ex101stockoptionplan.htm


    

      PAPERFREE
MEDICAL SOLUTIONS, INC.

      2008
STOCK AWARD PLAN

      


      


      This PAPERFREE MEDICAL SOLUTIONS, INC.
2008 Stock Award Plan (the "Plan") is designed to retain directors, executives
and selected employees and reward them for making major contributions to the
success of the Company.  These objectives are accomplished by making
long-term incentive awards under the Plan thereby providing Participants with a
proprietary interest in the growth and performance of the Company.

      


      
        	
                1.  

              	
                Definitions.

              


      

      


      (a) "Board" -
The Board of Directors of the Company.

      


      (b) "Code" -
The Internal Revenue Code of 1986, as amended from time to time.

      


      (c) "Committee"
- The Compensation Committee of the Company's Board, or such other committee of
the Board that is designated by the Board to administer the Plan, composed of
not less than two members of the Board all of whom are disinterested persons, as
contemplated by Rule 16b-3 ("Rule 16b-3") promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").

      


      (d) "Company"
- PAPERFREE MEDICAL SOLUTIONS, INC. and its subsidiaries including subsidiaries
of subsidiaries.

      


      (e) "Exchange
Act" - The Securities Exchange Act of 1934, as amended from time to
time.

      


      (f) "Fair
Market Value" - The fair market value of the Company's issued and outstanding
Stock as determined in good faith by the Board or Committee.

      


      (g) "Participant"
- A director, officer, or employee of the Company to whom an Award has been made
under the Plan.

      


      (h) "Securities
Act" - The Securities Act of 1933, as amended from time to time.

      


      (i) "Stock
Award Agreement" - An agreement between the Company and a Participant that sets
forth the terms, conditions and limitations applicable to a Stock
Award.

      


      (j) "Stock" -
Authorized and issued or unissued shares of Common Stock, $.001 par value of the
Company.

      


      (k) "Stock
Award" - A Stock Award made under the Plan in stock or denominated in units of
stock for which the Participant is not obligated to pay additional
consideration.

      


      2. Administration. The Plan shall
be administered by the Board;
provided however, that the Board may delegate such administration to the
Committee. Subject to the provisions of the Plan, the Board and/or the Committee
shall have authority to (a) grant, in its discretion, Stock Awards; (b)
determine in good faith the Fair Market Value of the Stock covered by any Stock
Award; (c) determine which eligible persons shall receive Stock Awards and the
number of shares, restrictions, terms and conditions to be included in such
Stock Awards; (d) construe and interpret the Plan; (e) promulgate, amend and
rescind rules and regulations relating to its administration, and correct
defects, omissions and inconsistencies in the Plan or any Stock Award; (f)
consistent with the Plan and with the consent of the Participant, as
appropriate, amend any outstanding Stock Award or amend the date thereof; (g)
determine the duration and purpose of leaves of absence which may be granted to
Participants without constituting termination of their employment for the
purpose of the Plan or any Stock Award; and (h) make all other determinations
necessary or advisable for the Plan's administration. The interpretation and
construction by the Board of any provisions of the Plan or selection of
Participants shall be conclusive and final. No member of the Board or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Stock Award made thereunder.

      


      
        	
                3.  

              	
                Eligibility.

              


      

      


      (a) General.  Any
director, officer, or employee of the Company is eligible to receive a Stock
Award.

      


      (b) Consultants.  Any
Consultant to the Company may be a Participant; provided, however, that the
Consultant is a natural person, provides bona fide services to the Company that
are not in connection with the offer or sale of securities in a capital-raising
transaction and do not directly or indirectly promote or maintain a market for
the Company’s securities; and,
provided, further, the Consultant otherwise is an “employee” as defined
in Section A 1 (a) of the General Instructions to Form S-8 under the Securities
Act.

      


      
        	
                4.  

              	
                Stock.

              


      

      


      (a) Authorized
Stock.  Stock subject to Stock Awards may be either unissued or
reacquired Stock.

      


      (b) Number of
Shares.  Subject to adjustment as provided in Section 5(i) of
the Plan, the total number of shares of Stock which may be granted directly by
Stock Awards shall not exceed Twenty Million (20,000,000) shares. If any Stock
Award shall for any reason terminate or expire, any shares allocated thereto
upon such expiration or termination shall again be available for Stock Awards
with respect thereto under the Plan as though no Stock Award had previously
occurred with respect to such shares.

      


      (c) Reservation of
Shares.  The Company shall reserve and keep available at all
times during the term of the Plan such number of shares as shall be sufficient
to satisfy the requirements of the Plan. If, after reasonable efforts, which
efforts shall not include the registration of the Plan or Stock Awards under the
Securities Act, the Company is unable to obtain authority from any applicable
regulatory body, which authorization is deemed necessary by legal counsel for
the Company for the lawful issuance of shares hereunder, the Company shall be
relieved of any liability with respect to its failure to issue and sell the
shares for which such requisite authority was so deemed necessary unless and
until such authority is obtained.

