Document:

EX-10.2

 

Exhibit 10.2

Baldwin Technology Company, Inc.

2 Trap Falls Road

Suite 402

Shelton, Connecticut 06484-0941

Tel: 203-402-1000

Fax: 203-402-5500

June 19, 2007

Mr. Gerald A. Nathe

11448 Bronzedale Drive

Oakton, VA 22124

Dear Mr. Nathe:

     This Agreement sets forth the terms of your employment with Baldwin Technology Company, Inc.,
a Delaware corporation (the “Company”), and supersedes our agreement dated March 19, 2001, as
amended by our subsequent agreements dated February 26, 2002, August 13, 2002, July 11, 2003, July
30, 2005 and November 14, 2005, and it is effective as of June 30, 2007.

	 	1.	 	Duties.
	 
	 	 	 	During the term of your employment hereunder, you shall be employed as the Chairman of
the Board of the Company, and you shall oversee the business, affairs, and property of
the Company subject to the direction of the Board of Directors of the Company (the
“Board of Directors”).
	 
	 	2.	 	Compensation.
	 
	 	 	 	As compensation for your services during the term of your employment hereunder:

	 	A.	 	Salary.
	 
	 	 	 	You shall be paid a salary at the annual rate of three hundred fifty thousand dollars

 

	 	 	 	($350,000) (the “base salary”), payable in appropriate installments to conform with regular
payroll dates for salaried personnel of the Company.
	 
	 	B.	 	Reviews and Adjustments.
	 
	 	 	 	As of July 1, 2007 and each succeeding July 1 during the term of your employment hereunder,
your performance shall be reviewed by the Board of Directors, your attainment of mutually
agreed-upon objectives shall be evaluated, and the base salary payable to you for the twelve
(12) months beginning on such July 1 may be adjusted upward (but not downward unless agreed
to by you) by the Board of Directors.
	 
	 	C.	 	Incentive Compensation.
	 
	 	 	 	During the term of your employment hereunder, and at such other times subsequent
thereto as are otherwise set forth herein, you shall be paid incentive compensation
which shall be determined and paid in accordance with the terms of the Management
Incentive Compensation Plan.
	 
	 	D.	 	Deferred Compensation.
	 
	 	 	 	You shall be paid, at such times as are set forth in this Agreement, annual deferred
compensation of one hundred and sixty thousand dollars ($160,000), which on a
monthly basis is thirteen thousand three hundred and thirty three and 33/100
dollars ($13,333.33) (the “Monthly Amount”). The Monthly Amount shall be paid
monthly to you or to your beneficiary or beneficiaries designated by you in writing
to the Company, or, if none is so designated, to your estate (such person or persons
being referred to herein as the “Beneficiary”), beginning on the day set forth in
this Agreement, for a period (except as otherwise provided in this

 

	 	 	 	Agreement) of one hundred eighty (180) months or the period ending with the month of
your death, whichever is longer. In this regard, if you die after the date on which
you first become entitled to payment of the Deferred Compensation, whether or not
the first payment of the Monthly Amount has been paid, and prior to the payment of
the Monthly Amount for one hundred eighty (180) months, the Monthly Amount shall be
paid monthly for the balance of such one hundred eighty (180) month period to the
Beneficiary.

	 	3.	 	Class A Stock.

	 	A.	 	Transfer of Shares.
	 
	 	 	 	The Company shall issue or transfer to you, at such times when you have earned them, at no
cost to you, a total of one hundred sixty thousand (160,000) shares of the Company’s Class A
Common Stock, par value $.01 per share (“Class A Stock”) in four (4) equal installments of
forty thousand (40,000) shares each. You will be deemed to have earned the first of the four
(4) installments of forty thousand (40,000) shares of Class A Stock on a date when the
closing price of the Class A Stock on the American Stock Exchange (the “Fair Market Value”)
reaches seven and 87/100 dollars ($7.87) per share. Each of the three (3) subsequent
installments of Class A Stock shall similarly be deemed to be earned by you when the Fair
Market Value of the Class A Stock increases by an additional two dollars ($2.00) per share
over the Fair Market Value at which the previous installment was earned. A stock
certificate for the Class A Stock so earned shall be issued and delivered to you within
fifteen (15) days of the date such Class A Stock was deemed to be earned by you.
	 
	 	B.	 	Adjustment in Shares and Fair Market Value.
	 
	 	 	 	In the event of a reorganization, recapitalization, change of shares, stock split, spinoff,

 

	 	 	 	stock dividend, reclassification, subdivision or combination of shares, merger,
consolidation, rights offering, or any other change in the corporate structure or shares of
capital stock of the Company, the number of shares and increase in price of the Fair Market
Value as stated in Paragraph 3A hereof shall be adjusted appropriately.
	 
