Securities Purchase Agreement
EXHIBIT 10.1
The undersigned investor (the “Investor”) hereby confirms Investor’s agreement with Arcadia
Resources, Inc. (“Arcadia” or the “Company”) as follows:
1. This Securities Purchase Agreement is made as of the date set forth below between the
Company and the Investor.
2. The Company has authorized the sale and issuance of 4,999,999 shares (the “Shares”) of
the common stock of the Company, $0.001 par value per share (the “Common Stock”), to the Investor
in a private placement (the “Offering”).
3. The Company and the Investor agree that the Investor will purchase from the Company
and the Company will issue and sell to the Investor 4,999,999 Shares at a purchase price of $2.00
per Share, for an aggregate purchase price of $9,999,998.00 (the “Purchase Price”), subject to the
Terms and Conditions for Purchase of Shares attached hereto as Annex I and incorporated herein by
reference as if fully set forth herein. Unless otherwise requested by the Investor in Exhibit “A”,
certificates representing the Shares purchased by the Investor will be registered in the Investor’s
name and address as set forth below.
4. The Investor represents that, except as set forth below, (a) it has had no position,
office or other material relationship within the past three (3) years with the Company or its
affiliates, (b) neither it, nor any group of which it is a member or to which it is related,
beneficially owns (including the right to acquire or vote) any securities of the Company, (c)
neither it, nor any group of which it is a member or to which it is related, acquired, directly or
indirectly, any securities of the Company in a certain private placement transaction that closed on
November 30, 2006, and (d) it has no direct or indirect affiliation or association with any
National Association of Securities Dealers, Inc. (“NASD”) member. Exceptions:
(If no exceptions, write “none.” If left blank, response will be deemed to be “none.”)
Please confirm that the foregoing correctly sets forth the agreement between us by signing in the
space provided below for that purpose.
| Dated as of: December 28, 2006 | ||||||
| Capital Research and Management Company | ||||||
| on behalf of SMALLCAP World Fund, Inc. and | ||||||
| American Funds Insurance Series, Global Small | ||||||
| Capitalization Fund | ||||||
| By: | /s/ Xxxxxxxxx X. Xxxx | |||
| Name: | Xxxxxxxxx X. Xxxx | |||
| Title: | Sr. Vice President | |||
| Address: | 000 X. Xxxx Xx. | |||||
| Xxx Xxxxxxx, XX | ||||||
| 00000 |
AGREED AND ACCEPTED:
By:
|
/s/ Xxxx X. Xxxxxxx, XX | |||
| Name: Xxxx X. Xxxxxxx, XX | ||||
| Title: Chairman and CEO |
[SECURITIES PURCHASE AGREEMENT SIGNATURE PAGE]
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Annex I
Terms and Conditions for Purchase of Shares
1. Agreement to Sell and Purchase the Shares; Subscription Date.
1.1 Purchase and Sale. At the Closing (as defined in Section 2), the Company will
sell to the Investor, and the Investor will purchase from the Company, upon the terms and subject
to the conditions set forth herein, and at the Purchase Price, the number of Shares described in
paragraph 3 of the Securities Purchase Agreement attached hereto (collectively with this Annex I
and the other exhibits attached hereto, this “Agreement”). The Registration Rights Agreement and
the Securities Purchase Agreement executed by the Investor are sometimes collectively referred to
herein as the “Agreements.” The Investor must execute and deliver the Securities Purchase Agreement
and the Registration Rights Agreement and must complete the Stock Certificate Questionnaire (in the
form attached as Exhibit “A” hereto) and the Investor Questionnaire (in the form attached as
Exhibit “B” hereto) in order to purchase Shares.
1.2 Placement Agent Fee. The Investor acknowledges that the Company intends to pay
to The Shemano Group, Inc. (in its capacity as placement agent for the Shares, the “Placement
Agent”) a fee in respect of the sale of Shares to the Investor from the proceeds of the Offering.
2. Delivery of the Shares at Closing. The completion of the purchase and sale of
the Shares (the “Closing”) shall occur on a date specified by the Company and the Placement Agent
that is anticipated to be December 28, 2006 (the “Closing Date”), but which date shall not be later
than December 29, 2006 (the “Outside Date”), and of which the Investor will be notified in advance
by the Placement Agent. At the Closing or upon AMEX listing approval of the Shares, whichever is
later, the Company shall deliver to the Investor one or more stock certificates representing the
number of Shares set forth in paragraph 3 of the Stock Purchase Agreement, each such certificate to
be registered in the name of the Investor or, if so indicated on the Stock Certificate
Questionnaire, in the name of a nominee designated by the Investor. In exchange for the delivery
of the subscription agreements, the Investor shall deliver at Closing the Purchase Price directly
to the Company by wire transfer of immediately available funds pursuant to written instructions.
On the Closing Date, the Company shall cause counsel to the Company to deliver to the Investors a
legal opinion, dated the Closing Date, in the form attached hereto as Exhibit “C” (the “Legal
Opinion”).
