Securities and Exchange Commission
Washington, D.C 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 11, 1997
VERMONT PURE HOLDINGS, LTD.
(Exact name of registrant as specified in its charter)
Delaware 1-11254
(State or other jurisdiction
of incorporation) (Commission File No.)
Route 66, P.O. Box C
Catamount Industrial Park
Randolph, Vermont 05060
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (802) 728-3600
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Item 2. Acquisition or Disposition of Assets
On August 27, 1997 Vermont Pure Springs, Inc., a Delaware corporation ("Vermont
Pure"), a wholly owned subsidiary of Vermont Pure Holdings, Ltd., a Delaware
corporation ("Holdings"), consummated the purchase of 100% of the stock of
Excelsior Springs Water Company, Inc., a New York corporation ("Excelsior"). The
purchase was accomplished through the execution of agreements with the stock and
note holders of Excelsior. Excelsior, based in Saratoga, New York, is
principally engaged in the bottling, sale, and distribution of spring water in
five and three gallon bottles, the rental of water coolers and coffee
dispensers, and the sale of coffee supplies for home and commercial customers.
Excelsior's primary market is the Albany region of New York but it also
distributes in southern Vermont and western Massachusetts.
Under the terms of the various agreements Vermont Pure paid cash totaling
$1,766,000, gave notes in an aggregate principal amount of $533,000, and issued
in a private placement 363,014 of Holdings common shares to stockholders and
creditors of Excelsior. Vermont Pure also entered into a consulting agreement
which provides $60,000 in cash over three years and 52,603 of Holdings
unregistered common shares with Excelsior's principal shareholder. The notes
have a term of five years and the consulting agreement includes a covenant not
to compete with Vermont Pure over the next five years. All shares issued in
conjunction with the acquisition were recorded at the market price on the date
of the transaction which was $2.28 per share.
In connection with the cash portion of the purchase price, Vermont Pure and
Holdings borrowed $1,750,000 from the Chittenden Bank under the terms of its
acquisition loan agreement. The loan is to be repaid in equal installments over
four years based on a ten year amortization with the principal balance due at
the end of four years. The interest rate of the note is the prime rate plus .5%
which presently equals 9%. The loan is secured by a pledge of all the assets
acquired from Excelsior pursuant to the purchase in addition to the inventory,
receivables, and intangible assets of Vermont Pure and Holdings which have also
been pledged as part of their line of credit agreement with the Chittenden Bank.
Strategically, this acquisition serves to geographically link Vermont Pure's
similar distribution system in the Syracuse, Rochester, and Buffalo areas of New
York with the Company's New England market. The management of Vermont Pure feels
that by integrating this business into its other home and commercial operations
they will further be able to leverage operating efficiencies in order to
increase profits and reduce the sales seasonality of the Company as a whole,
though no assurance can be given that this will be successful.
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Item 7. Financial Statements and Exhibits
(a) Financial Statements
No financial statements have been filed herein. Audited
statements for the prior fiscal year were unavailable for
Excelsior as of the filing date. Financial statements will be
filed in an amended 8K within 60 days of the date of this
filing.
(b) Pro Forma Financial Information
No pro forma financial information has been filed herein. Pro
forma financial information will be filed in an amended 8K
within 60 days of the date of this filing.
(c) The following documents are filed herein as exhibits:
10.1 Stock Purchase Agreement Between Vermont Pure and
David Eger dated August 27, 1997
10.2 Promissory Note from Vermont Pure to David Eger in
the principal amount $503,000
10.3 Form of Note Purchase Agreement Between Vermont Pure
and the scheduled note holders dated August 27, 1997
10.4 Form of Agreement Between Vermont Pure and scheduled
stockholders dated August 27, 1997
10.5 Promissory note from Vermont Pure Springs and Vermont
Pure Holdings to Chittenden bank dated August 22,
1997 regarding an acquisition line of credit for
Excelsior Springs Water Co.
10.6 Commercial Security Agreement between Vermont Pure
Springs and Vermont Pure Holdings and Chittenden Bank
dated August 22, 1997 concerning the acquisition of
Excelsior Springs Water Co.
10.7 Schedule of Stock and Note Purchase Agreement
Information dated August 27, 1997
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EXHIBIT INDEX
Exhibit # Description
10.1 Stock Purchase Agreement Between Vermont Pure and
David Eger dated August 27, 1997
10.2 Promissory Note of Vermont Pure to David Eger in the
principal amount $503,000
10.3 Form of Note Purchase Agreement Between Vermont Pure
and scheduled note holders dated August 27, 1997
10.4 Form of Stock Purchase Agreement Between Vermont Pure
and scheduled stockholders dated August 27, 1997
10.5 Promissory note from Vermont Pure Springs and Vermont
Pure Holdings to Chittenden bank dated August 22,
1997 regarding an acquisition line of credit for
Excelsior Springs Water Co.
10.6 Commercial Security Agreement between Vermont Pure
Springs and Vermont Pure Holdings and Chittenden Bank
dated August 22, 1997 concerning the acquisition of
Excelsior Springs Water Co.
10.7 Schedule of Stock and Note Purchase Agreement
Information dated August 27, 1997
STOCK PURCHASE AGREEMENT
Among
VERMONT PURE SPRINGS, INC.,
DAVID EGER
and
EXCELSIOR SPRINGS WATER COMPANY, INC.
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement, made and entered into this 27th day of
August, 1997 (the "Agreement") by and among VERMONT PURE SPRINGS, INC., a
Delaware corporation (the "Buyer"), DAVID EGER (the "Seller"), and EXCELSIOR
SPRINGS WATER COMPANY, INC., a New York corporation (the "Company").
WITNESSETH:
WHEREAS, the Company is engaged in the business of home and office
delivery of water products;
WHEREAS, the Seller owns 101.52 shares of the Company capital stock
(the "Stock"), representing ninety-four percent (94%) of the issued and
outstanding capital stock of the Company;
WHEREAS, the Seller desires to sell the Stock to the Buyer pursuant to
the terms and conditions set forth in this Agreement;
WHEREAS, the Buyer desires to purchase the Stock from the Seller on the
terms and conditions set forth in this Agreement; and
WHEREAS, the persons owning all of the stock of the Company other than
that owned by Seller ("Other Stockholders") and the persons owning all of the
notes of the Company (the "Noteholders") are also selling all of their stock and
notes to Seller as evidenced by individual Stock Purchase Agreements
(collectively, the "Stock Purchase Agreements") and Note Purchase Agreements
("collectively, the "Note Purchase Agreements") being executed contemporaneously
with this Agreement.
NOW, THEREFORE, the Buyer, the Company and the Seller, in consideration
of the agreements, covenants and conditions contained herein, hereby make the
following representations and warranties, give the following covenants and agree
to be legally bound hereby as follows:
ARTICLE I
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
OF THE SELLER
As an inducement to the Buyer to enter into this Agreement and to
consummate the transactions contemplated herein, the Seller represents and
warrants to the Buyer and agrees as set forth in this Article I. The
representations and warranties of the Seller are qualified by the information
set forth in the Schedules referred to in this Article I incorporated by
reference. Any disclosure made by Seller on one Schedule shall be deemed to be
disclosures for all purposes of this Agreement.
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1.1 Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York
and is duly qualified to transact business as a foreign corporation and is in
good standing as such in the jurisdictions listed on Schedule 1.1 hereto, which
except as described on Schedule 1.1 hereto, are the only jurisdictions in which
the failure to so qualify would have a material adverse effect on the business
or financial condition of the Company. The Company has the corporate power and
authority and other authorizations necessary or required in order for it to own
or lease and operate its properties and to carry on its businesses as now
conducted.
1.2 Subsidiaries; Partnerships. The Company does not own any
interest in any other corporation, partnership, joint venture or other entity.
1.3 Authority. This Agreement and the transactions contemplated
hereby have been duly approved by all necessary corporate action and Seller has
the authority to execute, deliver and perform his obligations under this
Agreement. This Agreement, when executed and delivered by the Seller and
assuming the due execution hereof by the Buyer and the Company, will constitute
the valid, legal and binding agreement of the Company, and the Seller
enforceable in accordance with its terms. Except as described on Schedule 1.3
hereof, no consent, authorization, approval, order, license, certificate or
permit of or from or declaration or filing with, any Federal, state, local or
other governmental authority or any court or other tribunal (collectively, the
"Governmental Consents") is required in connection with the execution, delivery
or performance of this Agreement by the Company, or the Seller. Except as
described on Schedule 1.3, no consent of any affiliate of the Company or the
Seller or of any party to any, contract, agreement, instrument, lease, license,
arrangement or understanding to which the Company is a party, or to which any of
its properties or assets is subject, is required for the execution, delivery or
performance of this Agreement by the Company, or the Seller. The execution,
delivery and performance by the Company, or the Seller does not (i) violate,
result in a breach of, conflict with or (with or without the giving of notice or
the passage of time or both) entitle any party to terminate, modify or otherwise
change, in any material respect, the rights or obligations of the parties
thereunder or call a default under any such contract, agreement, instrument,
lease, license, arrangement, or understanding, (ii) violate or result in a
material breach of any term of the certificate of incorporation or other
organizational documents or by-laws of the Company or (iii) violate, result in a
breach of or conflict, in any material respect, with any law, rule, regulation,
order, judgment or decree binding the Company, or the Seller, or to which any of
their respective operations, businesses, properties, or assets are subject.
