PROMISSORY NOTE
September 24, 2004
Subject to the terms and conditions of this Note and a certain
Debt Restructuring Agreement, dated September 24, 2004, by and between Borrower
and Lender (as defined below) (the "DEBT RESTRUCTURING Agreement"), and for good
and valuable consideration received, Knightsbridge Fine Wines, Inc., a Nevada
Corporation (the "BORROWER"), promises to pay to the order of Gryphon Master
Fund, L.P., a Bermuda limited partnership, or its assignee(s) (the "LENDER"),
the principal amount of seven hundred thousand dollars ($700,000) (the
"PRINCIPAL") and interest at a fixed rate of 6% per annum (the "INTEREST"). The
Principal and Interest shall be paid by Borrower to Lender upon the earlier to
occur of the following:
(i) demand by Lender upon the occurrence of an Event of Default;
or
(ii) August 31, 2005.
This Note may be prepaid in whole or in part at any time without premium or
penalty, but any such prepayment shall be applied first to accrued but unpaid
Interest and then to Principal.
1. SECURITY. The Note shall be secured by 3,000,000 shares of common stock of
the Borrower owned by ▇▇▇▇ ▇▇▇▇▇▇▇ (the "COLLATERAL"). The Collateral
shall be held pursuant to the Stock Pledge and Escrow Agreements attached
to the Debt Restructuring Agreement as Exhibit C and Exhibit D,
respectively.
2. PAYMENTS.
2.1 PRINCIPAL. All payments of the Principal payable on or in respect
of this Note shall be made to Lender in U.S. dollars, by wire
transfer, certified check or other "immediately available" funds.
Borrower shall make such payments of the Principal to Lender at
the address of Lender set forth herein or at such other place as
Lender shall have notified Borrower in writing.
2.2 NO SET-OFF. All payments on or in respect of this Note shall be
made to Lender without set-off or counterclaim and free and clear
of and without any deductions of any kind.
2.3 RELEASE UPON PAYMENT IN FULL. Upon payment in full of the
Principal and Interest Borrower shall be forever released from
all its obligations and liabilities under this Note.
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3. EVENT OF DEFAULT. Notwithstanding the foregoing, this Note shall be
immediately due and payable, in the event of the occurrence and
continuation of any of the following (each an "EVENT OF DEFAULT"):
3.1 INSOLVENCY. Borrower becomes insolvent or makes any
assignment for the benefit of its creditors,
3.2 BANKRUPTCY. Borrower files (or consents to the filing of)
any petition or complaint pursuant to federal or state
bankruptcy or insolvency laws seeking the appointment of a
receiver or trustee for any of its assets, seeking the
adjudication of Borrower as bankrupt or insolvent, seeking
an "order for relief" under such statutes, or seeking a
reorganization of or a plan of arrangement for Borrower and
such petition is not dismissed within 60 days after the
filing thereof, or
3.3 DEFAULT. (a) Borrower materially defaults in the due
observance or performance of any covenant, condition or
agreement on the part of Borrower to be observed or
performed pursuant to the terms of this Note (including the
failure of Borrower to pay the Principal or the Interest
when due hereunder) or the Debt Restructuring Agreement, or
Borrower is in material breach of any representation at the
time such representation is made by Borrower, (b) Lender
gives written demand to Borrower, and (c) such default or
breach remains uncured ten (10) business days after Borrower
receives such written demand.
4. MISCELLANEOUS.
4.1 NOTICES. All notices (including other communications
required or permitted) under this Note 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.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
▇▇▇▇▇▇ ▇. Garden, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. Garden, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To Borrower:
Knightsbridge Fine Wines, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Law Offices of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, PC
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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.
4.2 ATTORNEYS' FEES AND COSTS. If any legal action, arbitration
or other proceeding is brought to collect or enforce this
Note, Lender will be entitled to recover reasonable
attorneys' fees and expenses and other costs incurred in
such action, arbitration or proceeding from Borrower, in
addition to any other relief, if Lender is the prevailing
party.
