[EXHIBIT 3.6]
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY
IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR REASONABLY ACCEPTABLE TO THE
COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A
REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a) UNDER THE SECURITIES ACT.
COMMON STOCK PURCHASE WARRANT
To Purchase ________ Shares of Common Stock of
PACIFIC CMA, INC.
THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") CERTIFIES
that, for value received, Midsummer Investments, Ltd. (the
"Holder"), is entitled, upon the terms and subject to the
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limitations on exercise and the conditions hereinafter set forth,
at any time on or after the date of issuance of this Warrant (the
"Initial Exercise Date") and on or prior to the seventh year
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anniversary of the Initial Exercise Date (the "Termination Date")
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but not thereafter, to subscribe for and purchase from Pacific
CMA, Inc., a Delaware corporation (the "Company"), up to
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_________ shares (the "Warrant Shares") of Common Stock, par
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value $0.001 per share, of the Company (the "Common Stock"). The
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purchase price of one share of Common Stock (the "Exercise
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Price") under this Warrant shall be $_____, subject to adjustment
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hereunder. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain
Securities Purchase Agreement (the "Purchase Agreement"), dated
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as of May 6, 2004, among the Company and the purchasers signatory
thereto.
1. Title to Warrant. Prior to the Termination Date and subject
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to compliance with applicable laws and Section 7 of this Warrant,
this Warrant and all rights hereunder are transferable, in whole
or in part, at the office or agency of the Company by the Holder
in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly
endorsed. The transferee shall sign an investment letter in form
and substance reasonably satisfactory to the Company.
2. Authorization of Shares. The Company covenants that all
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Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free
from all taxes, liens and charges in respect of the issue thereof
(other than taxes in respect of any transfer occurring
contemporaneously with such issue).
3. Exercise of Warrant.
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(a) Exercise of the purchase rights represented
by this Warrant may be made at any time or times on or after
the Initial Exercise Date and on or before the Termination
Date by delivery to the Company of a duly executed facsimile
copy of the Notice of Exercise Form annexed hereto (or such
other office or agency of the Company as it may designate by
notice in writing to the registered Holder at the address of
such Holder appearing on the books of the Company);
provided, however, within 3 Trading Days of the date said
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Notice of Exercise is delivered to the Company, the Holder
shall have surrendered this Warrant to the Company and the
Company shall have received payment of the aggregate
Exercise Price of the shares thereby purchased by wire
transfer or cashier's check drawn on a United States bank.
Certificates for shares purchased hereunder shall be
delivered to the Holder within 3 Trading Days from the
delivery to the Company of the Notice of Exercise Form,
surrender of this Warrant and payment of the aggregate
Exercise Price as set forth above ("Warrant Share Delivery
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Date"). This Warrant shall be deemed to have been exercised
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on the later of the date the Notice of Exercise is delivered
to the Company by facsimile copy and the date the Exercise
Price is received by the Company. The Warrant Shares shall
be deemed to have been issued, and Holder or any other
person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all
purposes, as of the date the Warrant has been exercised by
payment to the Company of the Exercise Price and all taxes
required to be paid by the Holder, if any, pursuant to
Section 5 prior to the issuance of such shares, have been
paid. If the Company fails to deliver to the Holder a
certificate or certificates representing the Warrant Shares
pursuant to this Section 3(a) by the Warrant Share Delivery
Date, then the Holder will have the right to rescind such
exercise. In addition to any other rights available to the
Holder, if the Company fails to deliver to the Holder a
certificate or certificates representing the Warrant Shares
pursuant to an exercise by the Warrant Share Delivery Date,
and if after such day the Holder is required by its broker
to purchase (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale
by the Holder of the Warrant Shares which the Holder
anticipated receiving upon such exercise (a "Buy-In"), then
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the Company shall (1) pay in cash to the Holder the amount
by which (x) the Holder's total purchase price (including
brokerage commissions, if any) for the shares of Common
Stock so purchased exceeds (y) the amount obtained by
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multiplying (A) the number of Warrant Shares that the
Company was required to deliver to the Holder in connection
with the exercise at issue times (B) the price at which the
sell order giving rise to such purchase obligation was
executed, and (2) at the option of the Holder, either
reinstate the portion of the Warrant and equivalent number
of Warrant Shares for which such exercise was not honored or
deliver to the Holder the number of shares of Common Stock
that would have been issued had the Company timely complied
with its exercise and delivery obligations hereunder. For
example, if the Holder purchases Common Stock having a total
purchase price of $11,000 to cover a Buy-In with respect to
an attempted exercise of shares of Common Stock with an
aggregate sale price giving rise to such purchase obligation
of $10,000, under clause (1) of the immediately preceding
sentence the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of
the Buy-In, together with applicable confirmations and other
evidence reasonably requested by the Company. Nothing
herein shall limit a Holder's right to pursue any other
remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the
Company's failure to timely deliver certificates
representing shares of Common Stock upon exercise of the
Warrant as required pursuant to the terms hereof.
