Document:

Exhibit 10.3

Exhibit 10.3

EMPLOYMENT AGREEMENT

THIS AGREEMENT by and between Arcadia Resources, Inc., a Nevada corporation (“Arcadia” or
“Employer”), and Steven L. Zeller (the
“Executive”), is effective as of August 12, 2009; and

WHEREAS, Employer desires to employ Executive in the position described herein; and

WHEREAS, Executive desires to serve in that capacity,

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1. Employment. Employer shall employ the Executive, and the Executive shall serve
Employer and its subsidiaries, if any, on the terms and conditions set forth in this Agreement, for
the period beginning on the date hereof (the “Employment Date”) and continuing until terminated as
provided below in Section 4 (the “Employment Period”).

2. Position and Duties.

(a) As of the date of this Agreement, and during the Employment Period, the Executive will be
employed as Chief Operating Officer of Employer and such of its subsidiaries as may be determined
by Employer’s Board of Directors, performing such duties as may be designated by the Board of
Directors from time to time which shall be consistent with the general nature of the duties and
authority of a Chief Operating Officer in similarly situated companies. Executive shall report to
the President and Chief Executive Officer.

 

 

 

(b) During the Employment Period, excluding any periods of vacation and absence due to
intermittent illness to which the Executive is entitled, and any services or activities on behalf
of civic or charitable institutions that do not significantly interfere with the performance of his
responsibilities to Employer or violate the provisions of Section 9, the Executive shall devote his
full time and attention to the business and affairs of Employer and its
subsidiaries. Except as stated in the previous sentence and as permitted by Section 9
relative to BestCare Travel Staffing, LLC (“BestCare”), during the Employment Period, Executive
shall have no other employment or business interests; provided, however, that the Executive shall
be able to invest his personal assets in investments and entities as long as such investments do
not violate Section 9 and do not require a material amount of the Executive’s time. The Executive
shall use reasonable efforts to faithfully and efficiently carry out all duties and
responsibilities assigned to him.

3. Compensation.

(a) Base Salary. During the Employment Period, the Executive shall receive an annual
Base Salary of $250,000 payable in accordance with the regular payroll practices of Employer. The
Executive’s Base Salary shall be reviewed annually by Employer, in accordance with Employer’s
standard practices for executives generally, and may be increased, but not decreased, as determined
by the Board of Directors, in their sole discretion, or by any committee of the Board of Directors
to which such authority has been delegated. The parties acknowledge that as an accommodation to
the Employer, Executive agreed effective April 1, 2009 to temporarily receive a ten percent (10%)
reduction in his Base Salary (the “Reduced Base”). The amount of Executive’s Reduced Base Salary
is presently $225,000 annually and shall remain in effect until March 31, 2010. All severance
payments due to Executive under this Agreement shall be calculated based on Executive’s Base
Salary, not Executive’s Reduced Base.

 

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(b) Stock Grant. Employer, per the approval of its Board of Directors, awarded
Executive effective September 24, 2007, from and subject to the terms and conditions of the 2006
Arcadia Resources, Inc. Equity Incentive Plan and the Plan’s restricted stock award agreement,
150,000 shares of Arcadia common stock (the “Restricted Shares”). The Restricted
Shares, until vested, shall be subject to restrictions on transferability and held in escrow
as described below. The Restricted Shares shall vest over a four (4) year period at the rate of
9,375 shares at the end of each Arcadia fiscal quarter following the date of the Restricted Stock
award to executive (the “Vesting Date”). The Executive shall acquire rights as a shareholder in
Restricted Shares upon each Vesting Date. Restricted Stock which has not vested shall be forfeited
only in the event of Executive’s termination for Cause or Executive’s resignation without Good
Reason (as those terms are used in this Agreement). If Executive’s employment is terminated
without Cause or for Good Reason, the Restricted Stock shall continue to vest as if Executive’s
employment was continuing.

(c) Stock Options. Subject to the terms and conditions of this Agreement and the plan
adopted by the Employer’s Board of Directors, Executive has been granted options to purchase
450,000 shares of the Employer’s common stock at the strike price of $0.72 per share, of which
150,000 were vested and exercisable as of March 31, 2009. So long as Executive remains employed by
the Employer, Executive shall be entitled to exercise the remaining Stock Options pursuant to the
following vesting schedule: 150,000 options vested and exercisable March 31, 2010, and 150,000
options vested and exercisable March 31, 2011. The options granted pursuant to this paragraph are
subject to the following terms and conditions:

(i) Except as otherwise described in the paragraph immediately below, Executive shall forfeit
all unvested options upon a termination of Executive’s employment. Executive shall have one
calendar year from the date of termination to exercise any vested but not yet exercised options.

 

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(ii) Executive’s unvested options shall vest immediately upon the termination of Executive’s
employment only if the Executive’s employment is terminated
without Cause or for Good Reason within one calendar year of a Change in Control of the
Employer. Executive shall have one calendar year from the date of termination to exercise any
options vested pursuant to this paragraph.

(iii) For the purposes of this agreement, a Change in Control means the occurrence of any of
the following: (1) a reorganization, merger or consolidation in which the Employer is not the
surviving corporation, (2) a sale of all or substantially all of the assets of the Employer to
another person or entity, (3) the acquisition of beneficial ownership (within the meaning of Rule
13d-3 under the Exchange Act) of an aggregate of 25% or more of the voting power of the Employer’s
outstanding voting securities by any single person or group (as such term is used in Rule 13d-5
under the Exchange Act), unless such acquisition was approved by the Employer’s Board of Directors
prior to the consummation thereof, or (4) the appointment of a trustee in a Chapter 11 bankruptcy
proceeding involving the Employer or the conversion of such a proceeding into a case under Chapter
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(iv) To the extent that the vesting and/or payment upon termination provisions of this
Agreement differ from such provisions in any other compensation plan document of Employer, the
provisions in this Agreement shall control.

(d) Bonus Compensation. Executive shall be eligible to participate in executive bonus
plans as approved by the Compensation Committee, including the 2008 Executive Performance Based
Compensation Plan.

 

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(e) Other Benefits. To at least the same extent as other senior executives of
Employer, except as required by law or applicable government regulations, the Executive shall be
entitled to participate in: (i) any short-term and long-term incentive, savings, and retirement
plans; (ii) all practices, policies and programs including vacation policies established by
Employer; and (iii) the Executive and/or the Executive’s family, as the case may be, shall be
eligible for participation in, and shall receive all benefits under, all welfare benefits plans,
practices, policies and programs provided by Employer.

(f) Expenses. During the Employment Period, the Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by the Executive in carrying out
the Executive’s duties under this Agreement, provided that the Executive complies with the
generally applicable policies, practices and procedures of Employer for submission of expense
reports, receipts, or similar documentation of such expenses.

(g) Vacation. Executive shall be entitled to four (4) weeks of paid vacation leave
annually.

 

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4. Termination of Employment.

(a) Death or Disability. The Executive’s employment and the Employment Period shall
terminate automatically upon the Executive’s death or Disability during the Employment Period.
“Disability” means Executive’s inability, because of mental or physical illness or incapacity,
whether total or partial, to perform one or more primary duties of the Executive’s employment with
reasonable accommodation, and which continues for a period of one hundred eighty (180) days within
any twelve (12) month period. If any question shall arise during the Executive’s employment
hereunder regarding the Executive’s inability, because of mental or physical illness or incapacity,
whether total or partial, to perform one or more primary duties of the Executive’s employment with
reasonable accommodation, Executive, at the request of Employer, shall submit to a medical
examination by a physician selected by Employer (the “Employer Physician”) to determine whether the
Executive is so disabled. In the event that the Executive disagrees with the findings of the
Employer Physician, Executive shall have the right
to submit to a second medical examination by a physician selected by the Executive (the
“Executive Physician”). If the Employer Physician’s and the Executive Physician’s findings agreed
with respect to Executive’s disability status, such determination shall be binding on Employer and
the Executive. If the Employer Physician’s and the Executive Physician’s findings do not agree
with respect to Executive’s disability status, the Employer Physician and the Executive Physician
shall together designate a third physician to make the determination with respect to Executive’s
disability status and such determination shall be binding on the Employer and the Executive. The
date of the Executive’s Disability shall be the date on which a Physician (whether employer,
Executive or third Physician) makes a final, binding determination of Executive’s disability.

