EXHIBIT 4.2
WARRANT PURCHASE AND REGISTRATION RIGHTS AGREEMENT
THIS WARRANT PURCHASE AND REGISTRATION RIGHTS AGREEMENT ("Agreement") is
made and entered into on September 28, 2005 (the "Effective Date") by and
between Arcadia Resources, Inc., a Nevada corporation ("Seller" or "Company"),
and XXXX Master Fund, Ltd. ("Purchaser"). Seller and Purchaser are sometimes
referred to individually as a "Party" and collectively as the "Parties."
RECITALS
A. Subject to the terms and conditions of this Agreement, the Company
desires to issue and sell to Purchaser a warrant, in the form attached hereto as
Exhibit A ("Series B-1 Warrant") that would permit the Purchaser to purchase
that number of shares of the Company's common stock, $0.001 par value per share
(the "Common Stock") specified on the last page of this Agreement at an exercise
price of $0.001 per share for the term specified in the Series B-1 Warrant.
B. Subject to the terms and conditions of this Agreement, the Company
desires to issue and sell to Purchaser a warrant, in the form attached hereto as
Exhibit B ("Series B-2 Warrant") that would permit the Purchaser to purchase
that number of shares of Common Stock specified on the last page of this
Agreement at an exercise price of Two and 25/100 ($2.25) Dollars for the term
specified in the Series B-2 Warrant.
C. The Purchaser, which is an accredited investor as that rule is defined
in Rule 501(a) of Regulation D promulgated by the U.S. Securities and Exchange
Commission (the "Commission"), desires to purchase from the Company the Series
B-1 Warrant and Series B-2 Warrant (collectively the "Warrants"), subject to the
terms and conditions of this Agreement. The shares of Common Stock issuable on
exercise of the Warrants are collectively referred to herein as the "Warrant
Shares."
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Purchaser and Seller agree as
follows:
1. SALE OF WARRANTS. Upon execution of this Agreement, Purchaser hereby
agrees to and does purchase from Seller, and Seller hereby agrees to and does
sell to Purchaser, one Series B-1 Warrant and one Series B-2 Warrant per the
specifications set forth on the last page of this Agreement.
2. PURCHASE PRICE. The purchase price of the Warrants ("Purchase Price")
shall be the amount equal to the product of (a) the number of shares of Common
Stock issuable on exercise of the Series B-1 Warrant multiplied by (b) Two
Dollars and 25/100 ($2.25) Dollars.
3. PAYMENT OF PURCHASE PRICE. Contemporaneously with the execution of this
Agreement, the Purchase Price shall be paid in full in U.S. Dollars by certified
check or wire transfer.
4. ISSUANCE OF WARRANTS. Upon Seller's receipt of payment in full of the
Purchase Price, Seller shall deliver to Purchaser the Series B-1 Warrant and the
Series B-2 Warrant.
5. ACKNOWLEDGMENTS, COVENANTS, REPRESENTATIONS AND WARRANTIES OF
PURCHASER. Purchaser acknowledges, covenants, represents and warrants to Seller
each of the following:
(a) ORGANIZATION; AUTHORITY; ENFORCEABILITY. Purchaser is an entity
duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization with full power and
authority to enter into and to consummate the transactions
contemplated hereby and otherwise to carry out its obligations
hereunder. The execution, delivery and performance by Purchaser of
the transactions contemplated by this Agreement has been duly
authorized by all necessary corporate or similar action on the part
of Purchaser. This Agreement and any related transaction documents
have been duly executed by Purchaser, and when delivered by
Purchaser in accordance with the terms hereof, will constitute the
valid and legally binding obligation of Purchaser, enforceable
against it in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights
generally and rules of law governing specific performance,
injunctive relief, or other equitable remedies.
(b) NO CONFLICTS. The execution, delivery and performance of this
Agreement by Purchaser, and Purchaser's consummation of the
transactions contemplated hereby, will not result in a violation of
the organizational documents of Purchaser, or result in a violation
of any statute, law, rule, regulation, writ, injunction, order,
judgment or decree applicable to Purchaser. Purchaser is not
required to obtain any consent, authorization or order of, or make
any filing or registration with, any court or governmental or
regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under or contemplated by
this Agreement in accordance with the terms hereof.
(c) GENERAL SOLICITATION. Purchaser is not purchasing the Warrants
or the Warrant Shares (collectively the "Securities") as a result of
any advertisement, article, notice or other communication regarding
the Warrants 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. Purchaser
did not receive or review any advertisement, article, notice or
other communication published in a newspaper or magazine or similar
media or broadcast over television or radio, whether closed circuit
or generally available, or attend any seminar meeting or industry
investor conference whose attendees were invited by any general
solicitation or general advertising.
