AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
AMENDED
AND RESTATED
$1,500,000 El
Segundo,
California
Date:
July 1,
2007
This
Amended and Restated Loan and
Security Agreement is entered into as of July 1, 2007 (this “Amended Loan
Agreement” or this “Agreement”) by and among AUXILIO, INC., a Nevada
corporation (“Company”), CAMBRIA INVESTMENT FUND, L.P., a California
limited partnership (“CIF” or the “Holder”) and the other holders
listed on Schedule 1 hereto (together, the
“Holders”).
WHEREAS,
the Company and the Holders previously entered into a Loan and Security
Agreement dated as of October 25, 2006 (the “Original Loan Agreement”),
which permitted the Company to borrow up to $1,500,000 from the Holders, and
under the terms of which the Company borrowed a total of $745,000 (the
“Original Principal”) from such Holders.
WHEREAS,
the Company has requested that
the Holders extend the maturity date of the Original Principal until May 1,
2008, and the Holders have agreed to such extension in consideration for the
terms and conditions set forth in this Amended Loan Agreement, which fully
amends, restates and replaces the Original Loan Agreement.
WHEREAS,
as additional consideration
for the extension of the Original Principal by the Holders, the Company has
executed the Amended Warrant (as defined below), which accelerates the vesting
of the warrant shares thereunder as described on Schedule 1.
NOW,
THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Extension
of Maturity Date; Interest; Warrants.
(a) The
Company and the Holders agree that the maturity date of for the repayment of
the
Original Principal shall be May 1, 2008 (the “Original Principal Maturity
Date”). Upon the repayment of the Original Principal, the line of
credit represented by the Original Principal shall be extinguished, and the
amount available to the Company to borrow hereunder shall be reduced to $755,000
(the “Future Principal”). In the event that the Company
borrows a portion of or all of the Future Principal from the Holders, the
maturity date for the repayment of the Future Principal shall be December 31,
2008 (the “Future Principal Maturity Date”, which, together with the
Original Principal Maturity Date, may be referred to as a “Maturity
Date”). The Original Principal and the Future
Principal shall be referred to herein as the “Loan”. The
Future Principal may only be drawn down by the Company if no Material Adverse
Change (as defined below) shall have occurred. As used herein,
“Material Adverse Change” means, when used in connection with the Company, any
change or effect materially adverse to the business, financial condition or
results of operations of the Company and its subsidiaries taken as a
whole.
(b) The
Company hereby promises to pay to the Holders at such place as Holder may
specify, in lawful money of the United States of America, the Loan plus interest
on the principal amount outstanding from time to time hereunder at a rate equal
to the lesser of (i) the maximum lawful rate or (ii) twelve percent (12%) per
year. Interest on the outstanding principal balance shall
accrue and be payable on the last day of each fiscal
quarter. Interest due and payable hereunder shall be computed on the
basis of a year of 360 days and for the actual number of days
elapsed. All payments under this Agreement shall be applied
first to fees and expenses, then to accrued but unpaid interest and then to
principal. Any principal or interest payments on this Agreement
outstanding after the occurrence and during the continuance of a default under
this Agreement shall bear interest at a rate equal to the lesser of (i) the
lawful legal rate or (ii) five percent (5%) (computed annually) above the
interest rate otherwise applicable under this Agreement.
(c) In
connection with the Original Loan Agreement, the Company executed and delivered
to the Holders a warrant to purchase 750,000 shares of common stock (the
“Original Warrant”). As partial consideration for the Holders
entering into this Amended Loan Agreement, the Company agrees that all Warrant
Shares (as defined therein) shall vest thereunder as of the date
hereof. Concurrent with the execution of this Amended Loan
Agreement, the Company shall execute and deliver an Amendment to Warrant to
Purchase Common Stock (the
“Amended
Warrant”), setting forth the terms of this Section
1(c). The Holders other than CIF agree that the Amended Warrant
will be executed by the Company and CIF, as agent, on behalf of such
Holders.
(d) As
consideration for the extension of the Maturity Dates, the Company shall execute
and deliver to the Holders a warrant (the “Additional Warrant”) to
purchase 377,500 shares of common stock, all upon the terms and conditions
set
forth therein. This Amended Loan Agreement, together with the
Original Warrant (as amended by the Amended Warrant) and the
Additional Warrant, and any other documents delivered in connection with this
Amended Loan Agreement, shall be referred to as the “Loan
Documents”. This Amended Loan Agreement shall fully amend,
restate and replace the Original Loan Agreement.
2. Secured
Agreement. To secure repayment of all obligations evidenced by
this Agreement and performance of all of Company’s obligations hereunder,
Company, grants Holder a second priority security interest (subject to the
first
lien held by Laurus Master Fund, LTD) in all of Company’s inventory, accounts,
equipment, cash, deposit accounts, securities, Intellectual Property (as defined
in Exhibit A hereto), chattel paper, general intangibles and instruments,
now existing or hereafter arising, and all proceeds thereof, as such terms
are
defined in the California Uniform Commercial Code (the “UCC”), whether
now owned or hereafter acquired, or any value received in exchange for any
of
the foregoing (collectively, the “Collateral”) as set forth in Exhibit
A. Company shall take such actions as Holder reasonably requests
from time to time to perfect or continue the second priority security interest
granted hereunder including, without limitation, the filing of all necessary
UCC
financing statements in connection therewith. Company shall not
dispose of or encumber all or any substantial part of the Collateral, other
than
in the ordinary course of business, without the prior written consent of
Holder.