(b) By Employer. Employer may terminate the Executive’s employment under this
Agreement during the Employment Period for Cause or without Cause. “Cause” means:

(i) The Executive’s fraud, theft or embezzlement committed with respect to Employer, its
affiliates or customers;

(ii) the continued failure by the Executive to perform his duties as contemplated by this
Agreement (other than any such failure resulting from his Disability or any such actual or
anticipated failure after the issuance by the Executive of a Notice of Termination for Good Reason)
over a period of not less than ninety (90) days; provided however, that Employer may terminate the
Executive’s employment for “Cause” under this subdivision only if Employer has provided notice to
the Executive of his performance failures and such failures have not been cured by the Executive
within thirty (30) days of the receipt of notice by the Executive;

  

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(iii) the willful or negligent misconduct of the Executive that is materially injurious to
Employer (including, without limitation, any breach by the Executive of Section 9 of
this Agreement), and, in the case of negligent misconduct, such misconduct is not cured by
Executive within thirty (30) days of the receipt of notice by the Executive from Employer;

(iv) the Executive’s conviction of a misdemeanor which directly causes material financial harm
to Employer, which harm is not cured by the Executive within thirty (30) days of the receipt of
notice by the Executive from the Employer of such harm;

(v) the Executive’s conviction of a felony (including a felony constituting a crime of moral
turpitude);

(vi) Executive’s material breach of this Agreement causing material harm to Employer that is
not cured within thirty (30) days of receipt of notice thereof (any breach by the Executive of
Section 11 of this Agreement shall be deemed a material breach); provided that no “cure” shall be
deemed to have been effected unless both the breach and the harm have been cured;

(vii) the Executive’s breach of a fiduciary duty owed to Employer or its Affiliates; or

(viii) the Executive’s willful failure to carry out any material directive of Employer which
does not require unlawful action nor breach this Agreement.

(ix) Provided, however, that the Executive shall be limited to one cure during any twelve (12)
month period for all descriptions of cause and only for those causes where a cure period is
permitted.

 

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(c) A termination of Executive’s employment for Cause shall be effectuated by giving the
Executive written notice (“Notice of Termination for Cause”) of the termination, setting forth in
reasonable detail the specific conduct that constitutes Cause and the specific provision(s) of this
Agreement on which Employer relies. The Executive shall have 30 days to
remedy the conduct set forth in the Notice of Termination for Cause. A termination of
Executive’s employment for Cause shall be effective on the thirtieth business day following the
date when the Notice of Termination for Cause is given, unless the conduct set forth in the notice
is remedied by the Executive within the 30 day period; provided, however, that the Executive shall
be able to cure such conduct only once within a twelve (12) month period.

(d) By the Executive. The Executive may terminate employment under this Agreement for
Good Reason or without Good Reason. “Good Reason” means:

(i) any reduction in the Executive’s Base Salary;

(ii) removal of the Executive from his positions as Chief Operating Officer or failure to
re-elect the Executive to such position, except for “Cause” as defined in paragraph (b) above;

(iii) any change in Executive’s reporting assignment such that he is no longer reporting to
Employer’s President and Chief Executive Officer, except such a change that is made by mutual
agreement between the Executive and Employer;

(iv) a material failure by Employer to comply with any provision of Sections 2 and 3 of this
Agreement, other than (i) a purely monetary failure with respect to an amount less than $5,000,
(ii) a failure within Executive’s control or (iii) an isolated, insubstantial or inadvertent
failure that is not taken in bad faith and is remedied by Employer within 15 days after receipt of
written notice thereof from the Executive;

(v) any action by Employer, except as required by law or applicable government regulations,
which is specific to the Executive that would or does adversely affect Executive’s participation in
bonus or incentive plans or the Other Benefits as described in Section 3; and

 

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(vi) any failure by Employer to obtain from any successor in interest thereto assent to the
terms of this Agreement.

(e) A termination of employment by the Executive for Good Reason shall be effectuated by
giving Employer written notice (“Notice of Termination for Good Reason”) of the termination,
setting forth in reasonable detail the specific conduct that constitutes Good Reason and the
specific provision(s) of this Agreement on which the Executive relies. Employer shall have 30 days
to remedy the conduct set forth in the Notice of Termination for Good Reason. A termination of
employment by the Executive for Good Reason shall be effective on the thirtieth business day
following the date when the Notice of Termination for Good Reason is given, unless the conduct set
forth in the notice is remedied by Employer within the 30 day period; provided, however, that
Employer shall be able to cure such conduct only once within a twelve (12) month period.

(f) A termination of the Executive’s employment by the Executive without Good Reason shall be
effectuated by giving Employer at least 30 days’ advance written notice of the termination.

(g) Date of Termination. The “Date of Termination” means the date of the Executive’s
death, the date of the Executive’s Disability, the date the termination of the Executive’s
employment under this Agreement by Employer for Cause or without Cause or by the Executive for Good
Reason or without Good Reason, as the case may be, is effective. The Employment Period shall end
on the Date of Termination.

(h) “Affiliate” of Employer means any person or entity directly or indirectly controlling,
controlled by, or under common control with, Employer. For purposes of this definition, the terms
“Control,” “Controlling,” and “Controlled” mean the right to elect a
majority of the members or the board of directors or other comparable body responsible for
management and direction of a person or entity by contract, by virtue of share ownership or
otherwise.

 

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5. Obligations of Employer upon Termination. If Employer terminates the
Executive’s employment under this Agreement (other than for Cause) or the Executive terminates
employment under this Agreement for Good Reason, and provided the Executive continues to abide by
the provisions of Section 9 of this Agreement:

(a) Severance Payment. The Executive shall be entitled to a continued payment for one
year of the Executive’s Base Salary, payable in regular intervals, in accordance with the regular
payroll practices of Employer;

(b) Base Salary Reimbursement. The Executive shall be entitled to immediate
reimbursement of all unpaid Base Salary resulting from the 10% reduction in Executive’s Base Salary
described in paragraph 3(a) above. The amount of reimbursement shall be the difference between the
amount Executive should have received in Base Salary and the amount of Reduced Base actually paid
to Executive since April 1, 2009.

(c) Pro Rata Bonus. The Executive shall receive a pro rata portion of any bonus or
incentive plan amount for that portion of the year prior to the Date of Termination, but only to
the extent the Executive’s performance measures are likely to be achieved by the end of the fiscal
year. One-half of the Executive’s pro rata bonus shall be paid immediately upon termination of the
Executive’s employment; the other half (with appropriate adjustments to reflect actual performance)
shall be paid within 60 days of the end of the fiscal year.

 

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(d) COBRA Reimbursement. If after the Date of Termination the Executive elects to
receive continuation coverage under Employer’s group health plans pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Executive shall be
entitled to reimbursement from the Employer for the COBRA premium costs of medical, prescription,
dental and vision coverage, if any, under Employer’s group health plans (as in effect from time to
time) for the Executive and, to the extent permitted under COBRA, the Executive’s spouse and
eligible dependents, such reimbursement not to exceed the COBRA rates for such coverage and, unless
terminated sooner as described below, such reimbursement to continue for one year after the Date of
Termination; provided, however, that the Executive shall be required to submit to Employer
reasonable evidence of payment by the Executive of any such COBRA premiums in order to obtain
reimbursement from Employer and that the Executive may not submit any requests for reimbursement of
such payments more than once per calendar month; provided, further, that Employer, in its sole
discretion, may elect for the first two calendar months (or portions thereof) of the Severance
Period, as applicable, to remit any such payments directly on behalf of the Executive rather than
requiring the Executive to remit such payments and seek reimbursement therefore from Employer;
provided, further, that the obligations of Employer to reimburse any such payments shall terminate
on the date of occurrence of the first to occur of any of the following, if any of the following
should occur prior to the end of the Severance Period: (i) the date of commencement of eligibility
of the Executive under the group health plan of any other employer or (ii) the date of commencement
of eligibility of the Executive for Medicare benefits under Title XVIII of the Social Security Act
(“Medicare Benefits”); and provided, further, that the Executive nevertheless shall be entitled to
elect COBRA continuation coverage without reimbursement under Employer’s group health plans at the
applicable COBRA premium rates through the date that is 18 months after the Date of Termination or,
if earlier, 

 

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the date that the Executive becomes covered under the group health
plan of another employer or becomes eligible for Medicare Benefits, if the obligations of
Employer to reimburse the Executive for COBRA premiums for continuation coverage under Employer’s
group health plans should terminate prior to such date. Notwithstanding anything to the contrary
set forth above, employer, in its sole discretion, may discontinue any coverage contemplated
hereunder in the event that such continuation is not permitted under or would adversely affect the
tax status of the plan or plans of Employer pursuant to which the coverage is provided, in which
case Employer shall make supplemental severance payments to the Executive in monthly amounts equal
to the amounts to which the Executive otherwise would have been entitled to reimbursement hereunder
in respect of such coverage for the remainder of the period that Employer otherwise would have been
obligated to make reimbursements hereunder to the Executive. Any amounts that are reimbursed to
the Executive by Employer or paid directly to the Executive as supplemental severance payments will
be considered taxable income to the Executive and any taxes on such amounts will be the Executive’s
responsibility and subject to applicable tax withholding.