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(d) INVESTMENT; NO PUBLIC DISTRIBUTION. The Warrants are being
purchased by Purchaser for its own account, for investment purposes
only, not for the account of any other person, and not with a view
to distribution, assignment or resale to others in whole or in part.
Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the Securities, and
shall not sell, transfer or otherwise distribute any of the
Securities except in compliance with federal and applicable state
laws and regulations promulgated thereunder. Purchaser does not have
any contract, undertaking, agreement or arrangement with any person
to sell, transfer, pledge, hypothecate, grant any option to purchase
or otherwise dispose of any of the Securities. Nothing herein shall
prevent the distribution of any Securities to any subsidiary,
member, partner, stockholder, affiliate or former member, partner,
stockholder or affiliate of Purchaser in compliance with federal and
applicable state laws and the terms and conditions of this
Agreement.
(e) ACCREDITED INVESTOR STATUS. Purchaser is an "accredited
investor" as defined in Rule 501(a) of Regulation D promulgated by
the Commission and has such knowledge, sophistication and experience
in financial and business matters that Purchaser is capable of
evaluating the merits and risks of the investment in the Warrants.
(f) RESIDENCY. Purchaser is a resident of or domiciled in the
jurisdiction designated on the signature page of this Agreement.
(g) RELIANCE ON EXEMPTIONS. Purchaser acknowledges that the Warrants
are being offered and sold to it by Seller in reliance on specific
exemptions from the registration requirements of United States
federal and applicable state securities laws and that the Company is
relying on the truth and accuracy of, and Purchaser's compliance
with, the representations, covenants, warranties, agreements,
acknowledgments and understandings of Purchaser set forth herein in
order to determine the availability of such exemptions and the
eligibility of Purchaser to acquire the Securities.
(h) INFORMATION. Purchaser and its advisors, if any, have obtained
or have been furnished with all publicly available financial,
operational, business and other data, statements, information and
materials relating to the business, finances, prospects and
operations of the Company. The Company or its representatives have
made available to Purchaser all documents and information that
Purchaser has requested relating to an investment in the Securities.
Purchaser and its advisors, if any, have been afforded the
opportunity to ask questions of the Company, and all such questions
have been answered to its full satisfaction. Neither such inquiries
nor any other due diligence investigations conducted by Purchaser or
its advisors, if any, or its representatives shall modify, amend or
affect the terms and conditions of this Agreement or the
acknowledgements, covenants, representations and warranties given by
Purchaser hereunder. Purchaser understands that its investment in
the Securities involves a high degree of risk. No oral
representations, warranties or guarantees of any kind have been
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made or oral information furnished to Purchaser or its
representatives, if any, in connection with Purchaser's due
diligence review or purchase of the Securities. Purchaser
acknowledges that: (i) the Company's common stock has been quoted on
an over-the-counter bulletin board for only a limited number of
years; (ii) its common stock has limited trading volume; (iii) there
may only be a limited market for the Securities; and (iv) that
investment in the Company involves substantial risks, including loss
of the entire amount of such investment and has taken full
cognizance of and understands all of the risk factors relating to
the purchase of the Securities.
(i) NO GOVERNMENTAL REVIEW. Purchaser understands that no United
States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or
endorsement of the Securities or the fairness or suitability of the
investment in the Securities, nor have such authorities passed upon
or endorsed the merits of the offering of the Securities.
(j) EXPERIENCE OF PURCHASER. Purchaser, either alone or together
with its representatives, has such knowledge, sophistication and
experience in business and financial matters, including investing in
companies engaged in the business in which the Company is engaged,
so as to be capable of evaluating the merits and risks of the
prospective investment in the Securities, and has so evaluated the
merits and risks of such investment. Purchaser is able to bear the
financial risk of an investment in the Securities. Purchaser has
adequate means of providing for its financial needs and
contingencies while holding the Securities, which could be for an
indefinite period. Purchaser has adequate means of providing for its
current financial needs and possible contingencies, has no need for
liquidity of investment in the Company, can afford to hold
unregistered securities for an indefinite period of time and sustain
a complete loss of the entire amount of the Securities, and has not
made an overall commitment to investments which are not readily
marketable that is so disproportionate as to cause such overall
commitment to become excessive. Purchaser has not been formed for
the specific purpose of acquiring the Securities.
(k) SALE AND ISSUANCE OF ADDITIONAL SHARES TO OTHERS. Purchaser
understands and agrees that additional shares of the Company's
Common Stock may be issued by the Company from time to time, whether
as part of the same offering by which Purchaser purchases the
Securities or a different offering or other event, which could
result in the dilution of the Purchaser's percentage interest and
shareholding position in the Company.