3. Representations,
Warranties and Covenants of Company.
(a)
Corporate Existence and Authority. Company is and will
continue to be duly organized, validly existing and in good standing under
the
laws of the jurisdiction of its incorporation or
organization. Company is and will continue to be qualified and
licensed to do business in all jurisdictions in which any failure to do so
would
have a Material Adverse Change on Company. Company has all requisite
power to transact the business it transacts and proposes to transact, to execute
and deliver this Agreement, and all other documents and agreements contemplated
by this Agreement, and to perform the provisions of this Agreement and to
consummate the transactions contemplated by this Agreement. The execution,
delivery and performance of this Agreement, and all other documents and
agreements contemplated by this Agreement, and the consummation of the
transactions contemplated by this Agreement, have been duly authorized and
approved by Company. This Agreement, and all other documents and
agreements contemplated by this Agreement have each been duly authorized,
executed and delivered by, and each is the valid and binding obligation of,
Company enforceable against Company in accordance with its terms, except as
may
be limited by applicable bankruptcy, reorganization, insolvency, moratorium
or
other similar laws or by legal or equitable principles relating to or limiting
creditors’ rights generally.
(b)
No
Conflicts. Except as set forth on Schedule 3(b), the consummation of the
transactions contemplated by this Agreement and the performance of the terms
and
provisions of this Agreement, and any other documents or agreements contemplated
by this Agreement will not (i) contravene, result in any breach of, or
constitute a default under any indenture, mortgage, deed of trust, bank loan
or
credit agreement, corporate charter, by-laws or other material agreement or
instrument to which Company is a party or by which Company or any of its
properties or the Collateral is bound, (ii) conflict with or
result in a breach of any of the terms, conditions or provisions of any order
of
any court, arbitrator or Federal, State, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic
or
foreign (collectively, “Governmental Person”) applicable to Company or
(iii) violate any material provision of any statute or other rule or regulation
of any Governmental Person applicable to Company, which could have a material
adverse effect on Company.
(c) Place
of Business;
Location of Collateral. The address set forth in Section
8(c) of this Agreement is Company’s chief executive
office. Company will give Holder prior written notice before opening
any additional place of business or changing its chief executive
office. Holder acknowledges that portions of the Collateral are
located in the field and are moved from time to time. The
Company will cooperate with Holder in (i) perfecting the security interests
granted hereunder in all Collateral and (ii) in providing Holder, at Holder’s
request, with current information regarding the whereabouts of the Collateral
from time to time.
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(d) Title
to Collateral;
Permitted Liens. Company is currently the sole owner of all the
Collateral, except for those items and property which are leased by
Company. The Collateral now is and will remain free and clear of any
and all liens, charges, security interests, encumbrances and adverse claims,
except for the first priority security interest held by Laurus Master Fund
LTD
in all of the assets of the Company and any purchase money or lessor security
interests in certain equipment Holder now has, and will continue to
have, a second-priority perfected and enforceable security interest in all
of
the Collateral, subject only to the purchase money or lessor security interests,
contractual rights of set off under bank agreements, and the liens in favor
of
the other parties to the Intercreditor Agreement, and Company will at all times
defend Holder and the Collateral against all claims of others (subject to the
rights of Laurus Master Fund LTD and the holders of purchase money or lessor
security interests in certain equipment, contractual rights of set off under
bank agreements, and the liens in favor of the other parties to the
Intercreditor Agreement). So long as the loan is outstanding, none of
the Collateral now is or will be affixed to any real property in such a manner,
or with such intent, as to become a fixture. Company is not and will
not become a lessee under any real property lease pursuant to which the lessor
may obtain any rights in any of the Collateral and no such lease now prohibits,
restrains, impairs or will prohibit, restrain or impair Company’s right to
remove any Collateral from the leased premises (subject to statutory rights
of
landlords). Whenever any Collateral is located upon premises in which
any third party has an interest (whether as owner, mortgagee, beneficiary under
a deed of trust, lien or otherwise), Company shall, whenever requested by
Holder, use its best efforts to cause such third party to execute and deliver
to
Holder, in form acceptable to Holder, such waivers and subordinations as Holder
shall specify, so as to ensure that Holder’s rights in the Collateral are, and
will continue to be, superior to the rights of any such third
party. Company will keep in full force and effect, and will comply
with all the terms of, any lease of real property where any of the Collateral
now or in the future may be located.
(e) Maintenance
of
Collateral. Company will maintain the Collateral in good working
condition, ordinary wear and tear excepted, and Company will not use the
Collateral for any unlawful purposes. Company will immediately advise
Holder in writing of any material loss or damage to the Collateral.
(f) Books
and
Records. Company has maintained and will maintain at Company’s
chief executive office complete and accurate books and records, comprising
an
accounting system in accordance with generally accepted accounting
principles.
