Exhibit 10.1
DRINKS AMERICAS HOLDINGS, LTD.
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of
___________ __, 2005, is made by and between Drinks Americas Holdings, Ltd., a
Delaware corporation (the "Company"), and the individuals and entities set forth
on the signature page hereto (each an "Investor" or "Holder" and collectively,
the "Investors" or the "Holders").
WHEREAS, in connection with that certain Securities Purchase Agreements
by and among the Company and the Investors, dated March __, 2005 (the
"Securities Purchase Agreement"), the Company sold to the Investors certain 10%
senior convertible promissory notes (each a "Note" and collectively the "Notes")
and warrants (the "Warrants") to purchase shares of the Company's common stock,
$.001 par value per share (the "Common Stock"); and
WHEREAS, the Company has agreed to execute this Agreement as one of its
obligations under the Securities Purchase Agreement.
NOW, THEREFORE, the Company and the Investors hereby covenant and agree
as follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the common stock, par value $.001 per share,
of the Company.
"Eligible Securities" shall mean all Registrable Securities other than
Excluded Securities.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
"Excluded Securities" shall mean Registrable Securities that are free
of restriction on resale under the Securities Act (by removal of all restrictive
legends, instructions to transfer agent or otherwise) pursuant to Rule 144(k).
"Register," "registered" and "registration" each shall refer to a
registration effected by preparing and filing a Registration Statement or
statements or similar documents in compliance with the Securities Act and the
declaration or ordering of effectiveness of such Registration Statement or
document by the Commission.
"Registrable Securities" shall mean (i) the Common Stock issuable upon
conversion of the Note (or that may be issuable upon the conversion of any other
equity security issuable upon conversion of the Note), (ii) the Common stock
issuable upon exercise of the Warrants, and (iii) any other shares of Common
Stock issued as a dividend or other distribution with respect to or in exchange
for or in replacement of such Notes, Warrants or Common Stock, provided,
however, that shares of Common Stock which are Registrable Securities shall
cease to be Registrable Securities (x) upon any sale pursuant to a Registration
Statement or Rule 144 under the Securities Act or (y) at such time, as they
become eligible for sale pursuant to Rule 144(k) under the Securities Act or
another similar exemption under the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder, all as the same shall be
in effect at the applicable time.
Capitalized terms used but not defined herein shall have the meanings
set forth in the Securities Purchase Agreement or the Notes.
2. Mandatory Registration. The Company shall use best efforts to prepare
and, no later than 180 days after the date of the Closing (as defined in the
Securities Purchase Agreement), file with the Commission a Registration
Statement on Form S-3 covering the resale of all of the Registrable Securities.
In the event that Form S-3 is unavailable for such a registration, the Company
shall use such other form as is available for such a registration. The
Registration Statement prepared pursuant hereto shall register for resale at
least that number of shares of Common Stock equal to the number of Registrable
Securities. The Company shall use its best efforts to have the Registration
Statement declared effective by the Commission by the 270th day following the
date of the Closing.
3. Piggyback Registration.
(a) Except as provided in Section 2, if the Company, at any
time during the two (2) year period commencing after the date hereof, proposes
to register any of its securities under the Securities Act for sale to the
public, whether for its own account or for the account of other security holders
or both (except with respect to registration statements on Forms X-0, X-0 and
any successor forms thereto as well as registrations that do not permit resales)
(a "Piggyback Registration"), each such time it will give written notice to such
effect to all holders of outstanding Registrable Securities at least thirty (30)
days prior to such filing. Upon the written request of any such holder received
by the Company within thirty (30) days after the giving of any such notice by
the Company to register any of its Eligible Securities, the Company will cause
the Eligible Securities as to which registration shall have been so requested to
be included in the securities to be covered by the registration statement
proposed to be filed by the Company, all to the extent required to permit the
sale or other disposition by the holder of such Eligible Securities so
registered.
