COMMON STOCK PURCHASE WARRANT To Purchase up to Shares of the Common Stock of ARCADIA RESOURCES, INC.
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE LAW. THIS WARRANT AND THE SECURITIES REPRESENTED
HEREBY 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.
Warrant No.
COMMON STOCK PURCHASE WARRANT
To Purchase up to Shares of the Common Stock of
THIS IS TO CERTIFY THAT
, or registered assigns (the “Holder”), is entitled,
during the Exercise Period (as hereinafter defined), to purchase from Arcadia Resources, Inc., a
Nevada corporation (the “Company”), the Warrant Stock (as hereinafter defined), in whole or in
part, at a purchase price of $1.75 per share, all on and subject to the terms and conditions
hereinafter set forth.
1. Definitions. As used in this Warrant, the following terms have the respective
meanings set forth below:
“Affiliate” means any person or entity that, directly or indirectly through one or
more intermediaries, controls or is controlled by or is under common control with a person or
entity, as such terms are used in and construed under Rule 144 under the Securities Act. With
respect to a Holder of Warrants, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such Holder will be deemed to be an Affiliate
of such Holder.
“Appraised Value” means, in respect of any share of Common Stock on any date herein
specified, the fair saleable value of such share of Common Stock (determined with giving effect to
the discount for (i) a minority interest or (ii) any lack of liquidity of the Common Stock or to
the fact that the Company may have no class of equity registered under the Exchange Act) as of the
last day of the most recent fiscal month ending prior to such date specified, based on the value of
the Company on a fully-diluted basis, as determined by a nationally recognized investment banking
firm selected by the Company’s Board of Directors and having no prior relationship with the
Company.
“Business Day” means any day except Saturday, Sunday and any day which shall be a
legal holiday or a day on which banking institutions in the State of Michigan generally are
authorized or required by law or other government actions to close.
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“Change of Control” means the (i) acquisition by an individual or legal entity or
group (as set forth in Section 13(d) of the Exchange Act) of more than one-half of the voting
rights or equity interests in the Company; or (ii) sale, conveyance, or other disposition of all or
substantially all of the assets, property or business of the Company or the merger into or
consolidation with any other corporation (other than a wholly owned subsidiary corporation) or
effectuation of any transaction or series of related transactions where holders of the Company’s
voting securities prior to such transaction or series of transactions fail to continue to hold at
least 50% of the voting power of the Company (or, if other than the Company, the successor or
acquiring entity) immediately following such transaction.
“Commission” means the Securities and Exchange Commission or any other federal agency
then administering the Securities Act and other federal securities laws.
“Common Stock” means (except where the context otherwise indicates) the Common Stock,
$0.001 par value per share, of the Company as constituted on the Grant Date, and any capital stock
into which such Common Stock may thereafter be changed or converted, and shall also include (i)
capital stock of the Company of any other class (regardless of how denominated) issued to the
holders of shares of Common Stock upon any reclassification thereof which is also not preferred as
to dividends or assets on liquidation over any other class of stock of the Company and which is not
subject to redemption and (ii) shares of common stock of any successor or acquiring corporation
received by or distributed to the holders of Common Stock of the Company in the circumstances
contemplated by Section 4.
“Current Market Price” means, in respect of any share of Common Stock on any date
herein specified,
(1) if there shall not then be a public market for the Common Stock, the higher of
| (a) | the book value per share of Common Stock at such date, and | ||
| (b) | the Appraised Value per share of Common Stock at such date, |
or
(2) if there shall then be a public market for the Common Stock, the average of the daily
market prices for the ten (10) consecutive trading days immediately before such date. The daily
market price for each such trading day shall be (i) the closing bid price on such day on the OTC
Bulletin Board or principal stock exchange (including Nasdaq) on which such Common Stock is then
listed or admitted to trading, or quoted, as applicable, (ii) if no sale takes place on such day on
the OTC Bulletin Board or any such exchange, the last reported closing bid price on such day as
officially quoted on the OTC Bulletin Board or any such exchange (including Nasdaq), (iii) if the
Common Stock is not then listed or admitted to trading on the OTC Bulletin Board or any stock
exchange, the last reported closing bid price on such day in the over-the-counter market, as
furnished by the National Association of Securities Dealers Automatic Quotation System or the
National Quotation Bureau, Inc., (iv) if neither such corporation at the time is engaged in the
business of reporting such prices, as furnished by any similar firm then engaged in such business,
or (v) if there is no such firm, as furnished by any member of the NASD selected mutually by the
holder of this Warrant and the Company or, if they cannot agree
upon such selection, as selected by two such members of the NASD, one of which shall be
selected by holder of this Warrant and one of which shall be selected by the Company.
