Exhibit 10.8
Exhibit B-2
to
Exchange
Agreement
NEITHER THIS WARRANT NOR ISSUANCE OF THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF TO THE HOLDER HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
QUALIFIED OR REGISTERED UNDER STATE SECURITIES OR BLUE SKY LAWS. NEITHER THIS
WARRANT NOR SUCH SECURITIES MAY BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE SECURITIES ACT OF 1933, APPLICABLE STATE SECURITIES OR BLUE
SKY LAWS AND THE APPLICABLE RULES AND REGULATIONS THEREUNDER.
THIS WARRANT MAY NOT BE TRANSFERRED EXCEPT AS PROVIDED IN SECTION 23.
No. W-4 Right to
Purchase 5,000,000
Shares of Common
Stock of
Knightsbridge Fine
Wines, Inc.
KNIGHTSBRIDGE FINE WINES, INC.
Common Stock Purchase Warrant
(Green Shoe Warrant)
KNIGHTSBRIDGE FINE WINES, INC., a Nevada corporation, hereby certifies
that, for value received, GRYPHON MASTER FUND, L.P. or registered assigns (the
"Holder"), is entitled, subject to the terms set forth below, to purchase from
the Company at any time or from time to time before 5:00 p.m., Dallas, Texas
time, on the Expiration Date (such capitalized terms and all other capitalized
terms used herein having the respective meanings provided herein), 5,000,000
fully paid and nonassessable shares of Common Stock at a purchase price per
share equal to the Purchase Price. The number of such shares of Common Stock is
subject to adjustment as provided in this Warrant.
1. Definitions.
(a) As used in this Warrant, the term "Holder" shall have the meaning
assigned to such term in the first paragraph of this Warrant.
(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 Warrant.
(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):
"Affiliate" means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the subject Person. For
purposes of this definition, "control" (including, with correlative
meaning, the terms "controlled by" and "under common control with"), as
used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
"Aggregate Purchase Price" means at any time an amount equal to the
product obtained by multiplying (x) the Purchase Price times (y) the number
of shares of Common Stock for which this Warrant may be exercised at such
time.
"Aggregation Parties" shall have the meaning provided in Section 2(c).
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in the City of Dallas are authorized or
required by law or executive order to remain closed.
"Common Stock" includes the Company's Common Stock, par value $.001
per share (and any purchase rights issued with respect to the Common Stock
in the future), as authorized on the date hereof, and any other securities
into which or for which the Common Stock (and any such rights issued with
respect to the Common Stock) may be converted or exchanged pursuant to a
plan of recapitalization, reorganization, merger, sale of assets or
otherwise and any stock (other than Common Stock) and other securities of
the Company or any other Person which the Holder at any time shall be
entitled to receive, or shall have received, on the exercise of this
Warrant, in lieu of or in addition to Common Stock.
"Common Stock Equivalents" means any warrant, option, subscription or
purchase right with respect to shares of Common Stock, any security
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convertible into, exchangeable for, or otherwise entitling the holder
thereof to acquire, shares of Common Stock or any warrant, option,
subscription or purchase right with respect to any such convertible,
exchangeable or other security.
"Company" shall include Knightsbridge Fine Wines, Inc., a Nevada
corporation, and any corporation that shall succeed to or assume the
obligations of Knightsbridge Fine Wines, Inc. hereunder in accordance with
the terms hereof.
"Current Fair Market Value" means when used with respect to the Common
Stock as of a specified date with respect to each share of Common Stock,
the average of the closing prices of the Common Stock sold on all
securities exchanges (including the Nasdaq and the Nasdaq SmallCap) on
which the Common Stock may at the time be listed, or, if there have been no
sales on any such exchange on such day, the average of the highest bid and
lowest asked prices on all such exchanges at the end of such day, or, if on
such day the Common Stock is not so listed, the average of the
representative bid and asked prices quoted in the Nasdaq System as of 4:00
p.m., New York City time, or, if on such day the Common Stock is not quoted
in the Nasdaq System, the average of the highest bid and lowest asked price
on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor
organization, in each such case averaged over a period of ten Trading Days
consisting of the day as of which the Current Fair Market Value of Common
Stock is being determined (or if such day is not a Trading Day, the Trading
Day next preceding such day) and the nine consecutive Trading Days prior to
such day. If on the date for which Current Fair Market Value is to be
determined the Common Stock is not listed on any securities exchange or
quoted in the Nasdaq System or the over-the-counter market, the Current
Fair Market Value of Common Stock shall be the highest price per share
which the Company could then obtain from a willing buyer (not an employee
or director of the Company at the time of determination) in an arms'-length
transaction for shares of Common Stock sold by the Company, from authorized
but unissued shares, as determined in good faith by the Board of Directors.
"Exchange Agreement" means the Securities Exchange Agreement, dated as
of April 21, 2004, by and between the Company and Gryphon.
"Expiration Date" means the fifth (5th) anniversary of the Issuance
Date.
"Gryphon" means Gryphon Master Fund, L.P., a Bermuda limited
partnership.
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"Holder Share Notice" shall have the meaning provided in Section 3(a).
"Issuance Date" means the date of original issuance of this Warrant or
its predecessor instrument.
