Document:

EX-10.1

 

Exhibit 10.1

OSI PHARMACEUTICALS, INC.

STOCK INCENTIVE PLAN FOR NEW HIRES

1. Purpose

     The Company has adopted this Stock Incentive Plan for New Hires, effective as of April 2006,
as an incentive to induce qualified individuals to accept employment with the Company or a parent
or subsidiary of the Company, and to encourage them to acquire a proprietary interest in the
Company through the ownership of common stock, par value $.01 per share (the “Common Stock”), of
the Company. Such ownership will provide them with a more direct stake in the future welfare of
the Company. No option granted under the Plan shall be considered an “incentive stock option” as
defined in Section 422 of the Code.

     Pursuant to the Plan, the Company may grant: (i) Non-Qualified Stock Options; (ii) Stock
Appreciation Rights; (iii) Restricted Stock; and (iv) Stock Bonuses, as such terms are defined in
Section 2.

2. Definitions

     Capitalized terms not otherwise defined in the Plan shall have the following meanings:

          (a) “Award Agreement” shall mean a written agreement, in such form as the Committee shall
determine, that evidences the terms and conditions of a Stock Award granted under the Plan.

          (b) “Fair Market Value” on a specified date means the value of a share of Common Stock,
determined as follows:

               (i) if the Common Stock is listed on any established stock exchange or a national market
system, including without limitation The Nasdaq National Market or The Nasdaq SmallCap Market of
The Nasdaq Stock Market, Inc., its Fair Market Value shall be the closing sales price for such
stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the
day of determination, as reported in The Wall Street Journal or such other source as the Committee
deems reliable;

               (ii) if the Common Stock is regularly quoted by a recognized securities dealer but selling
prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked
prices for the Common Stock on the day of determination, as reported in The Wall Street Journal or
such other source as the Committee deems reliable; or

               (iii) in the absence of an established market for the Common Stock, the Fair Market Value
shall be determined in good faith by the Committee.

          (c) “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

 

          (d) “Non-Qualified Stock Option” shall mean an option that is not an “incentive stock option”
within the meaning of Section 422 of the Code.

          (e) “Restricted Stock” shall mean an award of shares of Common Stock that is subject to
certain conditions on vesting and restrictions on transferability as provided in Section 8 of this
Plan.

          (f) “Stock Appreciation Right” shall mean a right to receive payment of the appreciated value
of shares of Common Stock as provided in Section 7 of this Plan.

          (g) “Stock Award” shall mean a Non-Qualified Stock Option, a Restricted Stock award, a Stock
Appreciation Right or a Stock Bonus award.

          (h) “Stock Bonus” shall mean a bonus award payable in shares of Common Stock as provided in
Section 9 of this Plan.

3. Administration of the Plan

     The Plan shall be administered by a committee (the “Committee”) as appointed from time to time
by the Board of Directors of the Company, which may be the Compensation Committee of the Board of
Directors. Except as otherwise specifically provided herein, no person, other than members of the
Committee, shall have any discretion as to decisions regarding the Plan. The Company may engage a
third party to administer routine matters under the Plan, such as establishing and maintaining
accounts for Plan participants and facilitating transactions by participants pursuant to the Plan.

     In administering the Plan, the Committee may adopt rules and regulations for carrying out the
Plan. The interpretations and decisions made by the Committee with regard to any question arising
under the Plan shall be final and conclusive on all persons participating or eligible to
participate in the Plan. Subject to the provisions of the Plan, the Committee shall determine the
terms of all Stock Awards granted pursuant to the Plan, including, but not limited to, the persons
to whom, and the time or times at which, grants shall be made, the number of shares to be covered
by each Stock Award, and other terms and conditions of the Stock Award.

4. Shares of Stock Subject to the Plan

     Except as provided in Section 10, the number of shares that may be issued or transferred
pursuant to Stock Awards granted under the Plan shall not exceed 850,000 shares of Common Stock.
Such shares may be authorized and unissued shares or previously issued shares acquired or to be
acquired by the Company and held in treasury. Any shares subject to a Stock Award which for any
reason expires, is cancelled or is unexercised may again be subject to a Stock Award under the
Plan.

