Exhibit
10.4


REGISTRATION
RIGHTS AGREEMENT


This Registration
Rights Agreement (this “Agreement”) is made and entered into as of July
3, 2007, by and among Nascent Wine Company, Inc., a Nevada corporation (the “Company”),
and the purchasers listed on Schedule I hereto (the “Purchasers”).


This Agreement is
being entered into pursuant to the Series A Convertible Preferred Stock
Purchase Agreement dated as of the date hereof among the Company and the
Purchasers (the “Purchase Agreement”).


The Company and
the Purchasers hereby agree as follows:


1.            Definitions.


Capitalized terms
used and not otherwise defined herein shall have the meanings given such terms
in the Purchase Agreement.  As used in
this Agreement, the following terms shall have the following meanings:


“Advice”
shall have meaning set forth in Section 3(m).


“Affiliate”
means, with respect to any Person, any other Person that directly or indirectly
controls or is controlled by or under common control with such Person.  For the purposes of this definition, “control,”
when used with respect to any Person, means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of “affiliated,” “controlling” and “controlled”
have meanings correlative to the foregoing.


“Board”
shall have meaning set forth in Section 3(n).


“Business Day”
means any day except Saturday, Sunday and any day which shall be a legal holiday
or a day on which banking institutions in the state of New York generally are
authorized or required by law or other government actions to close.


“Closing Date”
means the date of the closing of the purchase and sale of the Preferred Stock
and the Warrants pursuant to the Purchase Agreement.


“Commission”
means the Securities and Exchange Commission.


“Common Stock”
means the Company’s Common Stock, par value $0.001 per share.


“Effectiveness Date” means with respect to the
Registration Statement the earlier of (A) the sixtieth (60th) day following the Filing
Date (or in the event the Registration Statement receives a “full review” by
the Commission, the ninetieth (90th))
day following the Filing Date) or (B) the date which is within three (3)
Business Days after the date on which the Commission informs the Company (i)
that the Commission will not review the Registration Statement or (ii)  that the Company may request the acceleration of the
effectiveness of the Registration Statement and the Company makes such request;
provided  that, if the Effectiveness Date falls on a













 


Saturday, Sunday or any other day which shall be a legal holiday or a
day on which the Commission is authorized or required by law or other
government actions to close, the Effectiveness Date shall be the following
Business Day.


“Effectiveness
Period” shall have the meaning set forth in Section 2.


“Event”
shall have the meaning set forth in Section 7(e).


“Event Date”
shall have the meaning set forth in Section 7(e).


“Exchange Act”
means the Securities Exchange Act of 1934, as amended.


“Filing Date” means the thirtieth (30th) day following the Closing
Date; provided  that, if the Filing Date falls on a Saturday,
Sunday or any other day which shall be a legal holiday or a day on which the
Commission is authorized or required by law or other government actions to
close, the Filing Date shall be the following Business Day.


“Holder” or
“Holders” means the holder or holders, as the case may be, from time to
time of Registrable Securities.


“Indemnified Party”
shall have the meaning set forth in Section 5(c).


“Indemnifying Party”
shall have the meaning set forth in Section 5(c).


“Losses”
shall have the meaning set forth in Section  5(a).


“Person”
means an individual or a corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.


“Preferred
Stock” means shares of the Company’s Series A Convertible Preferred Stock
issued to the Purchasers pursuant to the Purchase Agreement.


“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition), whether
commenced or threatened.


“Prospectus”
means the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference in such Prospectus.


“Registrable
Securities means the shares of Common Stock issuable upon conversion of the
Preferred Stock.



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“Registration
Statement” means the registration statements and any additional
registration statements contemplated by Section 2, including (in each case) the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference in such registration statement.


“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such Rule.


“Rule 158”
means Rule 158 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such Rule.


“Rule 415”
means Rule 415 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such Rule.


“Rule 424”
means Rule 424 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such Rule.


“Securities Act”
means the Securities Act of 1933, as amended.


“Special
Counsel” means Kramer Levin Naftalis & Frankel LLP or such counsel as
may be appointed by the Holders from time to time, for which the Holders will
be reimbursed by the Company pursuant to Section 4.


2.             Resale Registration.  On or prior to the Filing Date, the Company
shall prepare and file with the Commission a “resale” Registration Statement
providing for the resale of all Registrable Securities for an offering to be
made on a continuous basis pursuant to Rule 415.  The Registration Statement shall be on Form
SB-2 (except if the Company is not then eligible to register for resale the
Registrable Securities on Form SB-2, in which case such registration shall be
on another appropriate form in accordance herewith and the Securities Act and
the rules promulgated thereunder).  Such
Registration Statement shall cover to the extent allowable under the Securities
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.  The Company shall (i) not
permit any securities other than the Registrable Securities and the securities
listed on Schedule II hereto to be included in the Registration
Statement and (ii) use its best efforts to cause the Registration Statement to
be declared effective under the Securities Act as promptly as possible after
the filing thereof, but in any event prior to the Effectiveness Date, and to
keep such Registration Statement continuously effective under the Securities
Act until such date as is the earlier of (x) the date when all Registrable
Securities covered by such Registration Statement have been sold or (y) the
date on which the Registrable Securities may be sold without any restriction
pursuant to Rule 144(k) as determined by the counsel to the Company pursuant to
a written opinion letter, addressed to the Company’s transfer agent to such
effect (the “Effectiveness Period”). 
The



