Document:

exv10w2

 

EXHIBIT 10.2

EMPLOYMENT AGREEMENT

BETWEEN

INTEGRATED FINANCIAL SYSTEMS, INC. “EMPLOYER”

AND

JOHN C. HERBERS “EMPLOYEE”

EFFECTIVE: AUGUST 1, 2002

 

 

EMPLOYMENT AGREEMENT – JOHN C. HERBERS

TABLE OF CONTENTS

	 	 	 	 	 
	1. EMPLOYMENT
	 	 	1	 
	2. OFFICES & DUTIES
	 	 	1	 
	3. TERM
	 	 	1	 
	4. COMPENSATION
	 	 	1	 
	a. Base Salary
	 	 	1	 
	b. Bonus
	 	 	1	 
	5. STOCK OPTIONS
	 	 	2	 
	a. Grant of Stock Options
	 	 	2	 
	b. Related Conditions
	 	 	2	 
	6. BENEFITS
	 	 	2	 
	a. General
	 	 	2	 
	b. Vacations
	 	 	2	 
	c. Disability Insurance
	 	 	3	 
	7. EXPENSES
	 	 	3	 
	8. TERMINATION ON DEATH
	 	 	3	 
	9. TERMINATION ON DISABILITY
	 	 	3	 
	10. TERMINATION ON RESIGNATION
	 	 	3	 
	11. TERMINATION WITH CAUSE
	 	 	4	 
	12. TERMINATION WITHOUT CAUSE
	 	 	4	 
	13. WORK DEVELOPMENTS
	 	 	4	 
	14. LIMITED COVENANT NOT TO COMPETE OR INTERFERE
	 	 	4	 
	15. TRADE SECRETS AND CONFIDENTIAL INFORMATION
	 	 	5	 
	16. RETURN OF INFORMATION
	 	 	5	 
	17. REMEDIES
	 	 	6	 
	18. PRIOR AGREEMENTS
	 	 	6	 
	19. OTHER BUSINESS ACTIVITIES
	 	 	6	 

i 

 

	 	 	 	 	 
	a. Non Competitive Businesses
	 	 	6	 
	b. Full Disclosure of Paid Employment
	 	 	6	 
	20. ARBITRATION
	 	 	7	 
	a. First Action
	 	 	7	 
	b. Second Action
	 	 	7	 
	c. Third Action
	 	 	7	 
	d. Cost
	 	 	7	 
	21. MISCELLANEOUS
	 	 	7	 
	a. Waiver
	 	 	7	 
	b. Controlling Law
	 	 	7	 
	c. Notices
	 	 	7	 
	d. Binding Nature of Agreement
	 	 	8	 
	e. Survival
	 	 	8	 
	f. Execution in Counterparts
	 	 	8	 
	g. Provisions Separable
	 	 	8	 
	h. Entire Agreement
	 	 	8	 
	i. Amendment
	 	 	8	 
	k. Gender, Etc
	 	 	9	 
	I. Number of Days
	 	 	9	 
	22. EXECUTION AND DELIVERY
	 	 	9	 

ii 

 

EMPLOYMENT AGREEMENT

THIS AGREEMENT is dated as of August 1, 2002, and is entered into by and
between Integrated Financial Systems, Inc., a Colorado corporation (“Employer”
or the “Company”) and John C. Herbers, (“Employee”).

     Employer desires to avail itself of the general, marketing and sales
management, financial, and technical expertise possessed by Employee for the
purpose of establishing its healthcare financial services business. Employee
desires to provide such expertise to Employer. Employer has determined that it
is in its best interest to employ Employee, and Employee wishes to be employed
by Employer, all on the terms and conditions contained in this Agreement.

In consideration of the premises and the mutual promises and covenants herein
contained and intending to be legally bound, Employer and Employee agree as
follows:

1. Employment.

Employer hereby employs Employee and Employee hereby accepts employment by
Employer for the period and upon the terms and conditions contained in this
Agreement.

2. Offices & Duties.

     The Employee is hereby employed as Chairman, Chief Executive Officer and
President of Employer. Employer shall exert its best commercially reasonable
effort to have Employee elected to the Board of Directors. Employee shall exert
his best effort on behalf of Employer and shall carefully and accurately
perform all the duties and tasks of said offices and such other duties and
tasks as may be assigned by the Employer’s Board of Directors. He shall perform
all duties commonly discharged by the Chairman, Chief Executive Officers and
Presidents, and other duties as may be reasonably required from time to time by
Employer, as directed by the Employer’s Board of Directors, and, if
established, the Employer’s Executive Committee.

