EXECUTIVE EMPLOYMENT AGREEMENT
This
Executive Employment Agreement ("Agreement") is made effective as of January 1,
2010 (“Effective
Date”), by and between AUXILIO,
Inc., a Nevada corporation (“Company”) and Sasha Gala
("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 Senior Vice President and Chief Operations 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 Company’s Chief
Executive Officer in advance of Executive’s intent to engage in other paid work
and receives the Company’s Chief Executive Officer’s 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 until December 31, 2011 (“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 $159,500 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.
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 three 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 fourth 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 ninety
(90) days’ advance
written notice. In the event of Executive’s resignation for Good
Reason, Executive will be entitled to receive the Base Salary then in effect,
prorated to the date of termination, and the Severance described in subparagraph
7.2. above, provided Executive complies with all of the conditions in
subparagraph 7.2. above. All other Company obligations to Executive
pursuant to this Agreement will become automatically terminated and completely
extinguished. Executive will be deemed to have resigned for Good
Reason in the following circumstances: (a) Company’s
material breach of this Agreement; (b) Executive’s Base Salary is
reduced by more than 10% below Executive’s salary
in effect at any time during the preceding twelve months, unless the reduction
is made as part of, and is generally consistent with, a general reduction of
senior executive salaries; (c) Executive’s position and/or duties are modified
so that Executive’s duties are no longer consistent with the position of a
Senior Vice President, or Executive no longer reports to the Company’s Chief
Executive Officer, the Company’s Chief Financial Officer or a Chief Operating
Officer hired from outside the current Executive team or employee base;and
( Company relocates Executive’s principal place of work to a location
more than sixty (60) miles from the Executive’s current location, without
Executive’s prior written approval. 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 Section 7.2 above, which,
if paid, would exceed the Section 409A Safe Harbor Limit (as defined in Section
7.2(c) above), 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.
7.4 Voluntary Resignation by
Executive Without Good Reason. Executive may voluntarily
resign Executive’s position with Company without Good Reason, at any time after
the Initial Term, on ninety (90) days’ advance written
notice. In the event of Executive’s resignation without Good Reason,
Executive will be entitled to receive only the Base Salary for the ninety-day
notice period and no other amount for the remaining months of the current term,
if any. All other Company obligations to Executive pursuant to this
Agreement will become automatically terminated and completely
extinguished. In addition, executive will not be entitled to receive
the Severance Payment described in subparagraph 7.2 above.
7.5 Termination of Employment
Upon Nonrenewal. In the event either party decides not to
renew this Agreement for a subsequent 12 months in accordance with subparagraph
3.2 above, the Agreement will expire, Executive’s employment with Company will
terminate and Executive will only be entitled to Executive’s Base Salary paid
through the last day of the current term. All other Company obligations to
Executive pursuant to this Agreement will become automatically terminated and
completely extinguished. Executive will not be entitled to the
Severance Payment described in subparagraph 7.3 above.
8. No Conflict of
Interest. During the term of Executive’s employment with
Company and during any period Executive is receiving payments from Company,
Executive must not engage in any work, paid or unpaid, that creates an actual or
potential conflict of interest with Company. Such work shall include,
but is not limited to, directly or indirectly competing with Company in any way,
or acting as an officer, director, employee, consultant, stockholder, volunteer,
lender, or agent of any business enterprise of the same nature as, or which is
in direct competition with, the business in which Company is now engaged or in
which Company becomes engaged during the term of Executive’s employment with
Company, as may be determined by the Company’s Chief Executive Officer in its
sole discretion. If the Company’s Chief Executive Officer believes
such a conflict exists during the term of this Agreement, the Company’s Chief
Executive Officer may ask Executive to choose to discontinue the other work or
resign employment with Company. If the Company’s Chief Executive
Officer believes such a conflict exists during any period in which Executive is
receiving payments pursuant to this Agreement, the Company’s Chief Executive
Officer may ask Executive to choose to discontinue the other work or forfeit the
remaining severance payments. In addition, Executive agrees not to
refer any client or potential client of Company to competitors of Company,
without obtaining Company’s prior written consent, during the term of
Executive’s employment and during any period in which Executive is receiving
payments from Company pursuant to this Agreement.
9. Confidentiality and
Proprietary Rights. Executive agrees to read, sign and abide
by Company’s Employee Innovations and Proprietary Rights Assignment Agreement,
which is provided with this Agreement and incorporated herein by
reference.
