Exhibit 10.10
EXHIBIT D
TO
EXCHANGE
AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT, dated as of April 21,
2004 (this "Agreement"), by and between KNIGHTSBRIDGE FINE WINES, INC., a Nevada
corporation (the "Company"), and GRYPHON MASTER FUND, L.P., a Bermuda limited
partnership ("Gryphon").
W I T N E S S E T H:
WHEREAS, the Company and Gryphon have executed and entered into that
certain Security Agreement dated December 22, 2003 (the "Original Security
Agreement");
WHEREAS, in connection with the Exchange Agreement (such capitalized
term and all other capitalized terms used herein having the respective meanings
provided herein), Gryphon has exchanged, among other things, the Company's 7.5%
Secured Convertible Note due 2006 (the "Original Note") that was the subject of
the Original Security Agreement for the New Note, and the Company has agreed to
grant to Gryphon a security interest in the Company's properties and assets to
secure the payment of the New Note; and
WHEREAS, Gryphon and the Company desire that Gryphon continue to have a
first priority security interest in and to the Collateral, but to secure payment
of the New Note rather than the Original Note.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and
Gryphon hereby agree that the Original Security Agreement is amended and
restated in its entirety as follows:
1. REFERENCE TO NEW NOTE. This Agreement is being executed and delivered in
connection with that certain 7.5% Senior Secured Convertible Note due 2006, in
the original principal amount of $5,500,000, issued by the Company to Gryphon
pursuant to the Exchange Agreement (the "New Note").
2. INCORPORATION OF NEW NOTE. The terms, conditions, and provisions of the
New Note are incorporated herein by reference, the same as if set forth herein
verbatim, which terms, conditions, and provisions shall continue to be in full
force and effect hereunder until the New Note is paid and performed in full.
3. CERTAIN DEFINITIONS. As used herein, the following terms have the
meanings indicated:
"Collateral" means any and all assets and properties (real, personal or
mixed) of the Company, whether now owned or hereafter acquired, including,
without limitation, (i) all replacements, substitutions and additions thereto,
and the accounts, notes and any other proceeds therefrom, and (ii) the Company's
entire equity interest in Xxxxxxxx Knightsbridge LLC, a California limited
liability company ("KKLLC"). Without limiting the generality of the foregoing,
the term "Collateral" shall include all of the Company's right, title and
interest, whether now owned or hereafter acquired, whether direct or indirect,
whether legal, beneficial or economic, whether fixed or contingent, whether
arising under the KKLLC Organizational Documents, under applicable law or
otherwise (A) as a member in and to KKLLC (including the Company's 50%
membership interest in KKLLC), the Company's interest in any other rights to
participate in the equity of KKLLC, the Company's share of the profits, losses
and capital of KKLLC, the Company's voting rights and all of the Company's
rights in, to and under the KKLLC Organizational Documents, including any
purchase option, right of first refusal, right of first offer and buy/sell
right; (B) any other membership and other interest in and to KKLLC; (C) in all
Distributions from KKLLC; (D) in all proceeds (including claims against third
parties), products, offspring, rents, revenues, issues, profits, royalties,
income, benefits, additions and accessions to or of any of the foregoing; (E) in
all replacements and substitutions of or for any of the foregoing; (F) in all
books and records (in whatever form or media, including without limitation
computerized records, software and disks) relating to any of the foregoing; and
(G) in all documents, instruments, certificates, agreements or other evidence of
any of the foregoing, whether or not in written form and whether heretofore or
hereafter in existence or acquired.
"Distribution" means any and all dividends, including capital
dividends, stock dividends and liquidating dividends, payments, deferred
payments, money, real or personal property or any other distributions of any
kind or character, made by KKLLC on or in respect of any ownership interest and
any of the foregoing received in payment or in redemption of, or in exchange
for, any ownership interest.
"Event of Default" shall have the meaning provided in the New Note.
"Exchange Agreement" means the Securities Exchange Agreement, dated as
of April 21, 2004, by and between the Company and Gryphon.
2
"KKLLC Organizational Documents" means the Certificate of Organization
or Formation of KKLLC, the Operating Agreement or Limited Liability Company
Agreement of KKLLC, and each other organizational or constituent document of
KKLLC.
