REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is entered into
as of ____________, 2002 by and between The Chalone Wine Group, Ltd., a
California corporation (the "COMPANY"), and SFI Intermediate Limited, a
____________ ("SFI") and Les Domaines Baron de Rothschild (Lafite), a French
company ("DBR"). DBR and SFI are individually referred to herein as a
"PURCHASER" and collectively as the "PURCHASERS."
RECITALS
In order to induce the Purchasers to enter into the Convertible Note
Purchase Agreement of even date herewith between the Company and the Purchasers,
the Company has agreed to provide the registration rights provided for in this
Agreement. The execution of this Agreement is a condition to the closing of the
transactions contemplated by the Convertible Purchase Agreement.
NOW, THEREFORE, the parties agree as follows:
Section 1: CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the following respective meanings:
1.1 "APPLICABLE REGISTRATION STATEMENT" shall have the meaning
assigned thereto in SECTION 5.2 hereof.
1.2 "COMMISSION" shall mean the Securities and Exchange
Commission, or any other federal agency at the time administering the Exchange
Act or the Securities Act, whichever is the relevant statute for the particular
purpose.
1.3 "COMMON STOCK" shall mean the common stock of the Company,
no par value, or any other capital stock of the Company into which such stock is
reclassified or reconstituted.
1.4 "CONVERTIBLE NOTES" shall mean the subordinated convertible
notes of the Company to be issued and sold to the Purchasers pursuant to the
Purchase Agreement and any convertible notes issued in exchange therefor or in
lieu thereof.
1.5 "DEMAND MANAGING UNDERWRITER" shall have the meaning
assigned thereto in SECTION 5.4 hereof.
1.6 "DEMAND REGISTRABLE SECURITIES" shall have the meaning
assigned thereto in SECTION 2 hereof.
1.7 "DEMAND REGISTRATION STATEMENT" shall have the meaning
assigned thereto in SECTION 2 hereof.
1.8 "DEMAND REQUEST" shall have the meaning assigned thereto in
SECTION 2 hereof.
1.9 "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, or any successor thereto, as the same shall be amended from time to time.
1.
1.10 "PERSON" shall mean a corporation, association, partnership,
limited liability company, organization, business, individual, government or
political subdivision thereof or governmental agency.
1.11 "PIGGYBACK MARKET CUT-BACK" shall have the meaning assigned
thereto in SECTION 4.3 hereof.
1.12 "PIGGYBACK REGISTRABLE SECURITIES" shall have the meaning
assigned thereto in SECTION 4.1 hereof.
1.13 "PIGGYBACK REGISTRATION STATEMENT" shall have the meaning
assigned thereto in SECTION 4.1 hereof.
1.14 "PIGGYBACK REQUEST" shall have the meaning assigned thereto
in SECTION 4.1 hereof.
1.15 "PIGGYBACK UNDERWRITING AGREEMENT" shall have the meaning
assigned thereto in SECTION 4.2 hereof.
1.16 "PURCHASE AGREEMENT" means the Convertible Note Purchase
Agreement of even date herewith between the Company and the Purchasers.
1.17 "REGISTRABLE SECURITIES" means the Shares and any
securities issued in respect of the foregoing as a result of any stock split,
stock dividend, recapitalization or similar transaction.
1.18 "REGISTRATION EXPENSES" shall have the meaning assigned
thereto in SECTION 6 hereof.
1.19 "S-3 REGISTRATION STATEMENT" shall have the meaning
assigned thereto in SECTION 3 hereof.
1.20 "S-3 INITIATING HOLDERS" shall have the meaning assigned
thereto in SECTION 3 hereof.
1.21 "SECURITIES ACT" shall mean the Securities Act of 1933,
or any successor thereto, as the same shall be amended from time to time.
1.22 "SHARES" means the shares of Common Stock issued or issuable
upon conversion of the Convertible Notes.
1.23 "SUSPENSION CONDITION" shall have the meaning assigned
thereto in SECTION 5.5 hereof.
