[EXHIBIT 10.22]
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is
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made and entered into as of May 6, 2004, among Pacific CMA, Inc.,
a Delaware corporation (the "Company"), and the purchasers
signatory hereto (each such purchaser is a "Purchaser" and all
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such purchasers are, collectively, the "Purchasers").
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This Agreement is made pursuant to the Securities
Purchase Agreement, dated as of the date hereof among the Company
and the Purchasers (the "Purchase Agreement").
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The Company and the Purchasers hereby agree as
follows:
1. Definitions
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Capitalized terms used and not otherwise defined
herein that are defined in the Purchase Agreement shall have the
meanings given such terms in the Purchase Agreement. As used in
this Agreement, the following terms shall have the following
meanings:
"Effectiveness Date" means, with respect to
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the initial Registration Statement required to be filed
hereunder, the 120th calendar day following the Closing Date
and, with respect to any additional Registration Statements
which may be required pursuant to Section 3(c), the 120th
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calendar day following the date on which the Company first
knows, or reasonably should have known, that such additional
Registration Statement is required hereunder; provided,
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however, in the event the Company is notified by the
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Commission that one of the above Registration Statements
will not be reviewed or is no longer subject to further
review and comments, the Effectiveness Date as to such
Registration Statement shall be the fifth Trading Day
following the date on which the Company is so notified if
such date precedes the dates required above.
"Effectiveness Period" shall have the meaning
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set forth in Section 2(a).
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"Filing Date" means, with respect to the
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initial Registration Statement required hereunder, the 60th
calendar day following the Closing Date and, with respect to
any additional Registration Statements which may be required
pursuant to Section 3(c), the 15th day following the date on
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which the Company first knows, or reasonably should have
known that such additional Registration Statement is
required hereunder.
"Holder" or "Holders" means the holder or
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holders, as the case may be, from time to time of
Registrable Securities.
"Indemnified Party" shall have the meaning set
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forth in Section 5(c) hereof.
"Indemnifying Party" shall have the meaning set
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forth in Section 5(c) hereof.
"Losses" shall have the meaning set forth in
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Section 5(a).
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"Proceeding" means an action, claim, suit,
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investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a
deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in a
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Registration Statement (including, without limitation, a
prospectus that includes any information previously omitted
from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities
covered by a Registration Statement, and all other
amendments and supplements to the Prospectus, including post-
effective amendments, and all material incorporated by
reference or deemed to be incorporated by reference in such
Prospectus.
"Registrable Securities" means, as of the date
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in question, (i) all of the shares of Common Stock issuable
upon conversion in full of the shares of Preferred Stock,
(ii) all shares issuable as dividends on the Preferred Stock
assuming all interest payments are made in shares of Common
Stock and the Preferred Stock is held for at least 3 years,
(iii) all Warrant Shares, (iv) any securities issued or
issuable upon any stock split, dividend or other
distribution recapitalization or similar event with respect
to the foregoing and (v) any additional shares issuable in
connection with any anti-dilution provisions associated with
the Preferred Stock.
"Registration Statement" means the
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registration statements required to be filed hereunder and
any additional registration statements contemplated by
Section 3(c), including (in each case) the Prospectus,
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amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments,
all exhibits thereto, and all material incorporated by
reference or deemed to be incorporated by reference in such
registration statement.
"Rule 415" means Rule 415 promulgated by the
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Commission pursuant to the Securities Act, as such Rule may
be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.
"Rule 424" means Rule 424 promulgated by the
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Commission pursuant to the Securities Act, as such Rule may
be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.
"Securities Act" means the Securities Act of
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1933, as amended.
"Underlying Shares" means the shares of Common
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Stock issuable upon conversion of the Preferred Stock and
the Warrant Shares.
"Warrants" shall mean the Common Stock
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purchase warrants issued to the Purchasers pursuant to the
Purchase Agreement.
"Warrant Shares" shall mean the shares of
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Common Stock issuable upon exercise of the Warrants.
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2. Shelf Registration
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(a) On or prior to each Filing Date, the Company
shall prepare and file with the Commission a "Shelf" Registration
Statement covering the resale of 150% of the Registrable
Securities on such Filing Date for an offering to be made on a
continuous basis pursuant to Rule 415. The Registration
Statement shall be on Form S-3 (unless the Company is not then
eligible to register for resale the Registrable Securities on
Form S-3, in which case such registration shall be on another
appropriate form in accordance herewith) and shall contain
(unless otherwise directed by the Holders) substantially the
"Plan of Distribution" attached hereto as Annex A. Subject to
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the terms of this Agreement, the Company shall use its best
efforts to cause the Registration Statement to be declared
effective under the Securities Act as promptly as possible after
the filing thereof, but in any event prior to the applicable
Effectiveness Date, and shall use its best efforts to keep such
Registration Statement continuously effective under the
Securities Act until all Registrable Securities covered by such
Registration Statement have been sold or may be sold without
volume restrictions pursuant to Rule 144(k) as determined by the
counsel to the Company pursuant to a written opinion letter to
such effect, addressed and acceptable to the Company's transfer
agent and the affected Holders (the "Effectiveness Period"). The
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Company shall immediately notify the Holders via facsimile of the
effectiveness of the Registration Statement on the same day that
the Company receives notification of the effectiveness from the
Commission. Failure to so notify the Holder within 1 Trading Day
following such notification shall be deemed an Event under
Section 2(b).