1.4 Capital Structure. The authorized capital stock of the Company
consists of 200 shares of common stock par value $ -0- per share, of which 108
shares are issued and outstanding (and none of which are held by the Company as
treasury stock). Except for this Agreement and the Stock Purchase Agreements,
there are no agreements, arrangements, options, warrants or rights or
commitments of any character relating to the issuance, sale, purchase or
redemption of any shares of capital stock of the Company. There is outstanding
no security or is validly authorized, validly issued, fully paid and
nonassessable, has not been issued and is not owned or held in violation of any
preemptive right; and is owned of record and beneficially by
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the Seller, free and clear of any liens, security interests, pledges, charges,
encumbrances, stockholders' agreements, voting trusts or restrictions of any
kind and the transfer and delivery of the Stock to the Buyer by the Seller as
contemplated by this Agreement will be sufficient to transfer good and
marketable record and beneficial title and ownership to such Stock to the Buyer
free and clear of liens, claims, encumbrances and restrictions of any kind.
1.5 Financial Statements. The Seller has furnished to the Buyer the
reviewed consolidated balance sheets of the Company for the years ended October
31, 1992, 1993, 1994, 1995 and 1996 and the related statements of operations,
statements of shareholder's equity and statements of cash flows for the periods
then ended, including the notes thereto (the 1992-1996 statements are
collectively defined herein as the "Financial Statements") and the unaudited
financial statements (balance sheet and profit and loss statement) at and for
the period ended March 31, 1997 (the "March 31 Balance Sheet"). The Financial
Statements and the March 31, 1997 Balance Sheet fairly present the respective
financial positions of the Company as of the respective dates thereof and the
results of operations for the respective periods covered thereby, and the
Financial Statements have been prepared in accordance with generally accepted
accounting principles consistently applied throughout all periods and in
accordance with the books and records of the Company. Notwithstanding anything
set forth in the Financial Statements or otherwise, there shall be no liability
on the part of the Seller for any inadequate reserve or other account with
respect to customer deposits.
There is set forth on Schedule 1.5 hereto a correct and complete
list of all (i) accounts, borrowing resolutions and deposit boxes maintained by
the Company at any bank or other financial institution (ii) the names of the
persons authorized to sign or otherwise act with respect thereto, and (iii)
powers of attorney for the Company.
1.6 Material Changes since March 31, 1997. Since March 31, 1997,
the business of the Company has been operated only in the ordinary course and,
whether or not in the ordinary course of business other than as disclosed in
this Agreement or the Schedules referred to herein there has not been, occurred
or arisen (i) any material adverse change in the financial condition of the
Company from that shown on the March 31 Balance Sheet; (ii) any damage or
destruction in the nature of a casualty loss, whether covered by insurance or
not, to any property or business of the Company; (iii) any amendment or
termination of any agreement other than in the ordinary course of business, or
cancellation or material reduction of any debt owing to the Company or waiver or
relinquishment of any right of material value to the Company; or (iv) any other
event or condition which materially and adversely affects the results of
operations or business, financial condition or property of the Company.
1.7 Availability of Assets and Legality of Use. Except as specified
in Schedule 1.7, the assets owned or leased by the Company constitute all of the
assets which are being used in its business, and such assets are in good and
serviceable condition (normal wear and tear excepted) and suitable for the uses
for which intended and such assets and their uses conform in all material
respects to all applicable laws; and except as specified in Schedule 1.7, the
Company has title to, or valid leasehold interests in, all of their respective
properties and assets,
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including those reflected on the March 31 Balance Sheet (other than those
disposed of for fair value in the ordinary course of business) free and clear of
all liens, mortgages, security interests, pledges, charges and encumbrances.
1.8 Accounts Receivable. All accounts receivable reflected on the
March 31 Balance Sheet for the Company and not collected at the date hereof,
have arisen from bona fide transactions in the ordinary course of the Company's
business. Except as set forth in Schedule 1.8, none of such receivables is
subject to counterclaims, set-offs or is in dispute and all of such accounts are
good and collectible in the ordinary course of business at the aggregate
recorded amounts thereof, subject to the allowance for possible losses shown on
such March 31 Balance Sheet.
1.9 Real Property and Leases. The Company does not own any real
property. Attached hereto as Schedule 1.9 are true, correct and complete copies
of every lease or agreement under which the Company is lessee or sublessee of,
or holds or operates, any real property or personal property owned by any third
party. Each of such leases and agreements is in full force and effect and
constitutes a legal, valid and binding obligation of the Company and, to the
best of the Seller's knowledge, the other parties thereto. The Company is not in
default in any material respect under any such lease or agreement nor has any
event occurred which with the passage of time or giving of notice or both would
constitute such a default. Except as set forth on Schedule 1.9, none of such
leases or agreements requires the consent of any party thereto to the
transactions contemplated by this Agreement.
1.10 Organizational Documents. The Company has delivered to the
Buyer (i) the Certificate of Incorporation and Bylaws of the Company, as
presently in effect, certified by the Secretary of the Company. The stock
ledgers and stock transfer books and the minute book records of the Company
relating to all issuances and transfers of stock by the Company and all formal
proceedings of the Company and its Board of Directors since its incorporation
made available to the Buyer are the original stock ledgers and stock transfer
books and minute book records of the Company or exact copies thereof.
1.11 Material Contracts and Leases. True, correct and complete
copies of every material contract, agreement, lease or other obligation or
commitment under which the Company, is the obligor, lessor or sublessor have
been made available to the Buyer and attached hereto as Schedule 1.11. Each of
such agreements and leases is in full force and effect and constitutes a legal,
valid and binding obligation of the parties thereto and is enforceable in
accordance with its terms except as enforcement of such agreement may be limited
by bankruptcy, insolvency or other similar laws affecting creditors' rights
generally. Except as set forth in Schedule 1.11 hereto, neither the Company nor
the other parties to such agreements and leases are in default under any such
lease or agreement in any material respect as it relates to the Company nor has
any event occurred which with the passage of time or the giving of notice or
both would constitute such a material default.
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1.12 Insurance. Attached hereto as Schedule 1.12 is a list and an
accurate description of all policies of insurance that are held or maintained by
or for the benefit of the Company as of the date hereof (including policy
numbers, nature of coverage, limits, deductibles, carriers, premiums and
effective and termination dates) The Company has complied with each of such
policies and has not failed to give any notice or present any known claim
thereunder. The Company has not received, and no event or omission within the
control of the Company has occurred which may cause it to receive notice that
any such policies will be canceled or will be reduced in amount or scope. True
and complete copies of all such policies have been delivered to the Buyer.
1.13 No Undisclosed Liabilities. The Company is not subject to any
material liability (including unasserted claims), absolute or contingent, which
is not shown or which is in excess of amounts shown or reserved for in the March
31 Balance Sheet other than liabilities of the same nature as those set forth on
the March 31 Balance Sheet and reasonably incurred in the ordinary course of
business after March 31, 1997.
The accounts payable, accrued expenses, the costs
including reasonable attorneys' fees and other expenses of resolution of all
claims, litigation, or disputes (whether or not disclosed) and taxes (whether or
not disclosed) (collectively, the "Payables") payable at (or relating to periods
prior to) the Closing Date will be less than the cash, accounts receivable and
inventory being retained by the Company (that is, those items used in the coffee
and five-gallon businesses)(collectively, the "Receivables"). The March 31, 1997
financial statement was internally prepared in accordance with generally
accepted accounting principles, and possibly did not include certain payables
that should have been booked. Buyer acknowledges that the subsequent booking,
but not later than the Closing Date, of a March 31, 1997 payable will not be
construed as an undisclosed liability, provided, that all of such bookings when
combined with all of the Payables included in the March 31, 1997 financial
statements do not exceed the Receivables at the Closing Date. Buyer further
acknowledges that the Company may book as Payables as of the Closing Date the
professional fees and expenses in connection with this transaction, but not in
excess of Thirty-Five Thousand Dollars ($35,000 in the aggregate. The Company
and the Seller acknowledge that, subsequent to the Closing, the Buyer will
conduct an audit of the Company, and the amounts of the actual Payables and
Receivables shall be determined by that audit.
Buyer acknowledges that the provisions for federal and
state corporate income taxes (collectively, the "Corporate Taxes") for the
periods beginning after October 31, 1996 have been accrued on a basis consistent
with the Company's existing methods of accounting and election. Buyer
acknowledges that any increases in Corporate Taxes for periods beginning after
October 31, 1996, if resulting from changes in accounting methods after the
Closing, shall not be deemed to be a Payable.
1.14 Litigation and Claims. Except as set forth on Schedule 1.14
hereto, there are no lawsuits, proceedings, claims, governmental or other
proceedings (formal or informal) or investigations pending or threatened with
respect to the Company or its businesses, properties or assets which may
reasonably be expected to have a material adverse effect on the Company.
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1.15 Tax Liabilities. Schedule 1.15 sets forth a correct
description of the procedures followed with respect to all payments by the
Company of taxes, including any amounts paid in 1997, the dates of such payments
and any amounts remaining to be paid in respect of any period prior to the
Closing Date. The amounts reflected as liabilities for taxes on Schedule 1.15
are sufficient for the payment of all unpaid Federal, state, county, local and
foreign taxes of the Company accrued and applicable to the period ended on such
balance sheet date and all years and periods prior thereto.
