Company is required to file pursuant to Rule 433(d) under the Securities
Act has been, or will be, filed with the Commission in accordance with the requirements of
the Securities Act; and each free writing prospectus that the Company has filed, or is
required to file, pursuant to Rule 433(d) under the Securities Act or that was prepared by
or on behalf of or used by the Company complies or will comply in all material respects with
the requirements of the Securities Act.

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          3.     Agreements to Sell and Purchase.   The CS Purchasers agree to sell through CSS, on
each Sale Date, and CSS, upon the basis of the representations and warranties herein contained, but
subject to the conditions hereinafter stated, agrees to sell on behalf of each CS Purchaser, on
each Sale Date, the Shares. The Company agrees that it will not have any rights arising from the
provisions of this first paragraph of Section 3.

          The Company hereby agrees that, without the prior written consent of CSS, it will not, during
the period ending 60 days after the date of each Sale Date, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or
indirectly any Common Shares or any securities convertible into or exercisable or exchangeable for
Common Shares, or (ii) enter into any swap or other arrangement that transfers to another, in whole
or in part, any of the economic consequences of ownership of the Common Shares, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery of Common Shares or
such other securities, in cash or otherwise. Each of the parties hereto hereby acknowledges that
the foregoing sentence does not apply to repurchases of shares by a Finance Subsidiary or any other
share repurchase program by the Company for its Common Stock.

          The restrictions contained in the preceding paragraph shall not apply to (A) repurchases of
Shares by a CS Purchaser or one of its affiliates, (B) the issuance by the Company of Common Stock
upon the exercise of an option or warrant or the conversion of a security outstanding on the date
hereof of which CSS has been advised in writing, (C) grants by the Company of employee stock
options or other equity-based compensation pursuant to the terms of a plan in effect on the date of
this Agreement, (D) transactions by persons other than the Company relating to Common Stock, (E)
the filing by the Company of a shelf registration statement with respect to Common Stock or
securities convertible into or exercisable or exchangeable for Common Stock or (F) actions
undertaken by the Company to comply with the terms of the Investors Rights Agreement.

          4.     Payment and Delivery.   The Shares shall be registered in such names and in such
denominations as CSS shall request in writing not later than one full business day prior to the
appropriate Sale Date. The Shares shall be delivered on each Sale Date for the account of CSS or
to the account of a third party identified by CSS, with any transfer taxes payable in connection
with the transfer of the Shares duly paid, against payment of the purchase price therefor. The
Company agrees that it shall not have any rights arising from this Section 4.

          5.     Conditions to CSS’ Obligations.   The obligations of CSS on each Sale Date are
subject to the following conditions:

          (a)     Subsequent to the execution and delivery of this Agreement and prior to such
Sale Date there shall not have occurred any change, or any development involving a
prospective change, in the condition, financial or otherwise, or in the earnings, business
or results of operations of the Company and its combined subsidiaries, taken as a whole,
from that set forth in the Time of Sale Prospectus that, in the judgment of CSS, is material
and adverse and that makes it, in the judgment of CSS, impracticable to market the Shares on
the terms and in the manner contemplated in this Agreement and the Time of Sale Prospectus.

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          (b)     CSS and each CS Purchaser shall have received on the first Sale Date a
certificate, dated such Sale Date and signed by the Chief Executive Officer or Chief
Financial Officer of the Company, to the effect set forth in Section 5(a) and to the effect
that the representations and warranties of the Company contained in this Agreement that are
not qualified by materiality are true and correct in all material respects, and that the
representations and warranties of the Company contained in this Agreement that are qualified
by materiality are true and correct, in each case, as of such Sale Date and that the Company
has complied with all of the agreements and satisfied all of the conditions on its part to
be performed or satisfied hereunder on or before such Sale Date (including, without
limitation, the delivery of the letters contemplated by Section 6(h)).

          (c)     CSS and each CS Purchaser shall have received on the first Sale Date an
opinion and a negative assurance letter from Kirkland & Ellis LLP, outside counsel for the
Company, dated the first Sale Date, covering the matters referred to in Exhibit A-1.
Additionally, Tim O’Brien, General Counsel of the Company shall provide opinions, dated the
first Sale Date, as CSS and each CS Purchaser shall reasonably request. The opinion and a
negative assurance letter of Kirkland & Ellis LLP shall be rendered to CSS and each CS
Purchaser at the request of the Company and shall so state therein.

          (d)     CSS shall have received on the first Sale Date an opinion and a negative
assurance letter of Latham & Watkins LLP, counsel for CSS, dated the first Sale Date,
covering the matters referred to in the last paragraph of Exhibit A-2.

          (e)     CSS and each CS Purchaser shall have received, on each of the date of this
Agreement and on the first Sale Date, letters dated the respective dates of delivery
thereof, in form and substance satisfactory to CSS and each CS Purchaser, from KPMG LLP and
PricewaterhouseCoopers LLP, independent public accountants, containing statements and
information of the type ordinarily included in accountants’ “comfort letters” to
underwriters with respect to the financial statements and certain financial information
contained in the Time of Sale Prospectus and the Prospectus; provided that the letters
delivered on the first Sale Date shall use a “cut-off date” not earlier than the date
hereof.

          (f)     The delivery to CSS on such Sale Date of such documents as CSS may
reasonably request with respect to the good standing of the Company and each Finance
Subsidiary and other matters related to the delivery of the Shares.

          6.     Covenants of the Company.   In consideration of the agreements of CSS and each CS
Purchaser herein contained, the Company covenants with CSS and each CS Purchaser as follows:

          (a)     To furnish to CSS, without charge, five conformed copies of the Registration
Statement (including exhibits thereto and documents incorporated by reference) and to
furnish to CSS, without charge, prior to 10:00 a.m. New York City time on the business day
next succeeding the date of this Agreement and during the period mentioned in Section 6(d)
below, as many copies of the Time of Sale Prospectus, the
Prospectus, any documents incorporated therein by reference and any supplements and
amendments thereto or to the Registration Statement as CSS may reasonably request.

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          (b)     Before amending or supplementing the Registration Statement, the Time of
Sale Prospectus or the Prospectus (including by causing an additional document to be
incorporated by reference into the Registration Statement, the Time of Sale Prospectus or
the Prospectus), to furnish to CSS a copy of each such proposed amendment or supplement and
not to file any such proposed amendment or supplement to which CSS reasonably objects,
unless in each case at such time all of the Shares have been sold as contemplated in this
Agreement, and to file with the Commission within the applicable period specified in Rule
424(b) under the Securities Act any prospectus required to be filed pursuant to such Rule.

          (c)     To furnish to CSS a copy of each proposed free writing prospectus prepared
by or on behalf of, used by, or referred to by the Company during the Reference Period and
not to use or refer to any proposed free writing prospectus which CSS has not consented to
in advance, which consent shall not be unreasonably withheld, and to file with the
Commission within the applicable period specified in Rule 433(d) under the Securities Act
any free writing prospectus required to be filed pursuant to such rule.

          (d)     If:

          (i)     at a time when a prospectus relating to the Shares is
required to be delivered under the Securities Act, any representation or
warranty made pursuant to Section 2 ceases to be true and correct or any
event occurs as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein in the
light of the circumstances under which they were made not misleading, or

          (ii)     it shall be necessary to amend the Registration Statement
or supplement the Prospectus to comply with the Securities Act or the
Exchange Act or the respective rules thereunder,

          (iii)     the Company shall have received notice under Section
3.1(d) of the Investors Rights Agreement or otherwise that a stockholder of
the Company will conduct a registered offering of Common Stock,

          (iv)     the Company shall, at any time, determine that the CS
Purchasers and CSS should stop selling shares pursuant to this Agreement,

then, the Company promptly will notify CSS and each CS Purchaser of such event, and either
(A) (1) prepare and file with the Commission an amendment or supplement which will correct
any such statement or omission or effect any such compliance and (2) at its own expense,
supply any supplemented Prospectus to CSS in such quantities as CSS may reasonably request
or (B) inform CSS and each CS Purchaser that a blackout period (a
“Blackout”) has commenced and instruct each such person to discontinue offers and sales of
the Shares until such time as the Company informs CSS and each CS Purchaser that offers and
sales may be resumed (such days during which offers and sales of the Shares are so
discontinued, “Suspension Days”) and, if the Company elects to so instruct CSS and each CS
Purchaser, CSS and each CS Purchaser shall follow such instructions.

11

 

          (e)     To endeavor to qualify the Shares for offer and sale under the securities or
Blue Sky laws of such jurisdictions as CSS shall reasonably request, provided, that in no
event shall the Company be obligated to qualify to do business in any jurisdiction where it
is not now so qualified or to take any action that would subject it to material taxation or
service of process in suits, other than those arising out of the offering or sale of the
Shares, in any jurisdiction where it is not now so subject.

          (f)     To make generally available to the Company’s security holders and to CSS as
soon as practicable an earnings statement covering a period of at least twelve months
beginning with the first fiscal quarter of the Company occurring after the date of this
Agreement and the last day of the Reference Period which shall satisfy the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the Commission
thereunder.

          (g)     Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all expenses
incident to the performance of its obligations under this Agreement, including: (i) the
fees, disbursements and expenses of the Company’s counsel and the Company’s accountants in
connection with the registration and delivery of the Shares under the Securities Act and all
other fees or expenses in connection with the preparation and filing of the Registration
Statement, the preliminary prospectus, if any, the Time of Sale Prospectus, the Prospectus,
any free writing prospectus prepared by or on behalf of, used by, or referred to by the
Company and amendments and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof to CSS, CS Purchaser
and dealers, if any, in the quantities hereinabove specified, (ii) all costs and expenses
related to the transfer and delivery of the Shares to CSS, including any transfer or other
taxes payable thereon, (iii) the cost of printing or producing any Blue Sky memorandum in
connection with the offer and sale of the Shares under state securities laws and all
expenses in connection with the qualification of the Shares for offer and sale under state
securities laws as provided in Section 6(e) hereof, including filing fees and the reasonable
fees and disbursements of counsel for CSS in connection with such qualification and in
connection with the Blue Sky memorandum, which shall not exceed $25,000, (iv) all filing
fees and the reasonable fees and disbursements of counsel to CSS incurred in connection with
the review and qualification of the offering of the Shares by the National Association of
Securities Dealers, Inc., (v) the cost of printing certificates representing the Shares,
(vi) the costs and charges of any transfer agent, registrar or depositary, and (vii) all
other costs and expenses incident to the performance of the obligations of the Company
hereunder for which provision is not otherwise made in this Section. It is understood,
however, that except as provided in this Section, Section 8 entitled “Indemnity and
Contribution,” and the last paragraph of Section 10 below, CSS will pay all of its costs and
expenses,
including fees and disbursements of its counsel, stock transfer taxes payable on resale
of any of the Shares by it and any advertising expenses connected with any offers it may
make.

12

 

          (h)     Upon (i) the date of the filing by the Company with the SEC of a Quarterly
Report on Form 10-Q or a Current Report on Form 8-K, (ii) the date that is 30 days after the
last date on which the letters described in this Section (h) have been delivered, and (iii)
at the request of CSS or any CS Purchaser, the date of the furnishing by the Company with
the SEC of a Current Report on Form 8-K, unless at such time all of the Shares have been
sold as contemplated in this Agreement, the Company shall deliver, or cause to be delivered,
to CSS and each

CS Purchaser:

	 	(a)	 	A negative assurance letter dated such date from Kirkland & Ellis
LLP and addressed to the CS Purchasers and CSS confirming as of such
date the statements contained in the negative assurance letter of
Kirkland & Ellis LLP set forth on Exhibit A-1 hereto. (The negative
assurance letter of Kirkland & Ellis LLP shall be rendered to CSS and
each CS Purchaser at the request of the Company and shall so state
therein.)
	 
	 	(b)	 	A negative assurance letter dated such date from Latham & Watkins
LLP and addressed to CSS confirming as of such date the statements
contained in the negative assurance letter of Latham & Watkins LLP set
forth on Exhibit A-2 hereto.
	 
	 	(c)	 	Letters dated such date, in form and substance satisfactory to
CSS and each CS Purchaser, from KPMG LLP and (if requested by CSS or
any CS Purchaser) PricewaterhouseCoopers LLP, independent public
accountants, containing statements and information of the type
ordinarily included in accountants’ “comfort letters” to underwriters
with respect to the financial statements and certain financial
information contained in the Time of Sale Prospectus and the
Prospectus; provided that the letters delivered on the first Sale Date
shall use a “cut-off date” not earlier than such date; provided that in
connection with a filing on Form 8-K (other than a filing pursuant to
Item 1.03, Section 2, and Section 4 thereof) any such letter from KPMG
LLP will only need to be delivered upon request.
	 