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(b) If: (i) a Registration Statement is not filed
on or prior to its Filing Date (if the Company files a
Registration Statement without affording the Holders the
opportunity to review and comment on the same as required by
Section 3(a), the Company shall not be deemed to have satisfied
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clause (i) of Section 3(a) of this Agreement), or (ii) the
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Company fails to file with the Commission a request for
acceleration in accordance with Rule 461 promulgated under the
Securities Act, within five Trading Days of the date that the
Company is notified (orally or in writing, whichever is earlier)
by the Commission that a Registration Statement will not be
"reviewed," or not subject to further review, or (iii) prior to
its Effectiveness Date, the Company fails to file a pre-effective
amendment and otherwise respond in writing to comments made by
the Commission in respect of such Registration Statement within
10 Trading Days after the receipt of comments by or notice from
the Commission that such amendment is required in order for a
Registration Statement to be declared effective, or (iv) a
Registration Statement filed or required to be filed hereunder is
not declared effective by the Commission by its Effectiveness
Date, or (v) after the Effectiveness Date, a Registration
Statement ceases for any reason to remain continuously effective
as to all Registrable Securities for which it is required to be
effective, or the Holders are not permitted to utilize the
Prospectus therein to resell such Registrable Securities for 15
consecutive business days or an aggregate of 25 business days
during any 12-month period (which need not be consecutive days)
(any such failure or breach being referred to as an "Event", and
for purposes of clause (i) or (iv) the date on which such Event
occurs, or for purposes of clause (ii) the date on which such 5
Trading Day period is exceeded, or for purposes of clause (iii)
the date which such 10 Trading Day period is exceeded, or for
purposes of clause (v) the date on which such 15 or 25 day
period, as applicable, is exceeded being referred to as "Event
Date"), then, on each such Event Date and every monthly
anniversary thereof until the applicable Event is cured, the
Company shall pay to each Holder an amount in cash, as partial
liquidated damages and not as a penalty, equal to 2.0% per month,
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pro rata on a daily basis, of the Stated Value of the Preferred
Stock then held by the Holder. If the Company fails to pay any
liquidated damages pursuant to this Section in full within seven
days after the date payable, the Company will pay interest
thereon at a rate of 18% per annum (or such lesser maximum amount
that is permitted to be paid by applicable law) to the Holder,
accruing daily from the date such liquidated damages are due
until such amounts, plus all such interest thereon, are paid in
full. The liquidated damages pursuant to the terms hereof shall
apply on a pro-rata basis for any portion of a month prior to the
cure of an Event.
3. Registration Procedures
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In connection with the Company's registration
obligations hereunder, the Company shall:
(a) Not less than five Trading Days prior to the
filing of each Registration Statement or any related Prospectus
or any amendment or supplement thereto (including any document
that would be incorporated or deemed to be incorporated therein
by reference), the Company shall, (i) furnish to each Holder
copies of all such documents proposed to be filed, which
documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such
Holders, and (ii) cause its officers and directors, counsel and
independent certified public accountants to respond to such
inquiries as shall be necessary, in the reasonable opinion of
respective counsel to conduct a reasonable investigation within
the meaning of the Securities Act. The Company shall not file the
Registration Statement or any such Prospectus or any amendments
or supplements thereto to which the Holders of a majority of the
Registrable Securities shall reasonably and in good faith object,
provided, the Company is notified of such objection in writing no
later than two (2) Trading Days after the Holders have been so
furnished copies of such documents.
(b) (i) Prepare and file with the Commission such
amendments, including post-effective amendments, to a
Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep a Registration Statement
continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with
the Commission such additional Registration Statements in order
to register for resale under the Securities Act all of the
Registrable Securities; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement
(subject to the terms of this Agreement), and as so supplemented
or amended to be filed pursuant to Rule 424; (iii) respond as
promptly as reasonably possible, and in any event within 10
Trading Days, to any comments received from the Commission with
respect to a Registration Statement or any amendment thereto and
as promptly as reasonably possible provide the Holders true and
complete copies of all correspondence from and to the Commission
relating to a Registration Statement; and (iv) comply in all
material respects with the provisions of the Securities Act and
the Exchange Act with respect to the disposition of all
Registrable Securities covered by a Registration Statement during
the applicable period in accordance (subject to the terms of this
Agreement) with the intended methods of disposition by the
Holders thereof set forth in such Registration Statement as so
amended or in such Prospectus as so supplemented.