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“Current Warrant Price” means, in respect of a share of Common Stock at any date
herein specified, the price at which a share of Common Stock may be purchased pursuant to this
Warrant on such date. Unless and until the Current Warrant Price is adjusted pursuant to the terms
herein, the initial Current Warrant Price shall be $1.75 per share of Common Stock.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar
federal statute, and the rules and regulations of the Commission thereunder, all as the same shall
be in effect from time to time.
“Exercise Period” means the period during which this Warrant is exercisable pursuant
to Section 2.1.
“Expiration Date” means May ___, 2014, subject to modification as provided herein.
“Grant Date” means May ___, 2007.
“NASD” means the National Association of Securities Dealers, Inc., or any successor
corporation thereto.
“Other Property” has the meaning set forth in Section 4.
“Person” means any individual, sole proprietorship, partnership, joint venture, trust,
incorporated organization, association, corporation, limited liability company, institution, public
benefit corporation, entity or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality, division, agency, body or department
thereof).
“Purchase Agreement” means that certain Securities Purchase Agreement, pursuant to
which this Warrant was originally issued and dated as of May ___, 2007 among the Company and the
other parties named therein, and that certain Registration Rights Agreement of even date therewith.
“Restricted Common Stock” means shares of Common Stock which are, or which upon their
issuance upon the exercise of any Warrant would be required to be, evidenced by a certificate
bearing the restrictive legend set forth in Section 3.2.
“Securities Act” means the Securities Act of 1933, as amended, or any similar federal
statute, and the rules and regulations of the Commission thereunder, all as the same shall be in
effect at the time.
“Stock Purchase Price” means $1.19 per share.
“Trading Day” means any day on which the primary market on which shares of Common
Stock are listed is open for trading.
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“Transfer” means any disposition of any Warrant or Warrant Stock or of any interest in
either thereof, which would constitute a sale thereof within the meaning of the Securities Act.
“Warrants” means this Warrant and all warrants issued upon transfer, division or
combination of, or in substitution for, any thereof. All Warrants shall at all times be identical
as to terms and conditions and date, except as to the number of shares of Common Stock for which
they may be exercised.
“Warrant Price” means an amount equal to (i) the number of shares of Common Stock
being purchased upon exercise of this Warrant pursuant to Section 2.1, multiplied by (ii) the
Current Warrant Price.
“Warrant
Stock” means up to shares of Common Stock to be purchased upon
the exercise hereof, subject to adjustment as provided herein.
2. Exercise of Warrant.
2.1 Manner of Exercise. From and after the Grant Date, and until 5:00 P.M.,
New York time, on the Expiration Date (the “Exercise Period”), the Holder may exercise this
Warrant, on any Business Day, for all or any part of the number of shares of Warrant Stock
purchasable hereunder, subject to the terms and conditions of this Warrant.