"Nasdaq" means the Nasdaq National Market.
"Nasdaq SmallCap" means the Nasdaq SmallCap Market.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"1933 Act" means the Securities Act of 1933, as amended.
"Note" means the 7.5% Senior Secured Convertible Note due 2006 issued
by the Company pursuant to the Exchange Agreement.
"Other Securities" means any stock (other than Common Stock) and other
securities of the Company or any other Person which the Holder at any time
shall be entitled to receive, or shall have received, on the exercise of
this Warrant, in lieu of or in addition to Common Stock, or which at any
time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities pursuant to Section 5.
"Person" means an individual, corporation, partnership, limited
liability company, trust, business trust, association, joint stock company,
joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, governmental authority or any other form of entity not
specifically listed herein.
"Purchase Price" means $0.01.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of April 21, 2004, by and between the Company and
Gryphon.
"Registration Statement" shall have the meaning provided in the
Registration Rights Agreement.
"Restricted Ownership Percentage" shall have the meaning provided in
Section 2(c).
"Restricted Securities" means securities that are not eligible for
resale pursuant to Rule 144(k) under the 1933 Act (or any successor
provision).
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"Reorganization Event" means the occurrence of any one or more of the
following events:
(i) any consolidation, merger or similar transaction of the
Company or any Subsidiary with or into another entity (other than a
merger or consolidation or similar transaction of a Subsidiary into
the Company or a wholly-owned Subsidiary); or the sale or transfer of
all or substantially all of the assets of the Company and the
Subsidiaries in a single transaction or a series of related
transactions; or
(ii) the occurrence of any transaction or event in connection
with which all or substantially all the Common Stock shall be
exchanged for, converted into, acquired for or constitute the right to
receive securities of any other Person (whether by means of a Tender
Offer, liquidation, consolidation, merger, share exchange,
combination, reclassification, recapitalization, or otherwise); or
(iii) the acquisition by a Person or group of Persons acting in
concert as a partnership, limited partnership, syndicate or group, as
a result of a tender or exchange offer, open market purchases,
privately negotiated purchases or otherwise, of beneficial ownership
of securities of the Company representing 50% or more of the combined
voting power of the outstanding voting securities of the Company
ordinarily (and apart from rights accruing in special circumstances)
having the right to vote in the election of directors.
"Rule 144A" means Rule 144A as promulgated under the 1933 Act.
"SEC" means the Securities and Exchange Commission.
"Subsidiary" means any corporation or other entity of which 20% or
more of the capital stock or other ownership interests having ordinary
voting power to vote for the election of the board of directors or other
persons performing similar functions are at the time directly or indirectly
owned by the Company.
"Tender Offer" means a tender offer, exchange offer or other offer by
the Company to repurchase outstanding shares of its capital stock.
"Trading Day" means a day on whichever of the OTC Bulletin Board, any
national securities exchange, the Nasdaq or the Nasdaq SmallCap, which then
constitutes the principal securities market for the Common Stock, is open
for general trading.
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2. Exercise of Warrant.
(a) Exercise. This Warrant may be exercised by the Holder in whole at
any time or in part from time to time on or before the Expiration Date by
(x) surrendering this Warrant to the Company, (y) giving a subscription
form in the form of Exhibit 1 to this Warrant (duly executed by the Holder)
to the Company, and (z) making payment, in cash or by certified or official
bank check payable to the order of the Company, or by wire transfer of
funds to the account of the Company, in any such case, in the amount
obtained by multiplying (a) the number of shares of Common Stock designated
by the Holder in the subscription form by (b) the Purchase Price. On any
partial exercise the Company will forthwith issue and deliver to or upon
the order of the Holder a new Warrant or Warrants of like tenor, in the
name of the Holder or as the Holder (upon payment by the Holder of any
applicable transfer taxes) may request, providing in the aggregate on the
face or faces thereof for the purchase of the number of shares of Common
Stock for which such Warrant or Warrants may still be exercised. The
subscription form may be surrendered by telephone line facsimile
transmission to such telephone number for the Company as shall have been
specified in writing to the Holder by the Company; provided, however, that
if the subscription form is given to the Company by telephone line
facsimile transmission the Holder shall send an original of such
subscription form to the Company within ten Business Days after such
subscription form is so given to the Company; provided further, however,
that any failure or delay on the part of the Holder in giving such original
of any subscription form shall not affect the validity or the date on which
such subscription form is so given by telephone line facsimile
transmission.
(b) Net Exercise. The Holder may elect to exercise this Warrant, in
whole at any time or in part from time to time, by receiving shares of
Common Stock equal to the net issuance value (as determined below) of this
Warrant, or any part hereof, upon surrender of the subscription form
annexed hereto (duly executed by the Holder) to the Company (followed by
surrender of this Warrant to the Company within three Trading Days after
surrender of such subscription form), in which event the Company shall
issue to the Holder a number of shares of Common Stock computed using the
following formula:
X = Y x (A - B)
-----------
A
where,
X = the number of shares of Common Stock to be issued to the Holder
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Y = the number of shares of Common Stock as to which this Warrant
is to be exercised
A = the Current Fair Market Value of one share of Common Stock
calculated as of the last Trading Day immediately preceding the
exercise of this Warrant
B = the Purchase Price
Notwithstanding the foregoing, the Holder may conduct a "net" exercise pursuant
to this Section 2(b) only after the first anniversary of the Issuance Date, and
then only in the event that the Registration Statement is not then effective and
available for use by the Holder at the time that the Holder wishes to conduct
such "net" exercise.