The Company’s obligation to issue and sell the Shares to the Investor shall be subject to the
following conditions, any one or more of which may be waived by the Company: (a) prior receipt by
the Company of an executed copy of this Securities Purchase Agreement; (b) the accuracy of the
representations and warranties made by the Investor in this Agreement and the fulfillment of the
obligations of the Investor to be fulfilled by it under this Agreement on or prior to the Closing;
(c) the Company is satisfied that the issuance of the Securities will not be in violation of
applicable AMEX listing qualification rules; and (d) the absence of any order, writ, injunction,
judgment or decree that questions the validity of the Agreements or the right of the Company or the
Investor to enter into such Agreements or to consummate the transactions contemplated hereby and
thereby.
The Investor’s obligation to purchase the Shares shall be subject to the following conditions,
any one or more of which may be waived by the Investor: (a) the delivery of the Legal Opinion to
the Investor by counsel to the Company; (b) the accuracy of the representations and warranties made
by the Company in this Agreement on the Closing Date; (c) the execution and delivery by the Company
of the Registration Rights Agreement; and (d) the absence of any order, writ, injunction, judgment
or decree that questions the validity of the Agreements or the right of the Company or the Investor
to enter into such Agreements or to consummate the transactions contemplated hereby and thereby.
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In the event that the Closing does not occur on or before the Outside Date as a result of the
Company’s failure to satisfy any of the conditions set forth above (and such condition has not been
waived by the Investor), the Company shall return any and all funds paid hereunder to the Investor
no later than one Business Day following the Outside Date and the Investors shall have no further
obligations hereunder. For purposes of this Agreement, “Business Day” shall mean any day other
than a Saturday, Sunday or other day on which the New York Stock Exchange is permitted or required
by law to close.
3. Representations, Warranties and Covenants of the Company. Except as otherwise
described in the Company’s Annual Report on Form 10-K for the year ended March 31, 2006 (and any
amendments thereto filed at least two (2) Business Days prior to the Closing Date), the Company’s
S-1 Registration Statement effective July 18, 2006, the Company’s most recent Quarterly Report on
Form 10-Q for the quarter ended September 30, 2006, the Company’s Proxy Statement for its 2006
Annual Meeting of Shareholders, and any of the Company’s Current Reports on Form 8-K filed since
March 31, 2006 (and any amendments thereto filed at least two (2) Business Days prior to the
Closing Date) (all collectively, the “SEC Reports”), the Company hereby represents and warrants to,
and covenants with, the Investor as of the date hereof and the Closing Date, as follows:
3.1 Organization. The Company is duly incorporated and validly existing in good
standing under the laws of the State of Nevada. The Company has full power and authority to own,
operate and occupy its properties and to conduct its business as presently conducted and is
registered or qualified to do business and in good standing in each jurisdiction in which it owns
property or transacts business and where the failure to be so qualified would have a material
adverse effect upon the Company and its subsidiaries as a whole or the business, financial
condition, properties, operations or assets of the Company and its subsidiaries as a whole or the
Company’s ability to perform its obligations under the Agreements in all material respects
(“Material Adverse Effect”), and no proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such power and authority
or qualification.
3.2 Due Authorization. The Agreements have been validly executed and delivered by
the Company and constitute legal, valid and binding agreements of the Company enforceable against
the Company in accordance with their terms, except to the extent (i) rights to indemnity and
contribution may be limited by state or federal securities laws or the public policy underlying
such laws, (ii) such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights
generally and (iii) such enforceability may be subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at law).
3.3 No Conflict or Default. The execution and delivery of the Agreements, the
issuance and sale of the Shares to be sold by the Company under the Agreements, the fulfillment of
the terms of the Agreements and the consummation of the transactions contemplated thereby will not:
(A) result in a conflict with or constitute a material violation of, or material default (with the
passage of time or otherwise) under, (i) any bond, debenture, note, loan agreement or other
evidence of indebtedness, or any material lease, or contract to which the Company is a party or by
which the Company or their respective properties are bound, (ii) the Certificate of Incorporation,
by-laws or other organizational documents of the Company, as amended, or (iii) any law,
administrative regulation, or existing order of any court or governmental agency, or other
authority binding upon the Company or the Company’s respective properties; or, (B) result in the
creation or imposition of any lien, encumbrance, claim, or
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security interest upon any of the
material assets of the Company or an acceleration of indebtedness pursuant to any obligation,
agreement or condition contained in any material bond, debenture, note or any other evidence of
indebtedness or any material indenture, mortgage, deed of trust or any other agreement or
instrument to which the Company is a party or by which it is bound or to which any of the property
or assets of the Company is subject, that would have a Material Adverse Effect. Except for AMEX
listing approval of the Shares, no consent, approval, authorization or other order of, or
registration, qualification or filing with, any regulatory body, administrative agency, or other
governmental body is required for the execution and delivery of the Agreements by the Company and
the valid issuance or sale of the Shares by the Company pursuant to the Agreements, other than such
as have been made or obtained, and except for any filings required to be made under federal or
state securities laws.
3.4 Capitalization. The outstanding capital stock of the Company is as described in
the Company’s Quarterly Report on Form 10-Q for the three month period ending September 30, 2006.