In order to exercise this Warrant, in whole or in part, the Holder shall deliver to the
Company at its principal office or at the office or agency designated by the Company as
provided herein, (i) a written notice of Holder’s election to exercise this Warrant, which
notice shall specify the number of shares of Warrant Stock to be purchased, (ii) payment of
the Warrant Price as provided herein, and (iii) this Warrant. Such notice shall be
irrevocable and substantially in the form of the subscription form appearing at the end of
this Warrant as Exhibit A, duly executed by the Holder or its agent or attorney. Upon
receipt thereof, the Company shall, as promptly as reasonably practicable, execute or cause
to be executed and deliver or cause to be delivered to the Holder a certificate or
certificates representing the aggregate number of full shares of Warrant Stock issuable upon
such exercise, together with cash in lieu of any fraction of a share, as hereinafter
provided. The stock certificate or certificates so delivered shall be, to the extent
possible, in such denomination or denominations as the Holder shall reasonably request in
the notice and shall be registered in the name of the Holder or if permitted pursuant to the
terms of this Warrant such other name as shall be designated in the notice. This Warrant
shall be deemed to have been exercised and such certificate or certificates shall be deemed
to have been issued, and the Holder or any other Person so designated to be named therein
shall be deemed to have become a Holder of record of such shares for all purposes, as of the
date when the notice, together with the payment of the Warrant Price and this Warrant, is
received by the Company as described above. If this Warrant shall have been exercised in
part, the Company shall, at the time of delivery of the certificate or certificates
representing Warrant Stock, deliver to the Holder a new Warrant evidencing the rights of the
Holder to purchase the unpurchased shares of Common Stock called for by this Warrant, which
new Warrant shall in all other respects be identical with
this Warrant, or at the request of the Holder, appropriate notation may be made on this
Warrant and the same returned to the Holder.
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Payment of the Warrant Price may be made at the option of the Holder by: (i) certified
or official bank check payable to the order of the Company, (ii) wire transfer of
immediately available funds to the account of the Company, or (iii) the surrender and
cancellation of a portion of shares of Common Stock then held by the Holder or issuable upon
such exercise of this Warrant, which shall be valued and credited toward the total Warrant
Price due the Company for the exercise of the Warrant based upon the Current Market Price of
the Common Stock. All shares of Common Stock issuable upon the exercise of this Warrant
pursuant to the terms hereof shall be validly issued and, upon payment of the Warrant Price,
shall be fully paid and nonassessable and not subject to any preemptive rights.
2.2 Fractional Shares. The Company shall not be required to issue a fractional
share of Common Stock upon exercise of any Warrant. As to any fraction of a share which the
Holder of one or more Warrants, the rights under which are exercised in the same
transaction, would otherwise be entitled to purchase upon such exercise, the Company shall
pay an amount in cash equal to the Current Market Price per share of Common Stock on the
date of exercise multiplied by such fraction.
3. Transfer, Division and Combination.
3.1 Transfer. The Warrants and the Warrant Stock shall be freely transferable,
subject to compliance with this Section 3.1 and all applicable laws, including, but not
limited to the Securities Act. If, at the time of the surrender of this Warrant in
connection with any transfer of this Warrant or the resale of the Warrant Stock, this
Warrant or the Warrant Stock, as applicable, shall not be registered for resale under the
Securities Act, the Company may require, as a condition of allowing such transfer (i) that
the Holder or transferee of this Warrant or the Warrant Stock as the case may be, at the
cost of Holder or transferee, furnish to the Company a written opinion of counsel that is
reasonably acceptable to the Company to the effect that such transfer may be made without
registration under the Securities Act and any applicable state law, (ii) that the Holder or
transferee execute and deliver to the Company an investment representation letter in form
and substance acceptable to the Company and substantially in the form attached as
Exhibit C hereto and (iii) that the transferee be an “accredited investor” as
defined in Rule 501 (a) promulgated under the Securities Act. Transfer of this Warrant and
all rights hereunder, in whole or in part, in accordance with the foregoing provisions,
shall be registered on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company referred to in Section 2.1
or the office or agency designated by the Company as provided herein, together with a
written assignment of this Warrant substantially in the form of Exhibit B hereto
duly executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender and, if
required, such payment, the Company shall execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees and in the denomination specified in such instrument
of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this
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Warrant not so assigned, and this Warrant shall promptly be cancelled. Following a
transfer that complies with the requirements of this Section 3.1, the Warrant may be
exercised by a new Holder for the purchase of shares of Common Stock regardless of whether
the Company issued or registered a new Warrant on the books of the Company. In connection
with any transfer of this Warrant or the resale of the Warrant Stock pursuant to Rule 144 or
other than pursuant to an effective registration statement, the Holder or transferee shall
compensate the Company for its reasonable expenses incurred in connection with effectuating
such transfer or resale.