3. Term.

     This Agreement shall be for a term commencing on August 1, 2002 and ending
on July 31, 2005, unless ended sooner under Sections 8, 9, 10, 11 or 12 of this
Agreement. Unless Employee is notified otherwise in writing at least thirty
(30) days preceding the end of each term, the term of this agreement will be
automatically renewed for one year.

4. Compensation.

a. Base Salary.

     Employer shall pay to Employee an annual base salary of One Hundred Fifty
Thousand Dollars ($150,000) each year during the term of this Agreement. The
annual base salary is payable in reasonable periodic installments, not less
frequent than monthly. Employer shall be entitled to withhold such amounts on
account of payroll taxes and similar matters as required by applicable law,
rule or regulation of any appropriate governmental authority, and in accordance
to Employer’s regular payroll practices in effect from time to time.

     By action of the Board of Directors, Base Salary will be reviewed annually
and, as appropriate, may be increased.

b. Bonus.

     In addition to Employee’s base salary, Employer will pay to Employee such
bonuses, if any, up to 100% of the employee’s base pay and incentive stock
options, if any, in each case as the Board of Directors shall, from time to
time, approve.

 

 

5. Stock Options.

a. Grant of Stock Options

     In further consideration of, and as an inducement to Employee’s entering
into this Agreement and in respect of services to be rendered hereunder,
subject to the terms and conditions set forth herein, Employer hereby grants to
Employee Incentive Stock Options (“ISO’s”), equal to 5% of the total
outstanding shares of Employer at the time of original capitalization of the
Employer, under the Integrated Financial Systems, Inc. Stock Option Plan. The
exercise price of all options shall be 110% of the fair market of $.05 per
share.

     1) 1/3 of the Employee’s Options are to vest at the effective date
of this Employment Agreement,

     2) 1/3 of the Employee’s Options are to vest at the date of the
addition of the second hospital customer acquisition, and

     3) 1/3 of the Employee’s Options are to vest from the effective date
of this agreement in equal quarterly increments over three years.

b. Related Conditions

     Unless otherwise specifically provided in this Agreement, the exercise of
Employee’s Options, are subject to the terms and condition of the Integrated
Financial Systems, Inc. 2002 Stock Option Plan to be developed and enacted by
the Board of Directors.

     Upon the occurrence of a Transfer of Control as defined in the 2002 Stock
Option Plan, Employee’s Stock Options shall immediately vest.

     The Employee’s Options shall not confer upon Employee any right under this
Agreement not contained elsewhere herein with respect to continued employment
by Employer nor shall it interfere in any way with the right of Employer to
terminate Employee pursuant to the terms and conditions of this Agreement
elsewhere contained herein; nor shall the Employee’s Options be construed in
derogation of any other right(s) of Employer under this Agreement elsewhere
contained herein.

6. Benefits.

a. General.

     During the term of this Agreement, Employee shall be entitled to receive
all employee benefits and to participate in all plans or programs on the same
basis as they are made available by Employer to any other officers and senior
management employees of Employer including, but not limited to, employee stock
option plans and rights to participate in registration of securities.

b. Vacations.

     Employee shall be entitled to four (4) weeks of vacation at full pay for
the term, prorated for periods of such term less than a full calendar year,
provided that such term shall be deemed to have commenced, for purposes of this
Section 5 b., on June 1, 2002. Employer reserves the right to decide the dates
of Employee’s vacation to assure efficient and orderly operation of Employer’s
business and shall provide notice to Employee in writing of any general or
specific vacation scheduling constraints in advance of or within ten days of
any written vacation request by Employee. Vacation time not used during the
year, except that vacation time rescheduled as a result of exercise of
Employer’s right to decide the dates of Employee’s vacation, may not be carried
over to subsequent years. Employer’s grant of vacation is an unearned benefit
that is not vested or accrued.

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c. Disability Insurance.

     Employer shall reimburse Employee $825.00 per quarter for the cost of
disability insurance under Employee’s personal policy naming Employee as
beneficiary.

7. Expenses.

     Employer shall pay or reimburse Employee for any out-of-pocket business
expenses reasonably incurred by him in the performance of Employee’s duties,
subject to such policies and procedures regarding expense reimbursement as may
be adopted from time to time by Employer. Not withstanding the above, Employer
shall pay Employee per month a $1,000 automobile allowance and $416 for country
club dues.