(b) If this Warrant shall have been exercised in
part, the Company shall, at the time of delivery of the
certificate or certificates representing Warrant Shares,
deliver to Holder a new Warrant evidencing the rights of
Holder to purchase the unpurchased Warrant Shares called for
by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant.
(c) The Holder shall not have the right to exercise
any portion of this Warrant, pursuant to Section 3(a) or
otherwise, to the extent that after giving effect to such
issuance after exercise, the Holder (together with the Holder's
affiliates), as set forth on the applicable Notice of Exercise,
would beneficially own in excess of 4.99% of the number of shares
of the Common Stock outstanding immediately after giving effect
to such issuance. For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder
and its affiliates shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which
the determination of such sentence is being made, but shall
exclude the number of shares of Common Stock which would be
issuable upon (A) exercise of the remaining, nonexercised portion
of this Warrant beneficially owned by the Holder or any of its
affiliates and (B) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company
(including, without limitation, any other Warrants or the
Preferred Stock) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its affiliates. Except as set forth
in the preceding sentence, for purposes of this Section 3(c),
beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act, it being acknowledged by Holder
that the Company is not representing to Holder that such
calculation is in compliance with Section 13(d) of the Exchange
Act and Holder is solely responsible for any schedules required to
be filed in accordance therewith. To the extent that the
limitation contained in this Section 3(c) applies, the
determination of whether this Warrant is exercisable (in relation
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to other securities owned by the Holder) and of which a portion
of this Warrant is exercisable shall be in the sole discretion of
such Holder, and the submission of a Notice of Exercise shall be
deemed to be such Holder's determination of whether this Warrant
is exercisable (in relation to other securities owned by such
Holder) and of which portion of this Warrant is exercisable, in
each case subject to such aggregate percentage limitation, and
the Company shall have no obligation to verify or confirm the
accuracy of such determination. For purposes of this Section
3(c), in determining the number of outstanding shares of Common
Stock, the Holder may rely on the number of outstanding shares
of Common Stock as reflected in (x) the Company's most recent
Form 10-QSB or Form 10-KSB, as the case may be, (y) a more
recent public announcement by the Company or (z) any other
notice by the Company or the Company's Transfer Agent setting
forth the number of shares of Common Stock outstanding. Upon
the written or oral request of the Holder, the Company shall
within two Trading Days confirm orally and in writing to the
Holder the number of shares of Common Stock then outstanding.
In any case, the number of outstanding shares of Common Stock
shall be determined after giving effect to the conversion or
exercise of securities of the Company, including this Warrant,
by the Holder or its affiliates since the date as of which such
number of outstanding shares of Common Stock was reported.