	 	C.	 	Piggy-Back Registration Right, and Demand Registration Right.
	 
	 	 	 	With regard to each installment of the Class A Stock issued to you under Paragraph 3A
hereof, the Company grants to you the right to require the Company to include such Class A
Stock in any registration statement that the Company may file in the future (such right to
be known as a “Piggy-Back Registration Right”). In the event the Company does not file and
cause to become effective a registration statement subsequent to your earning an installment
of the Class A Stock issued under Paragraph 3A hereof on which you could have exercised your
Piggy-Back Registration Right, the Company further grants to you a one-time right to demand
that the Company file and cause to become effective a registration statement for any
installment of the Class A Stock issued to you under Paragraph 3A hereof, by written notice
to the Company (such right to be known as the “Demand Registration Right”). In the event
you notify the Company of your exercise of a Demand Registration Right, the Company shall
use its best efforts to have a registration statement with respect to the Class A Stock
issued to you under Paragraph 3A hereof prepared, filed, and declared effective by the
Securities and Exchange Commission as soon as practicable. Notwithstanding anything in this
Paragraph 3C to the contrary, the Company shall not be required to file a registration
statement during the period between (a) the date on which its financial statements for any
fiscal year become available and (b) the date on which it is required to file an annual
report with respect to such fiscal year on Form 10-K under the Securities Exchange Act of
1934; provided, however, that the

 

	 	 	 	Company shall during such period be required to continue to use its best efforts to prepare
such registration statement for filing and to file such registration statement as soon as
possible after the date described in the foregoing clause (b) of this Paragraph 3C. Your
right to exercise your Demand Registration Right shall expire, respectively, on or before
the earlier of (c) the date the Company files and causes to become effective a registration
statement on which you could have exercised your PiggyBack Registration Right for any
installment of Class A Stock issued under Paragraph 3A hereof, or (d) three (3) years after
the date any installment of shares of the Class A Stock is issued to you under Paragraph 3A
hereof.

	 	4.	 	Life Insurance.

	 	A.	 	The $500,000 Policy.
	 
	 	 	 	During the term of your employment hereunder, the Company shall continue to pay the premiums
on an existing contract of life insurance on your life in the amount of five hundred
thousand dollars ($500,000), which contract is currently owned by the GAN Irrevocable Trust,
dated July 31, 2000, under which you are the creator and your spouse is the initial trustee
(the “Trust”), and pursuant to which the Trust is the sole beneficiary.
	 
	 	B.	 	The $2,000,000 Policy.
	 
	 	 	 	During the term of your employment hereunder, the Company shall continue to pay the premiums
on an existing contract of life insurance on your life in the amount of two million dollars
($2,000,000), which contract is currently owned by the Trust, and pursuant to which the
Trust is the sole beneficiary.
	 
	 	C.	 	The $3,000,000 Policy.

 

	 	(i)	 	During the term of your employment hereunder, the Company shall continue to pay the
premiums on an existing contract of life insurance on your life in the amount of three
million dollars ($3,000,000), which contract is currently owned by the Company, and pursuant
to which the Company is the sole beneficiary.

	 	5.	 	Reimbursement of Expenses.
	 
	 	 	 	In addition to the compensation provided for herein, the Company shall reimburse you for all
reasonable expenses incurred by you during the term of this Agreement in connection with the
business of the Company, and its subsidiaries and affiliates, including but not limited to
business-class travel if overseas, reasonable accommodations, and entertainment, subject to
documentation in accordance with the Company’s policy, during the term of your employment
hereunder. In this connection, it is understood that certain business of the Company will
require the presence of your spouse, and this Paragraph 5 applies as well to such expenses
relating to her. All such reimbursements shall be made in accordance with the Company’s general
policies for reimbursement of expenses, but in no event later than the end of the calendar year
following the calendar year in which such expenses are incurred.
	 
	 	6.	 	Extent of Services.

	 	A.	 	In General.
	 
	 	 	 	During the term of your employment hereunder you shall devote your best and full-time
efforts to the business and affairs of the Company.
	 
	 	B.	 	Limitation on Other Services.
	 
	 	 	 	During the term of your employment hereunder, you shall not undertake employment with, or
participate in, the conduct of the business affairs of any other person, corporation, or
entity, except at the direction or with the written approval of the Board of

 

	 	 	 	Directors; provided, however, that this Paragraph 6B shall not apply to the affairs of your
family’s farming and ranching activities in Montana and the States and Canadian Provinces
adjoining Montana.
	 
	 	C.	 	Personal Investments.
	 
	 	 	 	Nothing herein shall preclude you from having, making or managing personal investments which
involve limited active participation in the affairs of the entities in which you so invest,
but, unless approved in writing by the Board of Directors, during the term of your
employment hereunder, you shall not have more than a one percent (1%) ownership interest in
any entity which is directly competitive with any business conducted by the Company at that
time. The phrase “conducted by the Company” as used in this Paragraph 6C and in Paragraph
13 hereof shall mean the business conducted by the Company, by any corporation in which the
Company owns fifty percent (50%) or more of the stock (either voting or non-voting), or by
any other entity in which the Company owns fifty percent (50%) or more of the equity
interests (either voting or non-voting) (each a “Subsidiary”).