Except as described in the SEC Reports, since September 30, 2006, the Company has not issued any
capital stock, other than pursuant to the purchase of shares under the Company’s employee stock
option plan and the exercise of outstanding warrants or stock options. The Shares to be sold
pursuant to the Agreements have been duly authorized, and when issued and paid for in accordance
with the terms of the Agreements, will be duly and validly issued, fully paid and nonassessable,
subject to no lien, claim or encumbrance (except for any such lien, claim or encumbrance created,
directly or indirectly, by the Investor). The outstanding shares of capital stock of the Company
have been duly and validly issued and are fully paid and nonassessable, have been issued in
compliance with the registration requirements of federal and state securities laws, and were not
issued in violation of any preemptive rights or similar rights to subscribe for or purchase
securities. The Company owns one hundred percent of all of the outstanding capital stock of each
of its subsidiaries, free and clear of all liens, claims and encumbrances, except for Care Clinic,
Inc. as to which the Company owns 85% of the outstanding capital stock. There are not (i) any
outstanding preemptive rights except as described in the SEC Reports, or (ii) any rights, warrants
or options to acquire, or instruments convertible into or exchangeable for, any unissued shares of
capital stock or other equity interest in the Company not disclosed in the SEC Reports, or (iii)
any contract or agreement to which the Company is a party that would provide for the issuance or
sale of any capital stock of the Company, any such convertible or exchangeable securities or any
such rights, warrants or options not disclosed in the SEC Reports. There are no shareholders
agreements, voting agreements or other similar agreements with respect to the Common Stock to which
the Company is a party, other than as described in SEC Reports.
3.5 Legal Proceedings. There is no material legal or governmental proceeding
pending, or to the actual knowledge of the Company, threatened, to which the Company is a party or
of which the business or property of the Company is subject that is required to be disclosed and
that is not so disclosed in the SEC Reports. Other than the information disclosed in the SEC
Reports, the Company is not subject to any injunction, judgment, decree or order of any court,
regulatory body, administrative agency or other government body.
3.6 No Violations. The Company is not in violation of its Certificate of
Incorporation, bylaws or other organizational documents, as amended, that is reasonably likely to
have a Material Adverse Effect. The Company is not in violation of any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration panel or authority
applicable to the Company, which violation, individually or in the aggregate, is reasonably likely
to have a Material Adverse Effect. The Company is not in default (and there exists no condition
which, with the passage of time or otherwise, would constitute a default) in the performance of any
bond, debenture, note or any other evidence of indebtedness or any indenture, mortgage, deed of
trust or any other material agreement or instrument to which the Company is a party or by which the
Company is bound, which such default is reasonably likely to have a Material Adverse Effect upon
the Company.
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3.7 Governmental Permits, Etc. The Company has all necessary franchises, licenses,
certificates and other authorizations from any foreign, federal, state or local government or
governmental agency, department or body that are currently necessary for the operation of the
business of the Company as currently conducted, except where the failure to currently possess such
franchises, licenses, certificates and other authorizations is not reasonably likely to have a
Material Adverse Effect.
3.8 Intellectual Property.
(a) Except for matters which are not reasonably likely to have a Material Adverse
Effect, (i) each of the Company has ownership of, or a license or other legal right to use, all
patents, copyrights, trade secrets, trademarks, customer lists, designs, manufacturing or other
processes, computer software, systems, data compilation, research results or other proprietary
rights used in the business of the Company (collectively, “Intellectual Property”) and (ii) all of
the Intellectual Property owned by the Company consisting of patents, registered trademarks and
registered copyrights have been duly registered in, filed in or issued by the United States Patent
and Trademark Office, the United States Register of Copyrights or the corresponding offices of
other jurisdictions and have been maintained and renewed in accordance with all applicable
provisions of law and administrative regulations in the United States and/or such other
jurisdictions.
(b) Except for matters which are not reasonably likely to have a Material Adverse
Effect, all material licenses or other material agreements under which (i) the Company employs
rights in Intellectual Property, or (ii) the Company has granted rights to others in Intellectual
Property owned or licensed by the Company are in full force and effect, and there is no default by
the Company with respect thereto.
(c) The Company believes that it has taken all steps reasonably required in
accordance with sound business practice and business judgment to establish and preserve the
ownership of the Company’s material Intellectual Property.
(d) Except for matters which are not reasonably likely to have a Material Adverse
Effect, to the actual knowledge of the Company, (i) the present business, activities and products
of the Company do not infringe any intellectual property of any other person; (ii) neither the
Company is making unauthorized use of any confidential information or trade secrets of any person;
and (iii) the activities of any of the employees of the Company, acting on behalf of the Company,
do not materially violate any agreements or arrangements related to confidential information or
trade secrets of third parties.
(e) Except for matters which are not reasonably likely to have a Material Adverse
Effect, and except as disclosed in the SEC Reports, no proceedings are pending, or to the knowledge
of the Company, threatened, which challenge the rights of the Company to the use the Company’s
Intellectual Property.
3.9 Financial Statements. The financial statements of the Company and the related
notes contained in the SEC Reports present fairly in all material respects the financial position
of the Company as of the dates therein indicated, and the results of its operations, cash flows and
the changes in shareholders’ equity for the periods therein specified, subject, in the case of
unaudited financial statements for interim periods, to normal year-end audit adjustments. Such
financial statements (including the related notes) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis at the times and throughout the
periods therein specified, except that unaudited financial statements may not contain all footnotes
required by generally accepted accounting principles.
