Document:

EX-10.9

 

Exhibit 10.9

April 27, 2006

Mr. Stephen Saft

892 Brightwater Circle

Maitland, FL 32751

Dear Steve:

This letter will confirm our offer of employment as the Chief Financial Officer of CCS
Medical, Inc. (the Company) in Clearwater, FL.

The principal terms of employment shall be as follows:

	 	1.	 	Your annualized base salary will be $275,000.00 paid bi-weekly. You will
receive an annual bonus based on the Company’s performance. The targeted bonus payout
will equal 75% of your base salary, earned at 100% achievement of performance
objectives.
	 
	 	2.	 	You shall receive an allocation of the management incentive stock program
(Restricted Preferred Stock) equal to 1.2% of the available equity pool, subject to
the parameters of the “Plan.”
	 
	 	3.	 	You are eligible for reimbursement of up to $35,000.00, to be paid on
actual receipts and/or direct billed services to compensate for moving expenses.
	 
	 	4.	 	You shall be entitled to participate in benefits provided by the
Company. Medical, dental, vision and other supplemental benefits are available
the first of the month following thirty (30) days of employment. The Company
will incur the cost of your health benefits.
	 
	 	5.	 	The Company maintains a 401(k) plan for its retirement benefit. Information
on eligibility and other 401k plan specifics will be provided along with your
benefits package at the start of employment. Your Paid Time Off (PTO) benefits will
be accrued at an equivalent of 20 days per anniversary year. We will provide you with
a copy of our Employee Handbook and benefit summaries describing each of our benefit
plans.
	 
	 	6.	 	You shall use your best efforts to commence work with the Company as soon
as possible, with reasonable notice to your current employer (expected to be 30
days), but in no event later than Monday, May 8, 2006.

 

 

	 	7.	 	You are eligible for a sign-on bonus of $25,000 which shall paid on or
about 90 days after your start date with the Company.

This offer is contingent on successful completion of all pre-hire screening, including but
not limited to, drug testing, background screening and professional references.

We look forward to having you as part of our executive team. Please contact me with your
affirmative response as soon as possible, and/or with any questions you may have regarding
this offer.

Acknowledged and Accepted:

 

 

EMPLOYMENT AGREEMENT

     This
EMPLOYMENT AGREEMENT is made and entered into as of this [27] day of April, 2006,
by and among Chronic Care Solutions Holding, Inc., a Delaware corporation
(“Holdings”), CCS Medical, Inc., a Delaware corporation (“CCS,” and
together with Holdings, the “Company”), and Stephen M. Saft (“Employee”).

W I T N E S S E T H:

     WHEREAS, the Company desires to employ Employee and to enter into an agreement
embodying the terms of such employment (this “Agreement”) and Employee desires to
enter into this Agreement and to accept such employment, subject to the terms and
provisions of this Agreement.

     NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein and for other good and valuable consideration, the receipt and sufficiency of which
are mutually acknowledged, the Company and Employee hereby agree as follows:

     Section 1.
Definitions.

     (a) “Accrued Obligations” shall mean (i) all accrued but unpaid Base Salary
through the date of termination of Employee’s employment; (ii) any unpaid or unreimbursed
expenses incurred in accordance with Company policy, including amounts due under Section 7
hereof to the extent incurred prior to termination of employment; and (iii) any benefits
provided under the Company’s employee benefit plans upon a termination of employment, in
accordance with the terms therein, including rights to equity in the Company pursuant to
any plan or grant.

     (b) “Affiliate” shall mean, as to any Person, any other Person that controls,
is controlled by, or is under common control with, such Person.

     (c) “Agreement” shall have the meaning set forth in the preamble hereto.

     (d) “Annual Bonus” shall have the meaning set forth in Section 4(b)
below.

     (e) “Base Salary” shall mean the salary provided for in Section 4(a) or any
increased salary granted to Employee pursuant to Section 4(a) below.

     (f) “Board”
shall mean the Board of Directors of Holdings.

     (g) “Cause” shall mean (i) acts of personal dishonesty, gross negligence or
willful misconduct by Employee in connection with Employee’s employment duties; (ii)
failure, neglect or refusal by Employee to perform in any material respect his duties or
responsibilities under this Agreement; (iii) misappropriation by Employee of the assets or
business opportunities of the Company or its affiliates; (iv) embezzlement or other
financial fraud committed by Employee, at his direction, or with his personal knowledge;
(v) Employee’s indictment for, conviction of, admission to, or entry of pleas of no
contest to any felony or any crime involving moral turpitude; (vi) public or consistent
drunkenness by Employee or his illegal use of narcotics which is, or could
reasonably be expected to become, materially injurious to the reputation or

 

 

business of the Company or its affiliates or which impairs, or could reasonably be
expected to impair, the performance of Employee’s duties hereunder; or (vii) Employee’s
breach of any material provision of this Agreement.

     (h) “CCS” shall have the meaning set forth in the preamble hereto.

     (i) “Change in Control” shall have the meaning set forth in the
Incentive Plan.

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

     (k)
“Commencement Date” shall mean May 8, 2006.

     (l) “Company” except as otherwise expressly set forth herein, shall
have the meaning set forth in the preamble hereto.

     (m) “Competitive Activities” shall mean any business activities in which
the Company or any of its subsidiaries are engaged (or have committed plans to engage)
during the Term of Employment, or, following termination of Employee’s employment
hereunder, were engaged (or had committed plans to engage) at the time of such termination
of employment.

     (n) “Confidential Information” shall have the meaning set forth in
Section 9(a) below.

     (o) “Developments” shall have the meaning set forth in Section 9(d)
below.

     (p) “Disability” shall mean any physical or mental disability or
infirmity that prevents the performance of Employee’s duties for a period of (i) ninety
(90) consecutive days or (ii) one hundred twenty (120) non-consecutive days during any
twelve (12) month period. Any question as to the existence, extent or potentiality of
Employee’s Disability upon which Employee and the Company cannot agree shall be determined
by a qualified, independent physician selected by the Company and approved by Employee
(which approval shall not be unreasonably withheld). The determination of any such
physician shall be final and conclusive for all purposes of this
Agreement.

     (q) “Employee” shall have the meaning set forth in the preamble
hereto.

     (r) “Exchange Act” shall mean the Securities Exchange Act of 1934,
as amended.

     (s) “Good Reason” shall mean, without Employee’s consent, (i) a
substantial and material diminution in Employee’s title, duties or responsibilities; (iii)
any reduction in Base Salary or target Annual Bonus opportunity (other than an
across-the-board reduction applicable to all other senior executives of the Company); (iv)
the relocation of Employee’s principal place of employment (as provided in Section 3(c)
hereof) more than fifty (50) miles from its current location; or (v) any breach by the
Company of any material provision of this Agreement.

     (t) “Holdings” shall have the meaning set forth in the preamble
hereto.

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     (u) “Incentive Plan” shall mean Holdings’ Stock Incentive
Plan.

     (v) “Interfering Activities” shall mean (i) encouraging, soliciting or
inducing, or in any manner attempting to encourage, solicit or induce, any Person employed
by, as agent of, or a service provider to, the Company or any subsidiary thereof to
terminate (or, in the case of an agent or service provider, reduce) such Person’s
employment, agency or service, as the case may be, with the Company or such subsidiary;
provided, that the foregoing shall not be violated by general advertising not targeted at
employees of the Company nor by serving as a reference upon an employee’s request with
regard to an entity with which Employee is not affiliated; or (ii) encouraging, soliciting
or inducing, or in any manner attempting to encourage, solicit or induce any customer,
supplier, licensee or other business relation of the Company or any subsidiary thereof to
cease doing business with or reduce the amount of business conducted with (including by
providing similar services or products to any such Person) the Company or such subsidiary,
or in any way interfere with the relationship between any such customer, supplier, licensee
or business relation and the Company or such subsidiary.

     (w) “Person” shall mean any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company, trust
(charitable or non-charitable), unincorporated organization or other form of business
entity.

     (x) “Restricted Area” means any State of the United States of America
or any other jurisdiction in which the Company or its subsidiaries engage (or have
committed plans to engage) in business during the Term of Employment, or, following
termination of Employee’s employment, were engaged (or had committed plans to engage) in
business at the time of such termination of employment.

     (y) “Restricted Period” shall mean the period commencing on the
Commencement Date and ending on the twelve (12) month anniversary of Employee’s
termination of employment hereunder for any reason.

     (z) “Severance
Multiplier” shall mean an amount equal to one (1).

     (aa) “Severance Term” shall mean the twelve (12) month period following
the date of Employee’s termination of employment hereunder.

     (bb) “Term of Employment” shall mean the period specified in Section
2 below.

     (cc) “Time Vested Awards” shall mean, as applicable, Time Vested Options
or Time Vested Restricted Stock, each as defined under the Incentive
Plan.

