LOAN AND SECURITY AGREEMENT
$1,500,000 El
Segundo, California
Date:
October 25,
2006
FOR
VALUE
RECEIVED, the undersigned AUXILIO, INC., a Nevada corporation (“Company”),
hereby promises to pay to CAMBRIA INVESTMENT FUND, L.P., a California limited
partnership (the “Holder”) and the other holders listed on Schedule 1 hereto
(together, the “Holders”)
at
such place as Holder may specify, in lawful money of the United States of
America, the principal amount of up to $1,500,000 (the “Loan
Amount”)
on or
before October 22, 2007 (the “Maturity
Date”),
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. Company shall also have delivered to Holder
a
warrant to purchase stock, in form reasonably acceptable to Holder
(“Warrant”,
together with this Loan and Security Agreement (this “Agreement”)
and
any other documents delivered in connection with this Agreement, the
“Loan
Documents”).
1. Advances;
Payments.
As
requested by the Company from time to time, and provided there shall be no
Event
of Default (as defined below) under this Agreement, the Holders will advance
the
Loan Amount to the Company in increments of $50,000. The initial advance of
$250,000 will be made on October 27, 2006. Of the total loan amount of
$1,500,000, the final $500,000 advance (a) shall not be made prior to February
15, 2007, and (b) shall only be made by the Holders if no Material Adverse
Change (as defined below) shall have occurred. 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. 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.
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 effect
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.
(d)
Title
to Collateral; Permitted Liens.
Company
is now, and will at all times in the future be, the sole owner of all the
Collateral, except for items of equipment 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 completely and 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 in the financial condition
or
business 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 any material adverse change in the financial
condition or business of Company, or in any material impairment in the ability
of Company to carry on its business in substantially the same manner as it
is
now being conducted. 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.
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.
(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 financial statements, as of June 30, 2006,
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.
(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.
(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.
(u)
Consolidation.
Company
will not merge or consolidate with any person or entity, or make any
investments, or dispose of any substantial portion 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.
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 plan, or (iii) any existing contractual stock purchase
right as of the date of this Agreement.
| 5. |
Optional
Conversion.
|
(a)
At
Holder’s option and upon the occurrence of one of the following events: (i)
funding of the next Succeeding Financing of Company, or (ii) the sale and
purchase of substantially all of the assets or stock of Company, the outstanding
principal balance and all accrued interest under the loan evidenced by this
Agreement shall be convertible, without the payment of any additional
consideration by Holder and at the option of Holder, into equity securities
of
Company of the class and series offered by the Company in the Succeeding
Financing described in (i) above or the sale and purchase of the assets or
stock
of Company described in (ii) above (the “Conversion
Securities”).
Holder’s option to convert will expire 60 days after the occurrence of one of
the events described in subsections (i) and (ii) above, provided, that Company
has given Holder at least 15 days’ prior written notice of such event. In the
event Holder elects to convert upon a funding of the Succeeding Financing
described in (i) above, Company shall issue the Conversion Securities to Holder
at a price per share equal to the “Exercise Price” as defined in the Warrant,
or, in the event the Holder elects to convert upon a sale of the assets or
stock
of Company described in (ii) above, Company shall issue common stock at a price
per share equal to the lower of (y) the Exercise Price or (z) eighty percent
(80%) of the book value of the common stock determined after giving effect
to
the purchase price of the assets, in each case by converting outstanding
principal balance and all accrued interest under the loan evidenced by this
Agreement into such equity. 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).
For
purposes of this Section
5,
“Succeeding
Financing”
means
a
sale of the Company of its debt or equity securities in a transaction that
results in aggregate net proceeds to the Company in an amount in excess of
$2,000,000.
(b)
In
order for the Holder to convert all amounts owing under this Agreement into
equity, Holder shall deliver a written notice to Company that Holder elects
to
convert. Any conversion made at the election of Holder 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 Holder or its nominee or 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 2% of the face amount
of
the Loan upon the initial funding of the Loan. Each party hereto shall pay
its
own costs and expenses, 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
Holder incurs 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.
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:
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 neverthe-less 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.
(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.]
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:
Xxxxxx X. Xxxxx
Title:
Chief Executive Officer
HOLDER:
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
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
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as
of the day and year set forth above.
Signature,
Name and Address of Holder Loan
Amount Date
of Loan Number
of Warrants
_______________________________
By:
Xxxx
X. Xxxxxxxxxx, President of
Cambria
Investment Advisors, LLC, the
General
partner of
CAMBRIA
INVESTMENT FUND, LP $125,000
Oct.
25,
2006 62,500
0000
Xxxxxxxxx Xxx., Xxxxx 0000
Xx
Xxxxxxx, XX 00000
__________________________________
Xxxxxx
Xxxxx $25,000 Oct.
25,
2006 12,500
_________________________________
Xxxxxx
Xxxxxxx
$25,000 Oct.
25,
2006 12,500
__________________________________
Xxxxx
Xxxxxxx
$25,000 Oct.
25,
2006
12,500
___________________________________
Xxxx
Xxxxx $25,000 Oct.
25,
2006
12,500
__________________________________
Zav
Lieblin $25,000 Oct.
25,
2006 12,500
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.
