EXHIBIT 10.3
EXHIBIT C
TO
PURCHASE
AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of October 16,
2003 (this "Agreement"), by and between KNIGHTSBRIDGE FINE WINES, INC., a Nevada
corporation (the "Company"), and GRYPHON MASTER FUND, L.P., a Bermuda limited
partnership ("Gryphon").
W I T N E S S E T H:
WHEREAS, in connection with the Purchase Agreement (such
capitalized term and all other capitalized terms used herein having the
respective meanings provided herein), the Company has agreed to provide certain
registration rights under the 1933 Act and applicable state securities laws with
respect to the Registrable Securities issuable to Gryphon pursuant to the
Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Purchasers hereby agree as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the terms "Agreement",
"Company" and "Gryphon" shall have the respective meanings assigned to such
terms in the introductory paragraph of this Agreement.
(b) All the agreements or instruments herein defined shall
mean such agreements or instruments as the same may from time to time be
supplemented or amended or the terms thereof waived or modified to the extent
permitted by, and in accordance with, the terms thereof and of this Agreement.
(c) The following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Additional Registrable Securities" means any shares of Common
Stock which are included within the definition of Registrable
Securities but not included in any Registration Statement filed
pursuant to Section 2(a)(i) below.
"Allowed Delay" shall have the meaning provided in Section
2(c)(ii).
"Approved Market" shall have the meaning provided in Section
2(c)(i).
"Availability Date" shall have the meanings provided in
Section 3(l).
"Blackout Period" shall have the meaning provided in Section
2(c)(i).
"Common Stock" means the Common Stock, par value $.001 per
share, of the Company.
"Conversion Price" shall have the meaning provided in the
Note.
"Initial Registrable Securities Amount" shall have the meaning
provided in Section 2(a)(i).
"1934 Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"1933 Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"NASD" means the National Association of Securities Dealers,
Inc.
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the
Registrable Securities or Additional Registrable Securities covered by
such Registration Statement and by all other amendments and supplements
to the prospectus, including post-effective amendments and all material
incorporated by reference in such prospectus.
"Purchase Agreement" means the Purchase Agreement, dated as of
October 16, 2003, by and between the Company and Gryphon.
"Purchasers" means Gryphon and each subsequent holder of the
Note, the Warrant, Registrable Securities or Additional Registrable
Securities, or any portion thereof.
"register," "registered" and "registration" refer to a
registration made by preparing and filing a registration statement or
similar document in compliance with the 1933 Act (as defined below),
and the declaration or ordering of effectiveness of such registration
statement or document by the SEC.
"Registrable Securities" means (i) the Underlying Shares, the
Warrant Shares and the shares of Common Stock or other securities
issued or issuable to each Purchaser or its permitted transferee or
designee (a) upon conversion of the Note and upon exercise of the
Warrant, or (b) upon any distribution with respect to, any exchange for
or any replacement of the Note or the Warrant, or (c) upon any
conversion, exercise or exchange of any securities issued in connection
with any such distribution, exchange or replacement; (ii) securities
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issued or issuable upon any stock split, stock dividend,
recapitalization or similar event with respect to such shares of Common
Stock; and (iii) any other security issued as a dividend or other
distribution with respect to, in exchange for, or in replacement of,
the securities referred to in the preceding clauses.
"Registration Date" shall have the meaning provided in Section
2(c)(i).
"Registration Period" shall have the meaning provided in
Section 3(a).
"Registration Statement" shall mean any registration statement
of the Company filed under the 1933 Act that covers the resale of any
of the Registrable Securities or Additional Registrable Securities
pursuant to the provisions of this Agreement, amendments and
supplements to such Registration Statement, including post-effective
amendments, all exhibits and all material incorporated by reference in
such Registration Statement.
"SEC" means the U.S. Securities and Exchange Commission.
"Underlying Shares" means the shares of Common Stock issuable
upon conversion of, or otherwise in respect of, the Note.
"Warrant Shares" means the shares of Common Stock issuable
upon exercise of, or otherwise in respect of, the Warrant.
(d) Capitalized terms used herein but not otherwise defined
herein shall have the respective meanings assigned to such terms in the Purchase
Agreement.