(l) UNREGISTERED SECURITIES; REGISTRATION RIGHTS. Purchaser
understands that the Securities have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or under
any applicable state securities law, in reliance upon available
exemptions from registration. Accordingly, Purchaser's right or
ability to sell, transfer, pledge or otherwise dispose of the
Securities are severely limited by applicable federal and state
securities laws. Purchaser understands and agrees that the
Securities cannot be resold, transferred, other
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otherwise disposed of unless it is registered or unless an exemption
from registration is available under the Securities Act and
applicable state law. In connection with any sale, transfer or other
disposition of the Securities other than pursuant to an effective
registration statement or to the Company, the Company may require
the transferor thereof to provide to the Company, at the
transferor's expense, a written opinion of counsel, the form and
substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require
registration of such transferred securities under the Securities
Act. Purchaser agrees that any removal of the restrictive legend
from certificates representing the Securities, which removal shall
first be authorized by the Company subject to the terms of this
Agreement, is predicated upon the Company's reliance on, and the
Purchaser's agreement that, and Purchaser hereby agrees that, the
Purchaser will not sell, transfer or otherwise dispose of any
Securities except pursuant to either the registration requirements
of the Securities Act and applicable state law, including any
applicable prospectus delivery requirements, or an exemption
therefrom. Except to the extent specified in this Agreement, the
Company shall have no obligation to register with the Commission or
any state regulator any secondary (i.e., resale) offering the
Securities by Purchaser or its permitted transferees. Purchaser
acknowledges and agrees that it has the financial wherewithal to and
hereby assumes the risk of non-registration of the resale
transaction of the Securities.
(m) RESTRICTIVE LEGEND. 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. 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 OR AN OPINION OF
THE COMPANY'S COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER THE
ACT.
Purchaser additionally agrees to the imprinting of such additional
legends as the Company may reasonably determine are necessary to
comply with the laws of any other jurisdiction, as well as any
legends which the Company is required or permitted to affix per the
terms of applicable voting or other contractual agreements.
(n) NON-PUBLIC INFORMATION. Other than the terms of this Agreement
which are subject to a confidentiality agreement until public
announcement by the Company, Purchaser has not requested nor been
furnished with any information known or believed to constitute
material non-public information of the Company, unless prior thereto
Purchaser shall have executed a written agreement acceptable
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to the Company regarding the confidentiality and use of such
information, the terms of which agreement are hereby incorporated by
this reference. Purchaser agrees to maintain the confidentiality of
the terms of this Agreement and the transactions contemplated
hereunder, except to the extent that this Agreement and the
transactions contemplated hereunder are publicly disclosed by the
Company.
(o) BROKERS/FINDERS. Except for fees payable by the Company to its
finder/placement agent, if any, in connection with the sale and
purchase of the Warrants by Purchaser, Purchaser represents and
agrees that no brokerage, finder's or other fees, commissions or
other amounts of any kind are or will be payable by the Company, on
account of any agreement, understanding or undertaking by Purchaser,
to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other person with respect to the
transactions contemplated by this Agreement.
(p) REGULATORY DISCLOSURES. Purchaser understands and agrees that
the Company shall and may make such public and regulatory filings
and notices, disclosing the transactions contemplated hereby, in the
manner and time required by the Commission and by state regulators,
including the filing of this Agreement. Purchaser agrees to promptly
review and comment on any proposed press release which the Company
furnishes to Purchaser per Section 6(j).
(q) REPLACEMENT OF CERTIFICATES. Purchaser agrees that if any
certificate or instrument evidencing any Security is mutilated,
lost, stolen or destroyed, the Company, at the cost of Purchaser or
such other holder, shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and
substitution therefor, a new certificate or instrument, but only
upon receipt of evidence reasonably satisfactory to the Company of
such loss, theft or destruction and customary and reasonable
indemnity or other form of security, if required by the Company.
(r) USE OF PROCEEDS. Purchaser understand and agrees that the net
proceeds from the sale of the Securities may be used by the Company
for general corporate purposes.
(s) LEGAL, TAXATION AND ACCOUNTING MATTERS. With respect to legal,
taxation, accounting and other financial considerations involved in
an investment in the Securities, Purchaser is not relying on the
Company. Purchaser has carefully considered and has, to the extent
Purchaser believes such discussion necessary, discussed with, and
sought advice from, its professional legal, tax, accounting and
financial advisors the suitability of an investment in the
Securities, for its particular taxation, accounting, legal and
financial situation and has determined that the Securities are
suitable investment for Purchaser.
6. ACKNOWLEDGMENTS, COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE
COMPANY. The Company acknowledges, covenants, represents and warrants to
Purchaser each of the following:
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(a) ORGANIZATION AND QUALIFICATION. The Company is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with full power and authority to enter
into and to consummate the transactions contemplated hereby and otherwise
to carry out its obligations hereunder.