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Company shall
request that the effective time of the Registration Statement is 4:00 p.m.
Eastern Time on the effective date.  If
at any time and for any reason, an additional Registration Statement is
required to be filed because at such time the actual number of shares of Common
Stock into which the Preferred Stock is convertible plus the number of shares
of Common Stock exceeds the number of shares of Registrable Securities
remaining under the Registration Statement, the Company shall have twenty (20)
Business Days to file such additional Registration Statement, and the Company
shall use its best efforts to cause such additional Registration Statement to
be declared effective by the Commission as soon as possible, but in no event
later than sixty (60) days after filing. 
Notwithstanding
anything to the contrary set forth in this Section 2, in the event the
Commission does not permit the Company to register all of the Registrable
Securities in the Registration Statement, the Company shall register in the
Registration Statement such number of Registrable Securities as is permitted by
the Commission.  In the event the
Commission does not permit the Company to register all of the Registrable
Securities in the Registration Statement, the Company shall use its best
efforts to register the Registrable Securities, subject to the foregoing
sentence, that were not registered in the Registration Statement as promptly as
possible and in a manner permitted by the Commission, whether by filing a
subsequent registration statement, providing demand registration rights, or
otherwise.


3.             Registration Procedures.


                                In connection with the
Company’s registration obligations hereunder, the Company shall:


                                (a)
          Prepare and file with the
Commission, on or prior to the Filing Date, a Registration Statement on Form
SB-2 (or if the Company is not then eligible to register for resale the
Registrable Securities on Form SB-2 such registration shall be on another
appropriate form in accordance herewith and the Securities Act and the rules
promulgated thereunder) in accordance with the plan of distribution as set
forth on Exhibit A hereto and in accordance with applicable law, and
cause the Registration Statement to become effective and remain effective as
provided herein; provided, however, that not less than five (5)
Business Days prior to the filing of the Registration Statement or any related
Prospectus or any amendment or supplement thereto, the Company shall (i)
furnish to the Holders and any Special Counsel, copies of all such documents
proposed to be filed, which documents will be subject to the review of such
Holders and such Special Counsel, and (ii) cause its officers and directors,
counsel and independent certified public accountants to respond to such
inquiries as shall be necessary, in the reasonable opinion of Special Counsel, to
conduct a reasonable review of such documents. 
The Company shall not file the Registration Statement or any such
Prospectus or any amendments or supplements thereto to which the Holders of a
majority of the Registrable Securities or any Special Counsel shall reasonably
object in writing within three (3) Business Days of their receipt thereof.


(b)           (i) Prepare and file with the
Commission such amendments, including post-effective amendments, to the
Registration Statement as may be necessary to keep the Registration Statement
continuously effective as to the applicable Registrable Securities for the
Effectiveness Period and prepare and file with the Commission such additional
Registration Statements as necessary in order to register for resale under the
Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424



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(or any similar
provisions then in force) promulgated under the Securities Act; (iii) respond
as promptly as possible, but in no event later than ten (10) Business Days, to
any comments received from the Commission with respect to the Registration
Statement or any amendment thereto and as promptly as possible provide the
Holders true and complete copies of all correspondence from and to the
Commission relating to the Registration Statement; (iv) file the final
prospectus pursuant to Rule 424 of the Securities Act no later than 9:00 a.m.
Eastern Time on the Business Day following the date the Registration Statement
is declared effective by the Commission; and (v) comply in all material
respects with the provisions of the Securities Act and the Exchange Act with
respect to the disposition of all Registrable Securities covered by the
Registration Statement during the Effectiveness Period in accordance with the
intended methods of disposition by the Holders thereof set forth in the
Registration Statement as so amended or in such Prospectus as so supplemented.


(c)           Notify the Holders of Registrable
Securities and any Special Counsel as promptly as possible (and, in the case of
(i)(A) below, not less than three (3) Business Days prior to such filing, and
in the case of (iii) below, on the same day of receipt by the Company of such
notice from the Commission) and (if requested by any such Person) confirm such
notice in writing no later than one (1) Business Day following the day (i)(A)
when a Prospectus or any Prospectus supplement or post-effective amendment to
the Registration Statement is filed; (B) when the Commission notifies the
Company whether there will be a “review” of such Registration Statement and
whenever the Commission comments in writing on such Registration Statement and
(C) with respect to the Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the Commission or
any other Federal or state governmental authority for amendments or supplements
to the Registration Statement or Prospectus or for additional information;
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement covering any or all of the
Registrable Securities or the initiation or threatening of any Proceedings for
that purpose; (iv) if at any time any of the representations and warranties of
the Company contained in any agreement contemplated hereby ceases to be true
and correct in all material respects; (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (vi) of the occurrence of any event that makes any statement made
in the Registration Statement or Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect
or that requires any revisions to the Registration Statement, Prospectus or
other documents so that, in the case of the Registration Statement or the
Prospectus, as the case may be, it will not contain any untrue statement of a
material fact or omit 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 they were made, not misleading.