(e) Accrued Obligations. Employer shall also pay, or cause to be paid, to the
Executive, in a lump sum in cash within 30 days after the Date of Termination certain of
Executive’s accrued but unpaid cash compensation (the “Accrued Obligations”), which shall include
but not be limited to the Executive’s Base Salary through the Date of Termination that has not yet
been paid, any accrued but unpaid vacation pay, and similar unpaid items that have accrued and as
to which the Executive has become entitled as of the Date of Termination, including declared but
unpaid bonuses and unreimbursed employee business expenses.

 

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(f) Death or Disability. If the Executive’s employment is terminated by reason of the
Executive’s death or Disability during the Employment Period, Employer shall pay the
Accrued Obligations to the Executive or the Executive’s estate or legal representative, as
applicable, in a lump sum in cash within 30 days after the Date of Termination. In addition,
Employer shall pay a pro-rata portion of the Executive’s bonus to Executive or his estate or legal
representative, determined and paid in the manner set forth in subparagraph 5(c) above. Pro rata
bonuses shall be paid within 60 days of the end of the fiscal year for that portion of the year
prior to the Date of Termination but only to the extent the Executive’s performance measures are
achieved at the end of the fiscal year. In such event, Employer shall have no further obligations
under this Agreement or otherwise to or with respect to the Executive other than for any
entitlements under the terms of any other plans or programs of Employer in which the Executive
participated and under which the Executive has become entitled to a benefit.

(g) By Employer for Cause; By the Executive Other than for Good Reason. If
the Executive’s employment is terminate by Employer for Cause or the Executive voluntarily
terminates his employer other than for Good Reason, Employer shall pay the Executive, or shall
cause the Executive to be paid, the Executive’s Base Salary through the Date of Termination that
has not been paid and the amount of any declared but unpaid bonuses, accrued but unpaid vacation
pay, and unreimbursed employee business expenses, and Employer shall have no further obligations
under this Agreement or otherwise to or with respect to the Executive other than for any
entitlements under the terms of any other plans or programs of Employer in which the Executive
participated and under which the Executive has become entitled to a benefit.

 

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6. Tax Treatment. It is the intention of the parties that payments to be made to the
Executive whether under the terms of this Agreement or otherwise shall not constitute “excess
parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986 (as
amended from time to time) (the “Code”) and any regulations thereunder. If the independent
accountants serving as auditors for Employer on the date of this Agreement (or any other
independent certified public accounting firm designated by Employer) determine that any payment or
distribution by Employer to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or otherwise) would be
nondeductible by Employer under Section 280G of the Code (or any successor provision), then the
amounts payable or distributable under this Agreement will be reduced to the maximum amount which
may be paid or distributed without causing such payments or distributions to be nondeductible. The
determination shall take into account (a) whether the payments or distributions are “parachute
payments” under Section 280G, (b) the amount of payments and distributions under this Agreement
that constitute reasonable compensation, and (c) the present value of such payments and
distributions determined in accordance with Treasury Regulations in effect from time to time. The
Executive shall have the right to designate which payments or distributions will be reduced.

7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the
Executive’s continuing or future participation in any plan, program, policy or practice provided by
Employer for which the Executive may qualify. Vested benefits and other amounts that the Executive
is otherwise entitled to receive on or after the Date of Termination under any plan, policy,
practice or program of, or any contract or agreement with, Employer shall be payable in accordance
with such plan, policy, practice, program, contract or agreement, as the case may be, except as
explicitly modified by this Agreement.

8. Mitigation. In no event shall the Executive be obligated to seek other employment
or take any other action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement. Notwithstanding this Section 8, the Executive shall continue
to be subject to all of the restrictions provided for in Section 9 of this Agreement during
the Severance Period.

 

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9. Confidential Information; Non-solicitation; Non-competition.

(a) The Executive agrees and acknowledges that by reason of his employment by and service to
Employer, he will have access to, become exposed to and/or become knowledgeable about confidential
information of Employer and its Affiliates (the “Confidential Information”) from time to time
during the Employment Period, including, without limitation, proposals, plans, inventions,
practices, systems, programs, processes, methods, techniques, research, records, supplier sources,
customer lists and other forms of business information that are not known to Employer’s
competitors, are not recognized as being encompassed within standard business or management
practices and/or are kept secret and confidential by Employer. Executive agrees that at no time
during or after the Employment Period will he disclose or use the Confidential Information except
as may be required in the prudent course of business for the benefit of Employer, or as may be
required by law or in a legal proceeding.

 

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(b) The Executive acknowledges that Employer’s business plan is to engage in business
throughout the United States. During the Executive’s employment by Employer and for the duration
of the Restricted Period (defined below), the Executive agrees that he will not, unless acting with
the prior written consent of Employer, directly or indirectly, own, manage, control, or participate
in the ownership, management or control of, be financially interested in, or be employed or engaged
by, or otherwise affiliated or associated with, as an officer, director, employee, consultant,
independent contractor or otherwise, any other corporation, partnership, proprietorship, firm,
association or other business entity, which is engaged in the management, ownership or operation of
retail pharmacies in the United States or any other business that, as of
the Date of Termination, is engaged in by Employer in the United States, has been reviewed
with the Board of Directors of Employer for development to be owned or managed by Employer, within
nine (9) months of the Date of Termination, and/or has been divested by Employer but as to which
Employer has an obligation to refrain from involvement for so long as such restriction applies to
Employer; provided, however, that the ownership of not more than 5% of the equity of a publicly
traded entity shall not be deemed to be a violation of this paragraph; and further provided that
Executive’s direct or indirect ownership, management or control of, or financial interest in,
BestCare shall not be deemed to be a violation of this paragraph, contingent on Executive acting in
compliance with his obligations specified in this Agreement and BestCare acting in compliance with
its obligations specified in an Agreement for Appointment of Arcadia Health Services, Inc.
Representative dated August 13, 2006, as exists now or may hereafter be superceded.
Notwithstanding the foregoing, the Executive shall be relieved of the covenants provided for in
this subsection in the event that Employer fails to make payments to Executive as provided for in
Section 5 of this Agreement and Employer has not cured such failure within fifteen (15) calendar
days after receipt of written notice from Executive. The foregoing will be construed to permit the
Executive to own or operate an independent pharmacy or to practice as a licensed pharmacist in an
independent or retail pharmacy at any time following the Date of Termination.

(c) The Executive also agrees that he will not, directly or indirectly, during the Restricted
Period induce any person who is an employee, officer, director, or agent of Employer, to terminate
such relationship, or employ, assist in employing or otherwise be associated in business with any
present or former employee or officer of Employer or its Affiliates, including
without limitation those who commence such positions with Employer or its Affiliates after the
Date of Termination.

 

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(d) During the Restricted Period, the Executive shall not attempt in any manner to contact or
solicit any individual, firm, corporation or other entity (i) that is or has been, a customer,
supplier or vender or Employer or its Affiliates at any time during the Restricted Period, (ii) to
which a proposal has been made by Employer during the Restricted Period or (iii) to which employer
has made a proposal during the nine (9) months preceding the Date of Termination, for the purpose
of implementing retail pharmacies or providing retail pharmacy or services or products similar to
the services and products provided by Employer at the Date of Termination. In addition, during the
Restricted Period, the Executive shall not persuade or attempt to persuade any customer, supplier,
vendor, licensor or other entity or individual doing business with Employer to discontinue or
reduce its business with Employer or otherwise interfere in any way with the business relationships
and activities of Employer. For purposes of this paragraph (d), a customer of Employer or its
Affiliates includes any retail/grocery establishment, physician’s office, clinic or any healthcare
or retail host business in which Employer or its subsidiaries has located or has proposed to locate
a pharmacy or provide pharmacy services.

(e) The Executive acknowledges and agrees that the restrictions contained in this Section 9
are reasonable and necessary to protect and preserve the legitimate interests, properties, goodwill
and business of Employer, that Employer would not have entered into this Agreement in the absence
of such restrictions and that irreparable injury will be suffered by Employer should the Executive
breach the provisions of this Section. The Executive represents and acknowledges that (i) the
Executive has been advised by Employer to consult the
Executive’s own legal counsel in respect of this Agreement, (ii) the Executive has consulted
with and been advised by his own counsel in respect of this Agreement, and (iii) the Executive has
had full opportunity, prior to execution of this Agreement, to review thoroughly this Agreement
with the Executive’s counsel.