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5. Eligibility

     Stock Awards may be granted to any newly hired employee of the Company or a parent or
subsidiary of the Company, but solely for the purpose of inducing such person to accept employment
with the Company or a parent or subsidiary of the Company.

6. Granting of Options

     The Committee may grant options to such persons eligible under the Plan as the Committee may
select. Such options shall be granted consistent with Section 5 in such amounts and upon such
other terms and conditions as the Committee shall determine, which shall be evidenced under an
Award Agreement and subject to the following terms and conditions:

          (a) Option Price. The purchase price under each Non-Qualified Stock Option shall be not less
than 100% of the Fair Market Value of the Common Stock at the time the option is granted and not
less than the par value of the Common Stock.

          (b) Medium and Time of Payment. Stock purchased pursuant to the exercise of an option shall
at the time of purchase be paid for in full in cash, or, upon conditions established by the
Committee, by delivery of shares of Common Stock owned by the recipient. If payment is made by the
delivery of shares, the value of the shares delivered shall be the Fair Market Value of such shares
on the date of exercise of the option. In addition, if the Committee consents in its sole
discretion, an “in the money” Non-Qualified Stock Option may be exercised on a “cashless” basis in
exchange for the issuance to the optionee (or other person entitled to exercise the option) of the
largest whole number of shares having an aggregate value equal to the value of such option on the
date of exercise. For this purpose, the value of the shares delivered by the Company and the value
of the option being exercised shall be determined based on the Fair Market Value of the Common
Stock on the date of exercise of the option. Upon receipt of payment and such documentation as the
Company may deem necessary to establish compliance with the Securities Act of 1933, as amended (the
“Securities Act”), the Company shall, without stock transfer tax to the optionee or other person
entitled to exercise the option, deliver to the person exercising the option a certificate or
certificates for such shares.

          (c) Waiting Period. The waiting period and time for exercising an option shall be prescribed
by the Committee in each particular case; provided, however, that no option may be exercised after
10 years from the date it is granted.

          (d) Non-Assignability of Options. Except as may otherwise be specifically provided by the
Committee, no Non-Qualified Stock Option shall be assignable or transferable by the recipient
except by will or by the laws of descent and distribution. During the lifetime of a recipient,
except as may otherwise be specifically provided by the Committee, Non-Qualified Stock Options
shall be exercisable only by such recipient. If the Committee approves provisions in any
particular case allowing for assignment or transfer of a Non-Qualified Stock Option, then such
option will nonetheless be subject to a six-month holding period commencing on the date of grant
during which period the recipient will not be permitted to assign or transfer such option,

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unless the Committee further specifically provides for the assignability or transferability of
such option during this period.

          (e) Effect of Termination of Employment. If a recipient’s employment (or service as an
officer, director or consultant) shall terminate for any reason, other than death or Retirement (as
defined below), the right of the recipient to exercise any option otherwise exercisable on the date
of such termination shall expire unless such right is exercised within a period of 90 days after
the date of such termination. Unless otherwise determined by the Committee and defined in the
applicable Award Agreement, the term “Retirement” shall mean the voluntary termination of
employment (or service as an officer, director or consultant) by a recipient who has attained the
age of 60 and who has completed at least twenty years of service with the Company. If a
recipient’s employment (or service as an officer, director or consultant) shall terminate because
of death or Retirement, the right of the recipient to exercise any option otherwise exercisable on
the date of such termination shall be unaffected by such termination and shall continue until the
normal expiration of such option. Option rights shall not be affected by any change of employment
as long as the recipient continues to be employed by either the Company or a parent or subsidiary
of the Company. In no event, however, shall an option be exercisable after the expiration of its
original term as determined by the Committee. The Committee may, if it determines that to do so
would be in the Company’s best interests, provide in a specific case or cases for the exercise of
options which would otherwise terminate upon termination of employment with the Company for any
reason, upon such terms and conditions as the Committee determines to be appropriate. Nothing in
the Plan or in any Award Agreement shall confer any right to continue in the employ of the Company
or any parent or subsidiary of the Company or interfere in any way with the right of the Company or
any parent or subsidiary of the Company to terminate the employment of a recipient at any time.