Section 2: DEMAND REGISTRATION. If at any time prior to the fifth
anniversary of the date of this Agreement the Company shall receive from a
Purchaser a written request (a "DEMAND REQUEST") that the Company register on
Form S-1, Form S-2 or any successor form of registration under the Securities
Act, or, if available, on Form S-3 or any successor form of registration under
the Securities Act (or if such form is not available, any registration statement
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form then available to the Company) Registrable Securities, then the Company
shall (a) promptly given written notice to the other Purchaser of the Demand
request and (b) prepare and file with the Commission as soon as practicable, but
in no event later than forty-five (45) days after receipt of such Demand
Request, a registration statement (a "DEMAND REGISTRATION STATEMENT") to effect
such registration. The Company shall use its best efforts to cause the
Registrable Securities specified in such Demand Request, together with all of
such portion of the Registrable Securities of the other Purchaser joining in
such request as are specified in a written request within 10 days after receipt
of such written notice from the Company, (collectively, the "DEMAND REGISTRABLE
SECURITIES") to become or be declared effective as soon as practicable. The
Company shall provide copies of all correspondence to, and from, the Commission
within twenty-four (24) hours after receipt, or delivery, as the case may be, of
any such correspondence. Each such Demand Request shall: (a) include an initial
request to register Registrable Securities having an aggregate offering value of
not less than the lesser of all of the Registrable Securities then owned by the
Purchaser or $5 million (or Registrable Securities having an aggregate offering
value of not less than $5 million when combined with a concurrent Demand Request
from the other Purchaser); (b) specify the number of Demand Registrable
Securities intended to be offered and sold by the Purchaser pursuant thereto;
(c) express the present intention of the Purchaser to offer or cause the
offering of such Demand Registrable Securities pursuant to such Demand
Registration Statement, (d) describe the nature or method of distribution of
such Demand Registrable Securities pursuant to such Demand Registration
Statement (including, in particular, whether the Purchaser plans to effect such
distribution by means of an underwritten offering); (e) identify the proposed
Demand Managing Underwriter, if any; and (f) contain the undertaking of the
Purchaser to provide all such information and materials and take all such
actions as may be required in order to permit the Company to comply with all
applicable requirements of the Securities Act, the Exchange Act and the rules
and Regulations of the Commission thereunder, and to obtain any desired
acceleration of the effective date of such Demand Registration Statement.
Section 3: FORM S-3 REGISTRATION. If the Company is eligible to use
Form S-3 under the Securities Act (or any similar successor form) and shall
receive from a Purchaser and its permitted transferees (the "S-3 INITIATING
HOLDERS") a written request or requests that the Company effect a registration
on such Form S-3 pursuant to Rule 415 of the Securities Act and any related
qualification or compliance with respect to all or part of the Registrable
Securities owned by the S-3 Initiating Holders and its permitted transferees
(provided that the S-3 Initiating Holders registering Registrable Securities in
such registration together with all other holders of Registrable Securities to
be included in such registration propose to sell their Registrable Securities at
an aggregate price to the public (net of any underwriters' discounts or
commissions) of no less than $1,000,000), the Company shall then (a) promptly
given written notice to the other Purchaser of the proposed registration and (b)
prepare and file with the Commission as soon as practicable, but in no event
later than forty-five (45) days after receipt of such request, a registration
statement (a "S-3 REGISTRATION STATEMENT") to effect such registration. No
registration requested by any S-3 Initiating Holders pursuant to this SECTION 3
shall be deemed a registration pursuant to SECTION 2. Notwithstanding the
foregoing, the Company shall not be obligated to effect a registration on From
S-3 pursuant to this SECTION 3 within 180 days after the effective date of a
registration statement subject to SECTION 4 or if the Company has, within the 12
month period preceding a request already effected two registrations on Form S-3
pursuant to this SECTION 3
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Section 4: PIGGYBACK REGISTRATION.
4.1 If at any time from and after the date hereof, the Company
shall determine to register any of its securities, whether for sale for its own
account or for the account of any other Person, other than registration
statements relating to (i) employee, consultant or distributor compensation or
incentive arrangements, including employee benefit plans, or (ii) acquisitions
or any transaction or transactions under Rule 145 under the Securities Act or
any successor rule with similar effect, then the Company will promptly give the
Purchasers written notice thereof and include in such registration statement (a
"PIGGYBACK REGISTRATION STATEMENT") and in any underwriting involved therein,
all Registrable Securities (the "PIGGYBACK REGISTRABLE SECURITIES") specified in
a written request made by each Purchaser (a "PIGGYBACK REQUEST") within 10 (ten)
business days (or such later time as the underwriters may allow in writing)
after receipt of such written notice from the Company.
