Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This
Employment Agreement (the “Agreement”)
by and between Power 3 Medical Products, Inc., a New York corporation (the
“Company”), and John P. Burton
(the “Officer”) is executed this 15th
day of September, 2005 and shall be effective for all purposes as of September 1,
2005 (the “Effective Date”).

 

NOW,
THEREFORE, in consideration of the premises and of the covenants and agreements
herein provided, the parties hereto agree as follows:

 

1.             EMPLOYMENT TERMS

 

1.1            Term.  The Company hereby employs the
Officer, and the Officer hereby accepts employment with the Company, all in
accordance with the terms and conditions hereof, for a term commencing on September 1,
2005 and terminating on August 31, 2008. 
However, the Officer shall be considered to be employed by the Company
beyond the Termination Date for purposes of receiving certain benefits
conferred under this Agreement, as described in Paragraph 3.1 hereof.

 

1.2                                 Position and Duties.

 

(a)            The Company
hereby employs the Officer, and the Officer agrees to serve the Company, as an
officer of the Company pursuant to the terms of this Agreement.  The Company has by action of its Board of
Directors appointed the Officer to the position of Chief Financial Officer,
however it may, in the sole and unfettered discretion of the Board of
Directors, amend the Officer’s title and/or duties and responsibilities,
provided that the Officer remains an officer of the Company pursuant to the
terms of this Agreement.

 

(b)           The Officer shall be responsible for such
duties as are commensurate with the office in which he serves and as may from
time to time be assigned to the Officer by the Company’s Board of Directors.

 

1.3                                 Performance of Duties.

 

(a)            At all times
prior to the Termination Date, the Officer (i) shall devote his full
business time, energies, best efforts, and attention to the business of the
Company, (ii) shall faithfully and diligently perform the duties of his
employment with the Company, (iii) shall do all reasonably in his power to
promote, develop, and extend the business of the Company, and (iv) shall
not enter into the service of, or be employed in any capacity or for any
purpose whatsoever by, any person, firm or corporation other than the Company
without the prior written consent of the Board of Directors of the Company.

 

 

(b)           The Officer shall perform his duties in
accordance with all applicable laws, rules, or regulations that apply to the
Company and/or its business, assets (real or personal), or employees.

 

1.4           Disability

 

Termination
of employment for Disability would include discontinuance of job performance
cause by or related to any of the diseases or impairments qualifying for
Federal, State or Health Insurance disability payments, occurring to such an
extent that the Officer is not able to perform his duties or carry out the
obligations of his Office.  As such
disability would include any other conditions under which a person would be
classified as “disabled” under normal regulations and decision criteria of
Federal, State or military regulations and classification systems.

 

1.5                                 Termination for Good Reason

 

Termination
for Good Reason is defined in this Agreement as “for Cause” on the part of
either party in Section 3.4 of this Agreement.

 

2.             COMPENSATION.

 

2.1           Salary.

 

(a)           For so long as Officer is employed by the
Company, the Company agrees to pay to the Officer, and the Officer shall accept
from the Company, for all of his services rendered pursuant to this Agreement,
a salary of One Hundred Thousand Dollars ($100,000) per annum, payable
semimonthly.

 

(b)           The Company’s Board of Directors, or
compensation committee of the Board of Directors (the “Compensation Committee”), shall review the
Officer’s salary annually and merit increases thereon shall be considered and
may be approved, in the sole and unlimited discretion of the Company’s Board of
Directors, depending in part on the profits and cash flow of the Company.  If the Company’s Board of Directors elects in
its discretion to increase the salary of the Officer at any time or from time
to time, the new salary rate shall, without further action by the Officer or
the Company, be deemed substituted for the amount set forth above.  At such time, this Agreement shall be deemed
amended accordingly (notwithstanding the provisions of Paragraph 7.8 below),
and, as so amended, shall remain in full force and effect.

 

2.2           Bonuses.               The Company, in the sole and unfettered
discretion of its Board of Directors or Compensation Committee, may from time
to time award cash bonuses to the Officer based upon its measure of Officer’s
performance.  Such bonuses may be awarded
in a lump sum or may be conditioned upon the future performance or employment
of Officer, in the sole and unfettered discretion of the Board of Directors of
the Company.

 

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2.3           Expenses.              Upon submission of appropriate invoices or
vouchers, the Company shall pay or reimburse the Officer for all reasonable
expenses incurred by the Officer in the performance of his duties hereunder in
furtherance of the business of the Company.

 

2.4           Benefits.                The Company extends to the Officer the right
to participate in whatever employee benefit plans (excluding any employee
benefit plan covered separately in this Agreement) may be in effect from time
to time, to the extent the Officer is eligible under the terms of the
plans.  However, no employee benefits
other than those specifically conferred by the terms of this Agreement have
been promised to the Officer in connection with this employment.  The adoption of one or more employee benefit
plans, the terms of the plans, and the Officer’s participation in the plans, if
any, are in the sole discretion of the Company and may be changed by the
Company at any time and from time to time.