(d) If at any time after one year from the date of
issuance of this Warrant there is no effective Registration
Statement registering the resale of the Warrant Shares by
the Holder, during any such periods this Warrant may also be
exercised at such time by means of a "cashless exercise" in
which the Holder shall be entitled to receive a certificate
for the number of Warrant Shares equal to the quotient
obtained by dividing [(A-B) (X)] by (A), where:
(A) = the VWAP on the Trading Day immediately preceding
the date of such election;
(B) = the Exercise Price of this Warrant, as adjusted;
and
(X) = the number of Warrant Shares issuable upon
exercise of this Warrant in accordance with the
terms of this Warrant by means of a cash exercise
rather than a cashless exercise.
(e) If the Company has not obtained Shareholder
Approval (as defined below) if required, then the Company
may not issue upon exercise of this Warrant any Warrant
Shares if such issuance aggregated with all prior issuances
of shares of Common Stock pursuant to this and any other
Warrants issued in connection with the Purchase Agreement
(as well as any warrants issued by the Company to Pacific
Summit Securities issued in connection with the Purchase
Agreement) or any shares of Common Stock issued upon
exercise or conversion of any securities issued in
connection with the Securities Purchase Agreement, dated
April 8, 2004 and upon conversion of or as payment of
interest on the Preferred Stock would exceed 19.999% of the
number of shares of Common Stock outstanding on the Trading
Day immediately preceding the Closing Date (such number of
shares, the "Issuable Maximum"). If on any attempted
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exercise of this Warrant, the issuance of Warrant Shares
would exceed the Issuable Maximum and the Company shall not
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have previously obtained the vote of shareholders (the
"Shareholder Approval"), if any, as may be required by the
applicable rules and regulations of the Principal Market (or
any successor entity) to approve the issuance of shares of
Common Stock in excess of the Issuable Maximum pursuant to
the terms hereof, then the Company shall issue to the Holder
requesting a Warrant exercise such number of Warrant Shares
as may be issued below the Issuable Maximum and, with
respect to the remainder of the aggregate number of Warrant
Shares, this Warrant shall not be exercisable until and
unless Shareholder Approval has been obtained.
4. No Fractional Shares or Scrip. No fractional shares or
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scrip representing fractional shares shall be issued upon the
exercise of this Warrant. As to any fraction of a share which
Holder would otherwise be entitled to purchase upon such
exercise, the Company shall pay a cash adjustment in respect of
such final fraction in an amount equal to such fraction
multiplied by the Exercise Price.
5. Charges, Taxes and Expenses. Issuance of certificates for
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Warrant Shares shall be made without charge to the Holder for any
issue or transfer tax or other incidental expense in respect of
the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be
issued in the name of the Holder or in such name or names as may
be directed by the Holder; provided, however, that in the event
certificates for Warrant Shares are to be issued in a name other
than the name of the Holder, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached
hereto duly executed by the Holder; and the Company may require,
as a condition thereto, the payment of a sum sufficient to
reimburse it for any transfer tax incidental thereto.
6. Closing of Books. The Company will not close its
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stockholder books or records in any manner which prevents the
timely exercise of this Warrant, pursuant to the terms hereof.
7. Transfer, Division and Combination.
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(a) Subject to compliance with any applicable securities laws
and the conditions set forth in Section 1 and Section 7(e) hereof
and to the provisions of Section 4.1 of the Purchase Agreement,
this Warrant and all rights hereunder are transferable, in whole
or in part, upon surrender of this Warrant at the principal
office of the Company, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed
by the Holder or its agent or attorney and funds sufficient to
pay any transfer taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, the Company
shall execute and deliver a new Warrant or Warrants in the name
of the assignee or assignees and in the denomination or
denominations specified in such instrument of assignment, and
shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly
be cancelled. A Warrant, if properly assigned, may be exercised
by a new holder for the purchase of Warrant Shares without having
a new Warrant issued.
(b) This Warrant may be divided or combined with other Warrants
upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and
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denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney. Subject to compliance with
Section 7(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a
new Warrant or Warrants in exchange for the Warrant or Warrants
to be divided or combined in accordance with such notice.
(c) The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants
under this Section 7.
(d) The Company agrees to maintain, at its aforesaid office,
books for the registration and the registration of transfer of
the Warrants.