          (f) Leave of Absence. In the case of a recipient on an approved leave of absence, the
Committee may, if it determines that to do so would be in the best interests of the Company,
provide in a specific case for continuation of options during such leave of absence, such
continuation to be on such terms and conditions as the Committee determines to be appropriate,
except that in no event shall an option be exercisable after 10 years from the date it is granted.

          (g) Sale or Reorganization. In case the Company is merged or consolidated with another
corporation, or in case the property or stock of the Company is acquired by another corporation, or
in case of a reorganization, or liquidation of the Company, the Board of Directors of the Company,
or the board of directors of any corporation assuming the obligations of the Company hereunder,
shall either (i) make appropriate provisions for the protection of any outstanding options by the
substitution on an equitable basis of appropriate stock of the Company, or appropriate options to
purchase stock of the merged, consolidated, or otherwise reorganized corporation, or (ii) give
written notice to optionees that their options, which will become immediately exercisable
notwithstanding any waiting period otherwise prescribed by the Committee, must be exercised within
30 days of the date of such notice or they will be terminated.

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          (h) Restrictions on Sale of Shares. No stock acquired by an optionee upon exercise of a
Non-Qualified Stock Option granted hereunder may be disposed of by the optionee (or other person
eligible to exercise the option) within six months from the date such Non-Qualified Stock Option
was granted, unless otherwise provided by the Committee.

7. Grant of Stock Appreciation Rights

     The Committee may grant Stock Appreciation Rights to such persons eligible under the Plan as
the Committee may select. Stock Appreciation Rights shall be granted consistent with Section 5 in
such amounts and under such other terms and conditions as the Committee shall determine, which
terms and conditions shall be evidenced under an Award Agreement, subject to the terms of the Plan.
Subject to the terms and conditions of the Award Agreement, a Stock Appreciation Right shall
entitle the award recipient to exercise the Stock Appreciation Right, in whole or in part, in
exchange for a payment of shares of Common Stock, cash or a combination thereof, as determined by
the Committee and provided under the Award Agreement, equal in value to the excess of the Fair
Market Value of the shares of Common Stock underlying the Stock Appreciation Right, determined on
the date of exercise, over the base amount set forth in the Award Agreement for shares of Common
Stock underlying the Stock Appreciation Right, which base amount shall not be less than the Fair
Market Value of such Common Stock, determined as of the date the Stock Appreciation Right is
granted.

8. Grant of Restricted Stock

     The Committee may grant Restricted Stock awards to such persons eligible under the Plan as the
Committee may select. Restricted Stock awards shall be granted consistent with Section 5 in such
amounts and under such other terms and conditions as the Committee shall determine, which terms and
conditions shall be evidenced under an Award Agreement, subject to the terms of the Plan. The
Award Agreement shall set forth any conditions on vesting and restrictions on transferability that
the Committee may determine is appropriate for the Restricted Stock award, including the
performance of future services or satisfaction of performance goals established by the Committee.
The books and records of the Company shall reflect the issuance of shares of Common Stock under a
Restricted Stock award and any applicable restrictions and limitations in such manner as the
Committee determines is appropriate. Unless otherwise provided in the Award Agreement, a recipient
of a Restricted Stock award shall be the record owner of the shares of Common Stock to which the
Restricted Stock relates and shall have all voting and dividend rights with respect to such shares
of Common Stock.

9. Grant of Stock Bonus

     The Committee may grant Stock Bonus awards to such persons eligible under the Plan as the
Committee may select. Stock Bonus awards shall be granted consistent with Section 5 in such
amounts and under such other terms and conditions as the Committee shall determine, which terms and
conditions shall be evidenced under an Award Agreement, subject to the terms of the Plan. Upon
satisfaction of any conditions, limitations and restrictions set forth in the Award Agreement, a
Stock Bonus award shall entitle the recipient to receive payment of a bonus

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described under the Stock Bonus award in the form of shares of Common Stock of the Company.
Prior to the date on which a Stock Bonus award is required to be paid under an Award Agreement, the
Stock Bonus award shall constitute an unfunded, unsecured promise by the Company to distribute
Common Stock in the future.