(c) If during the Effectiveness Period, the Holder
informs the Company that the number of Registrable Securities at
any time exceeds 75% of the number of shares of Common Stock then
registered in a Registration Statement, then the Company shall
file as soon as reasonably practicable but in any case prior to
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the applicable Filing Date, an additional Registration Statement
covering the resale by the Holders of not less than 150% of the
number of such Registrable Securities.
(d) Notify the Holders of Registrable Securities
to be sold (which notice shall, pursuant to clauses (ii) through
(vi) hereof, shall be accompanied by an instruction to suspend
the use of the Prospectus until the requisite changes have been
made) as promptly as reasonably possible (and, in the case of
(i)(A) below, not less than five Trading Days prior to such
filing) and (if requested by any such Person) confirm such notice
in writing no later than one Trading Day following the day (i)(A)
when a Prospectus or any Prospectus supplement or post-effective
amendment to a Registration Statement is proposed to be filed;
(B) when the Commission notifies the Company whether there will
be a "review" of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement
(the Company shall provide true and complete copies thereof and
all written responses thereto to each of the Holders); and (C)
with respect to a Registration Statement or any post-effective
amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state
governmental authority for amendments or supplements to a
Registration Statement or Prospectus or for additional
information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of a Registration Statement
covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iv) 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; (v) of the occurrence of any event or passage
of time that makes the financial statements included in a
Registration Statement ineligible for inclusion therein or any
statement made in a Registration Statement or Prospectus or any
document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any
revisions to a Registration Statement, Prospectus or other
documents so that, in the case of a 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 light of the circumstances under which they were
made, not misleading; and (vi) the occurrence or existence of any
pending corporate development with respect to the Company that
the Company believes may be material and that, in the
determination of the Company, makes it not in the best interest
of the Company to allow continued availability or the
Registration Statement or Prospectus; provided, however, that (a)
notwithstanding anything to the contrary provided herein or
elsewhere, shall require the Company and/or any of its
affiliates, agents, officers, directors and/or employees to
violate any law, rule, regulation and/or fiduciary duty, and (b)
any and all of such information shall remain confidential to each
Holder until such information otherwise becomes public, unless
disclosure by a Holder is required by law; provided, further,
notwithstanding each Holder's agreement to keep such information
confidential, the Holders make no acknowledgement that any such
information is material, non-public information.
(e) Promptly deliver to each Holder, without
charge, as many copies of the Prospectus or Prospectuses
(including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request.
Subject to the terms of this Agreement, the Company hereby
consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders in connection
with the offering and sale of the Registrable Securities covered
by such Prospectus and any amendment or supplement thereto.
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(f) Use commercially reasonable efforts to
register or qualify the resale of such Registrable Securities as
required under applicable securities or Blue Sky laws of each
State within the United States as any Holder requests in writing,
to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period; provided,
that the Company shall not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or
subject the Company to any material tax in any such jurisdiction
where it is not then so subject.
(g) Cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing
Registrable Securities to be delivered to a transferee pursuant
to a Registration Statement, which certificates shall be free, to
the extent permitted by the Purchase Agreement, of all
restrictive legends, and to enable such Registrable Securities to
be in such denominations and registered in such names as any such
Holders may request.
(h) Upon the occurrence of any event contemplated
by this Section 3, as promptly as reasonably possible under the
circumstances taking into account the Company's good faith
assessment of any adverse consequences to the Company and its
stockholders of the premature disclosure of such event, prepare a
supplement or amendment, including a post-effective amendment, to
a Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be
incorporated therein by reference, and file any other required
document so that, as thereafter delivered, neither a Registration
Statement nor such Prospectus will contain an 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
light of the circumstances under which they were made, not
misleading. If the Company notifies the Holders in accordance
with clauses (ii) through (v) of Section 3(d) above to suspend
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the use of the use of any Prospectus until the requisite changes
to such Prospectus have been made, then the Holders shall suspend
use of such Prospectus. The Company will use its best efforts to
ensure that the use of the Prospectus may be resumed as promptly
as is practicable. The Company shall be entitled to exercise its
right under this Section 3(h) to suspend the availability of a
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Registration Statement and Prospectus, subject to the payment of
liquidated damages pursuant to Section 2(b), for a period not to
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exceed 60 days (which need not be consecutive days) in any 12
month period.
(i) Comply with all applicable rules and
regulations of the Commission.