(e) If, at the time of the surrender of this Warrant in
connection with any transfer of this Warrant, the transfer of
this Warrant shall not be registered pursuant to an effective
registration statement under the Securities Act and under
applicable state securities or blue sky laws, the Company may
require, as a condition of allowing such transfer (i) that the
Holder or transferee of this Warrant, as the case may be, furnish
to the Company a written opinion of counsel (which opinion shall
be in form, substance and scope customary for opinions of counsel
in comparable transactions) to the effect that such transfer may
be made without registration under the Securities Act and under
applicable state securities or blue sky laws, (ii) that the
holder or transferee execute and deliver to the Company an
investment letter in form and substance acceptable to the Company
and (iii) that the transferee be an "accredited investor" as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8)
promulgated under the Securities Act or a qualified institutional
buyer as defined in Rule 144A(a) under the Securities Act.
8. No Rights as Shareholder until Exercise. This Warrant does
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not entitle the Holder to any voting rights or other rights as a
shareholder of the Company prior to the exercise hereof. Upon
the surrender of this Warrant and the payment of the aggregate
Exercise Price (or by means of a cashless exercise), the Warrant
Shares so purchased shall be and be deemed to be issued to such
Holder as the record owner of such shares as of the close of
business on the later of the date of such surrender or payment.
9. Loss, Theft, Destruction or Mutilation of Warrant. The
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Company covenants that upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant or any stock certificate relating to
the Warrant Shares, and in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to it (which, in
the case of the Warrant, shall not include the posting of any
bond), and upon surrender and cancellation of such Warrant or
stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and
dated as of such cancellation, in lieu of such Warrant or stock
certificate.
10. Saturdays, Sundays, Holidays, etc. If the last or appointed
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day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday, Sunday or a legal
holiday, then such action may be taken or such right may be
exercised on the next succeeding day not a Saturday, Sunday or
legal holiday.
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11. Adjustments of Exercise Price and Number of Warrant Shares.
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(a) Stock Splits, etc. The number and kind of securities
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purchasable upon the exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time upon the
happening of any of the following. In case the Company shall (i)
pay a dividend in shares of Common Stock or make a distribution
in shares of Common Stock to holders of its outstanding Common
Stock, (ii) subdivide its outstanding shares of Common Stock into
a greater number of shares, (iii) combine its outstanding shares
of Common Stock into a smaller number of shares of Common Stock,
or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, then the number of Warrant
Shares purchasable upon exercise of this Warrant immediately
prior thereto shall be adjusted so that the Holder shall be
entitled to receive the kind and number of Warrant Shares or
other securities of the Company which it would have owned or have
been entitled to receive had such Warrant been exercised in
advance thereof. Upon each such adjustment of the kind and
number of Warrant Shares or other securities of the Company which
are purchasable hereunder, the Holder shall thereafter be
entitled to purchase the number of Warrant Shares or other
securities resulting from such adjustment at an Exercise Price
per Warrant Share or other security obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares purchasable pursuant hereto
immediately prior to such adjustment and dividing by the number
of Warrant Shares or other securities of the Company that are
purchasable pursuant hereto immediately after such adjustment.
An adjustment made pursuant to this paragraph shall become
effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) Anti-Dilution Provisions. During the Exercise Period, the
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Exercise Price shall be subject to adjustment from time to time
as provided in this Section 11(b). In the event that any
adjustment of the Exercise Price as required herein results in a
fraction of a cent, such Exercise Price shall be rounded up or
down to the nearest cent.
(i) Adjustment of Exercise Price. If and
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whenever the Company issues or sells, or in accordance
with Section 11(b)(ii) hereof is deemed to have issued
or sold, any shares of Common Stock for an effective
consideration per share of less than the then Exercise
Price or for no consideration (such lower price, the
"Base Share Price" and such issuances collectively, a
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"Dilutive Issuance"), then, the Exercise Price shall be
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reduced to equal the Base Share Price; provided;
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however, if a Holder holds less than 10% of the
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Warrants originally purchased by such Holder pursuant
to the Purchase Agreement, the Exercise Price of the
Warrants held by such Holder and such Holder only,
shall not be adjusted pursuant to this Section
11(b)(i). Such adjustment shall be made whenever
shares of Common Stock or Common Stock Equivalents are
issued.