                                (d)           Use its best efforts to avoid the
issuance of, or, if issued, obtain the withdrawal of, as promptly as possible,
(i) any order suspending the effectiveness of the Registration Statement or
(ii) any suspension of the qualification (or exemption from qualification) of
any of the Registrable  Securities for
sale in any jurisdiction.


(e)           If requested by the Holders of a
majority in interest of the Registrable Securities, (i) promptly incorporate in
a Prospectus supplement or post-effective amendment to the Registration
Statement such information as the Company reasonably agrees should be



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included therein
and (ii) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement or
post-effective amendment.


(f)          If requested by any Holder, furnish to
such Holder and any Special Counsel, without charge, at least one conformed
copy of each Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits to the extent requested by
such Person (including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission.


(g)         Promptly deliver to each Holder and any
Special Counsel, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request; and subject to the
provisions of Sections 3(m) and 3(n), the Company hereby consents to the use of
such Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto.


(h)         Prior to any public offering of
Registrable Securities, use its best efforts to register or qualify or
cooperate with the selling Holders and any Special Counsel in connection with
the registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any Holder requests in writing, to keep each such registration or qualification
(or exemption therefrom) effective during the Effectiveness Period and to do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by a
Registration Statement; provided, however, that the Company shall
not be required to qualify generally to do business in any jurisdiction where
it is not then so qualified or to take any action that would subject it to
general service of process in any such jurisdiction where it is not then so
subject or subject the Company to any material tax in any such jurisdiction
where it is not then so subject.


                                (i)            Cooperate with the Holders to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold pursuant to a Registration Statement, which
certificates, to the extent permitted by the Purchase Agreement and applicable
federal and state securities laws, shall be free of all restrictive legends,
and to enable such Registrable Securities to be in such denominations and
registered in such names as any Holder may request in connection with any sale
of Registrable Securities.


(j)            Upon the occurrence of any event
contemplated by Section 3(c)(vi), as promptly as possible, prepare a supplement
or amendment, including a post-effective amendment, to the Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will 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, in the light of the circumstances
under which they were made, not misleading.



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(k)           Use its best efforts to cause all
Registrable Securities relating to the Registration Statement to be listed or
quoted on the OTC Bulletin Board or any other securities exchange, quotation
system or market, if any, on which similar securities issued by the Company are
then listed or traded as and when required pursuant to the Purchase Agreement.


(l)            Comply in all material respects with
all applicable rules and regulations of the Commission and make generally
available to its security holders all documents filed or required to be filed
with the Commission, including, but not limited, to, earning statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
not later than 45 days after the end of any 12-month period (or 90 days after
the end of any 12-month period if such period is a fiscal year) commencing on
the first day of the first fiscal quarter of the Company after the effective
date of the Registration Statement, which statement shall conform to the
requirements of Rule 158.


(m)          The Company may require each selling
Holder to furnish to the Company information regarding such Holder and the
distribution of such Registrable Securities as is required by law to be
disclosed in the Registration Statement, Prospectus, or any amendment or
supplement thereto, and the Company may exclude from such registration the
Registrable Securities of any such Holder who unreasonably fails to furnish
such information within a reasonable time after receiving such request.


If the
Registration Statement refers to any Holder by name or otherwise as the holder
of any securities of the Company, then such Holder shall have the right to
require (if such reference to such Holder by name or otherwise is not required
by the Securities Act or any similar federal statute then in force) the
deletion of the reference to such Holder in any amendment or supplement to the
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.


Each Holder
covenants and agrees that it will not sell any Registrable Securities under the
Registration Statement until the Company has electronically filed the
Prospectus as then amended or supplemented as contemplated in Section 3(g) and
notice from the Company that the Registration Statement and any post-effective
amendments thereto have become effective as contemplated by Section 3(c).


Each Holder agrees
by its acquisition of such Registrable Securities that, upon receipt of a
notice from the Company of the occurrence of any event of the kind described in
Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v), 3(c)(vi) or 3(n), such Holder
will forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement contemplated by
Section 3(j), or until it is advised in writing (the “Advice”) by the
Company that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus
or Registration Statement.


(n)           If (i) there is material non-public
information regarding the Company which the Company’s Board of Directors (the “Board”)
determines not to be in the Company’s best interest to disclose and which the
Company is not otherwise required to disclose, (ii) there is a significant
business opportunity (including, but not limited to, the acquisition or
disposition of



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assets (other than
in the ordinary course of business) or any merger, consolidation, tender offer
or other similar transaction) available to the Company which the Board
determines not to be in the Company’s best interest to disclose, or (iii) the
Company is required to file a post-effective amendment to the Registration
Statement to incorporate the Company’s quarterly and annual reports and audited
financial statements on Forms 10-QSB and 10-KSB, then the Company may (x) postpone
or suspend filing of a registration statement for a period not to exceed thirty
(30) consecutive days or (y) postpone or suspend effectiveness of a
registration statement for a period not to exceed twenty (20) consecutive days;
provided that the Company may not postpone or suspend effectiveness of a
registration statement under this Section 3(n) for more than forty-five (45)
days in the aggregate during any three hundred sixty (360) day period; provided,
however, that no such postponement or suspension shall be permitted for
consecutive twenty (20) day periods arising out of the same set of facts,
circumstances or transactions.