2. REGISTRATION.
(A) REGISTRATION STATEMENTS.
(I) REGISTRABLE SECURITIES. Promptly following the Closing of
the purchase and sale of the Note and the Warrant contemplated by the Purchase
Agreement on the Closing Date (but, subject to Section 2(a)(iii), no later than
sixty (60) days after the Closing Date), the Company shall prepare and file with
the SEC one Registration Statement on Form S-3 (or, if Form S-3 is not then
available to the Company, on such form of registration statement as is then
available to effect a registration for resale of the Registrable Securities,
subject to the Purchaser's consent), covering the resale of the Registrable
Securities in an amount at least equal to the sum of (1) 125% of the number of
Underlying Shares that would be issuable upon conversion of the Note in full
plus (2) 100% of the number of shares of Common Stock issuable upon exercise of
the Warrant in full for cash, in each case in the preceding clauses (1) and (2),
determined without regard to any restrictions on beneficial ownership contained
in the Note, the Warrant or the Purchase Agreement (such sum the "Initial
Registrable Securities Amount"). Such Registration Statement also shall cover,
to the extent allowable under the 1933 Act and the rules promulgated thereunder
(including Rule 416), such indeterminate number of additional shares of Common
Stock resulting from stock splits, stock dividends or similar transactions with
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respect to the Registrable Securities. In the Registration Statement the
Purchaser shall be identified as a selling securityholder and not as an
underwriter. No securities other than the Registrable Securities shall be
included in the Registration Statement without the consent of the Purchaser. The
Registration Statement (and each amendment or supplement thereto) shall be
provided in accordance with Section 3(c) to the Purchaser and its counsel prior
to its filing or other submission. If at any time the number of shares of Common
Stock included in a Registration Statement required to be filed as provided in
this Section 2(a) and remaining unsold thereunder shall be insufficient to cover
the resale of Registrable Securities in an amount at least equal to the sum of
(x) 125% of the number of Underlying Shares that would be issuable upon
conversion in full of the Note, plus (y) 100% of the number of shares of Common
Stock issuable upon exercise of the Warrant outstanding at such time in full for
cash, in each case in the preceding clauses (x) and (y) determined without
regard to any restrictions on beneficial ownership contained in the Note, the
Warrant or the Purchase Agreement, then promptly, but in no event later than
sixty (60) days after such insufficiency shall occur, the Company shall file
with the SEC an additional Registration Statement on Form S-3 covering such
number of shares of Common Stock as shall be sufficient to cover such amount.
Except as set forth above, the requirements with respect to a subsequent
Registration Statement shall be the same as those applicable to the initial
Registration Statement.
(II) ADDITIONAL REGISTRABLE SECURITIES. At any time and from
time to time, promptly following the written demand of the Purchaser following
the issuance of any Additional Registrable Securities, and in any event within
sixty (60) days following such demand, the Company shall prepare and file with
the SEC either a new Registration Statement or a post-effective amendment to a
previously filed Registration Statement, to the extent permitted under the 1933
Act, on Form S-3 (or, if Form S-3 is not then available to the Company, on such
form of registration statement as is then available to effect a registration for
resale of the Additional Registrable Securities) covering the resale of the
Additional Registrable Securities in an amount equal to the number of Additional
Registrable Securities. Such Registration Statement also shall cover, to the
extent allowable under the 1933 Act and the rules promulgated thereunder
(including Rule 416), such indeterminate number of additional shares of Common
Stock resulting from stock splits, stock dividends or similar transactions with
respect to the Additional Registrable Securities. The Registration Statement
(and each amendment or supplement thereto) shall be provided in accordance with
Section 3(c) to the Purchaser and its counsel prior to its filing or other
submission.
(III) If the Company proposes to file with the SEC a
registration statement (other than on Form S-8) relating to securities other
than the Registrable Securities or Additional Registrable Securities, then on or
before the date the Company files such other registration statement with the SEC
the Company shall file the Registration Statement required by Section 2(a)(i)
with the SEC. In any such case, the Company shall not request acceleration of
effectiveness of such other registration statement unless simultaneously
therewith the Company requests acceleration of effectiveness of the Registration
Statement to the same date and time as so requested for such other registration
statement.