3.2 Restrictive Legends. Each certificate for Warrant Stock initially issued
upon the exercise of this Warrant, and each certificate for Warrant Stock issued to any
subsequent transferee of any such certificate, unless, in each case, such Warrant Stock is
eligible for resale without registration pursuant to Rule 144(k), shall bear the following
legend:
“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.”
In addition, each certificate for Warrant Stock initially issued upon the exercise of this
Warrant, and each certificate for Warrant Stock issued to any subsequent transferee of any
such certificate, shall bear any legends which the Company reasonably believes is required
or permitted to affix per the terms of applicable voting or other contractual agreements.
The Company shall facilitate the timely preparation and delivery of certificates
representing the Warrant Stock to be sold pursuant to an effective Registration Statement,
which certificates shall be free, to the extent permitted by applicable law and this
Warrant, of all restrictive legends, and to enable such Warrant Stock to be in such
denominations and registered in such names as the Holder may request at least five (5)
business days prior to any sale of the Warrant Stock.
3.3 Division and Combination; Expenses; Books. This Warrant may be divided or
combined with other Warrants upon presentation hereof at the aforesaid office or agency of
the Company, together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to
compliance with Section 3.1 as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for
the Warrant or Warrants to be divided or combined in accordance with such notice. The
Company shall prepare, issue and deliver at Holder’s expense the new Warrant or Warrants
under this Section 3. The Company agrees to
maintain, at its aforesaid office or agency, books for the registration and the
registration of transfer of the Warrants.
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4. Adjustments. The number of shares of Common Stock for which this Warrant is
exercisable, and the price at which such shares may be purchased upon exercise of this Warrant,
shall be subject to adjustment from time to time as set forth in this Section 4.
4.1 Stock Dividends, Subdivisions and Combinations. If at any time while this
Warrant is outstanding the Company shall:
(i) declare a dividend or make a distribution on its outstanding shares of Common Stock in shares of Common Stock;
(ii) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock; or
(iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, then:
(1) the number of shares of Common Stock acquirable upon exercise of this Warrant immediately
after the occurrence of any such event shall be adjusted to equal the number of shares of Common
Stock which a record holder of the same number of shares of Common Stock that would have been
acquirable under this Warrant immediately prior to the record date for such dividend or
distribution or the effective date of such subdivision or combination would own or be entitled to
receive after such record date or the effective date of such subdivision or combination, as
applicable, and
(2) the Current Warrant Price shall be adjusted to equal:
(A) the Current Warrant Price in effect at the time of the record date for such
dividend or distribution or of the effective date of such subdivision or combination,
multiplied by the number of shares of Common Stock into which this Warrant is exercisable
immediately prior to the adjustment, divided by
(B) the number of shares of Common Stock into which this Warrant is exercisable
immediately after such adjustment.
Any adjustment made pursuant to clause (i) of this paragraph shall become effective
immediately after the record date for the determination of stockholders entitled to receive such
dividend or distribution, and any adjustment pursuant to clauses (ii) or (iii) of this paragraph
shall become effective immediately after the effective date of such subdivision or combination.
4.2 Other Provisions Applicable to Adjustments. The following provisions shall
be applicable to the making of adjustments of the number of shares of Common Stock into
which this Warrant is exercisable and the Current Warrant Price provided for in Section 4:
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(a) When Adjustments to Be Made. The adjustments required by Section 4
shall be made whenever and as often as any specified event requiring an adjustment
shall occur, except that any that would otherwise be required may be postponed
(except in the case of a subdivision or combination of shares of the Common Stock,
as provided for in Section 4.1) up to, but not beyond the date of exercise if such
adjustment either by itself or with other adjustments not previously made adds or
subtracts less than 1% of the shares of Common Stock into which this Warrant is
exercisable immediately prior to the making of such adjustment. Any adjustment
representing a change of less than such minimum amount (except as aforesaid) which
is postponed shall be carried forward and made as soon as such adjustment, together
with other adjustments required by this Section 4 and not previously made, would
result in a minimum adjustment or on the date of exercise. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.