(b) AUTHORIZATION AND ENFORCEABILITY. This Agreement and any related
transaction documents to which it is a party have been duly executed by
the Company, and when delivered by the Company in accordance with the
terms hereof, will constitute the valid and legally binding obligation of
the Company, enforceable against it in accordance with its terms, subject
to laws of general application relating to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and rules of law governing specific performance,
injunctive relief, or other equitable remedies.
(c) CAPITALIZATION. The authorized and outstanding capitalization of the
Company is as described in the Company's most recent periodic, current or
other report or documents filed with the Commission or otherwise disclosed
to purchaser upon its request. The Company has not issued any capital
stock since such filing, other than pursuant to the exercise of employee
stock options under the Company's stock option plans and pursuant to the
conversion or exercise of Common Stock options, warrants or other rights,
excluding any issuances of Common Stock or other securities not required
to be reported on Form 8-K. All shares of the Company's issued and
outstanding capital stock have been duly authorized, are validly issued
and outstanding, and are fully paid and nonassessable. There are no
dividends which have accrued or been declared but are unpaid on the
capital stock of the Company.
(d) ISSUANCE OF THE WARRANTS AND THE WARRANTS SHARES. The Warrants and
Warrant Shares are duly authorized. The Warrant Shares, when issued and
paid for in accordance with the terms of the Warrant, will be duly and
validly issued, fully paid and nonassessable, free and clear of all rights
of third parties, other than any rights created by or imposed on the
holders thereof through no action of the Company.
(e) NO CONFLICTS. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby do not and will not conflict with or
violate any provision of the Company's certificate or articles of
incorporation, bylaws or other organizational or charter documents.
(f) SEC REPORTS; FINANCIAL STATEMENTS; LIABILITIES.
(i) The Company has filed all reports required to be filed by it
under the Securities Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including pursuant to Section 13(a) or
15(d) of the Exchange Act for the 12 months preceding the date
hereof (the foregoing materials, including the exhibits thereto,
being collectively referred to herein as the "SEC Reports"). As of
their respective filing dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and
the Exchange
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Act, as the case may be, and the rules and regulations of the
Commission promulgated thereunder, as applicable, and none of the
SEC Reports, as of their respective filing dates, contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
(ii) The financial statements of the Company included in the SEC
Reports comply with applicable accounting requirements and the rules
and regulations of the Commission with respect thereto as in effect
at the time of filing. Such financial statements have been prepared
in accordance with generally accepted accounting principles in the
United States, applied on a consistent basis during the periods
involved ("GAAP"), except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP,
subject to normal year-end audit adjustments. Such financial
statements fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries, if any,
as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal year-end audit adjustments.
(g) LITIGATION. The Company has no knowledge of any action, suit, inquiry,
notice of violation, proceeding or investigation pending or threatened
against the Company, before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county,
local or foreign) which adversely affects or challenges the legality,
validity or enforceability of this Agreement or any of the Securities.
(h) LICENSES; COMPLIANCE WITH REGULATORY REQUIREMENTS. The Company holds
all material authorizations, consents, approvals, franchises, licenses and
permits required under applicable law or regulation for the operation of
the business of the Company as presently operated.
(i) PRIVATE PLACEMENT. Assuming and conditioned on the accuracy of the
Purchaser's acknowledgements, representations and warranties set forth in
Section 5, no registration under the Securities Act is required for the
offer and sale of the Warrants by the Company to the Purchaser as
contemplated hereby.
(j) PRESS RELEASE. Before releasing to the media any news release which
identifies Purchaser as having acquired the Securities, the Company shall
furnish Purchaser the opportunity to review and promptly comment on the
proposed press release.
(k) REPLACEMENT OF CERTIFICATES. The Company agrees to furnish replacement
certificates according to the provisions of Section 5(q).
(l) CONFIDENTIAL INFORMATION. The Company covenants and agrees that (i)
upon filing of a Current Report on Form 8-K describing the transactions
contemplated hereby, the Purchaser shall not have received from the
Company or any other person acting on its
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behalf any information known or believed to constitute material non-public
information of the Company, other than the terms of this Agreement which
are subject to a confidentiality agreement until public announcement; and
(ii) neither the Company nor any other person acting on its behalf will
after the date hereof provide the Purchaser or its agents or counsel with
any information that the Company believes constitutes material non-public
information, unless prior thereto the Purchaser shall have executed a
written agreement regarding the confidentiality and use of such
information. The Company understands and confirms that the Purchaser shall
be relying on the foregoing representations in effecting transactions in
securities of the Company.
