Document:

exhibit_10-107.htm

     

    
      
        

        

      

      
Exhibit
10.107

      
        

        EXHIBIT
A TO PRIVATE EQUITY CREDIT AGREEMENT

        

        REGISTRATION
RIGHTS AGREEMENT

        

        This
Registration Rights Agreement ("Agreement"), dated as of January 7, 2010,
is made by and between IMAGING DIAGNOSTIC SYSTEMS, INC., a Florida corporation
("Company"), and SOUTHRIDGE PARTNERS II LP, a Delaware limited partnership (the
"Investor").

        

        RECITALS

        

        WHEREAS,
upon the terms and subject to the conditions of the Amended Private Equity
Credit Agreement of even date ("Purchase Agreement"), between the Investor and
the Company, the Company has agreed to issue and sell to the Investor up to
Fifteen Million dollars ($15,000,000) of the common stock of the Company
("Subscribed Shares"), no par value per share (the "Common Stock"),
and

        

        WHEREAS,
to induce the Investor to execute and deliver the Purchase Agreement, the
Company has agreed to provide certain registration rights under the Securities
Act of 1933, as amended, and the rules and regulations thereunder, or any
similar successor statute (collectively, "Securities Act"), and applicable state
securities laws with respect to the Subscribed Shares;

        

        NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Investor hereby agree as
follows:

        

        1.           Definitions.

         

        (a)           As
used in this Agreement, the following terms shall have the following
meaning:

         

        (i)           “Potential
Material Event” means any of the following: (a) the possession by the Company of
material information not ripe for disclosure in a Registration Statement, which
shall be evidenced by determinations in good faith by the Board of Directors of
the Company that disclosure of such information in the Registration Statement
would be detrimental to the business and affairs of the Company, or (b) any
material engagement or activity by the Company which would, in the good faith
determination of the Board of Directors of the Company, be adversely affected by
disclosure in a Registration Statement at such time, which determination shall
be accompanied by a good faith determination by the

         

        (ii)

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        Board of
Directors of the Company that the Registration Statement would be materially
misleading absent the inclusion of such information.

         

        (iii)           "Subscription
Date" shall have the same meaning as set forth in the Purchase
Agreement.

         

        (iv)           "Investor",
has the meaning set forth in the preamble to this Agreement.

         

        (v)           "Register",
"registered" and "registration" refer to a registration effected by preparing
and filing a Registration Statement or Statements in compliance with the
Securities Act and pursuant to Rule 415 under the Securities Act or any
successor rule providing for offering securities on a delayed or continuous
basis ("Rule 415"), and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange Commission
(the "SEC").

         

        (vi)           "Registrable
Securities" shall have the same meaning as set forth in the Purchase
Agreement.

         

        (vii)           "Registration
Statement" shall have the same meaning as set forth in the Purchase
Agreement.

         

        (b)           Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Purchase Agreement.

         

        2.           Obligation of the
Company.  In connection with the registration of the
Registrable Securities, the Company shall do each of the following:

         

        (a)           Prepare
promptly, and file with the SEC within sixty (60) days of the Subscription
Date, a Registration Statement with respect to not less than 100,000,000 of
Registrable Securities, and, thereafter, use all diligent efforts to cause the
Registration Statement relating to the Registrable Securities to become
effective the earlier of (a) five (5) business days after notice from the
Securities and Exchange Commission that the Registration Statement may be
declared effective, or (b) one hundred eighty (180) days after the Subscription
Date, and keep the Registration Statement effective at all times until the
earliest of (i) the date that is one year after the completion of the last
Closing Date under the Purchase Agreement, (ii) the date when the Investor may
sell all Registrable Securities under Rule 144 without volume limitations, or
(iii) the date the Investor no longer owns any of the Registrable Securities
(collectively, the "Registration Period"), which Registration Statement
(including any amendments or supplements, thereto and prospectuses contained
therein) shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;

         

        
          
            
            

          

          
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        (b)           Prepare
and file with the SEC such amendments (including post-effective amendments) and
supplements to the Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary to keep the Registration
Statement effective at all times during the Registration Period, and, during the
Registration Period, and to comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities of the Company
covered by the Registration Statement until the expiration of the Registration
Period.

         

        (c)           Permit
a single firm of counsel designated by Investor to review the Registration
Statement and all amendments and supplements thereto a reasonable period of time
(but not less than three (3) Business Day) prior to their filing with the SEC,
and not file any document in a form to which such counsel reasonably
objects.

