AMENDMENT NO. 2 TO THE

AUXILIO, INC.

2011 STOCK INCENTIVE PLAN

 

WHEREAS, the Board of Directors (the “Board”) of Auxilio, Inc., a corporation
organized under the laws of Nevada (the “Company”), originally adopted the
Auxilio Inc. 2011 Stock Incentive Plan (as amended from time to time, the
“Plan”); and

 

WHEREAS, the Board may, at any time, amend the Plan provided that such amendment
does not adversely affect the rights of the Participants (as defined in the
Plan) with respect to any outstanding Award Agreement (as defined in the Plan)
previously granted under the Plan; and

 

WHEREAS, the Board has determined that it is in the best interests of the
Company and its stockholders to amend the Plan to add Restricted Stock Unit
Awards as an additional type of award available under the Plan;

 

WHEREAS, the following amendment is not considered a “material revision” of an
equity-compensation plan under the rules of the New York Stock Exchange and,
therefore, shareholder approval of such amendment is not required; and

 

WHEREAS, on September 1, 2017, the Board approved the following amendment to the
Plan.

 

NOW, THEREFORE, the Plan is hereby amended as follows:

 

1. Section 2.3 of the Plan shall be amended in its entirety to read as follows:

 

“2.3 Award.  “Award” means any Option, Restricted Stock, Restricted Stock Unit
or Stock Appreciation Right granted to a Participant under the Plan.” 

 

2.  Section 2.4 of the Plan shall be amended in its entirety to read as follows:

 

“2.4  Award Agreement.  “Award Agreement” means any Option Agreement, Restricted
Stock Purchase Agreement, Restricted Stock Unit Agreement or Stock Appreciation
Rights Agreement entered into between the Company and a Participant under the
Plan.” 

 

3.  A new Section 2.36 shall be added (and the remaining Sections in Article 2
renumbered and internal cross-references updated accordingly) to read as
follows:

 

“2.36  Restricted Stock Unit.  “Restricted Stock Unit” means a hypothetical
Common Stock unit issued pursuant to the Plan, subject to any restrictions and
conditions as are established pursuant to Article 7 hereof.” 

 

4.  A new Section 2.37 shall be added (and the remaining Sections in Article 2
renumbered and internal cross-references updated accordingly) to read as
follows:

 

“2.37  Restricted Stock Unit Agreement.  “Restricted Stock Unit Agreement” means
the written agreement entered into between the Company and a Participant with
respect to the award of Restricted Stock Units under the Plan.” 

 

5.  Section 3.2 shall be amended in its entirety to read as follows:

--------------------------------------------------------------------------------

“3.2  Nonqualified Options, Restricted Stock, Restricted Stock Units and Stock
Appreciation Rights.  Employees of the Company or of an Affiliated Company,
members of the Board (whether or not employed by the Company or an Affiliated
Company), and Service Providers are eligible to receive Nonqualified Options,
Restricted Stock, Restricted Stock Units or Stock Appreciation Rights under the
Plan.”   

 

6.  A new Article 7 shall be added (and the remaining Articles renumbered and
internal cross-references updated accordingly) to read as follows:

 

“ARTICLE 7.

 

RESTRICTED STOCK UNITS

 

7.1  Issuance of Restricted Stock Units.  The Administrator shall have the
authority to grant Restricted Stock Units under this Plan, subject to such
terms, restrictions and conditions as the Administrator may determine at the
time of grant.  The consideration (if any) to be paid by the Participant on
delivery of each share of Common Stock subject to the Restricted Stock Unit
Award shall be determined by the Administrator in its sole discretion. 

 

7.2  Restricted Stock Unit Agreements.  Each Restricted Stock Unit Agreement
shall be in such form and will contain such terms and conditions as the
Administrator deems appropriate.  The terms and conditions of Restricted Stock
Unit Agreements may change from time to time, and the terms and conditions of
separate Restricted Stock Unit Agreements need not be identical. 