	 	7.	 	Location.
	 
	 	 	 	Your duties hereunder shall be performed for the Company worldwide, with particular emphasis
in the Company’s office in Shelton, Connecticut.
	 
	 	8.	 	Vacation; Other Benefits.

	 	A.	 	Vacation.
	 
	 	 	 	During the term of your employment hereunder, you shall be entitled to a vacation or
vacations, with pay, totaling five (5) weeks in each fiscal year. You may accumulate up to
fifteen (15) weeks vacation, but not more than four (4) weeks from any single prior

 

	 	 	 	year. Any such accumulated vacation may be used in any subsequent year or years in addition
to the five (5) weeks of vacation to which you are entitled for each such year.
	 
	 	B.	 	The Company’s Benefit Plans.
	 
	 	 	 	During the term of your employment hereunder, you shall be eligible for inclusion, to the
extent permitted by law, as a full-time employee of the Company or any Subsidiary, in any
and all (i) pension, profit sharing, savings, and other retirement plans and programs as in
effect at the time, (ii) life and health (medical, dental, hospitalization, short-term and
long-term disability) insurance plans and programs as in effect at the time, (iii) stock
option and stock purchase plans and programs as in effect at the time, (iv) accidental death
and dismemberment protection plans and programs as in effect at the time, (v) travel
accident insurance plans and programs as in effect at the time, and (vi) other plans and
programs at the time sponsored by the Company or any Subsidiary for employees or executives
generally as in effect at the time, including any and all plans and programs that supplement
any or all of the foregoing types of plans or programs (except for any annual bonus plan).
	 
	 	C.	 	Automobile, Club, and Professional Services.
	 
	 	 	 	During the term of your employment hereunder, (i) the Company shall provide an automobile
for your continued business use pursuant to the arrangement between you and the Company that
was in effect immediately prior to the effective date of this Agreement, (ii) the Company
shall reimburse you for dues paid by you, not in excess of five thousand dollars ($5,000)
per calendar year, for your membership at a social club of your choice, and (iii) the
Company shall reimburse you, upon submission by you to the Company of the statements for
services of any person or persons of your choice that you have paid to

 

	 	 	 	advise you with regard to financial, investment, and tax matters; provided, however, that
reimbursement for such payments shall not exceed fifteen thousand dollars ($15,000) per
calendar year beginning with the calendar year 2007. All such reimbursements shall be made
in accordance with the Company’s general policies for reimbursement of expenses, but in no
event later than the last day of the calendar year following the calendar year in which such
expenses were incurred. The amount of expenses eligible for reimbursement during one
calendar year shall not affect the expenses eligible for reimbursement in any other calendar
year.
	 
	 	D.	 	Post-Termination Benefits.
	 
	 	 	 	In addition to any other payments and benefits provided in this Agreement, effective with
the termination of your employment, you and your spouse shall be permitted to participate in
the retiree medical program offered to other retirees of the Company generally, upon the
same terms as are applicable to such other retirees. The Company shall reimburse you for
eighty percent (80%) of any premiums paid by you for coverage under any such retiree medical
program. Should no retiree coverage be available to you and your spouse through the
Company, the Company shall reimburse you for eighty percent (80%) any premiums paid by you
for individual coverage for you and your spouse comparable to that which you and your spouse
were eligible for under the Company sponsored plan immediately before you were no longer
eligible for coverage under such plan. No reimbursement hereunder shall be made sooner than
first day of the seventh full calendar month following your termination, and all such
reimbursements shall be made in accordance with the Company’s general policies for
reimbursement of expenses, but in no event later than the last day of the calendar year
following the calendar year in which you paid such premiums. The amount of expenses
eligible for 

 

	 	 	 	reimbursement during one calendar year shall not affect the expenses eligible for reimbursement in any other calendar
year.

	 	9.	 	Termination of Employment.
	 
	 	 	 	For purposes of this Agreement, termination of employment (or retirement) shall mean a
separation from service from the Company and any affiliates of the Company, as “separation
from service” is defined under Section 409A of the Internal Revenue Code as amended, and
regulations issued thereunder.