(g) Financial
Condition,
Statements and Reports. All financial statements now or in the
future delivered to Holder have been, and will be, prepared in conformity with
generally accepted accounting principles and now and in the future will fairly
reflect the financial condition of Company, at the times and for the periods
therein stated. Between the last date covered by any such statement
provided to Holder and the date hereof, there has been no Material Adverse
Change of Company. Company is now and will continue to be
solvent.
(h) Compliance
with
Law. Company has complied, and will comply, in all material
respects, with all provisions of all applicable laws and regulations, including,
but not limited to, those relating to Company’s ownership of real or personal
property, the conduct and licensing of Company’s business, and all environmental
matters.
(i) Litigation. There
is no claim, suit, litigation, proceeding or investigation pending or, to the
best of Company’s knowledge, threatened by or against or affecting Company in
any court or before any governmental agency, or any basis therefor known to
Company, which could normally or reasonably be expected to result, either
separately or in the aggregate, in a Material Adverse Change of
Company. Company will promptly inform Holder in writing of any claim,
proceeding, litigation or investigation in the future threatened or instituted
by or against Company.
(j) Use
of
Proceeds. All proceeds of the loan shall be used solely for
lawful business purposes.
(k)
Intellectual Property. To its actual knowledge, Company
possesses all material licenses, permits, franchises, authorizations, patents,
copyrights, trademarks and trade names and any other tangible or intangible
or
intellectual property rights, or rights thereto, required to conduct its
business substantially as now conducted and as currently proposed to be
conducted, without actual knowledge of conflict with the rights of
others.
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(l)
Indebtedness. Except for the loan evidenced by this Agreement
and the indebtedness identified on Schedule 3(l) or as otherwise
disclosed in Company’s Quarterly Report on Form 10-QSB for the quarter
ended, March 31, 2007, which report was previously delivered to
Holder, Company has no outstanding indebtedness of any kind (including
contingent obligations, tax assessments and unusual forward or long-term
commitments).
(m)
Disclosure. No
representation or other statement made by Company to Holder contains any untrue
statement of a material fact or omits to state a material fact necessary to
make
any statements made to Holder not misleading.
(n) Performance. Company
shall pay the principal of and interest on the loan evidenced by this Agreement
in the manner provided in this Agreement. The obligation of Company
described in the preceding sentence is absolute and unconditional, irrespective
of any tax or accounting treatment of such obligation including without
limitation any documentary stamp, transfer, ad valorem or other taxes assessed
by any jurisdiction in connection with this transaction.
(o) Stay,
Extension and Usury Laws. Company agrees (to the extent it may
lawfully do so) that it will not at any time insist upon, plead or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension
law
or any usury law or other law that would prohibit or forgive Company from paying
all or a portion of the principal of, finance fee, or interest on the loan
contemplated by this Agreement, wherever enacted, now or at any time hereinafter
in force, or that may materially affect the covenants or the performance of
this
Agreement in any manner inconsistent with the provisions of this
Agreement. Company expressly waives all benefit or advantage of any
such law. If a court of competent jurisdiction prescribes that
Company may not waive its rights to take the benefit or advantage of any stay
or
extension law or any usury law or other law in accordance with the prior
sentence, then the obligation to pay interest on the principal shall be reduced
to the maximum legal limit under applicable law governing the interest payable
in connection with this Agreement, and any amount of interest paid by Company
that is deemed illegal shall be deemed to have been a prepayment of principal
on
the loan.
(p) Taxes. Company
shall make all necessary tax filings and reports and pay prior to delinquency
all taxes, assessments and governmental levies that may be imposed upon Company,
except as contested in good faith and by appropriate proceedings or which will
not result in a Material Adverse Change.
(q) Limitations
on Indebtedness. Other than amounts owing to Laurus Master Fund,
LTD, without Holder’s prior written consent, Company shall not, directly or
indirectly, create, incur, assume, suffer to exist or otherwise in any manner
become liable or commit to become liable for any indebtedness other than
Company’s obligations to Holder under this Agreement and indebtedness incurred
in the ordinary course of business not in excess of US$50,000 in the
aggregate.
(r) Insurance. Company
shall maintain insurance with responsible and reputable insurance companies
or
associations in such amounts and covering such risks as is usually carried
by
companies engaged in similar businesses and owning similar properties in the
same general areas in which Company operates.
(s) Reports. Company
will provide Holder with quarterly financial statements within 45 days after
the
end of each quarter and such additional financial and other information as
Holder may reasonably request from time to time; provided, that each such
quarterly financial statement shall be deemed to have been delivered if the
Company timely files with the Securities and Exchange Commission its quarterly
or annual report covering such quarterly financial statements.
(t) Insurance. Company
will maintain insurance on the Collateral that includes a lender’s loss payable
endorsement in favor of Holder as an additional loss payee. Company
will maintain insurance in a form acceptable to Holder relating to the
Collateral and Company’s business in amounts and of a type that are customary to
businesses similar to Company’s.
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(u) Consolidation. Company
will not merge or consolidate with any person or entity, or make any material
investments in any person or entity, or dispose of substantially all of its
assets without Holder’s prior written consent.