(b) If the registration for which the Company gives notice
pursuant to Section 3(a) is a registered public offering involving an
underwriting, the Company shall so advise the holders as a part of the written
notice given pursuant to Section 3(a). In such event, (i) the right of any
holder to include its Registrable Shares in such registration pursuant to this
Section 3 shall be conditioned upon such holder's participation in such
underwriting on the terms set forth herein and (ii) all holders including
Registrable Shares in such registration shall enter into an underwriting
agreement with the underwriter or underwriters selected for the underwriting by
the Company. If any holder who has requested inclusion of its Registrable Shares
in such registration as provided above disapproves of the terms of the
underwriting, such holder may elect, by written notice to the Company, to
withdraw its shares from such registration statement and underwriting. If the
managing underwriter advises the Company in writing that in its good faith
determination marketing factors require a limitation on the number of shares to
be underwritten, the shares to be included in the underwriting shall be
allocated, first to the Company, and second, to each of the holders of piggyback
or similar registration rights who request registration including the holders of
the Registrable Securities, in proportion, as nearly as practicable, to the
respective number of shares of Common Stock (on an as-converted basis) held by
them on the date the Company gives notice to such holders of its intent to file
a registration statement. If any such holder entitled to be included in such
registration statement would thus be entitled to include more shares than such
holder requested to be registered, the excess shall be allocated among all other
requesting holders referred to in the above sentence pro rata in the manner
described in the preceding sentence.
4. Registration Procedures. If and whenever the Company effects the
registration of any Registrable Securities under the Securities Act, the Company
will, as expeditiously as possible:
(a) use its best efforts to prepare and file with the
Commission such amendments and supplements to such Registration Statement and
the prospectus used in connection therewith as may be necessary to keep such
Registration Statement continuously effective and comply with the provisions of
the Securities Act with respect to the disposition of all Registrable Securities
covered by such Registration Statement in accordance with the intended method of
disposition set forth in such Registration Statement for such period;
(b) furnish to each seller of Registrable Securities and to
each underwriter such number of copies of the Registration Statement and the
prospectus included therein (including each preliminary prospectus) as such
persons reasonably may request in order to facilitate the intended disposition
of the Registrable Securities covered by such Registration Statement;
(c) use its best efforts (i) to register or qualify the
Registrable Securities covered by such Registration Statement under the
securities or "blue sky" laws of such jurisdictions as the sellers of
Registrable Securities or, in the case of an underwritten public offering, the
managing underwriter, reasonably shall request, (ii) to prepare and file in
those jurisdictions such amendments (including post-effective amendments) and
supplements, and take such other actions, as may be necessary to maintain such
registration and qualification in effect at all times for the period of
distribution contemplated thereby and (iii) to take such further action as may
be necessary or advisable to enable the disposition of the Registrable
Securities in such jurisdictions, provided, that the Company shall not for any
such purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent to
general service of process in any such jurisdiction;
(d) use its best efforts to list the Registrable Securities
covered by such Registration Statement with any securities exchange on which the
Common Stock of the Company is then listed;
(e) immediately notify each seller of Registrable Securities
and each underwriter under such Registration Statement, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event of which the Company has knowledge as a
result of which the prospectus contained in such Registration Statement, as then
in effect, includes any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing and promptly
amend or supplement such Registration Statement to correct any such untrue
statement or omission;
(f) promptly notify each seller of Registrable Securities of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that purpose
and make every reasonable effort to prevent the issuance of any stop order and,
if any stop order is issued, to obtain the lifting thereof at the earliest
possible time;
(g) if the offering is an underwritten offering, enter into a
written agreement with the managing underwriter selected in the manner herein
provided in such form and containing such provisions as are usual and customary
in the securities business for such an arrangement between such underwriter and
companies of the Company's size and investment stature, including, without
limitation, customary indemnification and contribution provisions; and
(h) take all actions reasonably necessary to facilitate the
timely preparation and delivery of certificates (not bearing any legend
restricting the sale or transfer of such securities) representing the
Registrable Securities to be sold pursuant to the Registration Statement and to
enable such certificates to be in such denominations and registered in such
names as the Investors or any underwriters may reasonably request.
5. Obligations of Holders.
Each holder of Registrable Securities shall furnish to the
Company such information regarding such holder, the number of Registrable
Securities owned and proposed to be sold by it, the intended method of
disposition of such securities and any other information as shall be required to
effect the registration of the Registrable Securities, and cooperate with the
Company in preparing the Registration Statement and in complying with the
requirements of the Securities Act.
6. Expenses. All fees and expenses incident 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 trading market on which the Common Stock is then listed for
trading, and (B) in compliance with applicable state securities or Blue Sky
laws), (ii) printing expenses, (iii) messenger, telephone and delivery expenses,
(iv) fees and disbursements of counsel and independent public accountants for
the Company and (v) fees and disbursements of one counsel to the Holders not to
exceed $10,000.