(c) 9.99% Limitation.
(1) Notwithstanding anything to the contrary contained herein, the
number of shares of Common Stock that may be acquired by the Holder upon
exercise pursuant to the terms hereof shall not exceed a number that, when added
to the total number of shares of Common Stock deemed beneficially owned by the
Holder (other than by virtue of the ownership of securities or rights to acquire
securities (including the Note, this Warrant and the Primary Warrant) that have
limitations on the Holder's right to convert, exercise or purchase similar to
the limitation set forth herein), together with all shares of Common Stock
deemed beneficially owned at such time (other than by virtue of the ownership of
securities or rights to acquire securities that have limitations on the right to
convert, exercise or purchase similar to the limitation set forth herein) by the
Holder's Affiliates (the "Aggregation Parties") that would be aggregated for
purposes of determining whether a group exists or for purposes of determining
the Holder's beneficial ownership, in either such case for purposes of Section
13(d) of the 1934 Act and Regulation 13D-G thereunder, would result in
beneficial ownership by the Holder or such group of more than 9.99% of the
outstanding shares of the Common Stock (the "Restricted Ownership Percentage").
The Holder shall have the right (x) at any time and from time to time to reduce
its Restricted Ownership Percentage immediately upon notice to the Company in
the event and only to the extent that Section 16 of the 1934 Act or the rules
promulgated thereunder (or any successor statute or rules) is changed to reduce
the beneficial ownership percentage threshold thereunder from 10%, (y) at any
time and from time to time, to increase its Restricted Ownership Percentage
immediately in the event of the happening of any Change in Control Transaction
(as defined in the Note), and (z) by written instrument delivered to the Company
to irrevocably waive its rights under the immediately preceding clause (y). If
at any time the limits in this Section 2(c) make this Warrant unexercisable in
whole or in part, the Company shall not by reason thereof be relieved of its
obligation to issue shares of Common Stock at any time or from time to time
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thereafter as shares of Common Stock may be issued in compliance with such
restrictions.
(2) For purposes of this Section 2(c), in determining the number of
outstanding shares of Common Stock at any time the Holder may rely on the number
of outstanding shares of Common Stock as reflected in (A) the Company's then
most recent Form 10-Q, Form 10-K or other public filing with the SEC, as the
case may be, (B) a public announcement by the Company that is later than any
such filing referred to in the preceding clause (A), or (C) any other notice by
the Company or its transfer agent setting forth the number shares of Common
Stock outstanding. Upon the written or oral request of the Holder, the Company
shall within one Business Day confirm orally and in writing to the Holder the
number of shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of Common Stock Equivalents, including, without
limitation, the Note, this Warrant and the Primary Warrant, by the Holder or its
Aggregation Parties, in each such case subsequent to the date as of which such
number of outstanding shares of Common Stock was reported.
3. Delivery of Stock Certificates, etc., on Exercise. (a) As soon as
practicable after the exercise of this Warrant and in any event within five
Trading Days thereafter, upon the terms and subject to the conditions of this
Warrant, the Company at its expense (including the payment by it of any
applicable issue or stamp taxes) will cause to be issued in the name of and
delivered to the Holder, or as the Holder (upon payment by the Holder of any
applicable transfer taxes) may direct, a certificate or certificates for the
number of fully paid and nonassessable shares of Common Stock (or Other
Securities) to which the Holder shall be entitled on such exercise, in such
denominations as may be requested by the Holder, which certificate or
certificates shall be free of restrictive and trading legends (except to the
extent permitted under Section 6.12 of the Exchange Agreement), plus, in lieu of
any fractional share to which the Holder would otherwise be entitled, cash equal
to such fraction multiplied by the then Current Fair Market Value of one full
share of Common Stock, together with any other stock or Other Securities or any
property (including cash, where applicable) to which the Holder is entitled upon
such exercise pursuant to Section 2 or otherwise. In lieu of delivering physical
certificates for the shares of Common Stock or (Other Securities) issuable upon
any exercise of this Warrant, provided the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer ("FAST") program, upon request of the Holder, the Company shall use
commercially reasonable efforts to cause its transfer agent electronically to
transmit such shares of Common Stock (or Other Securities) issuable upon
conversion to the Holder (or its designee), by crediting the account of the
Holder's (or such designee's) broker with DTC through its Deposit Withdrawal
Agent Commission system (provided that the same time periods herein as for stock
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certificates shall apply). The Company shall pay any taxes and other
governmental charges that may be imposed under the laws of the United States of
America or any political subdivision or taxing authority thereof or therein in
respect of the issue or delivery of shares of Common Stock (or Other Securities)
or payment of cash upon exercise of this Warrant (other than income taxes
imposed on the Holder). The Company shall not be required, however, to pay any
tax or other charge imposed in connection with any transfer involved in the
issue of any certificate for shares of Common Stock (or Other Securities)
issuable upon exercise of this Warrant or payment of cash to any Person other
than the Holder, and in case of such transfer or payment the Company shall not
be required to deliver any certificate for shares of Common Stock (or Other
Securities) upon such exercise or pay any cash until such tax or charge has been
paid or it has been established to the Company's reasonable satisfaction that no
such tax or charge is due. If the Holder notifies the Company that the Holder
has not received such shares of Common Stock (or Other Securities) (a "Holder
Share Notice") and the Company fails to deliver or cause to be delivered to the
Holder such shares of Common Stock (or Other Securities) pursuant to this
Section 3(a) (free of any restrictions on transfer or legends except to the
extent permitted under Section 6.12 of the Exchange Agreement) in accordance
herewith, within one Trading Day after the date the Holder gives such Holder
Share Notice, then, in addition to any other liability the Company may have, the
Company shall pay to the Holder, in cash, an amount, computed at the rate of 2%
per month of the Current Fair Market Value of the shares of Common Stock (or
Other Securities) not timely delivered by the Company, for the period such
failure continues (the "Exercise Delay Payments"), without duplication of any
amount payable to the Holder pursuant to clause (E) of Section 2(c)(i) of the
Registration Rights Agreement, with each change in the Current Fair Market Value
during such period being given effect. A Holder Share Notice may be given by
telephone or e-mail to the Company's Chief Financial Officer or General Counsel.