 

2.5           Stock Grant.

 

(a)           To induce the Officer to accept the position
of Chief Financial Officer, and subject to the terms of this
Paragraph 2.5, the Officer is hereby granted by the Company, effective
upon the Effective Date of this Agreement, One Hundred Forty Thousand (140,000)
shares of the Company’s common stock (the “Restricted
Stock”).  The grant of the
Restricted Stock shall be subject to the following terms and conditions:

 

(i)            If at any time before August 31, 2006,
the Officer’s employment with the Company shall cease or terminate for any
reason, including but not limited to, termination by reason of death or
disability, termination by the Company with or without cause and whether or not
in breach of the Agreement, or termination by the Officer for any reason, voluntarily
or otherwise, then the Officer shall forfeit all of such Restricted Stock to
the Company, and the Officer shall have no claim or right, either express or
implied, against the Company for any compensation, payment or benefit in lieu
of the Restricted Stock so forfeited or otherwise.  In addition, unless and until the Officer’s
rights in the foregoing Restricted Stock become nonforfeitable by virtue of the
satisfaction of the foregoing condition, the Officer shall have no right to,
and the Officer hereby agrees that he shall not, sell, pledge, assign,
hypothecate, encumber, give, grant or otherwise transfer such Restricted Stock
or alienate his then-current or expected future rights to such Restricted
Stock, and the certificates representing all of such Restricted Stock shall
prominently bear appropriate legends reflecting these restrictions and the
Company’s stock register shall likewise reflect these restrictions.

 

(ii)           Upon issuance of the Restricted Stock, except
for the restrictions set forth in this Paragraph 2.5, the Officer shall
have all rights of a shareholder of the Company with respect to such Restricted
Stock including the right to vote such Restricted Stock and to receive all
dividends and other distributions paid with respect to such Restricted Stock;
provided, however, dividends, if any, paid or 

 

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distributed
on the Restricted Stock shall not be paid by the Company to the Officer unless
and until such time as the Restricted Stock becomes nonforfeitable.

 

(iii)          In the event of a Change in Control (as
herein defined), the Company may waive in whole or in part any and all
remaining restrictions on the Restricted Stock. 
For purposes hereof, a Change of Control shall mean, and shall be deemed
to have occurred:

 

(A)          if any person, other than any benefit plan of
the Company or Steven B. Rash and Ira L. Goldknopf, Ph.D., as holders
of the Company’s Series B Preferred Stock, directly or indirectly, becomes
the beneficial owner (as defined in Section 13(d) of the Securities
Exchange Act of 1934, as amended) of securities representing 51% or more of the
combined voting power of the Company’s then-outstanding securities, but
excluding any such acquisition pursuant to a merger, consolidation or similar business
combination involving the Company; or

 

(B)           upon the consummation of a merger,
consolidation, or similar business combination involving the Company, other
than any such transaction which results in at least 75% of the total voting
power represented by the voting securities of the surviving entity (or the
parent entity thereof) outstanding immediately after such transaction being
beneficially owned by at least 75% of the holders of the outstanding voting
securities of the Company immediately prior to the transaction with the voting
power of each such continuing holder relative to other such continuing holders
not being substantially altered in the transaction; or

 

(C)           upon the Board of Directors or the
shareholders of the Company approving a plan of complete or substantially
complete liquidation of the Company; or

 

(D)          upon the consummation of the sale, lease, or
disposition by the Company of 50% or more of the total assets of the Company in
one or a series of related transactions (provided that a license, sublicense or
similar transaction involving the Company’s intellectual property rights shall
not be considered as a Change of Control); or

 

(E)           upon the individuals who constitute the Board
as of the Effective Date (the “Incumbent
Board”) ceasing for any reason to constitute at least a majority of
the members of the Board, provided that any person becoming a director after
the Effective Date whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least two-thirds of the directors
then comprising the Incumbent Board (other than any individual whose initial
assumption of office occurs as a result of either (a) an actual or
threatened election contest or (b) an actual or threatened solicitation of
proxies or consents by or on behalf of a person other than the Board) shall be,
for purposes of this Agreement, considered as though such person were a member
of the Incumbent Board.

 

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(v)           The Common Shares shall have demand
registration rights or piggyback registration rights (neither of which,
however, shall be effective unless and until, after July 1, 2006, the
Officer’s rights to such shares have ceased to be subject to the risks of
forfeiture as provided herein).

 

(b)           The Officer agrees to pay in a timely manner
deemed suitable by the Company, and to indemnify and hold harmless the Company
from, any and all taxes (including all penalties and interest, if any,
thereon), resulting from the grant and/or transfer of the above-referenced
Restricted Stock for which ultimate responsibility is assigned to or asserted
against the Officer under applicable law. 
For purposes of this provision, all withholding obligations of the
Company in respect of the aforementioned taxes (including any and all taxes,
penalties and interest imposed on or asserted against the Company for failure
to properly withhold and remit any such amounts in a timely manner) shall be
considered the responsibility of the Officer and, accordingly, the Officer agrees
to pay in a timely manner deemed suitable by the Company, and to indemnify and
hold harmless the Company from, any and all of such obligations.