"Obligation" means the Company's payment and performance duties and
obligations under the New Note, together with any and all renewals, extensions,
and modifications of the same, and all costs of collection thereunder.
"Obligor" means any person obligated with respect to any of the
Collateral, whether as an account debtor, obligor on an instrument, issuer of
securities, or otherwise.
"Security Interests" means the security interests granted and the
pledges and assignments made under Section 4.
"Security Document" means any security agreement, financing statement,
mortgage, deed of trust or other similar security document.
"UCC" means the Uniform Commercial Code as enacted in the State of
Nevada, the State of California, the State of New Jersey, and/or other
applicable jurisdiction, as amended at the time in question.
4. SECURITY INTERESTS. In order to secure the full and complete payment and
performance of the Obligation when due, the Company hereby grants to Gryphon a
first priority security interest in and to the Collateral and pledges and
assigns the Collateral to Gryphon, all upon and subject to the terms and
conditions of this Agreement. Such security interests are granted and such
pledges and assignments are made as security only and shall not subject Gryphon
to, or transfer or in any way affect or modify, any obligation of the Company
with respect to any of the Collateral or any transaction involving or giving
rise thereto.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
(a) REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. The
Company represents and warrants that (i) it has all requisite power and
authority to enter into this Agreement; (ii) except for any Security Documents
that may be filed by Gryphon with respect to the Collateral, no Security
Document covering the Collateral, or any part thereof, has been filed with any
filing officer, agency, instrumentality or authority; (iii) no other Security
Document covering the Collateral, or any part thereof, has been made and no
security interests, other than the ones created hereby, have attached to or been
perfected in
3
the Collateral or in any part thereof; and (iv) no dispute, right of setoff,
counterclaim, or defense exists with respect to any part of the Collateral.
(b) AFFIRMATIVE COVENANTS OF THE COMPANY. The Company covenants and
agrees to each and all of the following: (i) to execute and deliver promptly to
Gryphon all such other Security Documents, assignments, certificates, and
supplemental writings, and to do all other acts or things, as Gryphon may
reasonably request in order more fully to evidence and perfect the Security
Interests; (ii) to assist Gryphon, at its request from time to time, in
perfecting the Security Interests in each applicable foreign and domestic
jurisdiction; (iii) to furnish Gryphon promptly with any information or writing
that Gryphon may reasonably request concerning the Collateral; (iv) to allow
Gryphon to inspect all books and records of the Company relating to the
Collateral or the New Note, and to make and take away copies of such books and
records at Gryphon's expense; (v) to notify Gryphon promptly of any change in
any material fact or circumstance warranted or represented by the Company in
this Agreement or in any other writings furnished by the Company to Gryphon in
connection with the Collateral; (vi) to notify Gryphon promptly of any claim,
action, or proceeding affecting title to the Collateral, or any part thereof, or
any of the Security Interests, and at the request of Gryphon, to appear in and
defend, at the Company's sole cost and expense, any action or proceeding; and
(vii) to pay to Gryphon promptly the amount of all court costs and reasonable
attorney's fees incurred by Gryphon in the enforcement of its rights hereunder.
(c) NEGATIVE COVENANTS OF THE COMPANY. The Company covenants and agrees
that, without the prior written consent of Gryphon (which consent may be granted
or withheld in the sole and absolute discretion of Gryphon), the Company will
not create any other security interest in, mortgage, or otherwise encumber the
Collateral or any part thereof, or permit the Collateral to be or become subject
to any lien, attachment, execution, sequestration, other legal or equitable
process, or any encumbrance of any kind or character, except for the Security
Interests.
(d) NO CHANGES TO ORGANIZATIONAL DOCUMENTS OR OWNERSHIP STRUCTURE OF
KKLLC. The Company shall not, and shall not cause KKLLC to, (i) cancel or
terminate the KKLLC Organizational Documents or consent to or accept any
cancellation or termination thereof; (ii) amend, supplement or otherwise modify
the KKLLC Organizational Documents, (iii) petition, request or take any other
legal or administrative action that seeks, or may reasonably be expected, to
rescind, terminate, amend, modify or suspend the KKLLC Organizational Documents;
(iv) vote to enable, or take any other action to permit, KKLLC to admit any
additional person or entity as a member of KKLLC; (v) voluntarily withdraw as a
member in KKLLC; (vi) vote to enable, or take any other action to permit, KKLLC
to issue any
4
additional membership interests, or to issue any interests convertible into or
granting the right to purchase or exchange for any membership interests of
KKLLC; or (vii) vote to enable, or take any other action to permit, KKLLC to
issue any certificate or other writing (other than the KKLLC Organizational
Documents) to represent the Company's membership interest in KKLLC.
