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EXHIBIT 4.2
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.
12% CONVERTIBLE PROMISSORY NOTE
$5,000,000.00 APRIL 27, 2005
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 FIVE MILLION
DOLLARS
($5,000,000.00), 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")
of
twelve percent (12%) 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 May
1, 2006
("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: July 31, 2005; October 31,
2005;
January 31, 2006; and the Maturity Date.
1.3 Payor shall not have the right to prepay any portion of
the
principal amount due under this Note until June 27, 2005
("Permitted
Prepayment Date"). At any time and from time to time after
the
Permitted Prepayment Date, Payor may prepay this Note in whole
or in
part, together with (i) the unpaid interest thereon accrued
through
the date of prepayment, and (ii) a prepayment fee equal to 2.5%
of
the portion of then outstanding principal balance that is
being
prepaid.
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.
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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 covenants and agrees that, so long as this Note remains
outstanding
and unpaid, in whole, or in part:
4.1 Payor will not sell, transfer or dispose of a material part
of its
assets without obtaining Payee's written consent, other than
inventory in its ordinary course of business;
4.2 Intentionally Omitted
4.3 Payor will promptly pay and discharge all lawful taxes,
assessments
and governmental charges or levies imposed upon it, its income
and
profits, or any of its 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;
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4.4 Payor will do or cause to be done all things necessary to
preserve
and keep in full force and effect its corporate existence,
rights
and franchises and substantially comply with all laws applicable
to
Payor as its counsel may advise;
4.5 Payor will at all times maintain, preserve, protect and keep
its
property used or useful in the conduct of its 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;
4.6 Payor 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 corporati
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