Upon exercise of this Warrant as provided herein, the Company's obligation to
issue and deliver the certificates for Common Stock shall be absolute and
unconditional, irrespective of the absence of any action by the Holder to
enforce the same, any waiver or consent with respect to any provision hereof,
the recovery of any judgment against any Person or any action to enforce the
same, any failure or delay in the enforcement of any other obligation of the
Company to the Holder, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by the Holder or any other Person
of any obligation to the Company or any violation or alleged violation of law by
the Holder or any other Person, and irrespective of any other circumstance which
might otherwise limit such obligation of the Company to the Holder in connection
with such exercise.
(b) If in any case the Company shall fail to issue and deliver or
cause to be delivered the shares of Common Stock to the Holder in connection
with a particular exercise of this Warrant within one Trading Day after the
Holder gives a Holder Share Notice to the Company, in addition to any other
liabilities the Company may have hereunder and under applicable law, (A) the
Company shall
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pay or reimburse the Holder on demand for all out-of-pocket expenses, including,
without limitation, reasonable fees and expenses of legal counsel, incurred by
the Holder as a result of such failure; (B) if as a result of such failure the
Holder shall suffer any direct damages or liabilities from such failure
(including, without limitation, margin interest and the cost of purchasing
securities to cover a sale (whether by the Holder or the Holder's securities
broker) or borrowing of shares of Common Stock by the Holder for purposes of
settling any trade involving a sale of shares of Common Stock made by the Holder
during the period beginning on the Issuance Date and ending on the date the
Company delivers or causes to be delivered to the Holder such shares of Common
Stock), then, in addition to any amounts payable pursuant to Section 3(a), the
Company shall upon demand of the Holder pay to the Holder an amount equal to the
actual, direct, demonstrable out-of-pocket damages and liabilities suffered by
the Holder by reason thereof which the Holder documents to the reasonable
satisfaction of the Company, and (C) the Holder may by written notice (which may
be given by mail, courier, personal service or telephone line facsimile
transmission) or oral notice (promptly confirmed in writing), given at any time
prior to delivery to the Holder of the shares of Common Stock issuable in
connection with such exercise of the Holder's right, rescind such exercise and
the subscription form relating thereto, in which case the Holder shall
thereafter be entitled to exercise that portion of this Warrant as to which such
exercise is so rescinded and to exercise its other rights and remedies with
respect to such failure by the Company. Notwithstanding the foregoing the
Company shall not be liable to the Holder under clauses (A) or (B) of the
immediately preceding sentence to the extent the failure of the Company to
deliver or to cause to be delivered such shares of Common Stock results from
fire, flood, storm, earthquake, shipwreck, strike, war, acts of terrorism, crash
involving facilities of a common carrier, acts of God, or any similar event
outside the control of the Company (it being understood that the action or
failure to act of the Company's Transfer Agent shall not be deemed an event
outside the control of the Company except to the extent resulting from fire,
flood, storm, earthquake, shipwreck, strike, war, acts of terrorism, crash
involving facilities of a common carrier, acts of God, or any similar event
outside the control of such Transfer Agent or the bankruptcy, liquidation or
reorganization of such Transfer Agent under any bankruptcy, insolvency or other
similar law). The Holder shall notify the Company in writing (or by telephone
conversation, confirmed in writing) as promptly as practicable following the
third Trading Day after the Holder exercises this Warrant if the Holder becomes
aware that such shares of Common Stock so issuable have not been received as
provided herein, but any failure so to give such notice shall not affect the
Holder's rights under this Warrant or otherwise.