     (dd) “Warburg Investors” shall mean Warburg Pincus Private Equity IX,
L.P. and any other related fund of Warburg Pincus & Co. that holds equity securities of
Holdings.

     Section 2. Acceptance and Term of Employment.

     The Company agrees to employ Employee and Employee agrees to serve the Company on
the terms and conditions set forth herein. The Term of Employment shall

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commence on the Commencement Date and shall continue until Employee is terminated as provided in
Section 8 hereof.

     Section 3.
Position, Duties and Responsibilities; Place of Performance.

     (a) During the Term of Employment, Employee shall be employed and serve as the Chief
Financial Officer of CCS (together with such other position or positions consistent with
Employee’s title as the Board shall specify from time to time) and shall have such duties
typically associated with such title. Subject to the foregoing, Employee also agrees to
serve as an officer and/or director of the Company or any parent or subsidiary of the
Company, in each case without additional compensation.

     (b) Subject to the terms and conditions set forth in this Agreement, Employee shall
devote his full business time, attention, and efforts to the performance of his duties
under this Agreement and shall not engage in any other business or occupation during the
Term of Employment, including, without limitation, any activity that (x) conflicts with
the interests of the Company or its subsidiaries, (y) interferes with the proper and
efficient performance of his duties for the Company, or (z) interferes with the exercise
of his judgment in the Company’s best interests. Notwithstanding the foregoing, nothing
herein shall preclude Employee from (i) serving, with the prior written consent of the
Board, as a member of the board of directors or advisory boards (or their equivalents in
the case of a non-corporate entity) of non-competing businesses and charitable
organizations, (ii) engaging in charitable activities and community affairs, and (iii)
subject to the terms and conditions set forth in Section 9 hereof, managing his personal
investments and affairs; provided, however, that the activities set out in
clauses (i), (ii) and (iii) shall be limited by Employee so as not to materially
interfere, individually or in the aggregate, with the performance of his duties and
responsibilities hereunder.

     (c) Employee’s principal place of employment shall be in the Tampa Bay/Clearwater
metropolitan area, although Employee understands and agrees that he may be required to
travel from time to time for business reasons.

     (d) Subject to the terms and conditions of the Articles of Association and By-Laws
of the Company (in each case, as in effect from time to time) (the “Organizational
Documents”), the Company agrees to (i) hold harmless and indemnify Employee, to the
fullest extent permitted by the laws of the State of Delaware, as in effect at the time of
the subject alleged act or omission precipitating Employee’s invocation of this Section
3(d), against expenses (including attorneys’ fees), judgments, fines, penalties and
amounts paid in settlement resulting from any action, suit or proceeding threatened or
brought against Employee by reason of his serving as an officer or director of the Company
or serving another enterprise in any capacity at the request of the Company, and (ii)
subject to receipt by the Company of (A) a written affirmation of Employee’s good faith
belief that the alleged act or omission precipitating Employee’s invocation of this
Section 3(d) would not preclude his indemnification under the Organizational Documents or
applicable laws, and (B) a written undertaking by Employee,
executed personally or on his
behalf, to repay any advances if it is ultimately determined that he is not entitled to be
indemnified by the Company under this Section 3(d), pay for or reimburse within thirty
(30) days the reasonable expenses incurred from time to time by Employee in advance of the
final disposition of the action, suit or proceeding. In connection therewith,

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Employee shall be entitled to the protection of any insurance policies which the
Company maintains generally for the benefit of the Company’s directors and
officers.

     Section 4. Compensation. During the Term of Employment, Employee shall be
entitled to the following compensation:

     (a) Base Salary. Employee shall be paid an annualized Base Salary, payable in
accordance with the regular payroll practices of the Company, of not less than $275,000,
subject to increase, if any, as may be approved in writing by the Board, but not to
decrease from the then current Base Salary.

     (b) Annual Bonus. Employee shall be eligible for an annual incentive bonus
award determined by the Board in respect of each fiscal year during the Term of Employment
(the “Annual Bonus”). The target Annual Bonus for each fiscal year
shall be 75% of Base Salary. The actual Annual Bonus payable in respect of each fiscal year
shall be based upon the level of achievement of annual Company and individual performance
objectives for such fiscal year, as determined by the Board and communicated to Employee.
The Annual Bonus shall be paid to Employee at the same time as annual bonuses are generally
payable to other senior executives of the Company, but in no event later than the date
which is two and one-half (21/2) months following the end of the fiscal year to which such
Annual Bonus relates.

     Section 5. Employee Benefits.

     During the Term of Employment, Employee shall be entitled to participate in health,
insurance, retirement and other perquisites and benefits generally provided to other senior
executives of the Company that are made available from time to time. Employee shall also be
entitled to the same number of holidays, vacation and sick days as are generally allowed to
senior executives of the Company in accordance with the Company policy in effect from time
to time.

     Section 6.
“Key-Man” Insurance.

     At any time during the Term of Employment, the Company shall have the right to insure
the life of Employee for the sole benefit of the Company, in such amounts, and with such
terms, as it may determine. All premiums payable thereon shall be the obligation of the
Company. Employee shall have no interest in any such policy, but agrees to reasonably
cooperate with the Company in taking out such insurance by submitting to physical
examinations, supplying all information reasonably required by the insurance company, and
executing all necessary documents, provided that no financial obligation or liability is
imposed on Employee by any such documents.

     Section 7. Reimbursement of Business Expenses.

     Employee is authorized to incur reasonable business expenses in carrying out his
duties and responsibilities under this Agreement and the Company shall promptly reimburse
him for all such reasonable business expenses incurred in connection with carrying out the
business of the Company, subject to documentation in accordance with the Company’s policy,
as in effect from time to time.

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     Section 8. Termination of Employment.

     (a) General. The Term of Employment shall terminate upon the earliest to
occur of (i) Employee’s death, (ii) a termination by reason of a Disability, (iii) a
termination by the Company with or without Cause, or (iv) a termination by Employee with
or without Good Reason. Upon any termination of Employee’s employment for any reason,
except as may otherwise be requested by the Company in writing and agreed upon in writing
by Employee, Employee shall resign from any and all directorships, committee memberships
or any other positions Employee holds with the Company or any of its subsidiaries.

     (b) Termination Due to Death or Disability. Employee’s employment shall
terminate automatically upon his death. The Company may terminate Employee’s employment
immediately upon the occurrence of a Disability, such termination to be effective upon
Employee’s receipt of written notice of such termination. In the event Employee’s
employment is terminated due to his death or Disability, Employee or his estate or his
beneficiaries, as the case may be, shall be entitled to:

     (i) The Accrued Obligations;

     (ii) Any unpaid Annual Bonus in respect to any completed fiscal year
which has ended prior to the date of such termination, such amount to be paid at
the same time it would otherwise be paid to Employee had no such termination
occurred; and

     (iii) A pro rata Annual Bonus (determined using the target Annual Bonus if
such termination occurs during the fiscal year in which the Commencement Date
falls, and thereafter, using the Annual Bonus paid or payable for the immediately
prior fiscal year) based on the number of days elapsed from the commencement of
such fiscal year through and including the date of such termination, such amount to
be paid within five (5) business days of such termination.

Except as set forth in this Section 8(b), following Employee’s termination by reason of
his death or Disability, Employee shall have no further rights to any compensation or any
other benefits under this Agreement.

     (c) Termination by the Company for Cause.

     (i) A termination for Cause shall not take effect unless the provisions
of this subsection (i) are complied with. Employee shall be given not less than
fifteen (15) days written notice by the Board of the intention to terminate his
employment for Cause, such notice to state in detail the particular act or acts or
failure or failures to act that constitute the grounds on which the proposed
termination for Cause is based. Employee shall have fifteen (15) days after the
date that such written notice has been given to Employee in which to cure such act
or acts or failure or failures to act, to the extent such cure is possible. If he
fails to cure such act or acts or failure or failures to act, the termination shall
be effective on the date immediately following the expiration of the fifteen (15)
day notice period. If cure is not possible, the termination shall be effective on
the date of receipt of such notice by Employee. During any cure period provided
hereunder, the Board may, in its sole and absolute discretion, prohibit Employee
from

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entering the premises of the Company (or any subsidiary thereof) or otherwise performing his duties
hereunder, and any such prohibition shall in no event constitute an event pursuant to which
Employee may terminate employment with Good Reason; provided, however, that if cure is
possible, and Employee can reasonably demonstrate to the Board that he desires to enter the
premises of the Company (or a subsidiary thereof) or to otherwise perform his duties hereunder
solely to attempt to cure the act or acts or failure or failures to act that constitute the grounds
on which the proposed termination for Cause is based, Employee shall be permitted to enter the
premises of the Company (or a subsidiary thereof) or otherwise to perform his duties hereunder
solely for the purposes of curing such act or acts or failure or failures to act.