(e) COMPLIANCE WITH KKLLC ORGANIZATIONAL DOCUMENTS. The Company shall
(i) observe and perform each and every term, covenant and provision of the KKLLC
Organizational Documents on the part of the Company to be observed and performed
and shall duly and faithfully discharge the Company's obligations under the
KKLLC Organizational Documents and under each and every agreement, document or
instrument relating to the Company's right to receive the Collateral; and (ii)
take all steps required to enforce the rights of the Company under the KKLLC
Organizational Documents.
(f) NOT A "SECURITY". The Company shall not cause or consent to, and
shall not cause KKLLC to cause or consent to, (i) any membership interests in
KKLLC to be dealt with or traded on any securities exchanges or in any
securities markets, or (ii) elect to have the membership interests in KKLLC
treated as a "security" under or governed by Article 8 of the UCC.
6. DISTRIBUTIONS FROM KKLLC.
(a) GENERAL PROHIBITION. Without Gryphon's prior written consent, the
Company shall not cause or consent to any Distribution.
(b) DISTRIBUTION OBLIGATIONS. Without waiving any Event of Default for
any breach, default or violation of Section 6(a) above, with respect to any
Distribution to which the Company becomes entitled:
(i) To the extent such Distribution is in the form of cash or cash
equivalents, the Company shall request that the person or entity making such
Distribution deposit the same with Gryphon pursuant to instructions which
Gryphon shall specify, with all necessary endorsements. If the Company (or any
other person or entity) should nevertheless receive such Distribution, it shall
hold the same in trust for the benefit of Gryphon separate and apart from any of
its own assets and immediately cause the same to be delivered to Gryphon, with
all necessary endorsements;
(ii) To the extent such Distribution is not in the form of cash or
cash equivalents, the Company shall, concurrently with such Distribution,
execute, deliver and cause to be filed such Financing Statements naming Gryphon
as secured party in such jurisdictions as Gryphon shall specify covering such
Distribution;
5
(iii) To the extent such Distribution is a "certificated security"
within the meaning of Article 8 of the Uniform Commercial Code, the Company
shall also, concurrently with such Distribution, (A) request that KKLLC deliver
directly to Gryphon each such "certificated security," each undated and duly
endorsed in blank, and (B) deliver to Gryphon all necessary stock powers, other
powers, instruments of transfer or assignment, each undated and duly executed in
blank, as Gryphon may request; and
(iv) To the extent such Distribution is an "uncertificated
security" within the meaning of Article 8 of the Uniform Commercial Code, the
Company shall also, concurrently with such Distribution, request that KKLLC, (A)
create a registration book for the registration of such "uncertificated
security" and duly register Gryphon as the registered owner thereof to the
extent of its security interest therein and the prohibition on making
Distributions, and (B) deliver such registration book to Gryphon.
