DEBT RESTRUCTURING AGREEMENT
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This Debt Restructuring Agreement ("Agreement") is made and
entered into this 24th day of September, 2004 (the "Effective Date"), by and
among Knightsbridge Fine Wines, Inc. (hereinafter referred to as "Borrower"),
and Gryphon Master Fund, L.P. (hereinafter referred to as "Lender").
WHEREAS, Borrower has requested Lender to cancel certain penalties
due to Lender and to freeze remaining penalties which may come due pursuant to
the terms of that certain registration rights agreement, dated April 21, 2004,
between Borrower and Lender (the "Registration Rights Agreement");
WHEREAS, Borrower has requested Lender cancel certain interest
payments currently due and which will become due pursuant to the terms of that
certain 7.5% Senior Secured Convertible Note Due 2006, dated April 21, 2004, in
the original principal amount of $5,500,000, issued by Borrower to Lender (the
"Original Note"); and
WHEREAS, Lender has agreed to cancel certain penalties due and
freeze future penalties pursuant to the Registration Rights Agreement and to
cancel certain interest payments which are currently due and certain interest
payments which shall become due in the future pursuant to the Original Note, as
more specifically set forth herein, in consideration for the issuance of a new
promissory note in the amount of seven hundred thousand dollars ($700,000) to be
issued by Borrower to Lender.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
1. CANCELLATION OF AMOUNTS DUE AND TERMS OF PAYMENT
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1.1 Cancellation of Amounts Currently Due. Lender hereby agrees to
cancel (i) those penalties which are currently due under the
Registration Rights Agreement; (ii) one certain interest payment
which is currently due under the Original Note; and (iii) one
certain future interest payment which will be due in the future
pursuant to the terms of the Original Note. The specific amounts to
be cancelled pursuant to items (i)-(iii) of this paragraph 1.1 are
set forth in Exhibit A attached hereto and incorporated herein by
reference.
1.2 Freeze on Future Penalties. As of the Effective Date, Lender hereby
agrees to freeze any future penalties due pursuant to the terms of
the Registration Rights Agreement.
1.3 Note and Payment. In consideration for the above stated actions by
Lender, Borrower will issue and deliver to Lender the promissory
note in the amount of seven hundred thousand dollars ($700,000)
substantially in the form attached hereto as Exhibit B (the "New
Note"). Borrower agrees to pay to Lender the principal and interest
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due in respect to the New Note according to the terms thereof, which
terms are incorporated herein in their entirety.
1.4 Security and Reinstatement of Penalties and Interest. The New Note
shall be secured by 3,000,000 shares of common stock of the Borrower
owned by Xxxx Xxxxxxx (the "Collateral"). The Collateral shall be
held pursuant to the Stock Pledge and Escrow Agreements attached
hereto as Exhibit C and Exhibit D, respectively. Should an Event of
Default (as defined in the New Note) occur, which the Borrower does
not cure following notice in accordance with the terms of the New
Note, then the Lender shall have the right to immediately demand
that the Collateral be released to Lender and shall also be entitled
to reinstate any interest or penalties previously cancelled or
frozen pursuant to the terms of this Agreement less any amounts
actually paid by the Borrower under the New Note.
1.5 Term of Agreement. This Agreement shall have a term beginning as of
the Effective Date and ending on the date that the New Note is paid
in full and Borrower has complied with its obligations under this
Agreement and the New Note.
2. CONDITIONS PRECEDENT TO DEBT RESTRUCTURING
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2.1 Conditions to the Debt Restructuring. The restructuring of the debt
by Lender shall be subject to the following conditions set forth in
this Section.
A. The New Note shall have been duly executed and delivered by
Borrower to Lender.
B. The representations and warranties of Borrower contained in
this Agreement and the New Note shall be true and correct in
all material respects.
C. Xxxx Xxxxxxx shall have entered into the Stock Pledge and
Escrow Agreements attached hereto as Exhibit C and Exhibit D,
respectively.
D. Borrower shall have executed and delivered to Lender the
Notice of Conversion Price Adjustment in the form attached
hereto as Exhibit E.
E. Borrower shall have executed and delivered to Lender the
Irrevocable Escrow Agent Instructions in the form attached
hereto as Exhibit F.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
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Borrower represents and warrants that:
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3.1 Transaction is Legal and Authorized. This Agreement and the New Note
executed by Borrower, and compliance by Borrower with all of the
provisions of this Agreement are valid, legal, binding and
enforceable in accordance with their terms and will not conflict
with or result in any breach of any of the provisions of Borrower's
articles of incorporation, bylaws or the terms of any other
agreement to which Borrower is subject.
3.2 No Consents Required. The execution, delivery and performance of
this Agreement by Borrower does not require the consent or approval
of any governmental body, agency, authority or other person or
entity.
4. COVENANTS
4.1 Assignment. Borrower shall not assign or transfer any of its rights,
duties or obligations under the New Note without the prior written
consent of Lender.
4.2 Further Assurances. Borrower shall from time to time execute and
deliver, or cause to be executed and delivered, to Lender such other
documents and shall take, or cause to be taken, such other action as
may be reasonably requested by Lender in order to implement or
effectuate the provisions of, or more fully perfect the rights
granted or intended to be granted to Lender pursuant to the terms of
this Agreement, the New Note or any other agreement executed and
delivered to Lender by Borrower.