4.3 SEVERABILITY. The provisions of this Note are severable. The
invalidity, in whole or in part, of any provision of this
Note shall not affect the validity or enforceability of any
other of its provisions. If one or more provisions hereof
shall be declared invalid or unenforceable, the remaining
provisions shall remain in full force and effect and shall
be construed in the broadest possible manner to effectuate
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the purposes hereof. The parties further agree to replace
such void or unenforceable provisions of this Note with
valid and enforceable provisions which will achieve, to the
extent possible, the economic, business and other purposes
of the void or unenforceable provisions.
4.4 HEADINGS;EXHIBITS; REFERENCES. The headings in this Note are
only for convenience and ease of reference and are not to be
considered in construction or interpretation of this Note,
nor as evidence of the intention of the parties hereto. All
exhibits, schedules and appendices attached to this Note are
incorporated herein. Except where otherwise indicated, all
references in this Note to Sections refer to Sections of
this Note.
4.5 ENTIRE AGREEMENT. This Note (together with its exhibits and
other documents referred to herein, including the Debt
Restructuring Agreement) is the complete and exclusive
statement of agreement and understanding of the parties with
respect to matters herein and is a complete and exclusive
statement of the terms and conditions thereof. No
representation, statement, condition or warranty not
contained in this Note is binding on the parties.
4.6 AMENDMENTS. Any provision of this Note may be amended or
modified upon the written consent of all parties to this
Note.
4.7 DELAYS OR OMISSIONS. No delay or failure by any party to
insist on the strict performance of any provision of this
Note, or to exercise any power, right or remedy, will be
deemed a waiver or impairment of such performance, power,
right or remedy or of any other provision of this Note nor
shall it be construed to be a waiver of any breach or
default, or an acquiescence therein, or of or in any similar
breach or default thereafter occurring.
4.8 INTERPRETATION. If any claim is made by a party relating to
any conflict, omission or ambiguity in the provisions of
this Note, no presumption or burden of proof or persuasion
will be implied because this Note was prepared by or at the
request of any party or its counsel.
4.9 GOVERNINGLAW; VENUE. This Note 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 Note
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
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provided in or pursuant to Section 4.1 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 Note.
4.10 SUCCESSORS AND ASSIGNS. This Note is freely assignable by
Lender only, provided that the assignee agrees to be bound
by the provisions hereof. Borrower's rights and obligations
shall not be assigned or delegated without Lender's prior
written consent, given in its sole discretion, and any
purported assignment or delegation without such consent
shall be void and ab initio.
4.11 BINDING EFFECT; PARTIES IN INTEREST. This Note is binding
upon and benefits only the parties and their respective
permitted successors and assigns. Nothing in this Note gives
any rights or remedies to any person other than the parties
and their respective permitted successors and assigns, nor
does anything in this Note relieve or discharge any
obligation or liability of any third person to any party. No
provision of this Note gives any third person any right of
subrogation or action over or against any party to this
Note.
4.12 REPLACEMENT OF NOTE. Upon receipt of evidence reasonably
satisfactory to Borrower of the loss, theft, destruction or
mutilation of this Note and (in the case of loss, theft or
destruction) upon delivery of an indemnity agreement (with
surety if reasonably required) in an amount reasonably
satisfactory to Borrower, or (in the case of mutilation)
upon surrender and cancellation of this Note, Borrower will
issue, in lieu thereof, a new Note of like tenor.
4.13 COUNSEL. Each party to this Note represents and warrants
that it has received the advice and counsel of an attorney
in connection with the negotiation, preparation and
execution of this Note.
4.14 MISCELLANEOUS. Borrower hereby waives presentment, demand,
notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance and
enforcement of this Note, except as specifically provided
herein, and assent to extensions of the time of payment, or
forbearance or other indulgence without notice.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have caused this Note to be issued as
of the date first written above.
BORROWER:
KNIGHTSBRIDGE FINE WINES, INC.
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
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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▇▇▇▇▇▇ ▇. Garden, Authorized Agent