10. Adjustments in the Event of Recapitalization

     In the event that dividends payable in Common Stock during any fiscal year of the Company
exceed in the aggregate five percent of the Common Stock issued and outstanding at the beginning of
the year, or in the event there is during any fiscal year of the Company one or more splits,
subdivisions, or combinations of shares of Common Stock resulting in an increase or decrease by
more than five percent of the shares outstanding at the beginning of the year, the number of shares
available under the Plan shall be increased or decreased proportionately, as the case may be, and
the number of shares issuable under Stock Awards theretofore granted shall be increased or
decreased proportionately, as the case may be, without change in the aggregate purchase price that
may be applicable thereto. Common Stock dividends, splits, subdivisions, or combinations during
any fiscal year that do not exceed in the aggregate five percent of the Common Stock issued and
outstanding at the beginning of such year shall be ignored for purposes of the Plan. All
adjustments shall be made as of the day such action necessitating such adjustment becomes
effective.

11. Withholding of Applicable Taxes

     It shall be a condition to the performance of the Company’s obligation to issue or transfer
Common Stock or make a payment of cash pursuant to any Stock Award that the award recipient pay, or
make provision satisfactory to the Company for the payment of, any taxes (other than stock transfer
taxes) the Company or any subsidiary is obligated to collect with respect to the issuance or
transfer of Common Stock or the payment of cash under such Stock Award, including any applicable
federal, state, or local withholding or employment taxes.

12. General Restrictions

     Each Stock Award granted under the Plan shall be subject to the requirement that, if at any
time the Board of Directors shall determine, in its discretion, that the listing, registration, or
qualification of the shares of Common Stock issuable or transferable under the Stock Award upon any
securities exchange or under any state or federal law, or the consent or approval of any
governmental regulatory body is necessary or desirable as a condition of, or in connection with,
the granting of the Stock Award or the issue or transfer, of shares of Common Stock thereunder,
shares of Common Stock issuable or transferable under any Stock Award shall not be issued or
transferred, in whole or in part, unless such listing, registration, qualification, consent, or
approval shall have been effected or obtained free of any conditions not acceptable to the Board of
Directors.

     The Company shall not be obligated to sell or issue any shares of Common Stock in any manner
in contravention of the Securities Act, the Securities Exchange Act of 1934, as amended (the

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“Exchange Act”), the rules and regulations of the Securities and Exchange Commission, any
state securities law, the rules and regulations promulgated thereunder or the rules and regulations
of any securities exchange or over the counter market on which the Common Stock is listed or in
which it is included for quotation. The Board of Directors may, in connection with the granting of
Stock Awards, require the individual to whom the award is to be granted to enter into an agreement
with the Company stating that as a condition precedent to the receipt of shares of Common Stock
issuable or transferable under the Stock Award, in whole or in part, he shall, if then required by
the Company, represent to the Company in writing that such receipt is for investment only and not
with a view to distribution, and also setting forth such other terms and conditions as the
Committee may prescribe. Such agreements may also, in the discretion of the Committee, contain
provisions requiring the forfeiture of any Stock Awards granted and/or Common Stock held, in the
event of the termination of employment or association, as the case may be, of the award recipient
with the Company. Upon any forfeiture of Common Stock pursuant to an agreement authorized by the
preceding sentence, the Company shall pay consideration for such Common Stock to the award
recipient, pursuant to any such agreement, without interest thereon.

13. Termination and Amendment of the Plan

     The Board of Directors or the Committee shall have the right to amend, suspend, or terminate
the Plan at any time; provided, however, that no such action shall affect or in any way impair the
rights of a recipient under any Stock Award theretofore granted under the Plan.

14. Compliance with Rule 16b-3

     With respect to persons subject to Section 16 of the Exchange Act, transactions under this
Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors. To the
extent any provision of the Plan or action by the Committee (or any other person on behalf of the
Committee or the Company) fails to so comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Committee.