     (ii) In the event the Company terminates Employee’s employment for Cause,
he shall be entitled only to the Accrued Obligations. Following such termination of
Employee’s employment for Cause, except as set forth in this Section 8(c)(ii), Employee shall have no further rights to any compensation or any other
benefits under this Agreement.

     (d) Termination by the Company without Cause. The Company may terminate
Employee’s employment at any time without Cause, effective upon Employee’s receipt of
written notice of such termination. In the event Employee’s employment is terminated by the
Company without Cause (other than due to death or Disability), Employee shall be entitled
to:

     (i) The Accrued Obligations;

     (ii) Any unpaid Annual Bonus in respect to any completed fiscal year which
has ended prior to the date of such termination, such amount to be paid at the same
time it would otherwise be paid to Employee had no such termination occurred;

     (iii) A pro rata Annual Bonus (determined using the target Annual Bonus if
such termination occurs during the fiscal year in which the Commencement Date falls,
and thereafter, using the Annual Bonus paid or payable for the immediately prior
fiscal year) based on the number of days elapsed from the commencement of such
fiscal year through and including the date of such termination, such amount to be
paid within five (5) business days of such termination;

     (iv) An amount equal to the Severance Multiplier multiplied by his then
current Base Salary, such amount to be payable over the Severance Term in
substantially equal installments, on each regular payroll date of the Company during
the Severance Term;

     (v) Continuation of the health benefits provided to Employee and his
covered dependants under the Company health plans as of the date of such termination
at the same cost applicable to active employees until the earlier of: (A) the
expiration of the Severance Term, or (B) the date Employee commences employment with
any person or entity and, thus, is eligible for health insurance benefits;
provided, however, that as a condition of continuation of such
benefits, the Company may require employee to elect to

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continue his health insurance pursuant to COBRA (in which case the Company shall pay the cost of
such coverage in excess of the cost applicable to active employees); and

     (vi) If such termination occurs within the one (1) year period following a
Change in Control, vesting of all Time Vested Awards as of the date of such
termination.

Notwithstanding the foregoing, the payments and benefits described in subsections (ii)
through (v) above shall immediately cease, and the Company shall have no further
obligations to Employee with respect thereto, in the event that Employee breaches any
provision of Section 9 hereof.

     Following such termination of Employee’s employment by the Company without Cause,
except as set forth in this Section 8(d), Employee shall have no further rights to any
compensation or any other benefits under this Agreement.

     (e) Termination by Employee with Good Reason. Employee may terminate his
employment with Good Reason by providing the Company fifteen (15) days’ written notice
setting forth in reasonable specificity the event that constitutes Good Reason, which
written notice, to be effective, must be provided to the Company within sixty (60) days of
the occurrence of such event. During such fifteen (15) day notice period, the Company shall
have a cure right (if curable), and if not cured within such period, Employee’s termination
will be effective upon the date immediately following the expiration of the fifteen (15)
day notice period, and Employee shall be entitled to the same payments and benefits as
provided in Section 8(d) above for a termination without Cause, it being agreed that
Employee’s right to any such payments and benefits shall be subject to the same terms and
conditions as described in Section 8(d) above. Following such termination of Employee’s
employment by Employee with Good Reason, except as set forth in this Section 8(e), Employee
shall have no further rights to any compensation or any other benefits under this
Agreement.

     (f) Termination by Employee without Good Reason. Employee may terminate his
employment without Good Reason by providing the Company thirty (30) days’ written notice of
such termination. In the event of a termination of employment by Employee under this
Section 8(f), Employee shall be entitled only to the Accrued Obligations. In the event of
termination of Employee’s employment under this Section 8(f), the Company may, in its sole
and absolute discretion, by written notice accelerate such date of termination and still
have it treated as a termination without Good Reason. Following such termination of
Employee’s employment by Employee without Good Reason, except as set forth in this Section
8(f), Employee shall have no further rights to any compensation or any other benefits under
this Agreement.

     (g) Release. Notwithstanding any provision herein to the contrary, the Company
may require that, prior to payment of any amount or provision of any benefit pursuant to
subsections (d) or (e) of this Section 8 (other than the Accrued Obligations), Employee
shall have executed a general release in favor of the Company and its subsidiaries and
related parties in the form as is reasonably required by the Company, and any waiting
periods contained in such release shall have expired.

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     Section 9. Restrictive Covenants. Employee acknowledges and agrees that (A) the agreements
and covenants contained in this Section 9 are (i) reasonable and valid in geographical and
temporal scope and in all other respects, and (ii) essential to protect the value of the
Company’s business and assets, and (B) by his employment with the Company, Employee will obtain
knowledge, contacts, know-how, training and experience and there is a substantial probability
that such knowledge, know-how, contacts, training and experience could be used to the substantial
advantage of a competitor of the Company and to the Company’s substantial detriment. For purposes
of this Section 9, references to the Company shall be deemed to include Holdings, CCS and their
respective subsidiaries.

     (a) Confidential Information. At any time during and after the end of the Term
of Employment, without the prior written consent of the Board, except to the extent required
by an order of a court having jurisdiction or under subpoena from an appropriate government
agency, in which event, Employee shall, to the extent legally permitted, consult with the
Board prior to responding to any such order or subpoena, and except as he in good faith
believes necessary or desirable in the performance of his duties hereunder, Employee shall
not disclose to or use for the benefit of any third party any confidential or proprietary
trade secrets, customer lists, drawings, designs, information regarding product development,
marketing plans, sales plans, management organization information, operating policies or
manuals, business plans, financial records packaging design or other financial, commercial,
business or technical information (i) relating to the Company, or (ii) that the Company may
receive belonging to suppliers, customers or others who do business with the Company as a
result of his position with the Company (collectively, “Confidential Information”).
Employee’s obligation under this Section 9(a) shall not apply to any information that is in
the public domain or hereafter enters the public domains, in each case without the breach by
Employee of this Section 9(a).

     (b) Non-Competition. Employee covenants and agrees that during the Restricted
Period, Employee shall not, directly or indirectly, individually or jointly, own any
interest in, operate, join, control or participate as a partner, director, principal,
officer, or agent of, enter into the employment of, act as a consultant to, or perform any
services for any Person (other than the Company), that engages in any Competitive Activities
within the Restricted Area. Notwithstanding anything herein to the contrary, this Section
9(b) shall not prevent Employee from acquiring as an investment securities representing not
more than three percent (3%) of the outstanding voting securities of any publicly-held
corporation or from being a passive investor in any mutual fund, hedge fund, private equity
fund or similar pooled account so long as Employee’s interest therein is less than three
percent (3%) and he has no role in selecting or managing investments thereof.

     (c) Non-interference. During the Restricted Period, Employee shall not,
directly or indirectly, for his own account or for the account of any other Person, engage
in Interfering Activities.

     (d) Return of Documents. In the event of the termination of Employee’s
employment for any reason, Employee shall deliver to the Company all of (i) the property of
the Company, and (ii) the documents and data of any nature and in whatever medium of the
Company, and he shall not take with him any such property, documents or data or any
reproduction thereof, or any documents containing or pertaining to any Confidential
Information.

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     (e) Works for Hire. Employee agrees that the Company shall own all right,
title and interest throughout the world in and to any and all inventions, original works
of authorship, developments, concepts, know-how, improvements or trade secrets,
whether or not patentable or registerable under copyright or similar laws, which Employee
may solely or jointly conceive or develop or reduce to practice, or cause to be conceived
or developed or reduced to practice during the Term of Employment, whether or not during
regular working hours, provided they either (i) relate at the time of conception or
development to the actual or demonstrably proposed business or research and development
activities of the Company; (ii) result from or relate to any work performed for the
Company; or (iii) are developed through the use of Confidential Information and/or Company
resources or in consultation with Company personnel (collectively referred to as
“Developments”). Employee hereby assigns all right, title and interest in and to
any and all of these Developments to the Company, Employee agrees to assist the Company,
at the Company’s expense (but for no other consideration of any kind), to further
evidence, record and perfect such assignments, and to perfect, obtain, maintain, enforce,
and defend any rights specified to be so owned or assigned. Employee hereby irrevocably
designates and appoints the Company and its agents as attorneys-in-fact to act for and on
Employee’s behalf to execute and file any document and to do all other lawfully permitted
acts to further the purposes of the foregoing with the same legal force and effect as if
executed by Employee. In addition, and not in contravention of any of the foregoing,
Employee acknowledges that all original works of authorship which are made by him (solely
or jointly with others) within the scope of employment and which are protectable by
copyright are “works made for hire,” as that term is defined in the United States
Copyright Act (17 USC Sec. 101). To the extent allowed by law, this includes all rights of
paternity, integrity, disclosure and withdrawal and any other rights that may be known as
or referred to as “moral rights,” To the extent Employee retains any such moral rights
under applicable law, Employee hereby waives such moral rights and consents to any action
consistent with the terms of this Agreement with respect to such moral rights, in each
case, to the full extent of such applicable law. Employee will confirm any such waivers
and consents from time to time as requested by the Company.