     4.                        Registration
Expenses.


All fees and
expenses incident to the performance of or compliance with this Agreement by
the Company, except as and to the extent specified in this Section 4, shall be
borne by the Company whether or not the Registration Statement is filed or
becomes effective and whether or not any Registrable Securities are sold
pursuant to the Registration Statement. 
The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to
be made with the OTC Bulletin Board  and each other
securities exchange or market on which Registrable Securities are required
hereunder to be listed, if any (B) with respect to filing fees required to be
paid to the National Association of Securities Dealers, Inc. and the NASD Regulation,
Inc. (including, without limitation, pursuant to NASD Rule 2710) and (C) in
compliance with state securities or Blue Sky laws (including, without
limitation, fees and disbursements of counsel for the Holders in connection
with Blue Sky qualifications of the Registrable Securities and determination of
the eligibility of the Registrable Securities for investment under the laws of
such jurisdictions as the Holders of a majority of Registrable Securities may
designate)), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of printing prospectuses
if the printing of prospectuses is requested by the holders of a majority of
the Registrable Securities included in the Registration Statement), (iii)
messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company and Special Counsel for the Holders, in the case of the
Special Counsel, up to a maximum amount of $7,500, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement, including,
without limitation, the Company’s independent public accountants (including the
expenses of any comfort letters or costs associated with the delivery by
independent public accountants of a comfort letter or comfort letters).  In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation
of the transactions contemplated by this Agreement (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit, the fees and
expenses incurred in connection with the listing of the Registrable Securities
on any securities exchange if required hereunder.  The Company shall not be responsible for any
discounts, commissions, transfer taxes or other similar fees incurred by the
Holders in connection with the sale of the Registrable Securities.



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     5.                         Indemnification.


(a)           Indemnification by the Company.  The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, managers, partners, members, shareholders, agents,
brokers, investment advisors and employees of each of them, each Person who
controls any such Holder (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, causes of action,
damages, liabilities, costs (including, without limitation, costs of
preparation and attorneys’ fees), expenses and fees (collectively, “Losses”),
as incurred, arising out of or relating to any violation of securities laws or
untrue or alleged untrue statement of a material fact contained in the Registration
Statement, any Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that such untrue statements or omissions are based
solely upon information regarding such Holder or such other Indemnified Party
furnished in writing to the Company by such Holder expressly for use
therein.  The Company shall notify the
Holders promptly of the institution, threat or assertion of any Proceeding of
which the Company is aware in connection with the transactions contemplated by
this Agreement.


(b)           Indemnification by Holders.  Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents and employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses (as
determined by a court of competent jurisdiction in a final judgment not subject
to appeal or review), as incurred, arising solely out of or based solely upon
any untrue statement of a material fact contained in the Registration
Statement, any Prospectus, or any form of prospectus, or in any amendment or
supplement thereto, or arising solely out of or based solely upon any omission
of a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in any information so furnished in writing
by such Holder or other Indemnifying Party to the Company specifically for
inclusion in the Registration Statement or such Prospectus.  Notwithstanding anything to the contrary
contained herein, each Holder shall be liable under this Section 5(b) for only
that amount as does not exceed the net proceeds to such Holder as a result of
the sale of Registrable Securities pursuant to such Registration Statement.


(c)           Conduct of Indemnification
Proceedings.  If any Proceeding shall
be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party promptly shall notify the Person from whom
indemnity is sought (the “Indemnifying Party) in writing, and the
Indemnifying Party shall be entitled to assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified



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Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant
to this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.


An Indemnified
Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party or Parties unless:
(1) the Indemnifying Party has agreed in writing to pay such fees and expenses;
or (2) the Indemnifying Party shall have failed promptly to assume the defense
of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such parties shall have been advised by
counsel that a conflict of interest is likely to exist if the same counsel were
to represent such Indemnified Party and the Indemnifying Party (in which case,
if such Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Party).  The Indemnifying Party shall not be liable
for any settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld or delayed.  No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
pending or threatened Proceeding in respect of which any Indemnified Party is a
party and indemnity has been sought hereunder, unless such settlement includes
an unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.


All fees and
expenses of the Indemnified Party (including reasonable fees and expenses to
the extent incurred in connection with investigating or preparing to defend
such Proceeding in a manner not inconsistent with this Section) shall be paid
to the Indemnified Party, as incurred, within ten (10) Business Days of written
notice thereof to the Indemnifying Party (regardless of whether it is
ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder;  provided, that
the Indemnified Party shall reimburse all such fees and expenses to the extent
it is finally judicially determined that such Indemnified Party is not entitled
to indemnification hereunder).


