EXECUTIVE EMPLOYMENT AGREEMENT
This
Executive Employment Agreement ("Agreement") is made effective
as of January 1, 2008
(“Effective Date”), by and between
AUXILIO, Inc., a Nevada corporation
(“Company”) and Paul T. Anthony
("Executive”).
The
parties agree as follows:
1.
Employment . Company hereby employs Executive, and
Executive hereby accepts such employment, upon the terms and
conditions set forth herein.
2.
Duties .
2.1
Position . Executive is employed as Chief Financial
Officer and shall have the duties and responsibilities assigned by
the Company’s Chief Executive Officer, as may be reasonably
assigned from time to time. Executive shall perform
faithfully and diligently all duties assigned to
Executive. Company reserves the right to modify
Executive’s duties at any time in its sole and absolute
discretion.
2.2
Best Efforts/Full-time . Executive will expend
Executive’s best efforts on behalf of Company and its
subsidiaries, and will abide by all policies and decisions made by
Company, as well as all applicable federal, state and local laws,
regulations or ordinances. Executive will act in the
best interest of Company at all times. Executive shall
devote Executive’s full business time and efforts to the
performance of Executive’s assigned duties for Company,
unless Executive notifies the Chief Executive Officer in advance of
Executive’s intent to engage in other paid work and receives
the Chief Executive Officers’ express written consent to do
so.
3.
Term .
3.1
Initial Term . The employment relationship pursuant
to this Agreement shall be for an initial term commencing on the
Effective Date set forth above and continuing for a period of 2
(two) years following such date (“Initial Term”),
unless sooner terminated in accordance with paragraph 7
below.
3.2
Renewal . On
completion of the Initial Term specified in subparagraph 3.1
above, this Agreement will automatically renew for subsequent 12
month terms unless
either party provides advance written notice to the other that such
party does not wish to renew the Agreement for a subsequent 12
months . In the event either party
gives notice of nonrenewal pursuant to this subparagraph 3.2,
this Agreement will expire at the end of the current
term.
4.
Compensation .
4.1
Base Salary . As compensation for Executive’s
performance of Executive’s duties hereunder, Company shall
pay to Executive an initial Base Salary of $170,000 for the first
year, payable in accordance with the normal payroll practices of
Company, less required deductions for state and federal withholding
tax, social security and all other employment taxes and payroll
deductions. In the event Executive’s employment
under this Agreement is terminated by either party, for any reason,
Executive will be entitled to receive Executive’s Base Salary
prorated to the date of termination. Such amount shall
eligible for increase to $185,000 effective January 1, 2009 in
accordance with the provisions set forth in Exhibit A.
4.2
Incentive Compensation . Executive will be eligible
to earn incentive compensation in accordance with the provisions
set forth in Exhibit A.
4.3
Equity Compensation . From time to
time, Executive will be granted stock options to purchase shares of
the Company’s Common Stock at an exercise price equal to the
fair market value of the stock on the date of grant.
5.
Customary Fringe Benefits . Executive will be
eligible for all customary and usual fringe benefits generally
available to executives of Company subject to the terms and
conditions of Company’s benefit plan
documents. Company reserves the right to change or
eliminate the fringe benefits on a prospective basis, at any time,
effective upon notice to Executive.
6.
Business Expenses . Executive will be reimbursed for
all reasonable, out-of-pocket business expenses incurred in the
performance of Executive’s duties on behalf of
Company. To obtain reimbursement, expenses must be
submitted promptly with appropriate supporting documentation in
accordance with Company’s policies.
7.
Termination of Executive’s Employment .
7.1
Termination for Cause by Company . Although Company
anticipates a mutually rewarding employment relationship with
Executive, Company may terminate Executive’s employment
immediately at any time for Cause. For purposes of this
Agreement, “Cause” is defined as: (a) acts or
omissions constituting gross negligence, recklessness or willful
misconduct on the part of Executive with respect to
Executive’s obligations or otherwise relating to the business
of Company; (b) Executive’s material breach of this
Agreement; and (c) Executive’s conviction or entry of a
plea of nolo contendere for fraud, misappropriation or
embezzlement, or any felony or crime of moral
turpitude. In the event Executive’s employment is
terminated in accordance with this subparagraph 7.1, Executive
shall be entitled to receive Executive’s Base Salary prorated
to the date of termination. All other Company
obligations to Executive pursuant to this Agreement will become
automatically terminated and completely
extinguished. Executive will not be entitled to receive
the Severance Payment described in subparagraph 7.3
below.