7. TRANSFER RESTRICTIONS.
(a) The Securities may only be sold, transferred or otherwise disposed of
in compliance with the transfer restrictions specified in Section 3.1 of
the Series B-1 Warrant and B-2 Warrant, respectively.
(b) Purchaser and all subsequent holders agree to the imprinting, so long
as is required by the terms of this Agreement and of the Warrants, of a
legend on any certificates evidencing any of the transferred Securities,
as required by this Agreement and the Warrants.
8. REGISTRATION RIGHTS.
(a) Within sixty (60) days after the date the Company closes the offering
by which the Purchaser acquired the Warrants or September 30, 2005,
whichever occurs first, (the "Filing Date") and subject to the
requirements of the Securities Act and rules of the Commission, the
Company shall file with the Commission a Form S-1 registration statement
or pre-effective amendment thereto (or at the Company's election a
registration statement on such other form as is then available to the
Company) for the registration for resale of the Securities to be made on a
continuous basis pursuant to Rule 415 (the "Registration Statement"). This
provision may be satisfied by the Company furnishing the Commission's
staff, with the staff's consent, by the Filing Date with proposed
pre-effective amendments, for the staff's review and comment, prior to the
filing of the pre-effective amendment itself with the Commission (a
"Proposed Amendment").
(b) The Company shall use its best efforts to cause the Registration
Statement to be declared effective within one hundred eighty (180) days
after the date the Company closes the offering by which the Purchaser
acquired the Warrants or September 30, 2005, whichever occurs first (the
"Effective Date"). Each day beginning with the day the Company furnishes
the Commission's staff with a Registration Statement or a Proposed
Amendment until the day the Commission's staff furnishes its response to
the Company shall be excluded from the 180 day period, unless the Company
has not used its best efforts to furnish the Commission's staff with a
Registration Statement or Proposed Amendments reasonably believed to be in
material compliance with the Commission's rules. Upon Purchaser's request,
the Company shall notify Purchaser of the dates of such filings and the
Commission staff's responses.
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(c) Subject to the terms of this Agreement, the Company shall use its best
efforts to cause the Registration Statement to remain effective until the
earlier of (i) the date on which all Securities covered by the
Registration Statement have been sold to the public pursuant to the
Registration Statement or (ii) two years after the Effective Date of this
Agreement or the first date thereafter as of which the reporting
requirements of Rule 144(c) under the Securities Act have been satisfied
(the "Registration Effective Period"). Obligations specified herein and in
Section 9 of this Agreement which by their terms apply to Purchaser or any
holder of the Securities, shall be binding on Purchaser or any holder.
(d) Subject to the limitations specified herein and in the event that a
Registration Statement has not been declared effective on or before the
Effective Date, the Company shall pay Purchaser, and Purchaser shall
accept as its sole and exclusive remedy, liquidated damages equal to three
(3%) Percent of the Purchase Price ("Initial Liquidated Damages"). In
addition, for each additional thirty (30) days period after the Filing
Period that the Registration Statement has not yet become effective, the
Company will pay the Purchaser three-quarters of one percent (0.75%) of
the Purchase Price for each such thirty (30) day period, except that as
Warrant Shares become eligible for resale under Rule 144, the pro rata
portion of the Purchase Price allocated to such Warrant Shares shall be
excluded from the computation ("Additional Liquidated Damages"). Purchaser
agrees that the Company shall not be liable for Initial or Additional
Liquidated Damages in the event that failure to achieve an effective
Registration Statement by the Effective Date is due to events beyond the
Company's reasonable control, including the failure of accountants or
other experts to timely furnish opinions or consents, provided that the
Company has used its best efforts to timely request such opinions and
consents and has timely furnished such accountants or other experts with
all documents or other information which they reasonably require in order
to furnish such opinions or consents. Upon Purchaser's reasonable request
and subject to a mutually acceptable confidentiality agreement if
requested by the Company, the Company shall permit Purchaser to
communicate with such experts for the purpose of assessing whether the
Company has utilized its best efforts as required herein.
(e) Purchaser further agrees and acknowledges that (a) its damages for the
Company's failure to cause a Registration Statement to become effective by
the Effective Date are difficult to ascertain, (b) that the Initial
Liquidated Damages and the Additional Liquidated Damages are intended to
compensate Purchaser for such failure and not constitute a penalty and (c)
the Initial Liquidated Damages and the Additional Liquidated Damages shall
be Purchaser's sole and exclusive remedy, at law or in equity, for the
Company's failure to use its best efforts to file and cause a Registration
Statement to become effective by the Effective Date.
9. REGISTRATION PROCEDURES. In connection with the Company's registration
obligations hereunder, during the Registration Effective Period, the Company
shall:
(a) Prepare and file with the Commission such amendments, including
post-effective amendments, as may be necessary to keep the Registration
Statement continuously effective as to the Securities for the Registration
Effective Period.