(d)           Contribution. If a claim for
indemnification under Section 5(a) or 5(b) is due but unavailable to an
Indemnified Party because of a failure or refusal of a governmental authority
to enforce such indemnification in accordance with its terms (by reason of
public policy or otherwise), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative benefits received by the
Indemnifying Party on the one hand and the Indemnified Party on the other from
the offering of the Preferred Stock.  If,
but only if, the allocation provided by the foregoing sentence is not permitted
by applicable law, the allocation of contribution shall be made in such
proportion as is appropriate to reflect not only the relative benefits referred
to in the foregoing sentence but also the relative fault, as applicable, of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other


 



 10















relevant equitable
considerations.  The relative fault of
such Indemnifying Party and Indemnified Party shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of
a material fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the  parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such action, statement or omission. 
The amount paid or payable by a party as a result of any Losses shall be
deemed to include, subject to the limitations set forth in Section 5(c), any
reasonable attorneys’ or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have
been indemnified for such fees or expenses if the indemnification provided for
in this Section was available to such party in accordance with its terms.  In no event shall any selling Holder be
required to contribute an amount under this Section 5(d) in excess of the net
proceeds received by such Holder upon sale of such Holder’s Registrable
Securities pursuant to the Registration Statement giving rise to such
contribution obligation.


     The parties hereto agree that it would not
be just and equitable if contribution pursuant to this Section 5(d) were
determined by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to in the
immediately preceding paragraph.  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 indemnity and contribution agreements
contained in this Section are in addition to any liability that the
Indemnifying Parties may have to the Indemnified Parties pursuant to the law.


6.             Rule 144.


     As long as any Holder owns Preferred Stock
or Registrable Securities, the Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
Section 13(a) or 15(d) of the Exchange Act. 
As long as any Holder owns Preferred Stock or Registrable Securities, if
the Company is not required to file reports pursuant to Section 13(a) or 15(d)
of the Exchange Act, it will prepare and furnish to the Holders and make
publicly available in accordance with Rule 144(c) promulgated under the
Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance
substantially similar to those that would otherwise be required to be included
in reports required by Section 13(a) or 15(d) of the Exchange Act, as well as
any other information required thereby, in the time period that such filings
would have been required to have been made under the Exchange Act.  The Company further covenants that it will
take such further action as any Holder may reasonably request, all to the
extent required from time to time to enable such Person to sell Conversion
Shares and Warrant Shares without registration under the Securities Act within
the limitation of the exemptions provided by Rule 144 promulgated under the
Securities Act, including providing any legal opinions relating to such sale
pursuant to Rule 144.  Upon the request
of any Holder, the Company shall deliver to such Holder a written certification
of a duly authorized officer as to whether it has complied with such
requirements.



 11
 









 


7.             Miscellaneous.


(a)           Remedies.  In the event of a breach by the Company or by
a Holder, of any of their obligations under this Agreement, such Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this  Agreement.  The
Company and each Holder agree that monetary damages would not provide  adequate compensation for any losses incurred by reason of
a breach by it of any of the provisions of this Agreement and hereby further
agrees that, in the event of any action for specific performance in respect of
such breach, it shall waive the defense that a remedy at law would be adequate.


(b)           No Inconsistent Agreements.  Neither the Company nor any of its
subsidiaries has, as of the date hereof entered into and currently in effect,
nor shall the Company or any of its subsidiaries, on or after the date of this
Agreement, enter into any agreement with respect to its securities that is
inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. 
Except as disclosed in Schedule 2.1(c) of the Purchase Agreement
or Schedule II hereto, neither the Company nor any of its subsidiaries
has previously entered into any agreement currently in effect granting any
registration rights with respect to any of its securities to any Person.  Without limiting the generality of the
foregoing, without the written consent of the Holders of a majority of the then
outstanding Registrable Securities, the Company shall not grant to any Person
the right to request the Company to register any securities of the Company
under the Securities Act unless the rights so granted are subject in all
respects to the prior rights in full of the Holders set forth herein, and are
not otherwise in conflict with the provisions of this Agreement.


(c)           No Piggyback on Registrations.  Neither the Company nor any of its security
holders (other than the Holders in such capacity pursuant hereto or as
disclosed in Schedule 2.1(c) of the Purchase Agreement or Schedule II
hereto) may include securities of the Company in the Registration Statement,
and the Company shall not after the date hereof enter into any agreement
providing such right to any of its securityholders, unless the right so granted
is subject in all respects to the prior rights in full of the Holders set forth
herein, and is not otherwise in conflict with the provisions of this Agreement.