	 	(d)	 	An officers certificate dated such date confirming that the
conditions set forth in Section 5 have been satisfied with respect to
each Sale Date occurring since the date hereof or since the date of the
most recent officers certificate delivered pursuant to this Section
(h), if later.

In the event that the Company does not satisfy such request, then CSS may instruct the
Company that each subsequent day, to the date of delivery, be deemed a Suspension Day.

13

 

     (i)     The Company shall cause each of the conditions set forth in Section 5 to be
satisfied on or before the first Sale Date.

     (j)     To afford CSS, each CS Purchaser and any affiliates of CSS or any CS
Purchaser on reasonable notice, a reasonable opportunity to conduct a due diligence
investigation with respect to the Company customary in scope for transactions pursuant to
which CSS, any CS Purchaser or any affiliates of CSS acts as an underwriter of equity
securities (including, without limitation, the availability of the chief financial officer
and general counsel to respond to questions regarding the business and financial condition
of the Company and the right to have made available to them for inspection such records and
other information as they may reasonably request).

     (k)     The Company agrees to take all actions necessary (i) to cause each Finance
Subsidiary to remain an “Unrestricted Subsidiary” under the Company’s Existing Debt
Documents, (ii) to cause each Finance Subsidiary to comply with its organizational documents
and not to amend, modify or supplement (or cause to be amended, modified or supplemented)
any provision of, terminate or otherwise change any provision of its organizational
documents, (iii) to cause each Finance Subsidiary not to take any action or cause any action
to be taken that shall submit NRG or any of its other subsidiaries to any proceeding under
any applicable law involving bankruptcy, insolvency, reorganization or other laws affecting
the rights of creditors generally, and (iv) to cause each Finance Subsidiary to (A) maintain
its own books and records and bank accounts separate from those of the Company and any other
person, (B) maintain its assets in such a manner that it is not costly or difficult to
segregate, identify or ascertain such assets, (C) cause its managers to meet at least
annually or act pursuant to written consent and keep minutes of such meetings and actions
and observe all other Delaware limited liability company formalities, (D) hold itself out to
creditors and the public as a legal entity separate and distinct from the Company and any
other person, (E) prepare separate financial statements and separate tax returns, if
separate returns for the Company are required under applicable tax law, or if part of a
consolidated group, then it will be shown as a separate member of such group, and pay any
taxes required to be paid under applicable tax law, (F) pay the salaries of its own
employees, if any, (G) allocate and charge fairly and reasonably any common employee or
overhead shared with affiliates, (H) transact all business with affiliates on an
arm’s-length basis and pursuant to enforceable agreements, (I) conduct business in its own
name, use separate invoices, stationery and checks and strictly comply with all
organizational formalities to maintain its separate existence, (J) not commingle its assets
or funds with those of any other person, (K) not hold out its credit or assets as being
available to satisfy the obligations of others, (L) not assume, guarantee or pay the debts
or obligations of any other person or otherwise pledge its assets for the benefit of any
other person, (M) correct any known misunderstanding regarding its separate identity, (N)
maintain adequate capital in light of its contemplated business purpose, transactions and
liabilities, (O) pay its own liabilities only out of its own funds, (P) cause the managers
and any officers, managers, agents and other representatives of such Finance Subsidiary to
act at all times with respect to such Finance Subsidiary and the Company consistently and in
furtherance of the foregoing and in the best interests of such Finance Subsidiary, and (Q)
to reflect the transactions by each Finance Subsidiary on its financial statements in
accordance with GAAP and provide footnote disclosure in such financial statements to indicate that the assets of a
Finance Subsidiary are not available to the general creditors of the Company or its
subsidiaries (other than such Finance Subsidiary).

14

 

     (l)     The Company agrees that no portion of the proceeds of the Note or Preferred
Interests shall be used in any manner that causes or might cause an extension of credit
under the Note or the application of such proceeds to violate any provision of the Exchange
Act or to violate Regulation T, Regulation U, or Regulation X of the Board of Governors of
the Federal Reserve System.

          7.     Covenants of CSS. CSS hereby represents and agrees that:

     (a)     It has not made, and will not make any offer relating to the Shares that
would constitute a free writing prospectus, without the prior consent of the Company, which
consent shall not be unreasonably withheld.

     (b)     Any free writing prospectus used or referred to by it will not be subject to
broad unrestricted dissemination and will not be required to be filed with the Commission,
in accordance with Rule 433 under the Securities Act, as a result of any action taken or
caused to be taken by CSS, without the prior written consent of the Company, which consent
shall not be unreasonably withheld.

     (c)     Any free writing prospectus used or referred to by it, except any “issuer
free writing prospectus” as defined in Rule 433 under the Securities Act, as to which CSS
makes no representation or warranty, complied in all material respects with the Securities
Act.

          8.     Indemnity and Contribution.

          (a)     The Company agrees to indemnify and hold harmless CSS and each CS Purchaser
and each person, if any, who controls CSS or any CS Purchaser within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, and each affiliate of
CSS or any CS Purchaser within the meaning of Rule 405 under the Securities Act (provided
that the Company’s indemnification obligation shall not extend to any free writing
prospectus required to be filed by the Company due to CSS’ breach of the covenants set forth
in Section 7), from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, the preliminary prospectus, if any, the Time of Sale
Prospectus, any free writing prospectus that the Company has filed, or is required to file,
pursuant to Rule 433(d) of the Securities Act, or the Prospectus or any amendment or
supplement thereto (if the Company furnished any amendments or supplements thereto), or
caused by any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, (i) with respect to the
Registration Statement or any amendment thereof, not misleading, and (ii) with respect to
any preliminary prospectus, the Time of Sale Prospectus, any free
writing prospectus that the Company has filed, or is required to file, pursuant to Rule
433(d) under the Securities Act, or the Prospectus or any amendment or supplement thereto
(if the Company furnished any amendments or supplements thereto), not misleading in the
light of the circumstances under which they were made, except in each case insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement or omission
or alleged untrue statement or omission based upon information relating to CSS or a CS
Purchaser furnished to the Company in writing by CSS or CS Purchaser expressly for use
therein.

15

 

     (b)     CSS agrees to indemnify and hold harmless the Company, each CS Purchaser,
the directors of the Company and each CS Purchaser, the officers of the Company who sign the
Registration Statement and each person, if any, who controls the Company or any CS Purchaser
within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act to the same extent as the foregoing indemnity from the Company to CSS and the CS
Purchasers, but only with reference to information relating to CSS furnished to the Company
in writing by CSS expressly for use in the Registration Statement, any preliminary
prospectus, the Time of Sale Prospectus, any other free writing prospectus that the Company
has filed or is required to file pursuant to Rule 433(d) of the Securities Act, or the
Prospectus or any amendment or supplement thereto.

     (c)     Each CS Purchaser agrees to indemnify and hold harmless the Company, CSS,
the directors of the Company and CSS, the officers of the Company who sign the Registration
Statement and each person, if any, who controls the Company or CSS within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent
as the indemnity in subsection (a) above from the Company to CSS and the CS Purchasers, but
only with reference to information relating to such CS Purchaser furnished to the Company in
writing by such CS Purchaser expressly for use in the Registration Statement, any
preliminary prospectus, the Time of Sale Prospectus, any other free writing prospectus that
the Company has filed or is required to file pursuant to Rule 433(d) of the Securities Act,
or the Prospectus or any amendment or supplement thereto.

     (d)     In case any proceeding (including any governmental investigation) shall be
instituted involving any person in respect of which indemnity may be sought pursuant to
Section 8(a) or 8(b), such person (the “indemnified party”) shall promptly notify the person
against whom such indemnity may be sought (the “indemnifying party”) in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel chosen by
the indemnifying party and reasonably satisfactory to the indemnified party to represent the
indemnified party and any others entitled to indemnification pursuant to this Section 8 the
indemnifying party may designate in such proceeding and shall pay the reasonably incurred
fees and expenses of such counsel related to such proceeding as incurred. In any such
proceeding, any indemnified party shall have the right to retain its own counsel, but the
reasonably incurred fees and expenses of such counsel shall be at the expense of such
indemnified party unless 1) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or 2) the named parties to any such
proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation of
both parties by the same counsel would be inappropriate due to actual or potential differing
interests between them.

16

 

It is understood and agreed that the indemnifying party shall not,
in connection with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonably incurred fees and expenses of more than one separate firm (in addition to
any local counsel) for all such indemnified parties and that all such reasonably incurred
fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated
in writing by CSS, in the case of parties indemnified pursuant to Section 8(a), by the
Company, in the case of parties indemnified pursuant to Section 8(b), and by the CS
Purchaser, in the case of parties indemnified pursuant to Section 8(c). The indemnifying
party shall not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and against any loss
or liability by reason of such settlement or judgment. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding.

     (e)     To the extent the indemnification provided for in Section 8(a), 8(b) or 8(c)
is unavailable to an indemnified party or insufficient in respect of any losses, claims,
damages or liabilities referred to therein, then each indemnifying party under such
paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to
the amount paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the indemnified
party or parties on the other hand from the offering of the Shares or (ii) if the allocation
provided by clause 8(e)(i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause 8(e)(i)
above but also the relative fault of the indemnifying party or parties on the one hand and
of the indemnified party or parties on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Company on the one
hand and CSS and the CS Purchaser, as applicable, on the other hand in connection with the
offering of the Shares shall be deemed to be in the same respective proportions as the net
proceeds from the sale of the Notes and Preferred Interests (before deducting expenses)
received by the Finance Subsidiaries, on the one hand, and the Structuring Fee received by
CSS, on the other hand, bear to the aggregate public offering price of the Shares. The
relative fault of the Company on the one hand and CSS and the CS Purchaser, as applicable,
on the other hand shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company, by CSS, by the CS
Purchaser, as applicable, and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.

17

 

     (f)     The Company, CSS and each CS Purchaser, agree that it would not be just or
equitable if contribution pursuant to this Section 8 were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in Section 8(e). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages and liabilities referred to in Section 8(e)
shall be deemed to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this Section 8,
neither CSS nor any CS Purchaser shall be required to contribute any amount in excess of the
amount by which the total price at which the Shares underwritten and distributed to the
public were offered to the public exceeds the amount of any damages that CSS has otherwise
been required to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 8 are not exclusive and shall not limit any rights or remedies which may otherwise
be available to any indemnified party at law or in equity.

     (g)     The indemnity and contribution provisions contained in this Section 8 and
the representations, warranties and other statements of the Company contained in this
Agreement shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of CSS or any
person controlling CSS or any affiliate of CSS or by or on behalf of the Company, the
officers or directors of the Company or any person controlling the Company, (iii) any
investigation made by or on behalf of the CS Purchaser or any person controlling the CS
Purchaser or any affiliate of the CS Purchaser or by or on behalf of the Company, the
officers or directors of the Company or any person controlling the Company and (iv)
acceptance of and payment for any of the Shares.

          9.     Termination.   CSS may terminate this Agreement at any time by notice to the Company
and each CS Purchaser if after the execution and delivery of this Agreement and prior to any Sale
Date (i) trading generally shall have been suspended or materially limited on, or by, as the case
may be, any of the New York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market, (ii) trading of any securities of the Company shall have been suspended on any exchange or
in any over-the-counter market, (iii) a material disruption in the securities settlement, payment
or clearance services in the United States shall have occurred, (iv) any moratorium on commercial
banking activities shall have been declared by Federal or New York State authorities or (v) there
shall have occurred any outbreak or escalation of hostilities, or any change in financial markets
or any calamity or crisis that, in CSS’ judgment, is material and adverse and which, singly or
together with any other event specified in this clause (v), makes it, in CSS’ judgment,
impracticable or inadvisable to proceed with the offer, sale or delivery of the Shares on the terms
and in the manner contemplated in the Time of Sale Prospectus and the Prospectus. CSS shall not be
obligated to close the purchase and sale of any shares pursuant to this Agreement on any date on
which this Agreement is terminated pursuant to this Section 9.

18

 

          CSS may terminate this Agreement for any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement. If this Agreement
shall be terminated by CSS because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason
the Company shall be unable to perform its obligations under this Agreement, the Company will
reimburse CSS for all out-of-pocket expenses (including the fees and disbursements of their
counsel, but without duplication of any reimbursement obligation pursuant to any other agreement)
reasonably incurred by CSS in connection with this Agreement or the offering contemplated
hereunder. In the event that the this Agreement is terminated pursuant to this Section 9, each day
subsequent to such termination shall be deemed a Suspension Day.