 

2.6           Vacation; Sick Leave.          The Company’s vacation and sick leave policy
has been established by the Company and may be changed by the Company at any
time and from time to time.  Said policy
is published in separate data files accessible to the Officer.  The Officer will not be entitled to receive
payment for any unused sick leave either during employment or upon termination
of employment.

 

2.7           Withholding.        The Company may withhold from any amounts payable under this Agreement
any and all federal, state, city, or other taxes or other amounts required to
be withheld by any applicable law.

 

3.             TERMINATION.

 

3.1           Termination Upon 30 Days Notice.

 

(a)           Either party may terminate the Officer’s
employment under this Agreement for any reason whatsoever, either with or
without cause, upon giving the other party no less than thirty (30) days prior
written notice of such termination ( the “Notice
Date”).  The effective date of
a termination pursuant to this Paragraph 3.1 shall be such termination date as
stated on the notice, provided that the termination date can be no earlier than
the 31st day following the day the notice becomes effective pursuant
to Paragraph 5.4 below (the “Termination Date”).

 

(b)           Until the expiration of the contract on August 31,2008
(“Transition Period”), unless
terminated for “Cause” as defined in Paragraph 3.4 or if the Officer
resigns from his position or duties, the Officer will continue to be considered
as an employee of the Company only for the purpose of receiving the
compensation and benefits awarded in Paragraphs 2.1, 2.2, and 2.4
hereof.  More specifically, for the 

 

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duration
of Transition Period the Officer (i) shall continue to receive his salary
at the rate in effect as of the Notice Date, (ii) shall continue to be
considered an employee of the Company for purposes of determining eligibility
to receive any contingent or deferred bonuses awarded to the Officer prior to
the Termination Date, (iii) shall continue to be considered an officer of
the Company for purposes of vesting in any stock options granted to Officer
(but not for purposes of the forfeiture restrictions applicable to the
Restricted Stock as set forth in Paragraph 2.5), and (iv) shall, to
the extent allowed by such plan, remain eligible to participate in any benefit
plan of the Company in which the Officer participates as of the Notice Date.

 

(c)           Notwithstanding any provision herein to the
contrary, however, the Officer will not be entitled to act as, or represent
himself to be, an officer or employee of the Company following the Termination
date and will not be entitled to receive or participate in any bonus,
incentive, or benefit program, involving stock or otherwise, that is
established following the Termination Date.

 

3.2           Termination by Mutual Consent.      The Officer and the Company may at any time
terminate the employment of the Officer under this Agreement by mutual consent
in writing upon the terms and conditions stated in such writing.

 

3.3           Termination Upon Death.   If the Officer dies, his employment shall
immediately terminate automatically as of the date of his death.  In such event, the Officer shall be treated
as if he had terminated his employment with the Company under the terms of
Paragraph 3.1 above, with the date of his death serving as both the Notice
Date and the Termination Date.

 

3.4           Termination for Cause.        This Agreement may be terminated for Cause by
either party for the following reasons, only:

 

3.4.a.1    Commission of a criminal offense by either
party in the course of performance of the Agreement shall entitle the other to
effect immediate termination upon giving written notice;

 

3.4.a.2    If either party becomes insolvent or makes a
general assignment for the benefit of creditors or if petition in bankruptcy is
filed against the defaulting party and is not discharged or disputed within
five (5) working days of such filing or of the agent is adjudicated
bankrupt or insolvent;

 

3.4.a.3    The election of one party (the “aggrieved party”) to terminate this
Agreement upon (1) the actual breach or actual default by the other party
in the reasonable performance of the defaulting party’s obligations and duties
under this Agreement and (2) the failure of the defaulting party to cure
the same within fifteen (15) days (the “cure period”) after receipt by the
defaulting party of a good faith written notice from the aggrieved party specifying
such breach or default and (3) provided that the defaulting party 

 

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has
not cured the default and the aggrieved party may then give written notice to
defaulting party of his or its election to terminate ten (10) days after
expiration of the cure period.

 

3.5           Transition.  Officer shall make a good
faith effort to aid in the transition of management necessitated by the
termination of his employment pursuant to this Agreement.  To the extent feasible and/or practical,
Officer shall devote the time and energy necessary to effect said goal of a
smooth transition for the successor chief financial officer.  The salary payable to Officer by the Company
pursuant to Paragraph 2.1(a) of this contract shall continue to be
paid to Officer during such transition period.

 

4.             PROPRIETARY INFORMATION AND
ITEMS.

 

4.1           Acknowledgments.  The Officer acknowledges that (a) the
Officer has or will be afforded access to Proprietary Information of the
Company or its affiliates; (b) public disclosure of such Proprietary
Information could have an adverse effect on the Company and its affiliates; and
(c) the provisions of this Section 4 are reasonable and necessary to
prevent the improper use or disclosure of such Proprietary Information.