(d)           Piggy-Back Registrations.  If at any time when there is not an effective
Registration Statement covering (i) Conversion Shares or (ii) Warrant Shares,
the Company shall determine to prepare and file with the Commission a
registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued
solely in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans, the Company shall send to each holder of Registrable Securities written
notice of such determination and, if within thirty (30) days after receipt of
such notice, or within such shorter period of time as may be specified by the
Company in such written notice as may be necessary for the Company to comply
with its obligations with respect to the timing of the filing of such
registration statement, any such holder shall so request in writing, (which
request shall specify the Registrable Securities intended to be disposed of by
the Purchasers), the Company will cause the registration under the Securities
Act of all Registrable Securities which



 12
 









 


the Company has
been so requested to register by the holder, to the extent requisite to permit
the disposition of the Registrable Securities so to be registered, provided
that if at any time after giving written notice of its intention to register
any securities and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for any
reason not to register or to delay registration of such securities, the Company
may, at its election, give written notice of such determination to such holder
and, thereupon, (i) in the case of a determination not to register, shall be
relieved of its obligation to register any Registrable Securities in connection
with such registration (but not from its obligation to pay expenses in
accordance with Section 4 hereof), and (ii) in the case of a determination to
delay registering, shall be permitted to delay registering any Registrable
Securities being registered pursuant to this Section 7(d) for the same period
as the delay in registering such other securities. The Company shall include in
such registration statement all or any part of such Registrable Securities such
holder requests to be registered; provided, however, that the
Company shall not be required to register any Registrable Securities pursuant
to this Section 7(d) that are eligible for sale pursuant to Rule 144(k) of the
Securities Act.  In the case of an
underwritten public offering, if the managing underwriter(s) or underwriter(s)
should reasonably object to the inclusion of the Registrable Securities in such
registration statement, then if the Company after consultation with the
managing underwriter should reasonably determine that the inclusion of such
Registrable Securities would materially adversely affect the offering
contemplated in such registration statement, and based on such determination
recommends inclusion in such registration statement of fewer or none of the
Registrable Securities of the Holders, then (x) the number of Registrable
Securities of the Holders included in such registration statement shall be
reduced pro-rata among such Holders  (based upon
the number of Registrable Securities requested to be included in the
registration), if the Company after consultation with the underwriter(s)
recommends the inclusion of fewer Registrable Securities, or (y) none of the
Registrable Securities of the Holders shall be included in such registration
statement, if the Company after consultation with the underwriter(s) recommends
the inclusion of none of such Registrable Securities; provided, however,
that if securities are being offered for the account of other persons or
entities as well as the Company, such reduction shall not represent a greater
fraction of the number of Registrable securities intended to be offered by the
Holders than the fraction of similar reductions imposed on such other persons
or entities (other than the Company).


(e)           Failure to File Registration
Statement and Other Events.  The
Company and the Purchasers agree that the Holders will suffer damages if a
Registration Statement is not filed on or prior to the Filing Date or not
declared effective by the Commission on or prior to the Effectiveness Date and
maintained in the manner contemplated herein during the Effectiveness Period or
if certain other events occur.  The
Company and the Holders further agree that it would not be feasible to
ascertain the extent of such damages with precision.  Accordingly, if (A) the Registration
Statement is not filed on or prior to the Filing Date, or (B) the Registration
Statement is not declared effective by the Commission on or prior to the
Effectiveness Date, or (C) the Company fails to file with the Commission a
request for acceleration in accordance with Rule 461 promulgated under the
Securities Act within three (3) Business Days of the date that the Company is
notified (orally or in writing, whichever is earlier) by the Commission that a
Registration Statement will not be “reviewed,” or not subject to further
review, or (D) the Registration Statement is filed with and declared effective
by the Commission but thereafter ceases to be effective as to all Registrable
Securities at any time prior to the expiration of the Effectiveness Period,
without being succeeded immediately by a subsequent Registration Statement
filed with and declared effective by the Commission, or (E) the Company has



 13
 









 


breached Section
3(n), or (F) trading in the Common Stock shall be suspended or if the Common
Stock is no longer quoted on or is delisted from the OTC Bulletin Board (or
other principal exchange on which the Common Stock is traded) for any reason
for more than three (3) Business Days in the aggregate (any such failure or
breach being referred to as an “Event,” and for purposes of clauses (A)
and (B) the date on which such Event occurs, or for purposes of clause (C) the
date on which such three (3) Business Day period is exceeded, or for purposes
of clause (D) after more than fifteen (15) Business Days, or for purposes of
clause (F) the date on which such three (3) Business Day period is exceeded, being
referred to as “Event Date”), the Company shall pay an amount in cash as
liquidated damages to each Holder equal to one and one-half percent (1.5%) of
the amount of the Holder’s initial investment in the Preferred Stock for each
calendar month or portion thereof thereafter from the Event Date until the
applicable Event is cured; provided, however, that in no event
shall the amount of liquidated damages payable at any time and from time to
time to any Holder pursuant to this Section 7(e) exceed an aggregate of fifteen
percent (15%) of the amount of the Holder’s initial investment in the Preferred
Stock.  Notwithstanding anything to the
contrary in this paragraph (e), if (a) any of the Events described in clauses
(A), (B), (C), (D) or (F) shall have occurred, (b) on or prior to the
applicable Event Date, the Company shall have exercised its rights under
Section 3(n) hereof and (c) the postponement or suspension permitted pursuant
to such Section 3(n) shall remain effective as of such applicable Event Date, then
the applicable Event Date shall be deemed instead to occur on the second
Business Day following the termination of such postponement or suspension.  Liquidated damages payable by the Company
pursuant to this Section 7(d) shall be payable on the first (1st) Business Day of each thirty
(30) day period following the Event Date.