          10.     Effectiveness.   This Agreement shall become effective upon the execution and
delivery hereof by the parties hereto.

          11.     Successors and Assigns.   This Agreement shall be binding upon and inure solely to
the benefit of the parties hereto and their respective successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the
Shares from CSS shall be deemed a successor or assign solely by reason of such purchase.

          12.     Counterparts.   This Agreement may be signed in two or more counterparts, each of
which shall be an original, with the same effect as if the signatures thereto and hereto were upon
the same instrument.

          13.     Applicable Law; Submission to Jurisdiction; Appointment of Agent for Service.   This
Agreement shall be governed by and construed in accordance with the internal laws of the State of
New York.

          14.     Headings.   The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed a part of this Agreement.

          15.     No Fiduciary Duty.   The Company acknowledges and agrees that in connection with
this offering, sale of the Shares or any other services CSS or any CS Purchaser may be deemed to be
providing hereunder, notwithstanding any preexisting relationship, advisory or otherwise, between
the parties or any oral representations or assurances previously or subsequently made by CSS or any
CS Purchaser: (i) no fiduciary or agency relationship between the Company and any other person, on
the one hand, and CSS and any CS Purchaser, on the other, exists; (ii) neither CSS nor any CS
Purchaser is acting as advisor, expert or otherwise, to the Company, and such relationship between
the Company on the one hand, and CSS and each CS Purchaser, on the other, is entirely and solely
commercial, based on arms-length negotiations; (iii) any duties and obligations that CSS or any CS
Purchaser may have to the Company shall be limited to those duties and obligations specifically
stated herein; and (iv) CSS and each CS Purchaser and their affiliates may have interests that
differ from those of the Company. The Company hereby waives any claims that the Company may have
against CSS or any CS Purchaser with respect to any breach of fiduciary duty in connection with the
sale of the Shares.

          16.     Covenant of the CS Purchaser.   Each CS Purchaser agrees to provide a report to the
Company promptly upon completion of its sale of the Shares under this Agreement, which report shall
include the date of such completion and the price or prices at which the Shares were sold to the
public by CSS or such CS Purchaser, as the case may be.

19

 

	 	 	 	 	 	 	 
	 	 	NRG Energy, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/  Robert C. Flexon	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:  Robert
C. Flexon	 	 
	 

	 	 	 	Title:  Executive Vice
President, CFO	 	 
	 
	 	 	 	 	 	 

 

	 	 	 	 	 
	Accepted as of the date hereof	 	 
	 
	 	 	 	 
	Credit Suisse Securities (USA) LLC	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	By:
	 	/s/  Timothy Block	 	 
	 

	 	 

Name:  Timothy Block	 	 
	 

	 	Title:    Managing
Director	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	Credit Suisse International	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	By:
	 	/s/  Laura Muir	 	 
	 

	 	 

Name:  Laura Muir	 	 
	 

	 	Title:    Authorized
Signatory	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	By:
	 	/s/  Christian Bettley	 	 
	 

	 	 

Name:  Christian Bettley	 	 
	 

	 	Title:    Authorized
Signatory	 	 

 

 

	 	 	 	 	 
	Credit Suisse Capital LLC	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	By:
	 	/s/  Sean T.
Brady	 	 
	 

	 	 

Name:  Sean T. Brady	 	 
	 

	 	Title:    Managing
Director	 	 

 

 

EXHIBIT A-1

FORM OF OPINION OF KIRKLAND & ELLIS LLP

TO BE DELIVERED PURSUANT

TO SECTION 5(C)

(attached)

 

 

EXHIBIT A-2

FORM OF OPINION OF LATHAM & WATKINS LLP

TO BE DELIVERED PURSUANT

TO SECTION 5(D)

(attached)<PAGE>

                                                                  Exhibit 10.1

                            ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into as of
July _____, 2006, by and among BEACON RESPIRATORY SERVICES, INC., a Delaware
corporation ("Buyer"), ALLIANCE OXYGEN & MEDICAL EQUIPMENT, INC., a Florida
corporation ("Seller") and TIMOTHY BEACH and STUART CHRISTENSEN (collectively
the "Shareholders"). Certain other capitalized terms used herein are defined in
Article V and throughout this Agreement.

                                    RECITALS:

     A. Seller owns and operates a business with locations at 5355 McIntosh
Road, Suite C, Sarasota Florida 34233; 2828 South McCall Road, Suite 26,
Englewood, Florida 34224 and 1455 Railhead Boulevard, Suite 28, Naples, Florida
34110 (individually a "Location" and collectively the "Locations") which is
engaged in the business of the sale and rental of durable medical equipment
including respiratory medical equipment.

     B. Seller desires to sell, and Buyer desires to purchase, the assets of the
Seller described below, upon the terms and subject to the conditions,
representations, warrants and covenants contained in this Agreement.

     C. The Shareholders are the owners of all the issued and outstanding shares
of the capital stock of Seller and will benefit from the sale of Seller's
assets, and are joining in this Agreement as a material inducement to Buyer and
as a condition to Buyer's willingness to enter into this Agreement.

                                   AGREEMENT:

     NOW, THEREFORE, in consideration of the premises and the mutual promises
representations, warranties and covenants herein contained, the parties agree as
follows:

                                    ARTICLE I
            SALE AND PURCHASE OF ASSETS; PURCHASE PRICE; AND PAYMENT

     1.1 PURCHASE AND SALE OF ASSETS. The Seller agrees to sell to Buyer, and
Buyer agrees to purchase from the Seller, free and clear of all Encumbrances and
upon the terms and conditions set forth in this Agreement, all of the assets,
properties, rights and claims of every type and nature and wherever located,
whether real, personal, tangible, intangible which are owned, used or leased by
Seller or hereafter acquired prior to the Closing, except for Seller's cash on
hand as of the day of Closing, accounts receivable, real estate, and those other
assets set forth on Schedule 1.1 (the "Excluded Assets"). All of the foregoing
assets, properties, rights and claims are hereinafter referred to as the "Assets
Purchased" and include, without limitation, the following:

               1.1.1 Machinery and Equipment. All machinery and equipment,
          fixtures, furnishings, vehicles, parts, supplies, office equipment,
          furniture, computer hardware and software, leasehold improvements and
          other tangible property owned, leased

<PAGE>

          (whether under operating and/or capital leases) or used by the Seller
          including, without limitation, those items described in Schedule
          1.1.1.

               1.1.2 Inventory and Supplies. All inventories of raw materials,
          work in process, and finished products, including, without limitation,
          supplies, spare parts and miscellaneous personal property, including,
          without limitation, those items described in Schedule 1.1.2.

               1.1.3 Intellectual Property, Names, Etc. All Intellectual
          Property Assets and all internet domain names, all rights in Seller's
          name, internet web pages, telephone and facsimile numbers, and other
          similar assets, including, without limitation, those items described
          in Schedule 1.1.3.

               1.1.4 Assumed Contracts. All right, title and interest of Seller
          in the Contracts described in Schedule 1.1.4 ("Assumed Contracts").

               1.1.5 Permits. All governmental permits, consents,
          authorizations, approvals and licenses including, without limitation,
          those items described on Schedule 1.1.5.

               1.1.6 Client Lists. All client/patient lists compiled and/or
          utilized in connection with the Business and the operation of the
          Business. All such lists shall be attached as Schedule 1.1.6.

               1.1.7 Books and Records. All books and records of the Seller
          (other than corporate organizational records), including all financial
          and operational books and records, relating to the Business, Tax
          Returns (other than returns for income Taxes), vendor and
          representative lists, sales literature, catalogs, invoices, computer
          databases, brochures, and all marketing, accounting, financial or
          Business records and materials, and all other materials relating in
          any manner to the Seller or the use or operation of the Business or
          Assets Purchased.

               1.1.8 Goodwill and Other Intangibles. The "goodwill" of the
          Seller and the Business and all other intangible property of the
          Seller of any type or nature.

     1.2 PURCHASE PRICE. In consideration of the transfer by Seller to Buyer of
the Assets Purchased, the maximum aggregate purchase price to be paid to Seller
for the Assets Purchased shall be Fourteen Million Four Hundred Eighty Thousand
Five Hundred Seventy Five ($14,480,575) Dollars, payable in accordance with
Section 1.3 and subject to adjustment set forth in Section 1.4 and Section 1.6
(the "Purchase Price").

     1.3 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be payable, as
follows:

               1.3.1 The sum of Five Million Two Hundred Thousand ($5,200,000)
          Dollars shall be payable at the Closing by inter-bank wire transfer,
          subject to adjustment pursuant to section 1.6 ("Cash Payment").

                                        2

<PAGE>

               1.3.2 A subordinated unsecured promissory note in the form
          attached hereto as Exhibit A in the principal amount of Two Million
          ($2,000,000) Dollars together with interest thereon at a rate of 8% to
          be delivered by Buyer to Seller at Closing (the "Promissory Note").

               1.3.3 The assumption and payment by the Buyer of obligations of
          Seller under certain rental payments owing under equipment leases
          arising after the date of Closing all of which are described on
          Schedule 1.3.3, provided that in no event will the total of the
          obligations and liabilities assumed hereunder exceed One Million Four
          Hundred Eighty Thousand Five Hundred Seventy Five ($1,480,575) Dollars
          as further described on Schedule 1.3.3 (the "Equipment Leases"). The
          Seller and Shareholder acknowledge and agree that the Buyer will not
          be assuming liabilities of Seller in excess of the amounts set forth
          in this Section 1.3.3 and the accompanying Schedule 1.3.3 and any
          liabilities owing those creditors identified on Schedule 1.3.3 in
          excess of the amounts set forth herein shall remain the liability of
          Seller and be satisfied in accordance with Section 1.8.

               1.3.4 Subject to the provisions of Section 1.4 hereof, Shares of
          Common Stock of Buyer's ultimate parent company, Arcadia Resources,
          Inc. (OTB:ACDI.OB) ("Arcadia Shares") equal to Five Million Eight
          Hundred Thousand ($5,800,000) Dollars (the "Stock Payment").

                    (a) Subject to the terms of Section 1.4 hereof, Two Million
          Nine Hundred Thousand ($2,900,000) Dollars worth of the Stock Payment
          shall be payable within forty-five (45) days from the date that is
          twenty-four (24) months from the date of Closing. The number of
          Arcadia Shares to be provided to Seller will be based on the average
          closing price per share for each of the last ten (10) trading days
          prior to the date of Closing.

                    (b) Subject to the terms of Section 1.4 hereof, Two Million
          Nine Hundred Thousand ($2,900,000) Dollars worth of the Arcadia Shares
          shall be payable within forty-five (45) days from the date that is
          forty-eight (48) months from the date of Closing. The number of
          Arcadia Shares to be provided to Seller will be based on the average
          closing price per share for each of the last ten (10) trading days
          prior to the date of Closing.

                                        3

<PAGE>

     1.4 PURCHASE PRICE ADJUSTMENT. The ACDI Stock shall be payable as follows:

               (a) Arcadia Shares with a value of Two Million Nine Hundred
          Thousand ($2,900,000) Dollars, as determined in accordance with
          Section 1.3.4(a) shall be paid to the Seller if the monthly net
          revenue, on an accrual basis, for any full calendar month between
          August 2006 and July 2008 (the "Twenty-Four Month Period") generated
          from current, reimbursable, stationary oxygen patients with each
          patient billed for not more than one month's supply of oxygen during
          such month (the "Qualified Patients") equals or exceeds the sum of Six
          Hundred Thousand ($600,000) Dollars for such month plus the "Base
          Amount" (as hereinafter defined) for such month (the "Twenty-Four
          Month Target"); and

               (b) Arcadia Shares with a value of Two Million Nine Hundred
          Thousand ($2,900,000) Dollars, as determined in accordance with
          Section 1.3.4(b) shall be paid to the Seller if the monthly net
          revenue, on an accrual basis for any full calendar month between
          August 2008 and July 2010 ("Forty-Eight Month Period") generated from
          Qualified Patients equals or exceeds One Million ($1,000,000) Dollars
          for such month from plus the "Base Amount" for such month (the
          "Forty-Eight Month Target").