7. DEFAULT; REMEDIES. Should an Event of Default occur and be continuing,
Gryphon may, at its election, exercise any and all rights available to Gryphon
under the UCC, in addition to any and all other rights afforded by this
Agreement, at law, in equity, or otherwise, including, without limitation, (a)
requiring the Company to assemble all or part of the Collateral and make it
available to Gryphon at a place to be designated by Gryphon which is reasonably
convenient to the Company and Gryphon, (b) surrendering any policies of
insurance on all or part of the Collateral and receiving and applying the
unearned premiums as a credit on the Obligation, (c) applying by appropriate
judicial proceedings for appointment of a receiver for all or part of the
Collateral (and the Company hereby consents to any such appointment), and (d)
applying to the Obligation any cash held by Gryphon under this Agreement. In
addition, Gryphon shall have the right, without any further action or consent of
the Company or any other person or entity, to immediately (i) direct KKLLC
("KKLLC Direction") to identify Gryphon or Gryphon's designee, on the books and
records of KKLLC, as a member of KKLLC in full substitution of the Company and
(ii) otherwise take and cause KKLLC to take all other steps required to identify
Gryphon or such designee as the sole and exclusive owner of the Collateral. In
furtherance thereof, the Company hereby irrevocably authorizes and directs KKLLC
on receipt of any KKLLC Direction (A) to admit Gryphon or such designee as a
member in KKLLC, entitled to exercise all the rights, powers and privileges
(including voting rights, the right to receive all Distributions and be credited
with the capital account of the Company, the right to participate in the
management and operation of KKLLC, all rights in, to and under the KKLLC
Organizational Documents, including any purchase option, right of first refusal,
right of first offer and buy/sell right and the right to exercise all other
powers and privileges appertaining to such membership interest) to which the
Company would have been entitled had Gryphon not delivered the KKLLC Direction,
and (B) to file an amendment to the KKLLC Organizational Documents
6
admitting Gryphon or such designee as a member in substitution of the Company;
provided, however, that no such amendment shall be necessary or required to
effectuate, implement or activate Gryphon rights under this Agreement or
Gryphon's rights as owner and successor-in-interest to all of the Company's
rights in, to and under the Collateral. The Company acknowledges that sending of
the KKLLC Direction and the compliance by the Company or KKLLC with the
requirements hereof would not violate any automatic stay that may be in effect
under any bankruptcy law.
(a) NOTICE. Reasonable notification of the time and place of any public
sale of the Collateral, or reasonable notification of the time after which any
private sale or other intended disposition of the Collateral is to be made,
shall be sent to the Company and to any other person entitled to notice under
the UCC; provided that if any of the Collateral threatens to decline speedily in
value or is of the type customarily sold on a recognized market, Gryphon may
sell or otherwise dispose of the Collateral without notification, advertisement,
or other notice of any kind. It is agreed that notice sent or given not less
than three (3) calendar days prior to the taking of the action to which the
notice relates is reasonable notification and notice for the purposes of this
subsection.
(b) SALES OF SECURITIES. In connection with the sale of any Collateral
that is securities, Gryphon is authorized, but not obligated, to limit
prospective purchasers to the extent deemed necessary or desirable by Gryphon to
render such sale exempt from the registration requirements of the Securities Act
of 1933, as amended, and any applicable state securities laws, and no sale so
made in good faith by Gryphon shall be deemed not to be "commercially
reasonable" because so made.
(c) APPLICATION OF PROCEEDS. Gryphon shall apply the proceeds of any
sale or other disposition of the Collateral under this Section 7 in the
following order: First, to the payment of all its expenses incurred in retaking,
holding, and preparing any of the Collateral for sale(s) or other disposition,
in arranging for such sale(s) or other disposition, and in actually selling or
disposing of the same (all of which are part of the Obligation); second, toward
repayment of amounts expended by Gryphon under Section 8; and third, toward
payment of the balance of the Obligation in such order and manner as Gryphon, in
its discretion, may deem advisable. Any surplus remaining shall be delivered to
the Company or as a court of competent jurisdiction may direct.
8. OTHER RIGHTS OF GRYPHON.
(a) PERFORMANCE. In the event the Company shall fail to pay when due
all taxes on any of the Collateral, or to preserve the priority of the Security
7
Interests in any of the Collateral, or otherwise fail to perform any of its
obligations under this Agreement with respect to the Collateral, then Gryphon
may, at its option, but without being required to do so, pay such taxes,
prosecute or defend any suits in relation to the Collateral, or take all such
other action which the Company is required, but has failed or refused, to take
under this Agreement. Any sum which may be expended or paid by Gryphon under
this subsection (including, without limitation, court costs and attorneys' fees)
shall bear interest from the dates of expenditure or payment at the highest
lawful rate until paid and, together with such interest, shall be payable by the
Company to Gryphon upon demand and shall be part of the Obligation.
(b) COLLECTION. Upon notice from Gryphon, each Obligor with respect to
any payments on any of the Collateral (including, without limitation, dividends
and other distributions with respect to securities and insurance proceeds
payable by reason of loss or damage to any of the Collateral) is hereby
authorized and directed by the Company to make payment directly to Gryphon,
regardless of whether the Company was previously making collections thereon.