 

4.2           Non-Disclosure and Non-Use of Proprietary
Information.           During the Officer’s employment by the
Company and for a period of five (5) years thereafter, the Officer
covenants and agrees that the Officer (a) shall not disclose to others or
use for the benefit of himself or others, any of the Company’s Proprietary
Information, except that the Officer may disclose such information (i) in
the course of and in furtherance of the Officer’s employment with the Company
to the extent necessary for the benefit of the Company, (ii) with the
prior specific written consent of the Board of Directors of the Company, or (iii) to
the extent required by law; and (b) shall take all measures reasonably
necessary to preserve the confidentiality of all Proprietary Information of the
Company known to the Officer, shall cooperate fully with the Company’s or its
affiliates’ enforcement of measures intended to preserve the confidentiality of
all Proprietary Information, and shall notify the Board of Directors
immediately upon receiving any request for, or making any disclosure of, any
Proprietary Information from or to any person other than an officer or employee
of the Company or of one of its affiliates who has a need to know such
information.

 

4.3           Proprietary Information.  For
purposes of this Agreement,  “Proprietary Information” means trade
secrets, secret or confidential information or knowledge pertaining to, or any
other nonpublic information pertaining to the business or affairs of the
Company or any of its affiliates, including without limitation, medical imaging
software programs (including source code and object code) and design
documentation; identities, addresses, backgrounds, or other information
regarding licensors, suppliers, customers, sublicensees, potential customers
and sublicensees, employees, contractors, or sources of referral; marketing
plans or strategies, business or personnel acquisition plans; pending or
contemplated projects, ventures, or proposals; financial information (including
historical financial statements; financial, capital, or operating 

 

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budgets,
plans or projections; historical or projected sales, royalties and license
fees, and the amounts of compensation paid to employees and contractors); trade
secrets, know-how, technical processes, or research projects; and notes,
analysis, compilations, studies, summaries, and other material prepared by or
for the Company containing or based, in whole or in part, on any information
included in the foregoing, except information that is generally known in the
industry (other than as a result of a disclosure by the Officer).

 

4.4           Proprietary Items.    Upon termination or
expiration of the Officer’s employment by the Company for any reason or by
either party, or upon the request of the Company during such tenure, the
Officer will immediately return to the Company all Proprietary Items in the
Officer’s possession or subject to the Officer’s control, and the Officer shall
not retain any copies, abstracts, sketches, or other physical embodiment of any
Proprietary Items.  For purposes of this
Agreement, “Proprietary Items”
means all documents and tangible items (including all customer lists,
memoranda, books, papers, records, notebooks, plans, models, components,
devices, or computer software or code, whether embodied in a disk or in any
other form) provided to the Officer by the Company, created by the Officer, or
otherwise coming into the Officer’s possession for use in connection with is
engagement with the Company or otherwise containing Proprietary Information
(whether provided or created during the term of this agreement or prior
thereto).

 

4.5           Ownership Rights.    The Officer
recognizes that, as between the Company and the Officer, all of the Proprietary
Information and all of the Proprietary Items, whether or not developed by the
Officer, are the exclusive property of the Company.  The Officer agrees that all intellectual
property of every kind, including without limitation copyright, patent,
trademarks, trade secrets, and similar rights, created or developed or realized
in connection with the Officer’s performance of any duties or functions as an
Officer of the Company (collectively, the “Intellectual
Property”) shall be the exclusive property of the Company and shall
constitute Proprietary Information.  The
Officer hereby assigns unto the Company all rights, title, and interest that
the Officer may have to such Intellectual Property and each and every
derivative work thereof, and agrees to execute, acknowledge, and deliver to the
Company as assignment to the Company of any right, title, or interest of the
Officer in any and all such Intellectual Property, in such form as may be
reasonably requested by the Company.

 

4.6           Disputes of Controversies.  The Officer recognizes that,
should a dispute or controversy arising from or relating to this portion of the
Agreement (Section 4) be submitted for adjudication to any court,
arbitration panel, or other third party, the preservation of the secrecy of
Proprietary Information may be jeopardized. 
The Officer agrees that he will use best efforts to ensure that all
pleadings, documents, testimony, and records relating to any such adjudication
will be maintained in secrecy.

 

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5.             NON-INTERFERENCE; COMPLIANCE
WITH LAW; COOPERATION

 

5.1           Non-Interference.   During the Officer’s
employment with the Company and for a period of five (5) years following
termination or expiration of such tenure, the Officer covenants and agrees that
the Officer shall not, directly or indirectly, for the benefit of the Officer
or another (a) persuade or attempt to persuade any employee, independent
contractor, consultant, agent, supplier, licensor, or distributor of the
Company or of any affiliate of the Company to discontinue such person’s
relationship with the Company or the affiliate; (b) hire away or solicit
to hire away from the Company or from any of its affiliates any employee; (c) otherwise
engage or seek to engage any employee or independent contractor of the Company
or of any of its affiliates in a business relationship that would or might
conflict with such employee’s or independent contractor’s obligations to the
Company or affiliate; (d) interfere with the Company’s or any of its
affiliates’ relationship with any governmental or business entity, including
payor, supplier, licensor, lender, or contractor of the Company or the
affiliate; or (e) disparage the Company or any of its affiliates or any of
the shareholders, directors, officers, employees, or agents of any of them.