1.16 Employee Agreements. Attached hereto as Schedule 1.16 is a
true, correct and complete list of all employee benefit plans, contracts, and
arrangements, oral or written, including, but not limited to, union contracts,
employee benefit plans and severance plans, whereunder the Company has any
obligation (other than the obligation to make current wage or salary payments
terminable on notice of 30 days or less or normal policies concerning holidays,
vacations and salary continuation during short absence for illness or other
reasons) to or on behalf of its officers, employees or their beneficiaries or
whereunder any of such persons owes money to the Company.
1.17 Employee Relations. The Company has not engaged in any unfair
labor practice, unlawful employment practice or unlawful discriminatory practice
in the conduct of its business. The Company has complied in all material
respects with all applicable laws, rules and regulations relating to wages,
hours and collective bargaining and have withheld all amounts required to be
withheld from the wages or salaries of employees. The Company is not a party to
or threatened with or in danger of being a party to any labor dispute which
would materially interfere with the conduct of business. Set forth on Schedule
1.17 hereto is the name and total annual compensation (including bonuses) paid
by the Company to current active employees during the year ended December 31,
1996 and the annual compensation payable for 1997.
1.18 Benefit Plans. Schedule 1.18 contains a list of any "employee
pension benefit plan" or "employee welfare benefit plan" within the meaning of
Sections 3(1) and 3(2) of the Employee Retirement Income Security Act of 1974,
as amended, ("ERISA") established or maintained by the Company to which the
Company has made any contributions in 1996 or 1997 (collectively the "Employee
Benefit Plans"). The Company is not required, or was not required within the
immediately preceding five years, to make any contribution to any "multiemployer
plan" within the meaning of Section 3(7) of ERISA. The Company does not have any
liability in respect of any employee pension benefit plans established or
maintained and to which contributions are or were made by it to the Pension
Benefit Guaranty Corporation ("PBGC").
Schedule 1.18 also lists each deferred compensation plan, bonus
plan, stock option plan, employee stock purchase plan and any other employee
benefit plan, agreement, arrangement or commitment not required under the
preceding paragraph to be listed on Schedule 1.18 (other than normal policies
concerning holidays, vacations and salary continuation during short absences for
illness or other reasons) maintained by the Company.
Except as set forth on Schedule 1.18, (a) no employee pension
benefit plan, as defined in Section 3(2) of ERISA, maintained or contributed to
by the Company or in respect of which the Company is considered an "employer"
under Section 414 of the Internal Revenue Code of 1986, as amended (the "Code"),
(i) has incurred any "accumulated funding deficiency," as defined in Section 412
of the Code (whether or not waived), or (ii) has incurred any liability to PBGC,
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and (b) the Company has not breached any of the responsibilities, obligations or
duties imposed on it by ERISA or the Code with respect to any employee pension
benefit plan or employee welfare benefit plan maintained by it, which breach has
given rise to, or may in the future give rise to, an obligation to pay money,
including the obligation to make any required contribution to any employee
pension benefit plan for any plan year ending prior to the Closing Date. There
is no contribution due for any pension plan for the year in which the Closing
occurs. Except as set forth on Schedule 1.18, neither the Company nor any of its
affiliates or any "party in interest," as defined in Section 3(14) of ERISA, in
respect of any such plan has engaged in any non-exempted prohibited transaction
described in Sections 406 and 408 of ERISA or Section 4975 of the Code which
would result in a material adverse effect on the Company. Except as set forth on
Schedule 1.18, no reportable event, as defined in Section 4043 of ERISA, has
occurred with respect to any employee pension benefit plan maintained or
contributed to by the Company or in respect of which the Company is an employer
under Section 414 of the Code; and none of such plans has been terminated by the
plan administrator thereof or by the PBGC. The Company has not incurred any
unpaid liability for any pension plan covered under ERISA.
With respect to any employee pension benefit plan or employee
welfare benefit plan maintained by the Company, no action, suit, grievance,
arbitration or other manner of litigation, or claim with respect to the assets
of the plan (other than the routine claims for benefits made in the ordinary
course of plan administration for which plan administrative review procedures
have not been exhausted) are pending, threatened or imminent against or with
respect to the plan, the Company, or fiduciary (as defined in ERISA ss.3(21)) of
the plan (including any action, suit, grievance, arbitration or other manner of
litigation, or claim regarding conduct which allegedly interferes with the
attainment of rights under the plan), and the Seller has no knowledge of any
facts which would give rise to or could give rise to any action, suit,
grievance, arbitration or other manner of litigation, or claim.
1.19 Conflicts; Sensitive Payments. There are (a) no material
situations involving the interests of any of the Seller or any other stockholder
or (except as listed on Schedule 1.16 or Schedule 1.19) any officer or director
of the Company which may be generally characterized as a "conflict of interest,"
including but not limited to, the leasing of property to or from the Company or
significant direct or indirect interests in the business of competitors,
suppliers or customers of the Company; and (b) no situations involving illegal
payments or payments of doubtful legality from corporate funds of the Company
since January 1, 1993 to governmental officials or others which may be generally
characterized as a "sensitive payment."
1.20 Corporate Name. Except as set forth on Schedule 1.20
hereto, the Company owns and possesses, to the exclusion of the Seller and its
affiliates, all rights to the use of the name Excelsior Spring Water, Inc.
including, but not limited to, the right to use such names in advertising and
neither the Company nor the Seller has licensed the name to any party.
1.21 Trademarks and Proprietary Rights. All trademarks, trade
names, copyrights and applications therefor which are owned or exclusively used
or registered in the name of or
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licensed to the Company are listed and briefly described on Schedule 1.21, other
than as specified on Schedule 1.21, no proceedings have been instituted or are
pending or threatened which challenge the validity of the ownership by the
Company of any such trademarks, trade names, copyrights or applications. The
Company has not licensed anyone to use any of the foregoing or any other
technical know-how or other proprietary rights of the Company and neither the
Company nor the Seller has any knowledge of the infringing use of the any of
such trademarks and trade names or the infringement of any such copyrights by
any person except as set forth on Schedule 1.21. The Company owns all
trademarks, trade names, copyrights, processes and other technical know-how and
other proprietary rights now used in the conduct of its business and has not
received any notice of conflict with the asserted rights of others except as
specified in Schedule 1.21.
1.22 Brokers. Neither the Company nor the Seller has paid or become
obligated to pay any fee or commission to any broker, finder or intermediary for
or on account of the transactions provided for in this Agreement. Neither the
Company nor the Seller has any agreement or obligation whatsoever with entities
other than the Buyer regarding any proposed acquisition of the Company by any
such entity and none of them is engaged in any negotiations with any such entity
for any such acquisition.
1.23 Securities Laws.
(a) Seller acknowledges receipt of copies of the
Annual Report, the 1996 Form 10-K and the form 10-Q for the calendar quarter
ending March 31, 1997 of the Buyer.
(b) Seller acknowledges that any shares of capital
stock of Buyer received by him pursuant to this Agreement (the "Shares") have
been delivered to him pursuant to an exemption from the registration
requirements of the Securities Act of 1933, as amended (the "Act") and may not
be resold or otherwise transferred unless registered under the Act or unless an
exemption from the registration requirements of the Act is available. Rule 144
under the Act, permits sales or other transfers of unregistered securities by a
holder after a period of one (1) year from the date hereof, subject to
compliance with restrictions regarding amounts which may be sold, the manner of
sale and the other terms and conditions of that Rule.
(c) Seller acknowledges that:
(i) the Shares being acquired by him are
for his own account, for investment and without a view to the distribution or
resale thereof;
(ii) he has had access to all information
concerning Buyer, its business and this transaction that he deemed necessary to
make the determination to acquire the shares; he has had access to any
additional information deemed necessary by him to verify the accuracy of any
information given to him; and he has received all information which he has
requested;
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(iii) he has knowledge and experience in
financial matters and is capable of evaluating the risks associated with
ownership of the Shares and making an informed business decision with respect
thereto;
(iv) for a period of one year from the
date of this Agreement, Buyer may instruct any transfer agent for its common
stock not to permit transfer of the Shares to be made unless specifically
authorized by Buyer and during any calendar month thereafter, Payee may instruct
any transfer agent for its common stock not to permit transfers of more than
15,000 Shares to be made unless specifically authorized by Buyer ;
(v) the certificates for the Shares will
be legended to reflect the restrictions on the transferability of the Shares;
and
(vi) he has been represented by legal
counsel in connection with the Agreement and the receipt of the Shares by him.
1.24 No Omissions. None of the representations or warranties of the
Seller contained herein and, none of the information contained in the Schedules
referred to in this Article I is false or misleading in any material respect or
omits to state a fact herein or therein, necessary to make the statements herein
or therein in the circumstances in which they were made not misleading in any
material respect.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE BUYER
As an inducement to the Seller to enter into this Agreement and to
consummate the transactions contemplated herein, the Buyer represents and
warrants to the Seller and agrees as follows:
2.1 Organization. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
2.2 Authority. This Agreement and the transactions contemplated
herein have been duly approved by all necessary corporate action on the part of
the Buyer. This Agreement, when executed and delivered by the Buyer, and
assuming due execution hereof by the Company and the Seller will constitute the
valid and binding agreement of the Buyer enforceable in accordance with its
terms. Neither the execution nor the delivery of this Agreement, nor the
consummation of the transactions contemplated herein, nor compliance with nor
fulfillment of the terms and provisions hereof, will (i) conflict with or result
in a breach of the terms, conditions or provisions of or constitute a default
under the governing instruments of the Buyer, any instrument, mortgage,
agreement, judgment, order, award, decree or other restriction to which the
Buyer is a party or by which the Buyer is bound or any statute or regulatory
provisions affecting it or (ii) require
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the approval, consent, or authorization of or any filing with or notification to
any Federal, state or local court, governmental authority or regulatory body.