(f)            Amendments and Waivers.  The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the same shall be in writing and signed by the Company and the
Holders of seventy-five percent (75%) of the Registrable Securities
outstanding.


(g)           Notices.  Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery, telecopy or facsimile at the
address or number designated below (if delivered on a business day during
normal business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a business day
during normal business hours where such notice is to be received) or (b) on the
second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. 
The addresses for such communications shall be:




	
  If to the Company:

  	
   

  	
  Nascent Wine Company, Inc.

  2355 Paseo de las
  Americas

  San Diego, California 92154
 Attention: Sandro Piancone

  Tel. No.: (619) 661-0458
 Fax No.: (619) 661-9735

  






 



 14
 









 




	
  with copies (which 

  	
   

  	
  The Law Offices of Gary A. Agron

  
	
  shall not constitute

  notice) to:

  	
   

  	
  5445 DTC Parkway

  Suite 520

  Greenwood Village, CO 80111

  Attention: Gary A. Agron

  Tel. No.: (303) 770-7254

  Fax No.: (303) 770-7257

  
	
   

  	
   

  	
   

  
	
  If to any Purchaser:

  	
   

  	
  At the address of such Purchaser set forth on

  Exhibit A to this Agreement, with copies to

  Purchaser’s counsel as set forth on Exhibit A or as

  specified in writing by such:

  
	
   

  	
   

  	
   

  
	
  with copies (which

  shall not constitute

  notice) to:

  	
   

  	
  Kramer Levin Naftalis & Frankel LLP

  1177 Avenue of the Americas

  New York, New York 10036

  Attention: Howard T. Spilko

                   Christopher
  S. Auguste

  Tel No.: (212) 715-9100

  Fax No.: (212) 715-8000

  






 


Any party hereto
may from time to time change its address for notices by giving at least ten
(10) days written notice of such changed address to the other party hereto.


(h)           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns
and shall inure to the benefit of each Holder and its successors and
assigns.  The Company may not assign this
Agreement or any of its rights or obligations hereunder without the prior
written consent of each Holder.  Each
Purchaser may assign its rights hereunder in the manner and to the Persons as
permitted under the Purchase Agreement.


(i)            Assignment of Registration Rights.  The rights of each Holder hereunder,
including the right to have the Company register for resale Registrable
Securities in accordance with the terms of this Agreement, shall be automatically
assignable by each Holder to any Person of all or a portion  of
the Preferred Stock, the Common Shares or the Registrable Securities if: (i)
the Holder agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a)
the name and address of such transferee or assignee, and (b) the securities
with respect to which such registration rights are being transferred or
assigned, (iii) following such transfer or assignment the further disposition
of such securities by the transferee or assignees is restricted under the
Securities Act and applicable state securities laws unless such securities are
registered in a Registration Statement under this Agreement (in which case the
Company shall be obligated to amend such Registration Statement to reflect such
transfer or assignment) or are otherwise exempt from registration, (iv) at or
before the time the Company receives the written notice contemplated by clause
(ii) of this Section, the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions of this Agreement, and (v) such
transfer shall have been made in accordance with the applicable requirements of
the



 15
 









 


Purchase
Agreement.  The rights to assignment
shall apply to the Holders (and to subsequent) successors and assigns.


(j)            Counterparts.  This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement and shall become effective when counterparts have been signed by each
party and delivered to the other parties hereto, it being understood that all
parties need not sign the same counterpart. 
In the event that any signature is delivered by facsimile transmission,
such signature shall create a valid binding obligation of the party executing
(or on whose behalf such signature is executed) the same with the same force
and effect as if such facsimile signature were the original thereof.


(k)           Governing
Law; Jurisdiction.  This Agreement
shall be governed by and construed in accordance with the internal laws of the
State of New York, without giving effect to any of the conflicts of law
principles which would result in the application of the substantive law of
another jurisdiction.  This Agreement
shall not be interpreted or construed with any presumption against the party
causing this Agreement to be drafted. 
The Company and the Holders agree that venue for any dispute arising
under this Agreement will lie exclusively in the state or federal courts
located in New York County, New York, and the parties irrevocably waive any
right to raise forum non conveniens or any other
argument that New York is not the proper venue. 
The Company and the Holders irrevocably consent to personal jurisdiction
in the state and federal courts of the state of New York.  The Company and the Holders consent to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. 
Nothing in this Section 7(k) shall affect or limit any right to serve
process in any other manner permitted by law. 
The Company and the Holders hereby agree that the prevailing party in
any suit, action or proceeding arising out of or relating to this Agreement or
the Purchase Agreement, shall be entitled to reimbursement for reasonable legal
fees from the non-prevailing party.  The
parties hereby waive all rights to a trial by jury.


(l)            Cumulative Remedies.  The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.


(m)          Severability. If any term,
provision, covenant or restriction of this Agreement is held to be invalid,
illegal, void or unenforceable in any respect, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction.  It is hereby stipulated and declared  to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.


(n)           Headings.  The headings herein are for convenience only,
do not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.