8. Termination on Death.

     If Employee dies during the term of this Agreement, this Agreement shall
end on the date of Employee’s death without any further obligation by Employer
except the obligation to pay Employee’s estate executor or personal
representative:

	a.) 	 	such portion of Employee’s base salary provided for in Section 4.
a. hereof, as may be accrued and unpaid at the date of his death;
	 
	b.) 	 	any unpaid bonuses pursuant to Section 4. b. hereof, as the case
may be, in respect of the period before the date of death: and
	 
	c.) 	 	any un-reimbursed business expenses payable to Employee pursuant
to Section 7 hereof.
	 
	d.) 	 	any other benefits payable under any then current life insurance
policy or other benefits policy provided to Employee pursuant to
section 6 hereof.

9. Termination on Disability.

     If Employee becomes disabled (as defined below) during the term of this
Agreement, Employer may terminate this Agreement without any further obligation
by Employer except to pay Employee:

	a)	 	such portion of Employee’s base salary provided for in Section 4.
a. hereof, as may be accrued and unpaid at the date of his disability;
and
	 
	b)	 	any unpaid bonuses pursuant to Section 4. b. hereof, as the case
may be, in respect of the period before the date of disability; and
	 
	c)	 	any un-reimbursed business expenses payable to Employee pursuant
to Section 7 hereof.

     The term “Disabled” shall mean Employee’s inability due to any physical or
mental ailment or incapacity, for a period of at least six (6) consecutive
months or such lesser period as may be necessary for Employee to qualify for
long-term disability insurance benefits under any policy that may then be in
effect for Employer, because of injury or sickness, to perform the duties
incident to and contemplated by this Agreement. The term “Disabled” shall not
include any physical or mental ailment or incapacity as a result of alcoholism
or illegal drug use.

10. Termination on Resignation.

     Employee may terminate this Agreement and resign at any time, without
cause, on thirty (30) days’ written notice. If Employee resigns during the term
of this Agreement, this Agreement shall end without any further obligation by
Employer except to pay Employee:

	a)	 	such portion of Employee’s base salary provided for in
Section 4. a. hereof, as may be accrued and unpaid at the date of
his resignation; and

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	b)	 	any unpaid bonuses pursuant to Section 4. b. hereof, as the
case may be, in respect of the period before the date of
resignation; and
	 
	c)	 	any un-reimbursed business expenses payable to Employee
pursuant to Section 7 hereof.

11. Termination With Cause.

     Employer may terminate this Agreement and discharge Employee at any time
because of the violation by Employee of any of the provisions of this Agreement
or for Employee’s neglect of duty, gross negligence, incompetence, dishonesty,
criminal indictment or conviction of a felony crime, conviction of a
misdemeanor involving moral turpitude, or misconduct or willful inattention,
determined in good faith by its Board of Directors to be materially harmful to
the business of Employer. In such event, Employer shall have no obligations to
Employee other than to pay Employee such portion of Employee’s base salary
provided for in Section 4. a. hereof, as may be accrued and unpaid at the date
of termination with cause.

     Before terminating this Agreement and discharging Employee for any cause,
Employer shall take the actions in Section 20 a. through c. herein.

12. Termination Without Cause.

     Employer may terminate this Agreement and discharge Employee at any time
without cause on thirty (30) days’ written notice. If Employer terminates
Employee without cause, Employer shall continue, during the lesser of the
remaining term of this Agreement or one year from the date of termination
without cause, to pay Employee all amounts that would have been due to Employee
pursuant to Sections 4 and 7 hereof as if this Agreement were in full force and
effect and Employee’s unvested Stock Options shall immediately vest. Employer
expressly agrees that Employee shall have no duty to accept alternative
employment or otherwise mitigate damages.

13. Work Developments.

     For purposes of this Agreement, “Work Developments” consist of all
technological, financial, operating, and training ideas, processes and
materials, specifically including all inventions, discoveries, improvements,
enhancements, computer programs, written materials and developments relating to
the existing or contemplated business or interests of Employer that Employee
may develop or conceive during the term of his employment hereunder, alone or
with others, during or after working hours, with or without the use of the
resources of Employer. All Work Developments relating to the existing or
contemplated business or interests of Employer and prepared within the scope of
Employee’s employment shall be considered “Work for Hire” as that phrase is
defined in the Copyright Act of 1976, as amended. Employee shall communicate to
Employer promptly and fully all Work Developments, and make available to
Employer any drawings, work papers, models, diskettes, computer tapes, or other
tangible incidents of such Work Developments.