4. Adjustment for Dividends in Other Stock, Property, etc.;
Reclassification, etc. In case at any time or from time to time on or after the
Issuance Date, all holders of Common Stock (or Other Securities) shall have
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received, or (on or after the record date fixed for the determination of
stockholders eligible to receive) shall have become entitled to receive, without
payment therefor,
(a) other or additional stock, rights, warrants or other
securities or property (other than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out of
earnings or earned surplus of the Company), or
(c) other or additional stock, rights, warrants or other
securities or property (including cash) by way of spin-off, split-up,
reclassification, recapitalization, combination of shares or similar
corporate rearrangement,
other than additional shares of Common Stock (or Other Securities) issued as a
stock dividend or in a stock-split (adjustments in respect of which are provided
for in Section 6), then and in each such case the Holder, on the exercise hereof
as provided in Section 2, shall be entitled to receive the amount of stock,
rights, warrants and Other Securities and property (including cash in the cases
referred to in subdivisions (b) and (c) of this Section 4) which the Holder
would hold on the date of such exercise if on the date of such action specified
in the preceding clauses (a) through (c) (or the record date therefor) the
Holder had been the holder of record of the number of shares of Common Stock
called for on the face of this Warrant and had thereafter, during the period
from the date thereof to and including the date of such exercise, retained such
shares and all such other or additional stock, rights, warrants and Other
Securities and property (including cash in the case referred to in subdivisions
(b) and (c) of this Section 4) receivable by the Holder as aforesaid during such
period, giving effect to all adjustments called for during such period by
Section 5.
5. Exercise upon a Reorganization Event. In case of any Reorganization
Event the Company shall, as a condition precedent to the consummation of the
transactions constituting, or announced as, such Reorganization Event, cause
effective provisions to be made so that the Holder shall have the right
thereafter, by exercising this Warrant (in lieu of the shares of Common Stock of
the Company and Other Securities or property purchasable and receivable upon
exercise of the rights represented hereby immediately prior to such
Reorganization Event) to purchase the kind and amount of shares of stock and
Other Securities and property (including cash) receivable upon such
Reorganization Event by a holder of the number of shares of Common Stock that
might have been received upon exercise of this Warrant immediately prior to such
Reorganization Event. Any such provision shall include provisions for
adjustments in respect of such shares of stock and Other Securities and property
that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Warrant. The provisions of this Section 5 shall apply to
successive Reorganization Events.
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6. Adjustment for Certain Extraordinary Events. In the event that the
Company shall (i) pay a dividend or make a distribution, in shares of Common
Stock, on any class of capital stock of the Company or any Subsidiary which is
not directly or indirectly wholly owned by the Company, (ii) split or subdivide
its outstanding Common Stock into a greater number of shares, or (iii) combine
its outstanding Common Stock into a smaller number of shares, then in each such
case the number of shares issuable upon exercise of this Warrant shall be
adjusted so that the Holder of a Warrant thereafter surrendered for exercise
shall be entitled to receive the number of shares of Common Stock that such
Holder would have owned or have been entitled to receive after the occurrence of
any of the events described above had such Warrant been exercised immediately
prior to the occurrence of such event. An adjustment made pursuant to this
Section 6 shall become effective immediately after the close of business on the
record date in the case of a dividend or distribution and shall become effective
immediately after the close of business on the effective date in the case of
such subdivision, split or combination, as the case may be.
7. [Intentionally omitted.]
8. Effect of Reclassification, Consolidation, Merger or Sale. (a) If any of
the following events occur, namely (i) any reclassification or change of the
outstanding shares of Common Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination), (ii) any consolidation, merger, statutory
exchange or combination of the Company with another corporation as a result of
which holders of Common Stock shall be entitled to receive stock, other
securities or other property or assets (including cash) with respect to or in
exchange for such Common Stock, or (iii) any sale or conveyance of the
properties and assets of the Company as, or substantially as, an entirety to any
other Person as a result of which holders of Common Stock shall be entitled to
receive stock, other securities or other property or assets (including cash)
with respect to or in exchange for such Common Stock, then the Company, the
successor or purchasing Person and each Person who has agreed to issue such
stock or other securities or to transfer such other property or assets shall
execute and deliver to the Holder a written agreement providing that (x) this
Warrant shall thereafter entitle the Holder to purchase the kind and amount of
shares of stock and other securities or property or assets (including cash)
receivable upon such reclassification, change, consolidation, merger, statutory
exchange, combination, sale or conveyance, by the holder of a number of shares
of Common Stock issuable upon exercise of this Warrant (assuming, for such
purposes, a sufficient number of authorized shares of Common Stock available to
exercise this Warrant) immediately prior to such reclassification, change,
consolidation, merger, statutory exchange, combination, sale or conveyance,
assuming such holder of Common Stock did not exercise such holder's rights of
election, if any, as to the kind or amount of securities, cash or other property
receivable upon such reclassification, change, consolidation, merger, statutory
exchange, combination, sale or conveyance (provided that, if the kind or amount
of securities, cash or other property receivable upon such reclassification,
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change, consolidation, merger, statutory exchange, combination, sale or
conveyance is not the same for each share of Common Stock in respect of which
such rights of election shall not have been exercised ("non-electing share"),
then for the purposes of this Section 8 the kind and amount of securities, cash
or other property receivable upon such reclassification, change, consolidation,
merger, statutory exchange, combination, sale or conveyance for each
non-electing share shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares), (y) in the case of any such
successor or purchasing Person or any such Person who has agreed to issue such
stock or other securities or to transfer such other property or assets, upon
such consolidation, merger, statutory exchange, combination, sale or conveyance,
such successor or purchasing Person or any such Person who has agreed to issue
such stock or other securities or to transfer such other property or assets
shall be jointly and severally liable with the Company for the performance of
all of the Company's obligations under this Warrant, the Exchange Agreement and
the Registration Rights Agreement, and (z) if registration or qualification is
required under the 1933 Act or applicable state law for the public resale by the
Holder of such shares of stock and Other Securities so issuable upon exercise of
this Warrant, such registration or qualification shall be completed prior to
such reclassification, change, consolidation, merger, combination or sale. Such
written agreement shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Warrant. If, in the case of any such reclassification, change, consolidation,
merger, statutory exchange, combination, sale or conveyance, the stock or other
securities or other property or assets receivable thereupon by a holder of
shares of Common Stock includes shares of stock, other securities other property
or assets of a Person other than the Company or any such successor or purchasing
Person, as the case may be, in such reclassification, change, consolidation,
merger, statutory exchange, combination, sale or conveyance, then such written
agreement shall also be executed by such other Person and shall contain such
additional provisions to protect the interests of the Holder as the Board of
Directors shall reasonably consider necessary by reason of the foregoing.