 

5.2           Cooperation.  During the Officer’s Employment with the Company and for a
period of five (5) years following the termination or expiration of such
tenure, the Officer agrees to cooperate with the Company and its affiliates in
connection with any litigation or investigation involving the Company or any of
its affiliates or any of the shareholders, directors, officers, employees, or
agents of any of them and shall furnish such information and assistance as may
be lawfully requested by the Company.

 

6.             NON-COMPETITION

 

During the Officer’s employment by the
Company and for a period of two (2) years following the termination or
expiration of such tenure, the officer covenants and agrees to refrain from
carrying on or engaging in a business similar to that of the Company, and from
soliciting customers of the Company, within the North America, so long as the
Company carries on a like business therein. 
It is further stipulated that as forbearance for this contract term,
Company has provided Officer with separate and distinct consideration
consisting of 25,000 shares of common stock. 
Such shares are included in the Restricted Stock described in
Paragraph 2.5 and shall be subject to the restrictions set forth therein.

 

Each word of the foregoing provision is
severable.

 

7.             GENERAL PROVISIONS

 

7.1           Indemnification.   The Company hereby agrees to indemnify and
hold harmless the Officer from and against any and all losses, claims, damages,
expenses and/or liabilities which may incur arising out of the normal course of
business in carrying out the duties and responsibilities associated with the
position of Chief Financial Officer arising from the Officer’s reliance upon
and approved use of information, reports and data furnished by and representations
made by the Company, with respect to itself, 

 

9

 

where
the Officer in turn distributes and conveys such information, reports and data
to the public in the normal course of representing the Company.  Such indemnification shall include, but not
be limited to, expenses (including all attorney’s fees), judgments, and amounts
paid in settlement actually and reasonably incurred by Officer in connection
with an action, suit or proceeding brought against the Company or Officer.

 

7.2           Injunctive Relief.  The Officer acknowledges that the injury that
would be suffered by the Company as a result of a breach of the provisions of
this Agreement would be largely irreparable and that an award of monetary
damages to the Company for such a breach would be an inadequate remedy.  The Company will have the right, in addition
to any other rights it may have (including the right to damages that the
Company may suffer), to obtain injunctive relief to restrain any breach or
threatened breach or otherwise to specifically enforce any provision of this
Agreement, and the Company will not be obligated to post bond or other security
in seeking such relief.  The Officer
agrees to request neither bond nor security in connection with any such
injunction.  The Officer agrees that if
he breaches this Agreement, the Officer shall be liable for any attorney’s fees
and costs incurred by the Company in enforcing its rights under this Agreement.

 

7.3           Essential, Independent, and Surviving Covenants.

 

(a)           The parties agree that the covenants by the
Officer in Sections 4, 5, and 6 are essential elements of this Agreement, and
without the Officer’s agreement to comply with such covenants, the Company
would not have entered into this Agreement.

 

(b)           The Officer’s covenants in Sections 4, 5, and
6 are independent covenants and the existence of any claim by the officer
against the Company under this Agreement or otherwise will not excuse the
Officer’s breach of any covenant in Section 4, 5, or 6.

 

(c)           After the Officer’s employment by the Company
is terminated, this Agreement will continue in full force and effect as is
necessary or appropriate to enforce the covenants and agreements of the Officer
in Sections 4, 5, and 6.

 

7.4           Binding Effect; Benefits; Assignment.             This Agreement shall inure to the benefit of,
and shall be binding upon, the parties hereto and their respective successors,
assigns, heirs, and legal representatives. 
Insofar as the Officer is concerned, this contract, being personal, cannot
be assigned other than by will or the laws of descent and distribution.

 

7.5           Notices.       All
notices and other communications which are required or permitted hereunder
shall be in writing and shall be sufficient if mailed by certified mail,
postage prepaid, and shall be effective three days after such mailing or upon
delivery, whichever is earlier, to the following addresses or such other
address as the appropriate party may advise each other party hereto:

 

10

 

If
to the Officer:

 

John
P. Burton

2
Candlenut Place

The
Woodlands, TX   77381

 

If
to the Company:

 

Power
3 Medical Products, Inc.

3400
Research Forest Drive

The
Woodlands, TX  77381

 

Copy
to:

 

Billings
and Solomon, PLLC

2777
Allen Parkway, Suite 460

Houston,
TX 77019

ATTN:  Richard P. Martini

 

7.6           Entire Agreement.    This Agreement
contains the entire agreement between the parties hereto and supersedes all
prior agreements and understandings, oral or written, between the parties
hereto with respect to the subject matter hereof including, without limitation,
the Original Agreement.