     All Work Developments shall be and remain the sole and exclusive property
of Employer or its designee. All copyrightable material generated or developed
under this Agreement shall be considered works made for hire under U.S.
copyright law and all such materials shall, upon creation, be owned exclusively
by Employer. To the extent that any such material, under applicable law, may
not be considered works made for hire, Employee hereby assigns to Employer the
ownership of copyright in such materials, without the necessity of further
consideration, and Employer shall be entitled to register and hold in its own
name all copyrights in respect of such materials. Employee shall assign to
Employer in full any right Employee may acquire now or in the future with
respect to any such Work Developments. Any Work Development for which the date
of making or conception shall not otherwise have been established and which is
described in a copyright registered, or a patent application filed, or which is
disclosed to a third party, by Employee, within one year following the
termination of such employment shall be deemed to fall within this Provision.

14. Limited Covenant Not to Compete or Interfere.

     Employer expects to invest considerable time, effort, and capital in
enhancing the value and desirability of its management personnel. Both this
investment and Employee’s compensation reflect

4

 

Employer’s expectation of receiving considerable return from the use of
Employee’s services and know-how in the future, free from any danger that
Employer’s competitors may attempt to induce Employee to leave Employer and
wrongfully gain the benefit of Employer’s investment. The partial restraint set
for herein does not, and cannot, provide complete protection for Employer’s
investment, development efforts, product strategy, and propriety information,
but Employer believes that in combination with the other provisions of this
Agreement, it is the most fair and reasonable measure permitted under
applicable law to protect Employer’s interests, giving due regard to both
Employee’s and Employer’s interests. Employee recognizes that a substantial
part of the value of a company such as Employer’s resides in the goodwill with
its customers and that the value of Employer’s business will be significantly
diminished if Employee attempts to compete with Employer or interfere with
Employer’s activities or solicit its clients. Therefore, during the term of
this Agreement and for one (1) year after ending his employment with Employer
for any reason, other than termination by Employer without cause as set forth
in Section 12 Termination Without Cause, Employee shall not, within the United
States, associate in any capacity whatsoever, whether as a promoter, owner,
officer, director, employee, partner, lessee, lessor, licensee, licensor,
lender, agent, consultant, broker, commission salesman or otherwise, in any
business competitive, directly or indirectly, with the business of Employer;
and Employee will not attempt to solicit, employ, retain as a consultant,
interfere with, entice away or persuade, directly or indirectly, any employee(
or any individual who has agreed to be employed or retained as a consultant by
employer within one year of such prohibited acts of the Employer to terminate
his relationship with the Employer, or to do any act that may result in the
impairment of the relationship between the Employer and its employees. However,
nothing contained in this Section 16 shall prevent Employee from holding for
investment no more than five percent (5%) of any class of equity securities of
a company whose securities are traded on a national securities exchange or on
the over the counter market.

     Prior to engaging in any business during the period of non-competition
provided for above, Employee shall notify Employer of its intent to do so in
order that the Employer may determine whether such business is a competing
business. Employee, shall supply, upon request of Employer, any information
reasonably requested by Employer for such determination. For purpose of this
Agreement, the term “Client” shall mean any person, corporation, partnership or
any other entity of any nature whatsoever, with whom Employer has had written
or oral communications.

15. Trade Secrets and Confidential Information.

     Employee shall not, except as Employer may otherwise consent in writing or
as may be required by applicable law, disclose at any time (except as
Employee’s duties for Employer may require) or use directly or indirectly for
Employee or others, either during or subsequent to Employee’s employment, any
secret or confidential information, knowledge, or data of Employer or any of
Employer’s affiliate’s business or clients, which Employee may receive during
the course of Employee’s employment, relating to client lists, data, records,
computer programs, manuals, formulas, processes, methods, machines,
manufactures, compositions, inventions, discoveries or other matters that are
of secret or confidential nature. All records and equipment and other materials
relating in any way to confidential information connected to clients or to
Employer’s business shall be and remain Employer’s sole property during and
after the Term of Employment.

16. Return of Information.

     Employee shall deliver promptly to Employer on termination of Employee’s
employment, or at any time Employer may so request, all records which are in
Employee’s possession or under Employee’s control, and which pertain to the
Work Developments or to the secret or confidential information, knowledge, or
data of Employer described in Section 17 above. “Record” or “records” is used
herein to include without limitation the original or any copy (regardless of
origin or location) of any statements, papers, writings, letters, memoranda,
reports, log books, notes, articles, journals, journal articles, magazines,
newsletters, blueprints, drawings, sketches, books, pamphlets, records,
recordings, pictures, negatives, mechanical or electronic recordings, price
lists, advertisements, guarantees, contracts, other agreements, memoranda of
understanding, promissory notes, negotiable instruments, diaries, charts,
graphs, notices and any form of collated data for use with electronic data
processing equipment or any

5

 

other object containing a written, printed, spoken or photographic image
or sound. “Record” or “records” also includes cards, magnetic tapes, magnetic
or laser disks or other electronic information storage devices for use in a
computer or which can be extricated or assembled with the use of a computer or
computer accessories. Upon termination of employment, Employee agrees to
represent to Employer that he has complied with the provisions of this Section
16.

