STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT dated as of September 24, 2004, made by and
between Xxxx Xxxxxxx (the "Pledgor"), Gryphon Master Fund, L.P. (the "Secured
Party"), and Xxxxxx X. Garden, P.C. (the "Agent"), as agent for the Secured
Party.
PRELIMINARY STATEMENTS:
I. The Pledgor owns 3,000,000 shares of the common stock, $.001 par
value (the "Pledged Securities"), of Knightsbridge Fine Wines, Inc., a Nevada
corporation ("Knightsbridge").
II. It is a condition precedent to the Secured Party closing that
certain Debt Restructuring Agreement dated September 24, 2004, by and between
Knightsbridge and the Secured Party (the "Debt Restructuring Agreement") that
the Pledgor shall have entered into this Agreement.
III. Contemporaneously with the execution of this Agreement, the
parties hereto shall also execute an Escrow Agreement.
NOW THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained in this Agreement, the parties
agree as follows:
SECTION A. Pledge. The Pledgor hereby pledges to the Agent, and grant
to the Agent a security interest in, the following (the "Pledged Collateral"):
1. the Pledged Securities and the certificates representing the
Pledged Securities, and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Securities; and
2. all proceeds of any and all of the foregoing Pledged
Collateral (including, without limitation, proceeds that constitute property of
the types described above).
SECTION B. Security for Obligations. This Agreement secures the payment
of all obligations of Knightsbridge now or hereafter existing under the Debt
Restructuring Agreement and the Promissory Note dated September 24, 2004, issued
by Knightsbridge to the Secured Party (the "Promissory Note").
SECTION C. Delivery of Pledged Collateral. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of the Agent pursuant hereto and shall be in
suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Agent. Upon the occurrence and during the continuation of an
Event of Default (as defined in the Promissory Note), the Agent shall have the
duty, at any time at the direction of the Secured Party to transfer to or to
register in the name of the Agent or any of its nominees, or in the name of the
Secured Party any or all of the Pledged Collateral as provided herein, subject
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only to the revocable rights specified in Section F(a). In addition, the Agent
shall have the right at any such time to exchange certificates or instruments
representing or evidencing Pledged Collateral for certificates or instruments of
smaller or larger denominations.
SECTION D. Representations and Warranties. The Pledgor represents and
warrants as follows:
1. The Pledgor is the owner of the Pledged Collateral free and
clear of any lien, security interest, option or other charge or encumbrance
except for the security interest created by this Agreement.
2. The pledge of the Pledged Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest in the
Pledged Collateral, securing Knightsbridge's performance under the Debt
Restructuring Agreement and its payment of the Promissory Note.
SECTION E. Further Assurances. The Pledgor agrees that at any time and
from time to time the Pledgor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that the Agent may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable the Agent to exercise and enforce its rights and remedies hereunder with
respect to any Pledged Collateral. Such acts by Pledgor shall be at Pledgor's
expense until such time as the Promissory Note has been paid in full and at the
Secured Party's expense once the Promissory Note has been paid in full, except
for those expenses that accrued prior to such payment in full.
SECTION F. Voting Rights; Dividends; Etc. 1. So long as no Event of
Default shall have occurred and be continuing;
(a) The Pledgor shall be entitled to exercise or refrain from
exercising any and all voting and other consensual rights
pertaining to the Pledged Collateral or any part thereof for
any purpose not inconsistent with the terms of this Agreement.
(b) The Pledgor shall be entitled to receive and retain any
and all dividends and distributions paid in respect of the
Pledged Collateral, provided, however, that any and all (i)
dividends paid or payable other than in cash in respect of,
and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for,
Pledged Collateral, and (ii) dividends and other distributions
paid or payable in cash in respect of any Pledged Collateral
in connection with a partial or total liquidation or
dissolution of Knightsbridge, shall be, and shall be forthwith
delivered to the Agent to hold as, Pledged Collateral and
shall, if received by the Pledgor, be received in trust for
the benefit of the Agent, be segregated from the other
property or funds of the Pledgor, and be forthwith delivered
to the Agent as Pledged Collateral in the same form as so
received (with any necessary endorsement or assignment).
(c) The Agent shall execute and deliver (or cause to be
executed and delivered) to the Pledgor upon demand and without
undue delay all such proxies and other instruments as the
Pledgor may reasonably request for the purpose of enabling the
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Pledgor to exercise the voting and other rights which he is
entitled to exercise pursuant to paragraph (a) above and to
receive the dividends and distributions which he is authorized
to receive and retain pursuant to paragraph (b) above.