(v) Operations
of the Company. During the period of time that any amount under
this Loan Agreement is unpaid and outstanding, Company shall, and shall cause
each of its subsidiaries to, in all material respects, except as contemplated
by
this Loan Agreement, carry on its business in the usual and ordinary course
in
substantially the same manner as heretofore conducted and, to the extent
consistent therewith, use reasonable efforts to preserve intact its current
business organizations, keep available the services of its current officers
and
key employees and preserve its present relationships with customers, suppliers
and others having significant business dealings with it. Without
limiting the generality of the foregoing, during such period, the Company shall
not, and the Company shall cause its Subsidiaries not to, without the prior
written consent of the Holder pursuant to the procedure set forth in Section
3(v)(vii) below:
(i) (A) declare,
set aside or pay any dividends on, or make any other actual, constructive or
deemed distributions in respect of, any of its capital stock, or otherwise
make
any payments to its stockholders in their capacity as such, (B) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (C) purchase, redeem or otherwise
acquire any shares of its capital stock or any other securities thereof or
any
rights, warrants or options to acquire any such shares or other
securities;
(ii) amend
its articles or certificate of incorporation or bylaws or other similar
organizational documents;
(iii) sell,
lease, license, encumber or otherwise dispose of, or agree to sell, lease,
encumber or otherwise dispose of, any of its assets, other than transactions
that are in the ordinary course of business consistent with past practice or
pursuant to licenses entered into in the ordinary course of business consistent
with past practice, and, in any event, which involve assets which in the
aggregate are not in excess of $50,000;
(iv) other
than borrowings under this Loan Agreement and the loan of Laurus Master Fund,
LTD, incur any indebtedness for borrowed money on terms less favorable to
Company than those set forth in this Loan Agreement, or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of the Company or its Subsidiaries on terms less
favorable to Company than those set forth in this Loan Agreement, guarantee
any
debt securities of others, enter into any “keep-well” or other agreement to
maintain any financial statement condition of another person or enter into
any
arrangement having the economic effect of any of the foregoing, or make any
loans, advances or capital contributions to, or other investments in, any other
person, other than to or in the Company or its Subsidiaries;
(v) increase
the compensation payable or to become payable to its directors, officers or
employees, except for increases required under employment agreements existing
on
the date hereof, or with respect to non-executive officer and non-director
employees, in the ordinary course of business consistent with past practice
and
permitted under employment agreements, existing on the date hereof, or grant
any
severance or termination pay to, or enter into any employment or severance
agreement, or establish, adopt, enter into, or amend or take action to enhance
or accelerate any rights or benefits under, any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of any
director, officer or employee, except, in each case, as may be required by
the
terms of any such plan, agreement, trust, fund, policy or arrangement or to
comply with applicable law or regulation;
(vi) knowingly
violate or fail to perform any material obligation or duty imposed upon it
by
any applicable federal, state or local law, rule, regulation, guideline or
ordinance;
(vii) other
than in the ordinary course of business consistent with past practice, enter
into, modify, amend or terminate any material contract or agreement to which
the
Company or any of its Subsidiaries is a party or waive, release or assign any
material rights or claims;
(viii) Holder
hereby designates Xxxxxx Xxxx (the “Agent Designee”), as the officer of
Holder from which the Company must receive consent prior to taking (or any
of
its subsidiaries taking) the actions set forth in Section 3(v)
hereof. Within seventy-two (72) hours following receipt by the Agent
Designee of written notice from Company’s designee of the Company’s (or any of
its subsidiary’s) desire to take any actions set forth in Section 3(v),
the Agent Designee shall respond to the Company in writing indicating whether
Agent consents to such action. If the Agent Designee fails to respond
to the Company within such seventy-two (72) hour period, then Agent shall be
deemed to have consented in writing to such requested actions for purposes
of
Section 3(v) hereof. Notwithstanding the forgoing, in the
event that Xxxxxxx X. Xxxxxxxxxx consents to a transaction described in
Section 3(v) in his role as a director then consent shall not otherwise
be required hereunder.
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4. Prepayments.
(a) Optional. Company
may, from time to time, prepay the loan evidenced hereby, in whole or in part,
so long as each partial prepayment of principal is equal to or greater than
$10,000 and Company has given Holder two (2) or more business days’ written
notice of such optional prepayment. Any such optional prepayment of
principal shall be without premium or penalty. Each prepayment of principal
under this Section shall be accompanied by all interest then accrued and
unpaid on the principal so prepaid. Any principal prepaid pursuant to
this Section shall be in addition to, and not in lieu of, all payments
otherwise required to be paid under this Agreement at the time of such
prepayment. .
(b) Mandatory. Unless
otherwise agreed to by Holder, Company shall, subject to the consent of the
Laurus Master Fund, such consent being required by that certain Subordination
Agreement dated as of October 25, 2006, by and between the Company, Laurus
Master Fund LTD and Cambria (the “Subordination Agreement”), prepay the loan to
the extent of the net financing proceeds actually received by Company in the
event that Company completes any financing transaction, including without
limitation any public or private placements of debt or equity, that results
in
net proceeds to the Company in an amount in excess of $2,000,000 and that is
unrelated to the exercise of: (i) any existing stock option, (ii) the
Company’s Incentive Stock Option Plans, or (iii) any existing contractual stock
purchase right as of the date of this Agreement.
