ARCADIA RESOURCES, INC. 2008 EXECUTIVE PERFORMANCE BASED COMPENSATION PLAN

ARCADIA RESOURCES, INC.

2008 EXECUTIVE PERFORMANCE BASED COMPENSATION PLAN

1. 1.  

   2. Purpose . This Plan is intended to motivate and reward key employees of the Company and Company Subsidiaries for performance that will result in superior financial results for the Company and create long-term value for shareholders of the Company by: (a) encouraging Participants to focus decision-making and behavior on goals that are consistent with the overall business strategy of the Company; (b) reinforcing a pay-for-performance culture for the Company; and (c) allowing the Company and Company Subsidiaries to attract and retain employees with the skills critical to the Company's long-term success. The Plan's goals are to be achieved by providing Participants with incentive awards based on the achievement of objectively determinable goals relating to the performance of the Company, a Division or an individual Participant, as determined by the Plan Administrator in accordance with this Plan. The Plan is intended to permit the payment of bonuses that may qualify as Performance Based Compensation.

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   4. Definitions . Whenever used in this Plan, the following terms shall have the meanings set forth below (such definitions applicable to the singular or plural form of the term so defined):

   5. 1.  

      2. " Annual Base Salary " is the annualized amount of cash compensation paid to a Participant, exclusive of any incentive plan payments, bonuses, commissions, travel stipends, Company-sponsored retirement plan contributions, car allowance and any other type of cash allowances received on a regular basis by Participant in effect at the beginning of the Performance Period. Such Annual Base Salary shall be calculated before (i) deductions for taxes or benefits and (ii) deferrals of compensation pursuant to Company-sponsored plans.

      3.  

      4. " Annual Revenue " means the total revenue of the Company and Company Subsidiaries (or a Division) for the applicable Plan Year, determined by the Company's independent certified public accountants in accordance with GAAP.

      5.  

      6. " Arcadia FY Budget " means the applicable Plan Year operating budget or operating plan for the Company and Company Subsidiaries, as approved and adopted by the Board of Directors prior to a Determination Date.

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      8. " Award " means, with respect to each Participant, the total performance based compensation award (aggregating all Element Awards) as calculated under the provisions of this Plan for the applicable Performance Period.

      9.  

      10. " Board of Directors " or " Board " means the Board of Directors of Arcadia Resources, Inc.

      11.  

      12. " Cash Position " means the level of cash and cash equivalents of the Company and Company Subsidiaries as of the end of a Performance Period.

      13.  

      14. " Code " means the Internal Revenue Code of 1986, as amended from time to time, as the Code may be interpreted from time to time by the Internal Revenue Service, whether by regulation, notice or otherwise, and including the Treasury Regulations promulgated thereunder

      15.  

      16. " Common Stock " means the shares of common stock of the Company, par value $.001 per share.

      17.  

      18. " Company " means Arcadia Resources, Inc., a Nevada corporation.

      19.  

      20. " Company EBITDA " is defined as the Net Income of the Company and Company Subsidiaries (computed in accordance with GAAP) for the Plan Year, adjusted by adding back: (i) any taxes on income or net worth of the Company and Company Subsidiaries; (ii) interest; (iii) depreciation; and (iv) amortization, each of which have been taken into account in computing Net Income in accordance with GAAP, on a basis consistent with the historical the Company calculations and in and in conformity with the preparation of the applicable Arcadia FY Budget.

      21.  

      22. " Compensation Committee " means the Compensation Committee of the Board of Directors.

      23.  

      24. " Determination Date " means the latest possible date that will not jeopardize an Award or an Award's qualification as Performance Based Compensation.

      25.  

      26. " Division " means a separate reporting segment of the Company, as determined by the Plan Administrator.

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      28. " Earnings Per Share " means as to any Plan Year, the Net Income of the Company and Company Subsidiaries, divided by a weighted average number of shares of Common Stock outstanding and dilutive Common Stock equivalents deemed outstanding, determined by the Company's independent certified public accountants in accordance with GAAP.

      29.  

      30. " Element Award " means, with respect to each Participant, the performance based compensation award for a Result Area as calculated under the provisions of this Plan for the applicable Performance Period.

      31.  

      32. " Executive Officer " shall mean any officer of the Company subject to Section 16(a) of the Securities Exchange Act of 1934, as amended.

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      34. " GAAP " means generally accepted accounting principles recognized as such from time to time by the American Institute of Certified Public Accountants. Use of the term " GAAP " means that such principles are applied and maintained on a consistent basis throughout the period indicated and consistent with prior financial practices.

      35.  

      36. " Law " shall mean any local, county, state, federal, foreign or other law, statute, regulation, ordinance, rule, order, decree, judgment, consent decree, settlement agreement or governmental requirement enacted, promulgated, entered into, agreed or imposed by any governmental entity.

      37.  

      38. " Net Income " means as to any Plan Year, the income after taxes of the Company and Company Subsidiaries (or a Division) for the Plan Year determined by the Company's independent certified public accountants in accordance with GAAP.

      39.  

      40. " Operating Cash Flow " means the sum of the Net Income of the Company and Company Subsidiaries plus depreciation and amortization less capital expenditures plus changes in working capital, each as determined by the Company's independent certified public accountants in accordance with GAAP.

      41.  

      42. " Operating Income " means the Income of the Company and Company Subsidiaries (or a Division) from operations determined by the Company's independent certified public accountants in accordance with GAAP.