(ii) Effect on Exercise Price of Certain Events.
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For purposes of determining the adjusted Exercise Price
under Section 11(b) hereof, the following will be
applicable:
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(A) Issuance of Rights or Options. If
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the Company in any manner issues or grants any
warrants, rights or options, whether or not
immediately exercisable, to subscribe for or to
purchase Common Stock or Common Stock Equivalents
(such warrants, rights and options to purchase
Common Stock or Common Stock Equivalents are
hereinafter referred to as "Options") and the
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effective price per share for which Common Stock
is issuable upon the exercise of such Options is
less than the Exercise Price ("Below Base Price
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Options"), then the maximum total number of shares
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of Common Stock issuable upon the exercise of all
such Below Base Price Options (assuming full
exercise, conversion or exchange of Common Stock
Equivalents, if applicable) will, as of the date
of the issuance or grant of such Below Base Price
Options, be deemed to be outstanding and to have
been issued and sold by the Company for such price
per share and the maximum consideration payable to
the Company upon such exercise (assuming full
exercise, conversion or exchange of Common Stock
Equivalents, if applicable) will be deemed to have
been received by the Company. For purposes of the
preceding sentence, the "effective price per share
for which Common Stock is issuable upon the
exercise of such Below Base Price Options" is
determined by dividing (i) the total amount, if
any, received or receivable by the Company as
consideration for the issuance or granting of all
such Below Base Price Options, plus the minimum
aggregate amount of additional consideration, if
any, payable to the Company upon the exercise of
all such Below Base Price Options, plus, in the
case of Common Stock Equivalents issuable upon the
exercise of such Below Base Price Options, the
minimum aggregate amount of additional
consideration payable upon the exercise,
conversion or exchange thereof at the time such
Common Stock Equivalents first become exercisable,
convertible or exchangeable, by (ii) the maximum
total number of shares of Common Stock issuable
upon the exercise of all such Below Base Price
Options (assuming full conversion of Common Stock
Equivalents, if applicable). No further
adjustment to the Exercise Price will be made upon
the actual issuance of such Common Stock upon the
exercise of such Below Base Price Options or upon
the exercise, conversion or exchange of Common
Stock Equivalents issuable upon exercise of such
Below Base Price Options.
(B) Issuance of Common Stock
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Equivalents. If the Company in any manner issues
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or sells any Common Stock Equivalents, whether or
not immediately convertible (other than where the
same are issuable upon the exercise of Options)
and the effective price per share for which Common
Stock is issuable upon such exercise, conversion
or exchange is less than the Exercise Price, then
the maximum total number of shares of Common Stock
issuable upon the exercise, conversion or exchange
of all such Common Stock Equivalents will, as of
the date of the issuance of such Common Stock
Equivalents, be deemed to be outstanding and to
have been issued and sold by the Company for such
price per share and the maximum consideration
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payable to the Company upon such exercise
(assuming full exercise, conversion or exchange of
Common Stock Equivalents, if applicable) will be
deemed to have been received by the Company. For
the purposes of the preceding sentence, the
"effective price per share for which Common Stock
is issuable upon such exercise, conversion or
exchange" is determined by dividing (i) the total
amount, if any, received or receivable by the
Company as consideration for the issuance or sale
of all such Common Stock Equivalents, plus the
minimum aggregate amount of additional
consideration, if any, payable to the Company upon
the exercise, conversion or exchange thereof at
the time such Common Stock Equivalents first
become exercisable, convertible or exchangeable,
by (ii) the maximum total number of shares of
Common Stock issuable upon the exercise,
conversion or exchange of all such Common Stock
Equivalents. No further adjustment to the
Exercise Price will be made upon the actual
issuance of such Common Stock upon exercise,
conversion or exchange of such Common Stock
Equivalents.