The Buyer has full power and authority to purchase the Stock pursuant to this
Agreement and to do and perform all acts and things required to be done by the
Buyer under this Agreement.
2.3 Legal Proceedings. There is no legal, administrative or
arbitration proceeding action or suit pending or to Buyer's knowledge threatened
which, if adversely determined, would materially and adversely affect the
financial condition, business or assets of the Buyer or the ability of the Buyer
to consummate the transactions contemplated herein.
2.4 Agreement Not in Breach of Other Instruments. The execution,
delivery and performance of this Agreement and the Consulting Agreement by the
Buyer will not: (i) violate, conflict with or constitute a default under any
term or provision of the Certificate of Incorporation or By-laws of the Buyer;
(ii) result in a default or breach of or give rise to any right of termination,
cancellation or acceleration, under the terms, conditions or provisions of any
note, bond, mortgage, deed of trust, commitment, indenture, lease, guarantee,
authorization, franchise, license, permit, agreement, contract or any other
instrument or obligation to which the Buyer is a party or by which it or any of
its properties or assets have been bound; (iii) violate any law, order, rite,
injunction, decree, statute, rule or regulation applicable to the Buyer or its
properties or assets; (iv) result in the creation or imposition of any lien,
charge or encumbrance upon any of the assets of the Buyer; (v) terminate or
adversely affect any permit, license or authorization of a governmental
authority used or required by the Buyer in the conduct of its business. The
consent or approval by or notice to any governmental or regulatory authority is
required in connection with the execution and delivery of this Agreement or the
Consulting Agreement entered into with Seller as defined below, the consummation
of the transactions contemplated hereby or the fulfillment of the terms hereof
or thereof.
2.5 Investment Purpose. The Buyer is acquiring the Stock for its
own account, for investment purposes only and not with a view to the
distribution thereof as that phrase has meaning under the Act and the rules and
regulations of the Securities and Exchange Commission (the "Commission"). The
Buyer shall not sell or make any other distribution of any of the shares in
violation of the provisions of any applicable laws and regulations, including,
without limitation the rules and regulations of the Commission and state
securities or "blue sky" laws.
2.6 Brokers. Neither the Buyer nor its representatives have paid or
become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions provided for in this
Agreement.
2.7 No Omissions. None of the representations or warranties of the
Buyer contained herein and none of the other information or documents furnished
to the Seller or the Company by the Buyer or its representatives in connection
with this Agreement is false or misleading in any material respect or omits to
state a fact herein or therein necessary to make the statements herein or
therein not misleading in any material respect; to the best knowledge of the
Buyer, there is no fact which adversely affects, or in the future is likely to
adversely affect,
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the business or assets of the Buyer in any material respect which has not been
disclosed in writing to the Seller or the Company.
ARTICLE III
COVENANTS OF THE SELLER
3.1 Non-Competition.
(a) In furtherance of the sale of the Stock to the Buyer,
upon the consummation of the transactions contemplated herein and more
effectively to transfer and protect the business of the Company, the Seller
agrees that for a period ending on the fifth anniversary of the date hereof, he
will not (i) directly or indirectly own, manage or operate a home and office
water delivery business anywhere in New York or in any other state in which the
Company presently conducts its business, that sells to any of the Company's
existing customers; provided that ownership of not more than five percent (5%)
of the issued and outstanding shares of a class of securities of a corporation,
the securities of which are traded on a national securities exchange or in the
over-the-counter market, shall not be deemed ownership of the issuer of such
shares for the purposes of this paragraph; or (ii) induce or attempt to persuade
any employee or agent of the Company to terminate such employment or agency
relationship in order to enter into any such relationship with the Seller or any
of his subsidiaries or affiliates or to enter into any such relationship on
behalf of any other business organization in competition with the Company or the
Buyer.
(b) Without limiting the right of the Buyer and any of
its successors or assigns to pursue all other legal and equitable rights
available to them for violation of the covenant set forth in Section 3.1(a)
above by the Seller, it is agreed that other remedies cannot fully compensate
the Buyer and its successors and assigns for such a violation and that the Buyer
and its successors and assigns shall be entitled to injunctive relief to prevent
violation or continuing violation hereof. It is the intent and understanding of
each party hereto that if, in any action before any court or agency legally
empowered to enforce this covenant, any term, restriction, covenant or promise
is found to be unreasonable and for that reason unenforceable, then such term,
restriction, covenant or promise shall be deemed modified to the extent
necessary to make it enforceable by such court or agency.
3.2 Use of Trademarks. From the date hereof, the Seller shall not
have the right to use any of the trademarks, trade names, or applications
therefor heretofore exclusively used or owned by the Company or to use any
trademarks or trade names similar thereto or designs imitative thereof except as
officers or agents of the Company in connection with its business prior to the
Closing. From the date hereof, Seller shall have any right to use or to
disclose, except in the ordinary course of business of the Company, to any
person, firm or corporation other than the Buyer, its employees, agents and
representatives, any trade or business secrets or client lists or other
proprietary information of the Company.
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3.3 Additional Tax Information. The Seller agrees to deliver
promptly to the Buyer any copies of information in the Seller's possession
reasonably requested by the Buyer in connection with any tax returns relating to
the Company (whether filed prior to the Closing or to be filed hereafter). The
Seller shall have access to such records of the Company as shall reasonably be
required to enable the Seller to prepare any tax returns for periods ending on
or before the Closing.
3.4 Certain Tax Matters. The Seller shall cause the Company to pay
all Federal, state and local taxes, including without limitation, income,
profits, occupation, excise, property, sales, use and franchise taxes and
including interest and penalties on, based on, measured by or with respect to
the income, net worth or capital of the Company (the "Taxes") for all taxable
periods up to and including the Closing Date, except that the Seller need not
cause the Company to file Massachusetts tax returns or pay taxes to
Massachusetts prior to the Closing Date. An accrual of such taxes in the amount
of $15,000 has been included in the Company's Payables.
The Seller shall cause the Company to file all tax returns required
to be filed on or before the Closing Date with respect to the Company (and
amendments thereof) and all tax returns (and amendments thereof) with respect to
Taxes on income for tax periods ending on or before the Closing Date (except for
Massachusetts tax returns). The Buyer shall cause the Company to file all tax
returns required to be filed after the Closing Date with respect to the Company,
other than tax returns with respect to Taxes for tax periods ending on or before
the Closing Date.
ARTICLE IV
ACTION PRIOR TO THE CLOSING DATE
The parties hereto agree to take the following actions between the
date hereof and the Closing Date:
4.1 Confidential Nature of Information. The Buyer and the Seller
agree that, in the event that the transactions contemplated herein shall not be
consummated, each will treat in confidence all documents, materials and other
information which it shall have obtained during the course of the negotiations
leading to the execution of this Agreement, the investigation of the other party
hereto and the preparation of this Agreement and any other documents relating
hereto, and shall return to the other party all copies of non-public documents
and materials which have been furnished in connection therewith.
4.2 Accuracy of Representations and Warranties. The Seller shall
refrain from intentionally taking any action and shall cause the Company to
refrain from intentionally taking any action which would render any
representation and/or warranty contained in Article I of this Agreement
inaccurate at any time between the date hereof and the Closing Date. The Seller
will promptly notify the Buyer of any lawsuits, claims, proceedings or
investigations that, to the
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knowledge of the Seller, may be brought, asserted or commenced against the
Company, or its officers or directors.
4.3 No Material Change in the Company. Prior to the Closing Date,
the Company shall not, and the Seller shall not, without the prior written
approval of the Buyer, cause the Company to (i) make any material change in the
business or operations of the Company; (ii) make any material change in the
accounting policies applied in the preparation of the financial statements
referred to herein; (iii) declare any dividends on its issued and outstanding
shares of capital stock, or make any other distribution of any kind in respect
thereof; (iv) issue, sell or otherwise distribute any authorized but unissued
shares of its capital stock or effect any stock split or reclassification of any
such shares or grant or commit to grant any option, warrant or other rights to
subscribe for or purchase or otherwise acquire any shares of capital stock of
the Company or any security convertible or exchangeable for any such shares; (v)
purchase or redeem any of the capital stock of the Company; (vi) incur or be
liable for indebtedness to Seller or the other stockholders other than in the
ordinary course of business; (vii) make any material change in the base
compensation of officers or key employees of the Company; (viii) enter into any
contract, license, franchise or commitment other than in the ordinary course of
business, or waive any rights of substantial value; or (ix) enter into any other
transaction affecting in any material respect the business of the Company other
than in the ordinary course of business and in conformity with past practices,
or as contemplated by this Agreement. Notwithstanding the above, on or prior to
the Closing Date, the Company may sell any or all of its tangible assets other
than those listed on Exhibit A hereto to any buyer for nominal consideration.