               (c) For the purposes hereof the "Base Amount" shall equal the
          aggregate of (i) monthly net revenues from Qualified Patients of the
          Buyer and affiliates of the Buyer for the Month of July 2006 generated
          from locations that are both located in the State of Florida and will
          be managed by one or both of the Shareholders after Closing plus (ii)
          any monthly net revenues from Qualified Patients generated by Buyer or
          affiliates of Buyer from locations acquired after July 31, 2006
          provided such locations are both located in the State of Florida and
          managed by one or both of the Shareholders. With respect to net
          revenues calculated under Subsection 1.4(c)(ii) the Base Amount shall
          include the monthly net revenues inclusive of the month of closing on
          such transaction.

               (d) Notwithstanding anything contained herein to the contrary, if
          the Twenty-Four Month Target is not met, but the net revenue from
          Qualified Patients exceeds Three Hundred Sixty Thousand ($360,000)
          Dollars plus the Base Amount in the final month of the Twenty-Four
          Month Period, then Seller shall be entitled to receive the percentage
          of Arcadia Shares potentially payable in accordance with Section
          1.3.4(a) calculated as follows:

               (i) the result of the actual net revenue from Qualified Patients
               for the final month of the Month Twenty-Four Period less the sum
               of $300,000 plus the Base Amount, divided by

               (ii) the result of the Twenty-Four Month Target less the sum of
               $300,000 plus the Base Amount, the quotient of which is then
               multiplied by

               (iii) the maximum number of Arcadia Shares potentially issuable
               in accordance with Section 1.4(a).

          By way of example, if (a) the value of the Arcadia Shares on a per
          share basis determined in accordance with Section 1.3.4(a) equals
          $2.70, and (b) net revenue from Qualified Patients is Seven Hundred
          Thousand ($700,000) Dollars for the final month of the Twenty-Four
          Month Period and the Base Amount is Two Hundred

                                        4

<PAGE>

          Thousand ($200,000) Dollars then the Seller shall be entitled to
          716,049 Arcadia Shares as follows:

               1.   Arcadia Shares: $2,900,000 / $2.70 = 1,074,074 Arcadia
                    Shares potentially issuable

               2.   [($700,000)-($300,000+$200,000)] / [($800,000) -
                    ($300,000+$200,000)] = 66.7%

               3.   1,074,074*66.7%= 716,049

               (d) Notwithstanding anything contained herein to the contrary, if
          the Forty-Eight Month Target is not met, but the net revenue from
          Qualified Patients exceeds Seven Hundred Twenty Thousand ($720,000)
          Dollars plus the Base Amount for the last month of the Forty-Eight
          Month Period, then Seller shall be entitled to receive the percentage
          of Arcadia Shares potentially payable in accordance with Section
          1.3.4(b) calculated as follows:

               (i) the result of the actual net revenue from Qualified Patients
               for the last month of the Forty-Eight Month Period less the sum
               $600,000 plus the Base Amount, divided by;

               (ii) the result of the Forty-Eight Month Target less the sum of
               $600,000 plus the Base Amount the quotient of which is then
               multiplied by

               (iii) the maximum number of Arcadia Shares potentially issuable
               in accordance with Section 1.4(b).

          By way of example, if (a) the value of the Arcadia Shares on a per
          share basis determined in accordance with Section 1.3.4(b) equals
          $2.70, and (b) net revenue from Qualified Patients is Nine Hundred
          Thousand ($900,000) Dollars for the last month of the Forty-Eight
          Month Period and the Base Amount is Two Hundred Thousand ($200,000)
          Dollars then the Seller shall be entitled to 537,037 Arcadia Shares as
          follows:

               1.   Arcadia Shares: $2,900,000 / $2.70 = 1,074,074 Arcadia
                    Shares potentially issuable

               2.   [($900,000-($600,000+$200,000)] / [(1,000,0000 -
                    (600,000+200,000) = 50%

               3.   1,074,074*50%= 537,037

               (e) Notwithstanding anything contained herein to the contrary,
          the Buyer and Arcadia Resources, Inc.'s obligation to issue the
          Arcadia Shares will be subject to, and

                                        5

<PAGE>

          the number of Arcadia Shares issuable may be reduced, if Seller is
          obligated to indemnify Buyer hereunder for "Damages" (as herein
          defined) prior to the release of the Arcadia Shares from escrow.

               (f) In the event the Buyer fails to, or is prevented from causing
          the Arcadia Shares to be issued as contemplated herein, any amount
          payable to the Seller under this Section 1.4 will be paid in cash by
          the Buyer.

     1.5 REVENUE ADJUSTMENT. The parties acknowledge that Seller bills third
party payors in advance for the rental of home medical equipment and related
services provided to its rental patients, as is customary and routine in the
home medical equipment industry. Seller acknowledges that a portion of the
revenues it will receive from billings for cycle billing dates prior to the
Closing Date will include deferred revenues attributable to rental equipment and
related services to be provided by Buyer on and after the Closing Date. In order
to allocate such rental revenues between Buyer and Seller equitably and
accordingly, the parties acknowledge and agree that Seller shall remit to Buyer
Two Hundred Thousand ($200,000) Dollars on the Closing Date, which amount
represents the parties' mutually negotiated and agreed estimate of the portion
of such rental revenues that are attributable to Buyer's ownership of the
Business on and after the Closing Date.

     1.6 NATURE OF ARCADIA STOCK. Seller understands that the Arcadia Shares
acquired by it hereunder has not been registered under the Securities Act of
1933, as amended (the "Act"), or under any applicable state securities law, and
is being issued to it in reliance upon available exemptions from registration,
and is deemed restricted stock within the meaning of Rule 144 promulgated by the
Securities Exchange Commission. Seller further acknowledges and understands that
the resale of the ACDI stock has not been registered by ACDI, and the ACDI stock
cannot be resold by Sellers unless the ACDI stock is registered for resale or an
exemption from registration is available under federal and state law. As a
condition to Seller's receipt of the Stock Payment, Seller shall be required to
execute and deliver to Arcadia Resources, Inc., the Stock Payment Agreement in
the form attached hereto as Exhibit B. The Seller acknowledges and agrees that
the Arcadia Shares shall be issued and delivered into escrow pursuant to the
terms of "Escrow Agreement" (as hereinafter defined) upon the Buyer obtaining
all approvals required by the American Stock Exchange relating to the issuance
of such Arcadia Shares and the Seller agrees to provide all reasonable
information required by the Buyer in connection with obtaining such approval.

     1.7 ASSUMED CONTRACTS. At and as of the Closing, Seller shall assign the
Assumed Contracts, which shall include the Equipment Leases, to Buyer and Buyer
shall assume the obligation for the future performance of the Assumed Contracts
solely for the period following the Closing. Buyer shall only be obligated for
Buyer's own future performance under such Assumed Contracts and Buyer shall have
no duties, obligations or liabilities whatsoever, whether now existing or
hereafter arising, which directly or indirectly result from or arise out of any
period, events or circumstances prior to the Closing or any partial or full
performance or default by Seller or any other party in any Assumed Contract, nor
shall Buyer have any duties, liabilities or obligations whatsoever under any
Contracts of Seller that are not Assumed Contracts. The parties acknowledge and
agree that except for Buyer's obligation for future performance under Assumed
Contracts to the extent provided herein, no conduct, action inaction or course
of dealing of Buyer or any other party, and no other events or circumstances
whatsoever, shall be deemed to result in Buyer's assumption of part or all of
any Contract, or create any obligation or liabilities of Buyer under any
Contract of Seller. Seller and Shareholders shall, jointly and severally, fully
discharge and perform all Contracts of

                                        6

<PAGE>

Seller or otherwise relating to the Business when due, except for Buyer's
obligations under the Assumed Contracts as provided herein.

     1.8 NO ASSUMPTION OF LIABILITIES. Except for those liabilities set forth in
Schedule 1.3.3, any and all claims, obligations, costs and liabilities against
the Seller or otherwise arising out of the Assets Purchased or the Business
prior to Closing, whether fixed or contingent and whether now existing or
hereafter arising ("Seller's Liabilities") shall be and remain the Seller's sole
obligation and responsibility and the Buyer assumes no Seller's Liabilities
whatsoever. Seller and Shareholders shall fully pay and discharge all Seller's
Liabilities as and when due. The Seller's Liabilities shall remain the sole
obligation of the Seller, it being expressly understood and agreed that Buyer
shall not assume or otherwise become obligated for any of Seller's Liabilities
of any kind or nature, direct or indirect, existing or future, fixed or
contingent, whether arising by contract, tort, statute, operation of law or
otherwise.

     1.9 ALLOCATION OF PURCHASE PRICE. The parties mutually agree that the
consideration for the Assets Purchased shall be allocated as provided in
Schedule 1.9, which allocation shall be adhered to for income tax purposes in
all Tax Returns and governmental statements and filings of the parties.

     1.10 EMPLOYEES/REPRESENTATIVES. The Buyer may, but shall be under no
obligation to hire or retain the services of any of Seller's employees, agents
or representatives following the execution of this Agreement. The Buyer shall
have no liabilities arising out of any termination of Seller's employees, agents
or representatives, nor shall Buyer have any liabilities arising out of any
Employee Benefit Plans, severance or other agreements or arrangements with
respect to any such Persons, and Seller shall fully pay and discharge all such
liabilities.

     1.11 CLOSING. The consummation of the purchase and sale provided for in
this Agreement (the "Closing") will take place on July __, 2006 at 10:00 a.m.
(local time) at ___________________, or (b) at such other time and place as the
parties may agree (the "Closing Date"). At the Closing, the parties shall
execute and deliver the documents, agreements and instruments provided for under
this Agreement and, following the Closing, shall execute and deliver such other
documents and instruments as reasonably requested by any party in order to carry
out the purposes and intents of this Agreement and effectuate and/or evidence
the Contemplated Transactions. For the purposes of, transfer of title to the
Purchase Assets, the financial and other calculations herein, the Closing shall
be deemed effective as of 12:01 a.m. on the date of Closing.

     1.12 CLOSING OBLIGATIONS. At the Closing:

               1.12.1 Seller and Shareholders will deliver to Buyer
          (collectively the "Seller's Closing Deliveries") duly executed by
          Seller and Shareholders, as applicable:

                    (a) A bill of sale in the form of Exhibit "C" (the "Bill of
               Sale") and such other assignments, certificates of title, UCC
               termination statements and other discharge documents and
               instruments reasonably requested by Buyer in order to effectuate
               the transfer of marketable title to the Assets Purchased, free of
               all Encumbrances, to the Buyer, and to effectuate and evidence
               the other terms and provisions of this Agreement, consistent
               always with the terms and provisions of this Agreement;

                                        7

<PAGE>

                    (b) An Assignment and Assumption Agreement for assignment
               and assumption of the Assumed Contracts as provided in this
               Agreement and in the form of Exhibit "D" attached hereto
               ("Assignment and Assumption Agreement");

                    (c) Noncompetition agreements from the Seller and
               Shareholders in the form of Exhibit "E" (the "Noncompetition
               Agreement");

                    (d) Employment Agreements with the Shareholders in the form
               of Exhibit "F" (the "Employment Agreement")

                    (e) An opinion of Larry J. Gonzales, P.A., legal counsel to
               Seller and Shareholders, dated as of the date of Closing in the
               form of Exhibit "G" attached hereto;

                    (f) The Stock Payment Agreement;

                    (g) Assignments of the Confidentiality, Non-Compete and
               Exclusivity Agreements from Frank Wanderlingh, Kim Trost, Donna
               Camp and Joan Hyde;

                    (h) An Escrow Agreement in the form of Exhibit "H" pursuant
               to which the Arcadia Shares will be held;.

                    (i) Written, valid, binding and enforceable Consents (as
               hereafter defined) executed by all Persons whose consent,
               authorization and/or approval is necessary or appropriate in
               order to validly transfer the Seller's rights under Assumed
               Contracts to the Buyer, to validly transfer the Assets Purchased
               free of Encumbrances, and to consummate the Contemplated
               Transactions;

                    (j) An amendment to Seller's Articles of Incorporation
               changing the Seller's name to a name that is substantially
               different than the name of Seller and such consents and
               undertakings as may be required to permit the Buyer to change its
               corporate name and to register business names utilizing the names
               presently used by the Seller;

                    (k) Such other documents as Buyer may reasonably request for
               the purpose of (i) evidencing the accuracy of Seller's and
               Shareholders' representations and warranties, (ii) evidencing the
               performance by Seller and Shareholders of, or the compliance by
               Seller or Shareholders with, any covenant or obligation required
               to be performed or complied with by the Seller or the
               Shareholders, (iii) evidencing the satisfaction of any condition
               of this Agreement, or (iv) otherwise facilitating the
               consummation or performance of any of the Contemplated
               Transactions; and,

                    (l) Consent resolutions of the Shareholders and Board of
               Directors of Seller approving this Agreement, the Seller's
               Closing Deliveries and the Contemplated Transactions.