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3.10 No Material Adverse Change. Except as disclosed in the SEC Reports or in any
press releases issued by the Company at least two (2) Business Days prior to the Closing Date,
there has not been (i) an event, circumstance or change that has had or is reasonably likely to
have a Material Adverse Effect upon the Company, (ii) any obligation incurred by the Company that
is material to the Company, (iii) any dividend or distribution of any kind declared, paid or made
on the capital stock of the Company, or (iv) any loss or damage (whether or not insured) to the
physical property of the Company which has had a Material Adverse Effect.
3.11 AMEX Compliance. The Company’s Common Stock is registered pursuant to Section
12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is listed on the
American Stock Exchange (“AMEX”), and the Company has taken no action intended to, or which to its
actual knowledge could have the effect of, terminating the registration of the Common Stock under
the Exchange Act or delisting the Common Stock from AMEX.
3.12 Reporting Status. The Company has timely made all filings required under the
Exchange Act during the twelve (12) months preceding the date of this Agreement, and all of those
documents complied in all material respects with the SEC’s requirements as of their respective
filing dates, and the information contained therein as of the respective dates thereof did not
contain an 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 in light of the circumstances under
which they were made not misleading. The Company is currently eligible to register the resale of
Common Stock by the Investors pursuant to a registration statement on Form S-3 under the Securities
Act or on such other form as may be available to the Company (the “Registration Statement”).
3.13 No Manipulation; Disclosure of Information. The Company has not taken and will
not take any action designed to or that might reasonably be expected to cause or result in an
unlawful manipulation of the price of the Common Stock to facilitate the sale or resale of the
Shares. The Company has not disclosed any material non-public information to the Investors.
3.14 Accountants. BDO Xxxxxxx, LLP, who expressed their opinion with respect to the
consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended
March 31, 2006, have advised the Company that they are independent accountants as required by the
Securities Act and the rules and regulations promulgated thereunder.
3.15 Contracts. Except for matters which are not reasonably likely to have a
Material Adverse Effect and those contracts that are substantially or fully performed or expired by
their terms, the contracts listed as exhibits to or described in the SEC Reports that are material
to the Company and all amendments thereto, are in full force and effect on the date hereof, and
neither the Company nor, to the Company’s actual knowledge, any other party to such contracts is in
material breach of or default under any of such contracts.
3.16 Taxes. Except for tax matters which are not reasonably likely to have a
Material Adverse Effect, each of the Company and each of its Subsidiaries has filed all necessary
federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown
as due thereon.
3.17 Transfer Taxes. On the Closing Date, all stock transfer or other taxes (other
than income taxes) which are required to be paid in connection with the sale and transfer of the
Shares hereunder will be, or will have been, fully paid or provided for by the Company and the
Company will have complied with all laws imposing such taxes.
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3.18 Investment Company. The Company is not an “investment company” or an
“affiliated person” of, or “promoter” or “principal underwriter” for an investment company, within
the meaning of the Investment Company Act of 1940, as amended, and will not be deemed an
“investment company” as a result of the transactions contemplated by this Agreement.
3.19 Insurance. The Company maintains insurance of the types and in the amounts
that the Company reasonably believes is adequate for its businesses, including, but not limited to,
insurance covering real and personal property owned or leased by the Company against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against by similarly
situated companies, all of which insurance is in full force and effect.
3.20 Offering Prohibitions. Neither the Company nor to its actual knowledge any
person acting on its behalf or at its direction has in the past or will in the future take any
action to sell, offer for sale or solicit offers to buy any securities of the Company which would
bring the offer or sale of the Shares as contemplated by this Agreement within the provisions of
Section 5 of the Securities Act.
3.21 Listing. The Company shall comply with all requirements with respect to the
issuance of the Shares and the listing thereof on AMEX.
3.22 Related Party Transactions. Other than described in the SEC Reports, to the
knowledge of the Company, no transaction has occurred between or among the Company or any of its
affiliates, officers or directors or any affiliate or affiliates of any such officer or director
that with the passage of time are reasonably likely be required to be disclosed pursuant to Section
13, 14 or 15(d) of the Exchange Act.
3.23 Books and Records. The books, records and accounts of the Company accurately
and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of,
and the operations of, the Company. The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting
principles and to maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
3.24 Securities Law Representation Private Placement. Assuming the accuracy of the
representations of the Investor, no consent, authorization, approval, permit or order of or filing
with any governmental or regulatory authority is required under current laws and regulations in
connection with the execution and delivery of this Agreement or the offer, issuance, sale or
delivery of the Shares, other than the qualification thereof, if required, under applicable AMEX
rules and state securities law, which qualification has been or will be effected as a condition of
these sales and the filing of a Form D with the Securities and Exchange Commission (the
“SEC”) in connection with the transaction contemplated by this Agreement. Under the
circumstances contemplated by this Agreement, the offer, issuance, sale and delivery of the Shares
will not, under current laws and regulations, require compliance with the registration requirements
of the Securities Act of 1933, as amended (the “Securities Act”).