 

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(f) The Executive further acknowledges and agrees that a breach of the restrictions in this
Section 9 may not be adequately compensated by monetary damages. The Executive agrees that actual
damage may be difficult to ascertain and that, in the event of any such breach, Employer may be
entitled to injunctive relief in addition to such other legal or equitable remedies as may be
available to Employer. In the event that the provisions of this Section 9 should ever be
adjudicated to exceed the limitations permitted by applicable law in any jurisdiction, it is the
intention of the parties that the provision shall be amended such that those provisions are made
consistent with the maximum limitations permitted by applicable law, that such amendment shall
apply only within the jurisdiction of the court that made such adjudication and that those
provisions otherwise be enforced to the maximum extent permitted by law.

(g) For purposes of this Section 9, the term “Restricted Period” following the Date of
Termination means (i) if Employer terminates the Executive’s employment without Cause or if the
Executive terminates his employment with Good Reason, the entire period during which payments to
the Executive continue pursuant to Section 5, or (ii) in any other case, a period of one (1) year
following the Date of Termination.

(h) All Confidential Information; all innovations, inventions and discoveries of Employer; and
all correspondence, files, documents, advertising, sales, manufacturers’ and other materials or
articles or other information of any kind, in any media, form or format, whether or not deemed
confidential, shall be and remain the sole property of Employer (“Employer
Property”). Upon termination or at Employer’s request, whichever is earlier, Executive shall
immediately deliver to Employer all such Employer Property.

 

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(i) If, contrary to the effort and intent of the parties, any covenant or other obligation
contained in this Section 9 shall be found not to be reasonably necessary for the protection of, to
be unreasonable as to duration, scope or nature of restrictions, or to impose an undue hardship on
Executive, then it is the desire of the parties that such covenant or obligation not be rendered
invalid thereby, but rather that the duration, scope or nature of the restrictions be deemed
reduced or modified, with retroactive effect, to render such covenant or obligation reasonable,
valid and enforceable. The parties further agree that in the event a court, despite the efforts
and intent of the parties, declares any portion of the covenants or obligations in this Section 9
invalid, the remaining provisions of this Section 9 shall nonetheless remain valid and enforceable.

(j) Employer acknowledges that Executive is a member/owner and director of BestCare.
Employer, BestCare, and Executive are parties to an Agreement for the Appointment of
Representative, dated as of August 13, 2006 (the “Representative Agreement”). Executive’s
responsibilities to Employer include managing Employer’s staffing business, including the travel
nurse and allied health professional staffing business relationship with BestCare. Employer
believes it is in the best interest for Executive to retain his positions with BestCare to ensure
the purposes and intent of the Representative Agreement are fulfilled. Executive agrees he will
receive no annual salary or other employment-related compensation from BestCare. Employer and
Executive have developed a mutually acceptable protocol, which has been approved by the Audit
Committee of Employer’s Board of Directors, prescribing the process to identify and resolve any
conflicts of interest which arise during the Employment Period. Employer and
Executive each agree to comply with such protocol as approved by the Audit Committee and as
may thereafter be amended or superseded by written agreement of Employer and Executive (who shall
not unreasonably withhold his approval) with the approval of the Audit Committee. Any termination
of the term of the Representative Agreement will be governed by its terms and not by the terms of
this Agreement.

 

19

 

10. Governing Law and Arbitration. This Agreement and all disputes arising out of
Executive’s employment hereunder shall be governed by and construed in accordance with the laws of
the State of Indiana without reference to principles of conflict laws, notwithstanding the fact
that any party hereto is or may hereafter become domiciled or located in a different state. Any
dispute, controversy or claim arising out of or relating to this Agreement or Executive’s
employment, whether arising in contract, tort or otherwise, including all claims assertable under
any federal or state law prohibiting discrimination in employment, shall be resolved at arbitration
in accordance with the rules of the American Arbitration Association, except for any equitable or
injunctive relief sought by Employer under this Agreement. The arbitration shall be held at a
location within Marion County, Indiana. The parties hereto agree that any arbitration award
rendered on any claim submitted to arbitration shall be final and binding upon the parties, subject
to appeal, and that judgment may be entered upon any arbitration award by any circuit court located
in Indiana or by any other court of competent jurisdiction. The parties hereto agree that the
expenses of any arbitration shall be borne equally by the parties to the proceeding, except that
the party determined to have prevailed in any arbitration or civil action shall be awarded its
reasonable attorneys fees and costs of its own experts, evidence and the like. The parties hereto
acknowledge and agree that by making this agreement to submit all claims to binding arbitration,
they are waiving the right to litigate in a court of law, and to trial by jury if applicable, all
claims,
including all claims assertable under any federal or state law prohibiting discrimination in
employment.

 

20

 

11. Successors.

(a) This Agreement is personal to the Executive and, without the prior written consent of
Employer, shall not be assignable by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of and be enforceable by the
Executive’s legal representatives.

(b) This Agreement shall inure to the benefit of and be binding upon the Employer and its
successors and assigns.

(c) The Employer shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Employer expressly to assume and agree to perform this Agreement in the same manner and to the same
extent that the Employer would have been required to perform it if no such succession had taken
place. As used in this Agreement, “Employer” shall mean both Employer as defined above and any
such successor that assumes and agrees to perform this Agreement, by operation of law or otherwise.

12. Miscellaneous.

(a) The captions of this Agreement are not part of the provisions hereof and shall have no
force or effect. This Agreement may not be amended or modified except by a written agreement
executed by the parties hereto or their respective successors and legal representatives. This
Agreement supersedes all prior agreements between Employer and Executive with respect to its
subject matter, including Executive’s employment agreements with PrairieStone, and constitutes
(along with the documents referred to in this Agreement) a complete and exclusive
statement of the terms of the Agreement between Employer and Executive with respect to its
subject matter.

 

21

 

(b) All notices and other communications under this Agreement shall be in writing and shall be
given by hand to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:

If to the Executive:

Steven L. Zeller

120 E. Main Street, #1104

Lexington, KY 40507

If to the Employer:

Arcadia Resources, Inc.

9229 Delegates Row, Suite 260

Indianapolis, IN 46240

Attn: Chief Financial Officer

or to such other address as either party furnishes to the other in writing in accordance with this
Section. Notices and communications shall be effective when actually received by the addressee.

(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement. If any provision of this
Agreement shall be held invalid or unenforceable in part, the remaining portion of such provision
together with all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.

(d) Notwithstanding any other provision of this Agreement, Employer may withhold from amounts
payable under this Agreement all federal, state, local and foreign taxes that are required to be
withheld by applicable laws or regulations.

(e) The Executive’s or Employer’s failure to insist upon strict compliance with any provision
of, or to assert any right under, this Agreement (including, without limitation, the
right of the Executive to terminate employment for Good Reason pursuant to paragraph (d) of
Section 4 of this Agreement) shall not be deemed a waiver of such provision or right or of any
other provision of or right under this Agreement.

 

22

 

(f) This Agreement may be executed in several counterparts, each of which shall be deemed an
original, and said counterparts shall constitute but one and the same instrument.

13. The respective rights and obligations of the parties hereunder shall survive any
termination of the Executive’s employment to the extent necessary to the intended preservation of
such rights and obligations, including, but not by way of limitation, those rights and obligations
set forth in Sections 3, 5, 6, 8 and 9.

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the
authorization of the Board of Directors, Employer has caused this Agreement to be executed in its
name and on its behalf, all as of the day and year first above written.

ARCADIA RESOURCES, INC.

	 	 	 	 	 	 	 
	By:
	 	/s/ Marvin Richardson 	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Marvin Richardson	 	 
	 

	 	Title:
	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	EXECUTIVE	 	 
	 
	 	 	 	 	 	 
	/s/ Steven Zeller	 	 
	 	 	 
	Steven Zeller	 	 

 

23Exhibit 10.1

Exhibit 10.1

EMPLOYMENT LETTER

This EMPLOYMENT LETTER, dated as of May 7, 2009 (the “Employment Letter”), is between A.C.
Moore Arts & Crafts, Inc., a Pennsylvania corporation (“Company”), and David Abelman (“Executive”).

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending
to be legally bound hereby, the parties agree as follows:

1. Employment; Change of Control.

(a) The Company is pleased to offer Executive employment with the Company as set forth in this
Employment Letter, subject to the completion of the internal review and hiring process consistent
with the Company’s practices.