7. Indemnification and Contribution.
(a) In the event of a registration of any of the Registrable
Securities under the Securities Act pursuant to the terms of this Agreement, the
Company will indemnify and hold harmless and pay and reimburse, each seller of
such Registrable Securities thereunder, each underwriter of such Registrable
Securities thereunder and each other person, if any, who controls such seller or
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such seller,
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement
under which such Registrable Securities were registered under the Securities Act
pursuant hereto or any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or any violation or alleged violation of the Securities Act or any state
securities or blue sky laws and will reimburse each such seller, each such
underwriter and each such controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, that the Company will
not be liable in any such case if and to the extent that any such loss, claim,
damage or liability arises out of or is based upon the Company's reliance on an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by any such seller, any such
underwriter or any such controlling person in writing specifically for use in
such Registration Statement or prospectus. Notwithstanding the foregoing, the
indemnity provided in this Section 7(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or expense if such
settlement is effected without the consent of such indemnifying party, which
consent shall not be unreasonably withheld, and provided further, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability (or action in respect thereof) arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission in such Registration Statement, which untrue statement or
alleged untrue statement or omission or alleged omission is completely corrected
in an amendment or supplement to the Registration Statement and the undersigned
indemnitees thereafter fail to deliver or cause to be delivered such
Registration Statement as so amended or supplemented prior to or concurrently
with the sale of the Registrable Securities to the person asserting such loss,
claim, damage or liability (or actions in respect thereof) or expense after the
Company has furnished the undersigned with the same.
(b) In the event of a registration of any of the Registrable
Securities under the Securities Act pursuant hereto each seller of such
Registrable Securities thereunder, severally and not jointly, will indemnify and
hold harmless the Company, each person, if any, who controls the Company within
the meaning of the Securities Act, each officer of the Company who signs the
Registration Statement, each director of the Company, each underwriter and each
person who controls any underwriter within the meaning of the Securities Act,
against all losses, claims, damages or liabilities, joint or several, to which
the Company or such officer, director, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon reliance on any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement under which such
Registrable Securities were registered under the Securities Act pursuant hereto
or any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action, provided, that such seller will be liable hereunder in any
such case if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with information pertaining to such seller, as such, furnished in
writing to the Company by such seller specifically for use in such Registration
Statement or prospectus, and provided, that the liability of each seller
hereunder shall be limited to the proceeds received by such seller from the sale
of Registrable Securities covered by such Registration Statement.
(c) Promptly after receipt by an indemnified party hereunder
of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to such indemnified party other than under this Section 7 and shall only relieve
it from any liability which it may have to such indemnified party under this
Section 7 if and to the extent the indemnifying party is materially prejudiced
by such omission. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate in and, to the
extent it shall wish, to assume and undertake the defense thereof with counsel
reasonably satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 7 for any legal expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation and of liaison with counsel so selected,
provided, that if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded based upon written advise of its counsel that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the indemnifying
party, the indemnified party shall have the right to select a separate counsel
and to assume such legal defenses and otherwise to participate in the defense of
such action, with the expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the indemnifying
party as incurred.
(d) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i) any
holder of Registrable Securities exercising rights under this Agreement, or any
controlling person of any such holder, makes a claim for indemnification
pursuant to this Section 7 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 7 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any such selling holder
or any such controlling person in circumstances for which indemnification is
provided under this Section 7; then, and in each such case, the Company and such
holder will contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (after contribution from others) in such proportion
so that such holder is responsible for the portion represented by the percentage
that the public offering price of its Registrable Securities offered by the
Registration Statement bears to the public offering price of all securities
offered by such Registration Statement, and the Company is responsible for the
remaining portion; provided, that, in any such case, (A) no such holder will be
required to contribute any amount in excess of the public offering price of all
such Registrable Securities offered by it pursuant to such Registration
Statement and (B) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 12(f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.
8. Changes in Capital Stock. If, and as often as, there is any change
in the capital stock of the Company by way of a stock split, stock dividend,
combination or reclassification, or through a merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof so that the rights and
privileges granted hereby shall continue as so changed.
9. Representations and Warranties of the Company. The Company
represents and warrants to the Investor as follows:
(a) The execution, delivery and performance of this Agreement
by the Company have been duly authorized by all requisite corporate action and
will not violate any provision of law, any order of any court or other agency of
government, the Charter or By-laws of the Company or any provision of any
indenture, agreement or other instrument to which it or any or its properties or
assets is bound, conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any such indenture, agreement
or other instrument or result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever upon any of the properties or assets of
the Company or its subsidiaries.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to any applicable bankruptcy,
insolvency or other laws affecting the rights of creditors generally and to
general equitable principles and the availability of specific performance.