15. Rights as a Stockholder

     A recipient of a Stock Award shall have no rights as a stockholder with respect to any shares
issuable or transferable thereunder until the date a stock certificate is issued to him for such
shares unless otherwise provided in the Award Agreement under the Plan. Except as otherwise
expressly provided in the Plan, no adjustment shall be made for dividends or other rights for which
the record date is prior to the date such stock certificate is issued.

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EXHIBIT 10.1

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”). NO INTEREST IN THIS NOTE MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER THE
ACT (OR ANY SIMILAR RULE UNDER THE ACT), OR (iii) AN EXEMPTION FROM REGISTRATION UNDER THE ACT
WHERE THE HOLDER HAS FURNISHED TO THE PAYOR AN ACCEPTABLE OPINION OF ITS COUNSEL THAT AN EXEMPTION
PROM REGISTRATION UNDER THE ACT IS AVAILABLE.

ARCADIA RESOURCES, INC.

PROMISSORY NOTE

			
	 	 	 
	$15,000,000.00
	 	June 29, 2006

          FOR VALUE RECEIVED, the undersigned, Arcadia Resources, Inc., a Nevada corporation
(‘Payor”), having its executive office and principal place of business at 26777 Central Park
Boulevard, Suite 200, Southfield, Michigan 48076, hereby promises to pay to Jana Master Fund, Ltd.
(“Payee”), having an address at 200 Park Avenue, Suite 3900, New York, NY 10166, at Payee’s address
set forth above (or at such other place as Payee may from time to-time hereafter direct by notice
in writing to Payor), the principal sum of FIFTEEN MILLION DOLLARS ($15,000,000.00), in such coin
or currency of the United States of America as at the time shall be legal tender for the payment of
public and private debts in accordance with the terms hereof.

	1.	 	Payment of Principal and Interest.

	 	1.1	 	The principal amount of this Note outstanding
from time to time shall bear simple interest at
the annual rate (the “Note Rate”) equal to the
One Year Libor Rate (as such rate is published
in the Wall Street Journal) plus seven and one
half percent (7.5%) from the date hereof until
the entire principal balance due under this
Note has been paid in full.
	 
	 	1.2	 	The unpaid principal balance shall be due and
payable on December 26, 2007 (“Maturity Date”).
Accrued unpaid interest on the unpaid
principal balance due under this Note at the
Note Rate shall be due and payable on the
following dates: September 30, 2006; December
31, 2006; March 31, 2007; June 30, 2007;
September 30, 2007; and the Maturity Date.
	 
	 	1.3	 	If Payor prepays any portion of the principal amount due under this Note
on or before December 30, 2006 (“Permitted Prepayment Date”), together
with the unpaid interest thereon accrued through the date of such
prepayment, Payor shall pay a prepayment fee equal to the One Year Libor
Rate (as such rate is published in the Wall Street Journal on the date
of such prepayment) plus one and one-half percent (1.5%).

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	 	1.4	 	All payments (including prepayments) made by the Payor on this Note
shall be applied first to the payment of accrued unpaid interest on this
Note and then to the reduction of the unpaid principal balance of this
Note.
	 
	 	1.5	 	In the event that the date for the payment of any amount payable under
this Note falls due on a Saturday, Sunday or public holiday under the
laws of the State of New York, the time for payment of such amount shall
be extended to the next succeeding business day and interest at the Note
Rate shall continue to accrue on any principal amount so effected until
the payment thereof on such extended due date.

	2.	 	Replacement of Note.

	 	2.1	 	In the event that this Note is mutilated, destroyed, lost or stolen,
Payor shall, at its sole expense, execute, register and deliver a new
Note, in exchange and substitution for this Note, if mutilated, or in
lieu of and substitution for this Note, if destroyed, lost or stolen. In
the case of destruction, loss or theft, Payee shall furnish to Payor
indemnity reasonably satisfactory to Payor, and in any such case, and in
the case of mutilation, Payee shall also furnish to Payor evidence to
its reasonable satisfaction of the mutilation, destruction, loss or
theft of this Note and of the ownership thereof. Any replacement Note
so issued shall be in the same outstanding principal amount as this Note
and dated the date to which interest shall have been paid on this Note
or, if no interest shall have yet been paid, dated the date of this
Note.
	 