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4. Representations, Warranties and Covenants of the Investor.
4.1 Investor Knowledge and Status. The Investor represents and warrants to, and
covenants with, the Company that: (i) the Investor is an “accredited investor” as defined in
Regulation D under the Securities Act, is knowledgeable, sophisticated and experienced in making,
and is qualified to make decisions with respect to, investments in securities presenting an
investment decision similar to that involved in the purchase of the Securities, and has requested,
received, reviewed and considered all information it deemed relevant in making an informed decision
to purchase the Securities; (ii) the Investor understands that the Securities are “restricted
securities” and have not been registered under the Securities Act and is acquiring the number of
Securities set forth in paragraph 3 of the Securities Purchase Agreement in the ordinary course of
its business and for its own account for investment only, has no present intention of distributing
any of such Securities and has no arrangement or understanding with any other persons regarding the
distribution of such Securities (this representation and warranty not limiting the Investor’s right
to sell Securities pursuant to a Registration Statement filed under the Registration Rights
Agreement or otherwise, or other than with respect to any claim arising out of a breach of this
representation and warranty, the Investor’s right to indemnification under Section 3 of the
Registration Rights Agreement); (iii) the Investor will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of) any of the Securities except in compliance with the Securities Act,
applicable state securities laws and the respective rules and regulations promulgated thereunder;
(iv) the Investor has answered all questions in paragraph 4 of the Securities Purchase Agreement
and the Investor Questionnaire attached hereto as Exhibit B for use in preparation of the
Registration Statement and the answers thereto are true and correct as of the date hereof and will
be true and correct as of the Closing Date; (v) the Investor will notify the Company promptly of
any change in any of such information until such time as the Investor has sold all of its
Securities or until the Company is no longer required to keep the Registration Statement effective;
and (vi) the Investor has, in connection with its decision to purchase the number of Securities set
forth in paragraph 3 of the Securities Purchase Agreement, relied upon the representations and
warranties of the Company contained herein and the information contained in the SEC Reports. The
Investor understands that the issuance of the Securities to the Investor has not been registered
under the Securities Act, or registered or qualified under any state securities law, in reliance on
specific exemptions therefrom, which exemptions may depend upon, among other things, the
representations made by the Investor in this Agreement. No person (including without limitation the
Placement Agent) is authorized by the Company to provide any representation that is inconsistent
with or in addition to those contained herein or in the SEC Reports, and the Investor acknowledges
that it has not received or relied on any such representations.
4.2 Transfer of Securities. The Investor agrees that it will not make any sale,
transfer or other disposition of the Securities (a “Disposition”) other than Dispositions that are
made pursuant to the Registration Statement in compliance with any applicable prospectus delivery
requirements or that are exempt from registration under the Securities Act. Investor has not taken
and will not take any action designed to or that might reasonably be expected to cause or result in
manipulation of the price of the Common Stock to facilitate the subscription to, or the sale or
resale of the Securities. Investor represents and warrants that the Company has not disclosed any
material non-public information to the Investor.
4.3 Power and Authority. The Investor represents and warrants to the Company that
(i) the Investor has full right, power, authority and capacity to enter into this Agreement and to
consummate the transactions contemplated hereby and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement, and (ii) this Agreement constitutes a valid
and binding obligation of the Investor enforceable against the Investor in accordance with its
terms, except to the extent (i) rights to indemnity and contribution may be limited by state or
federal securities laws or the public policy underlying such laws, (ii) such enforceability may be
limited by applicable bankruptcy,
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insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and (iii) such enforceability may be subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding in equity or at
law).
4.4 No Short Position. During the last thirty (30) days prior to the date hereof,
Investor nor any affiliate of Investor, foreign or domestic, has, directly or indirectly, effected
or agreed to effect any “short sale” (as defined in Rule 200 under Regulation SHO), whether or not
against the box, established any “put equivalent position” (as defined in Rule 16a-1(h) under the
0000 Xxx) with respect to the Company’s common stock, borrowed or pre-borrowed any shares of the
Company’s common stock, or granted any other right (including, without limitation, any put or call
option) with respect to the Company’s common stock or with respect to any security that includes,
relates to or derived any significant part of its value from the Company’s common stock or
otherwise sought to hedge its position in the Shares, Warrants and Warrant Shares (each, a
“Prohibited Transaction”). Prior to the earliest to occur of (i) the termination of the Offering,
(ii) the date the Registration Statement (defined below) is declared effective by the Securities
and Exchange Commission (the “SEC”) or (iii) the Required Effective Date defined in the
Registration Rights Agreement, Investor shall not, and shall cause its affiliates not to, engage,
directly or indirectly, in (a) a Prohibited Transaction nor (b) any sale, assignment, pledge,
hypothecation, put, call, or other transfer of any of the Shares, or Warrants or other securities
of the Company acquired hereunder.
4.5 No Investment, Tax or Legal Advice. The Investor understands that nothing in
the SEC Reports, this Agreement, or any other materials presented to the Investor in connection
with the purchase and sale of the Securities constitutes legal, tax or investment advice. The
Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has
deemed necessary or appropriate in connection with its purchase of Securities.