4.3 Continuing Covenants. At all times during the term of this
Agreement, Borrower shall adhere to and comply with all of the
covenants and agreements set forth in this Section 4.
5. INFORMATION AS TO BORROWER
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5.1 Notice of Default or Event of Default. Immediately upon becoming
aware of the existence of any condition or event which constitutes
an Event of Default (as defined in the New Note), Borrower shall
submit to Lender a written notice specifying the nature of the Event
of Default and what action Borrower is taking or proposes to take
with respect thereto.
5.2 Requested Information. With reasonable promptness, Borrower shall
submit to Lender such other information as, from time to time, may
be reasonably requested by Lender.
6. GENERAL
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6.1 Parties, Successors and Assigns. This Agreement shall be binding
upon Borrower, its successors and assigns and inure to the benefit
of the successors and assigns of Lender.
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6.2 Notices. All notices (including other communications required or
permitted) under this Agreement must be in writing and must be
delivered (a) in person, (b) by registered or certified mail,
postage prepaid, return receipt requested, (c) by a generally
recognized courier or messenger service that provides written
acknowledgement of receipt by the addressee, or (d) by facsimile or
other generally accepted means of electronic transmission with a
verification of delivery. Notices are deemed delivered when actually
delivered to the address for notices as follows:
To Lender:
Gryphon Master Fund, L.P.
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx X. Garden, P.C.
000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Garden, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To Borrower:
Knightsbridge Fine Wines, Inc.
Xxx Xxxxxxxx Xxxxx Xxxx
Xxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: 000-000-0000
With a copy to:
Law Offices of Xxxxx X. Xxxxxxx, PC
000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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Any party may by written notice as set forth herein change the
address or telephone/fax numbers to which notices or other
communications to it are to be delivered or mailed.
6.3 Entire Agreement; Amendments. This Agreement and all other
agreements referred to herein or delivered in connection herewith
shall constitute the entire agreement between the parties relating
to the subject matter hereof, shall supersede all prior agreements,
commitment letters, and understandings between the parties hereto
relating to the subject matter hereof, and shall not be modified,
amended or terminated, nor shall any provision hereof be waived,
except in a writing signed by all parties affected. Notwithstanding
the foregoing, the Registration Rights Agreement and the Original
Note shall only be modified to the extent specifically set forth
herein and shall otherwise remain in full force and effect in
accordance with their existing terms.
6.4 Governing Law; Jurisdiction and Venue. This Agreement shall be
governed by, and construed in accordance with, the laws of the State
of Nevada without regard to principles of conflicts of law. The
parties hereby agree that all actions or proceedings arising
directly or indirectly from or in connection with this Agreement
shall be litigated only in the United States District Court for the
Northern District of Texas located in Dallas County, Dallas, Texas.
The parties consent and submit to the jurisdiction and venue of the
foregoing court and consent that any process or notice of motion or
other application to said court or a judge thereof may be served
inside or outside the State of Texas or the Northern District of
Texas (but with respect to any party hereto, such consent shall not
be deemed a general consent to jurisdiction and service for any
third parties) by registered mail, return receipt requested,
directed to the party being served at its address provided in or
pursuant to Section 6.2 above (and service so made shall be deemed
complete three (3) days after the same has been posted as aforesaid)
or by personal service or in such other manner as may be permissible
under the rules of said court. Borrower hereby waives any right to a
jury trial in connection with any litigation pursuant to this
Agreement.
6.5 Survival. All representations warranties and covenants made by
Borrower under this Agreement shall be considered to have been
relied upon by Lender and shall survive the delivery to Lender of
the New Note.
6.6 Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be deemed an original, with the
same effect as if the signatures thereto and hereto were upon the
same instrument.
6.7 Counsel. Each party to this Agreement represents and warrants that
it has received the advice and counsel of an attorney in connection
with the negotiation, preparation and execution of this Agreement.
[SIGNITURE PAGE FOLLOWS]
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IN WITNESS WHEREOF the parties have executed this Agreement effective
as of the day and year first above written.
BORROWER:
KNIGHTSBRIDGE FINE WINES, INC.
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Name: Xxxx Xxxxxxx
Title: Chief Executive Officer
LENDER:
GRYPHON MASTER FUND L.P.
By: Gryphon Partners, L.P.,
its General Partner
By: Gryphon Management Partners, L.P.,
its General Partner
By: Gryphon Advisors, L.L.C.,
its General Partner
By:
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Xxxxxx X. Garden, Authorized Agent
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EXHIBIT A
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1. All amounts currently payable, or that in the future may become payable,
as liquidated damages under Section 2(c)(i) of the Registration Rights
Agreement.
2. The interest payment that was due and payable on July 1, 2004, under
Section 2 of the Original Note.
3. The interest payment that will become due and payable on January 1, 2005,
under Section 2 of the Original Note.
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EXHIBIT B
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Form of New Note
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EXHIBIT C
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Form of Stock Pledge Agreement
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EXHIBIT D
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Form of Escrow Agreement
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EXHIBIT E
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Form of Notice of Conversion Price Adjustment
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EXHIBIT F
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Form of Irrevocable Escrow Agent Instructions
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