	 	2.2	 	Every Note issued pursuant to the provisions of Section 2.1 above in
substitution for this Note shall constitute an additional contractual
obligation of the Payor, whether or not this Note shall be found at any
time or be enforceable by anyone.

	3.	 	Intentionally Omitted

	4.	 	Covenants of Payor.
	 
	 	 	Payor, on behalf of itself and its subsidiaries, covenants and agrees that, so long as this Note remains outstanding
and unpaid, in whole, or in part:

	 	4.1	 	Payor and its subsidiaries will not sell, transfer or dispose of, nor
permit or suffer the placement of any lien (statutory or other),
priority, security interest, encumbrance or any other preferential
arrangement upon, any of their material assets (including but not
limited to real property and Payor’s equity interests in such
subsidiaries) without obtaining Payee’s written consent, other than
inventory in the ordinary course of business;
	 
	 	4.2	 	Payor shall upon Payee’s request furnish Payee with monthly financial
updates;
	 
	 	4.3	 	Payor and its subsidiaries will not pay any type of bonus to senior
executive officers unless Payor’s earnings before interest, taxes,
depreciation and amortization (“EBITDA”) for the fiscal year ending
March 30, 2007 is greater

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	 	 	 	than Eleven Million Dollars ($11,000,000) or
Payee otherwise gives its written consent;
	 
	 	4.4	 	Payor and its subsidiaries will not engage in sale/lease back
transactions wherein real or personal property of Payor or its
subsidiaries is sold and then reacquired in any type of lease
transaction if the aggregate amount of all such transactions would
exceed Five Million Dollars ($5,000,000);
	 
	 	4.5	 	Payor and its subsidiaries will promptly pay and discharge all lawful
taxes, assessments and governmental charges or levies imposed upon any
of them, their income and profits, or any of their property, before the
same shall become in default, as well as all lawful claims for labor,
materials and supplies which, if unpaid, might become a lien or charge
upon such properties or any part thereof; provided, however, that Payor
or such subsidiary shall not be required to pay and discharge any such
tax, assessment, charge, levy or claim so long as the validity thereof
shall be contested in good faith by appropriate proceedings and Payor or
such subsidiary, as the case may be, shall set aside on its books
adequate reserves with respect to any such tax, assessment, charge, levy
or claim so contested;
	 
	 	4.6	 	Payor and its subsidiaries will do or cause to be done all things
necessary to preserve and keep in full force and effect each of their
corporate existence, rights and franchises and substantially comply with
all laws applicable to them as their counsel may advise;
	 
	 	4.7	 	Payor and its subsidiaries will not: (i) incur any obligation for
borrowed money, any obligation evidenced by bonds, notes or similar
instruments (including any obligations incurred in the acquisition of
property, assets or business), any reimbursement obligation, any
deferred purchase price obligation, any guarantees of any such
obligations, or any similar obligations (collectively, “debt”) which is
senior or pari passu to the debt under this Note, or to which the debt
under this Note would be structurally subordinate, if such debt together
with such existing debt of Payor and its subsidiaries would exceed
Twenty Five Million Dollars ($25,000,000), without Payee’s consent or
(ii) incur debt junior to the debt under this Note in an aggregate
amount which exceeds Twenty Five Million Dollars ($25,000,000), other
than to the extent such junior debt is issued to finance acquisitions in
the ordinary course of Payor or its subsidiaries’ business, without
Payee’s consent;
	 
	 	4.8	 	Payor and its subsidiaries will utilize the proceeds of any sale of any
of real or personal property for any of: (i) additional capital
expenditures, (ii) payment of any debt which is senior to the debt under
this Note, or (iii) the payment of debt arising under this Note;
	 
