exhibit_103.htm


    EXECUTIVE
      EMPLOYMENT AGREEMENT

    


    This
      Executive Employment Agreement ("Agreement") is made effective as of January
      1,
      2008 (“Effective Date”), by and between AUXILIO,
      Inc., a Nevada corporation (“Company”) and Jacques Terblanche
      ("Executive”).

     

    The
      parties agree as follows:

     

    1.  Employment.  Company
      hereby employs Executive, and Executive hereby accepts such employment, upon
      the
      terms and conditions set forth herein.

     

    2.  Duties.

     

    2.1  Position.  Executive
      is employed as Chief 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 Chief Executive Officer in advance
      of
      Executive’s intent to engage in other paid work and receives the Chief Executive
      Officers’ express written consent to do so.

     

    3.  Term.

     

    3.1  Initial
      Term.  The employment relationship pursuant to this Agreement
      shall be for an initial term commencing on the Effective Date set forth above
      and continuing for a period of 2 (two) years following such date (“Initial
      Term”), unless sooner terminated in accordance with paragraph 7
      below.

     

    3.2     Renewal.  On
      completion of the Initial Term specified in subparagraph 3.1 above, this
      Agreement will automatically renew for subsequent 12
      month terms unless either party
      provides advance written notice to the other that such party does not wish
      to
      renew the Agreement for a subsequent 12 months.  In
      the event either party gives notice of nonrenewal pursuant to this
      subparagraph 3.2, this Agreement will expire at the end of the current
      term.

     

    4.  Compensation.

     

    4.1  Base
      Salary.  As compensation for Executive’s performance of
      Executive’s duties hereunder, Company shall pay to Executive an initial Base
      Salary of $165,000 for the first year, payable in accordance with the normal
      payroll practices of Company, less required deductions for state and federal
      withholding tax, social security and all other employment taxes and payroll
      deductions.  In the event Executive’s employment under this Agreement
      is terminated by either party, for any reason, Executive will be entitled to
      receive Executive’s Base Salary prorated to the date of
      termination.  Such amount shall eligible for increase to $180,000
      effective January 1, 2009 in accordance with the provisions set forth in Exhibit
      A.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.2  Incentive
      Compensation.  Executive will be eligible to earn incentive
      compensation in accordance with the provisions set forth in Exhibit
      A.

     

    4.3  Equity
      Compensation.  From time to time, Executive will
      be granted stock options to purchase shares of the Company’s Common Stock at an
      exercise price equal to the fair market value of the stock on the date of
      grant.

     

    5.  Customary
      Fringe Benefits.  Executive will be eligible for all customary and
      usual fringe benefits generally available to executives of Company subject
      to
      the terms and conditions of Company’s benefit plan documents.  Company
      reserves the right to change or eliminate the fringe benefits on a prospective
      basis, at any time, effective upon notice to Executive.

     

    6.  Business
      Expenses.  Executive will be reimbursed for all reasonable,
      out-of-pocket business expenses incurred in the performance of Executive’s
      duties on behalf of Company.  To obtain reimbursement, expenses must
      be submitted promptly with appropriate supporting documentation in accordance
      with Company’s policies.

     

    7.  Termination
      of Executive’s Employment.

     

    7.1  Termination
      for Cause by Company.  Although Company anticipates a mutually
      rewarding employment relationship with Executive, Company may terminate
      Executive’s employment immediately at any time for Cause.  For
      purposes of this Agreement, “Cause” is defined as: (a) acts or omissions
      constituting gross negligence, recklessness or willful misconduct on the part
      of
      Executive with respect to Executive’s obligations or otherwise relating to the
      business of Company; (b) Executive’s material breach of this Agreement; and
      (c) Executive’s conviction or entry of a plea of nolo contendere for fraud,
      misappropriation or embezzlement, or any felony or crime of moral
      turpitude.  In the event Executive’s employment is terminated in
      accordance with this subparagraph 7.1, Executive shall be entitled to receive
      Executive’s Base Salary prorated to the date of termination.  All
      other Company obligations to Executive pursuant to this Agreement will become
      automatically terminated and completely extinguished.  Executive will
      not be entitled to receive the Severance Payment described in subparagraph
      7.3
      below.

     

    7.2  Termination
      Without Cause by Company/Severance; Change of Control.

     