      


      
        	
                5.  

              	
                Stock
      Awards.

              


      

      


      (a) General
Conditions.  All or part of any Stock Award under the Plan may
be subject to conditions established by the Board or the Committee, and set
forth in the Stock Award Agreement, which may include, but are not limited to,
continuous service with the Company, achievement of specific business
objectives, increases in specified indices, attaining growth rates and other
comparable measurements of Company performance. Such Awards may be based on Fair
Market Value or other specified valuation.  All Stock Awards will be
made pursuant to the execution of a Stock Award Agreement substantially in the
form attached hereto as Exhibit A.

      


      (b) Insiders; Control Securities.
Any Participant subject to Section 16(a) of the Exchange Act (generally
any dirctor, officer or principal shareholder) shall comply with the
requirements of Section 16(b) of the Exchange Act (generally by holding the
Stock subject a Stock Award for at least six months from the date of the Stock
Award).  The amount of securities of the Company that may be sold by
any Participant that holds “control securities” and any other person with whom
he or she is acting in concert for the purpose of selling securities of the
Company, may not exceed, during any three month period, the amount specified in
Rule 144(e) of the General Rules and Regulations under the Securities Act
(generally one percent of the shares outstanding as shown by the most recent
report or statement published by the Company).  The Participant shall
have the burden of proving to the satisfaction of the Company, at Participant’s
cost, any exemption to the requirements of this paragraph, including any
exemption pursuant to Rule 16b-3 of the General Rules and Regulations under the
Exchange Act and any exception to Rule 144(e).

      


      (c) Cancellation and Rescission of Stock
Awards.  Unless the Stock Award Agreement specifies otherwise,
the Board or Committee, as applicable, may cancel any unexpired, unpaid, or
deferred Stock Awards at any time if the Participant is not in compliance with
all other applicable provisions of the Stock Award Agreement, the Plan and with
the following conditions:

      


      (i) A
Participant shall not render services for any organization or engage directly or
indirectly in any business which, in the judgment of the chief executive officer
of the Company or other senior officer designated by the Board or Committee, is
or becomes competitive with the Company, or which organization or business, or
the rendering of services to such organization or business, is or becomes
otherwise prejudicial to or in conflict with the interests of the
Company.  For Participants whose employment has terminated, the
judgment of the chief executive officer shall be based on the Participant's
position and responsibilities while employed by the Company, the Participant's
post-employment responsibilities and position with the other organization or
business, the extent of past, current and potential competition or conflict
between the Company and the other organization or business, the effect on the
Company's customers, suppliers and competitors and such other considerations as
are deemed relevant given the applicable facts and circumstances.  A
Participant who has retired shall be free, however, to purchase as an investment
or otherwise, stock or other securities of such organization or business so long
as they are listed upon a recognized securities exchange or traded
over-the-counter, and such investment does not represent a substantial
investment to the Participant or a greater than ten percent (10%) equity
interest in the organization or business.

      


      (ii) A
Participant shall not, without prior written authorization from the Company,
disclose to anyone outside the Company, or use in other than the Company's
business, any confidential information or material, as defined in the Company's
Proprietary Information and Invention Agreement or similar agreement regarding
confidential information and intellectual property, relating to the business of
the Company, acquired by the Participant either during or after employment with
the Company.

      


      (iii) A
Participant, pursuant to the Company's Proprietary Information and Invention
Agreement, shall disclose promptly and assign to the Company all right, title
and interest in any invention or idea, patentable or not, made or conceived by
the Participant during employment by the Company, relating in any manner to the
actual or anticipated business, research or development work of the Company and
shall do anything reasonably necessary to enable the Company to secure a patent
where appropriate in the United States and in foreign countries.

      


      (iv) In
performing its duties, the Participant agrees to adhere to and to act in
accordance with all applicable laws, rules and regulations, the policies and
procedures of the Company in effect from time to time, all written and oral
instructions received from an authorized officer or employee of the Company, and
high ethical standards.

      


      (v) Upon
delivery of a Stock Award, the Participant shall certify on a form acceptable to
the Committee that he or she is in compliance with the terms and conditions of
the Plan. Failure to comply with all of the provisions of this Section 5 prior
to, or during the six months after, any Stock Award shall cause such Stock Award
to be rescinded. The Company shall notify the Participant in writing of any such
rescission within two years after such exercise, payment or delivery. Within ten
days after receiving such a notice from the Company, the Participant shall pay
to the Company the amount of any gain realized or payment received as a result
of the rescinded Stock Award. Such payment shall be made either in cash or by
returning to the Company the number of shares of Stock that the Participant
received in connection with the rescinded exercise, payment or
delivery.