(C) Change in Option Price or
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Conversion Rate. If there is a change at any time
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in (i) the amount of additional consideration
payable to the Company upon the exercise of any
Options; (ii) the amount of additional
consideration, if any, payable to the Company upon
the exercise, conversion or exchange of any Common
Stock Equivalents; or (iii) the rate at which any
Common Stock Equivalents are convertible into or
exchangeable for Common Stock (in each such case,
other than under or by reason of provisions
designed to protect against dilution), the
Exercise Price in effect at the time of such
change will be readjusted to the Exercise Price
which would have been in effect at such time had
such Options or Common Stock Equivalents still
outstanding provided for such changed additional
consideration or changed conversion rate, as the
case may be, at the time initially granted, issued
or sold.
(D) Calculation of Consideration
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Received. If any Common Stock, Options or Common
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Stock Equivalents are issued, granted or sold for
cash, the consideration received therefor for
purposes of this Warrant will be the amount
received by the Company therefor, before deduction
of reasonable commissions, underwriting discounts
or allowances or other reasonable expenses paid or
incurred by the Company in connection with such
issuance, grant or sale. In case any Common
Stock, Options or Common Stock Equivalents are
issued or sold for a consideration part or all of
which shall be other than cash, the amount of the
consideration other than cash received by the
Company will be the fair market value of such
consideration, except where such consideration
consists of securities, in which case the amount
of consideration received by the Company will be
the fair market value (closing bid price, if
traded on any market) thereof as of the date of
receipt. In case any Common Stock, Options or
Common Stock Equivalents are issued in connection
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with any merger or consolidation in which the
Company is the surviving corporation, the amount
of consideration therefor will be deemed to be the
fair market value of such portion of the net
assets and business of the non-surviving
corporation as is attributable to such Common
Stock, Options or Common Stock Equivalents, as the
case may be. The fair market value of any
consideration other than cash or securities will
be determined in good faith by an investment
banker or other appropriate expert of national
reputation selected by the Company and reasonably
acceptable to the holder hereof, with the costs of
such appraisal to be borne by the Company.
(E) Exceptions to Adjustment of
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Exercise Price. Notwithstanding the foregoing, no
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adjustment will be made under this Section 11(b)
in respect of an Exempt Issuance.
(iii) Minimum Adjustment of Exercise Price. No
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adjustment of the Exercise Price shall be made in an
amount of less than 1% of the Exercise Price in effect at
the time such adjustment is otherwise required to be made,
but any such lesser adjustment shall be carried forward
and shall be made at the time and together with the next
subsequent adjustment which, together with any adjustments
so carried forward, shall amount to not less than 1% of
such Exercise Price.
12. Reorganization, Reclassification, Merger, Consolidation or
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Disposition of Assets. In case the Company shall reorganize its
---------------------
capital, reclassify its capital stock, consolidate or merge with
or into another corporation (where the Company is not the
surviving corporation or where there is a change in or
distribution with respect to the Common Stock of the Company), or
sell, transfer or otherwise dispose of its property, assets or
business to another corporation and, pursuant to the terms of
such reorganization, reclassification, merger, consolidation or
disposition of assets, shares of common stock of the successor or
acquiring corporation, or any cash, shares of stock or other
securities or property of any nature whatsoever (including
warrants or other subscription or purchase rights) in addition to
or in lieu of common stock of the successor or acquiring
corporation ("Other Property"), are to be received by or
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distributed to the holders of Common Stock of the Company, then
the Holder shall have the right thereafter to receive, at the
option of the Holder, (a) upon exercise of this Warrant, the
number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving
corporation, and Other Property receivable upon or as a result of
such reorganization, reclassification, merger, consolidation or
disposition of assets by a Holder of the number of shares of
Common Stock for which this Warrant is exercisable immediately
prior to such event or (b) cash equal to the value of this
Warrant as determined in accordance with the Black Scholes option
pricing formula. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets,
the successor or acquiring corporation (if other than the
Company) shall expressly assume the due and punctual observance
and performance of each and every covenant and condition of this
Warrant to be performed and observed by the Company and all the
obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined in good
faith by resolution of the Board of Directors of the Company) in
10
order to provide for adjustments of Warrant Shares for which this
Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 12.
