THIS AGREEMENT by and between Arcadia Resources,
Inc., a Nevada corporation (“Arcadia” or
“Employer”), and Steven L. Zeller (the
“Executive”), is effective as of August 12, 2009;
and
WHEREAS,
Employer desires to employ Executive in the position described
herein; and
WHEREAS,
Executive desires to serve in that capacity,
NOW, THEREFORE,
IT IS HEREBY AGREED AS FOLLOWS:
1. Employment . Employer shall
employ the Executive, and the Executive shall serve Employer and
its subsidiaries, if any, on the terms and conditions set forth in
this Agreement, for the period beginning on the date hereof (the
“Employment Date”) and continuing until terminated as
provided below in Section 4 (the “Employment
Period”).
(a) As of the date of this Agreement, and
during the Employment Period, the Executive will be employed as
Chief Operating Officer of Employer and such of its subsidiaries as
may be determined by Employer’s Board of Directors,
performing such duties as may be designated by the Board of
Directors from time to time which shall be consistent with the
general nature of the duties and authority of a Chief Operating
Officer in similarly situated companies. Executive shall report to
the President and Chief Executive Officer.
(b) During the Employment Period, excluding
any periods of vacation and absence due to intermittent illness to
which the Executive is entitled, and any services or activities on
behalf of civic or charitable institutions that do not
significantly interfere with the performance of his
responsibilities to Employer or violate the provisions of
Section 9, the Executive shall devote his full time and
attention to the business and affairs of Employer and its
subsidiaries. Except as stated in the previous sentence and as
permitted by Section 9 relative to BestCare Travel Staffing,
LLC (“BestCare”), during the Employment Period,
Executive shall have no other employment or business interests;
provided, however, that the Executive shall be able to invest his
personal assets in investments and entities as long as such
investments do not violate Section 9 and do not require a
material amount of the Executive’s time. The Executive shall
use reasonable efforts to faithfully and efficiently carry out all
duties and responsibilities assigned to him.
(a) Base Salary . During the
Employment Period, the Executive shall receive an annual Base
Salary of $250,000 payable in accordance with the regular payroll
practices of Employer. The Executive’s Base Salary shall be
reviewed annually by Employer, in accordance with Employer’s
standard practices for executives generally, and may be increased,
but not decreased, as determined by the Board of Directors, in
their sole discretion, or by any committee of the Board of
Directors to which such authority has been delegated. The parties
acknowledge that as an accommodation to the Employer, Executive
agreed effective April 1, 2009 to temporarily receive a ten
percent (10%) reduction in his Base Salary (the “Reduced
Base”). The amount of Executive’s Reduced Base Salary
is presently $225,000 annually and shall remain in effect until
March 31, 2010. All severance payments due to Executive under
this Agreement shall be calculated based on Executive’s Base
Salary, not Executive’s Reduced Base.
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(b) Stock Grant . Employer, per the
approval of its Board of Directors, awarded Executive effective
September 24, 2007, from and subject to the terms and
conditions of the 2006 Arcadia Resources, Inc. Equity Incentive
Plan and the Plan’s restricted stock award agreement, 150,000
shares of Arcadia common stock (the “Restricted
Shares”). The Restricted Shares, until vested, shall be
subject to restrictions on transferability and held in escrow as
described below. The Restricted Shares shall vest over a four
(4) year period at the rate of 9,375 shares at the end of each
Arcadia fiscal quarter following the date of the Restricted Stock
award to executive (the “Vesting Date”). The Executive
shall acquire rights as a shareholder in Restricted Shares upon
each Vesting Date. Restricted Stock which has not vested shall be
forfeited only in the event of Executive’s termination for
Cause or Executive’s resignation without Good Reason (as
those terms are used in this Agreement). If Executive’s
employment is terminated without Cause or for Good Reason, the
Restricted Stock shall continue to vest as if Executive’s
employment was continuing.
(c) Stock Options . Subject to the
terms and conditions of this Agreement and the plan adopted by the
Employer’s Board of Directors, Executive has been granted
options to purchase 450,000 shares of the Employer’s common
stock at the strike price of $0.72 per share, of which 150,000 were
vested and exercisable as of March 31, 2009. So long as
Executive remains employed by the Employer, Executive shall be
entitled to exercise the remaining Stock Options pursuant to the
following vesting schedule: 150,000 options vested and exercisable
March 31, 2010, and 150,000 options vested and exercisable
March 31, 2011. The options granted pursuant to this paragraph
are subject to the following terms and conditions:
(i) Except as otherwise described in the
paragraph immediately below, Executive shall forfeit all unvested
options upon a termination of Executive’s employment.
Executive shall have one calendar year from the date of termination
to exercise any vested but not yet exercised options.