(j) Use its best efforts to avoid the issuance
of, or, if issued, obtain the withdrawal of (i) any order
suspending the effectiveness of a Registration Statement, or (ii)
any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
(k) The Company may require, at any time prior
to the third Trading Day prior to the Filing Date, each Holder
to furnish to the Company (i) a statement as to the number of
shares of Common Stock beneficially owned by such Holder,
(ii) a selling shareholder questionnaire as provided by the
Company and attached hereto as Annex B, and, (iii) if requested
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by the Commission, the controlling person thereof, within three
Trading days of the Company's request. During any periods that
the Company is unable to meet its obligations hereunder with
respect to the registration of the Registrable Securities solely
because any Holder fails to furnish such information within three
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Trading Days of the Company's request, any liquidated damages
that are accruing at such time shall be tolled as to such Holder
only and any Event that may otherwise occur solely because of
such delay shall be suspended as to such Holder only, until such
information is delivered to the Company.
4. Registration Expenses. All fees and expenses incident
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to the performance of or compliance with this Agreement by the
Company shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to the Registration
Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration
and filing fees (including, without limitation, fees and expenses
(A) with respect to filings required to be made with the
Principal Market on which the Common Stock is then listed for
trading, and (B) in compliance with applicable state securities
or Blue Sky laws reasonably agreed to by the Company in writing
(including, without limitation, fees and disbursements of counsel
for the Company in connection with Blue Sky qualifications or
exemptions of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under
the laws of such jurisdictions as requested by the Holders), (ii)
printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of printing
prospectuses requested by the Holders), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, and (v) fees and expenses of all other
Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement.
In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of
any annual audit and the fees and expenses incurred in connection
with the listing of the Registrable Securities on any securities
exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions or, except to
the extent provided for in the Transaction Documents, any legal
fees or other costs of the Holders.
5. Indemnification
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(a) Indemnification by the Company. The Company
shall, notwithstanding any termination of this Agreement,
indemnify and hold harmless each Holder, the officers, directors,
agents, brokers (including brokers who offer and sell Registrable
Securities as principal as a result of a pledge or any failure to
perform under a margin call of Common Stock), investment advisors
and employees of each of them, each Person who controls any such
Holder (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the officers, directors,
agents and employees of each such controlling Person, to the
fullest extent permitted by applicable law, from and against any
and all losses, claims, damages, liabilities, costs (including,
without limitation, costs of preparation and reasonable
attorneys' fees) and expenses (collectively, "Losses"), as
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incurred, arising out of or relating to any untrue or alleged
untrue statement of a material fact contained in a Registration
Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus,
or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to
make the statements therein (in the case of any Prospectus or
form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except
to the extent, but only to the extent, that (1) such untrue
statements or omissions or alleged untrue statements or omissions
are based upon information regarding such Holder furnished in
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writing to the Company by such Holder expressly for use therein,
or to the extent that such information relates to such Holder or
such Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by
such Holder expressly for use in a Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or
supplement thereto or (2) in the case of an occurrence of an
event of the type specified in Section 3(d)(ii)-(vi), the use by
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such Holder of an outdated or defective Prospectus after the
Company has notified such Holder in writing that the Prospectus
is outdated or defective and prior to the receipt by such Holder
of the Advice contemplated in Section 6(e). The Company shall
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notify the Holders promptly of the institution, threat or
assertion of any Proceeding arising from or in connection with
the transactions contemplated by this Agreement of which the
Company is aware.
(b) Indemnification by Holders. Each Holder shall,
severally and not jointly, indemnify and hold harmless the
Company, its directors, officers, agents and employees, each
Person who controls the Company (within the meaning of Section 15
of the Securities Act and Section 20 of the Exchange Act), and
the directors, officers, agents or employees of such controlling
Persons, to the fullest extent permitted by applicable law, from
and against all Losses (as determined by a court of competent
jurisdiction in a final judgment not subject to appeal or review)
arising out of or based upon any untrue statement of a material
fact contained in any Registration Statement, any Prospectus, or
any form of prospectus, or in any amendment or supplement
thereto, or arising solely out of or based solely upon: (i) such
Holder's failure to comply with the prospectus delivery
requirements of the Securities Act or (ii) any omission of a
material fact required to be stated therein or necessary to make
the statements therein not misleading to the extent, but only to
the extent, such untrue statement or omission is contained in any
information so furnished in writing by such Holder to the Company
specifically for inclusion in such Registration Statement or such
Prospectus or to the extent that (1) such untrue statements or
omissions are based upon information regarding such Holder
furnished in writing to the Company by such Holder expressly for
use therein, or to the extent such information relates to such
Holder or such Holder's proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in
writing by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto or (2) in the case of an
occurrence of an event of the type specified in Section 3(d)(ii)-
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(vi), the use by such Holder of an outdated or defective
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Prospectus after the Company has notified such Holder in writing
that the Prospectus is outdated or defective and prior to the
receipt by such Holder of the Advice contemplated in Section
6(e). In no event shall the liability of any selling Holder
hereunder be greater in amount than the dollar amount of the
gross proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification
obligation.