4.6 Confidential Information. The Investor covenants that from the date hereof it
will maintain in confidence all material non-public information regarding the Company received by
the Investor from the Company, including the receipt and content of any Suspension Notice (as
defined in the Registration Rights Agreement)) until such information (a) becomes generally
publicly available other than through a violation of this provision by the Investor or its agents
or (b) is required to be disclosed in legal proceedings (such as by deposition, interrogatory,
request for documents, subpoena, civil investigation demand, filing with any governmental authority
or similar process); provided, however, that before making any disclosure in reliance on this
Section 4.6, the Investor will give the Company at least fifteen (15) days prior written notice (or
such shorter period as required by law) specifying the circumstances giving rise thereto and will
furnish only that portion of the non-public information which is legally required and will exercise
its commercially reasonable efforts to ensure that confidential treatment will be accorded any
non-public information so furnished. The parties acknowledge and agree that as of the date hereof
and as of the Closing Date, the Company has not disclosed any material non-public information to
the Investor.
4.7 Additional Acknowledgement. Investor has thoroughly reviewed and the SEC
Reports) prior to making this investment. Investor has been granted a reasonable time prior to the
date hereof during which we have had the opportunity to obtain such additional information as
Investor deems necessary to permit Investor to make an informed decision with respect to the
purchase of the Common Stock. After examination of the SEC Reports and other information
available, Investor is fully aware of the business prospects, financial condition, risks associated
with investment and the operating history relating to the Company, and therefore in subscribing for
the purchase of the Securities, Investor is not relying upon any information other than information
contained in the SEC Reports. The Investor acknowledges that it has independently evaluated the
merits of the transactions contemplated by this
8
Agreement, that it has independently determined to enter into the transactions contemplated
hereby. Investor acknowledges that the issuance of the Shares is contingent on AMEX listing
approval.
4.8 Acknowledgments Regarding Placement Agent. The Investor acknowledges that the
Placement Agent has acted solely as placement agent for the Company in connection with the Offering
of the Securities by the Company, and that the Placement Agent has made no representation or
warranty whatsoever with respect to the accuracy or completeness of information, data or other
related disclosure material that has been provided to the Investor. The Investor further
acknowledges that in making its decision to enter into this Agreement and purchase the Securities,
it has relied on its own examination of the Company and the terms of, and consequences of holding,
the Securities. The Investor further acknowledges that the provisions of this Section 4.7 are for
the benefit of, and may be enforced by, the Placement Agent. Investor has not received any general
solicitation or advertising regarding the Offering and Investor has not been furnished with any
oral or written representation or information in connection with the Offering which is not
contained in the SEC Reports.
4.9 No General Solicitation. Investor is not purchasing the Securities as a result of any
advertisement, article, notice or other communication regarding the Securities published in any
newspaper, magazine or similar media or broadcast over television or radio or presented at any
seminar or any other general solicitation or general advertisement.
4.10 Reliance on Exemptions. Investor acknowledges that the Securities are being offered and
sold to it by the Company in reliance on specific exemptions from the registration requirements of
the Securities Act of 1933, as amended, and applicable state securities laws and that the Company
is relying on the truth and accuracy of, and Investor’s compliance with, the representations,
covenants, warranties, agreements, acknowledgments and understandings of Investor set forth herein
in order to determine the availability of such exemptions and the eligibility of Investor to
acquire the Securities.
4.11 Other. Purchaser agrees to the imprinting, so long as is required under applicable
federal and state securities laws, of a legend on each certificate evidencing the Securities in
substantially the following form:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE LAW. THE SHARES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THESE SHARES UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE
STATE LAW OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS
NOT REQUIRED UNDER THE ACT.
The legend set forth above shall be removed and the Company shall issue a certificate without
such legend to the holder of the Shares upon which it is stamped or issue to such holder by
electronic delivery at the applicable balance account at DTC, if (i) such Shares are sold or
transferred pursuant to an effective Registration Statement or Rule 144 (assuming the transferor is
not an Affiliate of the Company), (ii) such Shares are eligible for sale under Rule 144(k), or
(iii) if such legend is not required under applicable requirements of the Securities Act (including
controlling judicial interpretations and pronouncements issued by the Commission). Any fees with
respect to the Transfer Agent and counsel to the Company associated with the removal of such legend
shall be borne by the Company. Following the
9
Effective Date or at such earlier time as a legend is no longer required for certain Shares,
the Company will no later than three (3) Trading Days following the delivery by a Purchaser to the
Company or the Transfer Agent (with notice to the Company) of a legended certificate representing
such Shares (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form
necessary to affect the reissuance and/or transfer and an opinion of counsel to the extent required
by Section 4.1(a)), deliver or cause to be delivered to such Purchaser a certificate representing
such Shares that is free from all restrictive and other legends. The Company may not make any
notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on
transfer set forth in this Section.
5. Survival of Representations, Warranties and Agreements. Notwithstanding any
investigation made by any party to this Agreement or by the Placement Agent, all covenants,
agreements, representations and warranties made by the Company and the Investor herein shall
survive the execution of this Agreement, the delivery to the Investor of the Securities being
purchased and the payment therefor, and a party’s reliance on such representations and warranties
shall not be affected by any investigation made by such party or any information developed thereby.