	 	A.	 	Termination by the Company without Cause.
	 
	 	 	 	The Company may, without cause, terminate your employment hereunder at any time upon ten
(10) or more days’ written notice to you. In the event your employment is terminated under
this Paragraph 9A, the Company shall pay to you the following:

	 	(i)	 	A single lump sum payment, no later than the last day of your
employment, of :

	 	(a)	 	Any accrued but unpaid salary set forth in Paragraph 2A
hereof (as adjusted by Paragraph 2B hereof), including salary in respect of
any accrued and accumulated vacation, due to you at the date of such
termination; and
	 
	 	(b)	 	Any amounts owing, but not yet paid, pursuant to
Paragraph 5 hereof;

	 	(ii)	 	A single lump sum of two and nine-tenths times (2.9) your then
current “base salary” as defined in Paragraph 2A (as adjusted by Paragraph 2B
hereof), with payment to be made on the first day of the seventh
(7th) full calendar month immediately succeeding the month in which
the last day of employment occurs;

 

	 	(iii)	 	A single lump sum payment of any accrued but unpaid incentive
compensation set forth in Paragraph 2C hereof due to you at the date of such
termination for the fiscal year ending June 30, 2007, which shall be paid
within the time period specified under the terms of the Management Incentive
Compensation Plan; and
	 
	 	(iv)	 	If and to the extent vested, the Deferred Compensation set
forth in Paragraph 2D hereof, with payment of the Monthly Amount delayed until
the first day of the seventh (7th) full calendar month immediately
succeeding the month in which the last day of your employment occurs. However,
the first such payment will include the aggregate of the Monthly Amounts that
would have been made during the interim period, and, therefore, will be equal
to seven (7) times the Monthly Amount, and such payment shall reduce the number
of overall payments due under Paragraph 2D hereof by seven (7). Payments under
this Paragraph 9A(iv) shall be made on the first day of each respective
calendar month.

     The Company shall have no further obligation to you under this Agreement
and you shall have no further obligation to the Company under this Agreement
except as provided in Paragraph 8D, Paragraph 12, and Paragraph 13 hereof.

	 	B.	 	Termination by Mutual Consent.
	 
	 	 	 	You may terminate your employment hereunder at any time with the written consent of the
Company. In the event your employment is terminated under this Paragraph 9B, the Company
shall pay to you the following:

 

	 	(i)	 	A single lump sum payment, no later than the last day of your
employment, of:

	 	(a)	 	Any accrued but unpaid salary set forth in Paragraph 2A
hereof (as adjusted by Paragraph 2B hereof), including salary in respect of
any accrued and accumulated vacation, due to you at the date of such
termination; and
	 
	 	(b)	 	Any amounts owing, but not yet paid, pursuant to
Paragraph 5 hereof;

	 	(ii)	 	A single lump sum to be paid on the first day of the seventh
(7th) full calendar month following the month in which your last day
of employment occurs, in an amount equal to your annual “base salary” under
Paragraph 2A hereof (as adjusted by Paragraph 2B hereof);
	 
	 	(iii)	 	A single lump sum payment of any accrued but unpaid incentive
compensation set forth in Paragraph 2C hereof due to you at the date of such
termination for the fiscal year ending June 30, 2007, which shall be paid
within the time period specified under the terms of the Management Incentive
Compensation Plan; and
	 
	 	(iv)	 	If and to the extent vested, the Deferred Compensation set forth in
Paragraph 2D hereof, with payment of the Monthly Amount delayed until the first
day of the seventh (7th) full calendar month immediately succeeding
the month in which the last day of your employment occurs. However, the first
such payment will include the aggregate of the Monthly Amounts that would have
been made during the interim period, and, therefore, will be equal to seven (7)
times the Monthly Amount, and such payment shall reduce the number of overall
payments due under Paragraph 2D hereof by seven (7).

 

	 	 	 	Payments under this Paragraph 9B(iv) shall be made on the first day of each
respective calendar month.
	 
	 	 	 	          The Company shall have no further obligation to you under this Agreement
and you shall have no further obligation to the Company under this Agreement
except as provided in Paragraph 8D, Paragraph 12, and Paragraph 13 hereof.
	 
	 	C.	 	Termination by the Company with Cause.
	 
	 	 	 	The Company may for cause terminate your employment hereunder at any time by written
notice to you. For purposes of this Agreement, the term “cause” shall mean (1) a
failure by you to remedy either (a) a continuing neglect in the performance of your
duties under this Agreement, or (b) any action taken by you that seriously
prejudices the interests of the Company, in either event within ten (10) days of the
Company’s written notice to you of such neglect or action, or (2) your conviction of
a felony. In the event of the termination of your employment hereunder for cause,
the Company shall pay to you the following:

	 	(i)	 	A single lump sum payment, no later than ten (10) days after
the last day of your employment, of

	 	(a)	 	Any accrued but unpaid salary set forth in Paragraph 2A
hereof (as adjusted by Paragraph 2B hereof), including salary in respect of
any accrued and accumulated vacation, due to you at the date of such
termination; and
	 
	 	(b)	 	Any amounts owing, but not yet paid pursuant to
Paragraph 5 hereof;

	 	(ii)	 	A single lump sum payment of any accrued but unpaid incentive
compensation set forth in Paragraph 2C hereof due to you at the date of such