10. Non-Solicitation.
10.1 Nonsolicitation of Customers
or Prospects. Executive acknowledges that information about
Company’s customers is confidential and constitutes trade
secrets. Accordingly, Executive agrees that during the term of this
Agreement and for a period of one (1) year after the termination of this
Agreement, Executive will not, either directly or indirectly, separately or in
association with others, interfere with, impair, disrupt or damage Company’s
relationship with any of its customers or customer prospects by soliciting or
encouraging others to solicit any of them for the purpose of diverting or taking
away business from Company.
10.2 Nonsolicitation of Company’s
Employees. Executive agrees that during the term of this
Agreement and for a period of one (1) year after the termination of this
Agreement, Executive will not, either directly or indirectly, separately or in
association with others, interfere with, impair, disrupt or damage Company’s
business by soliciting, encouraging or attempting to hire any of Company’s
employees or causing others to solicit or encourage any of Company’s employees
to discontinue their employment with Company.
11. Injunctive
Relief. Executive acknowledges that Executive’s breach of the
covenants contained in paragraphs 8-10 (collectively “Covenants”) would cause
irreparable injury to Company and agrees that in the event of any such breach,
Company shall be entitled to seek temporary, preliminary and permanent
injunctive relief without the necessity of proving actual damages or posting any
bond or other security.
12. Agreement to
Arbitrate. To the fullest extent permitted by law, Executive
and Company agree to arbitrate any controversy, claim or dispute between them
arising out of or in any way related to this Agreement, the employment
relationship between Company and Executive and any disputes upon termination of
employment, including but not limited to breach of contract, tort,
discrimination, harassment, wrongful termination, demotion, discipline, failure
to accommodate, family and medical leave, compensation or benefits claims,
constitutional claims; and any claims for violation of any local, state or
federal law, statute, regulation or ordinance or common law. Claims
for workers’ compensation, unemployment insurance benefits and Company’s right
to obtain injunctive relief pursuant to paragraph 11 above are
excluded. For the purpose of this agreement to arbitrate, references
to “Company” include all parent, subsidiary or related entities and their
employees, supervisors, officers, directors, agents, pension or benefit plans,
pension or benefit plan sponsors, fiduciaries, administrators, affiliates and
all successors and assigns of any of them, and this agreement shall apply to
them to the extent Executive’s claims arise out of or relate to their actions on
behalf of Company.
12.1 Consideration. The
mutual promise by Company and Executive to arbitrate any and all disputes
between them rather than litigate them before the courts or other bodies,
provides the consideration for this agreement to arbitrate.
12.2 Initiation of
Arbitration. Either party may exercise the right to arbitrate
by providing the other party with written notice of any and all claims forming
the basis of such right in sufficient detail to inform the other party of the
substance of such claims. In no event shall the request for
arbitration be made after the date when institution of legal or equitable
proceedings based on such claims would be barred by the applicable statute of
limitations.
12.3 Arbitration
Procedure. The arbitration will be conducted in Irvine, California by a single
neutral arbitrator and in accordance with the then current rules for resolution
of employment disputes of the American Arbitration Association
(“AAA”). The parties are entitled to representation by an attorney or
other representative of their choosing. The arbitrator shall have the
power to enter any award that could be entered by a judge of the trial court of
the State of California, and only such power, and shall follow the
law. In the event the arbitrator does not follow the law, the
arbitrator will have exceeded the scope of his or her authority and the parties
may, at their option, file a motion to vacate the award in court. The
parties agree to abide by and perform any award rendered by the
arbitrator. Judgment on the award may be entered in any court having
jurisdiction thereof.
12.4 Costs of
Arbitration. Each party shall bear one half the cost of the
arbitration filing and hearing fees, and the cost of the
arbitrator.
13. General
Provisions.
13.1 Successors and
Assigns. The rights and obligations of Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of Company. Executive shall not be entitled to assign any
of Executive’s rights or obligations under this Agreement.
13.2 Waiver. Either
party's failure to enforce any provision of this Agreement shall not in any way
be construed as a waiver of any such provision, or prevent that party thereafter
from enforcing each and every other provision of this Agreement.
13.3 Attorneys’
Fees. Each side will bear its own attorneys’ fees in any
dispute unless a statutory section at issue, if any, authorizes the award of
attorneys’ fees to the prevailing party.