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5.
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Optional
Conversion.
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(a) At
Holders’ option, the Original Principal and all accrued interest under the loan
evidenced by this Agreement shall be convertible, without the payment of any
additional consideration by such Holders, into common stock of Company (the
“Conversion Securities”). In the event the Holders elect to
convert the Original Principal into Conversion Securities, Company shall issue
the Conversion Securities to Holder at a price per share equal to the “Exercise
Price” as defined in the Original Warrant. In addition, the Holders,
at such Holders’ option, may convert the Future Principal and all accrued
interest under the loan evidenced by this Agreement, without the payment of
any
additional consideration by such Holders, into Conversion
Securities. In the event the Holders elect to convert the Future
Principal into Conversion Securities, Company shall issue the Conversion
Securities to such Holders at a price per share equal to the “Exercise Price” as
defined in the Additional Warrant. The outstanding principal shall
continue to accrue interest, and Company shall be obligated to pay such
interest, according to the terms and conditions of this Agreement until the
Conversion Date (as defined below).
(b) In
order for the Holders
to convert all amounts owing under this Agreement into equity, Holders shall
deliver a written notice to Company that Holders elect to exercise such
conversion. Any conversion made at the election of Holders
shall be deemed to have been made immediately prior to the close of business
on
the date Company is deemed to have received such notice, and the Holders or
their nominees entitled to receive the equity shall be treated for all such
purposes as the record holder or holders of such equity on such date (the
“Conversion Date”). Company shall have no obligation to issue
any fractional shares upon conversion. Any fractional shares shall be
rounded up to the nearest whole share.
6. Fees
and Expenses. Cambria Capital, LLC (“Cambria”) has
served as placement agent in connection with the Loan, and the Company will
pay
Cambria an administrative and placement fee equal to 1.5% of the face amount
of
the Original Principal upon the date hereof. In addition, CIF has
served as agent on behalf of the Holders, and accordingly the Company will
pay
CIF an administrative and extension fee equal to 1.5% of the face amount of
the
Original Principal upon the date hereof. Each party hereto shall pay
its own costs and expenses,
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including
reasonable attorney’s fees, incurred in the preparation of this Agreement and
the other documents executed in connection with this
Agreement. Company shall pay all reasonable and actual costs that the
Holders may incur in enforcing this Agreement or exercising any rights with
respect to the collateral, including without limitation reasonable attorneys’
fees and expenses.
7. Events
of Default; Remedies.
(a) Events
of Default Defined; Acceleration of Maturity. If any of the
following events (“Events of Default”) shall occur (for any reason
whatsoever and whether it shall be voluntary or involuntary or by operation
of
law or otherwise):
(i) failure
by the Company
to make a payment of principal within ten days after the due date, whether
at
maturity or by reason of acceleration pursuant to the terms of this Agreement
or
by required prepayment;
(ii) failure
by the Company
to pay any interest accrued and owing within ten days after the applicable
due
date, or failure to pay any other liabilities or make any other payment, fee
or
charge provided for herein or in any other document contemplated hereby within
ten days after the due date;
(iii) any
representation or
warranty made or deemed made by the Company in this Agreement shall prove to
have been incorrect, untrue, or misleading in any material respect on the date
when made or deemed to have been made; provided, however, that the
Company shall have ten Business Days from notice of default to cure any such
failure that is capable of cure before an Event of Default shall be deemed
to
have occurred under this Section;
(iv) failure
by the Company
to perform any of the covenants imposed by this Agreement; provided,
however, that the Company shall have ten Business Days from notice
of the
default to cure any such failure that is capable of cure before an Event of
Default shall be deemed to have occurred under this Section;
(v) the
Company shall (1)
apply for or consent to the appointment of, or the taking of possession by,
a
receiver, custodian, trustee or liquidator of itself or of all or a substantial
part of its property and assets, (2) be generally unable to pay its debts as
such debts become due, (3) make a general assignment for the benefit of its
creditors, (4) commence a voluntary case under the United States Bankruptcy
Code
or similar law or regulation (as now or hereafter in effect), (5) file a
petition seeking to take advantage of any other law providing for the relief
of
debtors, (6) fail to controvert in a timely or appropriate manner, or acquiesce
in writing to, any petition filed against it in an involuntary case under the
United States Bankruptcy Code or other law or regulation, (7) dissolve, (8)
take
any corporate action under any applicable law analogous to any of the foregoing,
or (9) take any corporate action for the purpose of effecting any of the
foregoing;
(vi)
a proceeding or case shall be
commenced, without the application or consent of Company in any court of
competent jurisdiction, seeking (1) the liquidation, reorganization,
dissolution, winding up or composition or readjustment of its debts, (2) the
appointment of a trustee, receiver, custodian, liquidator or the like of it
or
for all or any substantial part of its assets, or (3) similar relief in respect
of Company, under any law providing for the relief of debtors, and such
proceeding or case shall continue undismissed, or unstayed and in effect, for
a
period of sixty (60) days; or an order for relief shall be entered in an
involuntary case under the United States Bankruptcy Code or other similar law
or
regulation, against Company; or action under the laws of any jurisdiction
affecting Company analogous to any of the foregoing shall be taken with respect
to Company and shall continue unstayed and in effect for any period of sixty
(60) days; or
(vii) final
judgment for the
payment of money shall be rendered by a court of competent jurisdiction against
Company and Company shall not discharge the same or provide for its discharge
in
accordance with its terms, or procure a stay of execution thereof within sixty
(60) days from the date of entry thereof and within said period of sixty (60)
days, or such longer period during which execution of such judgment shall have
been stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal, and such judgment together with all other such judgments
shall exceed in the aggregate US$50,000.