(b) Fractional Interests. In computing adjustments under this Section
4, fractional interests in Common Stock shall be taken into account to the nearest
1/100th of a share.
(c) When Adjustment Not Required. If the Company undertakes a
transaction contemplated under this Section 4 and as a result takes a record of the
holders of its Common Stock for the purpose of entitling them to receive a dividend
or distribution or subscription or purchase rights or other benefits contemplated
under this Section 4 and shall, thereafter and before the distribution to
stockholders thereof, legally abandon its plan to pay or deliver such dividend,
distribution, subscription or purchase rights or other benefits contemplated under
this Section 4, then thereafter no adjustment shall be required by reason of the
taking of such record and any such adjustment previously made in respect thereof
shall be rescinded and annulled.
4.3 Reorganization, Reclassification, Merger, Consolidation or Disposition of
Assets.
(a) If there shall occur a Change of Control and, pursuant to the terms of such
Change of Control, shares of common stock of the successor or acquiring corporation,
or any cash, shares of stock or other securities or property of any nature
whatsoever (including warrants or other subscription or purchase rights) in addition
to or in lieu of common stock of the successor or acquiring corporation (“Other
Property”), are to be received by or distributed to the holders of Common Stock of
the Company, then the Holder of this Warrant shall have the right thereafter for the
Balance of the Exercise Period to receive, upon the exercise of the Warrant, the
number of shares of common stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and the Other Property receivable upon
or as a result of such Change of Control by a holder of the number of shares of
Common Stock into which this Warrant is exercisable immediately prior to such event.
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(b) In case of any such Change of Control described above, the resulting,
successor or acquiring entity (if not the Company) and, if an entity different from
the successor or acquiring entity, the entity whose capital stock or assets the
holders of the Common Stock are entitled to receive as a result of such Change of
Control, shall assume by written instrument all of the obligations of this Warrant
and the Transaction Documents (as defined in the Purchase Agreement), subject to
such modifications as may be deemed appropriate (as determined by resolution of the
Board of Directors of the Company) in order to provide for adjustments of shares of
the Common Stock into which this Warrant is exercisable which shall be as nearly
equivalent as practicable to the adjustments provided for in Section 4. For purposes
of Section 4, common stock of the successor or acquiring corporation shall include
stock of such corporation of any class which is not preferred as to dividends or
assets on liquidation over any other class of stock of such corporation and which is
not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible into or exchangeable for
any such stock, either immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights to subscribe for or
purchase any such stock. The foregoing provisions of this Section 4 shall similarly
apply to successive Change of Control transactions.