Subject to Section 8(e) hereof, until such notice is given, the Company is
authorized to retain and expend all payments made on the Collateral. Gryphon
shall have the right in its own name or in the name of the Company to compromise
or extend time of payment with respect to all or any portion of the Collateral
for such amounts and upon such terms as Gryphon may determine; to demand,
collect, receive, receipt for, xxx for, compound, and give acquaintances for any
and all amounts due or to become due with respect to the Collateral; to take
control of cash and other proceeds of any Collateral; to endorse the name of the
Company on any notes, acceptances, checks, drafts, money orders, or other
evidences of payment on the Collateral that may come into the possession of
Gryphon; to sign the name of the Company on any invoice or xxxx of lading
relating to any Collateral, on any drafts against Obligors or other persons
making payment with respect to the Collateral, on assignments and verifications
of accounts or other Collateral and on notices to Obligors making payment with
respect to the Collateral; to send requests for verification of obligations to
any Obligor; and to do all other acts and things necessary to carry out the
intent of this Agreement. If any Obligor fails or refuses to make payment on any
Collateral when due, Gryphon is authorized, in its sole discretion, either in
its own name or in the name of the Company, to take such action as it shall deem
appropriate for the collection of any amounts owed with respect to the
Collateral or upon which a delinquency exists. Regardless of any other provision
hereof, however, Gryphon shall never be liable for their failure to collect, or
for its failure to exercise diligence in the collection of, any amounts owed
with respect to the Collateral, nor shall it be under any duty whatever to
anyone except the Company to account for funds that it shall actually receive
hereunder. Without limiting the generality of the foregoing, Gryphon shall have
no responsibility for ascertaining any maturities, calls, conversions,
exchanges, offers, tenders, or similar matters relating to any
8
Collateral, or for informing the Company with respect to any of such matters
(irrespective of whether Gryphon actually has, or may be deemed to have,
knowledge thereof). The rights granted Gryphon under this subsection may be
exercised at any time, whether or not an Event of Default has occurred and is
continuing.
(c) RECORD OWNERSHIP OF SECURITIES. Whether or not an Event of Default
has occurred and is continuing, Gryphon at any time may have any Collateral that
is securities and that is in the possession of Gryphon, or its nominee or
nominees, registered in its name, or in the name of its nominee or nominees, as
pledgee; and, as to any securities so registered, Gryphon shall execute and
deliver (or cause to be executed and delivered) to the Company all such proxies,
powers of attorney, dividend coupons or orders, and other documents as the
Company may reasonably request for the purpose of enabling the Company to
exercise the voting rights and powers which it is entitled to exercise under
this Agreement and to receive the dividends and other payments in respect of
securities which it is authorized to receive and retain under this Agreement.
(d) VOTING OF SECURITIES. As long as an Event of Default has not
occurred and is not continuing, the Company shall be entitled to exercise all
voting rights pertaining to any Collateral that is securities. After the
occurrence and during the continuance of an Event of Default, the right to vote
any Collateral that is securities shall be vested exclusively in Gryphon. To
this end, the Company hereby irrevocably constitutes and appoints Gryphon the
proxy and attorney-in-fact of the Company, with full power of substitution, to
vote, and to act with respect to, any and all Collateral that is securities
standing in the name of the Company or with respect to which the Company is
entitled to vote and act, subject to the understanding that such proxy may not
be exercised unless an Event of Default has occurred and is continuing. The
proxy herein granted is coupled with an interest, is irrevocable, and shall
continue until the Obligation has been paid and performed in full.
(e) CERTAIN PROCEEDS. Notwithstanding any provision of this Agreement
to the contrary, any and all stock dividends or distributions in property made
on or in respect of any Collateral that is securities, and any proceeds of any
Collateral that is securities, whether such dividends, distributions, or
proceeds result from a subdivision, combination, or reclassification of the
outstanding capital stock of any issuer thereof or as a result of any merger,
consolidation, acquisition, or other exchange of assets to which any issuer may
be a party, or otherwise, shall be part of the Collateral hereunder, shall, if
received by the Company, be held in trust for the benefit of Gryphon, and shall
forthwith be delivered to Gryphon (accompanied by proper instruments of
assignment and/or stock and/or bond powers executed by the Company in accordance
with Gryphon's instructions) to be held subject to the terms of this Agreement.