4.2 If the Piggyback Registration Statement of which the Company
gives notice is for an underwritten offering or the Company proposes to do an
underwritten take down from an unallocated or universal shelf registration, the
Company shall so advise the Purchasers as a part of the written notice given
pursuant to SECTION 4.1. In such event, the right of a Purchaser to registration
pursuant to this SECTION 4 (or to participate in an underwritten take down in
the case of an unallocated or universal shelf registration) shall be conditioned
upon the agreement of the Purchaser to participate in such underwriting and in
the inclusion of such Piggyback Registrable Securities in the underwriting to
the extent provided herein. The Purchasers shall (together with the Company and
any other holders distributing securities in such Piggyback Registration
Statement, if any) enter into an underwriting agreement (the "PIGGYBACK
UNDERWRITING AGREEMENT") in customary form with the underwriter or underwriters
selected for such underwriting by the Company. If a Purchaser disapproves of the
terms of any such underwriting, it may elect to withdraw therefrom by written
notice to the Company and the managing underwriters. Any Piggyback Registrable
Securities excluded from such underwriting shall be excluded from such Piggyback
Registration Statement.
4.3 Notwithstanding any other provision of this Agreement,
if the managing underwriters of any underwritten offering pursuant to a
Piggyback Request determine, in their sole discretion that, after including all
the shares proposed to be offered by the Company and all the shares of any other
Persons entitled to registration rights with respect to such Piggyback
Registration Statement (pursuant to other agreements with the Company),
marketing factors require a limitation of the number of Piggyback Registrable
Securities to be underwritten (a "PIGGYBACK MARKET CUT-BACK"), the Company shall
include in the registration (i) in the event that such registration is on behalf
of shareholders of the Company having demand registration rights under other
agreements with the Company (A) first, the securities requested to be registered
by such other shareholders, and (B) second, the Piggyback Registrable Securities
requested to be included in the registration and securities, if any, requested
to be included by others having these rights, pro rata among the holders of
Piggyback Registrable Securities which are to be registered and sold pursuant to
the Piggyback Registration Statement and others exercising these rights, on the
basis of the number of securities requested to be included by the holders of
such Piggyback Registrable Securities and the others exercising these rights;
and (ii) in the event that such registration is on behalf of the Company, (A)
first, the securities that the Company proposes to sell, (B) second, the
Piggyback Registrable Securities requested to be
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included in the registration and securities, if any, requested to be included by
others having these rights, pro rata among the holders of the Piggyback
Registrable Securities which are to be registered and sold pursuant to such
Piggyback Registration Statement and others exercising these rights, on the
basis of the number of the Piggyback Registrable Securities requested to be
included by holders of such Piggyback Registrable Securities, and others
exercising these rights; provided, however, in no event shall the amount of
Piggyback Registrable Securities of the Purchasers included in the underwriting
on behalf of the Company (together with any other securities of the Purchasers
being included in the underwriting pursuant to other agreements with the
Company) be reduced below thirty percent (30%) of the total amount of securities
included in such offering.
4.4 Except to the extent specifically provided in this SECTION 4
hereof, the procedures to be followed by the Company and the Purchasers, and the
respective rights and obligations of the Company and the Purchasers, with
respect to the distribution of any Piggyback Registrable Securities by the
Purchasers pursuant to any Piggyback Registration Statement filed by the Company
shall be as set forth in the Piggyback Underwriting Agreement, or any other
agreement or agreements governing the distribution of such Piggyback Registrable
Securities pursuant to such Piggyback Registration Statement.
4.5 Notwithstanding the foregoing, however, nothing in this
SECTION 4, or any other provision of this Agreement, shall be construed to limit
the absolute right of the Company, for any reason and in its sole discretion (i)
to delay, suspend or terminate the filing of any Piggyback Registration
Statement; (ii) to delay the effectiveness of any Piggyback Registration
Statement; or (iii) to withdraw such Piggyback Registration Statement.