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(B) EXPENSES. The Company will pay all expenses associated
with each registration, including the Purchaser's reasonable expenses (including
reasonable attorneys fees) in connection with the registration but excluding
discounts, commissions, fees of underwriters, selling brokers, dealer managers
or similar securities industry professionals.
(C) EFFECTIVENESS.
(i) The Company shall use its best efforts to have each
Registration Statement declared effective as soon as practicable after it is
filed with the SEC. If (A) the Company fails to file with the SEC a Registration
Statement on or before the date by which the Company is required to file the
Registration Statement pursuant to Section 2(a)(i) above, (B) the Company fails
to file with the SEC the Registration Statement covering Additional Registrable
Securities within sixty (60) days following demand of the Purchaser relating to
the Additional Registrable Securities to be covered thereby, (C) the
Registration Statement covering Registrable Securities is not declared effective
by the SEC within one hundred and twenty (120) days following the Closing Date,
or the Registration Statement covering Additional Registrable Securities is not
declared effective by the SEC within one hundred and twenty (120) days following
demand of the Purchaser relating to the Additional Registrable Securities to be
covered thereby (each, a "Registration Date"), (D) after a Registration
Statement has been declared effective by the SEC, sales cannot be made pursuant
to such Registration Statement for any reason (including without limitation by
reason of a stop order, or the Company's failure to update the Registration
Statement) but except as excused pursuant to subparagraph (ii) below, (E) the
Common Stock generally or the Registrable Securities (or Additional Registrable
Securities after issuance) specifically are not listed or included for quotation
on the OTC Bulletin Board, the Nasdaq, the Nasdaq Small Cap, the NYSE or the
AMEX (each an "Approved Market"), or trading of the Common Stock is suspended or
halted on the Approved Market which at the time constitutes the principal market
for the Common Stock, or (F) the Company fails, refuses or is otherwise unable
timely to issue Underlying Shares upon conversion of the Note or Warrant Shares
upon exercise of the Warrant in accordance with the terms of the Note and the
Warrant, or certificates therefor as required under the Transaction Documents,
then the Company will make payments to the Purchaser as partial liquidated
damages for the minimum amount of damages to the Purchaser by reason thereof,
and not as a penalty, at the rate of (1) one percent (1%) of the purchase price
of the Note and the Warrant paid by the Purchaser pursuant to the Purchase
Agreement for the first thirty (30) day period, and (2) two percent (2%) of the
purchase price of the Note and the Warrant paid by the Purchaser pursuant to the
Purchase Agreement for the each thirty (30) day period thereafter (pro rated for
any period less than thirty (30) days), following the Registration Date during
which any of the events described in clause (A), (B), (C), (D), (E) or (F) above
occurs and is continuing (the "Blackout Period"). Each such payment shall be due
and payable within five (5) days after the end of each calendar month of the
Blackout Period until the termination of the Blackout Period and within five (5)
days after such termination. Such payments shall be in partial compensation to
the Purchaser, and shall not constitute the Purchaser's exclusive remedy for
such events. The Blackout Period shall terminate upon (v) the filing of the
applicable Registration Statement in the case of clauses (A) and (B) above; (w)
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the effectiveness of the applicable Registration Statement in the case of
clauses (C) and (D) above; (x) listing or inclusion and/or trading of the Common
Stock on an Approved Market, as the case may be, in the case of clause (E)
above; (y) delivery of such shares or certificates in the case of clause (F)
above; and (z) in the case of the events described in clauses (C) or (D) above,
the earlier termination of the Registration Period (as defined in Section 3(a)
below). The amounts payable as liquidated damages pursuant to this paragraph
shall be payable, at the option of the Purchaser, in lawful money of the United
States or in shares of Common Stock valued for this purpose at the Conversion
Price. Amounts payable as liquidated damages hereunder shall cease when the
Purchaser no longer holds the Note, the Warrant, Registrable Securities or
Additional Registrable Securities.