10. Assignment of Registration Rights. The rights to have the Company
register Registrable Securities pursuant to this Agreement may be assigned by
the Investor to transferees or assignees of such securities; provided, that the
Company is, within a reasonable time after such transfer, furnished with written
notice of the name and address of such transferee or assignee and the securities
with respect to which such registration rights are being assigned. The term
"Investor" as used in this Agreement shall include such permitted assigns.
11. Rule 144 Requirements. The Company agrees to:
(a) use its best efforts to make and keep current public information
about the Company available, as those terms are understood and defined in Rule
144;
(b) use its best efforts to file with the Commission in a timely manner
all reports and other documents required of the Company under the Securities Act
and the Exchange Act (at any time after it has become subject to such reporting
requirements); and
(c) furnish to any holder of Registrable Securities upon request (i) a
written statement by the Company as to its compliance with the reporting
requirements of Rule 144 and of the Securities Act and the Exchange Act (at any
time after it has become subject to such reporting requirements), (ii) a copy of
the most recent annual or quarterly report of the Company, and (iii) such other
reports and documents of the Company as such holder may reasonably request to
avail itself of any similar rule or regulation of the Commission allowing it to
sell any such securities without registration.
12. Termination. All of the Company's obligations to register
Registrable Shares under Sections 2 and 3 hereto shall terminate upon the date
on which no Investor holds any Registrable Securities.
13. Miscellaneous.
(a) All covenants and agreements contained in this Agreement
by or on behalf of any of the parties hereto shall bind and inure to the benefit
of the respective successors and assigns of the parties hereto (including
without limitation transferees of any Registrable Securities), whether so
expressed or not.
(b) All notices, requests, consents and other communications
hereunder shall be in writing and shall be delivered in person, mailed by
certified or registered mail, return receipt requested, or sent by telecopier,
addressed (i) if to the Company, at Drinks Americas Holdings, Ltd. 000 Xxxxxxx
Xxxx, Xxxxxx, XX 00000, attention: Xxxxx Xxxxx or (b) if to the Investor, c/o
Sloan Securities Corp., 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000; and (ii) if to any holder of Registrable Securities, to it at such
address as may have been furnished to the Company in writing by such holder; or,
in any case, at such other address or addresses as shall have been furnished in
writing to the Company (in the case of a holder of Registrable Securities) or to
the holders of Registrable Securities (in the case of the Company) in accordance
with the provisions of this paragraph.
(c) This Agreement shall be governed by and construed under
the laws of the State of New York as applied to agreements among New York
residents entered into and to be performed entirely within New York. The Company
(1) agrees that any legal suit, action or proceeding arising out of or relating
to this Agreement shall be instituted exclusively in New York State Supreme
Court, County of New York, or in the United States District Court for the
Southern District of New York, (2) waives any objection which the Company may
have now or hereafter to the venue of any such suit, action or proceeding, and
(3) irrevocably consents to the jurisdiction of the New York State Supreme
Court, County of New York, and the United States District Court for the Southern
District of New York in any such suit, action or proceeding. The Company further
agrees to accept and acknowledge service of any and all process which may be
served in any such suit, action or proceeding in the New York State Supreme
Court, County of New York, or in the United States District Court for the
Southern District of New York and agrees that service of process upon the
Company mailed by certified mail to the Company's address shall be deemed in
every respect effective service of process upon the Company, in any such suit,
action or proceeding. THE PARTIES HERETO AGREE TO WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY.
(d) 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.
(e) This Agreement may not be amended or modified without
the written consent of the Company and the holders of at least a majority of the
Registrable Securities.
(f) Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof. No waiver shall be effective
unless and until it is in writing and signed by the party granting the waiver.
(g) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement, once
executed by a party, may be delivered to the other party hereto by facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.
(h) If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
(i) This Agreement constitutes the entire contract among the
Company and the Investors relative to the subject matter hereof and supersedes
in its entirety any and all prior agreements, understandings and discussions
with respect thereto.
(j) The headings of the sections of this Agreement are for
convenience and shall not by themselves determine the interpretation of this
Agreement.
(k) The obligations of each Holder hereunder are several and
not joint with the obligations of any other Holder hereunder, and no Holder
shall be responsible in any way for the performance of the obligations of any
other Holder hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing pursuant to the Securities Purchase Agreement,
and no action taken by any Holder pursuant hereto or thereto, shall be deemed to
constitute the Holders as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Holders are in any way
acting in concert with respect to such obligations or the transactions
contemplated by this Agreement.
DRINKS AMERICAS HOLDINGS, INC.
By:________________________________
Name:
Title:
INVESTOR NAME
By:
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Name:
Title:
