EMPLOYMENT AGREEMENT DATED AS OF August 28, 2006 BETWEEN PAPERFREE MEDICAL SOLUTIONS, INC. AND CRAIG S. BARROW
EXHIBIT
10.3
DATED
AS
OF August 28, 2006
BETWEEN
PAPERFREE MEDICAL SOLUTIONS, INC. AND XXXXX X. XXXXXX
XXXXX
X.
XXXXXX ("Executive") and PAPERFREE MEDICAL SOLUTIONS, INC. ("Company") hereby
agree as follows:
1.
Term.
The term of Executive's employment by Company under this Agreement (the "Term")
shall commence on and as of August 28, 2006 for a four-month term ending
December 27, 2006, and continue thereafter for successive monthly terms (the
initial four-month term and each one-month term thereafter, collectively the
"Term"), unless either Company or Executive gives notice to the other at least
one (1) month in advance of the expiration of the current term that it wishes
to
terminate this Agreement, in which event this Agreement shall terminate as
of
the end of such term, unless earlier terminated as hereafter
provided.
2.
Title
and Duties. During the Term, Executive shall be employed by Company as Chief
Financial Officer ("CFO") reporting to the Chief Executive Officer and the
Board
of Directors of the Company. Executive shall devote his full-time attention
and
energies to the business of the Company; provided, however, that the foregoing
shall not preclude Executive from engaging in charitable and community affairs,
or participating as a director of a non competing business company, or managing
his personal investments. Executive shall perform such duties, which shall
not
be inconsistent with his position as CFO of Company, as are assigned to him
from
time to time by the Chairmen of the Board of Company and/or the Chief Executive
Officer, and any other duties undertaken or accepted by Executive consistent
with his position as Chief Financial Officer of the Company.
3.
Salary. Executive shall receive a salary of $12,000 per month during the first
Term. Executive's salary shall be reviewed at least annually. Salary payments
shall be made in equal installments in accordance with Company's then prevailing
payroll policy.
4.
Stock
Warrants. Subject to Board approval, Executive shall be granted stock warrants
(the "Two Million Warrants") to purchase an aggregate of Two Million (2,000,000)
shares of common stock of the Company. The Two Million Warrants are deemed
to be
of record as of January 1, 2007. The Two Million Warrants shall be granted
in
accordance with, and subject to the following:
(a)
The
exercise price of the Two Million Warrants shall be equal to the closing price
plus Ten Percent (10%) per share of the common stock of the Company on the
day
before this Agreement is executed, delivered, and announced. The Two Million
Warrants may be exercised at any time after vesting but prior to
expiration.
(b)
The
Two Million Warrants shall be subject to the terms and conditions of the 2004
Directors, Officers and Consultants Stock Option, Stock Warrant, and Stock
Award
Plan; a copy of which is attached hereto and incorporated herein by reference
as
Exhibit "A".
(c)
The
Two Million Warrants shall vest in such shares according to the following
schedule:
|
Tranche
|
No.
of Shares
|
Vesting
|
|
1
|
1,000,000
|
Immediately
upon execution of this Agreement
|
|
2
|
1,000,000
|
January
1, 2007
|
The
vesting schedule shall be accelerated in the event of a
Non-Fault Termination (as defined in Section 11).
(d)
In
the event there is a Change of Control at any time during the Term, then the
acceleration of the vesting schedule of the Two Million Warrants and the
exercisiability of the Two Million Warrants shall be governed by the Plan upon
such Change of Control.
(e)
The
Two Million Warrants shall expire on the earlier of ten years from the date
of
grant or the termination date plus two (2) years after termination of
Executive's employment with Company.
(f)
In
the event the outstanding shares of common stock of Company are changed into
or
exchanged for a different number or kind of shares or other securities of
Company or of another corporation by reason of merger, consolidation, other
reorganization, reclassification, combination of shares, stock split-up or
stock
dividend, rights of the Two Million Warrants granted hereunder, the number
of
subject shares and the exercise price (and other terms herein relating thereto)
shall be adjusted appropriately.
5.
Benefits. Executive shall be entitled to receive the following
benefits:
(a)
Health care coverage equivalent to that provided to the Company's other
executive officers at the Executive’s option subject to the stated Enrollment
Periods then prevailing.
(b)
Reimbursement of reasonable living expenses in the Kokomo area to a monthly
maximum of one thousand two hundred fifty dollars ($1,250) per month; contingent
on submission of expense report(s) under prevailing policies.
6.
Reimbursement for Expenses. Executive shall be expected to incur various
business expenses customarily incurred by persons holding like positions,
including but not limited to traveling, entertainment and similar expenses,
all
of which are to be incurred by Executive in the belief that they will benefit
the Company. Subject to Company's policy regarding the reimbursement and
non-reimbursement of such expenses, Company shall reimburse Executive for such
expenses from time to time, at Executive's request, and Executive shall account
to Company for such expenses.
7.
Protection of Company's Interests.
(a)
During the Term of Executive's employment by Company, Executive will not compete
in any manner, directly or indirectly, whether as a principal, employee,
consultant, agent, owner or otherwise, with Company or any affiliate thereof
except that the foregoing will not prevent Executive from holding at any time
less that 5% of the outstanding capital stock of any company whose stock is
publicly traded.
(b)
To
the extent permitted by law, all rights worldwide with respect to any and all
intellectual or other property of any nature produced, created or suggested
by
Executive during the Term of his employment or resulting from his service shall
be deemed to be a work for hire and shall be the sole and exclusive property
of
Company. Executive agrees to execute, acknowledge and deliver to Company, at
Company's request, such further documents as Company finds appropriate to
evidence Company's rights in such property. Any confidential and/or proprietary
information of Company or any affiliate thereof (including, without limitation,
any information relating to the identities, capabilities, compensatory and
contractual arrangements and/or general personnel data of employees of Company
and its affiliates) shall not be used by Executive or disclosed or made
available by Executive to any person except as required in the course of his
employment, and upon expiration or earlier termination of the term of this
Agreement, Executive shall return to Company all such information that exists
in
written or other physical form (and all copies thereof) under his control.
Executive agrees to sign the Company's standard form of confidentiality
agreement contemporaneously with the execution and delivery of this
Agreement.
8.
Termination. In addition to any right to terminate under Section 1
above:
(a)
Company shall have the right to terminate Executive's employment with Company
under the following circumstances:
(i)
Upon
death of Executive;
(ii)
Upon
notice from the Company to Executive in the event of an
illness
or other disability which has totally and permanently
incapacitated
him from performing his duties as Executive on a
substantially
full-time basis as described in the Company's long
term
disability plan;
(iii)
For
good cause immediately upon notice from Company. Termination
by
Company of Executive's employment for "good cause" as used in
this
Agreement shall mean actual fraud, embezzlement or
intentional
misconduct which has caused demonstrable and serious
injury
to
the Company; or
(iv)
Conviction of a felony or crime of moral turpitude which has
caused
serious injury to the Company.
(b)
If
Executive's employment is terminated pursuant to Section 8(a)(iii) or 8(a)(iv)
above, Executive's rights and Company's obligations hereunder, and all unvested
stock warrants granted in accordance with this Agreement which have not already
vested shall forthwith terminate in their entirety, except that, notwithstanding
the foregoing, (i) the expiration date of any Warrants which have already vested
in accordance with this Agreement shall be 30 days after the date of termination
pursuant to Section 9(a).
(c)
If
Executive's employment is terminated pursuant to this Section 8 no Termination
Payment (as defined in Section 10) shall be payable.
9.
Termination by Executive. Prior to the expiration of the Term, Executive shall
have the right to terminate his employment under this Agreement upon 10 days'
notice to Company given within 30 days following the occurrence of any of the
following events, provided that Company shall have 10 days after the date such
notice has been given to Company in which to cure the conduct or cause specified
in such notice:
(a)
Executive is not elected or retained in accordance with Section 2 as
CFO;
(b)
There
is a significant change in the nature or scope of the Executive's authority,
powers, functions, duties or responsibilities;
(c)
There
is a substantial and continued reduction in the level of support services,
staff, secretarial and other assistance, office space and accoutrements
available to a level below that which is reasonably necessary for the
performance of Executive's duties;
(d)
Company shall fail to issue stock pursuant to Executive's stock warrants
provided for herein or shall reduce his salary or shall deny Executive
eligibility for annual discretionary bonuses, or Company shall fail to make
any
compensation payment required hereunder;
(e)
A
Change of Control shall occur; and
(f)
Any
breach of this agreement by the Company.
10.
Termination Payment. If a Non-Fault Termination (as defined below) of
Executive's employment with Company shall occur other than by means of the
death
or disability of Executive, Executive shall be entitled to receive a lump sum
payment equal to double the Executive's monthly salary (Termination Payment).
The Termination Payment shall be made to Executive not later than 30 days after
the date of such Non-Fault Termination. "Non-Fault Termination" shall mean
Executive's employment with Company shall be terminated (i) without cause,
(ii)
be reason of death or total and permanent disability pursuant to Section 8(a)(i)
or (ii) hereof, or (iii) Executive shall validly terminate his employment
pursuant to Section 9 hereof. Except for Executive's rights under Sections
5(e),
5(f) and 6(e), which shall remain in full force and effect after any Non-Fault
Termination of this Agreement, and for the acceleration of the vesting of the
Two Million Warrants, the Termination Payment described in this Section 10
shall
be Executive's sole and exclusive remedy under this Agreement in the event
of a
Non-Fault Termination.
11.