For purposes of this Section 12, "common stock of the successor
or acquiring corporation" shall include stock of such corporation
of any class which is not preferred as to dividends or assets
over any other class of stock of such corporation and which is
not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either
immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights
to subscribe for or purchase any such stock. The foregoing
provisions of this Section 12 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or
disposition of assets.
13. Voluntary Adjustment by the Company. The Company may at any
-----------------------------------
time during the term of this Warrant reduce the then current
Exercise Price to any amount and for any period of time deemed
appropriate by the Board of Directors of the Company.
14. Notice of Adjustment. Whenever the number of Warrant Shares
--------------------
or number or kind of securities or other property purchasable
upon the exercise of this Warrant or the Exercise Price is
adjusted, as herein provided, the Company shall give notice
thereof to the Holder, which notice shall state the number of
Warrant Shares (and other securities or property) purchasable
upon the exercise of this Warrant and the Exercise Price of such
Warrant Shares (and other securities or property) after such
adjustment, setting forth a brief statement of the facts
requiring such adjustment and setting forth the computation by
which such adjustment was made.
15. Notice of Corporate Action. If at any time:
--------------------------
(a) the Company shall take a record of the
holders of its Common Stock for the purpose of entitling
them to receive a dividend or other distribution, or any
right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other
securities or property, or to receive any other right, or
(b) there shall be any capital reorganization of
the Company, any reclassification or recapitalization of the
capital stock of the Company or any consolidation or merger
of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets
or business of the Company to, another corporation or,
(c) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to
Holder (i) at least 20 days' prior written notice of the date on
which a record date shall be selected for such dividend,
distribution or right or for determining rights to vote in
respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or
winding up, and (ii) in the case of any such reorganization,
reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least 20
days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause also
11
shall specify (i) the date on which any such record is to be
taken for the purpose of such dividend, distribution or right,
the date on which the holders of Common Stock shall be entitled
to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any such
reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or winding up is
to take place and the time, if any such time is to be fixed, as
of which the holders of Common Stock shall be entitled to
exchange their Warrant Shares for securities or other property
deliverable upon such disposition, dissolution, liquidation or
winding up. Each such written notice shall be sufficiently given
if addressed to Holder at the last address of Xxxxxx appearing on
the books of the Company and delivered in accordance with Section
17(d).
16. Authorized Shares. The Company covenants that during the
-----------------
period the Warrant is outstanding, it will reserve from its
authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the
exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall
constitute full authority to its officers who are charged with
the duty of executing stock certificates to execute and issue the
necessary certificates for the Warrant Shares upon the exercise
of the purchase rights under this Warrant. The Company will take
all such reasonable action as may be necessary to assure that
such Warrant Shares may be issued as provided herein without
violation of any applicable law or regulation, or of any
requirements of the Principal Market upon which the Common Stock
may be listed.
Except and to the extent as waived or consented to by
the Holder, the Company shall not by any action, including,
without limitation, amending its certificate of incorporation or
through any 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 of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this
Warrant against impairment. Without limiting the generality of
the foregoing, the Company will (a) not increase the par value of
any Warrant Shares above the amount payable therefor upon such
exercise immediately prior to such increase in par value, (b)
take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares upon the exercise of this Warrant,
and (c) use commercially reasonable efforts to obtain all such
authorizations, exemptions or consents from any public regulatory
body having jurisdiction thereof as may be necessary to enable
the Company to perform its obligations under this Warrant.
Before taking any action which would result in an
adjustment in the number of Warrant Shares for which this Warrant
is exercisable or in the Exercise Price, the Company shall obtain
all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or
bodies having jurisdiction thereof.