(ii) For not more than five (5) consecutive Trading Days or
for a total of not more than twenty (20) Trading Days in any consecutive twelve
(12) month period, the Company may delay the disclosure of material non-public
information concerning the Company, by terminating or suspending effectiveness
of any registration contemplated by this Section, the disclosure of which
information at the time is not, in the good faith opinion of the Company, in the
best interests of the Company or would be unduly detrimental to the Company's
affairs (an "Allowed Delay"); provided, that the Company shall promptly (a)
notify the Purchaser in writing of the existence of (but in no event, without
the prior written consent of the Purchaser, shall the Company disclose to the
Purchaser any of the facts or circumstances regarding) material non-public
information giving rise to an Allowed Delay, and (b) advise the Purchaser in
writing to cease all sales under the Registration Statement until the end of the
Allowed Delay.
(D) UNDERWRITTEN OFFERING. If any offering pursuant to a
Registration Statement pursuant to Section 2(a) hereof involves an underwritten
offering, the Purchaser shall have the right to select an investment banker and
manager to administer the offering, which investment banker or manager shall be
reasonably satisfactory to the Company.
3. COMPANY OBLIGATIONS. The Company will use its best efforts
to effect the registration of the Registrable Securities and Additional
Registrable Securities in accordance with the terms hereof, and pursuant thereto
the Company will, as expeditiously as possible:
(a) use its best efforts to cause such Registration Statement
to become effective and to remain continuously effective for a period (the
"Registration Period") that will terminate upon the earlier of (i) the date on
which all Registrable Securities or Additional Registrable Securities have been
sold (and the Note and the Warrant no longer remain outstanding), (ii) the date
on which all Registrable Securities or Additional Registrable Securities, as the
case may be, may be sold pursuant to Rule 144(k) (and the Note and Warrant no
longer remain outstanding), and (iii) the second anniversary of the Closing
Date;
(b) prepare and file with the SEC such amendments,
post-effective amendments and prospectus supplements to the Registration
Statement and the Prospectus as may be necessary to keep the Registration
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Statement effective for the period specified in Section 3(a) and to comply with
the provisions of the 1933 Act and the 1934 Act with respect to the distribution
of all Registrable Securities and Additional Registrable Securities; provided
that, at a time reasonably prior to the filing of a Registration Statement or
Prospectus, or any amendments or supplements thereto, the Company will furnish
to the Purchaser copies of all documents proposed to be filed, which documents
will be subject to the comments of the Purchaser provided reasonably promptly
after receipt of such documents;
(c) permit counsel designated by the Purchaser to review each
Registration Statement and Prospectus and all amendments and supplements thereto
no fewer than seven (7) Business Days (or as many Business Days as possible if
SEC rules do not allow such time for such review) prior to their filing with the
SEC and not file any document to which such counsel reasonably objects;
(d) furnish to the Purchaser and its legal counsel (i)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one copy of any Registration Statement and any
amendment thereto, each preliminary prospectus and Prospectus and each amendment
or supplement thereto, and each letter written by or on behalf of the Company to
the SEC or the staff of the SEC, and each item of correspondence from the SEC or
the staff of the SEC, in each case relating to such Registration Statement
(other than any portion of any thereof which contains information for which the
Company has sought confidential treatment), and (ii) such number of copies of a
Prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents as the Purchaser may reasonably
request in order to facilitate the disposition of the Registrable Securities and
Additional Registrable Securities owned by the Purchaser;
(e) in the event the Purchaser selects an underwriter for the
offering, the Company shall enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
underwriter of such offering;
(f) if required by the underwriter, or if the Purchaser is
described in the Registration Statement as an underwriter, the Company shall
furnish, on the effective date of the Registration Statement, on the date that
Registrable Securities or Additional Registrable Securities, as applicable, are
delivered to an underwriter, if any, for sale in connection with the
Registration Statement and at periodic intervals thereafter from time to time on
request, (i) an opinion, dated as of such date, from independent legal counsel
representing the Company for purposes of such Registration Statement, in form,
scope and substance as is customarily given in an underwritten public offering,
addressed to the underwriter and the Purchaser, and (ii) a letter, dated such
date, from the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriter
and the Purchaser;
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(g) to prevent the issuance of any stop order or other
suspension of effectiveness and, if such order is issued, obtain the withdrawal
of any such order at the earliest possible moment;