         

        (d)           Notify
Investor and Investor’s legal counsel identified to the Company ((and, in the
case of (i)(A) below, not less than one (1) Business Day prior to such filing)
and (if requested by any such person) confirm such notice in writing no later
than one (1) Business Day following the day (i): (A) when a prospectus or any
prospectus supplement or post-effective amendment to the Registration Statement
is proposed to be filed; (B) whenever the SEC notifies the Company whether there
will be a "review" of such Registration Statement; (C) whenever the Company
receives (or a representative of the Company receives on its behalf) any oral or
written comments from the SEC respect of a Registration Statement (copies or, in
the case of oral comments, written or oral summaries of such comments shall be
promptly furnished by the Company to Investor’s Counsel); and (D) with respect
to the Registration Statement or any post-effective amendment, when the same has
become effective; (ii) of any request by the SEC or any other Federal or state
governmental authority for amendments or supplements to the Registration
Statement or the prospectus or for additional information; (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of the Registration
Statement covering any or all of the Registrable Securities or the initiation of
any proceedings for that purpose; (iv) if at any time any of the representations
or warranties of the Company contained in any agreement (including any
securities purchase agreement) contemplated hereby ceases to be true and correct
in all material respects; (v) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any jurisdiction,
or the initiation or threatening of any proceeding for such purpose; and (vi) of
the occurrence of any event that to the knowledge of the Company makes any
statement made in the Registration Statement or the prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to the Registration Statement,
the prospectus or other documents so that, in the case of the Registration
Statement or the prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. In addition, the
Company shall furnish Investor’s Counsel with copies of all intended written
responses to the comments

         

        
          
            
            

          

          
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        contemplated
in clause (C) of this Section not later than one (1) Business Day in advance of
the filing of such responses with the SEC so that Investor shall have the
opportunity to comment thereon.

         

        (e)           Furnish
to Investor, (i) promptly after the same is prepared and publicly distributed,
filed with the SEC, or received by the Company, one (1) copy of the Registration
Statement, each preliminary prospectus and the prospectus, and each amendment or
supplement thereto, and (ii) such number of copies of a prospectus, including a
preliminary prospectus, and all amendments and supplements thereto and such
other documents, as the Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by the
Investor;

         

        (f)           Use
all diligent efforts to (i) register and/or qualify the Registrable Securities
covered by the Registration Statement under such other securities or blue sky
laws of such jurisdictions as the Investor may reasonably request and in which
significant volumes of shares of Common Stock are traded, (ii) prepare and file
in those jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof at all times during the Registration Period,
(iii) take such other actions as may be necessary to maintain such registrations
and qualification in effect at all times during the Registration Period, and
(iv) take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions: provided, however,
that the Company shall not be required in connection therewith or as a condition
thereto to (A) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 2(f), (B) subject itself
to general taxation in any such jurisdiction, (C) file a general consent to
service of process in any such jurisdiction, (D) provide any undertakings that
cause more than nominal expense or burden to the Company or (E) make any change
in its charter or by-laws or any then existing contracts, which in each case the
Board of Directors of the Company determines to be contrary to the best
interests of the Company and its stockholders;

         

        (g)           As
promptly as practicable after becoming aware of such event, notify the Investor
of the happening of any event of which the Company has knowledge, as a result of
which the prospectus included in the Registration Statement, as then in effect,
includes any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading
("Registration Default"), and uses all diligent efforts to promptly prepare a
supplement or amendment to the Registration Statement or other appropriate
filing with the SEC to correct such untrue statement or omission, and any other
necessary steps to cure the Registration Default, and deliver a number of copies
of such supplement or amendment to the Investor as the Investor may reasonably
request.  Failure to cure the Registration Default within ten (10)
business days shall result in the Company including liquidated damages of 2% of
the cost of all common stock then held by the investor for each10 day period or
portion thereof, beginning on the date of suspension.