4.4 Stock Transfer Taxes. The issue of stock certificates upon exercise of this
Warrant shall be made without charge to the holder for any tax in respect of such issue. The
Company shall not, however, be required to pay any tax which may be payable in respect of
any transfer involved in the issue and delivery of shares in any name other than that of the
holder of this Warrant, and the Company shall not be required to issue or deliver any such
stock certificate unless and until the person or persons requesting the issue thereof shall
have paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
4.5 Adjustment for Issuance of Shares of Common Stock Below Stock Purchase
Price. If the Company, from the Grant Date until 36 months after the Grant Date (the
“Adjustment Period”), shall offer, sell, grant any option to purchase or offer, sell or
grant any right to reprice its securities, or otherwise dispose of or issue (or announce any
offer, sale, grant or any option to purchase or other disposition) any Common Stock in a
private placement transaction (including, without limitation, any private placement
transaction with CMS) at an effective price per share less than the Stock Purchase Price
(such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive
Issuance”), as adjusted hereunder (if the holder of the Common Stock so issued shall at any
time, whether by operation of purchase price adjustments, reset provisions, floating
conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights
per share which is issued in connection with such issuance, be entitled to receive shares of
Common Stock at an effective price per share which is less than the Stock Purchase Price,
such issuance shall be deemed to have occurred for less than the Stock Purchase Price on
such date of the Dilutive Issuance), then the Current Warrant Price shall be reduced and
only reduced to equal the Base Share Price, and the number of Warrant Shares issuable
hereunder shall be increased such that the aggregate
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Exercise Price payable hereunder, after taking into account the decrease in the Current
Warrant Price, shall be equal to the aggregate Exercise Price prior to such adjustment. Such
adjustment shall be made whenever such Common Stock is issued. The Company shall notify the
Holder in writing, no later than the Trading Day following the issuance of any Common Stock
subject to this section, indicating therein the applicable issuance price, or of applicable
reset price, exchange price, conversion price and other pricing terms (such notice the
“Dilutive Issuance Notice”). The provisions of this Section 4.5 shall not apply to the
issuance of (i) shares of Common Stock or options to employees, officers or directors of, or
consultants to, the Company pursuant to any stock option agreement, stock option plan or
equity incentive plan, including any shares of Common Stock issuable upon the exercise of
options or warrants issued pursuant to such agreement or plan; (ii) securities upon the
exercise or exchange of or conversion of any securities issued pursuant to the Purchase
Agreement or in connection with the transaction contemplated thereby; (iii) securities
issued pursuant to acquisitions or strategic transactions approved by a majority of the
disinterested directors; provided, however, that if, during the Adjustment Period, the
Company issues in such transactions shares of Common Stock in excess of 20 percent of the
number of shares of Common Stock issued and outstanding as of the Grant Date and issuable in
the offering pursuant to which this Warrant was acquired, such excess shares shall be
subject to the provisions of this Section 4.5; (iv) securities issued in connection with any
stock split, stock dividend or recapitalization of the Company; (v) securities issued in
connection with any registered primary public offering; (vi) securities or rights
exercisable or exchangeable for or convertible into shares of Common Stock which are issued
and outstanding on the date of the Purchase Agreement; and (vii) 250,000 warrants to be
issued to XXXX Master Fund, Ltd. pursuant to the terms of that Promissory Note, Warrant, and
Registration Rights Agreement dated March 20, 2007. Notwithstanding anything contained
within this Warrant to the contrary, under no circumstances shall the Company be required to
increase the number of Warrant Shares such that the aggregate number of shares issuable in
the transaction contemplated by the Purchase Agreement would constitute more than twenty
(20%) percent of all of the issued and outstanding shares of Common Stock as of May 8, 2007
without first obtaining the approval of the Company’s shareholders.
5. No Rights as Stockholder. This Warrant does not entitle the Holder to any voting or
other rights as a stockholder of the Company prior to exercise and payment for the Warrant Price in
accordance with the terms hereof.
6. Reservation and Authorization of Common Stock. From and after the Grant Date, the
Company shall at all times reserve and keep available for issue upon the exercise of Warrants such
number of its authorized but unissued shares of Common Stock as will be sufficient to permit the
exercise in full of all outstanding Warrants
7. Taking of Record; Stock and Warrant Transfer Books. In the case of all dividends or
other distributions by the Company to the holders of its Common Stock with respect to which any
provision of Section 4 refers to the taking of a record of such holders, the Company will in each
such case take such a record and will take such record as of the close of business on a
Business Day. The Company will not at any time, except upon dissolution, liquidation or
winding up of the Company, close its stock transfer books or Warrant transfer books so as to result
in preventing or delaying the exercise or transfer of any Warrant.