4.4 No Public Announcement. Neither the Company nor the Buyer
shall, without the approval of the other, make any press release or other public
announcements or filing concerning the transactions contemplated by this
Agreement, except as and to the extent that any such party shall be so obligated
by law, in which case the other party shall be advised thereof and given an
opportunity to comment thereon.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER
The obligations of the Buyer under this Agreement to purchase and
pay for the Stock and the Notes shall, at the option of the Buyer, be subject to
the satisfaction, on or prior to the Closing Date, of the following conditions:
5.1 Buyer shall have entered into a Stock Purchase Agreement
satisfactory to it with each of the Other Stockholders of the Company for the
purchase in the aggregate (including the Stock being purchased hereunder) of all
of the issued and outstanding capital stock of the Company, Buyer shall have
entered into a Note Purchase Agreement satisfactory to it with each of the
Noteholders, and each of the Other Stockholders and Noteholders shall have
performed all of their obligations under their respective Stock Purchase
Agreements and Note Purchase
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Agreements and are ready, willing and able to deliver to Buyer their stock and
notes on the Closing Date.
5.2 There shall have been no material breach by the Company or the
Seller in the performance of any of their covenants and agreements herein, each
of the representations and warranties of the Seller and the Company contained in
this Agreement shall be true and correct in all material respects on the Closing
Date as though made on the Closing Date and there shall have been delivered to
the Buyer a certificate or certificates to that effect, dated the Closing Date
and signed by the Seller and the President of the Company.
5.3 The Company will have resolved, to the satisfaction of the
Buyer, all of the matters required to be listed on any Schedule pursuant to
Article I of this Agreement.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER
The obligations of the Seller under this Agreement to deliver the
Stock shall, at the option of the Seller, be subject to the satisfaction, on or
prior to the Closing Date, of the following conditions:
There shall have been no material breach by the Buyer in the
performance of any of its covenants and agreements herein, each of the
representations and warranties of the Buyer contained or referred to in this
Agreement shall be true and correct in all material respects on the Closing Date
as though made on the Closing Date and there shall have been delivered to the
Seller a certificate or certificates to that effect, dated the Closing Date and
signed on behalf of the Buyer by its President.
ARTICLE VII
PURCHASE PRICE AND CLOSING
7.1 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the office of the attorney for
Seller on August 27, 1997 or such other date as shall be mutually agreed to by
the Seller and the Buyer (the "Closing Date").
7.2 Purchase and Sale of the Stock.
(a) On the Closing Date, the Seller shall sell to the
Buyer the Stock for the following consideration:
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(i) cash payable by wire transfer in the
amount of $1,220,918.70 to the following account:
Chase Bank 4 New York Plaza New York,
NY 10004 ABA #021000021 FBO First
Albany Corporation A/C# 066-002-044
FFC to David Eger FAC Account No.
3036-7552
(ii) note payable to the Seller made by
the Buyer in the amount of $470,000.00 plus fifty percent (50%) of the
difference between the amounts listed on Exhibit C hereto as being owed to all
of Company's creditors and the amount that such creditors have agreed, prior to
the Closing Date, to accept in full settlement of all claims against the
Company, as evidenced by written agreements and releases acceptable to counsel
for the Buyer. The Note shall be for a term of five (5) years at the prime rate
of interest as reported from time to time in the Wall Street Journal with equal
installments of principal and interest based on a 10-year amortization and a
balloon payment due at the expiration of the term of the note;
(iii) an aggregate of the sum of 94,000
shares of common stock of Vermont Pure Holdings, Ltd. ("Holdings"), the parent
corporation of Buyer, plus the number of shares of Holdings' stock that is
obtained by dividing $305,000 by the Closing Date Price of 2 9/32 in the form of
certificates issued in the name of the Seller. Stock issued pursuant to this
paragraph shall be restricted as described in Section 1.23(c) hereof. Closing
Date Price shall be 2 9/32.
(b) Seller shall enter into with the Company a
consulting agreement (the "Consulting Agreement") in the form of Exhibit B
hereto that will pay Seller compensation of $15,000 per year plus health and
welfare benefits including medical insurance and dental insurance at an
estimated cost of $5,000 annually, and during the term of the Contract Period
(as defined in the Consulting Agreement), Seller shall be entitled to use the
car currently leased by the Company for Seller's use. At the end of the Contract
Period, Seller shall have the option to purchase the car for $1.
7.3 Deliveries by the Seller. At the Closing, the Seller shall
sell, assign, transfer and convey to the Buyer all of the Stock of the Company
and shall deliver, at the Closing the following:
(a) A certificate or certificates representing the
Stock, together with fully executed and witnessed stock power (in blank)
attached thereto with signature guaranteed by an institution that is a
participant in the Securities Transfer Agents Medallion Program.
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(b) An opinion dated the Closing Date hereof from
counsel for the Seller, in form and substance satisfactory to the Buyer and its
counsel, to the effect that:
(i) The Company is duly incorporated,
validly existing and in good standing under the laws of the State of New York;
the Company has full corporate power and authority to own or lease and operate
its properties and to carry on its business as now conducted; and the Company
has no subsidiaries.
(ii) The authorized capital stock of the
Company consists of 200 shares of common stock, par value $ -0- per share, of
which 108 shares have been issued and are outstanding and are owned of record by
the Seller and the Other Stockholders who are entering into Stock Purchase
Agreements with Buyer; all of the issued and outstanding shares of capital stock
of the Company as of the Closing are validly issued, fully paid and
nonassessable.
(iii) This Agreement and the transactions
contemplated herein have been duly approved by all necessary corporate action of
the Company. This Agreement has been duly and validly executed and delivered by
the Seller and such Agreement, assuming due execution by the Buyer, is the valid
and binding agreement of the Seller enforceable against the Seller in accordance
with its terms except as enforcement of such agreement may be limited by
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally.
(iv) The Seller has full power and
authority to execute and deliver the Agreement and to perform its obligations
hereunder. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated herein, (a) violates or conflicts
with or results in the breach of the terms, conditions or provisions of, or
constitutes a default under, the Certificate of Incorporation or the Bylaws of
the Company or any agreement or instrument known to such counsel to which the
Company or the Seller is a party or by which either of them is bound or (b)
requires the consent, approval or authorization of or any filing with or
notification to any Federal, state or local court, governmental authority or
regulatory body not already obtained or made, as the case may be.
(v) To the best of such counsel's
knowledge there is no action, suit, proceeding or investigation pending or
threatened against the Seller or the Company, other than actions, suits,
proceedings or investigations described in Schedule 1.14, Schedule 1.17 or
Schedule 1.21 hereto, which might result in a material adverse change in the
properties, business or assets or in the condition financial or otherwise of the
Company which questions the legality, validity or propriety of this Agreement or
of any action taken or to be taken by the Company or the Seller pursuant to or
in connection with this Agreement.
(vi) The Seller is the lawful owner of the
Stock, to the best of such counsel's knowledge, free and clear of all adverse
claims, with unrestricted right and power to transfer and deliver the Stock to
the Buyer. The Seller has executed and delivered to the Buyer such instruments
as are sufficient in form to vest good and marketable title to the Stock in the
Buyer free and clear of all adverse claims.
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In giving such opinion, counsel for the Seller may rely, as to
matters of fact, upon certificates of officers of the Company.
(c) The resignations immediately prior to the Closing
of (i) each director of the Company and (ii) each officer of the Company as
requested by the Buyer.
7.4 Deliveries of the Buyer. At the Closing, the Buyer shall
deliver to the Seller an opinion of Ledgewood Law Firm, P.C., counsel for the
Buyer, in form and substance satisfactory to the Seller and its counsel, to the
effect that (i) The Buyer is a corporation duly organized, validly existing and
in good standing under the laws State of Delaware; and (ii) this Agreement and
the transactions contemplated herein have been duly approved by all necessary
corporate action of the Buyer and such Agreement, assuming due execution by the
Seller, is the valid and binding agreement of the Buyer enforceable against the
Buyer in accordance with its terms except as enforcement of such agreement may
be limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally.
In giving such opinion, counsel for the Buyer may rely, as to
matters of fact, upon certificates of officers of the Buyer.
7.5 Use of Premises; Rent. The Seller is also the owner of premises
currently used by the Company. Seller agrees to rent the premises to the Buyer
for successive one-month terms until the premises are vacated by the Buyer upon
fourteen (14) days' written notice to the Seller of its intention to so vacate.
The Buyer agrees to pay rent for the use of such premises at the rate of Four
Thousand Dollars ($4,000) for each full month of such use and to rent the
equipment located at said premises at the rate of Five Thousand Dollars ($5,000)
for each full month of such use. Payments of rent for periods prior to January
1998 shall be due January 2, 1998; rent for subsequent periods shall be due on
the fifteenth day of each month. Payments of rent for any period less than a
full month shall be pro-rated.
ARTICLE VIII
TERMINATION
8.1 Termination. This Agreement may be terminated by the Buyer if
any of the representations, warranties or covenants of the Company or the Seller
have been breached or if the purchase and sale has not been consummated, for any
reason, by August 31, 1997.
If this Agreement is terminated, each party shall pay its own
expenses.
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ARTICLE IX
SURVIVAL OF OBLIGATIONS; INDEMNIFICATION; LEGAL FEES
9.1 Survival of Obligations. All representations and warranties
made herein by the Seller and his obligations to be performed pursuant to the
terms hereof, shall survive the Closing hereunder and shall terminate three
years after the Closing; provided, that, (i) the representations and warranties
contained in Section 1.15 shall expire six years after the Closing, or with
respect to any dispute with the Internal Revenue Service, upon the later to
occur of the following (x) such dispute's final resolution and the payment of
all taxes, interest and penalties arising therefrom and (y) the expiration of
the applicable statute of limitations; and (ii) the representations in Section
1.4 shall not terminate.