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(ii) Executive’s unvested options
shall vest immediately upon the termination of Executive’s
employment only if the Executive’s employment is terminated
without Cause or for Good Reason within one calendar year of a
Change in Control of the Employer. Executive shall have one
calendar year from the date of termination to exercise any options
vested pursuant to this paragraph.
(iii) For the purposes of this agreement, a
Change in Control means the occurrence of any of the following:
(1) a reorganization, merger or consolidation in which the
Employer is not the surviving corporation, (2) a sale of all
or substantially all of the assets of the Employer to another
person or entity, (3) the acquisition of beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act) of an
aggregate of 25% or more of the voting power of the
Employer’s outstanding voting securities by any single person
or group (as such term is used in Rule 13d-5 under the
Exchange Act), unless such acquisition was approved by the
Employer’s Board of Directors prior to the consummation
thereof, or (4) the appointment of a trustee in a
Chapter 11 bankruptcy proceeding involving the Employer or the
conversion of such a proceeding into a case under Chapter
7.
(iv) To the extent that the vesting and/or
payment upon termination provisions of this Agreement differ from
such provisions in any other compensation plan document of
Employer, the provisions in this Agreement shall
control.
(d) Bonus Compensation . Executive
shall be eligible to participate in executive bonus plans as
approved by the Compensation Committee, including the 2008
Executive Performance Based Compensation Plan.
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(e) Other Benefits . To at least
the same extent as other senior executives of Employer, except as
required by law or applicable government regulations, the Executive
shall be entitled to participate in: (i) any short-term and
long-term incentive, savings, and retirement plans; (ii) all
practices, policies and programs including vacation policies
established by Employer; and (iii) the Executive and/or the
Executive’s family, as the case may be, shall be eligible for
participation in, and shall receive all benefits under, all welfare
benefits plans, practices, policies and programs provided by
Employer.
(f) Expenses . During the
Employment Period, the Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by the
Executive in carrying out the Executive’s duties under this
Agreement, provided that the Executive complies with the generally
applicable policies, practices and procedures of Employer for
submission of expense reports, receipts, or similar documentation
of such expenses.
(g) Vacation . Executive shall be
entitled to four (4) weeks of paid vacation leave
annually.
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4.
Termination of Employment .
(a) Death or Disability . The
Executive’s employment and the Employment Period shall
terminate automatically upon the Executive’s death or
Disability during the Employment Period. “Disability”
means Executive’s inability, because of mental or physical
illness or incapacity, whether total or partial, to perform one or
more primary duties of the Executive’s employment with
reasonable accommodation, and which continues for a period of one
hundred eighty (180) days within any twelve (12) month
period. If any question shall arise during the Executive’s
employment hereunder regarding the Executive’s inability,
because of mental or physical illness or incapacity, whether total
or partial, to perform one or more primary duties of the
Executive’s employment with reasonable accommodation,
Executive, at the request of Employer, shall submit to a medical
examination by a physician selected by Employer (the
“Employer Physician”) to determine whether the
Executive is so disabled. In the event that the Executive disagrees
with the findings of the Employer Physician, Executive shall have
the right to submit to a second medical examination by a physician
selected by the Executive (the “Executive Physician”).
If the Employer Physician’s and the Executive
Physician’s findings agreed with respect to Executive’s
disability status, such determination shall be binding on Employer
and the Executive. If the Employer Physician’s and the
Executive Physician’s findings do not agree with respect to
Executive’s disability status, the Employer Physician and the
Executive Physician shall together designate a third physician to
make the determination with respect to Executive’s disability
status and such determination shall be binding on the Employer and
the Executive. The date of the Executive’s Disability shall
be the date on which a Physician (whether employer, Executive or
third Physician) makes a final, binding determination of
Executive’s disability.
(b) By Employer . Employer may
terminate the Executive’s employment under this Agreement
during the Employment Period for Cause or without Cause.