Section 5: DEMAND REGISTRATION AND S-3 REGISTRATION PROCEDURES, RIGHTS
AND OBLIGATIONS. The procedures to be followed by the Company and the
Purchasers, and the respective rights and obligations of the Company and the
Purchasers, with respect to the preparation, filing and effectiveness of Demand
Registration Statements and S-3 Registration Statements, respectively, and the
distribution of Demand Registrable Securities and Registrable Securities,
respectively, pursuant thereto, are as follows:
5.1 A Purchaser shall not be entitled to make more than two (2)
Demand Requests; provided, however, that if any Demand Request: (i) does not
result in the corresponding Demand Registration Statement being declared
effective by the Commission; (ii) is withdrawn by the Purchaser following the
imposition of an order by the Commission with respect to the corresponding
Demand Registration Statement; (iii) is withdrawn by the Purchaser as a result
of the exercise by the Company of its suspension rights pursuant to this SECTION
5; or (iv) is withdrawn if the Purchaser shall have learned of a material
adverse change in the condition, business or prospects of the Company different
than that known to the Purchaser at the time the Purchaser shall have initiated
the Demand Request (other than a decline in the Company's stock price since such
time unless, however, the Purchaser agrees to pay, or otherwise reimburse the
Company, for all Registration Expenses) that makes the proposed offering
unreasonable in the good faith judgment of the Purchaser, then such Demand
Request in the event of any of (i) through (iv) shall not count as a Demand
Request for any purpose. A Purchaser shall not make more than one (1) Demand
Request within any 180-day period. Any Demand Request that is
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withdrawn by a Purchaser for any reason other than as set forth in the previous
sentence shall count as a Demand Request.
5.2 The Company shall use its best efforts to maintain the
effectiveness of each Demand Registration Statement and S-3 Registration
Statement (each an "APPLICABLE REGISTRATION STATEMENT") until the earliest to
occur of: (i) the sale or other disposition of all of the Registrable Securities
registered on the Applicable Registration Statement and (ii) one hundred twenty
(120) days after the effective date of any such Applicable Registration
Statement.
5.3 The Company shall prepare and file with the Commission
such amendments and supplements to each Applicable Registration Statement and
each prospectus used in connection therewith as may be necessary to make and to
keep such Applicable Registration Statement effective and to comply with the
provisions of the Securities Act with respect to the sale or other disposition
of all Registrable Securities proposed to be distributed pursuant to such
Applicable Registration Statement until the earliest to occur of: (i) the sale
or other disposition of all such Registrable Securities so registered and (ii)
one hundred twenty (120) days after the effective date of any such Applicable
Registration Statement.
5.4 In connection with any underwritten offering pursuant to a
Demand Registration Statement, the Purchaser holding a majority of the
Registrable Securities being registered by the Purchasers pursuant to the Demand
Request shall select one investment banking firm to serve as manager of such
offering which must be reasonably acceptable to the Company. The manager is
hereinafter referred to as the "DEMAND MANAGING UNDERWRITER." The Company shall,
together with the Purchasers, enter into an underwriting agreement with the
Demand Managing Underwriter, which agreement shall contain representations,
warranties, indemnities and agreements then customarily included by an issuer in
underwriting agreements with respect to secondary distributions under demand
registration statements or shelf registration statements, as the case may be,
and shall stipulate that the Demand Managing Underwriter will receive
commissions and fees and other remuneration in connection with the distribution
of any Demand Registrable Securities or Registrable Securities thereunder.