 

7.3  Consideration.  At the time of the grant of a Restricted Stock Unit Award,
the Administrator will determine the consideration, if any, to be paid by the
Participant on delivery of each share of Common Stock subject to the Restricted
Stock Unit Award.  Payment of the consideration (if any) may be made, in the
discretion of the Administrator, in any form of legal consideration that may be
acceptable to the Administrator, in its sole discretion, and permissible under
applicable law.  

 

7.4  Settlement.  A Restricted Stock Unit Award may be settled by the delivery
of shares of Common Stock, their cash equivalent, any combination thereof or in
any other form of consideration, as determined by the Administrator and
contained in the Award Agreement. 

 

7.5Additional Restrictions.  At the time of the grant of a Restricted Stock Unit
Award, the Administrator, in its sole discretion, may impose such restrictions
or conditions that delay the delivery of the shares of Common Stock (or their
cash equivalent) subject to a Restricted Stock Unit Award to a time after the
vesting of such Restricted Stock Unit Award. 

 

7.6Termination of Continuous Service.  In the event of a termination of a
Participant’s Continuous Service with the Company for any reason whatsoever
(including death or Disability), the unvested portion of any Restricted Stock
Unit Award will be forfeited on the Participant’s termination of Continuous
Service except as otherwise provided in the applicable Award Agreement. 

 

7.7Vesting of Restricted Stock Units.  Subject to Section 7.5 above, the Award
Agreement shall specify the date or dates, the performance goals or objectives
which must be achieved, and any other conditions on which the Restricted Stock
Units may vest. 

 

7.8Dividend Equivalents.  Dividend equivalents may be credited on shares of
Common Stock covered by a Restricted Stock Unit Award, as determined by the
Administrator and contained in an Award Agreement.  At the sole discretion of
the Administrator, such dividend equivalents may be converted into additional
shares of Common Stock covered by the Restricted Stock Unit Award in such manner
as determined by the Administrator.  Any additional shares covered by the
Restricted Stock Unit Award credited by reason of  

--------------------------------------------------------------------------------

such dividend equivalents will be subject to all the same terms and conditions
of the underlying Award Agreement to which they relate.

 

7.9Compliance with Code Section 409A.  Notwithstanding anything in this Article
7 to the contrary, all Restricted Stock Unit Awards are intended to be
structured to satisfy the requirements of Code Section 409A, or an applicable
exemption, as determined by the Administrator.” 

 

7.  Newly renumbered Section 9.2 (previously Section 8.2) shall be amended in
its entirety to read as follows:

 

“9.2  Powers of the Administrator.  In addition to any other powers or authority
conferred upon the Administrator elsewhere in the Plan or by law, the
Administrator shall have full power and authority:  (a) to determine the persons
to whom, and the time or times at which Awards shall be granted, the number of
shares of Common Stock to be represented by each Option or Stock Appreciation
Rights Agreement, the number of shares of Common Stock to be subject to each
Restricted Stock Purchase Agreement and the number of Restricted Stock Units
subject to each Restricted Stock Unit Agreement, and the consideration to be
received by the Company upon the exercise of such Options or Stock Appreciation
Right, sale of Restricted Stock or settlement of Restricted Stock Unit; (b) to
interpret the Plan; (c) to create, amend or rescind rules and regulations
relating to the Plan; (d) to determine the terms, conditions and restrictions
contained in, and the form of, Award Agreements; (e) to determine the identity
or capacity of any persons who may be entitled to exercise a Participant’s
rights under any Award Agreement under the Plan; (f) to correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in any Award
Agreement; (g) to accelerate the vesting of any Award or release or waive any
Repurchase Rights of the Company with respect to any Award; (h) to extend the
exercise date of any Option or Stock Appreciation Right (but not beyond the
original expiration date); (i) to provide the rights of first refusal and/or
Repurchase Rights; (j) to amend outstanding Award Agreements to provide for,
among other things, any change or modification which the Administrator could
have included in the original Award Agreement or in furtherance of the powers
provided for herein; and (k) to make all other determinations necessary or
advisable for the administration of the Plan, but only to the extent not
contrary to the express provisions of the Plan.  Any action, decision,
interpretation or determination made in good faith by the Administrator in the
exercise of its authority conferred upon it under the Plan shall be final and
binding on the Company and all Participants.” 