9.2 Indemnification. (a) The Seller agrees to indemnify and hold
harmless the Buyer, the Company and their subsidiaries, affiliates, successors
and assigns from and against any and all (x) liabilities, losses, costs,
deficiencies or damages and any and all amounts paid in settlement ("Loss") and
(y) reasonable attorneys' and accountants' fees and expenses, court costs and
all other reasonable out-of-pocket expenses ("Expense"), incurred by the Buyer
or the Company, in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim asserted in good faith in connection with
or arising from (i) any claim that the Seller or any of the stockholders did not
convey to the Buyer good and marketable title to capital stock of the Company
owned by them, (ii) any breach by the Seller of any of his covenants in, or
failure of the Seller to perform any of his obligations hereunder, (iii) any
breach of any warranty or the inaccuracy of any representation of the Company or
the Seller contained or referred to in this Agreement or in any certificate
delivered by or on behalf of the Seller, or (iv) any claim brought by any of the
Other Stockholders or Noteholders relating to the amount, form or timing of any
consideration received by him or her under the applicable Stock Purchase
Agreement or Note Purchase Agreement; provided, however, that prior to Buyer
expending in excess of One Thousand Dollars ($1,000) investigating, preparing,
or defending against any claims, Buyer shall give Seller written notice of such
claims and Seller shall have a period of thirty (30) days to settle or otherwise
resolve such claim. Buyer agrees to keep Seller reasonably informed, not less
than quarterly, of any Expenses being incurred.
(b) The Buyer agrees to indemnify and hold harmless
the Seller from and against any and all Loss and Expense incurred by the Seller
in investigating, preparing or defending against any litigation, commenced or
threatened, or any claim asserted in good faith in each case net of any
insurance received by the Seller in connection with or arising from (i) any
breach by the Buyer of any of its covenants in, or any failure of the Buyer to
perform any of its obligations under, this Agreement or (ii) any breach of any
warranty or the inaccuracy of any representation of the Buyer contained or
referred to in this Agreement or in any certificate delivered by or on behalf of
the Buyer pursuant hereto.
(c) If a party incurring a Loss of Expense (an
"Indemnified Person") has suffered or incurred any Loss or Expense, the
Indemnified Person shall so notify the party
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responsible therefor (an "Indemnifying Person") promptly in writing describing
such Loss or Expense, the amount thereof, if known, and the method of
computation of such Loss or Expense, all with reasonable particularity and
containing a reference to the provisions of this Agreement or any certificate
delivered pursuant hereto in respect of which such Loss or Expense shall have
occurred. If any action at law or suit in equity is instituted by or against a
third party with respect to which an Indemnified Person intends to claim any
liability or expense as Loss or Expense under this Section 9.2, such Indemnified
Person shall promptly notify the Indemnifying Person of such action or suit.
(d) An Indemnified Person shall have the right, but
not the obligation, to participate at its own expense in the defense of any
third party claim, action or suit with counsel of its own choosing, but the
Indemnifying Person shall be entitled to control the defense unless the
Indemnified Person has relieved the Indemnifying Person from liability with
respect to the particular matter. In the event that the Indemnifying Person
shall fail timely to defend, contest or otherwise protect against such claim,
the Indemnified Person shall have the right, but not the obligation, to defend,
contest or otherwise protect against the same or, on not less than thirty (30)
days' written notice to the Indemnifying Person, make any compromise or
settlement thereof, and such compromise or settlement shall be binding on the
Indemnifying Person for purposes of indemnification under this Article IX unless
the Indemnifying Person objects thereto within the thirty day period aforesaid.
(e) The Buyer and/or the Company shall have the right
to set off against any amounts due the Seller (including cancellation of Shares
issued pursuant to Article VII with any Shares cancelled being valued at the
Closing Date Price) with respect to any amounts owed to the Buyer by the Seller
as a result of the indemnification provided in this Section 9.2. Provided,
however, that no offset may be made against any payment due on the promissory
note issued pursuant to Section 7.2(ii) hereof without the consent of Seller
except that offset may be made against the last payment of principal and
interest due thereunder without consent and offset may be made against other
payments if there has been a determination by an arbitrator, selected in
accordance with the rules of the American Arbitration Association in an
arbitration proceeding that the parties agree shall be held in Vermont, that a
third party has made a claim against the Buyer or the Company that is reasonably
likely to result in a valid claim for indemnification against the Seller under
this Agreement.
(f) Notwithstanding the foregoing, in no event shall
an Indemnifying Person be responsible for any indemnity hereunder until the
aggregate Loss or Expense of the Indemnified Person exceeds the sum (as
determined by the audit described in Section 1.13 hereof) of Ten Thousand
Dollars ($10,000) plus (or minus if Payables exceed Receivables) the excess of
the Receivables over the Payables (after adjustment for any reduction reflected
in an increased principal amount of the note being issued pursuant to Section
7.2(ii) hereof) (the "Minimum Amount"). Once such Loss or Expense has exceeded
the Minimum Amount, the Indemnified Person shall be entitled to Ten Thousand
Dollars ($10,000) as well as amounts in excess of the Minimum Amount.
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9.3 Legal Expenses. In the case of any action brought by any party
hereto under this Agreement, the notes issued pursuant to Section 7.2 hereof or
the Consulting Agreement, the prevailing party shall be entitled to be
reimbursed by the losing party an amount equal to all of the prevailing party's
reasonable legal or other professional fees and expenses. In the case of a
judgment of less than that sought in any formal complaint, the party obtaining
the judgment shall be deemed to be the prevailing party to the extent of the
amount of the judgment divided by the amount sought and shall be deemed to be
the losing party with respect to the balance of the claim.
ARTICLE X
MISCELLANEOUS
10.1 Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given (a) three (3)
days after having been sent by certified or registered mail, return receipt
requested, (b) one (1) business day after having been sent by regional
recognized courier guarantying next business day delivery, or (c) upon delivery
if given by hand delivery against written receipt, addressed as follows:
If to the Buyer:
Vermont Pure Springs, Inc.
70 West Red Oak Lane
White Plains, NY 10604
With a copy to:
Kevin F. Berry, Esq.
Ledgewood Law Firm
1521 Locust Street
Philadelphia, PA 19102
If to the Seller:
David Eger
39 Franklin Street
Saratoga Springs, NY 12866
With a copy to:
Donald Zee, P.C.
Attorney at Law
1621 Central Avenue
Albany, NY 12205
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10.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
the provisions on conflicts of law.
10.3 Successors and Assigns. This Agreement shall be
bindingupon and inure to the benefit of the parties hereto and their respective
successors and assigns
10.4 Severability. In case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein unless the deletion of such provision
or provisions would result in such a material change as to cause enforcement of
the terms hereof to be unreasonable.
10.5 Expenses. Except as expressly stated otherwise herein, each
party hereto shall pay its own expenses (including, without limitation, legal
and accounting fees and expenses) incident to its negotiation and preparation of
this Agreement and to its performance and compliance with the provisions
contained herein.
10.6 Titles and Headings. Titles and headings to Articles and
Sections herein are inserted for the convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
10.7 Exhibits and Schedules. The Exhibits and Schedules to this
Agreement shall be construed with and read as an integral part of this Agreement
to the same extent as if the same had been set forth verbatim herein.
10.8 Entire Agreement; Amendments and Waivers. This Agreement,
including the Schedules hereto, contains the entire understanding of the parties
hereto with regard to the subject matter contained herein. The parties hereto,
by mutual agreement in writing, may amend, modify and supplement this Agreement.
The failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the rights of
such party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
21
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
VERMONT PURE SPRINGS, INC.
Attest: By:
President
Secretary
EXCELSIOR SPRINGS WATER COMPANY,
INC.
Attest: By:
President
Secretary
Witness: SELLER:
David Eger
RAbt\Vermont\EgerStoc.Ag5
22
<PAGE>
EXHIBIT A
LIST OF TANGIBLE ASSETS THAT MAY NOT BE SOLD
<PAGE>
EXHIBIT B
CONSULTING AGREEMENT
<PAGE>
EXHIBIT C
TERM NOTE
August 27, 1997
TERM NOTE
For value received and intending to be legally bound, VERMONT
PURE SPRINGS, INC., a Delaware corporation having a business address in
Randolph, Vermont ("Maker"), hereby promises to pay to the order of David Eger,
an individual residing at
("Payee"), after date, the
principal sum of five hundred and three thousand Dollars ($503,000), together
with interest thereon upon the terms and conditions hereinafter set forth.
1. Term and Interest Rate. This Note shall be for a term
expiring on August 31, 2002 and interest shall accrue on the outstanding
principal balance hereof at a per annum rate equal to the prime rate in effect
from time to time as reported in the Wall Street Journal (the "Interest Rate").
Interest shall be calculated on a three hundred sixty five (365) day year for
the actual number of days elapsed in each calendar year.
2. Payments.
a. Interest. Interest that accrues on the
outstanding principal balance hereof at the rate set forth above through
December 31, 1997 shall be due and payable on January 2, 1998. Interest that
accrues thereafter shall be payable monthly in arrears.
b. Principal Balance. The principal balance of
this Note shall be payable in consecutive monthly installments based on a ten
(10) year amortization of principal and assuming level payments of interest
(ignoring the fact that payment of 1997 interest is due on January 2, 1998) and
principal and an interest rate of eight and one-half percent (8 1/2%) per annum
payable on the last day of each month commencing on September 30, 1997 and one
final payment, on August 31, 2002, of the entire outstanding principal balance
hereof and all accrued interest and all other sums due and owing hereunder.