               1.12.2 Buyer will deliver to Seller, ("Buyer's Closing
          Deliveries") duly executed by Buyer:

                                        8

<PAGE>

               (a) The Cash Payment;

               (b) The Promissory Note;

               (c) Irrevocable Transfer Agent Instructions for the issuance of
          the Arcadia Shares to be held in accordance with the terms of the
          Escrow Agreement;

               (d) Consent resolutions of the board of directors of Buyer
          approving this Agreement, the Buyer's Closing Deliveries and the
          Contemplated Transactions; and

               (e) Such documents as Seller may reasonably request for the
          purpose of (i) evidencing the accuracy of any representation or
          warranty of Buyer, (ii) evidencing the performance by Buyer of, or the
          compliance by Buyer with, any covenant or obligation required to be
          performed or complied with by Buyer, (iii) evidencing the satisfaction
          of any condition under this Agreement, or (iv) otherwise facilitating
          the consummation of any of the Contemplated Transactions.

     1.13 POST CLOSING DELIVERIES

               1.13.1 As soon as practicable after Closing, Seller and
          Shareholders will deliver to Buyer:

                    (a) Compiled financial statements dated as of the date of
               Closing for the Seller prepared in a manner consistent with the
               financial statements described in Section 2.7 hereof certified by
               the Seller's Chief Accounting Officer (or equivalent) along with
               consent to submit such financial statements to AMEX and together
               with a Tax Asset Detail Report dated as of the date of Closing;

                    (b) Financing Statement Terminations for each Financing
               Statement of record, other than those that cover the obligations
               assumed under Section 1.3.3;

                    (c) Acknowledgements of each of the salespersons identified
               in Section 1.12.1(g) acknowledging the assignment of their
               respective Confidentiality Non-Compete, Exclusivity Agreements
               signed with the Seller and that such agreements now run to the
               benefit of the Buyer; and

                    (d) The Seller and Shareholders acknowledge and agree that
               the Buyer's obligation to make any payments under the Promissory
               Note is conditioned upon the Buyer's receipt of the above
               referenced items.

                                        9

<PAGE>

                                   ARTICLE II
            REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS

     As a material inducement to Buyer entering into this Agreement and knowing
and acknowledging that Buyer is relying upon the same, Seller and Shareholders
make, jointly and severally, as of the date hereof, the following
representations and warranties to Buyer.

     2.1 ORGANIZATION AND GOOD STANDING. Seller is a incorporated, validly
existing, and in good standing under the laws of the State of Florida, with full
power and authority to conduct its Business as it is now being conducted, to
own, lease and use the Assets Purchased and Excluded Assets and to perform all
its obligations under this Agreement. Seller is and has been duly qualified to
do business as a foreign corporation and is and has been in good standing under
the laws of each state or other jurisdiction during all such times in which
either the ownership, leasing or use of the Assets Purchased, or the nature of
the activities conducted by them, required such qualification.

     2.2 AUTHORITY/ENFORCEABILITY. This Agreement and Seller's Closing
Deliveries constitutes the legal, valid, and binding obligation of Seller and
Shareholders, enforceable in accordance with their terms. Seller and
Shareholders have the absolute and unrestricted right, power, authority, and
capacity to execute and deliver this Agreement and Seller's Closing Deliveries
and to perform their respective obligations under this Agreement and Seller's
Closing Deliveries.

     2.3 NO CONFLICT. Neither the execution and delivery of this Agreement nor
the consummation or performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time): (a)
contravene, result in a violation of or have any adverse affect upon (i) any
provision of the Organizational Documents of Seller, or (ii) any resolution
adopted by the board of directors or shareholders of Seller; (b) contravene,
conflict with, or result in a violation of, or give any Governmental Body or
other Person the right to challenge any of the Contemplated Transactions or to
exercise any remedy or obtain any relief under any Legal Requirement, or any
Order to which Seller, Shareholders or any of the Assets Purchased may be
subject; or (e) contravene, conflict with, result in a violation or breach of
any provision of, give any Person the right to declare a default or exercise any
remedy under, or to cancel, any Contract.

     2.4 CONSENTS. Except for the consents described in Schedule 2.4
("Consents"), Seller is not and shall not be required to give any notice to or
obtain any consent from any Person in connection with the execution and delivery
of this Agreement, the transfer of the Assets Purchased, the transfer of
Seller's rights in the Assumed Contracts to the Buyer or the consummation or
performance of any of the Contemplated Transactions.

     2.5 OWNERSHIP OF SELLER. The Shareholders owns, legally and beneficially,
one hundred percent (100%) of all of the outstanding voting and other stock and
securities of Seller.

     2.6 BOOKS AND RECORDS. The books of account, Business and accounting
records, minute books and other records of Seller, all of which have been made
available to Buyer, are complete, accurate and correct.

     2.7 FINANCIAL STATEMENTS. Attached as Schedule 2.7 are the following
financial statements of Seller: (a) the compiled balance sheets of Seller as of
December 31, 2005, 2004, 2003 and 2002, and the related statements of income,
and, changes in stockholders' equity and cash flow for the years then ended (the
"Annual Financial Statements"), and (b) the balance sheet of Seller as of June
30, 2006 and the related statements of income for the period then ended (the
"Interim Financial Statements"). The Annual Financial Statements and the Interim
Financial Statements are sometimes collectively referred to herein as the
"Financial Statements." The Financial Statements are true, accurate, complete,
and fully and accurately present the properties, financial condition and results
of operations of the Seller as of the respective dates of and for the periods
referred to in such Financial Statements and such Financial Statements have been
prepared on a consistent basis.

                                       10

<PAGE>

     2.8 TITLE TO AND CONDITION OF ASSETS PURCHASED. Seller owns and has
absolute, good and marketable title to all of the Assets Purchased, free and
clear of all Encumbrances. The Assets Purchased are (i) in good operating
condition and are not in need of any repair (other than minor routine repair and
maintenance), (ii) all located at the Seller's facilities and are reasonable and
sufficient for the continued conduct of the Business after the Closing in
substantially the same manner as conducted by Seller prior to the Closing, and
(iii) the only assets (except for the Excluded Assets), which are (a) used in
the Business or operations of the Seller, (b) reflected in the books, records
and Financial Statements and Interim Financial Statements of Seller, and/or (c)
located at the Seller's facilities. The Seller is not holding any assets of any
other Person at any of its facilities on consignment, bailment or otherwise. The
Seller does not conduct any business or operations other than the Business. The
ownership, possession, use or operation of the Assets Purchased or the Business
does not, directly or indirectly, give rise to or create any obligation for, the
payment of any rent, royalty, license fee, commission or the like.

     2.9 REAL PROPERTY.

               2.9.1 Seller does not own any real property.

               2.9.2 Schedule 2.9.2 lists and describes all real property leased
          or subleased to or by Seller and copies of all leases and subleases
          have been provided by Seller to Buyer ("Leased Property").

                    (a) The Leased Property, and all of the building,
               structures, improvements or appurtenances (and any equipment
               therein) and the operation and maintenance thereof, are in
               accordance with all Legal Requirements and the Seller has
               received all Governmental Authorizations required in connection
               with the ownership, use or operation thereof;

                    (b) There are no parties other than the Seller, in
               possession or control of any parcel of the Leased Property;

                    (c) With respect to the Leased Property, (i) each lease is
               valid, binding, enforceable and in full force and effect and will
               continue to be legal, valid, binding, enforceable and in full
               force and effect after the Closing, and has not been amended, and
               (ii) neither the Seller nor any other Person thereto are in
               default under any such lease;

                    (d) The Leased Property described on Schedule 2.9.2
               constitutes the only location at which the Seller conducts its
               Business.

                    (e) All buildings, structures, improvements and
               appurtenances constituting the Leased Property are in good
               operating condition and in a state of good maintenance and repair
               and are reasonable, adequate and suitable for the purposes for
               which they are currently being used; and

                                       11
<PAGE>

                    (f) No amounts are owing by the Seller in respect of the
               leased real property to any governmental authority or public
               utility for which Seller is responsible under the terms of the
               leases for the Leased Property, other than current accounts which
               are not in arrears and there are no outstanding levies, charges
               or fees assessed against the leased real property by any public
               authority (including development or improvement levies, charges
               or fees).

                    (g) To Seller's Knowledge, no amounts are owing in respect
               of the Leased Property to any governmental authority or public
               utility, other than current accounts which are not in arrears and
               there are no outstanding levies, charges or fees assessed against
               the leased real property by any public authority (including
               development or improvement levies, charges or fees).

     2.10 COMPETITIVE INTEREST. Except as disclosed in Schedule 2.10, neither
the Seller nor the Shareholders own, directly or indirectly, any interests in
any business or enterprise located within the State of Florida which is a
competitor or potential competitor of the Seller.

     2.11 [INTENTIONALLY DELETED].

     2.12 INVENTORY. All inventories of the Seller, other than minor amounts of
inventory used for parts, whether or not reflected in the Financial Statements,
(i) consist of good quality and are fully usable and salable within the six (6)
week period following the Closing Date in the Ordinary Course of Business, (ii)
have been priced at the lower of cost or market value, and (iii) the quantities
of each item of inventory are not excessive, are reasonable in the present
circumstances of the Seller and meet all current customer specifications.

     2.13 NO UNDISCLOSED LIABILITIES. The Seller has no Liabilities except for
Liabilities reflected in the Interim Financial Statements and current
Liabilities for trade payables and accrued operating expenses incurred in the
Ordinary Course of Business since the date of the Interim Financial Statement.

     2.14 TAXES.

               2.14.1 Seller has filed or caused to be filed, on a timely basis,
          all Tax Returns that are or were required to be filed by or with
          respect to Seller, pursuant to applicable Legal Requirements.

               2.14.2 All Taxes that Seller is or was required by Legal
          Requirements to pay, withhold or collect have been duly paid, withheld
          or collected and, to the full extent required, have been timely paid
          to the proper Governmental Body or other Person.

               2.14.3 There have been no audits of or proposed or actual
          adjustments to any Tax Returns of Seller.

               2.14.4 All Tax Returns filed by Seller are true, correct, and
          complete, and true copies of all Tax Returns filed by Seller within
          the six (6) year period prior to the date hereof and are attached
          hereto as Schedule 2.14.4.

                                       12

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     2.15 EMPLOYEE BENEFITS.

               2.15.1 Schedule 2.15.1 describes each Employee Benefit Plan that
          Seller currently maintains or to which Seller contributes and each
          Employee Benefit Plan that Seller maintains and true copies of all
          Employee Benefit Plans of Seller have been provided to Buyer.

               2.15.2 Each Employee Benefit Plan (and each related trust,
          insurance contract or fund) complies in form and in operation in all
          respects with all Legal Requirements.

               2.15.3 All required filings, returns, reports and descriptions
          have been timely filed or distributed appropriately with respect to
          each such Employee Benefit Plan as required by all Legal Requirements.

               2.15.4 All required contributions (including all employer
          contributions and employee salary reduction contributions) have been
          paid to each Employee Benefit Plan and all required contributions for
          any period ending on or before the Closing which are not yet due have
          been and shall be accrued and reserved in each of the Seller's
          respective Interim Financial Statements and books and records and
          shall be paid on or before the Closing. All premiums or other payments
          for all periods ending on or before the Closing have been paid with
          respect to each such Employee Benefit Plan.

               2.15.5 Seller has delivered to Buyer correct and complete copies
          of all Employee Benefit Plans, including without limitation, all
          agreements, plan documents and summary plan descriptions, the latest
          annual report, if any, and tax return, and all related trust
          agreements, insurance contracts and other funding agreements which
          implement or relate to each Employee Benefit Plan.

               2.15.6 The Seller has never contributed to, or ever has been
          required to contribute to any multi-employer plan or has any Liability
          (including withdrawal Liability) under any multi-employer plan.

               2.15.7 The Seller has never maintained or contributed to and has
          ever been required to contribute to, any Employee Benefit Plan or
          other arrangement providing medical, health or life insurance or other
          welfare-type benefits for current or future retired or terminated
          employees, their spouses or their dependents.

               2.15.8 The Seller has no Liability arising from any Employee
          Plan, except for any liability reflected in the Seller's Interim
          Financial Statement or as accrued in the Ordinary Course of Business
          since the date of such Interim Financial Statement.