(h) furnish to the Purchaser at least five copies of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules by air mail or reputable courier within three
(3) Business Days after the effective date thereof;
(i) prior to any public offering of Registrable Securities or
Additional Registrable Securities, use its best efforts to register or qualify
or cooperate with the Purchaser and its counsel in connection with the
registration or qualification of the Registrable Securities or Additional
Registrable Securities, as applicable, for offer and sale under the securities
or blue sky laws of such jurisdictions requested by the Purchaser and do any and
all other reasonable acts or things necessary or advisable to enable the
distribution in such jurisdictions of the Registrable Securities or Additional
Registrable Securities covered by the Registration Statement;
(j) cause all Registrable Securities or Additional Registrable
Securities covered by a Registration Statement to be listed on each securities
exchange, interdealer quotation system or other market on which similar
securities issued by the Company are then listed;
(k) immediately notify the Purchaser at any time when a
Prospectus relating to the Registrable Securities or Additional Registrable
Securities is required to be delivered under the 1933 Act, upon discovery that,
or upon the happening of any event as a result of which, the Prospectus included
in such Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which made, not misleading, and at the request of any such
holder, promptly prepare and furnish to such holder a reasonable number of
copies of a supplement to or an amendment of such Prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such Registrable
Securities or Additional Registrable Securities, as applicable, such Prospectus
shall not include 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 not misleading in the light of the circumstances then existing; and
(l) otherwise to comply with all applicable rules and
regulations of the SEC under the 1933 Act and the 1934 Act, take such other
actions as may be reasonably necessary to facilitate the registration of the
Registrable Securities and Additional Registrable Securities, if applicable,
hereunder; and make available to its security holders, as soon as reasonably
practicable, but not later than the Availability Date, an earnings statement
covering a period of at least twelve months, beginning after the effective date
of each Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the 1933 Act (for the purpose of this subsection
3(l), "Availability Date" means the 45th day following the end of the fourth
fiscal quarter following the fiscal quarter that includes the effective date of
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such Registration Statement, except that, if such fourth fiscal quarter is the
last quarter of the Company's fiscal year, "Availability Date" means the 90th
day after the end of such fourth fiscal quarter).
4. DUE DILIGENCE REVIEW; INFORMATION. The Company shall make
available, during normal business hours, for inspection and review by the
Purchaser, advisors to and representatives of the Purchaser (who may or may not
be affiliated with the Purchaser and who are reasonably acceptable to the
Company), and any underwriter participating in any disposition of Common Stock
on behalf of the Purchaser pursuant to the Registration Statement or amendments
or supplements thereto or any blue sky, NASD, or other filing, all financial and
other records, all SEC Filings and other filings with the SEC, and all other
corporate documents and properties of the Company as may be reasonably necessary
for the purpose of establishing a due diligence defense under applicable
securities laws and such other reasonable purposes, and cause the Company's
officers, directors and employees, within a reasonable time period, to supply
all such information reasonably requested by the Purchaser or any such
representative, advisor or underwriter in connection with such Registration
Statement (including, without limitation, in response to all questions and other
inquiries reasonably made or submitted by any of them), prior to and from time
to time after the filing and effectiveness of the Registration Statement for the
sole purpose of enabling the Purchaser and such representatives, advisors and
underwriters and their respective accountants and attorneys to conduct initial
and ongoing due diligence with respect to the Company and the accuracy of the
Registration Statement.
The above to the contrary notwithstanding, the Company shall
not disclose material nonpublic information to the Purchaser, or to advisors to
or representatives of the Purchaser, unless prior to disclosure of such
information the Company identifies such information as being material nonpublic
information and provides the Purchaser, such advisors and representatives with
the opportunity to accept or refuse to accept such material nonpublic
information for review. The Company may, as a condition to disclosing any
material nonpublic information hereunder, require the Purchaser's advisors and
representatives to enter into a confidentiality agreement (including an
agreement with such advisors and representatives prohibiting them from trading
in Common Stock during such period of time as they are in possession of material
nonpublic information) in form reasonably satisfactory to the Company and the
Purchaser. Nothing herein shall require the Company to disclose material
nonpublic information to the Purchaser or its advisors or representatives.