 

7.7           No Third-Party Beneficiaries.       This
Agreement shall not confer any rights or remedies upon any person other than
the Company, the Officer, and their respective successors and permitted
assigns, other than as expressly set forth in this Agreement.

 

7.8           Amendments and Waivers.         Except
as set forth in Paragraph 2.1(b) above, this Agreement may not be modified
or amended except by an instrument or instruments in writing signed by the
party against whom enforcement of any such modification or amendment
sought.  Either party hereto may, by an
instrument in writing, waive compliance by the other party with any term or
provision of this Agreement on the part of such other party hereto to be
performed or complied with.  The waiver
by any party hereto of a breach of any term or provision of this Agreement
shall not be construed as a waiver of any subsequent breach.  No delay or failure by either party in
exercising any right under this Agreement, and no partial or single exercise of
that right, shall constitute a waiver of that or any other right.

 

7.9           Headings.         The paragraph
headings contained in this Agreement are for reference purposes only and shall
not be deemed to be a part of this Agreement or to control or affect the
meaning or construction of any provision of this Agreement.

 

7.10         Construction.         The
language used in this Agreement will be deemed to be the language chosen by the
Company and the Officer to express their mutual intent, and no rule of
strict construction shall be applied against either party.

 

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7.11         Counterparts.        This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

 

7.12         Severability.          If any term or provision of this Agreement is
held or deemed to be invalid or unenforceable, in whole or in part, by a court
of competent jurisdiction, this Agreement shall be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement.

 

7.13         Expenses and Attorney’s Fees.         In the event that a dispute arises under this
Agreement that results in litigation or arbitration, the prevailing party, as
determined by the decision of a court or forum of competent and final
jurisdiction, shall be entitled to court costs and reasonable attorney’s fees.  A court or forum of “final” jurisdiction
shall mean a court of forum from which no appeal may be taken or from whose
decree, decision, judgment, or order no appeal is taken or prosecuted.

 

7.14         Governing Law.    This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas, without regard to the
conflict of laws principles thereof.

 

7.15         Agreement Preparation.      The Officer acknowledges that this Agreement
has been prepared by counsel for the Company, and the Officer has not relied on
any representation made by the Company’s attorneys.  The Officer has engaged an attorney of his
choice to review this agreement on his behalf. 
By signing this employment agreement, officer is hereby certifying that
officer (a) received a copy of this agreement for review and study before
executing it; (b) read this agreement carefully before signing it; (c) had
sufficient opportunity before signing the agreement to ask any questions
officer had about the agreement and received satisfactory answers to all such
questions; and (d) understands officer’s rights and obligations under the
agreement.

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this
Employment Agreement as of the date first written above but to be effective as
of the Effective Date.

 

 

	
   

  	
  OFFICER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    /s/
  John P. Burton

  	
   

  
	
   

  	
  John
  P. Burton

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  Power
  3 Medical Products, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Steven B. Rash

  	
   

  
	
   

  	
   

  	
  Steven B. Rash

  
	
   

  	
   

  	
  Chief Executive Officer

  
						

 

13Exhibit 10.24

 

This document
constitutes part of the prospectus covering

securities that have been registered under the Securities Act of 1933.

 

Walter Industries, Inc.

Long-Term Incentive Award Plan

Restricted Stock Unit Award Agreement

 

THIS AGREEMENT, effective as of
the Date of Grant set forth below, represents a grant of restricted stock units
(“RSUs”) by Walter Industries, Inc., a Delaware corporation (the “Company”),
to the Participant named below, pursuant to the provisions of the Amended 1995
Long-Term Incentive Stock Plan of Walter Industries, Inc. (the “Plan”).
You have been selected to receive a grant of RSUs pursuant to the Plan, as
specified below.

 

The Plan provides a complete description of the terms
and conditions governing the grant of RSUs. If there is any inconsistency
between the terms of this Agreement and the terms of the Plan, the Plan’s terms
shall completely supersede and replace the conflicting terms of this Agreement.
All capitalized terms shall have the meanings ascribed to them in the Plan,
unless specifically set forth otherwise herein.

 

Participant: Gregory E. Hyland

 

Date of Grant: September 16,
2005

 

Number of RSUs Granted: 35,000

 

Purchase Price: None

 

Share Price Targets:

 

	
  December 31, 2006

  	
   

  	
  $

  	
  53.01

  	
   

  
	
  December 31, 2007

  	
   

  	
  $

  	
  58.31

  	
   

  
	
  Deceember 31, 2008

  	
   

  	
  $

  	
  64.14

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  70.56

  	
   

  
	
  December 31, 2010

  	
   

  	
  $

  	
  77.61

  	
   

  
	
  December 31, 2011

  	
   

  	
  $

  	
  85.37

  	
   

  
	
  September 16, 2012

  	
   

  	
  $

  	
  91.82

  	
   

  

 

The parties hereto agree as follows:

 

1.         Employment
With the Company. Except as may otherwise be provided in Section 6,
the RSUs granted hereunder are granted on the condition that the Participant
remains an Employee of the Company or its Subsidiaries from the Date of Grant
through (and including) the vesting date, as set forth in Section 2
(referred to herein as the “Period of Restriction”).