Assignment. Company may assign this Agreement or all or any part of its rights
hereunder to any entity that succeeds to all or substantially all of Company's
assets or that holds, directly or indirectly, all or substantially all of the
capital stock of Company or that is otherwise a successor in interest to Company
generally, and this Agreement shall insure to the benefit of, and be binding
upon, such assignee or successor in interest. This Agreement is personal to
Executive and Executive may not, without the express written permission of
Company, assign or pledge any rights or obligations hereunder to any person,
firm, corporation or other entity.
12.
No
Conflict with Prior Agreements. Executive represents and warrants to Company
that, to the best of his personal knowledge and belief, neither the execution
and delivery of this Agreement, his commencement of employment hereunder nor
the
performance of his duties hereunder conflicts with any contractual commitment
on
his part of any third party or violates or interferes with any rights of any
third party.
13.
Key
Man Insurance. Company shall have the right to secure, in its own name or
otherwise, and at its own expense, life, disability, accident or other insurance
covering Executive and Executive shall have no right, title or interest in
or to
such insurance. Executive shall assist Company in procuring such insurance
by
submitting to reasonable examinations and signing such applications and other
instruments as may be required by the insurance carriers to which applications
is made for any such insurance.
14.
Post-Termination Obligation. After the expiration or earlier termination of
the
Executive's employment hereunder for any reason whatsoever, Executive shall
not
either alone or jointly, with or on behalf of others, either directly or
indirectly, expressly or implied, whether as principal, partner, agent,
shareholder, director, employee, consultant or otherwise, at any time during
a
period of two years following such expiration or termination, solicit in any
manner whatsoever the employment or engagement of, either for his own account
or
for any other person, firm, company or other entity, any person who is employed
by Company or any affiliated entity, whether or not such person would commit
any
breach of his contract of employment by reason of his leaving the service of
Company or any affiliated entity.
15.
Reimbursement of Legal Expenses. Company agrees to reimburse Executive for
his
reasonable out-of-pocket legal expenses and costs incurred in connection with
the negotiation and preparation of this Agreement.
16.
Entire Agreement, Amendment, Waiver, Etc.
(a)
This
Agreement supersedes all prior and/or contemporaneous agreement and/or
statements, whether written or oral, concerning the terms of Executive's
employment, and no amendment or modification of this Agreement shall be binding
unless set forth in writing signed by Company and Executive. No waiver by either
party of any breach by the other party of any provision or condition of this
Agreement shall be effective unless in writing and signed by the party effecting
the waiver, and no such waiver shall be deemed a waiver of any similar or
dissimilar provision or condition at the same or any prior or subsequent
time.
(b)
All
payments required to be made to Executive hereunder, whether during the term
of
his employment hereunder or otherwise, shall be subject to all applicable
federal, state and local tax withholding laws.
(c)
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Indiana. In the event of any controversy or claim by either party
hereunder, the prevailing party in any final and legally binding adjudication
(as to which all periods for the filing of any appeal have expired) with respect
to such controversy or claim shall be entitled to reimbursement from the losing
party for reasonable attorney's fees and costs and for all other reasonable
expenses of such adjudication.
17.
Notices. All notices that either party is required or may desire to give the
other shall be in writing and shall be effective (i) upon personal delivery
or
(ii) three business days after deposit of the same with the United States Postal
Service for delivery by certified mail, return receipt requested, addressed
to
the party to be given notice as follows:
To
Company: PaperFree Medical Solutions, Inc.
000
Xxxx
Xxxxxxxx Xxxxxx
Xxxxxx,
Xxxxxxx 00000
Attn:
Xxxxxxx Xxxxx, Chairman
To
Executive: XXXXX X. XXXXXX
0000
Xxxxxxxx Xx.
Xxxxxx
Xxxxx, Xxxx 00000
Either
party may by written notice designate a different address for giving notices.
The date of mailing of any such notices shall be deemed to be the date on which
such notice is given.
18.
Arbitration. Any dispute arising out of this Agreement shall be determined
by
arbitration in Indianapolis, Indiana, under the rules of the American
Arbitration Association then in effect and judgment upon any award pursuant
to
such arbitration may be enforced in any court having jurisdiction thereof,
provided each of the parties to this Agreement will appoint one person as an
arbitrator to hear and determine the dispute, and if they are unable to agree,
then the two arbitrators so chosen will select a third impartial arbitrator
whose decision will be final and conclusive upon the parties to this Agreement.
Subject to Section 15(c), the expenses of the arbitration proceedings concluded
pursuant to this paragraph will be borne by the parties in such proportions
as
the arbitrators decide.
19.
Certain Additional Payments by the Company. Anything in this Agreement to the
contrary notwithstanding, in the event it shall be determined that any payment,
award, benefit or distribution by the Company to or for the benefit of the
Executive would be subject to the excise tax imposed by Section 4999 of the
Code
or any corresponding provisions of state or local tax laws as a result of
payment upon a change of control, or any interest or penalties are incurred
by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as
the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes) imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
payments.
20.
Headings. The headings set forth herein are included solely for the purpose
of
identification and shall not be used for the purpose of construing the meaning
of the provisions of this Agreement.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.