	 	4.9	 	Payor and its subsidiaries will use Fifty Percent (50%) of the net cash
proceeds from any sale of equity securities in a public or private
placement capital raise offering to repay the debt under this Note;
	 
	 	4.10	 	Payor and its subsidiaries will at all times maintain, preserve, protect
and keep

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	 	 	 	each of their property used or useful in the conduct of
business in good repair, working order and condition (except for the
effects of reasonable wear and tear in the ordinary course of business)
and will from time to time, make all necessary and proper repairs,
renewals, replacements, betterments and improvements thereto;
	 
	 	4.11	 	Payor and its subsidiaries will keep adequately insured, by financially
sound reputable insurers, all property of a character usually insured by
similar corporations and carry such other insurance as is usually
carried by similar corporations;
	 
	 	4.12	 	Payor will, promptly following the occurrence of an Event of Default or
of any condition or event which, with the giving of notice or the lapse
of time or both, would constitute an Event of Default, furnish a
statement of Payor’s Chief Executive Officer or Chief Financial Officer
to Payee setting forth the details of such Event of Default or condition
or event and the action which Payor intends to take with respect
thereto; and
	 
	 	4.13	 	Payor will, and will cause each of its subsidiaries to, at all times
maintain books of account in which all of its financial transactions are
duly recorded in conformance with generally accepted accounting
principles.

	5.	 	Events of Default. The following events each constitute an “Event of Default”:

	 	5.1	 	The dissolution of Payor or any vote in favor thereof by the board of
directors and shareholders of Payor; or
	 
	 	5.2	 	Payor makes an assignment for the benefit of creditors, or files with a
court of competent jurisdiction an application for appointment of a
receiver or similar official with respect to it or any substantial part
of its assets, or Payor files a petition seeking relief under any
provision of the Federal Bankruptcy Code or any other federal or state
statute now or hereafter in effect affording relief to debtors, or any
such application or petition is filed against Payor, which application
or petition is not dismissed or withdrawn within sixty (60) days from
the date of its filing; or
	 
	 	5.3	 	Payor fails to pay the principal amount, or interest on, or any other
amount payable under this Note within five (5) days of when the same
becomes due and payable; or
	 
	 	5.4	 	Payor admits in writing its inability to pay its debts as they mature; or
	 
	 	5.5	 	Payor sells all or substantially all of its assets or merges or is
consolidated with or into another corporation other than a transaction
whose primary purpose is to re-domicile the Payor ; or
	 
	 	5.6	 	A proceeding is commenced to foreclose a security interest or lien in
any property or assets of Payor as a result of a default in the payment
or performance of any debt (in excess of $350,000 and secured by such
property or assets) of Payor or of any subsidiary of Payor; or

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	 	5.7	 	A final judgment for the payment of money in excess of $350,000 is
entered against Payor by a court of competent jurisdiction, and such
judgment is not discharged (nor the discharge thereof duly provided for)
in accordance with its terms, nor a stay of execution thereof procured,
within sixty (60) days after the date such judgment is entered, and,
within such period (or such longer period during which execution of such
judgment is effectively stayed), an appeal therefrom has not been
prosecuted and the execution thereof caused to be stayed during such
appeal; or
	 
	 	5.8	 	An attachment or garnishment is levied against the assets or properties
of Payor or any subsidiary of Payor involving an amount in excess of
$350,000 and such levy is not vacated, bonded or otherwise terminated
within sixty (60) days after the date of its effectiveness; or
	 
	 	5.9	 	Payor or any subsidiary defaults in the due observance or performance of
any covenant, condition or agreement to be observed or performed
pursuant to the terms of this Note (other than the default specified in
Section 5.3above) and such default continues uncured for a period of
thirty (30) days from the date Payor receives written notice from the
Payee.

	 	 	Upon the occurrence of any such Event of Default and at any time thereafter, the holder of this Note shall have the
right (at such holder’s option) to declare the principal of, accrued unpaid interest on, and all other amounts payable
under this Note to be forthwith due and payable, whereupon all such amounts shall be immediately due and payable to
the holder of this Note, without presentment, demand, protest or other notice of any kind, all of which are hereby
expressly waived; provided.