(b) The Board of Directors of the Company (the “Board”) has determined that it is in the best
interests of the Company and its shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of
Control (as defined in Appendix I) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the Executive’s full
attention and dedication to the Company currently and in the event of any threatened or pending
Change of Control, and to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other corporations. Therefore, in order
to accomplish these objectives if a Change of Control occurs, paragraphs 2 through 12 of this
Employment Letter (except paragraph 10 which shall continue) shall be superseded by Appendix I.

2. Effectiveness. This Employment Letter shall be effective as of the date hereof.

3. Position; Start Date. Executive’s title will be Executive Vice President and Chief
Marketing and Merchandising Officer. Executive will report directly to the Chief Executive
Officer. Executive’s employment with the Company will begin on May 7, 2009 (the “Start Date”).

4. Base Salary. Executive’s annual base salary will be $300,000, payable in regular
installments in accordance with the Company’s general payroll practices. Executive’s base salary
will be subject to review annually. Executive’s first performance and salary review is currently
anticipated to be in May 2010 and thereafter performance and base salary will be reviewed annually
on a schedule consistent with the Company’s practice for officers (such schedule currently
contemplated to be May of each year).

 

1

 

5. Sign-on Bonus. On the Start Date, Executive will receive a cash lump sum sign-on
bonus in the amount of $200,000 (the “Sign-on Bonus”). Each month (or any portion of such month)
that Executive remains employed by the Company, Executive will earn one-twenty-fourth (1/24th) of
the Sign-on Bonus. If Executive resigns his employment with the Company for any reason or is
terminated by the Company for cause (as defined below in paragraph 11) within twenty-four (24)
months of the Effective Date, Executive will repay the unearned portion of the Sign-on Bonus to the
Company.

If Executive’s employment is terminated by the Company for cause (as defined below) or by
Executive without Good Reason, Executive shall repay the unearned portion of the Sign-on Bonus to
Company. In the event that the Executive’s employment is terminated by the Company without cause
(as defined below) or by Executive with Good Reason after the payment of the sign-on bonus,
Executive shall be deemed to have earned One Hundred Percent (100%) of the Sign-on Bonus as of the
effective date of the termination of his employment, and Executive shall not be required to repay
any portion of the Sign-on Bonus. Notwithstanding anything to the foregoing in this paragraph or
in paragraph 9 below relating to relocation, Executive shall only have the right to terminate his
employment with Good Reason after the one-year anniversary of his Start Date. For purposes solely
of this Employment Agreement, and without reference or relation to, or otherwise superseding the
definition of Good Reason in Appendix I, Good Reason shall mean the occurrence of any one or more
of the following events without Executive’s prior written consent, unless Company fully cures the
circumstances constituting Good Reason (provided such circumstances are capable of cure) within
thirty (30) business days of receipt of written notice of such circumstances by Company from
Executive: (i) A material reduction in Executive’s titles, duties, authority and responsibilities,
or the assignment to Executive of any duties materially inconsistent with Executive’s position,
authority, duties or responsibilities without the written consent of Executive; (ii) Company’s
reduction of Executive’s annual base salary or bonus opportunity under the Annual Incentive Plan
(as defined below), each as in effect on the date hereof or as the same may be increased from time
to time; (iii) the relocation of Company’s headquarters to a location more than thirty-five (35)
miles from Company’s current headquarters in which Executive is employed, as contemplated by this
Employment Agreement; or (iv) Company’s failure to cure a material breach of its obligations under
this Employment Agreement within thirty (30) days after written notice is delivered to the Board by
Executive which specifically identifies the manner in which Executive believes that Company has
breached its obligations under the Agreement.

6. Annual Incentive Plan. During each fiscal year beginning in 2009 in which
Executive continues to be employed by the Company, he will be entitled to participate in the
Company’s annual incentive bonus plan (the “Annual Incentive Plan”) as administered and determined
by the Compensation Committee of the Board of Directors. In 2007 and 2008, executive vice
presidents were eligible to receive 75% of base salary at target. The Compensation Committee of
the Board of Directors restructured the 2009 Annual Incentive Plan as a discretionary plan. If the
Board or the Compensation Committee modifies such Annual Incentive Plan in subsequent years,
Executive shall continue to participate at a level no lower than the highest level established for
any Executive Vice President of the Company as administered and determined by the Compensation
Committee of the Board of Directors.

 

2

 

7. Long-Term Incentive Compensation. Executive will be eligible to participate in the
Company’s long-term incentive plan as administered and determined by the Compensation Committee of
the Board of Directors. Pursuant to the Company’s 2007 Stock Incentive Plan (the “2007 Plan”),
Executive will be granted 26,000 stock appreciation rights (“SARs”) and 35,000 shares of
performance accelerated restricted stock (“PARS”) on the Start Date. Pursuant to the 2007 Plan,
the grant of the PARS and SARs will be evidenced by, respectively, a Restricted Stock Agreement and
a Stock Appreciation Rights Agreement entered into between Executive and the Company.

8. Benefits. Executive will be entitled to receive benefits generally provided to
officers of the Company consistent with the Company’s practices, including without limitation, the
following:

	 	•	 	Medical, dental and prescription benefits.
	 
	 	•	 	Life insurance equal to 1.5 times his annual base salary, with a maximum
amount of $450,000; optional voluntary life insurance.
	 
	 	•	 	Long-term disability benefits; New Jersey short-term disability benefits.
	 
	 	•	 	Participation in the Company’s 401(k) plan.
	 
	 	•	 	Vacation (three (3) weeks in 2009).
	 
	 	•	 	Cell phone/blackberry.
	 
	 	•	 	Reimbursement for business expenses/use of a corporate credit card.

9. Relocation. The Company will provide Executive with the following relocation
benefits: (a) payment for temporary housing for the one hundred twenty (120) day period beginning
on the Start Date (the “Relocation Period”); (b) weekly meal allowance reimbursement of up to
$150.00 during the Relocation Period; (c) payment for bi-weekly round trip travel for either
Executive or his spouse for the purpose of relocation investigation and house hunting during the
Relocation Period; (d) arrangement and payment for the services of a moving firm in accordance with
the Company’s relocation policy for a relocation that takes place within 16 months of the Start
Date; (e) closing costs in an amount not to exceed $3,000 for the purchase of a new house/residence
within 16 months of the Start Date; and (f) reimbursement of the commission costs on the sale of
his house in Texas (the foregoing (a), (b), (c), (d), (e) and (f) are collectively referred to as
the “Relocation Benefits”). All Relocation Benefit payments or in-kind benefit shall be provided
during the Relocation Period and all reembursements and in-kind benefits shall comply with the
requirements of paragraph 16. For each month (or any portion of such month) that Executive remains
employed by the Company, Executive will earn one-twenty-fourth (1/24th) of the Relocation Benefits.
If his employment is terminated by Executive for any reason or by the Company for cause (as
defined below in paragraph 11) within twenty-four (24) months of the Effective Date, Executive will
repay the unearned portion of the Relocation Benefits to the Company. If Executive’s employment
is terminated by the Company for cause (as defined below) or by Executive without good reason (as
described below), Executive shall repay the unearned portion of the Relocation Benefits to Company.
In the event that the Executive is terminated by the company without cause (as defined below) or by
Executive with Good Reason after the payment of the Relocation Benefits, Executive shall be deemed
to have earned One Hundred Percent (100%) of the Relocation Benefits as of the effective date of
the termination of his employment, and Executive shall not be required to repay any portion of the Relocation Benefits. The Relocation Period may be extended for an additional sixty (60) days in the
event his house is not sold during the initial 120-day period.

 

3

 

10. Covenants.

(a) In consideration of the compensation to be paid to Executive as set forth in this
Employment Letter, the sufficiency of which Executive hereby acknowledges, Executive agrees that
for a period of twelve (12) months after termination of his employment (the “Non-Compete Period”),
Executive will not directly or indirectly own any interest in, manage, control, participate in,
consult with, render services for, or in any manner engage in any business competing with the
businesses of the Company or its subsidiaries (such businesses being the retail sale of arts and
crafts and related products), as such businesses exist or are in process on the date of the
termination of his employment, within a fifty (50) mile radius of any geographic location in which
the Company or its subsidiaries engage in such businesses or actively plan to engage in such
businesses. Nothing herein shall prohibit Executive from being a passive owner of not more than 2%
of the outstanding stock of any class of a corporation which is publicly traded and which competes
with the businesses of Company and its subsidiaries, so long as Executive has no direct or indirect
active participation in the business of such corporation.