         

        
          
            
            

          

          
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        (h)           As
promptly as practicable after becoming aware of such event, notify the Investor
(or, in the event of an underwritten offering, the managing underwriters) of the
issuance by the SEC of any notice of effectiveness or any stop order or other
suspension of the effectiveness of the Registration Statement at the earliest
possible time;

         

        (i)           Notwithstanding
the foregoing, if at any time or from time to time after the date of
effectiveness of the Registration Statement, the Company notifies Investor in
writing of the existence of a Potential Material Event (“Blackout Notice”),
Investor shall not offer or sell any Registrable Securities, or engage in any
other transaction involving or relating to the Registrable Securities, from the
time of the giving of notice with respect to a Potential Material Event until
Investor receives written notice from the Company that such Potential Material
Event either has been disclosed to the public or no longer constitutes a
Potential Material Event; provided, however, that (a) the
Company may not so suspend the right to such holders of Registrable Securities
for more than two ten (10) day periods in the aggregate during any 12-month
period (“Blackout Period”) with at least a ten (10) Business Day interval
between such periods, during the periods the Registration Statement is required
to be in effect, or (b) that if such Blackout Period exceeds the permitted ten
(10) day periods, the Company shall pay damages of  2% of the cost of
all common stock then held by the Investor for each ten (10) day period or
portion thereof, beginning on the date of the suspension.

         

        (j)           Use
its commercially reasonable efforts, if eligible, either to (i) cause all the
Registrable Securities covered by the Registration Statement to be listed on a
national securities exchange and on each additional national securities exchange
on which securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange, or (ii) secure designation of all the
Registrable Securities covered by the Registration Statement as a National
Association of Securities Dealers Automated Quotations System ("Nasdaq) "Small
Capitalization" within the meaning of Rule 11Aa2-1 of the SEC under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
quotation of the Registrable Securities on the Nasdaq Small Cap Market; or if,
despite the Company’s commercially reasonable efforts to satisfy the preceding
clause (i) or (ii), the Company is unsuccessful in doing so, to secure NASD
authorization and quotation for such Registrable Securities on the
over-the-counter bulletin board and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. ("NASD") as such with respect
to such registrable securities; provided, however, that the
Investor acknowledges that the Company does not currently meet the requirements
for listing on a national securities exchange or the Nasdaq Small Cap Market
pursuant to (i) or (ii) and that nothing in this section shall be construed to
require the Company to pursue such qualification until such time as the Company
satisfies such requirements for a period of not less than forty-five (45)
days:

         

        
          
            
            

          

          
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        (k)           Provide
a transfer agent for the Registrable Securities not later than the Subscription
Date of the Registration Statement;

         

        (l)           Cooperate
with the Investor to facilitate the timely preparation and delivery of
certificates for the Registrable Securities to be offered pursuant to the
Registration Statement and enable such certificates for the Registrable
Securities to be in such denominations or amounts as the case may be, as the
Investor may reasonably request and registration in such names as the Investor
may request; and, within five (5) business days after a Registration Statement
which includes Registrable Securities is ordered effective by the SEC, the
Company shall deliver, and shall cause legal counsel selected by the Company to
deliver, to the transfer agent for the Registrable Securities (with copies to
the Investor) an appropriate instruction and opinion of such counsel, if so
required by the Company’s transfer agent; and

         

        (m)           Take
all other reasonable actions necessary to expedite and facilitate distribution
to the Investor of the Registrable Securities pursuant to the Registration
Statement.

         

        3.           Obligations of the
Investor.  In connection with the registration of the
Registrable Securities, the Investor shall have the following
obligations;

         

        (a)           It
shall be a condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable
Securities of the Investor that the Investor shall timely furnish to the Company
such information regarding itself, the Registrable Securities held by it, and
the intended method of disposition of the Registrable Securities held by it, as
shall be reasonably required to effect the registration of such Registrable
Securities and shall timely execute such documents in connection with such
registration as the Company may reasonably request.

         

        (b)           The
Investor by such Investor’s acceptance of the Registrable Securities agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of the Registration Statement hereunder;
and

         

        (c)           The
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 2(g) or 2(h) above, the
Investor will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until the Investor receives the copies of the supplemented or amended prospectus
contemplated by Section 2(g) or 2(h) and, if so directed by the Company, the
Investor shall deliver to the Company (at the expense of the Company) or destroy
(and deliver to the Company a certificate of destruction) all copies in the
Investor’s possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice.

         

        
          
            
            

          

          
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        4.           Expenses of
Registration.

         

        (a)           All
reasonable expenses incurred in connection with Registrations, filings or
qualifications pursuant to Section 2, including,
without limitation, all Registration, listing, and qualifications fees, printers
and accounting fees, the fees and disbursements of counsel for the Company shall
be borne by the Company.