     (f) Blue Pencil. If any court of competent jurisdiction shall at anytime deem
the duration or the geographic scope of any of the provisions of this Section 9
unenforceable, the other provisions of this Section 9 shall nevertheless stand and the
duration and/or geographic scope set forth herein shall be deemed to be the longest period
and/or greatest size permissible by law under the circumstances, and the parties hereto
agree that such court shall reduce the time period and/or geographic scope to permissible
duration or size.

     (g) Incentive Plan Construction. Notwithstanding anything contained in the
Incentive Plan to the contrary, Employee shall not be considered to have engaged in a
“competitive activity” within the meaning of, and for all purposes under, the Incentive
Plan unless such activity would constitute a breach of subsections (a), (b) or (c) above.

     Section 10.
Breach of Restrictive Covenants.

     Without limiting the remedies available to the Company, Employee acknowledges that a
breach of any of the covenants contained in Section 9 hereof may result in material
irreparable injury to the Company or its subsidiaries for which there is no adequate
remedy at law, that it will not be possible to measure damages for such injuries precisely
and that, in the

-10-

 

event of such a breach or threat thereof, the Company shall be entitled to obtain a
temporary restraining order and/or a preliminary or permanent injunction, without the
necessity of proving irreparable harm or injury as a result of such breach or threatened
breach of Section 9 hereof, restraining Employee from engaging in activities prohibited by
Section 9 hereof or such other relief as may be required specifically to enforce any of
the covenants in Section 9 hereof. Notwithstanding any other provision to the contrary,
the Restricted Period shall be tolled during any period of violation of any of the
covenants in Section 9(b) or 9(c) hereof and during any other period required for
litigation during which the Company seeks to enforce such covenants against Employee or
another Person with whom Employee is affiliated if it is ultimately determined that
Employee was in breach of such covenants. Notwithstanding anything to the contrary in this
Agreement, the prevailing party in any action arising out of or related in any way to this
Section 10 shall be entitled to its or his attorneys’ fees and costs through trial and any
appellate proceedings.

     Section 11. Representations and Warranties of Employee.

     Employee represents and warrants to the Company that:

     (a) Employee’s employment will not conflict with or result in his breach of any
agreement to which he is a party or otherwise may be bound;

     (b) Employee has not violated, and in connection with his employment with the Company
will not violate, any non-solicitation, non-competition or other similar covenant or
agreement of a prior employer by which he is or may be bound; and

     (c) In connection with Employee’s employment with the Company, he will not use any
confidential or proprietary information that he may have obtained in connection with
employment with any prior employer.

     Section 12.
Taxes.

     The Company may withhold from any payments made under this Agreement all applicable
taxes, including but not limited to income, employment and social insurance taxes, as
shall be required by law. Employee acknowledges and represents that the Company has not
provided any tax advice to him in connection with this Agreement and that he has been
advised by the Company to seek tax advice from his own tax advisors regarding this
Agreement and payments that may be made to him pursuant to this Agreement including
specifically, the application of the provisions of Section 409A of the Code to such
payments.

     Section 13. Mitigation; Set Off.

     The Company’s obligation to pay Employee the amounts provided and to make the
arrangements provided hereunder shall be subject to set-off, counterclaim or recoupment of
amounts owed by Employee to the Company or its affiliates. Employee shall not be required
to mitigate the amount of any payment provided for pursuant to this Agreement by seeking
other employment or otherwise and the amount of any payment provided for pursuant to this
Agreement shall not be reduced by any compensation earned as a result of Employee’s other
employment or otherwise.

-11-

 

     Section 14. Successors and Assigns; No Third-Party Beneficiaries.

     (a) The Company. This Agreement shall inure to the benefit of and be
enforceable by, and may be assigned by the Company to, any purchaser of all or
substantially all of the Company’s business or assets or any successor to the Company
(whether direct or indirect, by purchase, merger, consolidation or otherwise). The Company
will require in a writing delivered to Employee any such purchaser, successor or assignee
to expressly assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such purchase, succession or
assignment had taken place. The Company may make no other assignment of this Agreement or
its obligations hereunder.

     (b) Employee. Employee’s rights and obligations under this Agreement shall
not be transferable by Employee by assignment or otherwise, “without the prior written
consent of the Company; provided, however, that if Employee shall die, all
amounts then payable to Employee hereunder shall be paid in accordance with the terms of
this Agreement to Employee’s devisee, legatee or other designee or, if there be no such
designee, to Employee’s estate.

     (c) No Third-Party Beneficiaries. Except as otherwise set forth in Section
8(b) or Section 14(b) hereof, nothing expressed or referred to in this Agreement will be
construed to give any Person other than the Company and Employee any legal or equitable
right, remedy or claim under or with respect to this Agreement or any provision of this
Agreement.

     Section 15. Waiver and Amendments.

     Any waiver, alteration, amendment or modification of any of the terms of this
Agreement shall be valid only if made in writing and signed by each of the parties
hereto; provided, however, that any such waiver, alteration, amendment or
modification is consented to on the Company’s behalf by the
Board. No waiver by either of
the parties hereto of their rights hereunder shall be deemed to constitute a waiver with
respect to any subsequent occurrences or transactions hereunder unless such waiver
specifically states that it is to be construed as a continuing waiver.

     Section 16. Severability.

     If any covenants or other provisions of this Agreement are found to be invalid or
unenforceable by a final determination of a court of competent jurisdiction: (a) the
remaining terms and provisions hereof shall be unimpaired, and (b) the invalid or
unenforceable term or provision hereof shall be deemed replaced by a term or provision
that is valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision hereof.

     Section 17. Governing Law.

     THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE (WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES THEREOF)
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.

-12-

 

     Section 18.
Dispute Resolution.

     Any controversy arising out of or relating to this Agreement or the breach hereof
(other than claims for injunctive relief pursuant to Section 10 hereof) shall be settled
by binding arbitration in accordance with the Employment Dispute Resolution Rules of the
American Arbitration Association (before a single arbitrator) and judgment upon the award
rendered may be entered in any court having jurisdiction thereof. The costs of any such
arbitration proceedings shall be borne equally by the Company and Employee; provided,
however, that the arbitrator shall have the right to award to the prevailing party in
such arbitration reasonable attorneys’ fees and costs expended in the course of
such arbitration or enforcement of the awarded rendered thereunder. The location for the
arbitration shall be in Tampa Bay, Florida. Any award made by such arbitrator shall be
final, binding and conclusive on the parties for all purposes, and judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction thereof.

     Section 19.
Notices.

     (a) Every notice or other communication relating to this Agreement shall be in
writing, and shall be mailed to or delivered to the party for whom it is intended at such
address as may from time to time be designated by it in a notice mailed or delivered to
the other party as herein provided, provided that, unless and until some other address be
so designated, all notices or communications by Employee to the Company shall be mailed or
delivered to the Company at its principal executive office, and all notices or
communications by the Company to Employee may be given to Employee personally or may be
mailed to Employee at Employee’s last known address, as reflected in the Company’s
records.

     (b) Any notice so addressed shall be deemed to be given; (i) if delivered by hand, on
the date of such delivery; (ii) if mailed by courier or by overnight mail, on the first
business day following the date of such mailing; and (iii) if mailed by registered or
certified mail, on the third business day after the date of such mailing.

     Section 20. Section Headings.

     The headings of the sections and subsections of this Agreement are inserted for
convenience only and shall not be deemed to constitute a part thereof, affect the meaning
or interpretation of this Agreement or of any term or provision hereof.

     Section 21. Entire Agreement

     This Agreement constitutes the entire understanding and agreement of the parties
hereto regarding the employment of Employee. This Agreement supersedes all prior
negotiations, discussions, correspondence, communications, understandings and agreements
between the parties relating to the subject matter of this Agreement. Notwithstanding the
foregoing, this Agreement incorporates by reference Paragraphs 2, 3 and 7 of that certain
written offer of employment by Joseph H. Capper, President and CEO of CCS, to Employee, of
even date herewith.

-13-

 

     Section 22. Survival of Operative Sections.

     Upon any termination of Employee’s employment, the provisions of Section 8 through
Section 23 of this Agreement (together with any related definitions set forth in Section 1
hereof) shall survive to the extent necessary to give effect to the provisions thereof.

     Section 23. Counterparts.

     This Agreement may be executed in two or more counterparts, each of which shall
be deemed to be an original but all of which together shall constitute one and the
same instrument. The execution of this Agreement may be by actual or facsimile
signature.

     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first
above written.

	 	 	 	 	 
	 

	 	CCS MEDICAL, INC.
	 	 
	 

	 		 	 
	 
	 	 	 	 
	 

	 	CHRONIC CARE SOLUTIONS HOLDING, INC.	 	 
	 