13.4 Severability. In
the event any provision of this Agreement is found to be unenforceable by an
arbitrator or court of competent jurisdiction, such provision shall be deemed
modified to the extent necessary to allow enforceability of the provision as so
limited, it being intended that the parties shall receive the benefit
contemplated herein to the fullest extent permitted by law. If a
deemed modification is not satisfactory in the judgment of such arbitrator or
court, the unenforceable provision shall be deemed deleted, and the validity and
enforceability of the remaining provisions shall not be affected
thereby.
13.5 Interpretation;
Construction. The headings set forth in this Agreement are for
convenience only and shall not be used in interpreting this
Agreement. This Agreement has been drafted by legal counsel
representing Company, but Executive has participated in the negotiation of its
terms. Furthermore, Executive acknowledges that Executive has had an
opportunity to review and revise the Agreement and have it reviewed by legal
counsel, if desired, and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement.
13.6 Governing
Law. This Agreement will be governed by and construed in
accordance with the laws of the United States and the State of
California. Each party consents to the jurisdiction and venue of the
state or federal courts in Irvine, California, if applicable,
in any action, suit, or proceeding arising out of or relating to this
Agreement.
13.7 Notices. Any
notice required or permitted by this Agreement shall be in writing and shall be
delivered as follows with notice deemed given as indicated: (a) by
personal delivery when delivered personally; (b) by overnight courier upon
written verification of receipt; (c ) by telecopy or facsimile transmission upon
acknowledgment of receipt of electronic transmission; or (d) by certified or
registered mail, return receipt requested, upon verification of
receipt. Notice shall be sent to the addresses set forth below, or
such other address as either party may specify in writing.
13.8 Survival. Sections
8 (“No Conflict of Interest”), 9 (“Confidentiality and Proprietary Rights”), 10
(Nonsolicitation), 11 (“Injunctive Relief”), 12 (“Agreement to Arbitrate”), 13
(“General Provisions”) and 14 (“Entire Agreement”) of this Agreement shall
survive Executive’s employment by Company.
14. Entire
Agreement. This Agreement, including the Employee Innovations
and Proprietary Rights Assignment Agreement incorporated herein by reference and
Company’s stock
option plan and
related option documents described in paragraph 4.3 of this Agreement,
constitutes the entire agreement between the parties relating to this subject
matter and supersedes all prior or simultaneous representations, discussions,
negotiations, and agreements, whether written or oral. This Agreement
may be amended or modified only with the written consent of Executive and the
Company’s Chief Executive Officer. No oral waiver, amendment or
modification will be effective under any circumstances whatsoever.
THE
PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND
EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED
THIS AGREEMENT ON THE DATES SHOWN BELOW.
Dated: 1/08/2010
Sasha
Gala
Senior
Vice President & Chief Operations Officer
Dated:
1/08/2010
By: 
Xxxxxx Xxxxx
President and Chief Executive
Officer
AUXILIO, Inc.
00000 Xxx Xxxxx, Xxxxx 000
Xxxxxxx
Xxxxx, XX 00000
EXHIBIT
A
INCENTIVE
COMPENSATION PLAN
Bonus
Target: $40,000 based on margin targets, account renewals, new contracts and
Personal Performance
Incentive Compensation -
Bonus:
VP will
be eligible for a bonus of up to $40,000 based on the performance of the Company
and the performance of your duties.
|
1.
|
5%
of the bonus plan will be based on the Company achieving its goals of 4
new contracts from September 2009 through the end of the 2010 calendar
year
|
|
2.
|
50%
will be tied to your territories existing accounts achieving a direct
margin of 34% with a minimum margin of 27% prorated for percent
achievement in between
|
|
3.
|
20%
will be tied to the renewal of Memorial Health System and St. Joseph’s of
Orange
|
|
4.
|
25%
will be tied to successfully completing the agreed upon corporate
operational initiatives.
|
In
addition, if Memorial or St. Joe’s renew this year VP will be eligible to
receive an additional bonus of up to $15,000 based on the terms of the
renewals. Amounts paid are at the sole discretion of the
CEO.
The
bonus, if any, will be paid on a semi-annual basis in August and March based on
the relevant second quarter 10Q and annual 10K filed with the SEC.
Territory:
The
Territories assigned at this time are the Southwest and Northwest.
The above
compensation plan is subject to change at any time by sole discretion of the
CEO.