(b) During the Non-Compete Period, Executive shall not directly or indirectly through another
person or entity (i) induce or attempt to induce any employee of the Company or any subsidiary to
leave the employ of the Company or such subsidiary, or in any way interfere with the relationship
between the Company or any subsidiary and any employee thereof, (ii) hire an employee of the
Company or any subsidiary, or (iii) induce or attempt to induce any customer, supplier, licensee,
licensor, franchisee or other business relation of the Company or any subsidiary to cease doing
business with the Company or such subsidiary, or in any way interfere with the relationship between
any such customer, supplier, licensee, licensor, franchisee, or business relation and the Company
or any subsidiary (including, without limitation, making any negative statements or communications
about the Company or its subsidiaries).

(c) The provisions of this paragraph 10 will be enforced to the fullest extent permitted by
the law in the state in which Executive resides or is employed at the time of the enforcement of
the provision. If, at the time of enforcement of this paragraph 10, a court shall hold that the
duration, scope or area restrictions stated herein are unreasonable under circumstances then
existing, the parties agree that the maximum duration, scope or area reasonable under such
circumstances shall be substituted for the stated duration, scope or area and that the court shall
be allowed to revise the restrictions contained herein to cover the maximum period, scope and area
permitted by law. Executive agrees that the restrictions contained in this paragraph 10 are
reasonable. In the event of the breach or a threatened breach by Executive of any of the
provisions of this paragraph 10, the Company, in addition and supplementary to other rights and
remedies existing in its favor, may apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive or other relief in order to enforce or prevent any
violations of the provisions hereof (without posting a bond or other security). In addition, in the
event of an alleged breach or violation by Executive of this paragraph 10, the Non-Compete Period shall be tolled until such breach or violation has been
duly cured

 

4

 

11. Severance and Benefits Prior to a Change of Control. If Executive’s employment is
terminated at any time by the Company without cause (as defined below) prior to a Change of
Control, Executive will receive (i) severance payments in the amount of six (6) months’salary
continuation at his then current rate, less any required withholdings or authorized deductions, in
equal monthly installments, plus (ii) health insurance benefits pursuant to the Company’s programs
as in effect from time to time, to the extent Executive participated immediately prior to the date
of such termination (“Insurance Benefits”) plus (iii) pro rata bonus (as defined below). Should
Executive remain continuously unemployed for six (6) months from the date of his termination, he
will receive an additional month of salary continuation at his then current rate and Insurance
Benefits for each month after the six (6) months that Executive remains unemployed, up to a maximum
of six (6) additional months of severance in the form of salary continuation at his then current
rate and Insurance Benefits. The total amount of salary continuation severance benefit to be paid
pursuant to this paragraph 11 shall not equal more than twelve (12) months’ base salary at
Executive’s then current rate. Likewise, Insurance Benefits will be provided for no more than
twelve (12) months following the termination date. Severance benefits in the form of salary
continuation shall be paid at the same time the Executive’s salary would have been paid based on
the Company’s normal payroll practices had the Executive continued employment through the severance
term. Severance in the form of pro rata bonus shall be paid within sixty (60) days of the
effective date of termination of employment. Executive agrees to (a) actively seek employment in
good faith and (b) notify the Company immediately upon obtaining employment.

Cause shall mean the a determination in good faith by the Company of either (i) failure of the
Executive to perform substantially the Executive’s duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to the Executive by the Chief Executive
Officer which specifically identifies the manner in which the Chief Executive Officer believes that
the Executive has not substantially performed the Executive’s duties; provided however, that
Executive shall have one opportunity to cure the failure so identified for sixty days from the
written demand, or (ii) the engaging by the Executive in illegal conduct or gross misconduct, in
either case, in violation of the Company’s Code of Business. Any act, or failure to act, based
upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of
the Chief Executive Officer or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the
best interests of the Company. The cessation of employment of the Executive shall not be deemed to
be for Cause unless and until there shall have been delivered to the Executive a written notice
from the Chief Executive Officer, a copy of which notice has been previously delivered to the Board
of Directors, finding that, in the good faith opinion of the Chief Executive Officer, the Executive
is guilty of the conduct described in subsection the aforementioned sections (i) or (ii) above, and
specifying the particulars thereof in detail.

 

5

 

Pro rata bonus shall mean the pro rata portion (calculated as if the “target” amount under
such plan has been reached) under any current Annual Incentive Plan from the first day of the Company’s fiscal year of the year of termination through the termination date. No payment of any
sum pursuant to this paragraph 11 will be made unless Executive shall have executed and delivered
to the Company a release of any and all claims against the Company and its subsidiaries (and their
respective present and former officers, directors, employees and agents), all in form and substance
as provided by counsel to the Company (the “Release”) and any waiting period or revocation period
provided by law for the effectiveness of the Release shall have expired without Executive having
revoked the Release.

12. At Will. Executive may terminate his employment with the Company at any time and
for any reason whatsoever. Likewise, the Company may terminate his employment at any time and for
any reason whatsoever, with or without cause or advance notice. This at-will employment
relationship cannot be changed except in writing signed by an officer of the Company so authorized.

13. No Confidences. During his employment, Executive shall not improperly use,
communicate, disclose, provide commentary regarding or make available any proprietary information
or trade secrets of any former employer or any other person or entity to whom or to which Executive
has any duty of confidentiality. Further, Executive warrants that Executive shall not bring onto
the Company’s premises or transfer to the Company’s electronic media any documents or information
that is not generally known to the public, belonging to any former employer or other person or
entity to whom or to which Executive owes a duty of confidentiality unless Executive has written
consent from the former employer or other person or entity. Executive acknowledges that Executive
is taking employment with the Company and is agreeing to all of the terms of this letter
voluntarily and without any coercion or restraint.

14. Other Agreements. Consistent with the Company’s practices, Executive will enter
into agreements relating to confidentiality and arbitration, along with equity agreements from time
to time, with the Company as a condition of his employment. This Employment Letter replaces and
supersedes any and all prior discussions, offers, communications or agreements of any sort
whatsoever previously provided to Executive by the Company.

15. Counterparts. This Employment Letter may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together constitute one and the
same letter.

16. Code Section 409A. Unless otherwise expressly provided, any payment of
compensation by Company to the Executive, whether pursuant to this Agreement or otherwise, shall be
made within two and one-half months (21/2 months) after the end of the later of the calendar year or
the Company’s fiscal year in which the Executive’s right to such payment vests (i.e., is not
subject to a substantial risk of forfeiture for purposes of Section 409A of the Internal Revenue
Code of 1986, as amended (“Code Section 409A”)).

All payments of “nonqualified deferred compensation” (within the meaning of Code Section 409A
are intended to comply with the requirements of Code Section 409A, and shall be interpreted in
accordance therewith. Neither party individually or in combination may accelerate, offset or
assign any such deferred payment, except in compliance with Code Section 409A, and no amount shall
be paid prior to the earliest date on which it is permitted to be paid

 

6

 

under Code Section 409A. In the event that an amount becomes payable to the Executive after
termination of employment, the Company shall determine whether such payment is subject to the
requirements of Code Section 409A (a) (2)(A)(i) and Code Section 409A (a)(2)(B)(i) (hereinafter
referred to as the “Specified Employee Rule”). The Company shall make such determination and
provide written notice thereof to the Executive prior to the earlier of the date that any such
amounts would be paid to the Executive without regard to Code Section 409A or within thirty (30)
days after his termination of employment. Upon the request of the Executive, the Company agrees to
promptly provide to him such information that the Executive may reasonably request with regard to
its determination. In the event that the Company determines that an amount payable to the
Executive after his termination of employment is subject to the Specified Employee Rule, then no
distribution of such amount shall be made to the Executive on account of his separation from
service before the date which is six (6) months after the date of his separation from service (or
if earlier, the date of death of the Executive) as and to the extent required under Code Section
409A. The aggregate amount that would have been payable to the Executive but for the restrictions
imposed by the prior sentence shall be paid to the Executive as soon as permitted by Code Section
409A, without the imposition of excise taxes.

All expense reimbursement or in-kind benefits provided under this Agreement or, unless
otherwise specified, under any Company program or policy subject to Code Section 409A shall comply
with the following rules: (i) the amount of expenses eligible for reimbursement or in-kind benefits
provided during one calendar year may not affect the benefits provided during any other year; (ii)
reimbursements shall be paid no later than the end of the calendar year following the year in which
the Executive incurs such expenses, and the Executive shall take all actions necessary to claim all
such reimbursements on a timely basis to permit the Company to make all such reimbursement payments
prior to the end of said period, and (iii) the right to reimbursement or in-kind benefits shall not
be subject to liquidation or exchange for another benefit.