         

        (b)           Except
as otherwise provided for in Schedule 4(b)
attached hereto, the Company nor any of its subsidiaries has, as of the date
hereof, and the Company shall not on or after the date of this Agreement, enter
into any agreement with respect to its securities that is inconsistent with the
rights granted to Investor in this Agreement or otherwise conflicts with the
provisions hereof.  Except as otherwise provided for in Schedule 4(b), the
Company has not previously entered into any agreement granting any registration
rights with respect to any of its securities to any person.  Except as
otherwise provided for in this Section 4, and
without limiting the generality of the foregoing, without the written consent of
Investor, the Company shall not grant to any person the right to request the
Company to Register any securities of the Company under the Securities Act
unless the rights so granted are subject in all respects to the prior rights in
full of Investor set forth herein, and are not otherwise in conflict or
inconsistent with the provisions of this Agreement and the other Transaction
Documents.

         

        5.           Indemnification.  After
Registrable Securities are included in a Registration Statement under this
Agreement:

         

        (a)           To
the extent permitted by law, the Company will indemnify and hold harmless, the
Investor, the directors, if any, of such Investor, the officers, if any, of such
Investor, each person, if any, who controls the Investor within the meaning of
the Securities Act or the Exchange Act (each, an "Indemnified Person"), against
any losses, claims, damages, liabilities or expenses (joint or several) incurred
(collectively, "Claims") to which any of them may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
post-effective amendment thereof or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus if used
prior to the Subscription Date of such Registration Statement, or contained in
the final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission or alleged
omission to state therein any material fact necessary to make the statements
made therein, in the light of the circumstances under which the statements
therein were made, not misleading or (iii) any violation or alleged violation by
the Company of the Securities Act, the Exchange Act, any state securities law or
any rule or regulation under the Securities Act, the Exchange Act or any state
securities law (the matters in the foregoing clauses (i) through (iii) being
collectively referred to as  "Violations").  The Company
shall

         

        
          
            
            

          

          
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        reimburse
the Investor, promptly as such expenses are incurred and are due and payable,
for any reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such
Claim.  Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 5(a) shall not (i) apply to
any Claims arising out of or based upon a Violation which occurs in reliance
upon and in conformity with information furnished in writing to the Company by
or on behalf of any Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the Company
pursuant to Section 2(b) hereof; (ii) with respect to any preliminary
prospectus, inure to the benefit of any such person from whom the person
asserting any such Claim purchased the Registrable Securities that are the
subject thereof (or to the benefit of any person controlling such person) if the
untrue statement or omission of material fact contained in the preliminary
prospectus was corrected in the prospectus, as then amended or supplemented, if
such prospectus was timely made available by the Company pursuant to Section
2(b) hereof; (iii) be available to the extent such Claim is based on a failure
of the Investor to deliver or cause to be delivered the prospectus made
available by the Company; or (iv) apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of
the  Company, which consent shall not be unreasonably
withheld.  The Investor will indemnify the Company, its officers,
directors and agents (including legal counsel) against any claims arising out of
or based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company, by or on behalf of such
Investor, expressly for use in connection with the preparation of the
Registration Statement, subject to such limitations and conditions set forth in
the previous sentence.  Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person or Indemnified Party.

         

        (b)           Promptly
after receipt by an Indemnified Person under this Section 5 of notice of the
commencement of any action (including any governmental action), such Indemnified
Person shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 5, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person, as the case may be; provided, however, that an
Indemnified Person shall have the right to retain its own counsel with the
reasonable fees and expenses to be paid by the indemnifying party, if, in the
reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person and the indemnifying
party would be inappropriate due to actual or potential differing interests
between such Indemnified Person and any other party represented by such counsel
in such proceeding.  In such event, the Company shall pay for only one
separate legal counsel for the Investor selected by the Investor.  The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Person under this Section 5, except to
the extent that the indemnifying party is prejudiced in its ability to defend
such action.  The

         

        
          
            
            

          

          
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        indemnification
required by this Section 5 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as such expense,
loss, damage or liability is incurred and is due and payable.

         

        6.           Contribution.  To
the extent any indemnification by an indemnifying party is prohibited or limited
by law, the indemnifying party agrees to make the maximum contribution with
respect to any amounts for which it would otherwise be liable under Section 5 to
the fullest extent permitted by law; provided, however, that (a) no
contribution shall be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in Section
5; (b) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any seller of Registrable Securities who
was not guilty of such fraudulent misrepresentation; and (c) contribution by any
seller of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable
Securities.