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then,
subject to the rights of the Laurus Master Fund LTD contained in the
Subordination Agreement, (x) upon the occurrence of any Event of
Default described in Section 7(a)(vi) or (vii), the unpaid
principal amount of the loan, together with the interest accrued thereon and
all
other amounts payable by Company under this Agreement, shall automatically
become immediately due and payable, without presentment, demand, protest, notice
of acceleration or intent to accelerate or other requirements of any kind,
all
of which are hereby expressly waived by Company or (y) upon the occurrence
of
any other Event of Default, Holder may, by notice to Company, declare the unpaid
principal amount of the loan to be, and the same shall forthwith become, due
and
payable, together with the interest accrued thereon and all other amounts
payable by Company hereunder. Failure by Holder to indicate any Event
of Default in any one notice shall not preclude Holder from indicating such
omitted Event or Events of Default in future notices and shall not relieve
Company of any liability under this Agreement, nor constitute a waiver of
Holder’s rights under this Agreement.
(b) Suits
for Enforcement. If any Event of Default shall have occurred and
be continuing, Holder may proceed to protect and enforce its rights against
Company, subject to the terms of the Intercreditor Agreement, either by suit
in
equity or by action at law, or both, whether for the specific performance of
any
covenant or agreement contained in this Agreement or in aid of the exercise
of
any power granted in this Agreement, or Holder may proceed to enforce the
payment by Company of all sums due under this Agreement or to enforce any other
legal or equitable right of Holder including without limitation all rights
of a
secured party under the UCC.
Company
covenants that, if it shall default in the making of any payment due hereunder
or in the performance or observance of any agreement contained in this
Agreement, it will pay to Holder such further amounts, to the extent lawful,
to
cover any reasonable costs and expenses of collection or of otherwise enforcing
Holder’s rights, including without limitation the reasonable counsel fees and
costs and expenses incurred in connection with any restructuring, negotiation,
refinancing, workout, bankruptcy or other similar transaction or
proceeding. The obligations set forth in this paragraph shall survive
the payment in full of the loan.
(c) Remedies
Cumulative. No remedy herein conferred upon Holder is intended to
be exclusive of any other remedy and each and every such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or
now
or hereafter existing at law or in equity or by statute or
otherwise.
(d) Remedies
Not
Waived. No course of dealing between Company and any other person
and no delay or failure in exercising any rights hereunder or under the loan
in
respect thereof shall operate as a waiver of Holder’s rights.
8. Miscellaneous.
(a) Reliance
on and Survival of Representations. All representations,
warranties, covenants and agreements of Company herein shall be deemed to be
material and to have been relied upon by Holder and shall survive the execution
and delivery of this Agreement and of the securities, for so long as the loan
remains outstanding.
(b) Successors
and Assigns. This Agreement shall bind and inure to the benefit
of and be enforceable by Company, Holder and each of their respective successors
and assigns, and, in addition, shall inure to the benefit of and be enforceable
by each person who shall from time to time be a holder of the
loan. Holder shall be permitted to transfer the securities being sold
hereunder in accordance with their terms and in accordance with applicable
restrictions under applicable federal and state securities laws.
(c) Notices. All
notices and other communications provided for in this Agreement shall be in
writing and delivered by registered or certified mail, postage prepaid, or
delivered by overnight courier (for next business day delivery) or telecopied,
addressed as follows, or at such other address as any of the parties hereto
may
hereafter designate by notice to the other parties given in accordance with
this
Section:
1) if
to Company:
8
Auxilio,
Inc.
00000
Xxx
Xxxxx, Xxxxx 000
Xxxxxxx
Xxxxx, XX 00000
Phone:
000-000-0000
Fax:
000-000-0000
|
|
2)
|
if
to Holder:
|
CAMBRIA
INVESTMENT FUND, LP
0000
Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xx
Xxxxxxx, XX 00000
Fax:
000.000.0000
Phone:
000.000.0000
Any
such
notice or communication shall be deemed to have been duly given on the fifth
day
after being so mailed, the next business day after delivery by overnight
courier, when received when sent by telecopy or upon receipt when delivered
personally.
(d) 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. Signatures may be exchanged by telecopy, with original
signatures to follow. Each of the parties hereto agrees that it will
be bound by its own telecopied signature and that it accepts the telecopied
signatures of the other parties to this Agreement. The original
signature pages shall be forwarded to Holder or its counsel and Holder or its
counsel will provide all of the parties hereto with a copy of the entire
Agreement.