    (a)           Company
      may terminate Executive’s employment under this Agreement without Cause at any
      time on thirty (30) days’ advance written notice to
      Executive.  In the event of (i) such termination without Cause, or
      (ii) Executive’s inability to perform the essential functions of Executive’s
      position due to a mental or physical disability or Executive's death, or (iii)
      in the event of the termination of Executive without Cause following a “Change
      of Control” (as defined in Section 7.2(b) below), Executive will receive the
      Base Salary then in effect, prorated to the date of termination, and a
“Severance Payment” equivalent to (a)  payment of compensation for an
      additional six months, payable in accordance with Company’s regular payroll
      cycle or lump sum, and (b) an additional provision of accelerating all unvested
      stock options and warrants  provided that
      Executive:  (i)  complies with all
      surviving provisions of this Agreement as specified in subparagraph 13.8 below;
      and (ii) executes a full general release, releasing all claims, known or
      unknown, that Executive may have against Company arising out of or any way
      related to Executive’s employment or termination of employment with
      Company.  Notwithstanding the foregoing, in the event the Company’s
      securities are publicly traded on the date of Executive’s termination of
      employment, any portion of the aggregate salary continuation payments described
      in clause (ii)(a) of this Section 7.2, which, if paid, would exceed the Section
      409A Safe Harbor Limit (as defined in Section 7.2(c) below), such excess portion
      shall be paid to Executive in a lump sum on the first day of the seventh
      calendar month immediately following the date of Executive’s
      termination.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)           As
      used herein, “Change of Control” means:  (i) a sale of all or
      substantially all of the assets of the Company; (ii) a merger or consolidation
      in which the Company is not the surviving entity and in which the holders of
      the
      Company’s outstanding voting stock immediately prior to such transaction own,
      immediately after such transaction, securities representing less than fifty
      percent (50%) of the voting power of the entity surviving such transaction
      or,
      where the surviving entity is a wholly-owned subsidiary of another entity,
      the
      surviving entity’s parent; or (iii) a reverse merger in which the Company is the
      surviving entity but the shares of common stock outstanding immediately
      preceding the merger are converted by virtue of the merger into other property,
      whether in the form of securities of the surviving entity’s parent, cash or
      otherwise, and in which the holders of the Company’s outstanding voting stock
      immediately prior to such transaction own, immediately after such transaction,
      securities representing less than fifty percent (50%) of the voting power of
      the
      Company or, where the Company is a wholly-owned subsidiary of another
      entity.

     

    (c)           As
      used herein, “Section 409A Safe Harbor Limit” means an amount equal to two (2)
      times the lesser of (i) Executive’s annual rate of compensation for the taxable
      year immediately preceding the taxable year in which Executive’s employment is
      terminated by the Company or (ii) the dollar amount in effect under Section
      401(a)(17) of the Internal Revenue Code of 1986, as amended, for the taxable
      year in which Executive’s employment is terminated.

     

    (d)           In
      the event that the benefits provided to you under this Agreement, and any other
      agreements, plans or arrangements to which you may be a party with the Company,
      cause you to incur an excise tax under Section 4999 of the Internal Revenue
      Code
      of 1986 (the “Code”) or any corresponding provisions of applicable state tax law
      in connection with a Change of Control, then the Company will pay you an
      additional amount sufficient to reimburse you for (i) the excise tax imposed
      on
      such benefits, and (ii) the federal and state income, employment and excise
      taxes, determined on a fully “grossed-up” basis, imposed on the benefits
      payments provided.  The Company shall be entitled to withhold from the
      payment required hereunder such taxes as it may be required to withhold under
      applicable tax law, and any such withheld taxes shall be treated as paid to
      you
      hereunder.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    7.3  Voluntary
      Resignation by Executive for Good Reason/Severance.  Executive may
      voluntarily resign Executive’s position with Company for Good Reason, at any
      time on thirty (30) days’ advance written
      notice.  In the event of Executive’s resignation for 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 Chief
      Executive Officer, or Executive no longer reports to the Board of Directors;
      and
      (d)  Company relocates Executive’s principal place of work to a
      location more than sixty (60) miles from the location specified in subparagraph
      2.3, 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 thirty (30) 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
      thirty-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 Chief Executive Officer in its sole
      discretion.  If the Chief Executive Officer believes such a conflict
      exists during the term of this Agreement, the Chief Executive Officer may ask
      Executive to choose to discontinue the other work or resign employment with
      Company.  If the Chief Executive Officer believes such a conflict
      exists during any period in which Executive is receiving payments pursuant
      to
      this Agreement, the 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
      Chief Executive Officer of the Company.  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:
      _____________________________________                  _________________________________________

                                                Jacques
      Terblanche

                                                Chief
      Operations
      Officer

                                                    

    


    


    Dated: _____________________________________     
By:  
  __________________________________________

                                                Etienne
      Weidemann

                                                Chief
      Executive
      Officer

                                                AUXILIO,
      Inc.

                                                27401
      Los Altos,
      Suite 100

                                                Mission
      Viejo,
      CA  92691

    
 

    


    


    


    


    


    



    
      
              

                  
      
      

                  DOCSOC/1250924v1/010036-0000      
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      A

    


    INCENTIVE
      COMPENSATION PLAN

    


    


    Incentive
      Compensation:

    


    The
      Executive will be entitled to share in the Executive Bonus and Commission
      Plans.

    


    
      	
              1.  

            	
              The
                Executive Bonus Plan will be based on 10% of EBITDA for 2008 and
                2009.  The bonus due, if any, will be paid on an annual basis in
                March based on the relevant 10K filed with the SEC.  The EBITDA
                described in this Exhibit A is calculated as if the bonus to be paid
                to
                the Executives has not been paid and therefore the expense has not
                been
                accrued and counted as an expense on the Company’s income
                statement.

            


    

    
      	
              2.  

            	
              The
                Executive Commission Plan will be based on 15% commission from net
                cash
                flow generated from equipment sales to customers. The commission
                due, if
                any, will be paid in the pay period following the payment of the
                cash
                amount due from the customer.

            


    

    


    Base
      Salary Adjustments:

    


    The
      Executive’s Base Salary will be adjusted in January 2009 to reflect an annual
      Base Salary of $180,000.

    



    
      
              

                  
      
      

                  
      
      

                            DOCSOC/1250924v1/010036-0000