 

This grant of RSUs shall not confer any right to the
Participant (or any other Participant) to be granted RSUs or other Awards in
the future under the Plan.

 

1

 

2.         Vesting.
RSUs shall vest one hundred percent (100%) at the end of the seventh
anniversary following the Date of Grant; provided, however, if the
predetermined Share Price Targets (as set forth on page 1) are achieved
and you remain employed by the Company, vesting of the RSUs shall accelerate as
follows:

 

(a)                            Twenty-five
percent (25%) of the total number of RSUs granted shall vest on December 31,
2006 (i.e., you must be employed by the Company on such date and achieve the
Share Price Target to vest) if the closing price of the Company’s stock is at
least equal to fifty-three dollars and one cent ($53.01) for any period of
sixty (60) consecutive calendar days preceding December 31, 2006.

 

(b)                           Fifty
percent (50%) of the total number of RSUs granted, less the number of any RSUs
previously vested, shall vest on December 31, 2007 (i.e., you must be
employed by the Company on such date and achieve the Share Price Target to
vest) if the closing price of the Company’s stock is at least equal to
fifty-eight dollars and thirty-one cents ($58.31) for any period of sixty (60)
consecutive calendar days preceding December 31, 2007.

 

(c)                            Seventy-five
percent (75%) of the total number of RSUs granted, less the number of any RSUs
previously vested, shall vest on December 31, 2008 (i.e., you must be
employed by the Company on such date and achieve the Share Price Target to
vest) if the closing price of the Company’s stock is at least equal to
sixty-four dollars and fourteen cents ($64.14) for any period of sixty (60)
consecutive calendar days preceding December 31, 2008.

 

(d)                           One
hundred percent (100%) of the total number of RSUs granted, less the number of
any RSUs previously vested, shall vest on December 31, 2009 (i.e., you
must be employed by the Company on such date and achieve the Share Price Target
to vest) if the closing price of the Company’s stock is at least equal to
seventy dollars and fifty-six cents ($70.56) for any period of sixty (60)
consecutive calendar days preceding December 31, 2009.

 

(e)                            One
hundred percent (100%) of the total number of RSUs granted, less the number of
any RSUs previously vested, shall vest at any time up to and including December 31,
2010 if the closing price of the Company’s stock is at least equal to
seventy-seven dollars and sixty-one cents ($77.61) for any period of sixty (60)
consecutive calendar days preceding December 31, 2010. Unless otherwise
elected in a properly executed Deferral Election Form, payout will occur as
soon as administratively feasible after fulfilling the Share Price Target goal.

 

(f)                              One
hundred percent (100%) of the total number of RSUs granted, less the number of
any RSUs previously vested, shall vest at any time up to and including December 31,
2011 if the closing price of the Company’s stock is at least equal to eighty-five
dollars and thirty-seven cents ($85.37) for any period of sixty (60)
consecutive calendar days preceding December 31, 2011. Unless otherwise
elected in a properly executed Deferral Election Form, payout will occur as
soon as administratively feasible after fulfilling the Share Price Target goal.

 

2

 

(g)                           One
hundred percent (100%) of the total number of RSUs granted, less the number of
any RSUs previously vested, shall vest at any time up to and including September 16,
2012 if the closing price of the Company’s stock is at least equal to
ninety-one dollars and eighty-two cents ($91.82) for any period of sixty (60)
consecutive calendar days preceding September 16, 2012. Unless otherwise
elected in a properly executed Deferral Election Form, payout will occur as
soon as administratively feasible after fulfilling the Share Price Target goal.

 

The following table summarizes the vesting treatment
of a hypothetical grant of 1,000 RSUs, based upon whether or not Share Price
Targets are achieved.

 

	
   

  	
   

  	
  Number
  of RSUs That Vest

  	
   

  
	
  Earliest Date on Which RSUs
  Vest

  	
   

  	
  If
  Share Price

  Targets Achieved

  	
   

  	
  If
  Share Price

  Targets Not Achieved

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December 31, 2006

  	
   

  	
  250

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December 31, 2007

  	
   

  	
  500 less RSUs previously
  vested

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December 31, 2008

  	
   

  	
  750 less RSUs
  previously vested

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December 31, 2009

  	
   

  	
  1,000 less RSUs
  previously vested

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December 31, 2010

  	
   

  	
  1,000 less RSUs
  previously vested

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December 31, 2011

  	
   

  	
  1,000 less RSUs previously
  vested

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  September 16, 2012

  	
   

  	
  1,000 less RSUs
  previously vested

  	
   

  	
  1,000

  	
   

  

 

3.         Timing
of Payout. Payout of all RSUs shall occur as soon as
administratively feasible after vesting, but not sooner than three business
days following vesting, unless a Participant elects to defer the payout of RSUs
upon vesting by completing in writing and returning to the Company an
irrevocable deferral election form within six (6) months of the Date of
Grant.