     2.16 NO MATERIAL ADVERSE CHANGE. Except as set forth in Schedule 2.16,
during the period from December 31, 2005 and the date hereof, Seller has
conducted its Business only in the Ordinary Course of Business and there has not
been any:

               2.16.1 Payment of any bonuses to or any increase in any salaries,
          wages, benefits or other compensation of any stockholder, director,
          officer, employee, agent or

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<PAGE>

          Representative of Seller or entry into any employment or severance
          agreement or arrangement, or any other Contract with such Person;

               2.16.2 Payment or accrual of any bonuses, commissions or other
          distributions to the Seller or any affiliate of the Seller;

               2.16.3 Adoption of, or increase in the payments to or benefits
          under, any profit sharing, bonus, deferred compensation, savings,
          insurance, pension, retirement, or other Employee Benefit Plan;

               2.16.4 Damage to or destruction or loss of any asset or property
          of the Seller, whether or not covered by insurance, in excess of
          $25,000;

               2.16.5 Entry into, termination of, or receipt of notice of
          termination of any Contract or transaction outside the Ordinary Course
          of Business or which involves a total remaining commitment by or to
          the of at least $25,000;

               2.16.6 Sale (other than sales of inventory in the Ordinary Course
          of Business), license, lease, or other disposition of any asset or
          property of Seller in excess of $25,000 or imposition of any
          Encumbrance on any asset or property of Seller;

               2.16.7 Cancellation, settlement, or waiver of any claims or
          rights of or against Seller or any other party in excess of $25,000;

               2.16.8 Change in any of the accounting methods, practices or
          principles used by Seller; or

               2.16.9 The entry into any Contract by Seller to do any of the
          foregoing.

     2.17 COMPLIANCE WITH LEGAL REQUIREMENTS. Seller is, and at all times has
been, in full compliance with each Legal Requirement that is or was applicable
to it or to the conduct or operation of its Business or the ownership or use of
any of its assets, or relating to employment. Neither the Seller nor the
Shareholders have received any notice or other communication (whether oral or
written) from any governmental body or any other Person regarding an actual or
alleged failure to comply with any Legal Requirement.

     2.18 PRODUCT WARRANTY/PRODUCT LIABILITY. Schedule 2.18 includes a complete
description of any notice, claim, demand or complaint received by the Seller
during the last five years relating to any product warranty or product Liability
matter.

     2.19 LEGAL PROCEEDINGS. Except as set forth in detail on Schedule 2.19,
there is no Proceeding: (a) that has been commenced or to the best of Seller and
Shareholders' Knowledge, Threatened by or against Seller or that otherwise
relates to or may affect the Business, or any of the Assets Purchased within the
last five years; or (b) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. The Seller has complied with all Orders to which it,
or any of the assets owned or used have been subjected.

                                       14

<PAGE>

     2.20 GOVERNMENTAL AUTHORIZATIONS. Schedule 2.20 contains a complete and
accurate list of each Governmental Authorization that is held by the Seller or
that otherwise relates to the Business, or to any of the assets owned or used by
the Seller. Each Governmental Authorization listed or required to be listed in
Schedule 2.20 is valid and in full force and effect. The Seller has fully
complied with all conditions and requirements for, or relating to, all
Governmental Authorizations. The Governmental Authorizations listed in Schedule
2.20 collectively constitute all of the Governmental Authorizations necessary or
required to permit the Seller to lawfully conduct and operate the Business in
the manner as currently conducted and as conducted during the previous five (5)
years, and to permit the Seller to own and use the Assets Purchased in the
manner in which they currently own and use such assets. Except as disclosed on
Schedule 2.20, the Seller has not received any notice or other communication
regarding any actual, alleged or potential (i) violation or failure to comply
with any Governmental Authorization or (ii) revocation, withdrawal, suspension,
cancellation, termination or modification of any Governmental Authorization.

     2.21 ENVIRONMENTAL MATTERS. Seller is, and at all times has been, in full
compliance with, and has never been in violation of or liable under, any
Environmental Law and has never engaged in any Hazardous Activity.

     2.22 INTELLECTUAL PROPERTY.

               2.22.1 Schedule 2.22.1 contains a complete and accurate list and
          summary description of all Intellectual Property Assets owned by
          Seller, relating to or included in the Assets Purchased or otherwise
          used in the operation of the Seller's Business as it is currently
          conducted and as it has been conducted during the five (5) year period
          prior to the date hereof.

               2.22.2 Seller is the owner of all right, title, and interest in
          and to each of the Intellectual Property Assets, free and clear of all
          Encumbrances and Seller has the sole and undiminished right to the use
          of the Intellectual Property Assets without any Liability for
          royalties or other payments to a third party

               2.22.3 No Patent, Mark, Copyright, Trade Secret or other
          Intellectual Property Assets violates or infringes upon any rights of
          any Person, or, to Seller's Knowledge, has been challenged or
          Threatened in any way.

     2.23 CONTRACTS; NO DEFAULTS.

               2.23.1 Schedule 2.23.1 contains a complete and accurate list, and
          Seller has delivered to Buyer true and complete copies of:

                    (a) Each Contract that involves the furnishing or
               performance of services, or the delivery, sale, lease or transfer
               of goods, materials or products, by Seller, including, but not
               limited to, purchase orders received by Seller;

                    (b) Each Contract that involves the furnishing or
               performance of services to, or the purchase, lease or receipt of
               goods, materials, inventory, supplies, products or other personal
               property by Seller, including, but not limited to, purchase
               orders issued by Seller;

                                       15

<PAGE>

                    (c) Each joint venture or partnership agreement or other
               Contract involving any joint conduct or sharing of any business,
               venture or enterprise, or a sharing of profits, losses, costs, or
               liabilities by Seller with any other Person;

                    (d) Each Contract containing covenants that in any way
               purport to restrict the business activity of Seller or limits the
               freedom of Seller, or any of Seller's employees, agents or
               representatives, to engage in any line of business or to compete
               with any Person;

                    (e) Each warranty, guaranty, or other similar undertaking
               extended by the Seller for or with respect to any products or
               services or otherwise providing any rights or benefits to any
               Person;

                    (f) Each Contract under which Seller has advanced,
               guaranteed or loaned any amount to or for the benefit of any of
               its employees or Representatives;

                    (g) Each Contract with any employee, officer, director,
               shareholder, sale representative, consultant, distributor,
               Representative or agent of Seller;

                    (h) Each Contract providing for aggregate payments to or
               from Seller or involving an aggregate consideration or value in
               excess of $25,000;

                    (i) Each Contract not entered into in the Ordinary Course of
               Business;

                    (j) Each Contract having a term or period of performance in
               excess of 30 days; and

                    (k) Each proposed or actual amendment, supplement, or
               modification (whether oral or written) in respect of any of the
               foregoing.

               2.23.2 Each Contract is in full force and effect and is valid and
          enforceable in accordance with its terms.

               2.23.3 Except as set forth in Schedule 2.23.3 with respect to
          each Contract (including, without limitation, those Contracts and
          agreements disclosed or required to be disclosed in Schedule 2.23.1):

                    (a) Seller is, and at all times has been, in full compliance
               with all applicable terms and requirements of each Contract;

                    (b) Each other Person that has or had any obligation or
               Liability under any Contract is, and at all times has been, in
               full compliance with all applicable terms and requirements of
               such Contract;

                    (c) No event has occurred that may contravene or result in a
               violation or breach of, or give Seller or other Person the right
               to declare a default or exercise any remedy under, or to cancel,
               terminate, or modify, any Contract; and

                                       16

<PAGE>

                    (d) Seller has not given to or received from any other
               Person any notice or other communication (whether oral or
               written) regarding any actual or alleged violation or breach of,
               default under or termination of, any Contract.

     2.24 INSURANCE. Schedule 2.24 sets forth a description of (i) each
insurance policy (including policies providing property, casualty, liability and
workers' compensation coverage, product liability and bond and surety
arrangements) of Seller, (ii) all insurance claims filed by Seller within the
last two (2) years, and (iii) all open claims under such policies. With respect
to each such insurance policy: (a) the policy is legal, valid, binding,
enforceable and in full force and effect; (b) the policy shall be maintained by
Seller without charge through the Closing Date; (c) neither Seller nor any other
Person is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification or acceleration, under the policy; and (d) no Person
has repudiated any provision thereof. The Seller has been covered during the
past six years by insurance in scope and amount customary and reasonable for the
Business in which it has been have engaged during the aforementioned period.
Seller does not have any self-insurance or captive insurance arrangements.

     2.25 EMPLOYEES/REPRESENTATIVES.

               2.25.1 Schedule 2.25.1 contains a complete and accurate list of
          the following information for each employee of Seller, including each
          employee on leave of absence or layoff status: (a) name; (b) job
          title; (c) current compensation and bonus paid or payable; (d)
          vacation accrued; (e) service credited for purposes of vesting and
          eligibility to participate under any Employee Benefit Plan and (f) all
          other compensation, bonus and overtime pay, as applicable for the
          calendar year immediately preceding the date of the Interim Financial
          Statement.

               2.25.2 Schedule 2.25.2 lists each current sales representative,
          commissioned salesperson, consultant or other agent or representative
          of Seller ("Representatives") and all former Representatives to which
          Seller owes any Liability, along with a complete description of the
          compensation or Liability payable to such Representatives and all
          Contracts relating thereto, and Seller has delivered to Buyer a true
          and complete copy of each such Contract and/or all amendments thereto.

               2.25.3 To Seller's Knowledge, all Representatives and employees
          of Seller intend to continue their employment or other business
          relationship with the Buyer following the Closing. Seller has not
          received any notice of termination or resignation from any current
          director, officer, employee, agent or Representative of Seller.

     2.26 FINDERS OR BROKER FEES. Except as disclosed on Schedule 2.26, there
are no broker commissions, finders fees or other payments of like nature payable
to any Person in connection with the Contemplated Transactions, and in no event
will Buyer have any Liability for any fee or commission including, but not
limited to, any finders, originators or brokers fees in connection with the
transactions contemplated hereby.

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<PAGE>

     2.27 REFERRAL SOURCES. Schedule 2.27 lists the ten (10) largest referral
sources of the Seller during the twelve (12) month period ending on the date
hereof. Neither the Seller nor the Shareholders have received notice of, and
neither the Seller nor the Shareholders has any Knowledge that any of the
Seller's referral sources intends to cease dealing with the Seller or intends to
alter, in any material respect, the amount of such Person's dealings with the
Seller.

     2.28 RELATED PARTY TRANSACTIONS. All of the transactions entered into by
Seller have been conducted on an arms-length basis. No portions of the sales or
other ongoing business relationship of the Seller is dependent upon any familial
or other personal relationship of Seller, Shareholders or any of the officers,
directors or other employees of the Seller or Shareholders.

     2.29 DISCLOSURE. No representation or warranty of Seller or Shareholders in
this Agreement and no statement in the Schedules hereto omits to state any fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading. No notice given pursuant
to this Agreement or otherwise will contain any untrue statement or omit to
state a material fact necessary to make the statements therein or in this
Agreement, in light of the circumstances in which they were made, not
misleading.

                                   ARTICLE III
                     REPRESENTATIONS AND WARRANTIES OF BUYER

     As a material inducement of Seller entering into this Agreement and knowing
and acknowledging that Seller is relying upon the same, Buyer hereby makes, as
of the date hereof the following representations and warranties to Seller:

     3.1 ORGANIZATION AND GOOD STANDING. Buyer is a Delaware corporation duly
incorporated, validly existing, and in good standing under the laws of the State
of Delaware.

     3.2 AUTHORITY; NO CONFLICT.

               3.2.1 This Agreement constitutes the legal, valid, and binding
          obligation of Buyer, enforceable against Buyer in accordance with its
          terms. Buyer has the absolute and unrestricted right, power, and
          authority to execute and deliver this Agreement and to perform its
          obligations under this Agreement.

               3.2.2 Neither the execution and delivery of this Agreement by
          Buyer, nor the consummation or performance of any of the Contemplated
          Transactions by Buyer will give any Person the right to prevent,
          delay, or otherwise interfere with any of the Contemplated
          Transactions pursuant to:

               (a) Any provision of Buyer's Organizational Documents;

               (b)Any resolution adopted by the board of directors or the
          members of Buyer;

               (c) Any Legal Requirement or Order to which Buyer may be subject;
          or

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<PAGE>

               (d) Any Contract to which Buyer is a party or by which Buyer may
          be bound.