IN WITNESS WHEREOF, the parties hereto have caused this Employment Letter to be duly executed
and delivered as of the date first written above.

	 	 	 	 	 
	 	 	 
	 	/s/ David Abelman
 	 
	 	EXECUTIVE 	 
	 	 	 
	 

	 	 	 	 	 
	 	A.C. MOORE ARTS & CRAFTS, INC.

 	 
	 	By:  	/s/ Rick A. Lepley
 	 
	 	 	Rick A. Lepley 	 
	 	 	President and Chief Executive Officer 	 
	 

 

7

 

APPENDIX I

CHANGE OF CONTROL PROVISIONS

To Employment Letter of David Abelman (“Executive”)

If a Change of Control (as defined in this Appendix I) of the Company occurs, paragraphs 2
through 12 of the Employment Letter (except paragraph 10 which shall continue) shall be superseded
by this Appendix I.

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1. Effective Date.

For the purpose of this Appendix I, the “Effective Date” shall mean the date on which a Change
of Control (as defined in Section 2 of this Appendix I) occurs. Anything in the Employment Letter
to the contrary notwithstanding, if a Change of Control occurs and if the Executive’s employment
with the Company is terminated prior to the date on which the Change of Control occurs, and if it
is reasonably demonstrated by the Executive that such termination of employment (i) was at the
request of a third party who has taken steps reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or anticipation of a Change of Control, then for all
purposes of the Employment Letter and this Appendix I, the “Effective Date” shall mean the date
immediately prior to the date of such termination of employment.

2. Change of Control. For the purpose of this Appendix I and the Employment Letter, a
“Change of Control” shall mean:

(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
more than 50% of either (i) the then-outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (ii) the combined voting power of the then-outstanding
voting securities of the Company entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection
(a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (iv) any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or

(b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease
for any reason to constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the Board; or

 

8

 

(c) Consummation of a reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company (a “Business Combination”), in each case,
unless, following such Business Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common
stock and the combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common
stock of the corporation resulting from such Business Combination, or the combined voting power of
the then-outstanding voting securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least a majority of the members of the board
of directors of the corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or

(d) Approval by the shareholders of the Company of a complete liquidation or dissolution of
the Company.

3. Employment Term. The Company hereby agrees to continue the Executive in its
employ, and the Executive hereby agrees to remain in the employ of the Company subject to the terms
and conditions of the Employment Letter and this Appendix I, for the period commencing on the
Effective Date and ending on the twelfth month anniversary of such date (the “Employment Term”).
Such period may be extended in writing by the mutual agreement of the Company and Executive at any
time prior to such anniversary.

4. Terms of Employment.

(a) Position and Duties.

(i) During the Employment Term, (A) the Executive’s position, authority, duties and
responsibilities shall be at least commensurate in all material respects with the most significant
of those held, exercised and assigned to him at any time during the 120-day period immediately
preceding the Effective Date and (B) the Executive’s services shall be performed at the location where the Executive was employed immediately preceding the Effective
Date or any office or location less than 35 miles from such location.

 

9

 

(ii) During the Employment Term, and excluding any periods of vacation and sick leave to which
the Executive is entitled, the Executive agrees to devote Executive’s best efforts and Executive’s
full business time and attention to the business and affairs of the Company and its subsidiaries.
During the Employment Term it shall not be a violation of this Appendix I or the Employment Letter
for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions, and (C) manage
personal investments, so long as such activities do not significantly interfere with the
performance of the Executive’s responsibilities as an employee of the Company in accordance with
this Appendix I and the Employment Letter. It is expressly understood and agreed that to the extent
that any such activities have been conducted by the Executive prior to the Effective Date, the
continued conduct of such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive’s responsibilities to the Company.

(b) Compensation.

(i) Base Salary. During the Employment Term, the Executive shall receive an annual base
salary (“Annual Base Salary”), which shall be paid at a monthly rate, at least equal to twelve
times the highest monthly base salary paid or payable, including any base salary which has been
earned but deferred, to the Executive by the Company and its affiliated companies in respect of the
twelve-month period immediately preceding the month in which the Effective Date occurs. During the
Employment Term, the Annual Base Salary shall be reviewed no more than 12 months after the last
salary increase awarded to the Executive prior to the Effective Date. Any increase in Annual Base
Salary shall not serve to limit or reduce any other obligation to the Executive under the
Employment Letter and this Appendix I. Annual Base Salary shall not be reduced after any such
increase and the term Annual Base Salary as utilized in the Employment Letter and this Appendix I
shall refer to Annual Base Salary as so increased. As used in this Appendix I, the term “affiliated
companies” shall include any company controlled by, controlling or under common control with the
Company.

(ii) Annual Bonus; Long-term incentive plan; Benefits. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the Employment Term, an annual bonus
(the “Annual Bonus”) in cash at least equal to the Executive’s bonus under the Company’s annual
bonus plans or any comparable bonus under any predecessor or successor plan or plans, for the last
full fiscal year prior to the Effective Date (annualized in the event that the Executive was not
employed by the Company for the whole of such fiscal year). Each such Annual Bonus shall be paid no
later than March 15th of the fiscal year next following the fiscal year for which the Annual Bonus
is awarded. Executive will continue to be eligible to participate in the Company’s long-term
incentive plan as administered and determined by the Compensation Committee of the Board of
Directors and to be entitled to receive benefits generally provided to officers of the Company
consistent with the Company’s practices.

 

10

 

5. Termination of Employment.

(a) Death or Disability. The Executive’s employment shall terminate automatically upon the
Executive’s death during the Employment Term. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Term (pursuant to the definition of
Disability set forth below), it may give to the Executive written notice in accordance with this
Appendix I and the Employment Letter of its intention to terminate the Executive’s employment. In
such event, the Executive’s employment with the Company shall terminate effective on the 30th day
after receipt of such notice by the Executive (the “Disability Effective Date”), provided that,
within the 30 days after such receipt, the Executive shall not have returned to full-time
performance of the Executive’s duties. For purposes of this Appendix I and the Employment Letter,
“Disability” shall mean the absence of the Executive from the Executive’s duties with the Company
on a full-time basis for 90 consecutive days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive’s legal representative.

(b) Cause. The Company may terminate the Executive’s employment during the Employment Term
for Cause. For purposes of this Appendix I and the Employment Letter, “Cause” shall mean:

(i) the failure of the Executive to perform substantially the Executive’s duties with the
Company or one of its affiliates (other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial performance is delivered to the
Executive by the Chief Executive Officer which specifically identifies the manner in which the
Chief Executive Officer believes that the Executive has not substantially performed the Executive’s
duties; provided however, that Executive shall have one opportunity to cure the failure so
identified for sixty days from the written demand, or

(ii) the engaging by the Executive in illegal conduct or gross misconduct, in either case, in
violation of the Company’s Code of Ethical Business Conduct.

Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of the Chief Executive Officer or based upon the advice of counsel
for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive
in good faith and in the best interests of the Company. The cessation of employment of the
Executive shall not be deemed to be for Cause unless and until there shall have been delivered to
the Executive a written notice from the Chief Executive Officer, a copy of which notice has been
previously delivered to the Board of Directors, finding that, in the good faith opinion of the
Chief Executive Officer, the Executive is guilty of the conduct described in subsection 5 (b)(i) or
(ii) above, and specifying the particulars thereof in detail.

(c) Good Reason. The Executive’s employment may be terminated by the Executive for Good
Reason. For purposes of this Appendix I and the Employment Letter, “Good Reason” shall mean:

 

11

 

(i) the assignment to the Executive of any duties inconsistent in any respect with the
Executive’s position, authority, duties or responsibilities as contemplated by Section 4(a) of this
Appendix I, or any other action by the Company which results in a material diminution in such
position, authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;

(ii) any failure by the Company to comply with any of the provisions of Section 4(b) of this
Appendix I, other than an isolated, insubstantial and inadvertent failure not occurring in bad
faith and which is remedied by the Company promptly after receipt of notice thereof given by the
Executive;

(iii) the Company’s requiring the Executive to be based at any office or location other than
as provided in Section 4(a)(i)(B) of this Appendix I;

(iv) any purported termination by the Company of the Executive’s employment otherwise than as
expressly permitted by this Appendix I; or

(v) any failure by the Company to require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform the this Appendix I and the
Employment Letter in the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place.

(d) Date of Termination. “Date of Termination” means (i) if the Executive’s employment is
terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of
the notice of termination, (ii) if the Executive’s employment is terminated by the Company other
than for Cause or Disability, the date on which the Company notifies the Executive of such
termination and (iii) if the Executive’s employment is terminated by reason of death or Disability,
the date of death of the Executive or the Disability Effective Date, as the case may be.