Any cash proceeds of Collateral which come
9
into the possession of Gryphon (including, without limitation, insurance
proceeds) may, at Gryphon's option, be applied in whole or in part to the
Obligation (to the extent then due), be released in whole or in part to or on
the written instructions of the Company for any general or specific purpose, or
be retained in whole or in part by Gryphon as additional Collateral. Any cash
Collateral in the possession of Gryphon may be invested by Gryphon in
certificates of deposit issued by any state or national bank having combined
capital and surplus greater than $10,000,000, or in securities issued or
guaranteed by the United States of America or any agency thereof. Gryphon shall
never be obligated to make any such investment and shall never have any
liability to the Company for any loss that may result therefrom. All interest
and other amounts earned from any investment of Collateral may be dealt with by
Gryphon in the same manner as other cash Collateral. The provisions of this
subsection shall be applicable whether or not an Event of Default has occurred
and is continuing.
(f) SUBROGATION. If any of the Obligation is given in renewal or
extension or applied toward the payment of indebtedness secured by any lien,
Gryphon shall be, and is hereby, subrogated to all of the rights, titles,
interests, and liens securing the indebtedness so renewed, extended, or paid.
(g) INDEMNIFICATION. The Company hereby assumes all liability for the
Collateral, for the Security Interests, and for any use, possession,
maintenance, and management of, all or any of the Collateral, including, without
limitation, any taxes arising as a result of, or in connection with, the
transactions contemplated herein, and agrees to assume liability for, and to
indemnify and hold Gryphon harmless from and against, any and all claims, causes
of action, or liability, for injuries to or deaths of persons and damage to
property, howsoever arising from or incident to such use, possession,
maintenance, and management, whether such persons be agents or employees of the
Company or of third parties, or such damage be to property of the Company or of
others. The Company agrees to indemnify, save, and hold Gryphon harmless from
and against, and covenants to defend Gryphon against, any and all losses,
damages, claims, costs, penalties, liabilities, and expenses, including, without
limitation, court costs and attorneys' fees, howsoever arising or incurred
because of, incident to, or with respect to Collateral or any use, possession,
maintenance, or management thereof.
9. MISCELLANEOUS.
(a) TERM. Upon full and final payment and performance of the
Obligation, this Agreement shall thereafter terminate upon receipt by Gryphon of
the Company's written notice of such termination; provided that no Obligor, if
any, on any of the Collateral shall ever be obligated to make inquiry as to the
10
termination of this Agreement, but shall be fully protected in making payment
directly to Gryphon.
(b) ACTIONS NOT RELEASES. The Security Interests and the Company's
obligations and Gryphon's rights hereunder shall not be released, diminished,
impaired, or adversely affected by the occurrence of any one or more of the
following events: (i) the taking or accepting of any other security or assurance
for any or all of the Obligation; (ii) any release, surrender, exchange,
subordination, or loss of any security or assurance at any time existing in
connection with any or all of the Obligation; (iii) the modification of,
amendment to, or waiver of compliance with any terms of this Agreement without
the notification or consent of the Company, except as required herein (the right
to such notification or consent being herein specifically waived by the
Company); (iv) the insolvency, bankruptcy, or lack of corporate, partnership or
trust power of any party at any time liable for the payment of any or all of the
Obligation, whether now existing or hereafter occurring; (v) any renewal,
extension, or rearrangement of the payment of any or all of the Obligation,
either with or without notice to or consent of the Company, or any adjustment,
indulgence, forbearance, or compromise that may be granted or given by Gryphon
to the Company; (vi) any neglect, delay, omission, failure, or refusal of
Gryphon to take or prosecute any action in connection with this Agreement or any
other agreement, document, guaranty, or instrument evidencing, securing, or
assuring the payment of all or any of the Obligation; (vii) any failure of
Gryphon to notify the Company of any renewal, extension, or assignment of the
Obligation or any part thereof, or the release of any security, or of any other
action taken or refrained from being taken by Gryphon against the Company or any
new agreement between Gryphon and the Company, it being understood that Gryphon
shall not be required to give the Company any notice of any kind under any
circumstances whatsoever with respect to or in connection with the Obligation,
including, without limitation, notice of acceptance of this Agreement or any
Collateral ever delivered to or for the account of Gryphon hereunder; (viii) the
illegality, invalidity, or unenforceability of all or any part of the Obligation
against any party obligated with respect thereto by reason of the fact that the
Obligation, or the interest paid or payable with respect thereto, exceeds the
amount permitted by law, the act of creating the Obligation, or any part
thereof, is ultra xxxxx, or the officers, partners, or trustees creating same
acted in excess of their authority, or for any other reason; or (ix) if any
payment by any party obligated with respect thereto is held to constitute a
preference under applicable laws or for any other reason Gryphon is required to
refund such payment or pay the amount thereof to someone else.