     Buyer is not and will not be required to obtain any Consent from any Person
     in connection with the execution and delivery of this Agreement or the
     consummation or performance of any of the Contemplated Transactions.

     3.3 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To Buyer's Knowledge, no such Proceeding has been
Threatened.

                                   ARTICLE IV
              INDEMNIFICATION, REMEDIES AND POST CLOSING COVENANTS

     4.1 SURVIVAL; RIGHT TO INDEMNIFICATION. All representations, warranties,
covenants, and obligations in this Agreement, the Schedules, the supplements to
the Schedules, and any other certificate or document delivered pursuant to this
Agreement will survive the Closing and continue in perpetuity and in full force
and effect thereafter. The right to indemnification, payment of Damages (as
hereinafter defined) or other remedy based on such representations, warranties,
covenants, and obligations will not be affected by any investigation conducted
with respect to, or any Knowledge acquired (or capable of being acquired) at any
time, whether before or after the execution and delivery of this Agreement or
the Closing, with respect to the accuracy or inaccuracy of or compliance with,
any such representation, warranty, covenant, or obligation. The waiver of any
condition based on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation, will not affect
the right to indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations, unless waived in
writing by the Buyer. Notwithstanding any Knowledge or facts determined by the
Buyer, the Buyer shall have the right to fully rely on the representations,
warranties, covenants and agreements of the Seller and Shareholders contained in
this Agreement or in any other documents or papers delivered in connection
herewith. Each representation, warranty, covenant and agreement of the Seller
and/or Shareholders contained in this Agreement is independent of each other
representation, warranty, covenant and agreement.

     4.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER AND SHAREHOLDERS.
Seller and the Shareholders, jointly and severally, shall indemnify, defend and
hold harmless Buyer, and its respective representatives, stockholders,
directors, officers, employees, controlling Persons, owners, members, agents and
affiliates (collectively, the "Indemnified Persons") for, and will pay to the
Indemnified Persons the amount of, any loss, Liability, claim, damage (including
incidental and consequential damages), expense (including costs of
investigation, defense and reasonable attorneys' fees) and diminution in value,
whether or not involving a third-party claim (collectively, "Damages"), arising,
directly or indirectly, from or in connection with:

               4.2.1 Any Liability of the Seller and/or any Liability which
          otherwise relates to or arises out of the Business, the ownership and
          use of the Assets Purchased, or any activities, occurrences,
          circumstances or events prior to the Closing;

                                       19

<PAGE>

               4.2.2 Any Liability arising out of any Contract of Seller, except
          for the performance due by Buyer under the Assumed Contracts following
          the Closing;

               4.2.3 Any Breach of any representation or warranty made by Seller
          and/or Shareholders in this Agreement, the Schedules, the supplements
          to the Schedules or any other certificate or document delivered by
          Seller pursuant to this Agreement;

               4.2.4 Any Breach by Seller and/or Shareholders of any covenant,
          obligation or agreement in this Agreement;

               4.2.5 Any Liability arising out of any product designed, shipped
          or manufactured by, or any services provided by, the Seller, including
          without limitation, product liabilities, product warranties, product
          recalls and Liabilities arising from such products or services;

               4.2.6 Any Liability or claim for any Tax which relates to any
          period prior to or including the Closing Date;

               4.2.7 Any Liability arising from any Breach, violation or
          noncompliance with any Legal Requirement prior to the Closing;

               4.2.8 Any claim by any Person for brokerage or finder's fees or
          commissions or similar payments based upon any agreement or
          understanding alleged to have been made by any such Person with Seller
          or the Shareholders (or any Person acting on their behalf) in
          connection with any of the Contemplated Transactions or any other
          transaction;

               4.2.9 Reliance by Buyer on any books or records of the Seller or
          the reliance by Buyer on any information furnished by or on behalf of
          Seller or Shareholders, to Buyer, to the extent any of such
          information should prove to be incorrect or false;

               4.2.10 Any Liability or claim for any compensation, damages,
          bonuses, severance pay, grievances, vacation pay, sick pay, paid time
          off, remuneration, workers' compensation benefits, health, life or
          other insurance benefits, and/or any and all other benefits or amounts
          payable to, or claims by or for, any of the agents, employees or
          Representatives of the Seller, whether or not hired by Buyer, arising
          out of, or accruing or vesting during, any period prior to the
          Closing, or arising out of any Employee Benefit Plan or other
          arrangements of Seller, or any other vesting, accrual, event or
          occurrence prior to the Closing;

               4.2.11 Any Liability or claim arising from the services,
          treatment, employment, grievance or termination of any employee, agent
          or Representative of the Seller on, prior to or after the Closing;

               4.2.12 Any agreements, Contracts, negotiations or other dealings
          by Seller or Shareholders with any Person concerning the sale,
          transfer or reorganization of the stock of the Seller, Assets
          Purchased or Business;

                                       20

<PAGE>

               4.2.13 Any Liability arising out of any Proceeding, demand, claim
          or charge pending or Threatened prior to the Closing, or otherwise
          arising out of or relating to any events, matters or circumstances
          prior to the Closing; and

               4.2.14 Any Liability arising out of Seller's or Shareholders'
          fraud or intentional misrepresentation.

               4.2.15 Any Liability arising out of the manner in which the
          Seller has inputted patient information into its billing system that
          prevents or delays Buyer's ability to collect amounts owing Buyer for
          services rendered after Closing.

     4.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. Buyer will indemnify
and hold harmless Seller, and will pay to Seller the amount of any Damages
arising, directly or indirectly, from or in connection with (a) any Breach of
any representation or warranty made by Buyer in this Agreement or in any
certificate delivered by Buyer pursuant to this Agreement, or (b) any Breach by
Buyer of any covenant or obligation of Buyer in this Agreement, or (c) the
failure of the Buyer to render the performance due by Buyer under the Assumed
Contracts following the Closing, or (d) ownership, use or operation by Buyer of
the Purchased Assets after the Closing.

     4.4 CURE PERIOD. In the event either Buyer or Seller determines that the
other has breached any obligation under the terms of this Agreement for which
the non-breaching party is seeking indemnification, such non-breaching party
shall provide the other with written notice of such breach. Upon receipt of such
written notice, the breaching party shall have either (a) five (5) days to cure
the breach, if the breach by its nature can be cured by the payment of money or
(b) thirty (30) days in which to cure such breach if the breach is of a nature
that can be cured other than through the payment of money. If, after the five
(5) day or thirty (30) day grace period, as applicable, the breaching party has
not substantially cured the breach specified in the notice, the non-breaching
party may exercise all remedies and rights which it may have under this
Agreement or at law or in equity against the breaching party arising out of said
breach. Notwithstanding anything contained herein to the contrary, the cure
periods contained herein shall not apply to any breach or default under any
Exhibit agreement referenced herein and the parties will look solely to the
notice and cure periods, if any, contained in those agreements.

                                   ARTICLE V
                                  DEFINITIONS

     For purposes of this Agreement, the following terms have the following
meanings:

     5.1 "AGREEMENT" shall mean this Asset Purchase Agreement together with all
Schedules, documents, Exhibits and instruments delivered in connection with this
Asset Purchase Agreement.

     5.2 "ASSETS PURCHASED" shall have the meaning as
defined in Section 1.1.

     5.3 "BREACH" shall mean a breach of a representation, warranty, covenant,
obligation, or other provision of this Agreement, any Schedule or any instrument
delivered pursuant to this Agreement and will be deemed to have occurred if
there is or has been (a) any inaccuracy or error in,

                                       21

<PAGE>

failure or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision, whether
material or otherwise or (b) any claim by any Person or other occurrence or
circumstance that is or was inconsistent with such representation, warranty,
covenant, obligation or other provision.

     5.4 "BUSINESS" shall mean the businesses and activities conducted by the
Seller.

     5.5 "CONTEMPLATED TRANSACTIONS" shall mean all of the transactions
contemplated by this Agreement, including, without limitation:

               5.5.1 The sale of the Assets Purchased by Seller to Buyer;

               5.5.2 The execution, delivery, and performance of the instruments
          and agreements required to be delivered pursuant to this Agreement;
          and

               5.5.3 The performance by Buyer and Seller of their respective
          covenants and obligations under this Agreement.

     5.6 "CONTRACT/CONTRACTS" shall mean any agreement (or group of related
agreements), contract, obligation, option, commitment, promise or understanding
(whether written or oral and whether expressed or implied) (a) under which the
Seller has or may acquire any rights, (b) under which the Seller has or may
become subject to any obligation or Liability, (c) by which the Seller or any of
the assets owned or used by it is or may become bound, or (d) which may relate
to, establish or restrict any rights or obligations affecting the capital stock
or assets of Seller.

     5.7 "EMPLOYEE BENEFIT PLAN(S)" shall mean non-qualified fringe benefit,
disability, health, medical, life insurance, supplemental compensation,
incentive, wage continuation, retirement, pension, profit sharing, bonus,
deferred compensation, stock ownership or other agreement, plan, trust, policy
or arrangement involving any past, present or future employee, consultant,
Representative, or agent of the Seller, including without limitation any plan,
program or arrangement defined in or relevant to any provision of ERISA.

     5.8 "ENCUMBRANCE(S)" shall mean any charge, claim, community property or
dower interest, mortgage, equitable interest, lien, option, pledge, security
interest, right of first refusal, contract, Liability or restriction of any
kind, including any restriction on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership.

     5.9 "ENVIRONMENTAL LAW" Shall mean any Legal Requirement that governs,
regulates, requires or relates to: (a) advising appropriate authorities,
employees, and the public of intended or actual releases of pollutants or
hazardous substances or materials, violations of discharge limits, or other
prohibitions and of the commencements of activities, such as resource extraction
or construction, that could have significant impact on the Environment; (b)
preventing or reducing to acceptable levels the Release of pollutants or
Hazardous Materials into the Environment; (c) reducing the quantities,
preventing the Release, or minimizing the hazardous characteristics of wastes
that are generated; (d) assuring that products are designed, formulated,
packaged, and used so that they do not present unreasonable risks to human
health or the Environment when used or disposed of; (e) protecting resources,
species, or ecological amenities; (f) reducing to acceptable levels the risks
inherent in the transportation of Hazardous Materials, pollutants, oil, or other

                                       22
<PAGE>

potentially harmful substances; (g) cleaning up pollutants that have been
released, preventing the Threat of Release, or paying the costs of such clean up
or prevention; (h) making responsible parties pay private parties, or groups of
them, for damages done to its health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets; (i) Hazardous Activities, Hazardous Materials,
pollutants, petroleum products, oil, asbestos or other potentially harmful
substances; or (j) the protection of the health, safety and welfare of the
public, water health and safety and pollution and/or protection of the
Environment.

     5.10 "GAAP" shall mean the United States generally accepted accounting
principles, consistently applied.

     5.11 "GOVERNMENTAL AUTHORIZATION" shall mean any approval, consent,
license, permit, waiver, or other authorization issued, granted, given, or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement.

     5.12 "GOVERNMENTAL BODY" shall mean any: (a) federal, state, local,
municipal, foreign, or other government; or (b) governmental or
quasi-governmental authority of any nature, including without limitation, (i)
any governmental agency, branch, department, official, or entity, (ii) any
court, judicial authority or other tribunal, and (iii) any arbitration body or
tribunal.

     5.13 "HAZARDOUS ACTIVITY" Shall mean the distribution, generation,
handling, importing, management, manufacturing, processing, production,
refinement, Release, storage, transfer, transportation, treatment, or use of
Hazardous Materials and/or any other act, business, operation, or action that
poses a risk of illness or property damage or diminution in value of any
property resulting from Hazardous Materials.

     5.14 "HAZARDOUS MATERIALS" shall mean any material, waste or substance that
may impair the quality of the environment or that is listed, regulated, defined,
designated, or classified under, or otherwise determined to be, hazardous,
radioactive, toxic, or a pollutant or a contaminant pursuant to, any
Environmental Law and shall include materials or equipment containing
polychlorinated biphenals, petroleum and petroleum products, flammable and
radioactive materials or asbestos in any form.

     5.15 "INTELLECTUAL PROPERTY ASSETS" shall include the following assets: (a)
Seller's name, all fictional business names, trade names, registered and
unregistered trademarks ("Marks"), service marks and applications; (b) all
patents, patent applications, and inventions and discoveries that are or may be
patentable ("Patents"); (c) all copyrights in both published works and
unpublished works ("Copyrights"); and (d) all know-how, trade secrets,
confidential information, customer lists, software, technical information, data,
process technology, plans, drawings, and blue prints, owned, used or licensed by
the Seller, or otherwise referenced in or affected by any Contract ("Trade
Secrets").