5. OBLIGATIONS OF THE PURCHASER.
(a) The Purchaser shall furnish in writing to the Company such
information regarding itself, the Registrable Securities or Additional
Registrable Securities, as applicable, held by it and the intended method of
disposition of the Registrable Securities or Additional Registrable Securities,
as applicable, held by it, as shall be required by the 1933 Act to effect the
registration of such Registrable Securities or Additional Registrable
Securities, as applicable, and shall execute such documents in connection with
such registration as the Company may reasonably request. At least ten (10)
Business Days prior to the first anticipated filing date of any Registration
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Statement (or such shorter period as may be agreed to by the Purchaser), the
Company shall notify the Purchaser of the information the Company requires from
the Purchaser if the Purchaser's Registrable Securities or Additional
Registrable Securities are to be included in the Registration Statement.
(b) The Purchaser, by its acceptance of the Registrable
Securities and Additional Registrable Securities, if any, agrees to cooperate
with the Company as reasonably requested by the Company in connection with the
preparation and filing of a Registration Statement hereunder, unless the
Purchaser has notified the Company in writing of its election to exclude all of
its Registrable Securities or Additional Registrable Securities, as applicable,
from the Registration Statement.
(c) If the Purchaser determines to engage the services of an
underwriter, which underwriter is reasonably acceptable to the Company, the
Purchaser agrees to enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing underwriter of
such offering and take such other actions as are reasonably required in order to
expedite or facilitate the dispositions of the Registrable Securities or
Additional Registrable Securities, as applicable.
(d) The Purchaser agrees that, upon receipt of any notice from
the Company of the happening of any event rendering a Registration Statement no
longer effective or available for use by the Purchaser, the Purchaser will
immediately discontinue disposition of Registrable Securities or Additional
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities or Additional Registrable Securities, until the
Purchaser's receipt of the copies of the supplemented or amended Prospectus
filed with the SEC and declared effective and, if so directed by the Company,
the Purchaser shall deliver to the Company (at the expense of the Company) or
destroy all copies in the Purchaser's possession of the Prospectus covering the
Registrable Securities or Additional Registrable Securities, as applicable,
current at the time of receipt of such notice.
(e) The Purchaser may participate in any third party
underwritten registration hereunder unless it (i) agrees to sell the Registrable
Securities or Additional Registrable Securities, as applicable, on the basis
provided in any underwriting arrangements in usual and customary form entered
into by the Purchaser, (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements, and (iii) agrees to
pay its pro rata share of all underwriting discounts and commissions and any
expenses in excess of those payable by the Company pursuant to the terms of this
Agreement.
6. INDEMNIFICATION.
(A) INDEMNIFICATION BY COMPANY. The Company agrees to
indemnify and hold harmless, to the fullest extent permitted by law, the
Purchaser, each investment advisor and investment sub-advisor of the Purchaser
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and each of their respective officers, directors, partners, members and
employees and each person who controls the Purchaser (within the meaning of the
0000 Xxx) against all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable attorney's fees) and expenses imposed on such
person caused by (i) any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus or any preliminary
prospectus or any amendment or supplement thereto or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are based upon any information furnished in writing to the Company by the
Purchaser, expressly for use therein, or (ii) any violation by the Company of
any federal, state or common law, rule or regulation applicable to the Company
in connection with any Registration Statement, Prospectus or any preliminary
prospectus, or any amendment or supplement thereto, and shall reimburse in
accordance with subparagraph (c) below, each of the foregoing persons for any
legal and any other expenses reasonably incurred in connection with
investigating or defending any such claims. The foregoing is subject to the
condition that, insofar as the foregoing indemnities relate to any untrue
statement, alleged untrue statement, omission or alleged omission made in any
preliminary prospectus or Prospectus that is eliminated or remedied in any
Prospectus or amendment or supplement thereto, the above indemnity obligations
of the Company shall not inure to the benefit of any indemnified party if a copy
of such corrected Prospectus or amendment or supplement thereto had been
provided to such indemnified party and was not sent or given by such indemnified
party at or prior to the time such action was required of such indemnified party
by the 1933 Act and if delivery of such Prospectus or amendment or supplement
thereto would have eliminated (or been a sufficient defense to) any liability of
such indemnified party with respect to such statement or omission. Indemnity
under this Section 6(a) shall remain in full force and effect regardless of any
investigation made by or on behalf of any indemnified party and shall survive
the transfer of the Registrable Securities and Additional Registrable
Securities.