	 		 	 
	 
	 	 	 	 
	 

	 	EMPLOYEE	 	 
	 

	 		 	 
	 

	 	Stephen M. Saft	 	 

-14-exv10w1

 

Exhibit 10.1

SEVERANCE AND RELEASE AGREEMENT

     On this 12th day of July, 2007, the parties (hereinafter referred to as “Party” or
“Parties”) to this Severance and Release Agreement (hereinafter referred to as “Agreement”), John
E. Elliott, II (hereinafter referred to as “Elliott”) and Arcadia Resources, Inc. f/k/a Critical
Home Care, Inc., a Nevada corporation (hereinafter referred to as “Arcadia”) have entered this
Agreement. The effective date of this Agreement (the “Effective Date”) shall be that date upon
which the last of the Parties executes the same.

     RECITALS:

     A. Elliott’s employment under the Employment Agreement (see attached Exhibit B) dated May 7,
2004 (the “Employment Agreement”), will be terminating and Elliott’s last day of providing
employment services, including, but not limited to employment services as CEO and Chairman of the
Board of Arcadia, will be on the Effective Date. Certain provisions of Elliott’s Employment
Agreement shall remain in effect as provided herein.

     B. Elliott will resign as a director of Arcadia on the Effective Date.

     C. Elliott’s Stock Option Agreement (see attached Exhibit C) dated May 7, 2004 (the “Stock
Option Agreement”) shall remain in full force and effect, subject to the terms, conditions,
covenants, and the like as provided herein or as amended herein.

     D. Elliott’s Escrow Agreement (see attached Exhibit D) dated May 7, 2004 (the “Escrow
Agreement”) shall remain in full force and effect, subject to the terms, conditions, covenants and
the like as provided herein.

     E. Elliott’s Class A Warrant To Purchase Shares dated May 5, 2007 (the “Existing Warrant”),
which is described in a side letter of even date herewith (the “Side Letter”), shall remain in full
force and effect.

     F. Arcadia will under no circumstances have any liability or obligation whatsoever, to Elliott
or his personal representatives, estate, heirs, beneficiaries, claiming by or through Elliott,
except for those payments, benefits, obligations and reimbursable expenses described in this
Agreement.

     G. Elliott agrees that the payments, benefits, obligations and reimbursable expenses to be
made to him or for his benefit pursuant to this Agreement will be his full severance, liquidated
damages and settlement due Elliott arising out of the termination of his Employment Agreement that
Elliott may have or had with Arcadia (“Release of Claims”).

     In exchange for good and valuable consideration, the receipt of which is hereby acknowledged,
and in order to set forth the terms of Elliott’s Release of Claims, Elliott and Arcadia agree as
follows:

 

 

     1. Severance Agreement.

     (a) Elliott will receive as provided in Paragraph 4 of his Employment Agreement his
compensation and benefits except for bonus, vacation and sick time as hereinafter defined.

     (b) Elliott will receive the sum of $15,000, as reimbursement of his attorney’s fees
incurred in connection with the negotiation and execution of this Agreement, and Arcadia
shall provide at no cost to Elliott the full COBRA benefits described in paragraph 27 of
this Agreement for eighteen (18) months beginning on the Effective Date. Arcadia shall
provide proof of payment of such COBRA benefits, in writing (on a monthly basis), to
Elliott.

     (c) Elliott hereby resigns as a director and Chairman of the Board of Arcadia effective
as of the Effective Date. For the period July 12, 2007 through July 11, 2008, Arcadia will
pay Elliott severance under this Agreement of One Hundred Eighty Seven Thousand Six Hundred
Five ($187,605) Dollars in equal installments of Seven Thousand Two Hundred Fifteen and
58/100 ($7,215.58) Dollars, payable every two (2) weeks. For the period July 12, 2008
through September 24, 2009, Arcadia will pay Elliott severance under this Agreement at the
annual rate of One Hundred Fifty Thousand ($150,000) Dollars in equal installments of Five
Thousand Seven Hundred Sixty Nine and 23/100 ($5,769.23) Dollars, payable every two (2)
weeks. Said amounts shall be paid to Elliott in accordance with Arcadia’s normal payroll
policies as in effect from time to time, with the first such payment to be made with respect
to the first payroll period beginning on or about July 12, 2007. Arcadia shall not withhold
any sums from these amounts except to the extent it is legally required to do so.

     (d) The Parties acknowledge that Paragraph 8 of Elliott’s Employment Agreement shall
remain in effect and Elliott shall be subject to the inventions provisions as provided
therein.

     (e) The Parties acknowledge that Paragraph 9 of Elliott’s Employment Agreement shall
remain in effect as provided therein and Elliott shall be subject to the confidentiality
provisions as provided therein.

     (f) The Parties acknowledge that Paragraph 10 of Elliott’s Employment Agreement is
hereby amended and restated in its entirety as set forth on Exhibit A to this Agreement, and
as so amended and restated shall remain in effect as provided therein and Elliott shall be
subject to the covenant-not-to-compete provisions as provided therein.

     (g) The Parties acknowledge that Paragraph 11 of Elliott’s Employment Agreement shall
remain in effect and Elliott and Arcadia shall be subject to the enforceability provisions
as provided therein.

2

 

     (h) In consideration of the Release of Claims by Elliott set forth in Paragraph 7,
Elliott shall be paid One Hundred Eighty Seven Thousand Six Hundred Five ($187,605) Dollars
in addition to any other payments set forth in this Agreement. One twelfth (1/12) (to wit:
Fifteen Thousand Six Hundred Thirty Three and 75/100 ($15,633.75) Dollars) of this amount
shall be paid to Elliott on the first of each month commencing on August 1, 2007 until fully
paid (subject to Paragraph 31 and the Schedule attached as Exhibit E).

     (i) The Parties agree that the termination hereunder is “other than for cause” within
the meaning of Paragraph 6(C) of the Employment Agreement. Paragraph 6(C) of the Employment
Agreement is amended as provided in paragraph 1(c) above.

     (j) In all other respects, the Elliott’s Employment Agreement is terminated and of no
effect as of the date of this Agreement.

     2. Stock Option Agreement.

     (a) The Options (as defined in the Stock Option Agreement ) #5 and #6 pursuant to
Paragraph 3 of the Stock Option Agreement and totaling two million (2,000,000) option shares
of Arcadia Voting Common Stock shall vest as of the Effective Date. No other Options shall
vest and Options #1, #2, #3 and #4 are terminated and will never vest. The exercise price
under each Option shall be twenty-five ($.25) cents per Option share. Elliott may exercise
any or all of the vested Options at any time commencing December 1, 2007 and ending March
15, 2008. Arcadia shall exercise its best efforts to issue the stock to Elliott pursuant to
an exercised Option within three (3) days of exercise.

     (b) The Stock Options may be exercised in whole or in part at Elliott’s demand, by
means of a cashless exercise through the surrender and cancellation of a portion of shares
of Arcadia common stock then held by Elliott or issuable on exercise of the options, Arcadia
being deemed to have received cash consideration as payment in full of the exercise price
based on the day of exercise upon the difference between the exercise price of $.25 per
share and the closing price of Arcadia stock on the American Stock Exchange as of such date,
being treated as cash consideration for the exercise of any option shares so designated by
Elliott.

     (c) Any changes or modifications made in this Agreement to the Stock Option Agreement
shall be treated as amendments to the Stock Option Agreement. Subject to any such
amendments provided for in this Agreement, the Stock Option Agreement shall remain in full
force and effect.

     (d) Arcadia covenants and agrees to use its commercially reasonable best efforts to
maintain the effectiveness of Arcadia’s registration statement with the SEC covering the
option shares that may be issued under the Stock Option Agreement for a period of not less
than two years from the date of termination of Elliott’s employment.

3

 

     (e) The Parties agree that through and including the date of this Agreement there has
not been a breach or default under the Stock Option Agreement by either Party.

     (f) To the best of Arcadia’s knowledge, Arcadia represents and warrants that the
Options satisfy the applicable conditions of Rule 16b-3 under the Securities Exchange Act of
1934 (the “Exchange Act”) and that transactions between Arcadia and Elliott involving the
Options will qualify for the exemption from Section 16(b) provided under Rule 16b-3(a) under
the Exchange Act.

     (g) Arcadia represents and warrants that, with respect to the grant of the Options
under the Stock Option Agreement, Arcadia has “timely reported all financial expenses due to
the issuance of the Options on financial statements or reports for the period in which the
related expense should have been reported under generally accepted accounting principles,”
as such terminology is used in IRS Notice 2006-79.

     3. Escrow Agreement. The Parties agree that the Escrow Agreement shall remain in full
force and effect and that through and including the date of this Agreement there has not been a
breach or default under the Escrow Agreement by either Party. Elliott acknowledges and agrees that
(1) the shares held in escrow under the Escrow Agreement will be forfeited due to the failure to
achieve required EBITDA targets, and (2) any claims by him pursuant to the Escrow Agreement are
subject to the release provisions of paragraph 7 and 8 of this Agreement.