(b) The above provisions of this Section 8 shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
(c) If this Section 8 applies to any event or occurrence, Section 5
shall not apply to such event or occurrence.
9. [Intentionally omitted.]
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10. Minimum Adjustment. (a) No adjustment in the number of shares of Common
Stock which may be purchased upon exercise of this Warrant shall be required
unless such adjustment would require an increase or decrease of at least 1% in
such number of shares of Common Stock; provided, however, that any adjustments
which by reason of this Section 10 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All such
calculations under this Warrant shall be made by the Company and shall be made
to the nearest one hundredth of a share.
(b) No adjustment need be made for a change in the par value of the
Common Stock or from par value to no par value or from no par value to par
value.
11. Notice of Adjustments. Whenever the number of shares purchasable upon
the exercise of this Warrant is adjusted as herein provided, the Company shall
promptly, but in no event later than five Trading Days thereafter, give a notice
to the Holder setting forth the number of shares of Common Stock which may be
purchased upon exercise of this Warrant after such adjustment and setting forth
a brief statement of the facts requiring such adjustment but which such
statement shall not include any information which would be material non-public
information for purposes of the 1934 Act. Failure to deliver such notice shall
not affect the legality or validity of any such adjustment.
12. Further Assurances. The Company will take all action that may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of stock, free from all taxes, liens and
charges with respect to the issue thereof, on the exercise of all or any portion
of this Warrant from time to time outstanding.
13. Notice to Holder Prior to Certain Actions. In case on or after the
Issuance Date:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock (other than in cash out of retained earnings); or
(b) the Company shall authorize the granting to the holders of its
Common Stock of rights or warrants to subscribe for or purchase any share of any
class or any other rights or warrants; or
(c) the Board of Directors shall authorize any reclassification of the
Common Stock (other than a subdivision or combination of its outstanding Common
Stock, or a change in par value, or from par value to no par value, or from no
par value to par value), or any consolidation or merger or other business
combination transaction to which the Company is a party and for which approval
of any
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stockholders of the Company is required, or the sale or transfer of all
or substantially all of the assets of the Company; or
(d) there shall be pending the voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
the Company shall give the Holder, as promptly as possible but in any event at
least ten Trading Days prior to the applicable date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution or rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution or rights are to be determined, or (y) the date
on which such reclassification, consolidation, merger, other business
combination transaction, sale, transfer, dissolution, liquidation or winding-up
is expected to become effective or occur, and the date as of which it is
expected that holders of Common Stock of record who shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, other business combination
transaction, sale, transfer, dissolution, liquidation or winding-up shall be
determined. Such notice shall not include any information which would be
material non-public information for purposes of the 1934 Act. Failure to give
such notice, or any defect therein, shall not affect the legality or validity of
such dividend, distribution, reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up. In the case of any such action
of which the Company gives such notice to the Holder or is required to give such
notice to the Holder, the Holder shall be entitled to give a subscription form
to exercise this Warrant in whole or in part that is contingent on the
completion of such action.
14. Reservation of Stock, etc., Issuable on Exercise of Warrants. The
Company will at all times reserve and keep available out of its authorized but
unissued shares of capital stock, solely for issuance and delivery on the
exercise of this Warrant, a sufficient number of shares of Common Stock (or
Other Securities) to effect the full exercise of this Warrant and the exercise,
conversion or exchange of all other Common Stock Equivalents from time to time
outstanding (or Other Securities), and if at any time the number of authorized
but unissued shares of Common Stock (or Other Securities) shall not be
sufficient to effect such exercise, conversion or exchange, the Company shall
take such action as may be necessary to increase its authorized but unissued
shares of Common Stock (or Other Securities) to such number as shall be
sufficient for such purposes.