2. Upon the occurrence and during the continuance of an Event
of Default or an event which, with the giving of notice or the
lapse of time, or both, would become an Event of Default:
(a) All rights of the Pledgor to exercise or refrain from
exercising the voting and other consensual rights which he
would otherwise be entitled to exercise pursuant to Section
F(1)(a) and to receive the dividends and distributions which
he would otherwise be authorized to receive and retain
pursuant to Section F(1)(b) shall cease, and all such rights
shall thereupon become vested in the Agent who shall thereupon
have the sole right to exercise or refrain from exercising
such voting and other consensual rights at the direction of
the Secured Party and to receive and hold as Pledged
Collateral such dividends and distributions.
(b) All dividends or distributions which are received by the
Pledgor contrary to the provisions of paragraph (a) of this
Section F(2) shall be received in trust for the benefit of the
Agent, shall be segregated from other funds of the Pledgor and
shall be forthwith paid over to the Agent as Pledged
Collateral in the same form as so received (with any necessary
endorsement).
SECTION G. Transfers and Other Liens. The Pledgor agrees that he will
not (i) sell, assign (by operation of law or otherwise) or otherwise dispose of,
or grant any option with respect to, any of the Pledged Collateral, or (ii)
create or permit to exist any lien, security interest, option or other charge or
encumbrance upon or with respect to any of the Pledged Collateral, except for
the security interest under this Agreement.
SECTION H. Agent Appointed Attorney-in-Fact. The Pledgor hereby
appoints the Agent the Pledgor's attorney-in-fact, with full authority in the
place and stead of the Pledgor and in the name of the Pledgor or otherwise, from
time to time in the Agent's discretion to take any action and to execute any
instrument which the Agent may deem necessary or advisable to accomplish the
purposes of this Agreement (subject to the rights of the Pledgor under Section
F), including, without limitation, to receive, endorse and collect all
instruments made payable to the Pledgor representing any dividend or
distribution or any part thereof and to give full discharge for the same.
SECTION I. Agent May Perform. If the Pledgor fails to perform any
agreement contained herein, the Agent may itself perform, or cause performance
of, such agreement, and the expenses of the Agent incurred in connection
therewith shall be payable by the Pledgor under Section L.
SECTION J. The Agent's Duties. 1. The powers conferred on the Agent
hereunder are solely to protect the Secured Party's interest in the Pledged
Collateral and shall not impose any duty upon it to exercise any such powers,
except upon the direction of the Secured Party. Except for the safe custody of
any Pledged Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Agent shall have no duty as to any Pledged
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
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Pledged Collateral, whether or not the Agent has or is deemed to have knowledge
of such matters, or as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to any Pledged Collateral.
The Agent shall be deemed to have exercised reasonable care in the custody and
preservation of any Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which the Agent
accords its own property.
2. The Pledgor and the Secured Party hereby, jointly and
severally, agree to indemnify and defend the Agent and to hold the Agent
harmless from any loss, liability or expense incurred by the Agent without
willful malfeasance or nonfeasance or bad faith on its part arising out of or in
connection with the acceptance or administration by the Agent of its duties
hereunder, including, but not limited to, the reasonable fees, costs and
expenses of defending itself against claims of liability hereunder. Anything in
the foregoing to the contrary notwithstanding, in the event of a dispute between
the parties or between either or both of the parties and the agent or in the
event of the agent's resignation if no successor agent has been appointed within
30 days following written notice to the parties by the Agent of such
resignation, at the sole discretion of the Agent, the Agent may at any time
deposit any or all of the Pledged Collateral with a federal or state court
located in Dallas County, Texas selected by the Agent and in such event (x) all
liability and responsibility of the Agent shall terminate upon such deposit
having been made, and (y) after such deposit is made, and absent willful
malfeasance or nonfeasance or bad faith on the part of the Agent, the Agent may
represent the Secured Party in connection with any dispute or proceeding
relating to the disposition of the Pledged Collateral. Absent willful
malfeasance or nonfeasance or bad faith on the part of the Agent, the Secured
Party and the Pledgor hereby waive any actual or alleged conflict of interest by
reason of the Agent serving as Agent hereunder or in connection with any such
representation. Any breach or violation of the terms of this Agreement by any
party, including the provisions and restrictions of this Section J, in addition
to giving rise to monetary damages, may be enjoined. The Agent shall not be
bound in any way by any agreement or contract between the Secured Party and the
Pledgor whether or not it has knowledge thereof, and the Agent's only duties and
responsibilities hereunder shall be to hold the Pledged Collateral as Agent and
to dispose of the Pledged Collateral in accordance with the terms of this
Agreement. The Agent may act upon any instruments or other writings believed by
the Agent in good faith to be genuine and to be signed or presented by the
proper persons. The Agent shall not be liable for any error in judgment, law or
fact or for any act done or omitted to be done in connection with the
performance of its duties under this Agreement, except for its own willful
malfeasance or nonfeasance or bad faith. The Agent may consult with independent
counsel and a written opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken or omitted by the
Agent hereunder in good faith and in reliance upon such opinion.