5.5 Notwithstanding any other provision of this Agreement, in the
event that the Company determines that: (i) non-public material information
regarding the Company exists, the immediate disclosure of which would be
significantly disadvantageous to the Company; (ii) the prospectus constituting a
part of any Applicable Registration Statement covering the distribution of any
Registrable Securities contains an untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; or (iii) an offering of Registrable Securities would
materially interfere with any proposed material acquisition, disposition or
other similar corporate transaction or event involving the Company (each of the
events or conditions referred to in clauses (i), (ii) and (iii) of this sentence
is hereinafter referred to as a "SUSPENSION CONDITION"), then the Company shall
have the right to suspend the filing or effectiveness of any Applicable
Registration Statement or any distribution of Registrable Securities thereunder
for so long as such Suspension Condition exists; provided that the Company shall
have suspended the filing or effectiveness of all other registration statements
registering securities for the account of the Company or any other Person or
suspended the
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distribution of any securities under such registration statements; provided,
further, that in the case of (ii) above, the Company shall be obligated to use
its best efforts to amend the Applicable Registration Statement to correct such
material misstatement or omission in such registration statement and related
prospectus as promptly as practicable; and, provided, further, that the Company
shall not have the right to suspend the filing or effectiveness of any
Applicable Registration Statement or any distribution of Registrable Securities
thereunder within six (6) months after the termination of a Purchaser Lockup as
provided in SECTION 5.15 below. The Company will as promptly as practicable
provide written notice to the Purchasers when a Suspension Condition arises and
when it ceases to exist. Upon receipt of notice from the Company of the
existence of any Suspension Condition, each Purchaser shall after receipt of
such notice discontinue efforts to: (i) file or cause any Applicable
Registration Statement to be declared effective by the Commission (in the event
that such Applicable Registration Statement has not been filed, or has been
filed but not declared effective, at the time the Purchaser receives notice that
a Suspension Condition has arisen); or (ii) offer or sell Registrable Securities
(in the event that such Applicable Registration Statement has been declared
effective at the time the Purchaser receives notice that a Suspension Condition
has arisen). In the event that a Purchaser had previously commenced or was about
to commence the distribution of Registrable Securities pursuant to a prospectus
under an effective Applicable Registration Statement, then the Company shall, as
promptly as practicable after the Suspension Condition ceases to exist, make
available to the Purchaser (and to each underwriter, if any, participating in
such distribution) an amendment or supplement to such prospectus.
5.6 Notwithstanding any other provision of this Agreement, the
Company shall not be permitted to postpone (i) the filing or effectiveness of
any Applicable Registration Statement or (ii) the distribution of any
Registrable Securities pursuant to an effective Demand Registration more than
two (2) times in any 360 day period, and the aggregate of such suspensions may
not exceed a total of sixty (60) days in any 360 day period.
5.7 The Company shall promptly notify the Purchasers of any stop
order issued or, to the Company's knowledge, threatened, to be issued by the
Commission with respect to any Applicable Registration Statement and will use
its best efforts to prevent the entry of such stop order or to remove it if
entered at the earliest possible date.
5.8 The Company shall furnish to the Purchasers (and any
underwriter in connection with any underwritten offering) such number of copies
of any prospectus (including any preliminary prospectus and any amended or
supplemented prospectus), in conformity with the requirements of the Securities
Act, as the Purchasers (and such underwriters) shall reasonably request in order
to effect the offering and sale of any or the Registrable Securities to be
offered and sold, but only while the Company shall be required under the
provisions hereof to cause the Applicable Registration Statement pursuant to
which such Registrable Securities are intended to be distributed to remain
current.
5.9 The Company shall use its best efforts to register or qualify
the Registrable Securities covered by each Applicable Registration Statement
under the state securities or "blue sky" laws of such states as the Purchasers
shall reasonably request and to maintain any such registration or qualification
current, until the earliest to occur of: (i) the sale of all such Registrable
Securities so registered and (ii) one hundred twenty (120) days after the
effective
7
date of any such Applicable Registration Statement; provided, however, that the
Company shall not be required to take any action that would subject it to the
general jurisdiction of the courts of any jurisdiction in which it is not so
subject or to qualify as a foreign corporation in any jurisdiction where the
Company is not so qualified.
5.10 The Company shall furnish to each Purchaser and to each
underwriter engaged in an underwritten offering of Registrable Securities a
signed counterpart, addressed to such Purchaser or such underwriter, of (i) an
opinion or opinions of counsel to the Company (with respect to the Company and
securities law compliance by the Company) and (ii) a comfort letter or comfort
letters from the Company's independent public accountants, each in customary
form and covering such matters of the type customarily covered by opinions or
comfort letters, as the case may be, as the Purchasers or the managing
underwriters may reasonably request.
5.11 The Company shall use its best efforts to make appropriate
members of its management reasonably available for due diligence purposes, "road
show" presentations and analyst presentations in connection with any
distributions of Demand Registrable Securities pursuant to a Demand Registration
Statement.
5.12 The Company shall use its best efforts to cause all
Registrable Securities to be listed on each securities exchange on which similar
securities of the Company are then listed, or, if the Company does not have a
class of equity securities listed on a national securities exchange, apply for
qualification and use its best efforts to qualify the Registrable Securities
being registered for inclusion on the Nasdaq Stock Market.