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(b) Respond as promptly as commercially reasonable to any comments
received from the Commission with respect to the Registration Statement or
any amendment thereto.
(c) Use its commercially reasonable efforts to comply in all material
respects with the provisions of the Securities Act and the Exchange Act
with respect to the disposition of Securities covered by the Registration
Statement during the applicable period in accordance with the intended
methods of disposition by the holders thereof set forth in the
Registration Statement as so amended or in such prospectus as so
supplemented.
(d) Use its commercially reasonable efforts to avoid the issuance of, or,
if issued, use such efforts to obtain the withdrawal of, (i) any order
suspending the effectiveness of the Registration Statement or (ii) any
suspension of the qualification (or exemption from qualification) of any
of the Securities for sale in any jurisdiction, at the earliest
practicable time.
(e) Furnish Purchaser, without charge upon request, at least one conformed
copy of each effective Registration Statement and each amendment thereto,
including financial statements and schedules.
(f) Deliver to the Purchaser, without charge upon request, one copy of the
effective prospectus and each amendment or supplement thereto; and the
Company hereby consents to the use of such prospectus and each amendment
or supplement thereto by the Purchaser in connection with the offering and
sale of the Securities covered by such prospectus and any amendment or
supplement thereto.
(g) Cooperate with the Purchaser to facilitate the timely preparation and
delivery of certificates representing Securities to be sold pursuant to a
Registration Statement, which certificates shall be free, to the extent
permitted by applicable law and this Agreement, of all restrictive
legends, and to enable such Securities to be in such denominations and
registered in such names as the Purchaser may request at least five (5)
business days prior to any sale of Securities. In connection therewith,
the Company shall promptly after the effectiveness of the Registration
Statement cause an opinion of counsel to be delivered to and maintained
with its transfer agent, together with any other authorizations,
certificates and directions required by the transfer agent, which
authorize and direct the transfer agent to issue such Securities without
legend upon sale by the holder of such shares of Securities under the
Registration Statement, for such time as the Registration Statement is
effective.
(h) Cause all Securities relating to such Registration Statement to be
listed or quoted on any United States securities exchange, quotation
system, market or over-the-counter bulletin board, if any, on which
similar securities issued by the Company are then listed or quoted.
(i) Request the Purchaser or its transferee to furnish to the Company
information regarding the Purchaser or transferee and the distribution of
such Securities as is required by law or the Commission to be disclosed in
the Registration Statement, and the Company may exclude from such
registration the Securities of the Purchaser or its
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transferee for failure to furnish such information within a reasonable
time prior to the filing of each Registration Statement, supplemented
prospectus and/or amended Registration Statement.
(j) Notify Purchaser when the Securities are covered by a Registration
Statement during the Registration Effectiveness Period at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under
which such statements were made, is outdated, or is otherwise required to
be amended. Thereafter, the Company shall use commercially reasonable
efforts to prepare and file with the Commission and furnish to Purchaser
or its transferee as promptly as commercially practicable a copy of a
supplement to or an amendment of such prospectus or other such documents
as may be necessary so that, as thereafter delivered to the holder of such
Securities, such prospectus shall not include 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 not misleading in the
light of the circumstances under which such statements were made.
Purchaser or its transferee agrees that, upon receipt of a notice given by
the Company of the occurrence of any event of the kind described herein,
the holder shall discontinue disposition of the Securities under the
Registration Statement or until the holder's receipt of the copies of the
supplemented prospectus and/or amended Registration Statement or until it
is advised in writing by the Company that the use of the applicable
prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such prospectus or Registration Statement.
(k) If (i) there is material non-public information regarding the Company
which the Company's Board of Directors (the "Board") reasonably determines
not to be in the Company's best interest to disclose and which the Company
is not otherwise required to disclose, or (ii) there is a significant
business opportunity (including, but not limited to, the acquisition or
disposition of assets (other than in the ordinary course of business) or
any merger, consolidation, tender offer or other similar transaction
available to the Company which the Board reasonably determines not to be
in the Company's best interest to disclose and which the Company would be
required to disclose under the Registration Statement, then the Company
may postpone or suspend filing or effectiveness of a Registration
Statement for a period not to exceed thirty (30) consecutive days,
provided that the Company may not postpone or suspend its obligation
hereunder for more than sixty (60) days in the aggregate during any 12
month period.
(l) All fees and expenses incident to the performance of or compliance
with the Registration Statement by the Company shall be borne by the
Company, except as indicated otherwise herein.