(B) INDEMNIFICATION BY PURCHASER. In connection with any
registration pursuant to the terms of this Agreement, the Purchaser will furnish
to the Company in writing such information as required by the 1933 Act
concerning the Purchaser or the proposed manner of distribution for use in
connection with any Registration Statement or Prospectus and agrees to indemnify
and hold harmless, to the fullest extent permitted by law, the Company, its
directors, officers, and each person who controls the Company (within the
meaning of the 0000 Xxx) against any losses, claims, damages, liabilities and
expense (including reasonable attorney's fees) resulting from any untrue
statement of a material fact or any omission of a material fact required to be
stated in the Registration Statement or Prospectus or preliminary prospectus or
amendment or supplement thereto or necessary to make the statements therein not
misleading, to the extent, but only to the extent that such untrue statement or
omission is contained in any information furnished in writing by such Purchaser
to the Company specifically for inclusion in such Registration Statement or
Prospectus or amendment or supplement thereto and that such information was
substantially relied upon by the Company in preparation of the Registration
Statement or Prospectus or any amendment or supplement thereto. In no event
shall the liability of the Purchaser be greater in amount than the dollar amount
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of the proceeds (net of the cost of the Registrable Securities and Additional
Registrable Securities sold and all expenses paid by the Purchaser and not
reimbursed by the Company and the amount of any damages the Purchaser has
otherwise been required to pay by reason of such untrue statement or omission)
received by the Purchaser upon the sale of the Registrable Securities or
Additional Registrable Securities included in the Registration Statement giving
rise to such indemnification obligation.
(C) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person
entitled to indemnification hereunder shall (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks indemnification,
(ii) permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party, and (iii) by notice to
the indemnifying party, require the indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party;
provided, however, that any person entitled to indemnification hereunder shall
have the right to employ separate counsel and to participate in the defense of
such claim, but the fees and expenses of such counsel shall be at the expense of
such person unless (a) the indemnifying party has agreed to pay such fees or
expenses, or (b) the indemnifying party shall have failed to assume the defense
of such claim and employ counsel reasonably satisfactory to such person, or (c)
in the reasonable judgment of any such person, based upon written advice of its
counsel, a conflict of interest exists between such person and the indemnifying
party with respect to such claims (in which case, if the person notifies the
indemnifying party in writing that such person elects to employ separate counsel
at the expense of the indemnifying party, the indemnifying party shall not have
the right to assume the defense of such claim on behalf of such person); and
provided, however, further, that the failure of any indemnified party to give
notice as provided herein shall not relieve the indemnifying party of its
obligations hereunder, except to the extent that such failure to give notice
shall materially adversely affect the indemnifying party in the defense of any
such claim or litigation. It is understood that the indemnifying party shall
not, in connection with any proceeding in the same jurisdiction, be liable for
fees or expenses of more than one separate firm of attorneys at any time for all
such indemnified parties. No indemnifying party will, except with the consent of
each indemnified party, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation.
(D) CONTRIBUTION. If for any reason the indemnification
provided for in the preceding paragraphs (a) and (b) is unavailable to an
indemnified party or insufficient to hold it harmless, other than as expressly
specified therein, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such loss, claim, damage
or liability in such proportion as is appropriate to reflect the relative fault
of the indemnified party and the indemnifying party, as well as any other
relevant equitable considerations. No person guilty of fraudulent
misrepresentation within the meaning of Section 11(f) of the 1933 Act shall be
entitled to contribution from any person not guilty of such fraudulent
misrepresentation. In no event shall the contribution obligation of a holder of
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Registrable Securities or Additional Registrable Securities be greater in amount
than the dollar amount of the proceeds (net of the cost of the Registrable
Securities or Additional Registrable Securities sold and all expenses paid by
such holder and not reimbursed by the Company and the amount of any damages such
holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission) received by it upon the sale
of the Registrable Securities or Additional Registrable Securities giving rise
to such contribution obligation.