(c) Conduct of Indemnification Proceedings. If any
Proceeding shall be brought or asserted against any Person
entitled to indemnity hereunder (an "Indemnified Party"), such
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Indemnified Party shall promptly notify the Person from whom
indemnity is sought (the "Indemnifying Party") in writing, and
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the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of all fees and expenses
incurred in connection with defense thereof; provided, that the
failure of any Indemnified Party to give such notice shall not
relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that
such failure shall have prejudiced the Indemnifying Party.
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An Indemnified Party shall have the right to
employ separate counsel in any such Proceeding and to participate
in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay
such fees and expenses; or (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to
employ counsel reasonably satisfactory to such Indemnified Party
in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such
Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a
material conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party
notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the
defense thereof and the expense of one such counsel for each
Holder shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any
such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party
shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending Proceeding in respect
of which any Indemnified Party is a party, unless such settlement
includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such
Proceeding.
Subject to the terms of this Agreement, all fees
and expenses of the Indemnified Party (including reasonable fees
and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner
not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, within ten Trading Days of
written notice thereof to the Indemnifying Party (regardless of
whether it is ultimately determined that an Indemnified Party is
not entitled to indemnification hereunder; provided, that the
Indemnifying Party may require such Indemnified Party to
undertake to reimburse all such fees and expenses to the extent
it is finally judicially determined that such Indemnified Party
is not entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification
under Section 5(a) or Section 5(b) is unavailable to an
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Indemnified Party (by reason of public policy or otherwise), then
each Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as
well as any other relevant equitable considerations. The
relative fault of such Indemnifying Party and Indemnified Party
shall be determined by reference to, among other things, whether
any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified
Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action,
statement or omission. The amount paid or payable by a party as
a result of any Losses shall be deemed to include, subject to the
limitations set forth in Section 5(c), any reasonable attorneys'
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or other reasonable fees or expenses incurred by such party in
connection with any Proceeding to the extent such party would
have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to
such party in accordance with its terms.
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The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 5(d) were
determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable
considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 5(d),
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no Holder shall be required to contribute, in the aggregate, any
amount in excess of the amount of gross proceeds received by such
Holder from the sale of the Registrable Securities subject to the
Proceeding exceeds the amount of any damages that such Holder has
otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
The indemnity and contribution agreements
contained in this Section are in addition to any liability that
the Indemnifying Parties may have to the Indemnified Parties.
6. Miscellaneous
-------------
(a) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be
amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, unless
the same shall be in writing and signed by the Company and all of
the Holders of the then outstanding Registrable Securities.
Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders and that does not directly
or indirectly affect the rights of other Holders may be given by
Holders of all of the Registrable Securities to which such waiver
or consent relates; provided, however, that the provisions of
-------- -------
this sentence may not be amended, modified, or supplemented
except in accordance with the provisions of the immediately
preceding sentence.
(b) No Inconsistent Agreements. Neither the
Company nor any of its subsidiaries has entered, as of the date
hereof, nor shall the Company or any of its subsidiaries, on or
after the date of this Agreement, enter into any agreement with
respect to its securities, that would have the effect of
impairing the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Except as set
forth on Schedule 6(b), neither the Company nor any of its
--------------
subsidiaries has previously entered into any agreement granting
any registration rights with respect to any of its securities to
any Person that have not been satisfied in full.
(c) No Piggyback on Registrations. Except as set
forth on Schedule 6(c) attached hereto, neither the Company nor
-------------
any of its security holders (other than the Holders in such
capacity pursuant hereto) may include securities of the Company
in the Registration Statement other than the Registrable
Securities, and the Company shall not after the date hereof enter
into any agreement providing any such right to any of its
security holders. The Company shall not file any other
registration statements until the initial Registration Statement
required hereunder is declared effective by the Commission,
provided that this Section 6(c) shall not prohibit the Company
------------
from filing amendments to registration statements already filed.
(d) Compliance. Each Holder covenants and agrees
that it will comply with the prospectus delivery requirements of
the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.
(e) Discontinued Disposition. Each Holder agrees
by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of any
10
event of the kind described in Sections 3(d)(ii), (iii) or (vi),
--------------------------------
such Holder will forthwith discontinue disposition of such
Registrable Securities under a Registration Statement until such
Holder's receipt of the copies of the supplemented Prospectus
and/or amended Registration Statement contemplated by Section
-------
3(h), or until it is advised in writing (the "Advice") by the
---- ------
Company that the use of the applicable Prospectus may be resumed,
and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration
Statement. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph. The Company agrees and
acknowledges that any period during which the Holder is required
to discontinue the disposition of the Registrable Securities
hereunder shall be subject to the provisions of Section 2(b).
------------
(f) Piggy-Back Registrations. If at any time
during the Effectiveness Period there is not an effective
Registration Statement covering all of the Registrable Securities
and the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for
its own account or the account of others under the Securities Act
of any of its equity securities, other than on Form S-4 or Form S-
8 (each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or
other employee benefit plans, then the Company shall send to each
Holder written notice of such determination and, if within
fifteen days after receipt of such notice, any such Holder shall
so request in writing, the Company shall include in such
registration statement all or any part of such Registrable
Securities such holder requests to be registered.
(g) Notices. Any and all notices or other
communications or deliveries required or permitted to be provided
hereunder shall be delivered as set forth in the Purchase
Agreement.
(h) Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors and
permitted assigns of each of the parties and shall inure to the
benefit of each Holder. The Company may not assign its rights or
obligations hereunder without the prior written consent of all of
the Holders of the then-outstanding Registrable Securities. Each
Holder may assign their respective rights hereunder in the manner
and to the Persons as permitted under the Purchase Agreement.
(i) Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed
shall be deemed to be an original and, all of which taken
together shall constitute one and the same Agreement. In the
event that any signature is delivered by facsimile transmission,
such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed)
the same with the same force and effect as if such facsimile
signature were the original thereof.
(j) Governing Law. All questions concerning the
construction, validity, enforcement and interpretation of this
Agreement shall be determined in accordance with the provisions
of the Purchase Agreement.
(k) Cumulative Remedies. The remedies provided
herein are cumulative and not exclusive of any remedies provided
by law.
11
(l) Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions
set forth herein shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid,
illegal, void or unenforceable.
(m) Headings. The headings in this Agreement are
for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
(n)Remedies. In the event of a breach by the Company or
by a Holder, of any of their obligations under this Agreement,
each Holder or the Company, as the case may be, in addition to
being entitled to exercise all rights granted by law and under
this Agreement, including recovery of damages, will be entitled
to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not
provide adequate compensation for any losses incurred by reason
of a breach by it of any of the provisions of this Agreement and
hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive
the defense that a remedy at law would be adequate.
(o) Independent Nature of Purchasers' Obligations
and Rights. The obligations of each Purchaser hereunder are
several and not joint with the obligations of any other Purchaser
hereunder, and no Purchaser shall be responsible in any way for
the performance of the obligations of any other Purchaser
hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any
Purchaser pursuant hereto or thereto, shall be deemed to
constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert
with respect to such obligations or the transactions contemplated
by this Agreement. Each Purchaser shall be entitled to protect
and enforce its rights, including without limitation the rights
arising out of this Agreement, and it shall not be necessary for
any other Purchaser to be joined as an additional party in any
proceeding for such purpose.
********************
12
IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.
PACIFIC CMA, INC.
By:____________________________________
Name:
Title:
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
13
[PURCHASER'S SIGNATURE PAGE TO XXX RRA]
Name of Investing Entity: __________________________
Signature of Authorized Signatory of Investing Entity:_______________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
[SIGNATURE PAGES CONTINUE]
14
ANNEX A
Plan of Distribution
--------------------
Each Selling Stockholder (the "Selling Stockholders") of the
--------------------
common stock ("Common Stock") of Pacific CMA, Inc., a Delaware
------------
corporation (the "Company") and any of their pledgees, assignees
-------
and successors-in-interest may, from time to time, sell any or
all of their shares of Common Stock on the Principal Market or
any other stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be
at fixed or negotiated prices. A Selling Stockholder may use any
one or more of the following methods when selling shares:
* ordinary brokerage transactions and transactions in
which the broker-dealer solicits purchasers;
* block trades in which the broker-dealer will attempt to
sell the shares as agent but may position and resell a
portion of the block as principal to facilitate the
transaction;
* purchases by a broker-dealer as principal and resale by
the broker-dealer for its account;
* an exchange distribution in accordance with the rules
of the applicable exchange;
* privately negotiated transactions;
* settlement of short sales entered into after the date
of this prospectus;
* broker-dealers may agree with the Selling Stockholders
to sell a specified number of such shares at a
stipulated price per share;
* a combination of any such methods of sale;
* through the writing or settlement of options or other
hedging transactions, whether through an options
exchange or otherwise; or
* any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144
under the Securities Act of 1933, as amended (the "Securities
----------
Act"), if available, rather than under this prospectus.
---
Broker-dealers engaged by the Selling Stockholders may
arrange for other brokers-dealers to participate in sales.
Broker-dealers may receive commissions or discounts from the
Selling Stockholders (or, if any broker-dealer acts as agent for
the purchaser of shares, from the purchaser) in amounts to be
negotiated. Each Selling Stockholder does not expect these
commissions and discounts relating to its sales of shares to
exceed what is customary in the types of transactions involved.
15
In connection with the sale of our common stock or interests
therein, the Selling Stockholders may enter into hedging
transactions with broker-dealers or other financial institutions,
which may in turn engage in short sales of the common stock in
the course of hedging the positions they assume. The Selling
Stockholders may also sell shares of our common stock short and
deliver these securities to close out their short positions, or
loan or pledge the common stock to broker-dealers that in turn
may sell these securities. The Selling Stockholders may also
enter into option or other transactions with broker-dealers or
other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-
dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial
institution may resell pursuant to this prospectus (as
supplemented or amended to reflect such transaction).
The Selling Stockholders and any broker-dealers or agents
that are involved in selling the shares may be deemed to be
"underwriters" within the meaning of the Securities Act in
connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
Each Selling Stockholder has informed the Company that it does
not have any agreement or understanding, directly or indirectly,
with any person to distribute the Common Stock.
The Company is required to pay certain fees and expenses
incurred by the Company incident to the registration of the
shares. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.
Because Selling Stockholders may be deemed to be
"underwriters" within the meaning of the Securities Act, they
will be subject to the prospectus delivery requirements of the
Securities Act. In addition, any securities covered by this
prospectus which qualify for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than under this
prospectus. Each Selling Stockholder has advised us that they
have not entered into any agreements, understandings or
arrangements with any underwriter or broker-dealer regarding the
sale of the resale shares. There is no underwriter or
coordinating broker acting in connection with the proposed sale
of the resale shares by the Selling Stockholders.
We agreed to keep this prospectus effective until the
earlier of (i) the date on which the shares may be resold by the
Selling Stockholders without registration and without regard to
any volume limitations by reason of Rule 144(e) under the
Securities Act or any other rule of similar effect or (ii) all of
the shares have been sold pursuant to the prospectus or Rule 144
under the Securities Act or any other rule of similar effect.
The resale shares will be sold only through registered or
licensed brokers or dealers if required under applicable state
securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from
the registration or qualification requirement is available and is
complied with.
Under applicable rules and regulations under the Exchange
Act, any person engaged in the distribution of the resale shares
may not simultaneously engage in market making activities with
respect to our common stock for a period of two business days
prior to the commencement of the distribution. In addition, the
Selling Stockholders will be subject to applicable provisions of
the Exchange Act and the rules and regulations thereunder,
including Regulation M, which may limit the timing of purchases
16
and sales of shares of our common stock by the Selling
Stockholders or any other person. We will make copies of this
prospectus available to the Selling Stockholders and have
informed them of the need to deliver a copy of this prospectus to
each purchaser at or prior to the time of the sale.
17
ANNEX B
SELLING STOCKHOLDER QUESTIONNAIRE
---------------------------------
Pacific CMA, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
I acknowledge that I am one of the selling stockholders in
the offering of shares of common stock issuable upon conversion
of shares of Series A Convertible Preferred Stock and shares of
common stock issuable upon exercise of warrants to purchase
shares of common stock, of Pacific CMA, Inc. ("XXX"). I
purchased these shares of preferred stock and warrants in
connection with PAM's private placement, under that certain
Securities Purchase Agreement, dated as of May 6, 2004, by and
among XXX and each purchaser identified on the signature pages
thereto, including me. I understand that I will be named as a
selling stockholder in the prospectus that forms a part of the
registration statement on Form S-3 that XXX will file with the
Securities and Exchange Commission to register under the
Securities Act of 1933 the shares I expect to sell. XXX will use
the information that I provide in this Questionnaire to ensure
the accuracy of the registration statement and the prospectus.
-----------------------------------------------
Please answer every question.
If the answer to any question is "none" or "not
applicable," please so state.
-----------------------------------------------
1. Name. Type or print your name exactly as it should
----
appear in the Registration Statement.
___________________________________________________
2. Contact Information. Provide the address, telephone number
-------------------
and fax number where you can be reached during business
hours.
Address: ___________________________________________________
___________________________________________________
Phone: ___________________________________________________
Fax: ___________________________________________________
3. Relationship with XXX. Describe the nature of any position,
---------------------
office or other material relationship you have had with XXX
during the past three years.
____________________________________________________________
____________________________________________________________
18
4. Organizational Structure. Please indicate or (if
--------------------------
applicable) describe how you are organized.
(a) Are you a natural person? [ ] Yes [ ] No
--------------
(if so, please xxxx the box and skip
to Question 5)
(b) Are you a reporting company under [ ] Yes [ ] No
-----------------
the 1934 Act?
(if so, please xxxx the box and skip
to Question 5)
(c) Are you a majority-owned subsidiary
-------------------------
of a reporting company under [ ] Yes [ ] No
the 1934 Act?
(if so, please xxxx the box and skip
to Question 5)
(d) Are you a registered investment [ ] Yes [ ] No
fund under the 1940 Act?
(if so, please xxxx the box and skip
to Question 5)
If you have answered "no" to all of the foregoing questions,
please describe: (i) the exact legal description of your entity
(e.g., corporation, partnership, limited liability company,
etc.); (ii) whether the legal entity so described is managed by
another entity and the exact legal description of such entity
(repeat this step until the last entity described is managed by a
person or persons, each of whom is described in any one of (a)
through (d) above), (iii) the names of each person or persons
having voting and investment control over PAM's securities that
the entity owns (e.g., director(s), general partner(s), managing
member(s), etc.).