 

	 	 	 	termination for the fiscal year ending June 30, 2007, which shall be paid
within the time period specified under the terms of the Management Incentive
Compensation Plan; and
	 
	 	(iii)	 	If and to the extent vested, the Deferred Compensation set for
in Paragraph 2D hereof, with payment of the Monthly Amount delayed until the
first day of the seventh (7th) full calendar month immediately
succeeding the month in which the last day of your employment occurs.
However, the first such payment will include the aggregate of the Monthly
Amounts that would have been made during the interim period, and, therefore,
will be equal to seven (7) times the Monthly Amount, and such payment shall
reduce the number of overall payments due under Paragraph 2D hereof by seven
(7). Payments under this Paragraph 9C(iii) shall be made on the first day of
each respective calendar month.
	 
	 	 	 	     The Company shall have no further obligation to you under this Agreement
and you shall have no further obligation to the Company under this Agreement
except as provided in Paragraph 8D, Paragraph 12, and Paragraph 13 hereof.

	 	D.	 	Events.
	 
	 	 	 	If any of the following described events occurs during the term of your employment
hereunder, you may terminate your employment hereunder by written notice to the Company
either prior to, or not more than six (6) months after, the happening of such event. In
such event, your employment hereunder will be terminated effective as of the
later of ten (10) days after the notice or ten (10) days after the event, and the Company
shall make to you the same payments that the Company would have been obligated to 

 

	 	 	 	make to
you under Paragraph 9A hereof if the Company had terminated your employment hereunder
effective on such date. The events, the occurrence of which shall permit you to terminate
your employment hereunder under this Paragraph 9D, are as follows:

	 	(i)	 	The removal of you or the election of any other person as the
Chairman of the Board of the Company; provided, however, that you shall not
have approved such removal or such election, in your capacity as a director, by
voting for such removal or such election;
	 
	 	(ii)	 	Any merger or consolidation by the Company with or into any
other entity or any sale by the Company of substantially all of its assets;
	 
	 	(iii)	 	Any change of a majority of the directors of the Company
occurring within any thirteen (13) month period, or the acquisition by a single
person or entity or a related group of persons or entities, of shares of any
class or classes of voting stock of the Company representing twenty-five
percent (25%) or more of the total votes entitled to be cast by all of the then
outstanding share of all classes of voting stock of the Company; provided,
however, that there shall be excluded from any such calculation of percentage
of ownership all stock held by any officer of the Company on the effective date
of this Agreement;
	 
	 	(iv)	 	The adoption by the Company of any plan of liquidation
providing for the distribution of all or substantially all of its assets;
provided, however, that you shall not have approved the adoption of such plan,
in your capacity as a director, by voting for it; and

 

	 	(v)	 	The failure by the Company to observe or comply in any material
respect with any of the provisions of this Agreement, including a material
diminution in your duties, or the assignment to you of duties that are
materially inconsistent with your duties or that materially impair your ability
to function as the Chairman of the Board of the Company if such failure has not
been cured within thirty (30) days after written notice thereof has been given
by you to the Company.

	 	E.	 	Disability or Death.
	 
	 	 	 	If you should suffer a Permanent Disability, the Company may terminate your employment
hereunder upon ten (10) or more days’ prior written notice to you. For purposes of this
Agreement, a “Permanent Disability” shall be deemed to have occurred only when you are
qualified for benefits under the Company’s or a Subsidiary’s Long Term Disability Insurance
Policy, and in addition, you meet one or both of the following requirements: you are unable
to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months; or you are, by reason of any
medically determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12 months,
receiving income replacement benefits for a period of not less than 3 months under an
accident and health plan covering employees of the Company. In the event of Permanent
Disability or death, the Company shall pay:

	 	(i)	 	In the case of Permanent Disability only, to you, on the first
(1st) and fifteenth (15th) days of each month, commencing
with the first day of the seventh (7th) full calendar month
following the month in which your

 

	 	 	 	Permanent Disability occurs, a semi-monthly amount equal to fifty percent (50%)
of the monthly base salary you were receiving at the date of such Permanent
Disability under Paragraph 2A hereof (as adjusted by Paragraph 2B hereof),
payable through June 30, 2010; provided, however, that the semi-monthly amount
payable under this Paragraph 9E(i) (but not the Deferred Compensation payable
under Paragraph 2D hereof, which shall be paid in accordance with the terms of
Section 9B(iv) of hereof) shall be reduced to the extent of any payments made to
you through any Company-sponsored group disability plan; and the first such
payment shall include a lump sum payment in an amount equal to the amount that
would have been paid under this Paragraph 9E(i) had payments hereunder commenced
immediately upon the first day of the first month following your Permanent
Disability.
	 