Page 12 of 17
10. INDEMNIFICATION.
(a) Except as otherwise provided for in Section 8, the Company shall
indemnify and hold harmless Purchaser from and against any and all losses,
claims, damages, liabilities, costs (including reasonable attorneys' fees)
and expenses (collectively, "Losses"), as incurred, arising out of or
relating to any untrue or alleged untrue statement of a material fact
contained or incorporated by reference in the Registration Statement, any
prospectus or any form of prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or relating to
any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
prospectus or form of prospectus or amendment or supplement thereto, in
the light of the circumstances under which they were made) not misleading,
except to the extent, but only to the extent, that (i) such untrue
statements or omissions are based solely upon information regarding
Purchaser furnished in writing to the Company by Purchaser expressly for
use therein, which information was reasonably relied on by the Company for
use therein or to the extent that such information relates to (x)
Purchaser and was reviewed and expressly approved in writing by Purchaser
expressly for use in the Registration Statement, such prospectus or such
form of prospectus or in any amendment or supplement thereto or (y)
Purchaser's proposed method of distribution of Registrable Securities, or
(ii) the use by Purchaser of an outdated or defective prospectus;
provided, however, that the indemnity agreement contained herein shall not
apply to amounts paid in settlement of any Losses if such settlement is
effected without the prior written consent of the Company, which shall not
be unreasonably withheld. The Company shall timely notify Purchaser of the
institution, threat or assertion of any proceeding of which the Company is
aware which may give rise to the Company's obligations under this
agreement. Notwithstanding anything in this agreement to the contrary, the
Seller shall have no obligation to indemnify Purchaser for its damages in
an amount in excess of the Purchase Price.
(b) Purchaser and each holder of Registerable Securities shall indemnify
and hold harmless the Company, its directors, officers, agents and
employees, from and against all Losses arising out of or based solely upon
any untrue statement of a material fact contained in the Registration
Statement, any prospectus, or any form of prospectus, or in any amendment
or supplement thereto, or arising solely out of or based solely upon any
omission of a material fact required to be stated therein or necessary to
make the statements therein (in the case of any prospectus or form of
prospectus or supplement thereto, in the light of the circumstances under
which they were made) not misleading, to the extent, but only to the
extent, that (i) such untrue statement or omission is contained in or
omitted from any information so furnished in writing by Purchaser or such
holder to the Company specifically for inclusion in the Registration
Statement or such prospectus and that such information was reasonably
relied upon by the Company for use in the Registration Statement, such
prospectus, or in any amendment or supplement thereto, or to the extent
that such information relates to (x) Purchaser or such holder and was
reviewed and expressly approved in writing by Purchaser or such holder
expressly for use in the Registration Statement, such prospectus, or such
form of prospectus or in any amendment or supplement thereto or (y)
Purchaser's or such holder's proposed method of distribution of
Registrable Securities or the use by Purchaser or a holder of an outdated
or
Page 13 of 17
defective prospectus; provided, however, that this indemnity agreement
shall not apply to amounts paid in settlement of any Losses if such
settlement is effected without the prior written consent of the Purchaser
or holder, which consent shall not be unreasonably withheld.
(c) Except as otherwise provided for in Section 8, the Company agrees to
indemnify and hold harmless the Purchaser and its officers, directors,
employees, shareholders, partners, members, agents, successors and assigns
from and against any losses, damages, or expenses which are caused by or
arise out of any breach or default in the performance by the Company of
any covenant, representation, warranty or agreement made by the Company in
this Agreement and the Warrants, and any and all third party actions,
suits, proceedings, claims, demands, judgments, costs and expenses
(including reasonable legal fees and expenses) incident to any of the
foregoing.
(d) The Purchaser agrees to indemnify and hold harmless the Company and
its officers, directors, employees, shareholders, partners, members,
agents, successors and assigns from and against any losses, damages, or
expenses which are caused by or arise out of any breach or default in the
performance by the Purchaser of any covenant, representation, warranty or
agreement made by the Purchasers in this Agreement and the Warrants, and
any and all third party actions, suits, proceedings, claims, demands,
judgments, costs and expenses (including reasonable legal fees and
expenses) incident to any of the foregoing.
11. GOVERNING LAW AND ARBITRATION. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, notwithstanding
the fact that either Party is or may hereafter become domiciled or located in a
different state or country. Any dispute, controversy or claim arising out of or
relating to this Agreement, whether arising in contract, tort or otherwise shall
be resolved in accordance with the rules of the American Arbitration
Association, except for any equitable or injunctive relief sought under this
Agreement. The arbitration shall be held at a location within Oakland County,
Michigan. The Parties agree that any arbitration award rendered on any claim
submitted to arbitration shall be final and binding upon the Parties and not
subject to appeal and that judgment may be entered upon any arbitration award by
any circuit court located in Michigan.
