EXHIBIT 4.1
THIS WARRANT AND THE SECURITIES
ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH
ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION
IS NOT REQUIRED.
WARRANT TO PURCHASE COMMON
STOCK
Date: May 12, 2009
THIS WARRANT CERTIFIES THAT, for the agreed upon
value of $10.00 and for other good and valuable consideration,
CAMBRIA CAPITAL, LLC, a California limited liability company
(“ Holder ”), is entitled to purchase a total of
up to 141,667 shares of common stock (the “ Warrant
Shares ”) of AUXILIO, INC., a Nevada corporation (“
Company ”). Holder has assisted the Company with a
financing, and Company has agreed to issue this Warrant to Holder
as part of the consideration for such assistance. This Warrant may
be exercised at any time during the term hereof, at the initial
exercise price per Share equal to sixty cents ($0.60) per share
(the “ Exercise Price ”) as adjusted pursuant to
Article 2 of this Warrant, subject to the provisions and
upon the terms and conditions set forth in this Warrant (the
“ Warrant ”). The Warrant Shares issuable under
this Warrant shall vest as of the date hereof.
ARTICLE 1.
EXERCISE
1.1 Method of
Exercise . Holder may
exercise this Warrant by delivering a duly executed Notice of
Exercise in substantially the form attached hereto as
Appendix 1
to the principal office of Company.
Unless Holder is exercising the conversion right set forth
in Section
1.2 , Holder shall also
deliver to Company a check for the aggregate Exercise Price for the
Shares being purchased.
1.2 Cashless
Exercise . In lieu of
exercising this Warrant as specified in Section 1.1 , Holder may from time to time convert this
Warrant, in whole or in part, into a number of Shares determined by
dividing (a) the aggregate fair market value of the Shares or other
securities otherwise issuable upon exercise of this Warrant minus
the aggregate Exercise Price of such Shares by (b) the fair market
value of one Share. The fair market value of the Shares shall be
determined pursuant to Section 1.4 .
1.3 No Shareholder
Rights . This Warrant does not entitle Holder to any voting
rights as a shareholder of Company prior to the exercise
hereof.
1.4 Fair Market
Value . If the Shares are
traded in a public market, the fair market value of the Shares
shall be the closing price of the Shares (or the closing price of
Company’s stock into which the Shares are convertible)
reported for the business day immediately before Holder delivers
its Notice of Exercise to Company. If the Shares are not traded in
a public market, the Board of Directors of Company shall determine
the fair market value in its reasonable good faith judgment. The
foregoing notwithstanding, if Holder advises the Board of Directors
in writing that Holder disagrees with such determination, then
Company and Holder shall promptly agree upon a reputable investment
banking or public accounting firm to undertake such valuation. If
the valuation of such investment banking or public accounting firm
is greater than that determined by the Board of Directors, then all
fees and expenses of such investment banking or public accounting
firm shall be paid by Company. In all other circumstances, Holder
shall pay such fees and expenses.
1
1.5 Delivery
of Certificate and New Warrant . Promptly after Holder
exercises this Warrant, Company shall deliver to Holder
certificates for the Shares acquired and, if this Warrant has not
been fully exercised or converted and has not expired, a new
Warrant representing the Shares not so acquired in exchange for
Holder’s delivery to Company of this Warrant.
1.6 Replacement of
Warrants . On receipt of evidence reasonably satisfactory to
Company of the loss, theft, destruction or mutilation of this
Warrant and, in the case of loss, theft or destruction, on delivery
of an indemnity agreement reasonably satisfactory in form and
amount to Company, or in the case of mutilation or surrender and
cancellation of this Warrant, Company at its expense shall execute
and deliver, in lieu of this Warrant, a new warrant of like
tenor.
1.7 Sale, Merger, or Consolidation of
Company
(a) Acquisition . For the purpose of
this Warrant, “ Acquisition ” means any sale, license, or other
disposition of all or substantially all of the assets of Company,
or any reorganization, consolidation, or merger of Company where
the holders of Company’s securities before the transaction
beneficially own less than fifty percent (50%) of the outstanding
voting securities of the surviving entity after the
transaction.