17. Remedies.

     Employee agrees and acknowledges that a breach on the part of Employee of
the covenants contained in Sections 14, 15 or 16 hereto (hereinafter “Section
17 Breach”) will cause irreparable damage to the Employer, and that it is and
will be impossible to estimate or determine the damage that will be suffered by
the Employer in the event of a breach by Employee of such covenant and that
Employer would not have an adequate remedy at law. Employee, therefore, further
agrees that if:

	 	 	(a.) the Employer notifies Employee of a Section 17 Breach; and
	 
	 	 	(b.) Employee fails to cure the Section 17 Breach within 24 hours of such notice; and
	 
	 	 	(c.) the Employer submits the matter to arbitration pursuant to Section 20 hereof; and
	 
	 	 	(d.) the matter is not resolved to the satisfaction of both
parties within fifteen (15) days of such submission.

then, the Employer shall be entitled as a matter of course to specific
performance and/or temporary and permanent injunctive relief from any court of
competent equity jurisdiction restraining any further Section 17 Breach by
Employee, his employers, employees, partners, agents or other associates, or
any of them, without the necessity of proving actual damage to the Employer by
reason of any such breach.

     If any particular provisions of this Agreement shall be adjudicated to be
invalid or unenforceable, they shall be deemed to be amended to delete
therefrom such provision or portion adjudicated to be invalid or unenforceable,
such amendment to apply only with respect to operation of this Agreement in the
particular jurisdiction in which such adjudication is made. Nothing herein
shall be construed as limiting, or prohibiting Employer from pursing any other
remedies for such breach or threatened breach. The prevailing party in any suit
under this Section 17 will reimburse the other party for its expenses incurred
in connection with such a suit, including attorneys’ fees.

18. Prior Agreements.

     Employee represents to Employer that there are no restrictions, agreements
or understandings to which Employee is a party that would prevent or make
unlawful his execution of this Agreement or his employment hereunder.

19. Other Business Activities.

a. Non Competitive Businesses.

     Except as provided in Section 3 hereof, throughout the term of this
Agreement, Employee shall exert his best full time efforts on behalf of
Employer to the performance of his duties hereunder in a way that will
faithfully and diligently further the business and interests of Employer.
Employee shall not engage in significant other business activities without
approval of the Board of Directors.

b. Full Disclosure of Paid Employment.

     Employee shall provide Employer with full disclosure of any paid
employment other than Employer at August 1, 2002. For any paid employment other
than Employer subsequent to August 1, 2002, Employee shall during the term of
this Agreement provide Employer with full disclosure of any paid employment
other than Employer in advance of such employment. Such disclosure shall
disclose the employer, duties, responsibilities, authority, compensation,
products and services offered and hours.

6

 

20. Arbitration.

     The procedure for resolving disputes between Employee and Employer shall
be as modified by Section 17 hereof, and shall involve the following steps:

a. First Action.

     In case one party (the “First Party”) comes to believe that another party
(the “Second Party”) is performing improperly, or failing to perform, the
Second Party’s obligations under this Agreement, the First Party shall go to
the Second Party alone and tell such party their concern and both parties shall
attempt mutually to resolve the dispute.

b. Second Action.

     If the first action does not resolve the dispute, then the First Party
shall represent his or its concerns to the Second Party in a meeting in front
of one or more witnesses who shall maintain a record of the proceedings of such
meeting.

c. Third Action.

     If under the second action the dispute is unresolved, then the dispute
shall be submitted for arbitration to a panel of three arbitrators, one of whom
shall be selected by the First Party, one of whom shall be selected by the
Second Party and one of whom shall be selected by the first two arbitrators.
The arbitration shall be conducted in accordance with the rules of the American
Arbitration Association. The panel’s ruling shall be final, unappealable and
binding upon both parties and may be entered by either party as a final award
in any court having jurisdiction.

d. Cost.

     Allocation of the cost of arbitration between parties to the arbitration
shall be determined by the arbitrators in accordance with the Rules of the
American Arbitration Association.

21. Miscellaneous.

a. Waiver.

     Neither the failure nor any delay by either party to exercise any right,
remedy, power or privilege under this Agreement shall operate as a waiver of
it, nor shall any single or partial exercise of any right, remedy, power or
privilege preclude any other or further exercise of the same or of any other
right, remedy, power or privilege, nor shall waiver of any right, remedy, power
or privilege with respect to any occurrence be construed as a waiver of right,
remedy, power or privilege with respect to any other occurrence.

b. Controlling Law.