	6.	 	Suits for Enforcement and Remedies.

	 	6.1	 	If any one or more Events of Default shall occur and be continuing, the
Payee may proceed to (1) protect and enforce Payee’s rights either by
suit in equity or by action at law, or both, whether for the specific
performance of any covenant, condition or agreement contained in this
Note or in any agreement or document referred to herein or in aid of the
exercise of any power granted in this Note or in any agreement or
document referred to herein, (ii) enforce the payment of this Note, or
(iii) enforce any other legal or equitable right of the holder of this
Note. No right or remedy herein or in any other agreement or instrument
conferred upon the holder of this Note is intended to be exclusive of
any other right or remedy, and each and every such right or remedy
shall be cumulative and shall be in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity
or by statute or otherwise.

	7.	 	Unconditional Obligation; Fees, Waivers, Other.

	 	7.1	 	The obligation to make the payments provided for in this Note are
absolute and unconditional and are not subject to any defense, set-off,
counterclaim, rescission, recoupment or adjustment whatsoever.

Page 5 of 7

 

	 	7.2	 	If, following the occurrence of an Event of Default, Payee shall seek to
enforce the collection of any amount of principal of and/or interest on
this Note, there shall be immediately due and payable from Payor, in
addition to the then unpaid principal of, and accrued unpaid interest
on, this Note, all reasonable costs and expenses incurred by Payee in
connection therewith, including, without limitation, reasonable
attorneys’ fees and disbursements.
	 
	 	7.3	 	No forbearance, indulgence, delay or failure to exercise any right or
remedy with respect to this Note shall operate as a waiver or as an
acquiescence in any default, nor shall any single or partial exercise of
any right or remedy preclude any other or further exercise thereof or
the exercise of any other right or remedy.
	 
	 	7.4	 	This Note may not be modified or discharged (other than by payment)
except by a writing duly executed by Payor and Payee.
	 
	 	7.5	 	Payor hereby expressly waives demand and presentment for payment, notice
of nonpayment, notice of dishonor, protest, notice of protest, bringing
of suit, and diligence in taking any action to collect amounts called
for hereunder, and shall be directly and primarily liable for the
payment of all sums owing and to be owing hereon, regardless of and
without any notice, diligence, act or omission with respect to the
collection of any amount called for hereunder or in connection with any
right, lien, interest or property at any and all times which Payee had
or is existing as security for any amount called for hereunder.

	8.	 	Intentionally Deleted.
	 
	9.	 	Intentionally Deleted.
	 
	10.	 	Intentionally Deleted.
	 
	11.	 	Miscellaneous.

	 	11.1	 	The headings of the various paragraphs of this Note are for convenience
of reference only and shall in no way modify any of the terms or
provisions of this Note.
	 
	 	11.2	 	All notices required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given when personally
delivered or sent by registered or certified mail (return receipt
requested, postage prepaid), facsimile transmission or overnight courier
to the address of the intended recipient as set forth in the preamble to
this Note or at such other address as the intended recipient shall have
hereafter given to the other party hereto pursuant to the provisions of
this Note.
	 
	 	11.3	 	This Note and the obligations of Payor and the rights of Payee shall be
governed by and construed in accordance with the substantive laws of the
State of New York without giving effect to the choice of laws rules
thereof.
	 
	 	11.4	 	This Note shall bind Payor and its successors and assigns.

Page 6 of 7

 

	 	 	 	 	 	 	 
	 	 	ARCADIA RESOURCES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	   /s/ John E. Elliott, II	 	 
	 

	 	 	 	 

          John E. Elliott, II
	 	 
	 
	 	 	 	 	 	 
	 

	 	Its:
	 	Chief Executive Officer	 	 

Accepted and Agreed to:

	 	 	 	 	 	 	 
	JANA MASTER FUND, LTD.	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	Its Investment Advisor, JANA Partners LLC	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Marc Lehmann
 

   Marc Lehmann
	 	 	 	 
	 
	 	 	 	 	 	 
	Its:

	 	   Partner	 	 	 	 

Page 7 of 7

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