7.2
Termination Without Cause by Company/Severance; Change of
Control .
(a) Company
may terminate Executive’s employment under this
Agreement without Cause at any time on thirty (30) days’
advance written notice to
Executive. In the event of (i) such termination
without Cause, or (ii) Executive’s inability to perform
the essential functions of Executive’s position due to a
mental or physical disability or Executive's death, or (iii)
in the event of the termination of Executive without Cause
following a “Change of Control” (as defined in
Section 7.2(b) below), Executive will receive the Base Salary
then in effect, prorated to the date of termination, and a
“Severance Payment” equivalent to
(a) payment of compensation for an additional six
months, payable in accordance with Company’s regular
payroll cycle or lump sum, and (b) an additional provision of
accelerating all unvested stock options and
warrants provided that Executive :
(i) complies with all surviving
provisions of this Agreement as specified in subparagraph 13.8
below; and (ii) executes a full general release, releasing all
claims, known or unknown, that Executive may have against
Company arising out of or any way related to Executive’s
employment or termination of employment with
Company. Notwithstanding the foregoing, in the
event the Company’s securities are publicly traded on
the date of Executive’s termination of employment, any
portion of the aggregate salary continuation payments
described in clause (ii)(a) of this Section 7.2, which, if
paid, would exceed the Section 409A Safe Harbor Limit (as
defined in Section 7.2(c) below), such excess portion shall be
paid to Executive in a lump sum on the first day of the
seventh calendar month immediately following the date of
Executive’s termination.
(b) As
used herein, “Change of Control”
means: (i) a sale of all or substantially all of
the assets of the Company; (ii) a merger or consolidation in
which the Company is not the surviving entity and in which
the holders of the Company’s outstanding voting stock
immediately prior to such transaction own, immediately after
such transaction, securities representing less than fifty
percent (50%) of the voting power of the entity surviving
such transaction or, where the surviving entity is a
wholly-owned subsidiary of another entity, the surviving
entity’s parent; or (iii) a reverse merger in which the
Company is the surviving entity but the shares of common
stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property,
whether in the form of securities of the surviving
entity’s parent, cash or otherwise, and in which the
holders of the Company’s outstanding voting stock
immediately prior to such transaction own, immediately after
such transaction, securities representing less than fifty
percent (50%) of the voting power of the Company or, where
the Company is a wholly-owned subsidiary of another
entity.
(c) As
used herein, “Section 409A Safe Harbor Limit”
means an amount equal to two (2) times the lesser of (i)
Executive’s annual rate of compensation for the taxable
year immediately preceding the taxable year in which
Executive’s employment is terminated by the Company or
(ii) the dollar amount in effect under Section 401(a)(17) of
the Internal Revenue Code of 1986, as amended, for the
taxable year in which Executive’s employment is
terminated.
(d) In
the event that the benefits provided to you under this
Agreement, and any other agreements, plans or arrangements to
which you may be a party with the Company, cause you to incur
an excise tax under Section 4999 of the Internal Revenue Code
of 1986 (the “Code”) or any corresponding
provisions of applicable state tax law in connection with a
Change of Control, then the Company will pay you an
additional amount sufficient to reimburse you for (i) the
excise tax imposed on such benefits, and (ii) the federal and
state income, employment and excise taxes, determined on a
fully “grossed-up” basis, imposed on the benefits
payments provided. The Company shall be entitled
to withhold from the payment required hereunder such taxes as
it may be required to withhold under applicable tax law, and
any such withheld taxes shall be treated as paid to you
hereunder.
7.3
Voluntary Resignation by Executive for Good Reason/Severance
. Executive may voluntarily resign Executive’s
position with Company for Good Reason, at any time on thirty (30)
days’ advance written
notice. In the event of Executive’s resignation
for
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