	 	(ii)	 	To you or your legal representative, or to the Beneficiary, a
single lump sum payment of :

	 	(a)	 	In the event of your Death or Permanent Disability, no
later than ten (10) days after the last day of your employment, any accrued
but unpaid salary set forth in Paragraph 2A hereof (as adjusted by
Paragraph 2B hereof), including salary in respect of any accrued and
accumulated vacation, due to you at the date of such termination;
	 
	 	(b)	 	In the event of your Death or Permanent Disability, no
later than ten (10) days after the last day of your employment, any amounts
owing, but not yet paid, pursuant to Paragraph 5 hereof; and
	 
	 	(c)	 	In the event of your Death or Permanent Disability, a
single lump sum payment of any accrued but unpaid incentive compensation
set forth in

 

	 	 	 	Paragraph 2C hereof due to you at the date of such termination for the
fiscal year ending June 30, 2007, which shall be paid within the time period
specified under the terms of the Management Incentive Compensation Plan; and

	 	(iii)	 	In the case of death only, to your legal representative, or to
the Beneficiary, the vested portion of the Deferred Compensation set forth in
Paragraph 2D hereof, with payment of the Monthly Amount beginning on the first
day of the month immediately succeeding the last day of your employment.
	 
	 	 	 	The Company shall have no further obligation to you under this Agreement and you
shall have no further obligation to the Company under this Agreement except as
provided in Paragraph 8D, Paragraph 12, and Paragraph 13 hereof.

	 	F.	 	No Excess Parachute Payments.
	 
	 	 	 	Notwithstanding anything to the contrary contained in this Agreement, if the Company obtains
a written opinion of its tax counsel (“Tax Counsel”) to the effect that there exists a
material possibility that any payment to which you would (but for the application of this
Paragraph 9F) be entitled under this Agreement, would (but for such application) be treated
as an “excess parachute payment” (as defined in Section 280G(b) of the Internal Revenue Code
and the Treasury Regulations promulgated thereunder), this Agreement shall be amended by
reducing the payments to which you are entitled hereunder as follows, to the extent
necessary, so that, in the opinion of Tax Counsel, there does not exist a material
possibility that any payment to which you are entitled under this Agreement (as so amended)
will be treated as an excess parachute payment: first, the 

 

	 	 	 	Deferred Compensation (and,
concomitantly, the Monthly Amount), second (if
applicable), the amount payable under Paragraph 9A(ii) hereof by virtue of your election
under Paragraph 9D hereof to treat an event described therein as constituting the
termination of your employment, and third, on a pro-rata basis, all other amounts (other
than amounts payable pursuant to Paragraph 5 hereof, which shall in any event be paid in
full) to which you are entitled hereunder.
	 
	 	G.	 	Retirement.
	 
	 	 	 	If not previously terminated under any of the previously outlined provisions, your
employment hereunder shall terminate when you retire from full-time employment with the
Company, which shall occur no earlier than June 30, 2010, at which time the Company shall
pay to you the following:

	 	(i)	 	A single lump sum payment, no later than the last day of your
employment, of:

	 	(a)	 	Any accrued but unpaid salary set forth in Paragraph 2A
hereof (as adjusted by Paragraph 2B hereof), including salary in respect of
any accrued and accumulated vacation, due to you at the date of such
termination; and
	 
	 	(b)	 	Any amounts owing, but not yet paid, pursuant to Paragraph 5 hereof;
and

	 	(ii)	 	The Deferred Compensation as set forth in Paragraph 2D hereof,
with payment of the Monthly Amount delayed until the first day of the seventh
(7th) full calendar month immediately succeeding the month in which
the last day of your employment occurs. However, the first such payment will
include the aggregate of the Monthly Amounts that would have been made 

 

	 	 	 	during
the interim period, and, therefore, will be equal to seven (7) times the
Monthly
Amount, and such payment shall reduce the number of overall payments due under
Paragraph 2D hereof by seven (7). Payments under this Paragraph 9A(iv) shall be
made on the first day of each respective calendar month.
	 
	 	 	 	     The Company shall have no further obligation to you under this Agreement
and you shall have no further obligation to the Company under this Agreement
except as provided in Paragraph 8D, Paragraph 12, and Paragraph 13 hereof.

	 	10.	 	Source of Payments.
	 
	 	 	 	All payments provided for hereunder shall be paid from the general funds of the Company. The
Company may, but shall not be required to, make any investment or investments whatsoever,
including the purchase of a life insurance contract or contracts on your life, to provide it
with funds to satisfy its obligations hereunder; provided, however, that neither you, the
Beneficiary, nor any other person or persons, shall have any right, title, or interest
whatsoever in or to any such investment or contracts. If the Company shall elect to purchase a
life insurance contract or contracts on your life to provide the Company with funds to satisfy
its obligations hereunder, the Company shall at all times be the sole and complete owner and
beneficiary of such contract or contracts, and shall have the unrestricted right to use all
amounts and to exercise all options and privileges thereunder without the knowledge or consent
of you, the Beneficiary, or any other person or persons, it being expressly agreed that neither
you, the Beneficiary, no any other person or persons shall have any right, title, or interest
whatsoever in or to any such contract or contracts. Notwithstanding anything to the contrary
contained in this Paragraph 10, if the Company purchases any such contract or 

 

	 	 	 	contracts, you shall have the right, upon the termination of your employment by the Company to purchase as soon
after such termination as possible any one or more of such contracts for
an amount equal to the cash surrender value thereof; provided, however, that you notify the
Company in writing of your intention to make any such purchase no later than thirty (30) days
subsequent to such termination.
	 