      


      (d) Nonassignability.

      


      (i) Except
pursuant to Section 5(e)(iii) and except as set forth in Section 5(d)(ii), no
Stock Award or any other benefit under the Plan shall be assignable or
transferable, or payable to or exercisable by, anyone other than the
Participant.

      


      (ii) Where a
Participant terminates employment and retains a Stock Award pursuant to Section
5(e)(ii) in order to assume a position with a governmental, charitable or
educational institution, the Board or Committee, in its discretion and to the
extent permitted by law, may authorize a third party (including but not limited
to the trustee of a "blind" trust), acceptable to the applicable governmental or
institutional authorities, the Participant and the Board or Committee, to act on
behalf of the Participant with regard to such Stock Award.

      


      (e) Termination of
Employment.  If the employment or service to the Company of a
Participant terminates, other than pursuant to any of the following provisions
under this Section 5(e), all unexercised, deferred and unpaid Stock Awards shall
be cancelled immediately, unless the Stock Award Agreement provides
otherwise.

      


      (i) Retirement Under a Company Retirement
Plan. When a Participant's employment terminates as a result of
retirement in accordance with the terms of a Company retirement plan, the Board
or Committee may permit the Participant’s Stock Award to continue in effect
beyond the date of retirement in accordance with the applicable Stock Award
Agreement and the exercisability and vesting of any such Stock Award may be
accelerated.

      


      (ii) Rights in the Best Interests of the
Company. When a Participant resigns from the Company and, in the judgment
of the Board or Committee, the acceleration and/or continuation of outstanding
Stock Awards would be in the best interests of the Company, the Board or
Committee may (A) authorize, where appropriate, the acceleration and/or
continuation of all or any part of any Stock Award issued prior to such
termination and (B) permit the exercise, vesting and payment of such Stock Award
for such period as may be set forth in the applicable Stock Award Agreement,
subject to earlier cancellation pursuant to Section 8 or at such time as the
Board or Committee shall deem the continuation of all or any part of the
Participant's Stock Award is not in the Company's best interest.

      


      (iii) Death or Disability of a
Participant.

      


      
        	
                (A)  

              	
                In
      the event of a Participant's death, the Participant's estate or
      beneficiaries shall have a period up to the expiration date specified in
      the Stock Award Agreement within which to receive or exercise any
      outstanding Stock Award held by the Participant under such terms as may be
      specified in the applicable Stock Award Agreement. Rights to any such
      outstanding Stock Award shall pass by will or the laws of descent and
      distribution in the following order: (I) to beneficiaries so designated by
      the Participant; if none, then (II) to a legal representative of the
      Participant; if none, then (III) to the persons entitled thereto as
      determined by a court of competent jurisdiction. Any Stock Award so
      passing shall be made at such times and in such manner as if the
      Participant were living.

              


      

      


      
        	
                (B)  

              	
                In
      the event a Participant is deemed by the Board or Committee to be unable
      to perform his or her usual duties by reason of mental disorder or medical
      condition which does not result from facts which would be grounds for
      termination for cause, a Stock Award and rights to any such Stock Award
      may be paid to or exercised by the Participant, if legally competent, or a
      committee or other legally designated guardian or representative if the
      Participant is legally incompetent by virtue of such
      disability.

              


      

      


      
        	
                (C)  

              	
                After
      the death or disability of a Participant, the Board or Committee may in
      its sole discretion at any time terminate restrictions in a Stock Award
      Agreement.

              


      

      


      
        	
                (D)  

              	
                In
      the event of uncertainty as to interpretation of or controversies
      concerning this Section 5, the determinations of the Board or Committee,
      as applicable, shall be binding and
conclusive.

              


      

      


      6.           Investment
Intent.  All Stock Awards under the Plan are intended to be
exempt from registration under the Securities Act provided by Rule 701
thereunder.  Unless and until the issuance of Stock subject to the
Plan are registered under the Securities Act or shall be exempt pursuant to the
rules promulgated thereunder, each Stock Award under the Plan shall provide that
the purchases or other acquisitions of Stock thereunder shall be for investment
purposes and not with a view to, or for resale in connection with, any
distribution thereof.  Further, unless the issuance and sale of the
Stock have been registered under the Securities Act, each Stock Award shall
provide that no shares shall be issued under such Stock Award unless and until
(a) all then applicable requirements of state and federal laws and regulatory
agencies shall have been fully complied with to the satisfaction of the Company
and its counsel, and (b) if requested to do so by the Company, the person
exercising the rights under the Stock Award shall (i) give written assurances as
to knowledge and experience of such person (or a representative employed by such
person) in financial and business matters and the ability of such person (or
representative) to evaluate the merits and risks of exercising the Option, and
(ii) execute and deliver to the Company a letter of investment intent and/or
such other form related to applicable exemptions from registration, all in such
form and substance as the Company may require. If shares are issued upon
exercise of any rights under a Stock Award without registration under the
Securities Act, subsequent registration of such shares shall relieve the
purchaser thereof of any investment restrictions or representations made upon
the exercise of such rights.

