Exhibit 10.4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of December 22,
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
December 22, 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 the 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
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 ten (10) 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 Warrant Shares 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 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 Warrant Shares 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 30
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 30 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.
(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 30 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 90 days following the Closing Date, or the Registration
Statement covering Additional Registrable Securities is not declared
effective by the SEC within 90 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 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 30 day period thereafter (in either case, pro
rated for any period less than 30 days), 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) 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 20 Trading Days in any consecutive 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 filed 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 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;
(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 12 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 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
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 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 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 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 of the Purchaser to such amendment, action or
omission to act.
(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 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 court 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.
[Signature Page Follows]
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: /s/ Xxxxxx Garden
--------------------------------------
Xxxxxx X. Garden, Authorized Agent