     4. Return of Employer Property. On the date Elliott signs this Agreement, Elliott
will immediately turn over to Arcadia all Arcadia property which he has in his possession or
control, including any Arcadia records, files, computer disks, software, printers, cellular phones
and PDA’s issued by Arcadia, and documents, regardless of the media in which such documents are
stored, and including any keys or Arcadia credit cards, which Elliott agrees to immediately cease
using. However, Elliott may purchase his office furniture for book value. Elliott is entitled to
keep the computer(s) he currently uses, however, Arcadia reserves the right to inspect such
computer(s), or other equipment and to delete, at its option, any data Arcadia deems proprietary or
confidential in nature. Elliott agrees that should a dispute arise between Elliott and Arcadia
regarding the deletion of data on equipment retained by Elliott, then Arcadia may, at its
discretion, request the return of said computer(s) or equipment.

     5. Full Payment. Elliott agrees that the consideration to be paid to him described
above in Paragraphs 1, 2, 3 and Recital Subparagraph E shall constitute full and final payment for
all services he has rendered to Arcadia and for such promises made by Elliott in this Agreement and
that such payments are in lieu of any other compensation, bonus, severance pay, vacation pay,
incentive compensation pay, or employee benefits.

     6. Reimbursement of Expenses. Arcadia shall reimburse Elliott for any and all
business expenses incurred during the term of his Employment Agreement for which he is entitled to
reimbursement under Arcadia’s reimbursement policies and procedures in effect on the date hereof.
All such expenses for reimbursement shall be submitted within thirty (30) days from the date of
this Agreement. Any such expenses submitted after this thirty day period will not be reimbursed.
Arcadia shall make reimbursement payments promptly and in any event no later than seven days after
submission.

4

 

     7. Release of Claims — Elliott. Except for a breach by Arcadia of this Agreement, the
Stock Option Agreement as amended in Paragraph 2 above, portions of the Employment Agreement
addressed in this Agreement and the Existing Warrant (none of which are the subject of any release
hereunder), from the date of this Agreement forward, Elliott hereby forever releases and discharges
Arcadia and each of Arcadia’s past or present owners, members, shareholders, predecessors,
successors, assigns, agents, directors, officers, employees, representatives, attorneys, insurers,
employee benefit programs, the trustees, administrators, fiduciaries, and insurers of such
programs, parent companies, divisions, subsidiaries, affiliates (and any past or present agents,
directors, officers, employees, representatives, attorneys, insurers, and employee benefit programs
of such parent companies, divisions, subsidiaries, and affiliates), and all persons acting by,
through, under, or in concert with any of them (collectively “Releasees”), from any and all claims,
demands, rights, charges, actions, interests, debts, liabilities, damages, costs and expenses, or
causes of action of whatever type or nature, whether legal or equitable, whether in tort or in
contract, which Elliott may now have against them, either individually, jointly or severally, based
upon acts which have occurred from the beginning of time to the date of this Agreement, and
especially from any and all claims, demands, or causes of action arising out of, either directly or
indirectly, Elliott’s employment or separation of employment with Arcadia, including, but not
limited to, any rights or causes of action Elliott may have under the Age Discrimination in
Employment Act, as amended, 29 U.S.C. §621, et. seq. (“ADEA”), Title VII of the
Civil Rights Act of 1964, 42 U.S.C. §2000 et. seq., and the Florida Civil Rights
Act (Chapter 760, Florida Statutes), the Florida Public Whistleblower Act (Fla. Stat. 112.3187, et.
seq.), the Florida Equal Pay Act, and waivable rights under the Florida Constitution, the Americans
With Disabilities Act, and the Persons With Disabilities Civil Rights Act, the Employee Retirement
Income Security Act of 1974, the Family and Medical Leave Act of 1993, and the Sarbanes-Oxley Act
of 2002, including any claim for or right to attorney fees, costs and expenses thereunder. Elliott
does not intend to waive and does not waive any claims that may arise under the ADEA after the date
on which he signs this Agreement. Elliott understands that this Agreement may not affect the
rights and responsibilities of the Equal Employment Opportunity Commission (“EEOC”) to enforce the
ADEA and that this Agreement may not be used to justify interfering with the protected right of
employees, including Elliott, to file a charge or participate in an investigation or proceeding
conducted by the EEOC under the ADEA.

     8. Knowing and Voluntary Release. Elliott acknowledges and agrees that:

     (a) He is the sole owner of the claims that are released in this Agreement and that he
has the full right and power to grant, execute and deliver the releases and promises in this
Agreement;

     (b) This Agreement covers all claims arising out of his employment, including those
that he does not know about;

     (c) This Agreement is written in a manner that Elliott understands;

     (d) Elliott is waiving claims under the foregoing laws, including specifically the Age
Discrimination in Employment Act, as amended, 29 U.S.C. 621, et. seq.;

5

 

     (e) Except as otherwise provided in this Agreement, Elliott is waiving and releasing
only those claims based on acts or omissions or transactions and dealings that arose prior
to the execution of this Agreement;

     (f) That no representations of any kind have been made by Arcadia to induce Elliott to
execute this Agreement, and that the only representations made to Elliott in order to obtain
his consent to this Agreement are as stated herein;

     (g) That he is entering into this Agreement of his own free will and without coercion,
intimidation or threat of retaliation. He acknowledges and agrees that Arcadia has not
exerted undue pressure or influence in this regard;

     (h) That a portion of the consideration offered herein is accepted by him as being in
full accord, satisfaction, compromise and settlement of any and all claims or potential
claims and that he expressly agrees that he is not entitled to and shall not receive any
further recovery of any kind from Arcadia or its affiliates and that in the event of any
further action, charge, complaint, arbitration or proceeding of any kind in any court, or
before any administrative or investigative body or agency (whether public, quasi-public or
private) against Arcadia arising out of any act, omission, transaction or occurrence up to
and including the effective date, except claims to enforce this Agreement, Arcadia shall
have no further monetary or other obligation of any kind to him, including any obligation
for any costs, expenses and attorneys’ fees incurred by him or on his behalf or on behalf of
any other person or entity and/or on behalf of or as a member of any alleged class of
persons; and

     (i) Elliott has been advised to consult with an attorney and to have an attorney review
this Agreement.

     9. Revocation Period. For a period of seven (7) days following Elliott’s execution of
this Agreement (“Revocation Period”), Elliott may revoke this Agreement, and this Agreement shall
not become effective or enforceable until the Revocation Period has expired. In the event that
Elliott shall revoke this Agreement, Elliott and Arcadia shall have no obligations under this
Agreement.

     10. Covenant-Not-to-Sue. Elliott further agrees that he will not file a lawsuit
against the Releasees and will not file a charge of discrimination with any state or federal
administrative agency against the Releasees based upon any acts or omissions which have occurred
prior to the date of this Agreement. Elliott also understands and agrees that by signing this
Agreement, Elliott is agreeing not to sue the Releasees for any claims covered by the releases
included in Paragraphs 7 and 8. Elliott represents and warrants that neither he nor any person,
organization or entity acting on his behalf has filed or initiated any complaint, charge, claim or
proceeding against Arcadia or its affiliate entities before any court or other body relating to his
employment or the termination thereof, nor does he have actual knowledge of, or reasonable cause to
believe that there may exist now or hereafter, any claims asserted or assertable against Arcadia by
other persons based on his acts or omissions through the date of the execution of this Agreement.
Elliott acknowledges that he waives any right he may have to benefit in any manner from any relief,
monetary or otherwise, arising out of any past, present or future proceeding. The

6

 

foregoing waiver does not apply to Elliott’s rights under this Agreement and from the date of
this Agreement forward under the other agreements that remain in effect as provided elsewhere in
this Agreement.

     11. Release of Claims — Arcadia. Except for a breach, from the date of this Agreement
forward, by Elliott of this Agreement, the Stock Option Agreement as amended in Paragraph 2 above,
portions of the Employment Agreement addressed in this Agreement, or the Existing Warrant (none of
which are the subject of any release hereunder), Arcadia and all their past or present parent
companies, affiliates, shareholders, agents, directors, officers, employees and attorneys, and all
persons acting by, through or in concert with it, hereby forever release and discharge Elliott and
his successors, heirs, assigns, representatives, attorney and all persons acting by, through or in
concert with him (collectively “Elliott Releasees”), from any and all claims, demands, rights,
charges, actions, interests, debts, liabilities, damages, costs and expenses, or causes of action
of whatever type or nature, whether legal or equitable, whether in tort or in contract, which
Arcadia may now have against him, either individually, jointly or severally, based upon acts which
have occurred from the beginning of time to the date of this Agreement.