      


      7.           Amendment, Modification, Suspension
or Discontinuance of the Plan. The Board may, insofar as permitted by
law, from time to time, with respect to any shares at the time not subject to
outstanding Stock Award, suspend or terminate the Plan or revise or amend it in
any respect whatsoever, except that no such revision or amendment shall (a)
increase the number of shares subject to the Plan, (b) materially increase the
benefits to Participants, or (c) change the class of persons eligible to receive
a Stock Award under the Plan; provided, however, no such
action shall alter or impair the rights and obligations under any Stock Award
outstanding as of the date thereof without the written consent of the
Participant thereunder. No Stock Award may be issued while the Plan is suspended
or after it is terminated, but the rights and obligations under any Stock Award
issued while the Plan is in effect shall not be impaired by suspension or
termination of the Plan.

      


      In the
event of any change in the outstanding Stock by reason of a stock split, stock
dividend, combination or reclassification of shares, recapitalization, merger,
or similar event, the Board or the Committee may adjust proportionally: (a) the
number of shares of Stock (i) reserved under the Plan, and (ii) covered by
outstanding Stock Awards; (b) the Stock prices related to outstanding Stock
Awards; and, (c) the appropriate Fair Market Value and other price
determinations for such Stock Awards. In the event of any other change affecting
the Stock or any distribution (other than normal cash dividends) to holders of
Stock, such adjustments as may be deemed equitable by the Board or the
Committee, including adjustments to avoid fractional shares, shall be made to
give proper effect to such event.  In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Board or the Committee shall be authorized to issue or assume
stock options, whether or not in a transaction to which Section 424(a) of the
Code applies, and other Stock Awards by means of substitution of new Stock Award
Agreements for previously issued Stock Awards or an assumption of previously
issued Stock Awards.

      


      8.           Tax
Withholding.  The Company shall have the right to deduct
applicable taxes from any Stock Award withhold, at the time of delivery or
exercise of a Stock Award or vesting of shares under such Stock Award, an
appropriate number of shares for payment of taxes required by law or to take
such other action as may be necessary in the opinion of the Company to satisfy
all obligations for withholding of such taxes.  If Stock is used to
satisfy tax withholding, such stock shall be valued based on the Fair Market
Value when the tax withholding is required to be made.

      


      9.           Notice. Any written
notice to the Company required by any of the provisions of the Plan shall be
addressed to the chief personnel officer or to the chief executive officer of
the Company, and shall become effective when the office of the chief personnel
officer or the chief executive officer receives it.

      


      10.           Governing Law.  The
Plan and all determinations made and actions taken pursuant hereto, to the
extent not otherwise governed by the Code or the securities laws of the United
States, shall be governed by the law of the State of Oregon and construed
accordingly.

      


      11.           Effective and Termination
Dates.  The Plan shall become effective on the date it is
approved by Board. The Plan shall terminate ten years later, subject to earlier
termination by the Board pursuant to Section 7.

      


                 The
undersigned certifies that the foregoing is a true and correct copy of the
PAPERFREE MEDICAL SOLUTIONS, INC. 2008 Stock Award Plan as adopted by its Board
of Directors on July 22, 2008.

      


      ___________________________________

      Michael Gelmon, Chief Executive
Officer

      



      
        
          
             

          

           


        

        
           


          
            

          

        

        
           


        

      

       

       

       

      
        EXHBIT
A

        FORM
OF STOCK AWARD AGREEMENT

        


        PAPERFREE MEDICAL SOLUTIONS, INC. (the
"Company") hereby grants to ___________ (“Employee”),
_____________ shares of the Common Stock, $.001 par value of the Company (the
“Stock”).  This Stock Award is subject to the restrictions as set
forth below and to all the terms and conditions of the PAPERFREE MEDICAL
SOLUTIONS, INC. 2008 Stock Award Plan, (the “Plan”) which are incorporated
herein by this reference, and neither this Stock Award nor the Stock may be
assigned or transferred except as provided in the Plan.

        


        This Stock Award is subject to
following additional restrictions:

        


        [Any
additional restrictions to be inserted here]

        


        By signing below, Employee certifies
that Employee is in compliance with the terms and conditions of the
Plan.

        


        
          	
                  Dated:
      __________ , _______

                	
                  "Company"

                
	 
      	 
      
	 
      	 
      
	 
      	
                  By:
      _______________________________

                
	 
      	
                  [Type
      name and title of Authorized Officer]

                   

                
	 
      	
                  "Employee"

                   

                
	 
      	 
      
	 
      	
                  By:________________________________

                
	 
      	
                  [Type
      name of
Participant]