5.13 The Company shall provide, in connection with the filing of
a registration statement pursuant to this Agreement, a transfer agent and
registrar for all Registrable Securities registered thereunder and a CUSIP
number for all such Registrable Securities not later than the effective date of
such registration.
5.14 The Company shall take all such other actions either
reasonably necessary or desirable to permit the Registrable Securities held by
the Purchasers to be registered and disposed of in accordance with the methods
of disposition described herein.
5.15 A Purchaser shall not effect any public sale or distribution
(including sales pursuant to Rule 144) of equity securities of the Company, or
any securities convertible into or exchangeable or exercisable for equity
securities of the Company, during the five (5) days prior to, and the sixty
(60)-day period beginning on the effective date of any registration statement
covering the offer and sale of Common Stock for the Company's account having
aggregate proceeds to the Company of not less than $20,000,000 in which the
Purchaser was able to register 50% of the Registrable Securities proposed by the
Purchaser to be included in such registration, unless the underwriters managing
the public offering otherwise agree to allow such sales or distributions (such
restriction on the Purchaser, the "PURCHASER LOCKUP").
Section 6: REGISTRATION EXPENSES.The Company agrees to bear and to pay or
cause to be paid promptly upon request being made therefor all expenses incident
to the Company's performance of or compliance with this Agreement, including,
without limitation, (i) all Commission and any NASD registration and filing fees
and expenses, (ii) all fees and expenses
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in connection with the qualification of the Registrable Securities for offering
and sale under any state securities and blue sky laws, including reasonable fees
and disbursements of counsel for the placement or sales agent or underwriters in
connection with such qualifications, (iii) all fees and expenses in connection
with the approval for trading of the Shares or other shares of Common Stock on
the Nasdaq National Market or other appropriate exchange, (iv) all expenses
relating to the preparation, printing, distribution and reproduction of each
registration statement required to be filed hereunder, each prospectus included
therein or prepared for distribution pursuant hereto, each amendment or
supplement to the foregoing, the certificates representing the Registrable
Securities and all other documents relating hereto, (v) internal expenses
(including, without limitation, all salaries and expenses of the Company's
officers and employees performing legal or accounting duties), and (vi) fees,
disbursements and expenses of counsel and independent certified public
accountants of the Company (including the expenses of any opinions or "cold
comfort" letters required by or incident to such performance and compliance)
(collectively, the "REGISTRATION EXPENSES"). Notwithstanding the foregoing, the
Purchasers shall pay all underwriting discounts and commissions attributable to
the sale of the Registrable Securities and the fees and disbursements of any
counsel or other advisors or experts retained by the Purchasers.
Section 7: REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to, and agrees with, each Purchaser that:
7.1 Each registration statement covering Registrable Securities
and each prospectus (including any preliminary or summary prospectus) contained
therein and any further amendments or supplements to any such registration
statement or prospectus, when it becomes effective or is filed with the
Commission, as the case may be, and, in the case of an underwritten offering of
Registrable Securities, at the time of the closing under the underwriting
agreement relating thereto will conform in all material respects to the
requirements of the Securities Act, and will not contain 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 light of the
circumstances in which they were made; and at all times subsequent to the
Effective Time when a prospectus would be required to be delivered under the
Securities Act, other than from (i) such time as a notice has been given to the
Purchaser pursuant to SECTION 5.5 hereof until (ii) such time as the Company
furnishes an amended or supplemented prospectus pursuant to SECTION 5.5 hereof,
each such registration statement, and each prospectus (including any summary
prospectus) contained therein or furnished pursuant to SECTION 5.5 hereof, as
then amended or supplemented, will conform in all material respects to the
requirements of the Securities Act, and will not contain 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; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company by the
Purchaser expressly for use therein.
7.2 Any documents incorporated by reference in any prospectus
prepared pursuant to this Agreement, when they become or became effective or are
or were filed with the Commission, or if amended, when amended, as the case may
be, will conform or conformed in all material respects to the requirements of
the Exchange Act, and none of such documents will contain or contained an untrue
statement of a material fact or will omit or omitted to state a
9
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they were made;
provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by the Purchaser expressly for use therein.
Section 8: INDEMNIFICATION.