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8. Registration Rights. The resale of the Warrant Stock shall be registered in
accordance with and subject to the terms and conditions contained in the Purchase Agreement. The
Holder acknowledges that pursuant to the Purchase Agreement, the Company has the right to request
that the Holder furnish information regarding such Holder and the distribution of the Warrant Stock
as is required by law or the Commission to be disclosed in the Resale Registration Statement (as
such term is defined in the Purchase Agreement), and the Company may exclude from such registration
the shares of Warrant Stock acquirable hereunder if Holder fails to furnish such information within
a reasonable time prior to the filing of each Resale Registration Statement, supplemented
prospectus included therein and/or amended Resale Registration Statement.
9. Loss or Mutilation. Upon receipt by the Company from the Holder of evidence
reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of
this Warrant and indemnity or security reasonably satisfactory to it and reimbursement to the
Company of all reasonable expenses incidental thereto and in case of mutilation upon surrender and
cancellation hereof, the Company, at Holder’s cost, will execute and deliver in lieu hereof a new
Warrant of like tenor to the Holder; provided, however, that in the case of mutilation, no
indemnity shall be required if this Warrant in identifiable form is surrendered to the Company for
cancellation.
10. Office of the Company. As long as any of the Warrants remain outstanding, the
Company shall maintain an office or agency (which may be the principal executive offices of the
Company) where the Warrants may be presented for exercise, registration of transfer, division or
combination as provided in this Warrant.
11. Acceleration of Expiration Date at Company’s Election. The Company may, at the
option of the Board of Directors of the Company, accelerate the Expiration Date of this Warrant in
connection with the consummation of a Change of Control transaction by giving the Holder or
transferee at least 21 days written notice prior to the anticipated date of consummation of the
applicable Change of Control transaction (the “Accelerated Expiration Date”). As of the
Accelerated Expiration Date, all rights and obligations of the Company under this Warrant shall
become null and void to the extent that the Holder or transferee shall not have exercised this
Warrant as of or prior to the Accelerated Expiration Date.
12. Miscellaneous.
12.1 Nonwaiver. No course of dealing or any delay or failure to exercise any
right or obligation hereunder on the part of the Holder or the Company shall operate as a
waiver of such right or obligation, unless the same shall be in writing signed by the Holder
or the Company.
12.2 Notice Generally. All notices, requests, demands or other communications
provided for herein shall be in writing and shall be given in the manner and to the
addresses set forth in the Purchase Agreement.
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12.3 Successors and Assigns. Subject to compliance with the provisions of
Section 3.1, this Warrant and the rights evidenced hereby shall inure to the benefit of and
be binding upon the successors of the Company and the successors and assigns of the Holder.
The provisions of this Warrant are intended to be for the benefit of all Holders from time
to time of this Warrant, and shall be enforceable by any such Holder.
12.4 Amendment. This Warrant may be modified or amended or the provisions of
this Warrant waived with the written consent of both the Company and the Holder.
12.5 Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under applicable law, but
if any provision of this Warrant 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 Warrant.
12.6 Headings. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.
12.7 Governing Law. This Warrant and the transactions contemplated hereby shall
be deemed to be consummated in the State of Michigan and shall be governed by and
interpreted in accordance with the local laws of the State of Michigan without regard to the
provisions thereof relating to conflicts of laws. 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.
12.8 Entire Agreement. This Warrant, together with the Purchase Agreement
which this Warrant is subject to and pursuant to which it is given, constitute the entire
agreement between the Company and Holder with respect to the subject matter hereof and
supersedes any and all other prior or contemporaneous agreements, either oral or written,
between the Company and Holder with respect to the subject matter hereof. Headings herein
are for convenience only and shall not be deemed to limit or affect any of the provisions
hereof.
[SIGNATURE APPEAR ON FOLLOWING PAGE]
Page 12 of 17
IN WITNESS WHEREOF, Arcadia Resources, Inc. has caused this Warrant to be executed by its duly
authorized officer and attested by its Secretary or other designated officer.
Dated:
| ARCADIA RESOURCES, INC. | ||||
| By: | ||||
| Name: Title: |
||||
Page 13 of 17
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
1. The
undersigned hereby elects to purchase shares of the Common Stock of Arcadia
Resources, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the
purchase price of such shares in full.