15. Transfer of Warrant. This Warrant shall inure to the benefit of the
successors to and assigns of the Holder. The Holder may not assign or transfer
this Warrant to a Person who is a business competitor of the Company without the
Company's prior written consent, which the Company may withhold in its sole
discretion. This Warrant and all rights hereunder, in whole or in part, are
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registrable at the office or agency of the Company referred to below by the
Holder in Person or by his duly authorized attorney, upon surrender of this
Warrant properly endorsed accompanied by an assignment form in the form attached
to this Warrant, or other customary form, duly executed by the transferring
Holder.
16. Register of Warrants. The Company shall maintain, at the principal
office of the Company (or such other office as it may designate by notice to the
Holder), a register in which the Company shall record the name and address of
the Person in whose name this Warrant has been issued, as well as the name and
address of each successor and prior owner of such Warrant. The Company shall be
entitled to treat the Person in whose name this Warrant is so registered as the
sole and absolute owner of this Warrant for all purposes.
17. Exchange of Warrant. This Warrant is exchangeable, upon the surrender
hereof by the Holder at the office or agency of the Company referred to in
Section 15, for one or more new Warrants of like tenor representing in the
aggregate the right to subscribe for and purchase the number of shares of Common
Stock which may be subscribed for and purchased hereunder, each of such new
Warrants to represent the right to subscribe for and purchase such number of
shares as shall be designated by the Holder at the time of such surrender.
18. Replacement of Warrant. On receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Warrant and (a) in the case of loss, theft or
destruction, of indemnity from the Holder reasonably satisfactory in form to the
Company (and without the requirement to post any bond or other security), or (b)
in the case of mutilation, upon surrender and cancellation of this Warrant, the
Company will execute and deliver to the Holder a new Warrant of like tenor
without charge to the Holder.
19. Warrant Agent. The Company may, by written notice to the Holder,
appoint the transfer agent and registrar for the Common Stock as the Company's
agent for the purpose of issuing Common Stock (or Other Securities) on the
exercise of this Warrant pursuant to Section 2, and the Company may, by written
notice to the Holder, appoint an agent having an office in the United States of
America for the purpose of exchanging this Warrant pursuant to Section 17, and
replacing this Warrant pursuant to Section 18, or any of the foregoing, and
thereafter any such exchange or replacement, as the case may be, shall be made
at such office by such agent.
20. Remedies. The Company stipulates that the remedies at law of the Holder
in the event of any default or threatened default by the Company in the
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate, and that such terms may be specifically enforced by a
decree for
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the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
21. No Rights or Liabilities as a Stockholder. This Warrant shall not
entitle the Holder to any voting rights or other rights as a stockholder of the
Company. Nothing contained in this Warrant shall be construed as conferring upon
the Holder the right to vote or to consent or to receive notice as a stockholder
of the Company on any matters or with respect to any rights whatsoever as a
stockholder of the Company. No dividends or interest shall be payable or accrued
in respect of this Warrant or the interest represented hereby or the Common
Stock (or Other Securities) purchasable hereunder until, and only to the extent
that, this Warrant shall have been exercised in accordance with its terms.
22. Notices, etc. All notices and other communications from the Company to
the Holder shall be in writing and delivered personally, by confirmed facsimile,
by a nationally recognized overnight courier service or mailed by first class
certified mail, postage prepaid, at such facsimile telephone number or address
as may have been furnished to the Company in writing by the Holder or at such
facsimile telephone number or the address shown for the Holder on the register
of Warrants referred to in Section 16.
23. Transfer Restrictions. This Warrant has not been and is not being
registered under the provisions of the 1933 Act or any state securities laws and
this Warrant may not be transferred prior to the end of the holding period
applicable to sales hereof under Rule 144(k) unless (1) the transferee is an
"accredited investor" (as defined in Regulation D under the 0000 Xxx) or a QIB
in a transfer that meets the requirements of Rule 144A, and (2) the Holder shall
have delivered to the Company an opinion of counsel, reasonably satisfactory in
form, scope and substance to the Company, to the effect that this Warrant may be
sold or transferred without registration under the 1933 Act. Prior to any such
transfer, such transferee shall have represented in writing to the Company that
such transferee has requested and received from the Company all information
relating to the business, properties, operations, condition (financial or
other), results of operations or prospects of the Company deemed relevant by
such transferee; and that such transferee has been afforded the opportunity to
ask questions of the Company concerning the foregoing and has had the
opportunity to obtain and review the Registration Statement and the prospectus
related thereto, each as amended or supplemented to the date of transfer to such
transferee, and the reports and other information concerning the Company which
at the time of such transfer have been filed by the Company with the SEC
pursuant to the 1934 Act and which are incorporated by reference in such
prospectus as of the date of such transfer. If such transfer is intended to
assign the rights and obligations of the Holder the Exchange Agreement and the
Registration Rights Agreement, such transfer shall
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otherwise be made in compliance with the applicable provisions of the Exchange
Agreement and the Registration Rights Agreement.