8.1 INDEMNIFICATION BY THE COMPANY. Upon the registration of
Registrable Securities pursuant to this Agreement, and in consideration of the
agreements of each Purchaser contained herein, and as an inducement to each
Purchaser to purchase the Convertible Notes, the Company shall, and it hereby
agrees to, indemnify and hold harmless each Purchaser and its officers,
directors, partners, employees, representatives, underwriters and agents and
each control person (as defined in Section 15 of the Exchange Act) against any
losses, claims, damages or liabilities, joint or several, to which the Purchaser
or any of its officers, directors, partners, employees, representatives,
underwriters and agents and each control person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
registration statement under which such Registrable Securities were registered
under the Securities Act pursuant to this Agreement, or any preliminary, final
or summary prospectus contained therein or furnished by the Company to the
Purchaser, any officer, director, partner, employee, representative, underwriter
or agent or control person, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they were made,
and the Company shall, and it hereby agrees to, reimburse the Purchaser, any
officer, director, partner, employee, representative, underwriter or agent or
control person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company shall not be liable
to any such person in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, or preliminary, final or summary prospectus, or
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such person expressly for use therein or
is caused by the Purchaser's failure to deliver a copy of the registration
statement or prospectus, or any supplement or amendment of which it is aware.
8.2 INDEMNIFICATION BY THE PURCHASERS. In connection with any
registration statement pursuant to which a Purchaser sold or offered for sale
Registrable Securities, the Purchaser agrees to (i) indemnify and hold harmless
the Company and its officers, directors, employees, representatives, underwriter
and agents and each control person against any losses, claims, damages or
liabilities to which the Company may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in such registration statement, or
any preliminary, final or summary prospectus contained therein or furnished by
the Company to the Purchaser, any officer, director, partner, employee,
representative, underwriter or agent or control person, or any amendment or
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supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances in which they were made, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by the Purchaser or its officers,
directors, partners, employees representatives, or agents expressly for use
therein, and (ii) reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such action or claim as such expenses are incurred; provided that in no
event shall any indemnity under this subsection exceed the gross proceeds from
such offering received by the Purchaser.
8.3 NOTICES OF CLAIMS, ETC. Promptly after receipt by an
indemnified party under SECTION 8.1 or SECTION 8.2 above of written notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against an indemnifying party pursuant to the
indemnification provisions of or contemplated by this SECTION 8, notify such
indemnifying party in writing of the commencement of such action; but the
failure so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party other than under the
indemnification provisions of or contemplated by SECTION 8.1 or SECTION 8.2
hereof and only to the extent of prejudice caused by such failure. In case any
such action shall be brought against any indemnified party and it shall notify
an indemnifying party of the commencement thereof, such indemnifying party shall
be entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party and, after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense and costs of investigation thereof, such indemnifying
party shall not be liable to such indemnified party for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof.
8.4 CONTRIBUTION. If the indemnification provided for in this
SECTION 8 is held by a court of competent jurisdiction to be unavailable to or
insufficient to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the indemnifying party and the indemnified
party in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by such indemnifying party or by such indemnified party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contributions pursuant to this
SECTION 8.4 were determined by pro rata allocation (even if the Purchasers or
any agents or underwriters or all of them were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this SECTION 8.4. The amount paid or
payable by an indemnified
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party as a result of the losses, claims, damages, or liabilities (or actions in
respect thereof) referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding the
provisions of this SECTION 8.4, a Purchaser shall not be required to contribute
any amount in excess of the amount by which the dollar amount of the proceeds
received by the Purchaser from the sale of any Registrable Securities (after
deducting any fees, discounts and commissions applicable thereto) exceeds the
amount of any damages which the Purchaser may have otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission, and no underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Purchasers and any underwriters in
this SECTION 8.4 to contribute shall be several in proportion to the principal
amount of Registrable Securities registered or underwritten, as the case may be,
by them and not joint.
8.5 The obligations of the Company under this SECTION 8 shall
be in addition to any liability which the Company may otherwise have; and the
obligations of the Purchasers and any agents and underwriters contemplated by
this SECTION 8 shall be in addition to any liability which the Purchasers may
otherwise have.
8.6 Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in an underwriting
agreement entered into by the Purchasers are in conflict with the foregoing
provisions, the provisions of such underwriting agreement shall control.
Section 9: MISCELLANEOUS.