     This Agreement shall be governed by and construed according to the laws of
the State of Colorado.

c. Notices.

     All notices, requests, demands, and other communication, required or
permitted under this Agreement and the transactions contemplated herein shall
be in writing. They shall be deemed to have been duly given, made and received
when delivered against receipt or when sent by United States registered mail,
return receipt requested, postage prepaid, addressed as set forth below:1) If
to Employee:

7

 

	 	 	 
	

	 	Mr. John C. Herbers
	

	 	16473 East Powers Avenue
	

	 	Centennial, CO 80015
	 
	2) If to Employer:
	 
	

	 	Integrated Financial Services, Inc.
	

	 	7315 East Orchard Road, Suite 300
	

	 	Greenwood Village, Colorado 80111

d. Binding Nature of Agreement.

     This Agreement shall be binding upon and inure to the benefit of Employer,
its successors and assigns and upon Employee, his heirs and legal
representatives, but shall not be assignable by the Employee.

e. Survival.

     The obligations of Sections 14,15, and 16 shall survive the termination of
Employee’s employment for any reason.

f. Execution in Counterparts.

     This Agreement may be executed in any number of counterparts, each shall
be deemed to be an original against any party whose signature appears thereon,
and all together are the same instrument.

g. Provisions Separable.

     The provisions of this Agreement are independent of and separable from
each other. No provision shall be affected or rendered invalid or unenforceable
because for any reason any other of them may be invalid or unenforceable in
whole or in part.

h. Entire Agreement.

     This Agreement contains the entire understanding among the parties hereto
with respect to its subject matter. It supersedes all prior and contemporaneous
agreements and understandings, inducements or conditions, express or implied,
oral or written, except as herein contained. The express terms hereof control
and supersede any courses of performance or use of the trade inconsistent with
any of the terms.

i. Amendment.

     This Agreement may not be modified or amended other than by a written
agreement executed by both parties.

8

 

j. Paragraph Headings.

     The paragraph headings in this Agreement are for convenience only. They
form no part of this Agreement and shall not affect its interpretation.

k. Gender, Etc.

     Words used herein, despite the number and gender specifically used, shall
be deemed and construed to include any other number, singular or plural, and
any other gender, masculine, feminine or neuter, as the context requires.

l. Number of Days.

     In computing the number of days for purposes of this Agreement, all days
shall be counted, including Saturdays, Sundays and holidays; provided, however,
if the final day of any period falls on a Saturday, Sunday or holiday, then the
final day shall be deemed to be the next day that is not a Saturday, Sunday or
holiday.

22. Execution and Delivery.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered on the date first above written:

[CORPORATE SEAL]

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	Integrated Financial Services,
Inc.
	 
	 	 	 	by:	 	/s/ Steven C. Robbins

	

	 	 	 	 	 	Director	 	 	 	 
	 
	 	 	 	by:	 	/s/ John C. Herbers

	

	 	 	 	 	 	Director	 	 	 	 
	 
	

	 	 	Employee:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	/s/ John C. Herbers
	 	 
	

	 	 	 	 	 	John C. Herbers	 	 	 	 

9exv10w3

 

EXHIBIT 10.3

Strategic Asset Management LLC

575 N. Shore Drive

Miami Beach, Florida 33141

March 17, 2004

Mr. John C. Herbers, CEO

Integrated Financial Systems, Inc.

7807 East Peakview Avenue, Suite 300

Greenwood Village, CO 80111

Dear John:

     The terms of the retention of Spencer I. Browne and Strategic Asset
Management LLC (“SAM”) by Integrated Financial Systems, Inc. (the “Company”) as
a business and financial advisor to the Company for the term of this letter agreement (the
“Agreement”) are set forth below.

	 	1.	 	The Company hereby engages SAM to advise the Company in
connection with business and financial and related matters. SAM
also may assist in such other matters as the Company may direct;
and the Company will compensate SAM for such services in a manner to
be mutually agreed prior to SAM undertaking such efforts. During
this engagement, SAM will:

	 	a.	 	Familiarize itself with the business,
operations, properties, financial condition, prospects and
management of the Company;
	 
	 	b.	 	Advise and assist the Company in the
preparation of appropriate offering materials and in
presenting these materials to potential investors;
	 
	 	c.	 	Provide the Company with general business
financial advisory advice; and
	 
	 	d.	 	Assist and advise the Company on any other
matter which the Company and SAM agree.

     SAM understands that initially, the Company is contemplating a
private placement of securities of the Company totaling $1,250,000 as
a bridge loan to a $6,000,000 initial public offering.