3. Prepayment. Maker shall have the right to prepay, without
premium or penalty, the principal sum hereof, in whole or in part, at any time
after January 1, 1998, provided that such repayment is accompanied by the
payment of all interest accrued hereunder to the date of prepayment and all
other fees and charges due hereunder.
4. Place of Payment. Principal and interest hereunder
shall be payable by wire transfer to the account as follows, or such other
account as shall be specified in writing by Payee:
Chase Bank
4 New York Plaza
New York, NY 10004
ABA #021000021
FBO First Albany Corporation
A/C# 066-002-044
<PAGE>
FFC to David Eger
FAC Account No. 3036-7552
5. Default; Acceleration; Remedies. Should there occur an
event of default hereunder, and if such default is not cured by Maker within
fifteen (15) business days after receipt by Maker of written notice from Payee
detailing such default, the late payment shall bear interest at the Default Rate
(which shall be the Interest Rate plus five percent (5%) per year) if not paid
within the grace period provided, and Payee, at his option, may declare in
writing immediately due and payable the entire unpaid balance of principal and
all other sums due by Maker hereunder, together with interest accrued thereon at
the applicable rate specified herein to the date of default and thereafter at
the Default Rate. Upon such a declaration of all such sums becoming due and
payable by reason of such event of default, payment thereof may be enforced and
recovered in whole or in part at any time by one or more of the remedies
provided to Payee in this Note. If Payee is required to sue for collection of
any installment, Payee should also be entitled to the reasonable costs of
collection, including reasonable attorneys' fees.
6. Severability. If any provision of this Note is held
to be invalid or enforceable by a court of competent jurisdiction, the other
provisions of this Note remain in full force and effect and shall be liberally
construed in favor of Payee in order to effect the provisions of this Note.
7. Limitation of Interest to Maximum Lawful Rate. In no event
shall the rate of interest payable hereunder exceed the maximum rate of interest
permitted to be charged by applicable law (including the choice of law rules)
and any interest paid in excess of the permitted rate shall be refunded to
Maker. Such refund shall be made by application of the excessive amount of
interest paid against any sums outstanding and shall be applied in such order as
Payee may determine. If the excessive amount of interest paid exceeds the sums
outstanding, the portion exceeding the said sums outstanding shall be refunded
in cash to Maker by Payee. Any such crediting or refund shall not cure or waive
any default by Maker hereunder.
8. Waivers. All parties to this instrument, whether makers,
endorsers, sureties, guarantors, or otherwise, waive, severally and jointly,
presentment, demand, notice of dishonor, protest, notice of protest, notice of
nonpayment or nonacceptance and any other notice that may otherwise be required
by law, except as to notice requirements explicitly required hereunder.
9. Applicable Law. This instrument shall be governed by
and construed according to the laws of the State of New York.
10. Captions. The option or headings of the paragraphs
in this Note are for convenience only and shall not control or affect the
meaning or construction of any of the terms or provisions of this Note.
11. Construction. Whenever used, the singular number
shall include the
2
<PAGE>
plural, the plural the singular and the use of any gender shall be applicable to
all genders. The words "Payee" and "Maker" shall be deemed to include the
respective heirs, personal representatives, successors and assigns of Payee and
Maker.
IN WITNESS WHEREOF, Maker, intending to be legally bound
hereby, has caused this Note to be duly executed the day and year first above
written.
12.
VERMONT PURE SPRINGS, INC.
By:___________________________
Title:_________________________
3
NOTE PURCHASE AGREEMENT
Between
VERMONT PURE SPRINGS, INC.,
and
ROGER DUNHAM
Relating to the Note of
EXCELSIOR SPRINGS WATER COMPANY, INC.
<PAGE>
NOTE PURCHASE AGREEMENT
This Note Purchase Agreement, made and entered into this 27th day of
August, 1997 (the "Agreement") by and between VERMONT PURE SPRINGS, INC., a
Delaware corporation (the "Buyer") and ROGER DUNHAM (the "Seller").
WITNESSETH:
WHEREAS, Excelsior Springs Water Company, Inc. (the "Company") is
engaged in the business of home and office delivery of water products;
WHEREAS, the Seller owns a promissory note (the "Note:) of the Company
with a face amount of $185,110.12 and unpaid and accrued interest of $89,769.76
through July 31, 1997;
WHEREAS, the Seller desires to sell his Note to the Buyer pursuant to
the terms and conditions set forth in this Agreement;
WHEREAS, the Buyer desires to purchase (the "Purchase") the Note from
the Seller on the terms and conditions set forth in this Agreement; and
WHEREAS, the persons owning all of the promissory notes of the Company
other than that owned by Seller ("Other Noteholders") and the persons owning all
of the stock of the Company (the "Stockholders") are also selling all of their
stock and notes to Seller as evidenced by individual Stock Purchase Agreement
(collectively, the "Stock Purchase Agreements") and Note Purchase Agreement
("collectively, the "Note Purchase Agreements") being executed contemporaneously
with this Agreement.
NOW, THEREFORE, the Buyer and the Seller, in consideration of the
agreements, covenants and conditions contained herein, hereby make the following
representations and warranties, give the following covenants and agree to be
legally bound hereby as follows:
ARTICLE I
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
OF THE SELLER
As an inducement to the Buyer to enter into this Agreement and to
consummate the transactions contemplated herein, the Seller represents and
warrants to the Buyer and agree as set forth in this Article I, and the Seller
acknowledges that the Buyer intends to rely on such representations and
warranties. The representations and warranties of the Seller are qualified by
the information set forth in the Schedules referred to in this Article I.
1.1 Authority. The Seller has the authority to execute, deliver
and perform his obligations under this Agreement. This Agreement, when executed
and delivered by the Seller
<PAGE>
and assuming the due execution hereof by the Buyer, will constitute the valid,
legal and binding agreement of the Seller enforceable in accordance with its
terms. Except as described on Schedule 1.2 hereof, no consent, authorization,
approval, order, license, certificate or permit of or from or declaration or
filing with, any Federal, state, local or other governmental authority or any
court or other tribunal (collectively, the "Governmental Consents") is required
in connection with the execution, delivery or performance of this Agreement by
the Seller. Except as described on Schedule 1.1, no consent of any party to any,
contract, agreement, instrument, lease, license, arrangement or understanding is
required for the execution, delivery or performance of this Agreement by the
Seller. The execution, delivery and performance by the Seller do not (i)
violate, result in a breach of, conflict with or (with or without the giving of
notice or the passage of time or both) entitle any party to terminate, modify or
otherwise change, in any material respect, the rights or obligations of the
parties thereunder or call a default under any such contract, agreement,
instrument, lease, license, arrangement, or understanding, or (ii) violate,
result in a breach of or conflict, in any material respect, with any law, rule,
regulation, order, judgment or decree binding the Seller.
1.2 Brokers. The Seller has not paid or become obligated to pay any fee
or commission to any broker, finder or intermediary for or on account of the
transactions provided for in this Agreement. The Seller does not have any
agreement or obligation whatsoever with entities other than the Buyer regarding
any proposed acquisition of the Company by any such entity and the Seller is not
engaged in any negotiations with any such entity for any such acquisition.
1.3 Securities Laws.
(a) Seller acknowledges receipt of copies of the Annual
Report, the 1996 Form 10-K and the form 10-Q for the calendar quarter ending
March 31, 1997 of the Buyer.
(b) Seller acknowledges that any shares of Stock of Buyer
received by him pursuant to this Agreement (the "Shares") have been delivered to
them pursuant to an exemption from the registration requirements of the
Securities Act of 1933, as amended (the "Act") and may not be resold or
otherwise transferred unless registered under the Act or unless an exemption
from the registration requirements of the Act is available. Rule 144 under the
Act, permits sales or other transfers of unregistered securities by a holder
after a period of one (1) year from the date hereof. Subject to compliance with
restrictions regarding amounts which may be sold, the manner of sale and the
other terms and conditions of that Rule.
(c) Seller acknowledges that:
(i) the Shares being acquired by his are for his
own account, for investment and without a view to the distribution or resale
thereof;
2
<PAGE>
(ii) during the course of this transaction and
prior to his receipt of the Shares, he has had access to all information
concerning Buyer, its business and this transaction that it deemed necessary to
make the determination to acquire the shares; he or she has had access to
any additional information deemed necessary by it to verify the accuracy of
any information given to it; and he has received all information which they
have requested, and he has been given an opportunity to ask questions of, and
receive answers from representatives of the Buyer concerning the terms and
conditions of the Purchase, and all such questions have been answered to the
satisfaction of the Seller;
(iii) he has knowledge and experience in financial
matters and is capable of evaluating the risks of the Shares and making an
informed business decision with respect thereto;
(iv) Buyer may instruct any transfer agent for
its common stock not to permit transfer of the Shares to be made unless
specifically authorized by Buyer;
(v) the certificates for the Shares will be
legended to reflect the restrictions on the transferability of the Shares; and
(vi) he has been represented by legal counsel in
connection with the Agreement and the receipt of the Shares by him.