(e) Amendments. This
Agreement may only be amended by a writing duly executed by the parties
hereto.
(f) Severability.
If any term or provision of this Agreement or any other document executed in
connection herewith shall be determined to be illegal or unenforceable, all
other terms and provisions hereof and thereof shall nevertheless remain
effective and shall be enforced to the fullest extent permitted by applicable
law.
(g) Governing
Law; Submission to Process. THIS AGREEMENT AND ALL AMENDMENTS, SUPPLEMENTS,
WAIVERS AND CONSENTS RELATING HERETO OR THERETO SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY
SUBMITS ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS
SITTING IN THE STATE OF CALIFORNIA AND AGREES AND CONSENTS THAT SERVICE OF
PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDINGS RELATING HERETO BY ANY
MEANS ALLOWED UNDER CALIFORNIA OR FEDERAL LAW. THE COMPANY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
PROCEEDING BROUGHT IN SUCH COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT
IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(h) Entire
Agreement. This Agreement and the other Loan Documents contain
the entire Agreement of the parties hereto with respect to the transactions
contemplated hereby and supersedes all previous oral and written, and all
previous contemporaneous oral negotiations, commitments and
understandings.
(i) Further
Assurances. Company agrees promptly to execute and deliver such
documents and to take such other acts as are reasonably necessary to effectuate
the purposes of this Agreement.
(j) Headings. The
headings contained herein are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
9
(k) Assignments
and
Participations. Company may not assign its rights or obligations
hereunder or under the loan without the prior written consent of
Holder. Subject to compliance with applicable Federal and State
Securities laws, Holder may assign all or any portion of the loan without the
prior consent of Company. Holder may sell or agree to sell to one or
more other persons a participation in all or any part of any of the loan without
the prior consent of Company. Upon surrender of the loan, Company
shall execute and deliver one or more substitute notes in such denominations
and
of a like aggregate unpaid principal amount or other amount issued to Holder
and/or to Holder’s designated transferee or transferees. Holder may
furnish any information in the possession of Holder concerning Company, or
any
of its respective subsidiaries, from time to time to assignees and participants
(including prospective assignees and participants).
(l) Waivers;
Indemnity. Company waives presentment and demand for payment,
notice of dishonor, protest of this Agreement, notice of acceleration or intent
to accelerate, and shall pay all costs of collection when incurred, including
reasonable attorneys’ fees, costs and expenses. Company shall
indemnify and hold harmless from any claim, obligation or liability (including
without limitation reasonable attorneys fees and expenses) arising out of this
Agreement or the transactions contemplated under the Loan
Documents.
(m) JURY
WAIVER. HOLDER AND COMPANY EACH WAIVES ANY RIGHT TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF THE LOAN DOCUMENTS OR ANY OF
THE
TRANSACTIONS CONTEMPLATED HEREIN.
(n)
Interest
Payments. Interest on the debt evidenced by this Agreement will
not exceed the maximum rate or amount of non-usurious interest that may be
contracted for, taken, reserved, charged, or received under law. Any
interest in excess of that maximum amount will be credited on the principal
amount or, if the principal amount has been paid, refunded. On any
acceleration or required or permitted prepayment, any excess interest above
the
maximum lawful amount will be canceled automatically as of the acceleration
or
prepayment, or, if the excess interest has already been paid, credited on the
principal amount, or, if the principal amount has been paid,
refunded. This provision overrides any conflicting provisions in this
Agreement and all other instruments concerning the debt.
[Signature
page follows.]
10
IN
WITNESS WHEREOF, the parties hereto
have caused this Agreement to be executed as of the day and year set forth
above.
COMPANY:
AUXILIO,
INC.
a
Nevada corporation
By:
________________________________
Name: Xxxx
Xxxxxxx
Title: Chief
Financial
Officer
HOLDERS:
CAMBRIA
INVESTMENT FUND,
L.P.
a
California limited
partnership
By: CAMBRIA
INVESTMENT ADVISORS, LLC
a
California limited liability
company,
its
general partner
By:
_____________________________
Xxxx
X. Xxxxxxxxxx
President
__________________________________
Xxxxxx
Xxxxx
_________________________________
Xxxxxx
Xxxxxxx
__________________________________
Xxxxx
Xxxxxxx
___________________________________
Xxxx
Xxxxx
__________________________________
Xxx
Xxxxxxxx
11
__________________________________
Xxxxx
Xxxxxxxx
_________________________________
Xxxxxx
Xxxxxxx
__________________________________
Xxxxxx
Xxxxxxxxx
___________________________________
Xxxxxx
Xxxxx, as Trustee of the Xx. Xxxxxx Xxxxx Trust dated 8/6/2003
__________________________________
Xxxxxx
Xxxxx, as Trustee of the Xxxxxx Xxxxx MD and Xxxxx X. Xxxxx Living Trust UAD
9/7/05
_________________________________
Xxxxxx
Xxxxx
__________________________________
X.