	 	11.	 	Enforcement of Rights.
	 
	 	 	 	Nothing in this Agreement, and no action taken pursuant to its terms, shall create or be
construed to create a trust or escrow account of any kind, or a fiduciary relationship between
the Company and you, the Beneficiary, or any other person or persons. You, the Beneficiary, and
any other person or persons claiming a right to any payments or interests hereunder shall rely
solely on the unsecured promise of the Company, and nothing herein shall be construed to give
you, the Beneficiary, or any other person or persons, any right, title, interest, or claim in or
to any specific asset, fund reserve, account, or property of any kind whatsoever owned by the
Company or in which it may have any right, title, or interest now or in the future, but you, the
Beneficiary, and any other person or persons shall have the right to enforce a claim for
benefits hereunder against the Company in the same manner as any unsecured creditor.
Notwithstanding anything to the contrary set forth in this Paragraph 11, the Company has
established a so-called “rabbi trust,” as described in the Internal Revenue Service’s Revenue
Procedure 92-64, and is permitted to contribute the amounts necessary for the Company to fund
the Deferred Compensation set forth in Paragraph 2D hereof.
	 
	 	12.	 	Inventions and Confidential Information.
	 
	 	 	 	So long as you shall be employed by the Company, you agree promptly to make known to the Company
the existence of any and all creations, inventions, discoveries, and improvements made or
conceived by you, either solely or jointly with others, during the term 

 

	 	 	 	of this Agreement and
for three (3) years thereafter, and to assign to the Company the full exclusive right to any and
all such creations, inventions, discoveries, and improvements relating to any
subject matter with which the Company is now or shall become concerned, or relating to any other
subject matter if made with the use of the Company’s time, materials, or facilities. To the
fullest extent permitted by law, any of the foregoing inventions shall be considered as
“work-made-for-hire” and the Company shall be the owner thereof. You further agree, without
charge to the Company but at its expense, if requested to do so by the Company, to execute,
acknowledge, and deliver all papers, including applications or assignments for patents,
trademarks, and copyrights, and papers relating thereto, as may be considered by the Company to
be necessary or desirable to obtain or assign to the Company any and all patents, trademarks, or
copyrights for any and all such creations, inventions, discoveries, and improvements in any and
all countries, and to vest title thereto in the Company in all such creations, inventions,
discoveries, and improvements as indicated above conceived during your employment by the
Company, and for three (3) years thereafter. You further agree that you will not disclose to
any third person any trade secrets or proprietary information of the Company, or use any trade
secrets or proprietary information of the Company in any manner, except in the pursuit of your
duties as an employee of the Company, and that you will return to the Company all materials
(whether originals or copies) containing any such trade secrets or proprietary information (in
whatever medium) on termination of your employment by the Company. The obligations set forth in
this Paragraph 12 shall survive the termination of your employment hereunder. This Paragraph 12
replaces the agreement executed by you on January 5, 1993, which prior to agreement is now null
and void.
	 
	 	13.	 	Restrictive Covenant.

 

	 	 	 	For a period of three (3) years after the termination of your employment by the Company, you
shall not, in any geographical location at which there is at that time business conducted by the
Company which was conducted by the Company at the date of such termination, directly or
indirectly, own, manage, operate, control, be employed by, participate in, or be connected in
any manner with, the ownership, management, operation or control of any business similar to or
competitive with such business conducted by the Company without the written consent of the
Company; provided, however, that you may have an ownership interest of up to one percent (1%) in
any entity, notwithstanding that such entity is directly competitive with any business conducted
by the Company at the date of such termination.
	 
	 	14.	 	Legal Fees.
	 
	 	 	 	The Company shall reimburse you, upon submission by you to the Company of a statement for
services of any attorney or attorneys of your choice that you have paid to advise you with
regard to this Agreement; provided, however, that such reimbursement shall not exceed twenty
thousand dollars ($20,000) per calendar year beginning with the calendar year 2007. Any such
reimbursement shall be made in accordance with the Company’s general policies for reimbursement
of expenses, but in no event later than the last day of the calendar year following the calendar
year in which the expense was incurred. The amount of expenses eligible for reimbursement
during one calendar year shall not affect the expenses eligible for reimbursement in any other
calendar year.
	 