 16
 









 


(o)           Shares Held by the Company and its
Affiliates. Whenever the consent or approval of Holders of a specified
percentage of Registrable Securities is required hereunder, Registrable
Securities held by the Company or its Affiliates (other than any Holder or
transferees or successors or assigns thereof if such Holder is deemed to be an
Affiliate solely by reason of its holdings of such Registrable Securities) shall
not be counted in determining whether such consent or approval was given by the
Holders of such required percentage.


[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]



 17
 









 


IN WITNESS
WHEREOF, the parties hereto have caused this Registration Rights Agreement to
be duly executed by their respective authorized persons as of the date first
indicated above.


	
  

  	
  NASCENT WINE COMPANY, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Sandro Piancone

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PURCHASER:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						



 



 18
 









 


Schedule I

Purchasers


	
  Names and Addresses

  	
   

  	
  Number of Preferred Shares

  	
   

  	
  Dollar Amount of

  	
   

  
	
  of Purchasers

  	
   

  	
  & Warrants Purchased

  	
   

  	
  Investment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 



 19
 









 


Schedule II

Other Securities to be Included on the Registration Statement



 20
 









 


Exhibit A

Plan of Distribution


The selling security holders and any of their
pledgees, donees, assignees and successors-in-interest may, from time to time,
sell any or all of their shares of common stock being offered under this
prospectus on any stock exchange, market or trading facility on which shares of
our common stock are traded or in private transactions.  These sales may be at fixed or negotiated
prices.  The selling security holders may
use any one or more of the following methods when disposing of shares:


·              ordinary brokerage transactions and
transactions in which the broker-dealer solicits purchasers;


·              block trades in which the broker-dealer will
attempt to sell the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;


·              purchases by a broker-dealer as principal and
resales by the broker-dealer for its account;


·              an exchange distribution in accordance with
the rules of the applicable exchange;


·              privately negotiated transactions;


·              to cover short sales made after the date that
the registration statement of which this prospectus is a part is declared
effective by the Commission;


·              broker-dealers may agree with the selling
security holders to sell a specified number of such shares at a stipulated
price per share;


·              a combination of any of these methods of
sale; and


·              any other method permitted pursuant to
applicable law.


The shares may also be sold under Rule 144 under the
Securities Act of 1933, as amended (“Securities Act”), if available, rather
than under this prospectus.  The selling
security holders have the sole and absolute discretion not to accept any
purchase offer or make any sale of shares if they deem the purchase price to be
unsatisfactory at any particular time.


The selling security holders may pledge their shares
to their brokers under the margin provisions of customer agreements.  If a selling security holder defaults on a
margin loan, the broker may, from time to time, offer and sell the pledged
shares.


Broker-dealers engaged by the selling security holders
may arrange for other broker-dealers to participate in sales. Broker-dealers
may receive commissions or discounts from the selling security holders (or, if
any broker-dealer acts as agent for the purchaser of shares, from the
purchaser) in amounts to be negotiated, which commissions as to a particular
broker or dealer may be in excess of customary commissions to the extent
permitted by applicable law.



 21
 









 


If sales of shares offered under this prospectus are
made to broker-dealers as principals, we would be required to file a
post-effective amendment to the registration statement of which this prospectus
is a part.  In the post-effective
amendment, we would be required to disclose the names of any participating broker-dealers
and the compensation arrangements relating to such sales.


The selling security holders and any broker-dealers or
agents that are involved in selling the shares offered under this prospectus
may be deemed to be “underwriters” within the meaning of the Securities Act in
connection with these sales.  Commissions
received by these broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.  Any
broker-dealers or agents that are deemed to be underwriters may not sell shares
offered under this prospectus unless and until we set forth the names of the
underwriters and the material details of their underwriting arrangements in a
supplement to this prospectus or, if required, in a replacement prospectus
included in a post-effective amendment to the registration statement of which
this prospectus is a part.


The selling security holders and any other persons
participating in the sale or distribution of the shares offered under this
prospectus will be subject to applicable provisions of the Exchange Act, and
the rules and regulations under that act, including Regulation M.  These provisions may restrict activities of,
and limit the timing of purchases and sales of any of the shares by, the
selling security holders or any other person. 
Furthermore, under Regulation M, persons engaged in a distribution of
securities are prohibited from simultaneously engaging in market making and
other activities with respect to those securities for a specified period of
time prior to the commencement of such distributions, subject to specified
exceptions or exemptions.  All of these
limitations may affect the marketability of the shares.


If any of the shares of common stock offered for sale
pursuant to this prospectus are transferred other than pursuant to a sale under
this prospectus, then subsequent holders could not use this prospectus until a
post-effective amendment or prospectus supplement is filed, naming such holders.  We offer no assurance as to whether any of
the selling security holders will sell all or any portion of the shares offered
under this prospectus.


We have agreed to pay all fees and expenses we incur
incident to the registration of the shares being offered under this
prospectus.  However, each selling
security holder and purchaser is responsible for paying any discounts,
commissions and similar selling expenses they incur.


We and the selling security holders have agreed to
indemnify one another against certain losses, damages and liabilities arising
in connection with this prospectus, including liabilities under the Securities
Act.


 



 22