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      44. " Participant " means an employee of the Company or a Company Subsidiary who has been selected to participate in the Plan by the Plan Administrator. Employees who are eligible to participate under this Plan shall be the Chief Executive Officer, the Chief Financial Officer, the General Counsel, the Executive Vice Presidents, the Senior Vice Presidents, any other Executive Officer and any other officer selected by the Plan Administrator as eligible to participate. No person shall automatically be entitled to participate in the Plan.

      45.  

      46. " Payout Formula " means as to any Performance Period, the formula or payout matrix established by the Plan Administrator pursuant to Section 6 in order to determine the Awards (if any) to be paid to Participants. The formula or matrix may differ from Participant to Participant.

      47.  

      48. " Performance Based Compensation " means compensation that is intended to qualify as "performance-based compensation" within the meaning of Section 162(m).

      49.  

      50. " Performance Goal " shall mean a Company Goal, a Division Goal and/or an Individual Goal, as applicable, as established by the Plan Administrator in accordance with the terms and conditions of this Plan, in each case based upon objectively determinable performance goals (as determined within the meaning of Section 162(m)). Performance Goals may differ from Participant to Participant and from Award to Award.

      51.  

      52. " Performance Period " is the performance based plan measurement period that corresponds to the Company's Plan Year or such longer period than a Plan Year as determined by the Plan Administrator in its sole discretion.

      53.  

      54. " Permanent Disability " is defined as a determination of permanent disability under the Company's (or the applicable Company Subsidiary's) long term disability insurance plan; provided , to the extent that no long term disability insurance plan is in effect as of the date of determination of permanent disability, "Permanent Disability" is defined as set forth in the Employee Retirement Income Security Act of 1974 or any successor Law, and regulations and rules issued pursuant to that act or any successor Law.

      55.  

      56. " Plan " means this Arcadia Resources, Inc. 2008 Executive Performance Based Compensation Plan, as stated herein and as the same may be amended, modified or supplemented from time to time.

      57.  

      58. " Plan Year " means the Company's fiscal year that begins on April 1and ends on March 31.

      59.  

      60. " Result Area " means a Company Result Area, a Division Result Area or an Individual Result Area, as applicable.

      61.  

      62. " Return on Assets " means the percentage equal to the Operating Income of the Company and Company Subsidiaries (before incentive compensation) divided by average net Company and Company Subsidiary assets, determined by the Company's independent certified public accountants in accordance with GAAP.

      63.  

      64. " Return on Equity " means the percentage equal to the Net Income of the Company and Company Subsidiaries (before incentive compensation) divided by average shareholder's equity, determined by the Company's independent certified public accountants in accordance with GAAP.

      65.  

      66. " Return on Sales " means the percentage equal to the Operating Income of the Company and Company Subsidiaries (before incentive compensation) divided by the Annual Revenue of the Company and Company Subsidiaries, determined by the Company's independent certified public accountants in accordance with GAAP.

      67.  

      68. " Section 162(m) " means Section 162(m) of the Code, or any successor to Section 162(m).

      69.  

      70. " Section 409A " means Section 409A of the Code, or any successor to Section 409A.

      71.  

      72. " Subsidiary " means any entity in which the Company, directly or indirectly, owns or controls fifty percent (50%) or more of the total combined voting power of all classes of equity of such entity.

      73.  

      74. " Target Award " means the target award payable under the Plan to a Participant for the Performance Period, expressed as a percentage of his or her Annual Base Salary or a specific dollar amount, as determined by the Plan Administrator in accordance with Section 5 .

      75.  

      76. " Total Stockholder Return " means the total return (change in share price plus reinvestment of any dividends) of a share of the Company's Common Stock.

       

   6. Effective Date; Term of Plan . The effective date of the Plan is May 1, 2008, subject to shareholder approval, and shall first apply to the Company's 2009 Plan Year (April 1, 2008 to March 31, 2009). This Plan shall be submitted for the approval of the Company's shareholders at the annual meeting of shareholders to be held in 2008. In the event that this Plan is not so approved, this Plan shall cease to be effective and will terminate with respect to the Company's 2009 Plan Year and all subsequent Plan Years. Once approved by the Company's shareholders, the Plan shall continue until terminated under Section 16 of the Plan.

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   8. Establishing Annual Performance Goals . The Award will based on the Company, the applicable Division and/or the individual Participant meeting performance goals to be established as follows (such goals to be established based on and in conjunction with the applicable Arcadia FY Budget):

   9. 1.  

      2. Annual Company performance goals may be established by the Plan Administrator in its sole discretion (" Company Goals "). A Company Goal may be established in any of the following results areas (the " Company Result Areas "):

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         2. Company EBITDA;

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         4. Company Annual Revenue;

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         6. Company Cash Position;

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         8. Company Earnings Per Share;

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         10. Company Net Income;

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         12. Company Operating Cash Flow;

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         14. Company Operating Income;

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         16. Company Return on Assets;

         17.  

         18. Company Return on Equity;

         19.  

         20. Company Return on Sales;

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         22. Company Total Stockholder Return; or

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         24. Any such other Company Goal as established by the Plan Administrator from time to time, so long as such Company Goal is objectively determinable within the meaning of Code Section 162(m).

          

         The definition of and parameters of each Company Goal and Company Result Area shall be as established by the Plan Administrator and shall be calculated by the Company's independent auditors and/or Chief Financial Officer from time to time, but shall be con