	 	15.	 	Arbitration.
	 
	 	 	 	Any controversy or claim arising out of or relating to this Agreement, or the breach or asserted
breach thereof, shall be settled by arbitration to be held in New York, New York in accordance
with the rules then obtaining of the American Arbitration Association, and the judgment upon the
award rendered may be entered in any court having jurisdiction thereof.

 

	 	 	 	The arbitrator shall
determine which party shall bear the costs of such arbitration, including attorneys’ fees.
	 
	 	16.	 	Non-assignability.
	 
	 	 	 	Your rights and benefits hereunder are personal to you, and shall not be alienated, voluntarily
or involuntarily, assigned or transferred.
	 
	 	17.	 	Binding Effect.
	 
	 	 	 	This Agreement shall be binding upon the parties hereto, and their respective assigns,
successors, executors, administrators, and heirs. In the event the Company becomes a part to
any merger, consolidation, or reorganization, this Agreement shall remain in full force and
effect as an obligation of the Company and its successors in interest. None of the payments
provided for by this Agreement shall be subject to seizure for payment of any debts or judgments
against you, the Beneficiary, or any other person or persons, nor shall you, the Beneficiary, or
any other person or persons have any right to transfer or encumber any right or benefit
hereunder.
	 
	 	18.	 	Entire Agreement.
	 
	 	 	 	This Agreement contains the entire agreement relating to your employment by the Company. It may
not be changed orally, and may be changed only be an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, extension, deletion, or revocation
is sought. Our agreement dated March 19, 2001 as amended by our subsequent agreements dated
February 26, 2002, August 13, 2002, July 11, 2003, July 30, 2005, and November 14, 2005 is now
null and void.
	 
	 	19.	 	Deferred Compensation.

 

	 	 	 	The portions of this Agreement dealing with deferred compensation have been prepared with
reference to Section 409A of the Internal Revenue Code and should be interpreted and
administered in a manner consistent with Section 409A.
	 
	 	20.	 	Notices.
	 
	 	 	 	All notices and communications hereunder shall be in writing, sent by certified or registered
mail, return receipt requested, postage prepaid; by facsimile transmission, time and date of
receipt noted thereon; or by hand-delivery properly receipted. The actual date of receipt as
shown by the receipt therefore shall determine the time at which notice was given. All payments
required hereunder by the Company to you shall be sent postage prepaid, or, at your election,
shall be transferred to you electronically to such bank as you designate in writing to the
Company, including designation of the applicable electronic address. The foregoing items (other
than any electronic transfer to you) shall be addressed as follows (or to such other address as
the Company and you may designate in writing from time to time):

	 	 	 
	To the Company:

	 	To you:
	 
	 	 
	Baldwin Technology Company, Inc.

	 	Gerald A. Nathe
	2 Trap Falls Road

	 	11448 Bronzedale Drive
	Suite 402

	 	Oakton, VA 22124
	Shelton, CT 06484-0941

	 	Facsimile: 703-264-0670
	Facsimile: 203-402-5500
	 	 

	 	21.	 	NEW YORK LAW TO GOVERN. This Agreement shall be governed by, and construed and
enforced according to, the domestic laws of the State of New York without giving effect to the
principles of conflict of laws thereof.

 

	 	 	 	 	 
	 	Very truly yours,

BALDWIN TECHNOLOGY COMPANY, INC.

 	 
	 	BY: 	 	 /s/ Ralph R. Whitney, Jr.
 	 
	 	 	 	Ralph R. Whitney, Jr. 	 
	 	 	 	Chair of the Compensation
Committee of the Board of Directors 	 

	 	 	 	 	 
	

AGREED TO AND ACCEPTED:

 	 	 
	/s/ Gerald A. Nathe
 	 	 
	Gerald A. Natheexv10w1

 

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

ARCADIA RESOURCES, INC.

     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.

Page 1 of 17

 

     “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.

Page 2 of 17

 

     “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.

Page 3 of 17

 

     “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.

Page 4 of 17

 

     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

Page 5 of 17

 

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.

Page 6 of 17

 

     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:

Page 7 of 17

 

     (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.

Page 8 of 17

 

     (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

Page 9 of 17

 

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 JANA 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.

Page 10 of 17

 

     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.

Page 11 of 17

 

     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:

	 	 	 	 	 
	 

	 	 

 (Name)
	 	 
	 

	 	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

 (Address)
	 	 

     [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.]

	 	 	 
	 

(Name of Registered Owner)

	 	 
	 
	 	 
	 

(Signature of Registered Owner)

	 	 
	 
	 	 
	 

(Street Address)

	 	 
	 
	 	 
	 

(State) (Zip Code)

	 	 

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:

	 	 	 
	 

	 	 
	 

	 	 
	 

(Name and Address of Assignee)

	 	 
	 	 
	 
	 	 
	 

(Number of Shares of Common Stock)

	 	 

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:

Page 17 of 17

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}]]