6. Registration of Shares; Public Statements.
6.1 In connection with the purchase and sale of the Shares by the Investor
contemplated hereby, the Company has entered into a Registration Rights Agreement with the Investor
providing for the filing by the Company of a Registration Statement on Form S-3 or such other form
available to the Company to enable the resale of the Shares by the Investors from time to time.
6.2 The Company agrees to disclose on a Current Report on Form 8-K the existence of
the Offering and the material terms, thereof, including pricing, within four (4) Business Days
after the Closing. The Company will not issue any public statement, press release or any other
public disclosure listing the Investor as the purchaser of the Securities without the Investor’s
prior review of the statement and prior consent thereto, except as may be required on Form 8-K,
10-Q, 10-K, or exhibits thereto, or by other applicable law or rules of any exchange on which the
Company’s securities are listed.
7. Notices. All notices, requests, consents and other communications hereunder
shall be in writing, shall be delivered (A) if within the United States, by first-class registered
or certified airmail, or nationally recognized overnight express courier, postage prepaid, or by
facsimile, or (B) if from outside the United States, by International Federal Express (or
comparable service) or facsimile, and shall be deemed given (i) if delivered by first-class
registered or certified mail domestic, upon the Business Day received, (ii) if delivered by
nationally recognized overnight carrier, one (1) Business Day after timely delivery to such
carrier, (iii) if delivered by International Federal Express (or comparable service), two (2)
Business Days after timely delivery to such carrier, (iv) if delivered by facsimile, upon electric
confirmation of receipt and shall be addressed as follows, or to such other address or addresses as
may have been furnished in writing by a party to another party pursuant to this paragraph:
| (a) | if to the Company, to: | |||
| Arcadia Resources, Inc. | ||||
| 000 0xx Xxxxxx Xxxxx, Xxxxx 0 | ||||
| Xxxxxx, XX 00000 | ||||
| Attention: Chairman and CEO | ||||
| Telephone: (000) 000-0000 | ||||
| Fax: (000) 000-0000 |
10
| with a copy to: | ||||
| Xxxx, Xxxxxxx and Xxxxx, PLC | ||||
| Attention: Xxxxxxx X. Xxxxxx, Esq. | ||||
| 000 Xxxxxxxx Xxx., Xxxxx 0000 | ||||
| Xxxxxxx, XX 00000-0000 | ||||
| Telephone: (000) 000-0000 | ||||
| Fax: (000) 000-0000 |
(b) if to the Investor, at its address on the signature page to the Stock Purchase
Agreement.
8. Amendments; Waiver. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and the Investor. Any waiver of a
provision of this Agreement must be in writing and executed by the party against whom enforcement
of such waiver is sought.
9. Headings. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of this Agreement.
10. Entire Agreement; Severability. This Agreement sets forth the entire agreement
and understanding of the parties relating to the subject matter hereof and supersedes all prior and
contemporaneous agreements, negotiations and understandings between the parties, both oral and
written relating to the subject matter hereof. If any provision contained in this Agreement is
determined to be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way be affected or
impaired thereby.
11. Governing Law. This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Michigan, without giving effect to the principles of
conflicts of law.
12. Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall constitute an original, but all of which, when taken together, shall constitute but
one instrument, and shall become effective when one or more counterparts have been signed by each
party hereto and delivered to the other parties.
11
Exhibit A
STOCK CERTIFICATE QUESTIONNAIRE
Please provide us with the following information:
1.
|
The exact name in which your Securities are to be registered (this is the name that will appear on your stock certificate(s)). You may use a nominee name if appropriate: | |||
2.
|
If a nominee name is listed in response to item 1 above, the relationship between the Investor and such nominee: | |||
3.
|
The mailing address of the registered holder listed in response to item 1 above: | |||
4.
|
The Social Security Number or Tax Identification Number of the registered holder listed in the response to item 1 above: |
A-1
Exhibit B
INVESTOR QUESTIONNAIRE
(All information will be treated confidentially)
The undersigned hereby acknowledges the following:
This Investor Questionnaire (“Questionnaire”) must be completed by the Investor in connection
with the offer and sale of the shares of the common stock, par value $0.001 per share (the
“Shares”), of Arcadia Resources, Inc. (the “Company”). The Shares are being offered and sold by
the Company without registration under the Securities Act of 1933, as amended (the “Securities
Act”), and the securities laws of certain states, in reliance on the exemptions contained in
Section 4 of the Securities Act and on Regulation D promulgated thereunder and in reliance on
similar exemptions under applicable state laws. The Company must determine that the Investor meets
certain suitability requirements before offering or selling Shares to the Investor. The purpose of
this Questionnaire is to assure the Company that the Investor will meet the applicable suitability
requirements. The information supplied by the undersigned will be used in determining whether the
undersigned meets such criteria, and reliance upon the private offering exemption from registration
is based in part on the information herein supplied.