24. Rule 144A Information Requirement. Within the period prior to the
expiration of the holding period applicable to sales hereof under Rule 144(k)
under the 1933 Act (or any successor provision), the Company covenants and
agrees that it shall, during any period in which it is not subject to Section 13
or 15(d) under the 1934 Act, make available to the Holder and the holder of any
shares of Common Stock issued upon exercise of this Warrant which continue to be
Restricted Securities in connection with any sale thereof and any prospective
purchaser of this Warrant from the Holder, the information required pursuant to
Rule 144A(d)(4) under the 1933 Act upon the request of the Holder and it will
take such further action as the Holder may reasonably request, all to the extent
required from time to time to enable the Holder to sell this Warrant without
registration under the 1933 Act within the limitation of the exemption provided
by Rule 144A, as Rule 144A may be amended from time to time. Upon the request of
the Holder, the Company will deliver to the Holder a written statement as to
whether it has complied with such requirements.
25. Legend. The provisions of Section 6.12 of the Exchange Agreement and
the related definitions of capitalized terms used therein and defined in the
Exchange Agreement are by this reference incorporated herein as if set forth in
full at this place.
26. Amendment; Waiver. This Warrant and any terms hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought.
27. Miscellaneous. This Warrant shall be construed and enforced in
accordance with and governed by the internal laws of the State of Nevada. The
Company hereby agrees that all actions or proceedings arising directly or
indirectly from or in connection with this Warrant shall be litigated only in
the United States District Court for the Northern District of Texas located in
Dallas County, Dallas, Texas. The Company consents and submits to the
jurisdiction and venue of the foregoing court and consents 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 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 Company at its address provided in or pursuant to the Exchange
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
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litigation pursuant to this Warrant. The headings, captions and footers in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.
28. Attorneys' Fees. In any litigation, arbitration or court proceeding
between the Company and Holder relating hereto, the prevailing party shall be
entitled to attorneys' fees and expenses and all costs of proceedings incurred
in enforcing this Warrant.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed on its behalf by one of its officers thereunto duly authorized.
Issuance Date: April 21, 2004 KNIGHTSBRIDGE FINE WINES, INC.
By:
--------------------------------------
Name: Xxxx Xxxxxxx
Title: President & CEO
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ASSIGNMENT
For value __________________________hereby sell(s), assign(s) and
transfer(s) unto __________________________(Please insert social security or
other Taxpayer Identification Number of assignee: ___________________________)
the attached original, executed Warrant to purchase _______________shares of
Common Stock of Knightsbridge Fine Wines, Inc., a Nevada corporation (the
"Company"), and hereby irrevocably constitutes and appoints
___________________________attorney to transfer the Warrant on the books of the
Company, with full power of substitution in the premises.
In connection with any transfer of the Warrant within the period prior
to the expiration of the holding period applicable to sales thereof under Rule
144(k) under the 1933 Act (or any successor provision) (other than any transfer
pursuant to a registration statement that has been declared effective under the
1933 Act), the undersigned confirms that such Warrant is being transferred:
[ ] To the Company or a subsidiary thereof; or
[ ] To a QIB pursuant to and in compliance with
Rule 144A; or
[ ] To an "accredited investor" (as defined in
Regulation D under the 0000 Xxx) pursuant to
and in compliance with the 1933 Act; or
[ ] Pursuant to and in compliance with Rule 144 under
the 1933 Act;
and unless the box below is checked, the undersigned confirms that, to the
knowledge of the undersigned, such Warrant is not being transferred to an
"affiliate" (as defined in Rule 144 under the 0000 Xxx) of the Company.
[ ] The transferee is an affiliate of the Company.
Capitalized terms used in this Assignment and not defined in
this Assignment shall have the respective meanings provided in the Warrant.
Dated: NAME:
--------------- ----------------------------------
----------------------------------
Signature(s)
Exhibit 1
FORM OF SUBSCRIPTION
KNIGHTSBRIDGE FINE WINES, INC.
(To be signed only on exercise of Warrant)
TO: Knightsbridge Fine Wines, Inc.
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
1. The undersigned Holder of the attached original, executed Warrant hereby
elects to exercise its purchase right under such Warrant with respect to
___________ shares (the "Exercise Shares") of Common Stock, as defined in the
Warrant, of Knightsbridge Fine Wines, Inc., a Nevada corporation (the
"Company").
2. The undersigned Holder (check one):
|_| (a) elects to pay the Aggregate Purchase Price for such shares of
Common Stock (i) in lawful money of the United States or by the
enclosed certified or official bank check payable in United States
dollars to the order of the Company in the amount of $__________, or
(ii) by wire transfer of United States funds to the account of the
Company in the amount of $___________ , which transfer has been made
before or simultaneously with the delivery of this Form of
Subscription pursuant to the instructions of the Company;
or
|_| (b) elects to receive shares of Common Stock having a value equal to
the value of the Warrant calculated in accordance with Section 2(b) of
the Warrant.
3. Please issue a stock certificate or certificates representing the
appropriate number of shares of Common Stock in the name of the undersigned or
in such other name(s) as is specified below:
1-1
Name:
---------------------------------------------
Address:
---------------------------------------------
---------------------------------------------
Social Security or Tax Identification Number (if any):
---------------------------------------------
Dated:
------------------ ------------------------------------
(Signature must conform to name of
Holder as specified on the face of the
Warrant)
------------------------------------
------------------------------------
(Address)
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