6. Obligations of the Company upon Termination.

(a) Good Reason; Other Than for Cause, Death or Disability. If, during the Employment Term,
the Company shall terminate the Executive’s employment other than for Cause, death or Disability or
the Executive shall terminate Executive’s employment for Good Reason:

(i) the Company shall pay to the Executive in a single lump sum payment in cash within 30 days
after the Date of Termination the aggregate of the following amounts:

(A) the sum of (1) the Executive’s Annual Base Salary through the Date of Termination to the
extent not theretofore paid, plus (2) the product of (I) the target Annual Bonus paid or payable,
for the most recently completed fiscal year during the Employment Term and (II) a fraction, the
numerator of which is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365 (“Pro Rata Bonus”), plus (3) any compensation previously deferred by the Executive and not
theretofore previously paid shall be paid in accordance with the terms of the plan pursuant to
which deferral was made and (4) the amount equal to the Executive’s Annual Base Salary through the
twelfth month anniversary of the Date of Termination.

 

12

 

(ii) The Company shall provide all benefits as are, from time to time, maintained for officers
of the Company, including without limitation, medical and other insurance plans to the Executive
through the twelfth month anniversary of the Date of the Termination of Executive’s employment
pursuant to or, if not pursuant to, which are substantially equal to the Company’s insurance
programs in effect and to the extent Executive participated immediately prior to the date of such
termination, provided that if the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) applies
to the provision of health insurance benefits for any part of the period of benefit continuation
provided for by this paragraph, Executive will make all necessary elections and such benefits will
run concurrently with and satisfy the continuation coverage requirements of this paragraph for the
period to which COBRA applies.

No payment of any sum nor the receipt of any benefit shall be due to Executive under this Section
6(a) unless and until Executive shall have executed and delivered to the Company a release of any
and all claims against the Company and its subsidiaries (and their respective present and former
officers, directors, employees and agents — collectively the “Released Parties”) and a covenant
not to sue the Released Parties, all in form and substance as provided by counsel to the Company
(the “Release”) and any waiting period or revocation period provided by law for the effectiveness
of such Release shall have expired without Executive’s having revoked such Release. In the event
Executive shall decline or fail for any reason to execute and deliver such Release, the Executive
shall be entitled to receive only those amounts provided pursuant to Section 6(d) provided for an
Executive whose employment is terminated by the Company for Cause or by Executive without Good
Reason.

(b) Death. If the Executive’s employment is terminated by reason of the Executive’s death
during the Employment Term, this Appendix I and the Employment Letter shall terminate without
further obligations to the Executive’s legal representatives under this Appendix I and the
Employment Letter, except that Executive, or Executive’s estate if applicable, shall be entitled to
receive the sum of (i) Executive’s Annual Base Salary through the Date of Termination, (ii)
Executive’s Pro Rata Bonus (as defined in Section 6(a)(i)(A)(2)) and (iii) the timely payment or
provision of any other amounts or benefits required to be paid or provided or which the Executive
is eligible to receive under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies. The amounts set forth in Section 6(b)(i) and (ii) shall be
paid to the Executive’s estate, as applicable, in a lump sum in cash within 30 days of the Date of
Termination.

(c) Disability. If the Executive’s employment is terminated by reason of the Executive’s
Disability during the Employment Term, this Appendix I and the Employment Letter shall terminate
without further obligations to the Executive, except that Executive shall be entitled to receive
the sum of (i) Executive’s Annual Base Salary through the Disability Effective Date and (ii)
Executive’s Pro Rata Bonus (as defined in Section 6(a)(i)(A)(2)) and (iii) the timely payment or
provision of other benefits required to be paid or provided to Executive or which Executive is
eligible to receive under any plan, program, practices or policies relating to disability of the Company and its affiliated Companies. The amounts set forth in Section
6(c)(i) and (ii) shall be paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination.

 

13

 

(d) Cause; Other than for Good Reason. If the Executive’s employment shall be terminated for
Cause or Executive voluntarily terminates employment without Good Reason during the Employment
Term, this Appendix I and the Employment Letter shall terminate without further obligations to the
Executive other than for the Executive’s Annual Base Salary through the Date of Termination and
timely payment or provision of any other applicable benefits, in each case to the extent
theretofore unpaid.

7. Options, SARs and Restricted Stock. All options to purchase and stock appreciation
rights in common stock in the Company and the grants of common stock in the Company with vesting
restrictions held by Executive on the date of a Change of Control shall immediately be deemed
vested and the options and stock appreciation rights shall immediately become exercisable on the
date of the Change in Control and Executive shall have until the end of the applicable original
term of each such option and stock appreciation right to exercise such option and stock
appreciation right; provided, however, that if Executive’s employment with the Company is
terminated for any reason (other than Cause) after the Change in Control, Executive shall have
until the earlier of (1) the end of the applicable original term of each such option and stock
appreciation right and (2) 18 months after the Date of Termination to exercise each such option and
stock appreciation right post-termination. In the event that Executive’s employment with the
Company is terminated for Cause, all options, stock appreciation rights and unvested restricted
stock held by Executive shall terminate immediately.

8. Nonexclusivity of Rights. Nothing in this Appendix I or the Employment Letter
shall prevent or limit the Executive’s continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies and amounts which are
vested benefits or which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or any of its affiliated
companies at or subsequent to the date of termination of employment shall be payable in accordance
with such plan, policy, practice or program or contract or agreement except as explicitly modified
by this Appendix I and the Employment Letter.

9. Code Section 409A. Unless otherwise expressly provided, any payment of
compensation by Company to the Executive, whether pursuant to this Agreement or otherwise, shall be
made within two and one-half months (21/2 months) after the end of the later of the calendar year or
the Company’s fiscal year in which the Executive’s right to such payment vests (i.e., is not
subject to a substantial risk of forfeiture for purposes of Section 409A of the Internal Revenue
Code of 1986, as amended (“Code Section 409A”)).

 

14

 

All payments of “nonqualified deferred compensation” (within the meaning of Code Section 409A
are intended to comply with the requirements of Code Section 409A, and shall be interpreted in
accordance therewith. Neither party individually or in combination may accelerate, offset or
assign any such deferred payment, except in compliance with Code Section 409A, and no amount shall be paid prior to the earliest date on which it is permitted to be paid
under Code Section 409A. In the event that an amount becomes payable to the Executive upon
termination of employment, the Company shall determine whether such payment is subject to the
requirements of Code Section 409A (a) (2)(A)(i) and Code Section 409A (a)(2)(B)(i) (hereinafter
referred to as the “Specified Employee Rule”). The Company shall make such determination and
provide written notice thereof to the Executive prior to the earlier of the date that any such
amounts would be paid to the Executive without regard to Code Section 409A or within thirty (30)
days after his termination of employment. Upon the request of the Executive, the Company agrees to
promptly provide to him such information that the Executive may reasonably request with regard to
its determination. In the event that the Company determines that an amount payable to the
Executive after his termination of employment is subject to the Specified Employee Rule, then no
distribution of such amount shall be made to the Executive on account of his separation from
service before the date which is six (6) months after the date of his separation from service (or
if earlier, the date of death of the Executive) as and to the extent required under Code Section
409A. The aggregate amount that would have been payable to the Executive but for the restrictions
imposed by Code Section 409A shall be paid to the Executive as soon as permitted by Code Section
409A without the imposition of excise taxes.

All expense reimbursement or in-kind benefits provided under this Agreement or, unless
otherwise specified, under any Company program or policy subject to Code Section 409A shall comply
with the following rules: (i) the amount of expenses eligible for reimbursement or in-kind benefits
provided during one calendar year may not affect the benefits provided during any other year; (ii)
reimbursements shall be paid no later than the end of the calendar year following the year in which
the Executive incurs such expenses, and the Executive shall take all actions necessary to claim all
such reimbursements on a timely basis to permit the Company to make all such reimbursement payments
prior to the end of said period, and (iii) the right to reimbursement or in-kind benefits shall not
be subject to liquidation or exchange for another benefit.

10. Code Section 280G. If it shall be determined that any payment or distribution by
the Company to or for the benefit of the Employee under this Agreement or any other arrangements
between the parties would be subject to the deduction limitations and excise tax imposed by
Sections 280G and 4999 of the Internal Revenue Code, (including any applicable interest and
penalties, the “Excise Tax”), then the parties agree that the Company shall reduce the aggregate
amount of all such payments or distributions or other arrangements as may be necessary to avoid the
application of any Excise Tax.

 

15

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