12. SUCCESSORS BOUND BY AGREEMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors and
permitted assigns. Purchaser may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Company, which
may be withheld. This Agreement is intended for the benefit of the Parties
hereto and their respective successors and permitted assigns and is not for the
benefit of, nor may any provision hereof be enforced by, any other person.
Page 14 of 17
13. WAIVER. The waiver of a breach of any provision of this Agreement by
any Party shall not operate or be construed as a waiver of any subsequent
breach. Each and every right, remedy and power granted herein to any Party or
allowed by law or equity shall be cumulative and not exclusive of any other. No
waiver shall be effective unless signed in writing by the Party against whom it
is sought to be enforced.
14. AMENDMENT OF AGREEMENT. This Agreement may be altered or amended in
any of its provisions only by the written agreement of the Parties hereto.
15. INTERPRETATION OF AGREEMENT. This Agreement and the Warrants
constitute the entire agreement between the Parties with respect to the subject
matter hereof and supersedes any and all other prior or contemporaneous
agreements, either oral or written, between the Parties with respect to the
subject matter hereof. This Agreement, or any facsimile hereof, may be executed
by any number of counterparts, each of which shall constitute an original
agreement, and all of which shall constitute one and the same instrument.
Headings herein are for convenience only and shall not be deemed to limit or
affect any of the provisions hereof.
16. SURVIVAL OF COVENANTS, REPRESENTATIONS, WARRANTIES AND INDEMNITIES.
All covenants, acknowledgements, representations, warranties and indemnities
contained herein shall survive the execution and delivery of this Agreement.
17. FORCE MAJEURE. If and to the extent that either Party's performance of
any of its obligations pursuant to this Agreement is prevented, hindered or
delayed by fire, flood, earthquake, elements of nature or acts of God, acts of
war, terrorism, riots, civil disorders, rebellions, electrical outages or
revolutions or for any other similar reason which is not within the control of
the Party whose performance is interfered with, (each, a "Force Majeure Event"),
and such non-performance could not have been prevented by reasonable
precautions, then the non-performing Party shall be excused from any further
performance of those obligations for as long as such Force Majeure Event
continues and such Party continues to use its best efforts to recommence
performance whenever and to whatever extent possible without delay, including
through the use of alternate sources, work around plans or other means. The
Party whose performance is prevented, hindered or delayed by a Force Majeure
Event shall immediately notify the other Party of the occurrence of the Force
Majeure Event and describe in reasonable detail the nature of the Force Majeure
Event (to be confirmed in writing within five (5) days of the inception of such
delay).
18. SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be modified to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
19. HEADINGS. The headings used in this Agreement are for the convenience
of reference only and shall not, for any purpose, be deemed a part of this
Agreement.
20. NOTICE. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder, unless otherwise stated, shall
be in writing and shall be
page 15 of 17
deemed given and effective on the earlier of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice prior to 5:00 p.m., New York City time, on
a business day, (ii) the next business day after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a Business Day or later than 5:00
p.m., New York City time, on any date and earlier than 11:59 p.m., New York City
time, on such date, (iii) the business day following the date of mailing, if
sent by nationally recognized overnight courier service such as Federal Express
or (iv) actual receipt by the party to whom such notice is required to be given.
The addresses for such communications shall be with respect to Purchaser at its
address set forth on the last page of this Agreement, or with respect to the
Company, addressed to:
Arcadia Resources, Inc.
00000 Xxxxxxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Chairman and CEO
Tel. No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to:
Xxxx, Xxxxxxx & Xxxxx, PLC
000 Xxxxxxxx Xxx., Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Tel. No.: (000) 000-0000
Facsimile No.: (000) 000-0000
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice.
SIGNATURES APPEAR ON NEXT PAGE
page 16 of 17
The Parties hereto have executed and delivered this Agreement as of the
Effective Date written above.
SELLER:
ARCADIA RESOURCES, INC.,
a Nevada corporation
By: /s/ Xxxx X. Xxxxxxx, XX
------------------------
Its: Chairman and CEO
PURCHASER:
XXXX MASTER FUND, LTD.
BY: XXXX PARTNERS LLC, ITS INVESTMENT MANAGER
By: /s/ Xxxx Xxxxxxx
-----------------
Name: Xxxx Xxxxxxx
Title: Managing Director
FEIN: ________________
State of Incorporation: Cayman Islands
Mailing Address for Securities Certificates:
XXXX Partners LLC
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Number of Shares Issuable on
exercise of Series B-1 Warrant: 4,444,444
Number of Shares Issuable on
exercise of Series B-2 Warrant: 1,555,555
Total Purchase Price: $10,000,000 and No/100
Expiration Date of Terms of Warrants: September 28, 2009
page 17 of 17