         

        7.           Reports under Exchange
Act.  With a view to making available to the Investor the
benefits of Rule 144 promulgated under the Securities Act or any other similar
rule or regulation of the SEC that may at any time permit the Investor to sell
securities of the Company to the public without registration ("Rule 144"), the
Company agrees to use its reasonable best efforts to:

         

        (a)           make
and keep public information available, as those terms are understood and defined
in Rule 144;

         

        (b)           file
with the SEC in a timely manner all reports and other documents required of the
Company under the Exchange Act;

         

        (c)           furnish
to the Investor so long as the Investor owns Registrable Securities, promptly
upon request, (i) a written statement by the Company that it has complied with
the reporting requirements of Rule 144, the Securities Act and the Exchange Act,
(ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company solely if unavailable
by EDGAR, and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration; and

         

        (d)           at
the request of any Investor of Registrable Securities, give its Transfer Agent
irrevocable instructions (supported by an opinion of Company counsel, if
required or requested by the Transfer Agent) to the effect that, upon the
Transfer Agent’s receipt from such Investor of:

         

        (i)           a
certificate (a “Rule 144 Certificate”) certifying (A) that such Investor has
held the shares of Registrable Securities which the Investor proposes to sell
(the “Securities Being Sold”) for a period of not less than (1) year and (B) as
to such other matters as may be appropriate in accordance with Rule 144 under
the Securities Act, and

         

        
          
            
            

          

          
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        (ii)           an
opinion of counsel acceptable to the Company (for which purposes it is agreed
that the initial Investor’s Counsel shall be deemed acceptable if such opinion
is not given by Company Counsel) that, based on the Rule 144 Certificate,
Securities Being Sold may be sold pursuant to the provisions of Rule 144, even
in the absence of an effective Registration Statement,

         

        the
Transfer Agent is to effect the transfer of the Securities Being Sold and issue
to the buyer(s) or transferee(s) thereof one or more stock certificates
representing the transferred Securities Being Sold without any restrictive
legend and without recording any restrictions on the transferability of such
shares on the Transfer Agent’s  books and records (except to the
extent any such legend or restriction results from facts other than the identity
of the Investor, as the seller or transferor thereof, or the status, including
any relevant legends or restrictions, of the shares of the Securities Being Sold
while held by the Investor).   If the Transfer Agent requires any
additional documentation at the time of the transfer, the Company shall deliver
or cause to be delivered all such reasonable additional documentation as may be
necessary to effectuate the issuance of an unlegended certificate.

        

        8.           Miscellaneous.

         

        (a)           Registered
Owners.  A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record such
Registrable Securities.  If the Company receives conflicting
instructions, notices or elections from two or more persons or entities with
respect to the same Registrable Securities, the Company shall act upon the basis
of instructions, notice or election received from the registered owner of such
Registrable Securities.

         

        (b)           Rights Cumulative;
Waivers.  The rights of each of the parties under this
Agreement are cumulative.  The rights of each of the parties hereunder
shall not be capable of being waived or varied other than by an express waiver
or variation in writing.  Any failure to exercise or any delay in
exercising any of such rights shall not operate as a waiver or variation of that
or any other such right.  Any defective or partial exercise of any of
such rights shall not preclude any other or further exercise of that or any
other such right.  No act or course of conduct or negotiation on the
part of any party shall in any way preclude such party from exercising any such
right or constitute a suspension or any variation of any such
right.

         

        (c)           Benefit; Successors
Bound.  This Agreement and the terms, covenants, conditions,
provisions, obligations, undertakings, rights, and benefits hereof, shall be
binding upon, and shall inure to the benefit of, the undersigned parties and
their heirs, executors, administrators, representatives, successors, and
permitted assigns.

         

        (d)           Entire
Agreement.  This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof.  There
are no promises, agreements, conditions, undertakings, understandings,
warranties, covenants or representations, oral or written, express or implied,
between them with respect to this Agreement or the matters described in this
Agreement,

         

        
          
            
            

          

          
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        except as
set forth in this Agreement and in the other documentation relating to the
transactions contemplated by this Agreement.  Any such negotiations,
promises, or understandings shall not be used to interpret or constitute this
Agreement.

         

        (e)           Assignment.  The
rights to have the Company register Registrable Securities pursuant to this
Agreement may be assigned by the Investors to any transferee, only
if:  (a) the assignment relates to not less than one million dollars
($1,000,000) of Registrable Securities and the Transferee is
an  Accredited Investor under Regulation D not in competition with the
Company; (b) the Company receives a legal opinion in form and substance
satisfactory to the Company that the proposed transfer complies with federal and
state securities laws and does not adversely effect the validity of the
transactions executed (or to be executed) under this Agreement and the Purchase
Agreement under federal and state securities laws; (c)  the assignment
requires that the Transferee be bound by all of the provisions contained in this
Agreement, and Investor, the Company and the transferee or assignee (the
"Transferee") enter into a written agreement, which shall be enforceable by the
Company against the Transferee and by the Transferee against the Company, to
assign such rights; and (d) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is
restricted under the Securities Act and applicable state securities
laws.  Prior to the assignment the company shall have the right to
perform its own due diligence regarding the assignee and have the right to
approve the assignment, provided that such approval shall not be unreasonably
withheld.