9.1 ENTIRE AGREEMENT. This Agreement and the other writings
referred to herein or delivered pursuant hereto which form a part hereof contain
the entire understanding of the parties with respect to its subject matter. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to its subject matter.
9.2 NO INCONSISTENT AGREEMENTS. The Company represents,
warrants, covenants and agrees that it has not granted, and shall not grant,
registration rights with respect to shares of Common Stock or any other
securities which would be inconsistent with the terms contained in this
Agreement.
9.3 SPECIFIC PERFORMANCE.The parties hereto acknowledge that there
may be no adequate remedy at law if any party fails to perform any of its
obligations hereunder and that each party may be irreparably harmed by any such
failure, and accordingly agree that each party, in addition to any other remedy
to which it may be entitled at law or in equity, shall be entitled to compel
specific performance of the obligations of any other party under this Agreement
12
in accordance with the terms and conditions of this Agreement, in any court of
the United States or any State thereof having jurisdiction.
9.4 AMENDMENTS AND WAIVERS. This Agreement may not be amended or
terminated, or any right or obligation hereunder waived, other than by a written
instrument signed by the party against whom enforcement of such amendment,
termination or waiver is sought.
9.5 GOVERNING LAW. Except for applicable federal securities laws
this Agreement shall be governed in all respects by the laws of the State of
California.
9.6 COUNTERPARTS. This Agreement may be signed in any number
of counterparts with the same effect as if the signatures to each counterpart
were upon a single instrument and is intended to be binding when all parties
have delivered their signatures to the other parties. Signatures may be
delivered by facsimile transmission. All counterparts shall be deemed an
original of this Agreement.
9.7 HEADINGS. The table of contents and headings used herein are
used for convenience only, are not part of this Agreement and shall not be
considered in construing or interpreting this Agreement.
9.8 NOTICES. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and will be
effective (a) immediately upon delivery in person or by messenger, (b) the next
business day after deposit with a commercial courier or delivery service for
next day delivery, (c) upon receipt by facsimile as established by evidence of
successful transmission or (d) three business days after deposit with the United
States Postal Service, certified mail, return receipt requested, postage
prepaid. All notices must be properly addressed as follows (or to such other
address as a party may specify by notice in pursuant to this SECTION 8.8.
(a) If to the Company:
The Chalone Wine Group, Ltd.
621 Airpark Road
Napa, CA 94558
Attention: Thomas Selfridge
Facsimile No.: (707) 254-4204
with a copy to:
Farella Braun + Martel LLP
235 Montgomery Street
San Francisco, CA 94104
Attention: Daniel E. Cohn, Esq.
Facsimile No.: (415) 954-4480
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If to DBR:
_______________________________
_______________________________
_______________________________
_______________________________
Facsimile No.:
with a copy to:
Piper Rudnick LLP
1251 Avenue of the Americas
New York, NY 10020
Attention: Michael A. Varet, Esq.
Facsimile No.: (212) 835-6001
(b) If to SFI:
_______________________________
_______________________________
_______________________________
_______________________________
with a copy to:
Baker & Botts, L.L.P.
One Shell Plaza
910 Louisiana
Houston, TX 77002
Attention: Gray Jennings, Esq.
Facsimile No.: (713) 229-1522
9.9 SURVIVAL. The respective indemnities, agreements,
representations, warranties and each other provision set forth in this Agreement
or made pursuant hereto shall remain in full force and effect regardless of any
investigation (or statement as to the results thereof) made by or on behalf of
the Purchasers or any of its officers, directors, partners, employees,
representatives, or agents, or any controlling person of any of the foregoing.
9.10 ASSIGNMENT. In connection with any permitted transfer of
Shares, a Purchaser may assign its rights hereunder in respect of such Shares to
the transferee. Upon such assignment the transferee shall, insofar as the
transferred Shares are concerned, be entitled to all of the rights, and be
subject to all of the obligations, of the Purchaser under this Agreement, and
all references to the "PURCHASER" herein shall thereafter be deemed to include
the transferring Purchaser, or such transferee, or both, as the circumstances
warrant.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date referred to above.
COMPANY: THE CHALONE WINE GROUP, LTD.
By:
_________________________________________
Name:
Title:
PURCHASERS: LES DOMAINES BARON DE ROTHSCHILD (LAFITE)
By:
_________________________________________
Name:
Title:
By:
_________________________________________
Name:
Title:
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
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