Legal Description of Entity:_____________________________________
Name of Entity(ies) Managing Such Entity (if any):_______________
_________________________________________________________________
_________________________________________________________________
Name of Entity(ies) Managing such Entity(ies) (if any):__________
_________________________________________________________________
_________________________________________________________________
Name(s) of Natural Persons Having Voting or Investment
Control Over the Shares Held by such Entity(ies):________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
19
5. Ownership of XXX Securities. This question covers your
---------------------------
beneficial ownership of XXX securities. Please consult the
Appendix A to this Questionnaire for information as to the
meaning of "beneficial ownership." State the number of
shares of XXX common stock that you beneficially owned as of
________ ___, 2004:
No. of Shares of Stock ________________________________
6. Plan of Distribution. I have reviewed the proposed "Plan of
--------------------
Distribution" attached to Registration Rights Agreement,
dated May __, 2004 by and among the Company and the
purchasers signatory thereto, and agree that the statements
contained therein reflect my intended method(s) of
distribution or, to the extent these statements are
inaccurate or incomplete, I have communicated in writing to
one of the parties listed above my signature on page 6 any
changes to the proposed "Plan of Distribution" that are
required to make these statements accurate and complete.
[ ] (Please check the box if you have made any changes to
Appendix B)
7. Reliance on Responses. I acknowledge and agree that XXX and
---------------------
its counsel, Gusrae, Xxxxxx & Bruno, PLLC, shall be entitled
to rely on my responses in this Questionnaire in all matters
pertaining to the registration statement and the sale of any
shares of common stock of XXX pursuant to the registration
statement.
Please acknowledge that your answers to the foregoing questions are
true and correct to the best of your information and belief by
signing and dating this Questionnaire where indicated below.
Please return the completed questionnaire via fax to
______________________________ no later than May __, 2004.
If at any time you discover that your answer to any question was
inaccurate, or if any event occurring after your completion hereof
would require a change in your answer to any questions, please
immediately contact ___________________.
Date:_______________ ______________________________________
(Print name of selling stockholder)
By:___________________________________
(Signature)
Name:_________________________________
(Print name)
Title:________________________________
20
APPENDIX A
1. Definition of "Beneficial Ownership"
(a) A "Beneficial Owner" of a security includes any person
who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise has
or shares:
(1) Voting power which includes the power to vote, or to
direct the voting of, such security; and/or
(2) Investment power which includes the power to
dispose, or direct the disposition of, such
security.
Please note that either voting power or investment power,
or both, is sufficient for you to be considered the
beneficial owner of shares.
(b) Any person who, directly or indirectly, creates or uses a
trust, proxy, power of attorney, pooling arrangement or
any other contract, arrangement or device with the
purpose or effect of divesting such person of beneficial
ownership of a security or preventing the vesting of such
beneficial ownership as part of a plan or scheme to evade
the reporting requirements of the federal securities acts
shall be deemed to be the beneficial owner of such
security.
(c) Notwithstanding the provisions of paragraph (a), a person
is deemed to be the "beneficial owner" of a security, if
that person has the right to acquire beneficial ownership
of such security within 60 days, including but not
limited to any right to acquire: (A) through the
exercise of any option, warrant or right; (B) through the
conversion of a security; (C) pursuant to the power to
revoke a trust, discretionary account or similar
arrangement; or (D) pursuant to the automatic termination
of a trust, discretionary account or similar arrangement;
provided, however, any person who acquires a security or
power specified in paragraphs (A), (B) or (C) above, with
the purpose or effect of changing or influencing the
control of the issuer, or in connection with or as a
participant in any transaction having such purpose or
effect, immediately upon such acquisition shall be deemed
to be the beneficial owner of the securities which may be
acquired through the exercise or conversion of such
security or power.
21
SCHEDULE 6(b) TO REGISTRATION RIGHTS AGREEMENT
----------------------------------------------
1. Midsummer Investments Ltd. and Crestview Investments
Ltd. have registration rights in connection with their purchase
of the Company's Series A Preferred Stock and Warrants pursuant
to a Securities Purchase Agreement dated as of April 8, 2004 by
and between such persons and the Company (the "Prior Financing").
2. Pacific Summit Securities has piggyback registration
rights with respect to warrants to purchase 145,833 shares of
Common Stock received in connection with the Prior Financing.
3. The Oberon Group LLC has piggyback registration rights
with respect to warrants to purchase 70,000 shares of Common
Stock to be issued in connection with the Offering.
22
SCHEDULE 6(c) TO
REGISTRATION RIGHT AGREEMENT
----------------------------
1. The persons set forth in Schedule 6(b) may include the
shares of Common Stock issuable upon exercise of the
warrants and conversion of the Preferred Stock.
23