SECTION K. Remedies upon Default. Subject to the provisions of Section
F, if any Event of Default shall have occurred and be continuing:
1. The Agent may, as directed by the Secured Party, (i)
transfer the Pledged Collateral to the Secured Party in full satisfaction of the
Pledgor's obligations pursuant to this Agreement, or (ii) exercise in respect of
the Pledged Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of the Secured
Party on default under the Uniform Commercial Code in effect in the State of
Texas at the time (the "Code") (whether or not the Code applies to the Pledged
Collateral), and may also, without notice except as specified below, sell the
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Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange, broker's board or at any office of the Agent or
elsewhere, for cash, on credit or for future delivery, and upon such other terms
as the Agent may deem commercially reasonable, as directed by the Secured Party.
The Pledgor agrees that, to the extent notice of sale shall be required by law,
at least ten days' notice to the Pledgor of the time and place of any public
sale or the time after which any private sale is to be made shall constitute
reasonable notification. The Agent shall not be obligated to make any sale of
Pledged Collateral regardless of notice of sale having been given. The Agent may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
2. Any cash held by the Agent as Pledged Collateral and all
cash proceeds received by the Agent in respect of any sale of, collection from,
or other realization upon all or any part of the Pledged Collateral may, in the
discretion of the Agent, be held by the Agent as collateral for, and/or then or
at any time thereafter be applied (after payment of any amounts payable to the
Agent pursuant to Section L) in whole or in part by the Agent to satisfy the
obligations of Knightsbridge and the Pledgor pursuant to the Debt Restructuring
Agreement and the Promissory Note, as the Agent shall be directed by the Secured
Party. Any surplus of such cash or cash proceeds held by the Agent and remaining
after satisfaction in full of such obligations shall be paid over to the Pledgor
or to whomsoever may be lawfully entitled to receive such surplus.
SECTION L. Expenses. Prior to payment in full of the Promissory Note,
the Pledgor will upon demand pay to the Agent the amount of any and all
reasonable expenses, including the reasonable fees and expenses of its counsel
and of any experts and agents, which the Agent may incur in connection with (i)
the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (ii) the exercise or
enforcement of any of the rights of the Agent hereunder or (iii) the failure by
the Pledgor to perform or observe any of the provisions hereof. Subsequent to
the payment in full of the Promissory Note, the Secured Party shall be
responsible for all reasonable expenses of the Agent, except for such expenses
that accrued prior to the payment in full of the Promissory Note.
SECTION M. Amendments, Etc. This Agreement may be altered or amended
only with the written consent of all of the parties hereto.
SECTION N. Addresses for 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 Secured Party:
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
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To Agent:
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 Pledgor:
Xxxx Xxxxxxx c/o
Knightsbridge Fine Wines, Inc.
Xxx Xxxxxxxx Xxxxx Xxxx
Xxxx, Xxxxxxxxxx 00000
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
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.
SECTION O. Continuing Security Interest.
1. This Agreement shall create a continuing security interest
in the Pledged Collateral and shall (i) remain in full force and effect until
the exercise and payment in full of the Promissory Note and all other amounts
payable under this Agreement, (ii) be binding upon the Pledgor, his successors
and assigns, and (iii) inure to the benefit of, and be enforceable by, the
Agent, the Secured Party and their respective successors, transferees and
assigns.
2. Upon the payment in full of the obligations and all other
amounts payable under this Agreement, the security interest granted hereby shall
terminate and all rights to the Pledged Collateral shall revert to the Pledgor.
Upon any such termination, the Agent will, at the Pledgor's expense, return to
the Pledgor such of the Pledged Collateral as shall not have been sold or
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otherwise applied pursuant to the terms hereof and execute and deliver to the
Pledgor such documents as the Pledgor shall reasonably request to evidence such
termination.
SECTION P. 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 N 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. Pledgor hereby
waives any right to a jury trial in connection with any litigation pursuant to
this Agreement.
SECTION Q. This Agreement may be executed in counterparts, each one of
which will constitute an original and all of which taken together will
constitute one document. This Agreement may be executed by delivery of a signed
signature page by fax to the other parties hereto and such fax execution and
delivery will be valid in all respects.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered as of the date first above written.
EXECUTED:
Pledgor:
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Xxxx Xxxxxxx
Secured Party:
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:
--------------------------------------
Xxxxxx X. Garden, Authorized Agent
Agent:
Xxxxxx X. Garden, P.C.
By:
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Xxxxxx X. Garden, President