Xxxxx
Senor
12
EXHIBIT
A
The
Collateral shall consist of all
right, title and interest of Company, subject to the first priority security
interest held by the Laurus Master Fund LTD in and to all of the assets of
the
Company, in and to the following:
(a) All
goods and equipment now owned or hereafter acquired, including, without
limitation, all machinery, fixtures, vehicles (including motor vehicles and
trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
(b) All
inventory, now owned or hereafter acquired, including, without limitation,
all
merchandise, raw materials, parts, supplies, packing and shipping materials,
work in process and finished products including such inventory as is temporarily
out of Company’s custody or possession or in transit and including any returns
upon any accounts or other proceeds, including insurance proceeds, resulting
from the sale or disposition of any of the foregoing and any documents of title
representing any of the above, and Company’s books relating to any of the
foregoing;
(c) All
contract rights and general intangibles now owned or hereafter acquired,
including, without limitation, all leases, license agreements, franchise
agreements, blueprints, drawings, purchase orders, customer lists, route lists,
infringements, claims, computer programs, computer discs, computer tapes,
literature, reports, catalogs, design rights, income tax refunds, payments
of
insurance and rights to payment of any kind, all copyrights, copyright
registrations and applications, copyright renewals or extensions, patents and
patent applications, all reissues, divisions, continuations, renewals,
extensions and continuations-in-part of all patents or patent applications,
all
trademarks, trade names, trade styles, service marks, logos, together with
product lines and goodwill of the business connected with the use of, or
otherwise symbolized by, each such trade name, trademark and service xxxx,
trademark and service xxxx registrations and applications for trademark and
service xxxx registrations, all renewals and extensions of any trademarks,
trade
names, trade styles, and service marks, all trade secret rights, including
all
rights to unpatented inventions, know-how, operating manuals, license rights
and
agreements and confidential information, all mask work or similar rights
available for the protection of semiconductor chips, and all rights in the
foregoing intellectual property to income, royalties, damages, and other
payments, and all rights to xxx for all past, present and future infringements,
and all rights otherwise accruing under or pertaining to any of the foregoing
throughout the world (“Intellectual Property”);
(d) All
now existing and hereafter arising accounts, contract rights, royalties, license
rights and all other forms of obligations owing to Company arising out of the
sale or lease of goods, the licensing of technology or the rendering of services
by Company, whether or not earned by performance, and any and all credit
insurance, guaranties, and other security therefor, as well as all merchandise
returned to or reclaimed by Company and Company’s books relating to any of the
foregoing;
(e) All
documents, cash, deposit accounts, securities, letters of credit, certificates
of deposit, instruments and chattel paper now owned or hereafter acquired and
Company’s books relating to the foregoing; and
(f) Any
and all claims, rights and interests in any of the above and all substitutions
for, additions and accessions to and proceeds thereof.
Schedule
1
|
First
Name
|
Last
Name
|
Company/Trustee
|
Loan
Amt
|
Original
Warrants ($0.46) - 50% coverage
|
Extension
Warrants ($0.46) - 25% coverage
|
Total
$0.46 Warrants
|
Total
Warrant Coverage Percentage
|
|
Cambria
Investment Fund, LP
|
$ 125,000
|
62,500
|
31,250
|
93,750
|
75%
|
||
|
Xxxxxx
|
Xxxxx
|
$ 25,000
|
12,500
|
6,250
|
18,750
|
75%
|
|
|
Xxxxxx
|
Xxxxxxx
|
$ 25,000
|
12,500
|
6,250
|
18,750
|
75%
|
|
|
Xxxxx
|
Xxxxxxx
|
$ 25,000
|
12,500
|
6,250
|
18,750
|
75%
|
|
|
Xxxx
|
Xxxxx
|
$ 25,000
|
12,500
|
6,250
|
18,750
|
75%
|
|
|
Zav
|
Lieblinc
|
$ 25,000
|
12,500
|
6,250
|
18,750
|
75%
|
|
|
Xxxxx
|
Xxxxxxxx
|
$ 20,000
|
10,000
|
5,000
|
15,000
|
75%
|
|
|
Xxxxxx
|
Xxxxxxx
MD
|
$ 100,000
|
50,000
|
25,000
|
75,000
|
75%
|
|
|
Xxxxxx
|
Xxxxxxxxx
|
DOLCE
VITA Inc.
|
$ 50,000
|
25,000
|
12,500
|
37,500
|
75%
|
|
Xxxxxx
|
Xxxxx,
MD
|
$ 50,000
|
25,000
|
12,500
|
37,500
|
75%
|
|
|
Xxxxxx
|
Xxxxx,
MD
|
Xxxxxx
Xxxxx MD and Xxxxx X
Xxxxx
Living Trust UAD 9/7/05 TTEES
Dated
8/6/2003 Trustee: Xx. Xxxxxx Xxxxx
|
$ 25,000
|
12,500
|
6,250
|
18,750
|
75%
|
|
Xxxxxx
|
Xxxxx
|
$ 50,000
|
25,000
|
12,500
|
37,500
|
75%
|
|
|
X.
Xxxxx
|
Senor |
$ 200,000
|
100,000
|
50,000
|
150,000
|
75% |
Schedule
3(l)
$2,800,000
principal amount loan with Laurus Master Fund LTD; which loan is secured by
a
first priority interest in all of the assets of the Company.