“Cause” means:
(i) The Executive’s fraud, theft or
embezzlement committed with respect to Employer, its affiliates or
customers;
(ii) the continued failure by the Executive
to perform his duties as contemplated by this Agreement (other than
any such failure resulting from his Disability or any such actual
or anticipated failure after the issuance by the Executive of a
Notice of Termination for Good Reason) over a period of not less
than ninety (90) days; provided however, that Employer may
terminate the Executive’s employment for “Cause”
under this subdivision only if Employer has provided notice to the
Executive of his performance failures and such failures have not
been cured by the Executive within thirty (30) days of the
receipt of notice by the Executive;
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(iii) the willful or negligent misconduct
of the Executive that is materially injurious to Employer
(including, without limitation, any breach by the Executive of
Section 9 of this Agreement), and, in the case of negligent
misconduct, such misconduct is not cured by Executive within thirty
(30) days of the receipt of notice by the Executive from
Employer;
(iv) the Executive’s conviction of a
misdemeanor which directly causes material financial harm to
Employer, which harm is not cured by the Executive within thirty
(30) days of the receipt of notice by the Executive from the
Employer of such harm;
(v) the Executive’s conviction of a
felony (including a felony constituting a crime of moral
turpitude);
(vi) Executive’s material breach of
this Agreement causing material harm to Employer that is not cured
within thirty (30) days of receipt of notice thereof (any
breach by the Executive of Section 11 of this Agreement shall
be deemed a material breach); provided that no “cure”
shall be deemed to have been effected unless both the breach and
the harm have been cured;
(vii) the
Executive’s breach of a fiduciary duty owed to Employer or
its Affiliates; or
(viii) the Executive’s willful
failure to carry out any material directive of Employer which does
not require unlawful action nor breach this Agreement.
(ix) Provided, however, that the Executive
shall be limited to one cure during any twelve (12) month period
for all descriptions of cause and only for those causes where a
cure period is permitted.
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(c) A termination of Executive’s
employment for Cause shall be effectuated by giving the Executive
written notice (“Notice of Termination for Cause”) of
the termination, setting forth in reasonable detail the specific
conduct that constitutes Cause and the specific provision(s) of
this Agreement on which Employer relies. The Executive shall have
30 days to remedy the conduct set forth in the Notice of
Termination for Cause. A termination of Executive’s
employment for Cause shall be effective on the thirtieth business
day following the date when the Notice of Termination for Cause is
given, unless the conduct set forth in the notice is remedied by
the Executive within the 30 day period; provided, however,
that the Executive shall be able to cure such conduct only once
within a twelve (12) month period.
(d) By the Executive . The
Executive may terminate employment under this Agreement for Good
Reason or without Good Reason. “Good Reason”
means:
(i) any
reduction in the Executive’s Base Salary;
(ii) removal of the Executive from his
positions as Chief Operating Officer or failure to re-elect the
Executive to such position, except for “Cause” as
defined in paragraph (b) above;
(iii) any change in Executive’s
reporting assignment such that he is no longer reporting to
Employer’s President and Chief Executive Officer, except such
a change that is made by mutual agreement between the Executive and
Employer;
(iv) a material failure by Employer to
comply with any provision of Sections 2 and 3 of this
Agreement, other than (i) a purely monetary failure with
respect to an amount less than $5,000, (ii) a failure within
Executive’s control or (iii) an isolated, insubstantial
or inadvertent failure that is not taken in bad faith and is
remedied by Employer within 15 days after receipt of written
notice thereof from the Executive;
(v) any action by Employer, except as
required by law or applicable government regulations, which is
specific to the Executive that would or does adversely affect
Executive’s participation in bonus or incentive plans or the
Other Benefits as described in Section 3; and
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(vi) any failure by Employer to obtain from
any successor in interest thereto assent to the terms of this
Agreement.
(e) A termination of employment by the
Executive for Good Reason shall be effectuated by giving Employer
written notice (“Notice of Termination for Good
Reason”) of the termination, setting forth in reasonable
detail the specific conduct that constitutes Good Reason and the
specific provision(s) of this Agreement on which the Executive
relies. Employer shall have 30 days to remedy the conduct set
forth in the Notice of Termination for Good Reason. A termination
of employment by the Executive for Good Reason shall be effective
on the thirtieth business day following the date when the Notice of
Termination for Good Reason is given, unless the conduct set forth
in the notice is remedied by Employer within the 30 day
period; provided, however, that Employer shall be able to cure such
conduct only once within a twelve (12) month
period.
(f) A termination of the Executive’s
employment by the Executive without Good Reason shall be
effectuated by giving Employer at least 30 days’ advance
written notice of the termination.
(g) Date of Termination . The
“Date of Termination” means the date of the
Executive’s death, the date of the Executive’s
Disability, the date the termination of the Executive’s
employment under this Agreement by Employer for Cause or without
Cause or by the Executive for Good Reason or without Good Reason,
as the case may be, is effective. The Employment Period shall end
on the Date of Termination.
(h) “Affiliate” of Employer
means any person or entity directly or indirectly controlling,
controlled by, or under common control with, Employer. For purposes
of this definition, the terms “ Control,”
“Controlling ,” and “Controlled”
mean the right to elect a majority of the members or the board of
directors or other comparable body responsible for management and
direction of a person or entity by contract, by virtue of share
ownership or otherwise.
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5. Obligations of Employer upon
Termination . If Employer terminates the Executive’s
employment under this Agreement (other than for Cause) or the
Executive terminates employment under this Agreement for Good
Reason, and provided the Executive continues to abide by the
provisi
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