17. Miscellaneous.
-------------
(a) Jurisdiction. All questions concerning the construction,
------------
validity, enforcement and interpretation of this Warrant shall be
determined in accordance with the provisions of the Purchase
Agreement.
12
(b) Restrictions. The Holder acknowledges that the Warrant
------------
Shares acquired upon the exercise of this Warrant, if not
registered, will have restrictions upon resale imposed by state
and federal securities laws.
(c) Nonwaiver and Expenses. No course of dealing or any
----------------------
delay or failure to exercise any right hereunder on the part of
Holder shall operate as a waiver of such right or otherwise prejudice
Holder's rights, powers or remedies, notwithstanding all rights
hereunder terminate on the Termination Date. If the Company
willfully and knowingly fails to comply with any provision of
this Warrant, which results in any material damages to the
Holder, the Company shall pay to Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not
limited to, reasonable attorneys' fees, including those of
appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.
(d) Notices. Any notice, request or other document required
-------
or permitted to be given or delivered to the Holder by the Company
shall be delivered in accordance with the notice provisions of
the Purchase Agreement.
(e) Limitation of Liability. No provision hereof, in the
-----------------------
absence of any affirmative action by Holder to exercise this
Warrant or purchase Warrant Shares, and no enumeration herein of
the rights or privileges of Holder, shall give rise to any
liability of Holder for the purchase price of any Common Stock or
as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.
(f) Remedies. Holder, in addition to being entitled to
--------
exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this
Warrant. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Warrant and hereby agrees to
waive the defense in any action for specific performance that a
remedy at law would be adequate.
(g) Successors and Assigns. Subject to applicable securities
----------------------
laws, this Warrant and the rights and obligations evidenced
hereby shall inure to the benefit of and be binding upon the
successors of the Company and the successors and permitted
assigns of Holder. The provisions of this Warrant are intended
to be for the benefit of all Holders from time to time of this
Warrant and shall be enforceable by any such Holder or holder of
Warrant Shares.
(h) Amendment. This Warrant may be modified or amended or
---------
the provisions hereof waived with the written consent of the Company
and the Holder.
(i) Severability. Wherever possible, each provision of
------------
this Warrant shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this
Warrant shall be prohibited by or invalid under applicable law,
such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provisions or the remaining provisions of this Warrant.
13
(j) Headings. The headings used in this Warrant are for
--------
the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
********************
14
IN WITNESS WHEREOF, the Company has caused this Warrant
to be executed by its officer thereunto duly authorized.
Dated: May 7, 2004
PACIFIC CMA, INC.
By:__________________________
Name:
Title:
15
NOTICE OF EXERCISE
To: Pacific CMA, Inc.
(1) The undersigned hereby elects to purchase ________ Warrant
Shares of the Company pursuant to the terms of the attached
Warrant (only if exercised in full), and tenders herewith payment
of the exercise price in full, together with all applicable
transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] the cancellation of such number of Warrant
Shares as is necessary, in accordance with the
formula set forth in subsection 3(d), to exercise
this Warrant with respect to the maximum number of
Warrant Shares purchasable pursuant to the
cashless exercise procedure set forth in
subsection 3(d).
(3) Please issue a certificate or certificates representing said
Warrant Shares in the name of the undersigned or in such other
name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following:
_______________________________
_______________________________
_______________________________
4) Accredited Investor. The undersigned is an
--------------------
"accredited investor" as defined in Regulation D under the
Securities Act of 1933, as amended.
[PURCHASER]
By:______________________________
Name:
Title:
Dated:___________________________
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all
rights evidenced thereby are hereby assigned to
_______________________________________________ whose address is
_______________________________________________________________.
________________________________________________________________
Dated: ______________, ________
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed:___________________________________________
NOTE: The signature to this Assignment Form must correspond with
the name as it appears on the face of the Warrant, without
alteration or enlargement or any change whatsoever, and must be
guaranteed by a bank or trust company. Officers of corporations
and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing
Warrant.