 

4.         Form of
Payout. Vested RSUs will be paid out solely in the form of
shares of stock of the Company.

 

5.         Voting
Rights and Dividends. Until such time as the RSUs are paid
out in shares of Company stock, the Participant shall not have voting rights.
Further, no dividends shall be paid on any RSUs.

 

6.         Termination
of Employment. In the event of the Participant’s termination
of employment with the Company or its Subsidiaries for any reason during the
Period of Restriction, all RSUs held by the Participant at the time of
employment termination and still subject to the Period of Restriction
shall be forfeited by the Participant to the Company. However, the Committee
may, in its sole discretion, vest all or any portion of the RSUs held by the
Participant. For all previously vested RSUs that have been properly deferred,
payout shall occur upon the earlier to occur of the elected deferred vesting
date or the date of your employment termination for any reason.

 

7.         RESERVED

 

3

 

8.         Restrictions
on Transfer. Unless and until actual shares of stock of the
Company are received upon payout, RSUs granted pursuant to this Agreement may
not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated (a “Transfer”), other than by will or by the laws of descent and distribution,
except as provided in the Plan. If any Transfer, whether voluntary or
involuntary, of RSUs is made, or if any attachment, execution, garnishment, or
lien shall be issued against or placed upon the RSUs, the Participant’s right
to such RSUs shall be immediately forfeited by the Participant to the Company,
and this Agreement shall lapse.

 

9.         Recapitalization.
In the event of any change in the capitalization of the Company such as a stock
split or a corporate transaction such as any merger, consolidation, separation,
or otherwise, the number and class of RSUs subject to this Agreement may be
equitably adjusted by the Committee, in its sole discretion, to prevent
dilution or enlargement of rights.

 

10.       Beneficiary
Designation. The Participant may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under this Agreement is to be paid in case of his or her death
before he or she receives any or all of such benefit. Each such designation
shall revoke all prior designations by the Participant, shall be in a form
prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Secretary of the Company during the Participant’s
lifetime. In the absence of any such designation, benefits remaining unpaid at
the Participant’s death shall be paid to the Participant’s estate.

 

11.       Continuation
of Employment. This Agreement shall not confer upon the
Participant any right to continue employment with the Company or its
Subsidiaries, nor shall this Agreement interfere in any way with the Company’s
or its Subsidiaries’ right to terminate the Participant’s employment at any
time.

 

12.       Miscellaneous.

 

(a)                            This
Agreement and the rights of the Participant hereunder are subject to all the
terms and conditions of the Plan, as the same may be amended from time to time,
as well as to such rules and regulations as the Committee may adopt for
administration of the Plan. The Committee shall have the right to impose such restrictions
on any shares acquired pursuant to this Agreement, as it may deem advisable,
including, without limitation, restrictions under applicable federal securities
laws, under the requirements of any stock exchange or market upon which such
shares are then listed and/or traded, and under any blue sky or state
securities laws applicable to such shares. It is expressly understood that the
Committee is authorized to administer, construe, and make all determinations
necessary or appropriate to the administration of the Plan and this Agreement,
all of which shall be binding upon the Participant.

 

(b)                           The
Committee may terminate, amend, or modify the Plan; provided, however, that no
such termination, amendment, or modification of the Plan may in any material
way adversely affect the Participant’s rights under this Agreement, without the
written consent of the Participant.

 

(c)                            The
Participant may elect, subject to any procedural rules adopted by the
Committee, to satisfy the withholding requirement, in whole or in part, by
having

 

4

 

the Company
withhold and sell shares having an aggregate Fair Market Value on the date the
tax is to be determined, equal to the amount required to be withheld.

 

The Company shall
have the power and the right to deduct or withhold from the Participant’s
compensation, or require the Participant to remit to the Company, an amount
sufficient to satisfy federal, state, and local taxes (including the
Participant’s FICA obligation), domestic or foreign, required by law to be
withheld with respect to any payout to the Participant under this Agreement.

 

(d)                           The
Participant agrees to take all steps necessary to comply with all applicable
provisions of federal and state securities laws in exercising his or her rights
under this Agreement.

 

(e)                            This
Agreement shall be subject to all applicable laws, rules, and regulations, and
to such approvals by any governmental agencies or national securities exchanges
as may be required.

 

(f)                              All
obligations of the Company under the Plan and this Agreement, with respect to
the RSUs, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the
business and/or assets of the Company.

 

(g)                           To
the extent not preempted by federal law, this Agreement shall be governed by,
and construed in accordance with, the laws of the state of Delaware.

 

IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed effective as of the Date of Grant.

 

	
   

  	
  Walter Industries, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donald N. Boyce

  
	
   

  	
   

  	
  Chairman, Compensation and Human Resources

  
	
   

  	
   

  	
  Committee

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Victor P. Patrick

  	
   

  	
   

  	
  /s/ GE Hyland

  
	
   

  	
   

  	
  Participant

  
				

 

5

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