 

8.  A new Section 10.1(j) (what would previously have been Section 9.1(j)) shall
be added to read as follows:

 

“(j)The Administrator may, in its discretion, take one or more of the following
actions with respect to Restricted Stock Units:  (i) accelerate the vesting
and/or remove any other restrictions, in whole or in part, of the Restricted
Stock Unit effective as of immediately prior to the consummation of the Change
in Control; (ii) arrange for the acquiring or successor entity (or parent or
subsidiary thereof) to assume or continue the Restricted Stock Unit or to
substitute a similar stock award for the Restricted Stock Unit, (iii) cancel the
Restricted Stock Unit to the extent not vested prior to the effective time of
the Change in Control; (iv) make a payment, in such form as may be determined by
the Administrator, equal to the excess, if any, of (A) the value of the property
the Participant would have received on the settlement of the Restricted Stock
Unit immediately prior to the effective time of the Change in Control, over (B)
the consideration, if any, payable by such Participant in connection with such
settlement, in consideration for the termination of such Restricted Stock Unit
at or immediately prior to the closing; and/or (v) provide in the Restricted
Stock Unit Agreement other terms and conditions that relate to (A) vesting of
the Restricted Stock Unit in the event of a Change in Control, and (B)
assumption of such Restricted Stock Unit or issuance of a similar stock award in
the event of a Change in Control. The Administrator need not take the same
action or actions with respect to all Restricted Stock Units or portions thereof
or with respect to all Participants.  The Administrator may take different
actions with respect to the vested and unvested portions of a Restricted Stock
Unit.” 

--------------------------------------------------------------------------------

9.  Newly renumbered Section 12.1 (previously Section 11.1) shall be amended in
its entirety to read as follows:

 

“12.1  Tax Withholding.  The Company shall have the power to withhold, or
require a Participant to remit to the Company, an amount sufficient to satisfy
any applicable Federal, state, and local tax withholding requirements with
respect to any Options or Stock Appreciation Rights exercised, shares of
Restricted Stock issued or Restricted Stock Units settled under this Plan.  To
the extent permissible under applicable tax, securities and other laws, the
Administrator may, in its sole discretion and upon such terms and conditions as
it may deem appropriate, permit a Participant to satisfy his or her obligation
to pay any such tax, in whole or in part, up to an amount determined on the
basis of the highest marginal tax rate applicable to such Participant, by (a)
directing the Company to apply shares of Common Stock to which the Participant
is entitled as a result of the exercise of an Option or Stock Appreciation
 Right, the purchase of or lapse of restrictions on shares of Restricted Stock,
or the settlement of Restricted Stock Units, or (b) delivering to the Company
shares of Common Stock owned by the Participant.  The shares of Common Stock so
applied or delivered in satisfaction of the Participant’s tax withholding
obligation shall be valued at their Fair Market Value as of the date of
measurement of the amount of income subject to withholding.” 

 

10.  Newly renumbered Section 13.3 (previously Section 12.3) shall be amended in
its entirety to read as follows:

 

“13.3  Application of Funds.  The proceeds received by the Company from the sale
of Common Stock pursuant to Option Agreements, Restricted Stock Purchase
Agreements, and Restricted Stock Unit Agreements, except as otherwise provided
herein, will be used for general corporate purposes.” 

 

11.  Except as expressly set forth in this Amendment, all other terms and
conditions set forth in the Plan shall remain in full force and effect.
Capitalized terms used and not defined herein shall have the meanings set forth
in the Plan.

 

 

This Amendment was adopted by the Board of Directors of the Company as of
September 1, 2017.

 

 

 

/s/ Paul T. Anthony

Name:

Paul T. Anthony

Title:

Corporate Secretary