     12. Covenant-Not-to-Sue — Arcadia. Except for a breach by Elliott of this Agreement,
the Stock Option Agreement including the amendments in Paragraph 2 above, portions of the
Employment Agreement addressed in this Agreement, the Escrow Agreement, the Existing Warrant and
except for matters excluded from the scope of the release given by Arcadia in Paragraph 11
hereunder, Arcadia further agrees it will not file a lawsuit against the Elliott Releasees.

     13. Entire Agreement. This Agreement sets forth the entire agreement between Elliott
and Arcadia, and supersedes any and all other previous or contemporaneous communication,
representations, understandings, assignments, negotiations and discussions, either oral or written
between the Parties with respect to the subject matter of this Agreement. Notwithstanding the
above sentence, portions of the Employment Agreement addressed in this Agreement, the Stock Option
Agreement including the amendments in Paragraph 2 above, the Existing Warrant and the Escrow
Agreement shall remain in full force and effect, subject to any modifications made in this
Agreement. This Agreement may not be modified in any manner except by the mutual written agreement
of the Parties hereto. Elliott acknowledges that Arcadia has made no representations or promises
to him (such as that Elliott’s former position will remain vacant), other than those in this
Agreement. If any provision of this Agreement is found to be unenforceable, all other provisions
will remain enforceable.

     14. Arcadia Representations, Etc. Arcadia represents and warrants, as follows:

     (a) The execution, delivery and performance of this Agreement by Arcadia has been duly
approved by Arcadia’s Board of Directors and no further corporate or other action, consent
or waiver is necessary or appropriate as a precondition to making this Agreement the valid
and binding agreement of Arcadia enforceable against Arcadia in accordance with its terms.

7

 

     (b) To the best of Arcadia’s knowledge other than knowledge derived from Elliott,
within the past twelve (12) months Elliott has not engaged in any purchase, sale or other
transactions in any of Arcardia’s equity securities that are required to be reported under
Section 16(a) of the Exchange Act.

     (c) To the best of Arcadia’s knowledge, as of the date of this Agreement, Elliott is
the “beneficial owner” (as that term is defined under Rule 16a-1 under the Exchange Act) of
less than 10% of any class of equity security of Arcadia and would also be the owner of less
than 10% of any such class even if solely for purposes of this calculation the Options were
deemed to be immediately convertible into Arcadia stock.

     15. Elliott Representations, Etc. Elliott represents and warrants that to the best of
Elliott’s knowledge, neither Elliott nor his spouse, directly or indirectly, has within the past
twelve (12) months, engaged in any purchase, sale or other transactions with respect to any of
Arcadia’s equity securities that are required to be reported under Section 16(a) of the Exchange
Act, that Elliott has not previously disclosed to Arcadia.

     16. Successors; Obligations to Elliott’s Estate. This Agreement binds Elliott’s
heirs, administrators, representatives, executors, successors, and assigns and will inure to the
benefit of all Releasees and their respective heirs, administrators, representatives, executors,
successors and assigns. If Elliott should die prior to the payment of all amounts due under this
Agreement, Arcadia shall continue to make the payments called for under this Agreement to Elliott
or to Elliott’s estate, as the case may be. Arcadia shall also be obligated to Elliott or
Elliott’s estate for any benefits provided for under this Agreement, including COBRA benefits, the
Stock Option Agreement provisions set forth in Section 2, and any warrants or other benefits that
Elliott is entitled to exercise under prior agreements between Elliott and Arcadia.

     17. Confidentiality; Press Release. Elliott agrees to keep the financial terms of
this Agreement strictly confidential; provided that it shall not be a breach of this provision for
Elliott to discuss this Agreement with his spouse, attorney, or financial advisor, all of whom
shall be subject to the requirement of strict confidentiality, or to make disclosure pursuant to a
validly issued subpoena or court order from a court or agency of competent jurisdiction. The
foregoing covenants shall terminate immediately and be void and of no force or effect if at any
time Arcadia files this Agreement (or a form of this Agreement) with the SEC or otherwise makes
public disclosure of the general terms of this Agreement. Within a reasonable time prior to any
press release or other public disclosure of the termination of Elliott’s employment and other
relationships with Arcadia, Elliott shall be given a copy of the proposed press release and other
public disclosure and an opportunity to provide his comments and input with respect thereto.

     18. Cooperation in Disclosure of Confidential Information. Elliott agrees that in the
event that he is required to make disclosure of confidential or proprietary information or
materials relating to his employment by Arcadia under any court order, subpoena, or other judicial
process, he will cooperate with Arcadia and provide Arcadia with prompt written notice, take all
commercial reasonable steps reasonably requested by Arcadia to defend against the compulsory
disclosure and permit Arcadia to participate with counsel of its choice in any proceeding relating
to the compulsory disclosure. Arcadia shall promptly pay for or reimburse

8

 

Elliott for his reasonable out of pocket expenses (including the expense of counsel of
Elliott’s own choosing) incurred in connection with any of the activities referred to in this
Paragraph 18.

     19. Indemnification, Etc. If Elliott is made a party to or a witness in or is
otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of, arising out of or relating to (A) Elliott’s service as an employee,
officer or director of Arcadia or any of Arcadia’s subsidiaries or affiliates or (B) at the request
of Arcadia or for the benefit of Arcadia Elliott’s service as a trustee or in any fiduciary or
similar capacity for or in connection with any employee benefit plan maintained by Arcadia or for
the benefit of any of the employees of Arcadia or any of its affiliates, or service on any trade
association, civic, religious, educational or charitable boards or committees, Arcadia hereby
agrees, in each instance, to the same extent and on a basis no less favorable than it does for
Arcadia’ directors and senior executive officers (i) to indemnify Elliott and hold Elliott harmless
from any and all cost, expense and damages by reason of in each instance, and (ii) to promptly pay
as incurred all Elliott’s expenses (including fees and expenses of counsel of Elliott’s choosing)
incurred in any matter as to which Elliott is entitled to be indemnified under this Agreement or,
if more favorable to Elliott, otherwise to the same extent and on a basis no less favorable than it
does for Arcadia’s directors and senior executive officers, and (iii) so long as Arcadia maintains
any policy of directors and officers’ liability insurance (or any similar or successor policy), to
include Elliott as an insured on each such policy with coverage and benefits no less favorable than
those provided to other officers and directors. Arcadia has furnished or will promptly furnish to
Elliott a copy of any documents regarding indemnification of officers and directors and any related
policies of insurance as the same may be updated from time to time for a period of three years
after the termination of Elliott’s employment.

     20. Cost of Enforcement; Interest. The prevailing party in any action brought under
this Agreement shall be entitled to recover all reasonable costs and expenses (including reasonable
attorneys’ fees before and at trial and in appellate proceedings). If any monies shall be due
either of the Parties to this Agreement hereunder and shall not be paid within ten (10) days from
the date of written request for payment, interest shall accrue on such unpaid amount at the rate of
ten (10%) percent per annum, or any lower rate as may be required to comply with applicable law.

     21. Indemnification by Arcadia and Elliott. The Parties understand that the Parties
have relied upon each other’s representations and warranties and covenants and agreements in
entering into this Agreement and that but for the Parties’ willingness to make such representations
and warranties and covenants and agreements, the Parties would not have been willing to enter into
this Agreement. Accordingly, in addition to any other obligations the Parties have to each other
under this Agreement, each Party shall also indemnify the other Party and its respective heirs,
administrators, representatives, executors, successors, and assigns (collectively, the “Indemnified
Parties”) and save and hold each of the Indemnified Parties harmless against and pay on behalf of
or reimburse such Indemnified Parties as and when incurred for any loss, liability, demand, claim,
action, cause of action, cost, damage, deficiency, tax, penalty, fine or expense, whether or not
arising out of third-party claims (including interest, penalties, reasonable attorneys’ fees and
expenses and all amounts paid in investigation, defense or settlement of any of the foregoing),
which any such Indemnified Party may suffer, sustain or

9

 

become subject to, as a result of, in connection with, relating or incidental to or by virtue
of: (i) any breach by a Party of any representation or warranty made by such Party in this
Agreement or any of the Exhibits attached hereto, or in any other instruments or documents
furnished by such other Party pursuant to this Agreement; or (ii) any nonfulfillment or breach of
any covenant, agreement or other provision by a Party under this Agreement or any of the Exhibits
attached hereto.

     22. Nondisparagement. Elliott agrees not to disparage Arcadia, all its parent
companies and affiliates, its operations, products, shareholders, employees, officers or directors.
Arcadia, all its parent companies and affiliates, its shareholders, employees, officers and
directors agree not to disparage Elliott.

     23. Future Employment. Elliott acknowledges that his employment, including but not
limited to his status as President and CEO with Arcadia, has been ended and it will not be resumed
again at any time in the future, and Elliott agrees not to seek such employment from Arcadia at a
later time. Elliott agrees not to bring any claim or cause of action against Arcadia or any of its
respective affiliated entities for failing or refusing to hire him.