 

 

2

	 	2.	 	In connection with SAM’s activities for the Company, the
Company will cooperate with SAM and furnish SAM with all information
and data concerning the Company which SAM deems appropriate (the
“Information”). The Company will provide SAM with reasonable access
to the Company’s officers, directors, employees, independent
accountants and legal counsel. The Company represents that all
Information concerning the Company provided to SAM by the Company or
its advisors will be complete and correct in all material respects
and will not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
therein not misleading in light of the circumstances under which
such statements are made. The Company further represents that all
projections concerning the Company were prepared in good faith based
on the information available to the Company at the time the
projections were prepared, and were based on assumptions which, in
light of the circumstances under which they were made, were
reasonable.
	 
	 	 	 	The Company agrees that SAM will be using and relying on the
Information without independent verification and that SAM does not
assume responsibility for the accuracy or completeness of the
Information. The advice rendered by SAM pursuant to this Agreement
is solely for the benefit of the Company and may not be disclosed
publicly without SAM’s prior consent.
	 
	 	 	 	SAM agrees to keep confidential all material non-public Information
provided to it by the Company, except as required by law or as
contemplated by the terms of this Agreement.
	 
	 	3.	 	In consideration for the services provided by SAM to the
Company pursuant to this Agreement, SAM shall be entitled to
receive, and the Company agrees to pay to SAM, the following fees:

	 	a.	 	A non-refundable retainer of $3,000 payable in
cash, upon the signing of this Agreement (this retainer shall
be credited against future cash fees payable to SAM under
this Agreement), as well as 6,062 shares of common stock on
April 15, 2004, which shares shall be considered “restricted
securities” under the Securities Act of 1933;
	 
	 	b.	 	Fees of (i) $12,500 due July 31, 2004; and (ii)
$80,000, payable in eight consecutive monthly payments of
$10,000 on the first day of each month, the first payment to
be made on November 1, 2004
	 
	 	c.	 	Warrants to purchase 100,000 shares of common
stock exercisable at $2.26 per share. These Warrants shall
have a five-year term and shall have customary warrant rights
including, but not limited to, anti-dilution provisions and
registration rights, comparable to the Company’s currently
outstanding warrants or the warrants, convertible securities
or options to be issued.

 

 

3

	 	4.	 	The Company also engages SAM and Browne as a business and
financial advisor to the Company for a period of one year from
November 1, 2004, at a rate to be agreed upon by the Company and
SAM.
	 
	 	5.	 	In addition to the fees described in paragraph 3 above, the
Company agrees to promptly reimburse SAM, upon request, for all
reasonable out-of-pocket expenses incurred by SAM (including,
without limitation, reasonable fees and expenses of counsel, other
consultants and advisors retained by SAM ) in connection with the
matters arising in connection with this Agreement; provided,
however, any costs in excess of $500 will be subject to written
approval by the Company before such expenses are incurred.
	 
	 	6.	 	This Agreement may be terminated at anytime after November
2004 upon receipt of written notice to that effect by either party,
provided that SAM will be entitled to payment in full of the fees
set forth in paragraph 3 of this Agreement. Termination of this
Agreement shall not affect the provisions of paragraphs 2 and 5-7,
inclusive, of this Agreement, all of which shall remain operative
and in full force and effect.
	 
	 	7.	 	The Company agrees to indemnify SAM in accordance with the
indemnification provisions attached as Exhibit A to this Agreement,
which indemnification provisions are incorporated into and made a
part of this Agreement.
	 
	 	8.	 	This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado applicable to
agreements made and to be fully performed therein.
	 
	 	9.	 	The benefits of this Agreement shall inure to the respective
successors and assigns of the parties to it and of the indemnified
parties hereunder and their successors and assigns and
representatives, and the obligations and liabilities assumed in this
Agreement by the parties hereto shall be binding upon their
respective successors and assigns; provided that SAM may not
delegate any of its obligations hereunder.
	 
	 	10.	 	For the convenience of the parties hereto, any number of
counterparts of this Agreement may be executed by the parties to
this Agreement. Each such counterpart shall be an original
instrument, but all the counterparts taken together shall constitute
one and the same Agreement. This Agreement may not be modified or
amended except in writing and signed by the parties.

     If the foregoing correctly sets forth our Agreement, please sign the
enclosed copy of this letter in the space provided and return it to us with the
retainer. SAM is looking forward to the successful completion of this project.