This Questionnaire does not constitute an offer to sell or a solicitation of an offer to buy
any security. The undersigned’s answers will be kept strictly confidential. However, by signing
this Questionnaire the undersigned will be authorizing the Company to provide a completed copy of
this Questionnaire to such parties as the Company deems appropriate in order to ensure that the
offer and sale of the Shares will not result in a violation of the Securities Act or the securities
laws of any state and that the undersigned otherwise satisfies the suitability standards applicable
to purchasers of the Shares. The Investors must answer all applicable questions and complete, date
and sign this Questionnaire. The undersigned shall print or type its responses and attach
additional sheets of paper if necessary to complete its answers to any item.
A. Background Information
Name: |
||
Business Address: |
||
| (Number and Street) | ||
| (City) | (State) | (Zip Code) |
Telephone Number: ( ) |
||
Residence Address: |
||
| (Number and Street) | ||
| (City) | (State) | (Zip Code) |
Telephone Number: ( ) |
||
If an individual:
| Age: | Citizenship: | Where registered to vote: |
B-1
If a corporation, partnership, limited liability company, trust or other entity:
Type of entity: |
||
| State of formation: | Date of formation: |
Social Security or Taxpayer Identification No. |
||
| Send all correspondence to (check one): ___ Residence Address | ___ Business Address |
B. Status as Accredited Investor
The undersigned is an “accredited investor” as such term is defined in Regulation D under the
Securities Act, because at the time of the sale of the Shares the undersigned falls within one or
more of the following categories (Please initial one or more, as applicable):
___
(1) a bank as defined in Section 3(a)(2) of the Securities Act, or a savings and loan
association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether
acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section
15 of the Securities Exchange Act of 1934; an insurance company as defined in Section 2(13) of the
Securities Act; an investment company registered under the Investment Company Act of 1940 or a
business development company as defined in Section 2(a)(48) of that act; a Small Business
Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d)
of the Small Business Investment Act of 1958; a plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a state or its political subdivisions
for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an
employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if
the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such act, which
is either a bank, savings and loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with the investment decisions made solely by persons that are accredited
investors;1
___
(2) a private business development company as defined in Section 202(a)(22) of the Investment
Advisers Act of 1940;
___
(3) an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986,
corporation, Massachusetts or similar business trust, or partnership, not formed for the specific
purpose of acquiring the Shares offered, with total assets in excess of $5,000,000;
___
(4) a natural person whose individual net worth, or joint net worth with that person’s
spouse, at the time of such person’s purchase of the Shares exceeds $1,000,000;
___
(5) a natural person who had an individual income in excess of $200,000 in each of the two
most recent years or joint income with that person’s spouse in excess of $300,000 in each of those
years and has a reasonable expectation of reaching the same income level in the current year;
| 1 | As used in this Questionnaire, the term “net worth” means the excess of total assets over total liabilities. In computing net worth for the purpose of subsection (4), the principal residence of the investor must be valued at cost, including cost of improvements, or at recently appraised value by a professional appraiser. In determining income, the investor should add to the investor’s adjusted gross income any amounts attributable to tax exempt income received, losses claimed as a limited partner in any limited partnership, deductions claimed for depreciation, contributions to an XXX or XXXXX retirement plan, alimony payments, and any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income. |
B-2
___
(6) a trust, with total assets in excess of $5,000,000, not formed for the specific purpose
of acquiring the Shares offered, whose purchase is directed by a sophisticated person as described
in Rule 506(b)(2)(ii) of Regulation D; and
___
(7) an entity in which all of the equity owners are accredited investors (as defined above).
C. Representations
The undersigned hereby represents and warrants to the Company as follows:
1. Any purchase of the Shares would be solely for the account of the undersigned and not for
the account of any other person or with a view to any resale, fractionalization, division, or
distribution thereof.
2. The information contained herein is complete and accurate and may be relied upon by the
Company, and the undersigned will notify the Company immediately of any material change in any of
such information occurring prior to the closing, if any, with respect to the purchase of Shares by
the undersigned or any co-purchaser.
3. The undersigned acknowledges that there may occasionally be times when the Company, based
on the advice of its counsel, determines that it must suspend the use of the Prospectus forming a
part of the Registration Statement (as such terms are defined in the Stock Purchase Agreement to
which this Questionnaire is attached) until such time as an amendment to the Registration Statement
has been filed by the Company and declared effective by the Securities and Exchange Commission or
until the Company has amended or supplemented such Prospectus. The undersigned is aware that, in
such event, the Shares will not be subject to ready liquidation, and that any Shares purchased by
the undersigned would have to be held during such suspension. The overall commitment of the
undersigned to investments which are not readily marketable is not excessive in view of the
undersigned’s net worth and financial circumstances, and any purchase of the Shares will not cause
such commitment to become excessive. The undersigned is able to bear the economic risk of an
investment in the Shares.
4. The following is a list of all states and other jurisdictions in which blue sky or similar
clearance will be required in connection with the undersigned’s purchase of the Shares:
The undersigned agrees to notify the Company in writing of any additional states or other
jurisdictions in which blue sky or similar clearance will be required in connection with the
undersigned’s purchase of the Shares.
B-3
IN WITNESS WHEREOF, the undersigned has executed this Questionnaire on , 20___, and
declares under oath that it is truthful and correct.
| Print Name | ||||
| By: | ||||
| Signature | ||||
| Title: | ||||
| (required for any purchaser that is a corporation, partnership, trust or other entity) | ||||
B-4