     5.16 "KNOWLEDGE" of any Person shall be deemed to include a particular fact
or other matter if: (a) such Person is actually aware of such fact or other
matter; or (b) a prudent Person could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
reasonably comprehensive investigation concerning the existence of such fact or
other matter. A Person other than an individual will be deemed to have
"Knowledge" of a particular fact

                                       23

<PAGE>

or other matter if any individual who is serving, or who has at any time served,
as a director, officer, partner, executor, or trustee of such Person (or in any
similar capacity) has, or at any time had, Knowledge of such fact or other
matter.

     5.17 "LEGAL REQUIREMENT(S)" shall mean any federal, state, local,
municipal, foreign, or other administrative order, law, charter, ordinance,
code, principle of common law, case, decision, regulation, or statute.

     5.18 "LIABILITY/LIABILITIES" shall mean any present or future liability or
obligation whether known or unknown, foreseeable or unforeseeable, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become due.

     5.19 "MATERIAL ADVERSE CHANGE (OR EFFECT)" means a change (or effect), in
the condition (financial or otherwise), properties, assets, liabilities, rights,
obligations, business or prospects of any Person which change (or effect),
individually or in the aggregate, is materially adverse to such condition,
properties, assets, liabilities, rights, obligations, business or prospects of
as Person.

     5.20 "ORDER" shall mean any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.

     5.21 "ORDINARY COURSE OF BUSINESS" shall mean an action taken by a Person
that is consistent with the past practices of such Person and is taken in the
ordinary course of the normal day-to-day operations of such Person and such
action is similar in nature and magnitude to actions customarily taken, without
any authorization by the board of directors (or by any Person or group of
Persons exercising similar authority), in the ordinary course of the normal
day-to-day operations of other Persons that are in the same line of business as
such Person.

     5.22 "ORGANIZATIONAL DOCUMENTS" shall mean the articles or certificates of
incorporation and the bylaws of a corporation including any amendments thereto
or restatements thereof, and all resolutions of the Board of Directors and
stockholders of such corporation, or in the case of a limited liability company,
its Articles of Organization, operating agreement (if more than one Member) and
resolutions of its Managers and Members.

     5.23 "PERSON(S)" shall mean any individual, corporation, general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union, or other entity or Governmental Body.

     5.24 "PROCEEDING" shall mean any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator or Person.

     5.25 "RELEASE" shall mean any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
Environment, whether intentional or unintentional.

                                       24

<PAGE>

     5.26 "TAX(ES)" shall mean any federal, state, local or foreign income,
gross receipts, license, payroll, employment, excise, customs, duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated or
other tax, assessment or charge by a Governmental Body of any kind whatsoever,
including any interest, penalty or addition thereto, whether disputed or not.

     5.27 "TAX RETURN(S)" shall mean any return (including any information
return), report, statement, schedule, notice, form, or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with any Legal
Requirement relating to any Tax.

     5.28 "THREAT OF RELEASE" shall mean a reasonable possibility of a Release
that may require action in order to prevent or mitigate damage to the
Environment that may result from such Release.

     5.29 "THREATENED" shall mean a claim, Proceeding, dispute, action, or other
matter if any demand or statement has been made (orally or in writing) or any
notice has been given (orally or in writing), or if any other event has occurred
or any other circumstances exist, that would lead a prudent Person to conclude
that such a claim, Proceeding, dispute, action, or other matter may be asserted,
commenced, taken, or otherwise pursued in the future.

                                   ARTICLE VI
                               GENERAL PROVISIONS

     6.1 OBLIGATIONS OF SELLER AND SHAREHOLDERS. Notwithstanding anything
contained in this Agreement to the contrary, all liabilities and obligations of
the Seller and/or Shareholders arising under or in connection with any term or
provision of this Agreement shall be deemed joint and several among the Seller
and Shareholders, whether or not the particular text or provision so indicates.

     6.2 CONFIDENTIALITY. The parties agree and acknowledge that any non-public
information, knowledge or data obtained by one party concerning the business,
financial or other affairs of the other party is strictly confidential and no
party shall use, reveal or disclose any such information except as necessary for
purposes reasonably related to the transactions contemplated herein or the
operations of Buyer following the execution of this Agreement. The Seller and
Shareholders further covenant and agree that they shall not use or disclose or
reveal (i) any information, knowledge or data relating in any way to the
business, financial condition, sales, customers, operations, suppliers,
products, technologies or services of Seller, Buyer or the Business, or (ii) any
other proprietary or confidential information, knowledge, data or details of the
business or affairs or practices of Seller, Buyer or the Business, or (iii) any
information or facts relating to this Purchase Agreement, any agreement referred
to herein, any agreement executed in connection herewith or the sale consummated
thereunder.

                                       25

<PAGE>

     6.3 EXPENSES. Except as otherwise expressly provided in this Agreement, the
Seller, on the one hand, and the Buyer, on the other hand, shall each bear their
own respective expenses incurred in connection with the preparation, execution,
and performance of this Agreement and the Contemplated Transactions, including,
but not limited to fees and expenses of agents, representatives, investment
bankers, advisors, consultants, counsel, and accountants (collectively
"Transaction Costs"). In the event of termination of this Agreement, the
obligation of each party to pay its own expenses will be subject to any rights
of such party arising from a Breach of this Agreement by another party.

     6.4 SCHEDULES. The Schedules are numbered to correspond to the various
sections of this Agreement relating to the representations and warranties
contained in this Agreement and certain other information called for by this
Agreement. Unless otherwise expressly specified, no disclosure made in any
particular Schedule shall be deemed made in any other Schedule.

     6.5 INTERPRETATION OF AGREEMENT. Where appropriate in this Agreement, words
used in the singular shall include the plural, and words used in the masculine
shall include the feminine and neuter. All headings which are used in this
Agreement are for the convenience of the reader only and shall not be used to
limit or construe any of the provisions hereof.

     6.6 PUBLIC ANNOUNCEMENTS. Prior to the Closing, any public announcement or
similar publicity with respect to this Agreement or the Contemplated
Transactions will be issued, at such time and in such manner as is mutually
agreed upon by Buyer and Seller.

     6.7 ARBITRATION. Any and all other disputes, controversies or claims
arising out of or relating to this Agreement shall be resolved exclusively and
conclusively by binding arbitration in Oakland County, Michigan in accordance
with the rules of the American Arbitration Association, except for any equitable
or injunctive relief sought hereunder or under the Seller Non-Competition
Agreement. Such arbitration shall be held at the office of the American
Arbitration Association. Any award or decision as a result of such arbitration
shall be final and binding upon the parties, shall not be subject to appeal and
shall be enforceable by entry of a judgment by any court of competent
jurisdiction.

     6.8 NOTICES. All notices, consents, waivers, and other communications under
this Agreement must be in writing and will be deemed to have been duly given
when (a) delivered by hand (with written confirmation of receipt), (b) sent by
telecopier (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), or (d) two (2) business days following the deposit of same
in the U.S. mail, in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):

          Seller:         Alliance Oxygen & Medical Equipment, Inc.
                          5355 McIntosh Road, Suite C,
                          Sarasota Florida 34233
                          Fax No.: (941) 926-8059

                          With a copy to:
                          Larry J. Gonzales

                                       26

<PAGE>

                          2655 McCormick Dr., Suite 212
                          Clearwater, FL 33759
                          Fax No.: (727) 799-1670

          Shareholders:   Timothy Beach

                          ____________________

                          ____________________

                          Fax No._____________

                          Stuart Christensen

                          ____________________

                          ____________________

                          Fax No._____________

          Buyer:          Beacon Respiratory Services, Inc.
                          26777 Central Park Boulevard, Suite 200
                          Southfield, Michigan 48076
                          Attn: Larry Kuhnert
                          Fax No. (248) 352-7534

          With a copy to: Kerr, Russell and Weber, PLC
                          500 Woodward Ave., Suite 2500
                          Detroit, Michigan 48226
                          Attn: Kevin T. Block
                          Fax No. (313) 963-7145

     6.9 RECOUPMENT. Notwithstanding anything contained in this Agreement or in
any Closing Delivery to the contrary, Seller and Shareholders hereby agree that
in the event any amount is or hereafter becomes due or payable by the Seller or
Shareholders to the Buyer, whether as indemnifiable Damages or otherwise
("Buyer's Receivable"), the Buyer shall have the option (but not obligation) to
elect to reduce, on a dollar-for-dollar basis, any amount owed, due or payable
to the Seller, Shareholders or any of their respective affiliates, including
without limitation, the Promissory Note, ("Seller's Receivable") under this
Agreement, or otherwise, by part or all of the Buyer's Receivable, which
recoupment may be offset and applied against one or more payments due under the
Seller's Receivable (in the order designated by Buyer) and/or treated as a
prepayment of principal balance of the Seller's Receivable, or applied against
any other Seller's Receivable in any manner, as the Buyer may elect from time to
time. This elective right of recoupment shall be cumulative and in addition to
any and all additional remedies to which Buyer may be entitled at law or in
equity.

     6.10 CERTAIN TAXES. All transfer, sales, use, registration and other Taxes
and fees (including any penalties and interest) due or payable in connection
with the Contemplated Transactions (including, without limitation, the transfer
of the Assets Purchased to the Buyer), shall be paid by Seller when due, and
Seller will, at its own expense, file all necessary Tax Returns and other
documentation with respect to all such transfer.

                                       27

<PAGE>

     6.11 FURTHER ASSURANCES. The parties agree (i) to furnish upon request to
each other such further information, (ii) to execute and deliver to each other
such other documents, and (iii) to do such other acts and things, all as the
other party may reasonably request for the purpose of carrying out the intent of
this Agreement and the documents referred to in this Agreement.

     6.12 WAIVER. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right this Agreement or the documents referred to in this
Agreement will operate as a waiver of such right and no single or partial
exercise of any such right will preclude any other or further exercise of such
right or the exercise of any other right.

     6.13 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all prior
agreements between the parties with respect to its subject matter and
constitutes (along with the Schedules and documents referred to in this
Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to the subject matter hereof, and there are no
other representations, warranties or covenants or understandings of the parties
relating to the subject matter hereof which are not contained herein. This
Agreement supersedes and terminates any provision in the Letter of Intent dated
May 5, 2006 by and among the parties. This Agreement may not be amended except
by a written agreement executed by the party to be charged with the amendment.

     6.14 CONSTRUCTION. The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumptions or burden of proof shall arise
favoring or disfavoring any party by virtue of the authoring of any of the
provisions of this Agreement. In the event of any inconsistency between the
statements in the body of this Agreement and those in the Schedules, the
statements in the body of this Agreement will control.

     6.15 ASSIGNMENTS; SUCCESSORS; NO THIRD PARTY RIGHTS. No party may assign
any of its rights under this Agreement without the prior consent of all the
other parties. Subject to the preceding sentence, this Agreement will apply to,
be binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
Agreement (and its successors and assigns) and those Persons expressly
identified herein as receiving or obtaining rights or benefits under this
Agreement.

     6.16 SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction or arbitrator, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.

     6.17 SECTION HEADINGS. The headings of Sections in this Agreement are
provided for convenience only and will not affect its construction or
interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement.

     6.18 GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the internal laws of the State of Florida without regard to
conflicts of laws principles.

                                       28

<PAGE>

     6.19 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original of this Agreement
and all of which, when taken together, will be deemed to constitute one and the
same agreement. A facsimile signature of any party shall be considered to have
the same binding legal effect as an original signature and shall be immediately
binding upon the parties.

                      [SIGNATURES APPEAR ON FOLLOWING PAGE]

                                       29

<PAGE>

     The parties have executed and delivered this Agreement as of the date first
written above.

                                        "BUYER":

                                        BEACON RESPIRATORY SERVICES, INC., a
                                        Delaware corporation

                                        By: /s/ Lawrence R. Kuhnert
                                            ------------------------------------
                                        Its: President

                                        "SELLER":

                                        ALLIANCE OXYGEN & MEDICAL EQUIPMENT,
                                        INC., a Florida corporation

                                        By: /s/ Stuart Christensen
                                            ------------------------------------
                                        Its: President

                                        "SHAREHOLDERS":

                                        /s/ Timothy Beach
                                        ----------------------------------------
                                        Timothy Beach

                                        /s/ Stuart Christensen
                                        ----------------------------------------
                                        Stuart Christensen

                                       30

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