         

        (f)           Amendment.  Any
provision of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and
Investor.  Any amendment or waiver affected in accordance with this
Section 8 shall be binding upon the Company and any subsequent
Transferees.

         

        (g)           Severability.  Each
part of this Agreement is intended to be severable.  In the event that
any provision of this Agreement is found by any court or other authority of
competent jurisdiction to be illegal or unenforceable, such provision shall be
severed or modified to the extent necessary to render it enforceable and as so
severed or modified, this Agreement shall continue in full force and
effect.

         

        (h)           Notices.  Notices
required or permitted to be given hereunder shall be in writing and shall be
deemed to be sufficiently given when personally delivered (by hand, by courier,
by telephone line facsimile transmission, receipt confirmed, or other means) or
sent by certified mail, return receipt requested, properly addressed and with
proper postage pre-paid (i) if to the Company, at its executive office and (ii)
if to the Investor, at the address set forth under its name in the Purchase
Agreement, with a copy to its designated attorney, or at such other address as
each such party furnishes by notice given in accordance with this Section 8(a),
and shall be effective, when personally delivered, upon receipt and, when so
sent by certified mail, five (5) business days after deposit with the United
States Postal Service.

         

        
          
            
            

          

          
            11

            
              

            

          

          
            
            

          

        

        (i)           Governing Law.  This
Agreement shall be governed by the interpreted in accordance with the laws of
the State of Florida without reference to its conflicts of laws rules or
principles.  Each of the parties consents to the exclusive
jurisdiction of the federal courts of the State of Florida in connection
with any dispute arising under this Agreement and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on forum non coveniens, to the
bringing of any such proceeding in such jurisdictions.

         

        (j)           Consents.  The
person signing this Agreement on behalf of each party hereby represents and
warrants that he has the necessary power, consent and authority to execute and
deliver this Agreement on behalf of that party.

         

        (k)           Further
Assurances.  In addition to the instruments and documents to be
made, executed and delivered pursuant to this Agreement, the parties hereto
agree to make, execute and deliver or cause to be made, executed and delivered,
to the requesting party such other instruments and to take such other actions as
the requesting party may reasonably require to carry out the terms of this
Agreement and the transactions contemplated hereby.

         

        (l)           Section
Headings.  The Section headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

         

        (m)           Construction.  Unless
the context otherwise requires, when used herein, the singular shall be deemed
to include the plural, the plural shall be deemed to include each of the
singular, and pronouns of one or no gender shall be deemed to include the
equivalent pronoun of the other or no gender.

         

        (n)           Execution in Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original but all of which shall constitute one and the same
agreement.  This Agreement, once executed by a party, may be delivered
to the other party hereto by telephone line facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this
Agreement.  A facsimile transmission of this signed Agreement shall be
legal and binding on all parties hereto.

         

        

        

        

        [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

        

        
          
            
            

          

          
            12

            
              

            

          

          
            
            

          

        

        

        IN WITNESS WHEREOF, the
parties have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized as of the day and year first above
written.

        

        COMPANY:

        

        IMAGING
DIAGNOSTIC SYSTEMS, INC.

        

        

        
          	
                   
      

                	
                  By:  /s/ Linda B.
      Grable

                

        

        
          	
                   
      

                	
                  Name:
      Linda B. Grable

                

        

        
          	
                   
      

                	
                  Title:
      Chief Executive Officer

                

        

        

         

         

        INVESTOR:

        

        SOUTHRIDGE
PARTNERS II LP

        

        

                       
By:  /s/
Stephen Hicks

        Name:
Stephen Hicks

        Title:
Manager of General Partner

         

         

         

        13auxex01122010.htm

    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:                                                                          

                                   
Joseph Flynn

    President and Chief Executive
Officer

    AUXILIO, Inc.

    27401 Los Altos, Suite 100

    Mission
Viejo, CA  92691

    

    

    

    

    

    

    
      
        
           

        

         

      

      
         

        
          

        

      

      
         

      

    

    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.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00167-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00167-of-00352.parquet"}]]