 

 

4

	 	 	 	 	 
	 	Very truly yours,

STRATEGIC ASSET MANAGEMENT LLC

 	 
	 
	 	By:  	/s/ Spencer I. Browne
 	 
	 	 	Spencer I. Browne, Principal 	 
	 	 	 	 
	 

Confirmed and agreed to:

INTEGRATED FINANCIAL SYSTEMS, INC.

	 	 	 	 	 
	 	 	 
	By:  	/s/ John C. Herbers
 	 	 
	 	John C. Herbers, 	 	 
	 	Chief Executive Officer 	 	 
	 

 

 

5

EXHIBIT A

INDEMNIFICATION

     The Company shall:

	 	(a)	 	Indemnify SAM and hold it harmless against any and all losses,
claims, damages or liabilities to which SAM may become subject arising
in any manner out of or in connection with the rendering of services by
SAM hereunder (including any services rendered prior to the date
hereof) or the rendering of additional services by SAM as requested by
the Company that are related to the services rendered hereunder, unless
it is finally judicially determined that such losses, claims, damages
or liabilities resulted from the gross negligence or willful misconduct
of SAM; and
	 
	 	(b)	 	Reimburse SAM promptly for any legal or other expenses reasonably
incurred by it in connection with investigating, preparing to defend or
defending, or providing evidence in or preparing to serve or serving as
a witness with respect to, or otherwise relating to, any lawsuits,
investigations, claims or other proceedings arising in any manner out
of or in connection with the rendering of services by SAM hereunder or
the rendering of additional services by SAM as requested by the Company
that are related to the services rendered hereunder (including without
limitation, in connection with the enforcement of this Agreement and
the indemnification obligations set forth herein); provided, however,
that in the event a final judicial determination is made to the effect
specified in subparagraph (a) above, SAM will remit to the Company any
amounts reimbursed under this subparagraph (b).

     The Company herein agrees that the indemnification and reimbursement
commitments set forth in the above subparagraphs shall apply whether or not the
Company or SAM is a formal party to any such lawsuits, investigations, claims
or other proceedings and that such commitments shall extend upon the terms set
forth in this paragraph to any controlling person, affiliate, director,
officer, employee or consultant of SAM (each, with SAM, an “Indemnified
Person”). The Company further agrees that, without SAM’s prior written
consent, the Company will not enter into any settlement of a lawsuit, claim or
other proceeding arising out of the transaction contemplated by this Agreement
(whether or not SAM or any other Indemnified Person is an actual or potential
party of such lawsuit, claim or proceeding) unless such settlement includes an
explicit and unconditional release from the party bringing such lawsuit, claim
or other proceeding of all Indemnified Persons.

     If indemnification is to be sought hereunder by an Indemnified Person,
then such Indemnified Person shall notify the Company of the commencement of
any action or proceeding in respect thereof; provided, however, that the
failure so to notify the Company shall not relieve the Company from any
liability that it may have to such Indemnified Person pursuant to this
paragraph except to the extent the Company has been

 

 

6

prejudiced in any material respect by such failure or from any liability
that it may have to such Indemnified Person other than pursuant to this
paragraph. Notwithstanding the above, following such notification, the Company
may elect in writing to assume the defense of such action or proceeding, and,
upon such election, it shall not be liable for any legal costs subsequently
incurred by such Indemnified Person (other than reasonable costs of
investigation and providing evidence) in connection therewith, unless (i) the
Company has failed to provide counsel reasonably satisfactory to such
Indemnified Person in a timely manner; (ii) counsel which has been provided by
the Company reasonably determines that its representation of such Indemnified
Person would present it with a conflict of interest; or (iii) the Indemnified
Person reasonably determines that there may be legal defenses available to it
which are different from or in addition to those available to the Company. In
connection with any one action or proceeding, the Company shall not be
responsible for the fees and expenses of more than one separate law firm in any
one jurisdiction for all Indemnified Persons.

     The Company and SAM agree that if any indemnification or reimbursement
sought pursuant to these indemnification provisions is judicially determined to
be unavailable for a reason other than the gross negligence or willful
misconduct of SAM, then whether or not SAM is the Indemnified Person, the
Company and SAM shall contribute to the losses, claims, damages, liabilities
and expenses for which such indemnification or reimbursement is held
unavailable (i) in such proportion as is appropriate to reflect the relative
benefits to the Company and SAM, on the one hand, in connection with the
transactions to which such indemnification or reimbursement relates, or (ii) if
the allocation provided by clause (i) above is judicially determined not to be
permitted, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) but also the relative faults of the
Company and of SAM on the other hand, as well as any other equitable
considerations; provided, however, that in no event shall the amount to be
contributed by SAM pursuant to this paragraph exceed the amount of the fees
actually received by SAM hereunder.

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