Exhibit 10.9
Exhibit C
to
Exchange
Agreement
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement, dated as of April 21, 2004
(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 Exchange 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
Exchange 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
Gryphon 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.
"Exchange Agreement" means the Securities Exchange Agreement,
dated as of April 21, 2004, by and between the Company and Gryphon.
"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.
"Purchasers" means Gryphon and each subsequent holder of the
Note, the Warrants, 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
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to the Purchaser or its permitted transferee or designee (a) upon
conversion of the Note and upon exercise of the Warrants, or (b) upon
any distribution with respect to, any exchange for or any replacement
of the Note or the Warrants, 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 any such Registration Statement, including
post-effective amendments, all exhibits and all material incorporated
by reference in any 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.
"Warrants" means the Company's (i) Common Stock Purchase
Warrant (Primary Warrant) dated April 21, 2004, issued to Gryphon and
representing the right to purchase an aggregate of 3,055,556 shares of
Common Stock, and (ii) Common Stock Purchase Warrant (Green Shoe
Warrant) dated April 21, 2004, issued to Gryphon and representing the
right to purchase an aggregate of 5,000,000 shares of Common Stock.
"Warrant Shares" means the shares of Common Stock issuable
upon exercise of, or otherwise in respect of, the Warrants.
(d) Capitalized terms used herein but not otherwise defined
herein shall have the respective meanings assigned to such terms in the Exchange
Agreement.
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2. Registration.
(a) Registration Statements.
(i) Registrable Securities. Promptly following the Closing of
the exchange contemplated by the Exchange Agreement on the Closing Date (but in
any event, subject to Section 2(a)(iii), no later than April 30, 2004), 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 Form SB-2, or, if
Form SB-2 is not then available to the Company, on such other 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 Warrants 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 Warrants or the Exchange
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 such Registration Statement Gryphon shall be identified as a
selling securityholder and not as an underwriter. No securities other than (A)
the Registrable Securities, and (B) the other securities that are specifically
described in the Company's registration statement on Form SB-2 that was filed
with the SEC on or about December 30, 2003 (as initially filed), but was
subsequently withdrawn, shall be included in such Registration Statement without
the consent of Gryphon. 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 Warrants
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 Warrants or the Exchange 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
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.
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(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) In any case where 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
by June 15, 2004, or the Registration Statement
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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 Warrants in accordance with
the terms of the Note and the Warrants, 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) $55,000
for the first 30 day period, and (2) $110,000 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 sole 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 Warrants, 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
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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 Warrants 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 Warrants 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
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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;
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(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).
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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
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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.
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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
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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
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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 Exchange
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 Warrants,
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 Warrants, 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.
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(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
Exchange Agreement, the Note and the Warrants 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 Exchange Agreement, the Note and the
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Warrants 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 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 litigation pursuant to
this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.
THE COMPANY:
KNIGHTSBRIDGE FINE WINES, INC.
By:
------------------------------------------
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, L.L.C.,
its General Partner
By:
-------------------------------
X.X. Xxxx, XX, Authorized Agent
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