     24. Non-Admission. This Agreement is not and shall not be deemed or construed to be
an admission by Arcadia or by Elliott of any wrongdoing of any kind or of any breach of any
contract, obligation, policy, or procedure of any kind or nature.

     25. Validity. Each of the paragraphs of this Agreement shall stand independently and
severally, and the invalidity of any one paragraph or portion shall not affect the validity of any
other provision. In the event any provision shall be construed to be invalid, no other provision
of this Agreement shall be affected.

     26. Governing Law. This Agreement shall be governed and construed in accordance with
the laws of the State of Florida, including its choice of laws, statutes, and common law,
notwithstanding the fact that a Party is or may hereafter become domiciled or located in a
different state.

     27. COBRA. Elliott acknowledges that he, his spouse and dependent children
(collectively, “qualified beneficiaries”) may elect COBRA (Consolidated Omnibus Budget
Reconciliation Act of 1985) continuation of medical and/or dental coverage for the maximum coverage
period of up to eighteen months at a monthly premium equal to 102% of actual plan cost, effective
as of the Effective Date. If a qualified beneficiary elects to continue this coverage under the
provisions of COBRA, he/she will be permitted to continue participation in Arcadia’s group medical
and/or dental benefit plans for the maximum coverage period at the contribution level in effect for
active employees until the earlier of (i) the date the qualified beneficiary becomes entitled to
and is covered by Medicare, or (ii) the date the qualified beneficiary becomes covered under
medical and/or dental insurance benefit plans of another employer; provided, however, if the other
group health plan’s preexisting condition exclusion or limitation applies to a condition of the
qualified beneficiary, COBRA coverage can be terminated early only after the other plan’s exclusion
or limitation is satisfied.

10

 

     28. Waiver of Breach. The waiver of breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach. Each and every right, remedy and
power hereby granted to any Party or allowed it by law shall be cumulative and not exclusive of any
other.

     29. Counterparts. This Agreement may be executed in any number of counterparts and by
facsimile, each which shall be deemed an original, and all of which shall be deemed to be one and
the same document when taken together.

     30. Arbitration. Notwithstanding anything in this Agreement, the Employment Agreement
and the Stock Option Agreement to the contrary, except as provided in Paragraph 1(f) of this
Agreement, any dispute, controversy or claim arising out of or relating to this Agreement, the
Employment Agreement and the Stock Option Agreement, whether arising in contract, tort or otherwise
shall be resolved at arbitration in accordance with the rules of the American Arbitration
Association by an arbitration panel sitting in the State of Florida, except for any equitable or
injunctive relief sought under this Agreement which shall be brought in a court of competent
jurisdiction in the State of Florida. 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
Florida or by any other court of competent jurisdiction.

     31. Application of Internal Revenue Code Section 409A. The Parties agree that Elliott
is a “specified employee” within the meaning of section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”) and the Regulations thereunder. Notwithstanding anything to the contrary
in this Agreement, any payments and benefits due hereunder that may constitute nonqualified
deferred compensation under section 409A of the Code will be accumulated and may not be paid to
Elliott until the Payment Date (hereinafter defined) provided, that the aggregate amount of the
payments so delayed shall be paid in a lump sum, on the first business day following the Payment
Date. For purposes of this Agreement, the “Payment Date” means the earlier of: (i) the first
(1st) business day following the six-month anniversary of the termination of Elliott’s
employment, and (ii) the fifth (5th) business day following Arcadia’s receipt of notice
of Elliott’s death.

     32. Notices. All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder
shall be deemed duly given if (and then two business days after) it is sent by registered or
certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient
as set forth below:

	 	 	 	 	 
	 

	 	If to Arcadia:
	 	Arcadia Resources, Inc.
	 

	 	 	 	405 Fifth Avenue S.
	 

	 	 	 	Suite 6
	 

	 	 	 	Naples, FL 34102
	 

	 	 	 	Attn: Chief Executive Officer
	 
	 	 	 	 
	 

	 	With a Copy to:
	 	Dennis Nowak
	 

	 	 	 	Tew Cardenas LLP

11

 

	 	 	 	 	 
	 

	 	 	 	1441 Brickell Ave.
	 

	 	 	 	15th Floor
	 

	 	 	 	Miami, FL 33131-3407
	 
	 	 	 	 
	 

	 	If to Elliott:
	 	John E. Elliott, II
	 

	 	 	 	1389 Great Egret Trail
	 

	 	 	 	Naples, FL 34105
	 
	 	 	 	 
	 

	 	With a Copy to:
	 	James S. Fontichiaro
	 

	 	 	 	Barris, Sott, Denn & Driker, P.L.L.C.
	 

	 	 	 	211 W. Fort St., 15th Floor
	 

	 	 	 	Detroit, MI 48226-3281

Any Party may send any notice, request, demand, claim, or other communication hereunder to the
intended recipient at the address set forth above using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended recipient. Any Party may
change the address to which notices, requests, demands, claims, and other communications hereunder
are to be delivered by giving the other Parties notice in the manner herein set forth.

     IN WITNESS WHEREOF, this Agreement is entered into and shall be effective as of the date first
written above.

	 	 	 	 	 
	 	 	 
	Date:  July 12, 2007 	/s/ John E. Elliott, II
 	 
	 	John E. Elliott, II 	 
	 	 	 
	Received By:

Date: July 12, 2007 	

ARCADIA RESOURCES, INC., a Nevada corporation

 	 
	 	By:  	/s/ Marvin M. Richardson
 	 	 
	 	 	Its:  President and Chief Executive Officer 	 

12

 

	 	 	 	 	 

EXHIBIT A

	 	10.	 	Covenant-Not-To-Compete. Elliott covenants and agrees that for the one
(1) year period following the execution of the Severance and Release Agreement to which
this Exhibit is attached (“Restricted Period”), Elliott shall not within North America
(“Restricted Area”), directly or indirectly, through intermediaries or other persons or
entities, either as owner, shareholder, director, officer, agent, consultant,
representative, investor, partner, executive, or on behalf of any other person or
entity, or in any other capacity whatsoever (i) engage in, assist or provide services
to any business or enterprise that is competitive with any business conducted by the
Corporation or its affiliates, (ii) contact for any business purpose, solicit or
attempt to solicit any supplier, customer, agent, representative or executive of the
Corporation or its affiliates for the purpose of disrupting any relationship or
agreement between the Corporation or its affiliates and any of its customers,
executives, agents, representatives or others doing business with the Corporation or
its affiliates, or (iii) compete with the Corporation or its affiliates. In addition,
notwithstanding the foregoing, Elliott shall be permitted to own, directly or
indirectly, up to five percent (5%) of the issued and outstanding voting securities of
any class of any publicly traded corporation even if such companies conduct businesses
that are in competition with the Corporation’s business.

 

 

EXHIBIT E

SCHEDULE OF PAYMENTS

     The payment of all amounts set forth below is subject to the provisions of Paragraph 30 of the
Agreement.

	 	 	 
	Payment	 	Payment Date
	$15,000 reimbursement of attorney
fees (Paragraph 1a)

	 	July 23, 2007
	 
	 	 
	Direct payment by Arcadia of COBRA
premium payments (currently $966.13
per month) for 18 month period
beginning on the Effective Date
(Paragraph 1a)

	 	As required under policy; Arcadia to
provide Elliott of proof of timely
payment
	 
	 	 
	Severance payments for the period of
July 12, 2007 through July 11, 2008
in equal installments of $7,215.58
(aggregate amount of $187,605)
beginning on the first payroll date
for the period beginning on or about
July 12, 2007 (Paragraph 1c)

	 	Normal bi-weekly payroll dates
during the period of July 12, 2007
through July 11, 2008
	 
	 	 
	Severance payments for period of
July 12, 2008 through September 24,
2009 in equal installments of
$5,769.23 based on an annual rate of
$150,000 (aggregate amount of
$200,000) beginning on the first
payroll date for the period
beginning July 12, 2008 (Paragraph
1c)

	 	Normal bi-weekly payroll dates
during the period of July 12, 2008
through September 24, 2009
	 
	 	 
	$187,605 for execution of release,
payable in equal monthly
installments of $15,633.75 beginning
August 1, 2007 until fully paid
(Paragraph 1h) *

	 	6 installment payments on January
14, 2008, to wit, $93,802.50, and
remaining 6 installments on the
first day of each succeeding month
beginning on February 1, 2008

 

			
	*	 	Payment of nonqualified deferred compensation delayed for a period of 6-months from
the date of Elliott=s separation from service in order to comply with the required payment
delay applicable to Aspecified employees@ under section 409A of the Code. If upon
further review of the foregoing payment is subsequently determined, to the satisfaction of Elliott,
that these payments are not nonqualified deferred compensation, such amounts shall be payable to
Elliott as otherwise provided in this Agreement.

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