7. MISCELLANEOUS.
(A) AMENDMENTS AND WAIVERS. This Agreement may be amended only
by a writing signed by the Company and the Purchaser. The Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company shall have obtained the written consent to
such amendment, action or omission to act, of the Purchasers affected by such
amendment, action or omission to act who hold, directly or indirectly, at least
80% of the Registrable Securities and Additional Registrable Securities held by
all Purchaser.
(B) NOTICES. All notices and other communications provided for
or permitted hereunder shall be made as set forth in Section 9.4 of the Purchase
Agreement.
(C) ASSIGNMENTS AND TRANSFERS BY PURCHASER. This Agreement and
the rights and obligations of the Purchaser hereunder may be assigned or
transferred in whole to any transferee or assignee of the Note, the Warrant, the
Registrable Securities or the Additional Registrable Securities or in part to
any transferee or assignee of any portion thereof, except as otherwise set forth
herein. The Purchaser may make such assignment or transfer to any transferee or
assignee of the Note, the Warrant, the Registrable Securities or the Additional
Registrable Securities; provided, that (i) such transfer is made expressly
subject to this Agreement and the transferee agrees in writing to be bound by
the terms and conditions hereof, and (ii) the Company is provided with written
notice of such assignment.
(D) ASSIGNMENTS AND TRANSFERS BY THE COMPANY. This Agreement
may not be assigned by the Company without the prior written consent of the
Purchaser but, in any case of any successor-in-interest to the Company or any
Person other than the Company who is an issuer of Registrable Securities or
Additional Registrable Securities, such successor-in-interest or other issuer,
shall assume, jointly and severally with the Company, the rights and duties of
the Company hereunder, in the event of a merger or consolidation of the Company
with or into another corporation or the sale of all or substantially all of the
Company's assets (and it shall be a condition to any such merger, consolidation
or sale that such successor-in-interest or other issuer assume in writing all
obligations hereunder jointly and severally with the Company).
(E) BENEFITS OF THE AGREEMENT. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
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hereto or their respective permitted successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
(F) COUNTERPARTS. 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.
(G) TITLES AND SUBTITLES. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(H) SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms to the fullest extent permitted by law.
(I) FURTHER ASSURANCES. The parties shall execute and deliver
all such further instruments and documents and take all such other actions as
may reasonably be required to carry out the transactions contemplated hereby and
to evidence the fulfillment of the agreements herein contained.
(J) ENTIRE AGREEMENT. This Agreement, together with the
Purchase Agreement, the Note and the Warrant and documents contemplated thereby,
is intended by the parties as a final expression of their agreement and intended
to be a complete and exclusive statement of the agreement and understanding of
the parties hereto in respect of the subject matter contained herein. This
Agreement, together with the Purchase Agreement, the Note and the Warrant and
documents contemplated thereby, supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
(K) APPLICABLE LAW; JURISDICTION. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of Nevada
without regard to principles of conflicts of law. The parties hereby agree that
all actions or proceedings arising directly or indirectly from or in connection
with this Agreement shall be litigated only in the United States District Court
for the Northern District of Texas located in Dallas County, Dallas, Texas. The
parties consent and submit to the jurisdiction and venue of the foregoing courts
and consent that any process or notice of motion or other application to said
court or a judge thereof may be served inside or outside the State of Texas or
the Northern District of Texas (but with respect to any party hereto, such
consent shall not be deemed a general consent to jurisdiction and service for
any third parties) by registered mail, return receipt requested, directed to the
party being served at its address provided in or pursuant to the Purchase
Agreement (and service so made shall be deemed complete three (3) days after the
same has been posted as aforesaid) or by personal service or in such other
manner as may be permissible under the rules of said court. The Company hereby
waives any right to a jury trial in connection with any litigation pursuant to
this Agreement.
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[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.
THE COMPANY:
KNIGHTSBRIDGE FINE WINES, INC.
By: /s/ Xxxx Xxxxxxx
----------------
Name: Xxxx Xxxxxxx
Title: President & CEO
THE PURCHASER:
GRYPHON MASTER FUND, L.P.
By: Gryphon Partners, L.P., its General Partner
By: Gryphon Management Partners, L.P.,
its General Partner
By: Gryphon Advisors, LLC,
its General Partner
By: ----------------------------------
Xxxxxx X. Garden, Authorized Agent
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