2. The undersigned hereby elects to convert the attached Warrant into Common Stock of Arcadia
Resources, Inc. through “cashless exercise” in the manner specified in the Warrant. This conversion
is exercised with respect to of the Shares covered by the Warrant.
3. Please issue a certificate or certificates representing said shares in the name of the
undersigned or in such other name as is specified below:
[and, if such shares of Common Stock shall not include all of the shares of Common Stock
issuable as provided in this Warrant, that a new Warrant of like tenor and date for the balance of
the shares of Common Stock issuable hereunder be delivered to the undersigned.]
NOTICE: The signature on this subscription must correspond with the name as written upon the face
of the Warrant in every particular, without alteration or enlargement or any change whatsoever.
Page 14 of 17
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant for the purchase of shares of
common stock of Arcadia Resources, Inc. hereby sells, assigns and transfers unto the Assignee named
below all of the rights of the undersigned under this Warrant, with respect to the number of shares
of common stock set forth below:
and does hereby irrevocably constitute and appoint attorney-in-fact to
register such transfer on the books of the Company, maintained for the purpose, with full power of
substitution in the premises.
Dated:
| (Print Name and Title) | ||||
| (Signature) | ||||
| (Witness) | ||||
NOTICE: The signature on this assignment must correspond with the name as written upon the face of
the Warrant in every particular, without alteration or enlargement or any change whatsoever.
Page 15 of 17
EXHIBIT C
FORM OF INVESTMENT REPRESENTATION LETTER
In
connection with the acquisition of [warrants (the “Warrants”) to purchase shares of
common stock of Arcadia Resources, Inc. (the “Company”), par value $0.001 per share (the “Common
Stock”)] [
shares of common stock of Arcadia Resources, Inc. (the “Company”), par value
$0.001 per share (the “Common Stock”) upon the exercise of
warrants by ],
by
(the “Holder”) from , the Holder hereby represents and warrants to the
Company as follows:
The Holder (i) is an “Accredited Investor” as that term is defined in Rule 501 of Regulation D
promulgated under the Securities Act of 1933, as amended (the “Act”); and (ii) has the ability to
bear the economic risks of such Holder’s prospective investment, including a complete loss of
Holder’s investment in the Warrants and the shares of Common Stock issuable upon the exercise
thereof (collectively, the “Securities”).
The Holder, by acceptance of the Warrants, represents and warrants to the Company that the Warrants
and all securities acquired upon any and all exercises of the Warrants are purchased for the
Holder’s own account, and not with view to distribution of either the Warrants or any securities
purchasable upon exercise thereof in violation of applicable securities laws.
[The Holder acknowledges that (i) the Securities have not been registered under the Act, (ii) the
Securities are “restricted securities” and the certificate(s) representing the Securities shall
bear the following legend, or a similar legend to the same effect, until (i) in the case of the
shares of Common Stock underlying the Warrants, such shares shall have been registered for resale
by the Holder under the Act and effectively been disposed of in accordance with a registration
statement that has been declared effective; or (ii) in the opinion of counsel for the Company such
Securities may be sold without registration under the Act:
"[NEITHER] THE SECURITIES REPRESENTED BY THIS CERTIFICATE [NOR THE SECURITIES INTO WHICH THEY ARE
EXERCISABLE] HAVE [NOT] BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
AND ALL SUCH SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN THIS
CERTIFICATE. [NEITHER] THE SECURITIES REPRESENTED HEREBY [NOR THE SECURITIES INTO WHICH THEY ARE
EXERCISABLE] MAY [NOT] BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
THE COMPANY TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER, OR DISPOSITION MAY BE EFFECTUATED
WITHOUT REGISTRATION UNDER THE ACT.”]1
| 1 | Bracketed language to be inserted if applicable. |
Page 16 of 17
IN WITNESS WHEREOF, the Holder has caused this Investment Representation Letter to be executed
this ___ day of , 200___.
[Name]
By:
Name:
Title:
Name:
Title:
Page 17 of 17