(b) Assumption of Warrant . Upon the
closing of any Acquisition, the successor entity shall assume the
obligations of this Warrant, and this Warrant shall be exercisable
for the same securities, cash, and property as would be payable for
the Shares issuable upon exercise of the unexercised portion of
this Warrant as if such Shares were outstanding on the record date
for the Acquisition and subsequent closing. The Exercise Price
shall be adjusted accordingly. If the successor entity refuses to
assume this Warrant in connection with the Acquisition, the Company
shall give Holder written notice at least 5 days prior to the
closing of the Acquisition of such fact. In such event,
notwithstanding any other provision of this Warrant to the
contrary, Holder may immediately exercise this Warrant in the
manner specified in this Warrant with such exercise effective
immediately prior to closing of the Acquisition. If Holder elects
not to exercise this Warrant, then this Warrant will terminate
immediately prior to the closing of the Acquisition.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1 Stock Dividends,
Splits, Etc . If Company declares or pays a dividend on its
common stock (or the Shares if the Shares are securities other than
common stock) payable in common stock, or other securities,
subdivides the outstanding common stock into a greater amount of
common stock, or, if the Shares are securities other than common
stock, subdivides the Shares in a transaction that increases the
amount of common stock into which the Shares are convertible, then
upon exercise of this Warrant, for each Share acquired, Holder
shall receive, without cost to Holder, the total number and kind of
securities to which Holder would have been entitled had Holder
owned the Shares of record as of the date the dividend or
subdivision occurred.
2.2 Reclassification, Exchange or
Substitution .
Upon any reclassification, exchange,
substitution, or other event that results in a change of the number
and/or class of the securities issuable upon exercise or conversion
of this Warrant, Holder shall be entitled to receive, upon exercise
or conversion of this Warrant, the number and kind of securities
and property that Holder would have received for the Shares if this
Warrant had been exercised immediately before such
reclassification, exchange, substitution, or other event. Company
or its successor shall promptly issue to Holder a new Warrant for
such new securities or other property. The new Warrant shall
provide for adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Article
2
2
including,
without limitation, adjustments to the Exercise Price and to the
number of securities or property issuable upon exercise of the new
Warrant. The provisions of this Section 2.2 shall similarly
apply to successive reclassifications, exchanges, substitutions, or
other events.
2.3 Adjustments for
Combinations, Etc . If the outstanding Shares are combined or
consolidated, by reclassification or otherwise, into a lesser
number of shares, the Exercise Price shall be proportionately
increased.
2.4 No Impairment. Company shall not, by
amendment of its Certificate of Incorporation or through a
reorganization, transfer of assets, consolidation, merger,
dissolution, issue, or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed under this Warrant by
Company, but shall at all times in good faith assist in carrying
out of all the provisions of this Article 2
and in taking all such action as may
be necessary or appropriate to protect Holder’s rights under
this Article against impairment. If Company takes any action
affecting the Shares or its common stock other than as described
above that adversely affects Holder’s rights under this
Warrant, the Exercise Price shall be adjusted downward and the
number of Shares issuable upon exercise of this Warrant shall be
adjusted upward in such a manner that the aggregate Exercise Price
of this Warrant is unchanged.
2.5 Fractional
Shares . No fractional
Shares shall be issuable upon exercise or conversion of the Warrant
and the number of Shares to be issued shall be rounded down to the
nearest whole Share. If a fractional share interest arises upon any
exercise or conversion of the Warrant, Company shall eliminate such
fractional share interest by paying Holder an amount computed by
multiplying the fractional interest by the fair market value of a
full Share.
2.6 Certificate as to
Adjustments . Upon each adjustment of the Exercise Price,
Company at its expense shall promptly compute such adjustment, and
furnish Holder with a certificate of its chief financial officer
setting forth such adjustment and the facts upon which such
adjustment is based. Company shall, upon written request, furnish
Holder a certificate setting forth the Exercise Price in effect
upon the date thereof and the series of adjustments leading to such
Exercise Price.
ARTICLE 3. REPRESENTATIONS AND
COVENANTS OF THE COMPANY .
3.1 Representations and
Warranties . Company hereby represents and warrants to Holder
that all Shares which may be issued upon the exercise of the
purchase right represented by this Warrant and all securities, if
any, issuable upon conversion of the Shares, shall, upon issuance,
be duly authorized, validly issued, fully paid and nonassessable,
and free of any liens and encumbrances except for restrictions on
transfer provided for herein or under applicable federal and state
securities laws.
3.2 Notice of Certain
Events . If Compan