(c) WAIVERS. Except to the extent expressly otherwise provided herein,
the Company waives (i) any right to require Gryphon to proceed against any other
person, to exhaust its rights in the Collateral, or to pursue any other right
which Gryphon may have; (ii) with respect to the Obligation, presentment and
11
demand for payment, protest, notice of protest and nonpayment, and notice of the
intention to accelerate; and (iii) all rights of marshaling in respect of any
and all of the Collateral.
(d) FINANCING STATEMENT. Gryphon shall be entitled at any time to file
this Agreement or a carbon, photographic, or other reproduction of this
Agreement, as a financing statement or other Security Document, but the failure
of Gryphon to do so shall not impair the validity or enforceability of this
Agreement.
(e) AMENDMENTS. This Agreement may be amended only by an instrument in
writing executed jointly by the Company and Gryphon, and supplemented only by
documents delivered or to be delivered in accordance with the express terms
hereof.
(f) MULTIPLE COUNTERPARTS. This Agreement may be executed in a two
identical counterparts, each of which shall be deemed an original for all
purposes and both of which will constitute, collectively, one agreement; but, in
making proof of this Agreement, it shall not be necessary to produce or account
for more than one such counterpart.
(g) PARTIES BOUND; ASSIGNMENT. This Agreement shall be binding on the
Company and the Company's successors and assigns and shall inure to the benefit
of Gryphon and Gryphon's successors and assigns. The Company may not, without
the prior written consent of Gryphon (which consent may be granted or withheld
in the sole and absolute discretion of Gryphon), assign any rights, duties, or
obligations hereunder. In the event of an assignment of all or part of the
Obligation, the Security Interests and other rights and benefits hereunder, to
the extent applicable to the part of the Obligation so assigned, shall be
transferred therewith.
(h) GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with and governed by the internal laws of the State of Nevada and the
laws of the United States of America. 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. Each party
consents and submits to the jurisdiction and venue of the foregoing court and
consents that any process or notice of motion or other application to said court
or a judge thereof may be served inside or outside the State of Texas or the
Northern District of Texas (but such consent shall not be deemed a general
consent to jurisdiction and service for any third parties) by registered mail,
return receipt requested, directed to the parties at their respective addresses
provided in or pursuant to the Exchange Agreement (and service so made shall be
deemed
12
complete three (3) days after the same has been posted as aforesaid) or by
personal service or in such other manner as may be permissible under the rules
of said court. The Company hereby waives any right to a jury trial in connection
with any litigation pursuant to this Agreement.
(i) COMPLETE AGREEMENT. This Agreement, the Exchange Agreement, the New
Note, and all other agreements, instruments or documents executed and/or
delivered in connection herewith and therewith are intended by the Company and
Gryphon as a final expression of their agreement with respect to the subject
matter hereof and thereof, and supersede all prior agreements and understandings
whether oral or written with respect to the subject matter hereof and thereof.
[Signature Page Follows]
13
IN WITNESS WHEREOF, the parties have executed this Security
Agreement as of the date first written above.
THE COMPANY:
KNIGHTSBRIDGE FINE WINES, INC.
By:
----------------------------------------------
Name: Xxxx Xxxxxxx
Title: President & CEO
GRYPHON:
GRYPHON MASTER FUND, L.P.
By: Gryphon Partners, L.P.,
its General Partner
By: Gryphon Management Partners, L.P.,
its General Partner
By: Gryphon Advisors, L.L.C.,
its General Partner
By:
----------------------------------
X.X. Xxxx, XX, Authorized Agent
14