1.4 No Omissions. None of the representations or warranties of the
Seller contained herein and, none of the information contained in the Schedules
referred to in this Article I is false or misleading in any material respect or
omits to state a fact herein or therein, necessary to make the statements herein
or therein in the circumstances in which they were made not misleading in any
material respect.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE BUYER
As an inducement to the Seller to enter into this Agreement and to
consummate the transactions contemplated herein, the Buyer represents and
warrants to the Seller and agrees as follows:
2.1 Organization. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
2.2 Authority. This Agreement and the transactions contemplated herein
have been duly approved by all necessary corporate action on the part of the
Buyer. This Agreement, when executed and delivered by the Buyer, and assuming
due execution hereof by the Company and the Seller will constitute the valid and
binding agreement of the Buyer enforceable in
3
<PAGE>
accordance with its terms. Neither the execution nor the delivery of this
Agreement, nor the consummation of the transactions contemplated herein, nor
compliance with nor fulfillment of the terms and provisions hereof, will (i)
conflict with or result in a breach of the terms, conditions or provisions of or
constitute a default under the governing instruments of the Buyer, any
instrument, mortgage, agreement, judgment, order, award, decree or other
restriction to which the Buyer is a party or by which the Buyer is bound or any
statute or regulatory provisions affecting it or (ii) require the approval,
consent, or authorization of or any filing with or notification to any Federal,
state or local court, governmental authority or regulatory body. The Buyer has
full power and authority to purchase the Stock pursuant to this Agreement and to
do and perform all acts and things required to be done by the Buyer under this
Agreement.
2.3 Legal Proceedings. There is no legal, administrative or arbitration
proceeding action or suit pending or to Buyer's knowledge which, if adversely
determined, would materially and adversely affect the financial condition,
business or assets of the Buyer or the ability of the Buyer to consummate the
transactions contemplated herein.
2.4 Agreement Not in Breach of Other Instruments. The execution,
delivery and performance of this Agreement and the Consulting Agreement by the
Buyer will not: (i) violate, conflict with or constitute a default under any
term or provision of the Certificate of Incorporation or By-laws of the Buyer;
(ii) result in a default or breach of or give rise to any right of termination,
cancellation or acceleration, under the terms, conditions or provisions of any
note, bond, mortgage, deed of trust, commitment, indenture, lease, guarantee,
authorization, franchise, license, permit, agreement, contract or any other
instrument or obligation to which the Buyer is a party or by which it or any of
its properties or assets have been bound; (iii) violate any law, order, rite,
injunction, decree, statute, rule or regulation applicable to the Buyer or its
properties or assets; (iv) result in the creation or imposition of any lien,
charge or encumbrance upon any of the assets of the Buyer; (v) terminate or
adversely affect any permit, license or authorization of a governmental
authority used or required by the Buyer in the conduct of its business. The
consent or approval by or notice to any governmental or regulatory authority is
required in connection with the execution and delivery of this Agreement or the
Consulting Agreement entered into with Seller as defined below, the consummation
of the transactions contemplated hereby or the fulfillment of the terms hereof
or thereof.
2.5 Brokers. Neither the Buyer nor its representatives have paid or
become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions provided for in this
Agreement.
2.6 No Omissions. None of the representations or warranties of the
Buyer contained herein and none of the other information or documents furnished
to the Seller or the Company by the Buyer or its representatives in connection
with this Agreement is false or misleading in any material respect or omits to
state a fact herein or therein necessary to make the statements herein or
therein not misleading in any material respect; to the best knowledge of the
Buyer, there is no fact which adversely affects, or in the future is likely to
adversely affect, the business
4
<PAGE>
or assets of the Buyer in any material respect which has not been disclosed in
writing to the Seller or the Company.
ARTICLE III
COVENANT OF THE SELLER
Non-Competition.
(a) In furtherance of the sale of the Stock to the Buyer, upon the
consummation of the transactions contemplated herein and more effectively to
transfer and protect the business of the Company, the Seller agrees that for a
period ending on the fifth anniversary of the date hereof, he will not (i)
directly or indirectly own, manage or operate a home and office water delivery
business anywhere in New York and any other state in which the Company presently
conducts its business, that sells to any of the Company's existing customers;
provided that ownership of not more than five percent (5%) of the issued and
outstanding shares of a class of securities of a corporation, the securities of
which are traded on a national securities exchange or in the over-the-counter
market, shall not be deemed ownership of the issuer of such shares for the
purposes of this paragraph; or (ii) induce or attempt to persuade any employee
or agent of the Company to terminate such employment or agency relationship in
order to enter into any such relationship with the Seller or any of his
subsidiaries or affiliates or to enter into any such relationship on behalf of
any other business organization in competition with the Company or the Buyer.
(b) Without limiting the right of the Buyer and any of its successors
or assigns to pursue all other legal and equitable rights available to them for
violation of the covenant set forth in Section 3.1(a) above by the Seller, it is
agreed that other remedies cannot fully compensate the Buyer and its successors
and assigns for such a violation and that the Buyer and its successors and
assigns shall be entitled to injunctive relief to prevent violation or
continuing violation hereof. It is the intent and understanding of each party
hereto that if, in any action before any court or agency legally empowered to
enforce this covenant, any term, restriction, covenant or promise is found to be
unreasonable and for that reason unenforceable, then such term, restriction,
covenant or promise shall be deemed modified to the extent necessary to make it
enforceable by such court or agency.
ARTICLE IV
ACTION PRIOR TO THE CLOSING DATE
The parties hereto agree to take the following actions between the date
hereof and the Closing Date:
5
<PAGE>
4.1 Confidential Nature of Information. The Buyer and the Seller agree
that, in the event that the transactions contemplated herein shall not be
consummated, each will treat in confidence all documents, materials and other
information which it shall have obtained during the course of the negotiations
leading to the execution of this Agreement, the investigation of the other party
hereto and the preparation of this Agreement and any other documents relating
hereto, and shall return to the other party all copies of non-public documents
and materials which have been furnished in connection therewith.
4.2 Accuracy of Representations and Warranties. The Seller shall
refrain from intentionally taking any action and shall cause the Company to
refrain from intentionally taking any action which would render any
representation and/or warranty contained in Article I of this Agreement
inaccurate at any time between the date hereof and the Closing Date. The Seller
will promptly notify the Buyer of any lawsuits, claims, proceedings or
investigations that, to the knowledge of the Seller, may be brought, asserted or
commenced against the Company, or its officers or directors.
4.3 No Public Announcement. Neither the Seller nor the Buyer shall,
without the approval of the other, make any press release or other public
announcements or filing concerning the transactions contemplated by this
Agreement, except as and to the extent that any such party shall be so obligated
by law, in which case the other party shall be advised thereof and given an
opportunity to comment thereon.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER
The obligations of the Buyer under this Agreement to purchase and pay
for the Stock and the Notes shall, at the option of the Buyer, be subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
5.1 Buyer shall have entered into a Note Purchase Agreement
satisfactory to it with each of the Other Noteholders of the Company for the
purchase in the aggregate (including the Note being purchased hereunder) of all
of the issued and outstanding promissory notes of the Company, Buyer shall have
entered into a Stock Purchase Agreement satisfactory to it with each of the
Stockholders, and each of the Other Noteholders and Stockholders have performed
all of their obligations under their respective Stock Purchase Agreement and
Note Purchase Agreement and are ready, willing and able to deliver to Buyer
their stock and notes on the Closing Date.
5.2 There shall have been no material breach by the Seller in the
performance of any of its covenants and agreements herein, each of the
representations and warranties of the Seller contained in this Agreement shall
be true and correct in all material respects on the Closing Date as though made
on the Closing Date and there shall have been delivered to the Buyer a
certificate or certificates to that effect, dated the Closing Date and signed by
the Seller.
6
<PAGE>
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER
The obligations of the Seller under this Agreement to deliver the Stock
shall, at the option of the Seller, be subject to the satisfaction, on or prior
to the Closing Date, of the following conditions:
There shall have been no material breach by the Buyer in the
performance of any of its covenants and agreements herein, each of the
representations and warranties of the Buyer contained or referred to in this
Agreement shall be true and correct in all material respects on the Closing Date
as though made on the Closing Date and there shall have been delivered to the
Seller a certificate or certificates to that effect, dated the Closing Date and
signed on behalf of the Buyer by its President.
ARTICLE VII
PURCHASE PRICE AND CLOSING
7.1 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place on August , 1997 or such other date
as shall be mutually agreed to by the Seller and the Buyer (the "Closing Date").
7.2 Purchase and Sale of the Note. On the Closing Date, the Seller
shall sell to the Buyer the Note, including all rights hereunder to receive
principal and interest (whether or not previously accrued) for the following
consideration: $130,000 cash payable by check of Buyer and that amount of shares
of Vermont Pure Springs Holding, Inc. ("Holding"), the parent of Buyer, equal to
$145,000 divided by the closing price of the stock of Holdings as reported in
The Wall Street Journal for the NASDAQ small cap market for the trading the day
immediately prior to the Closing Date, provided that if there are no trades on
such day the closing price shall be the mean between the closing "bid" and "ask"
prices for such day (the "Closing Date Price").
7.3 Deliveries by the Seller. At the Closing, the Seller shall sell,
assign, transfer and issue to the Buyer all of his Notes, and shall deliver, at
the Closing, the following:
(a) The original of the Note properly endorsed.
(b) An opinion dated the Closing Date hereof from counsel for
the Seller in form and substance satisfactory to the Buyer and its counsel, to
the effect that:
(i) The Seller has full power and authority to
execute and deliver the Agreement and to perform his obligations hereunder.
Neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated herein, requires the consent,
7
<PAGE>
approval or authorization of or any filing with or notification to any Federal,
state or local court, governmental authority or regulatory body not already
obtained or made, as the case may be.
(ii) To the best of such counsel's knowledge
there is no action, suit, proceeding or investigation pending or threatened
against the Seller which questions the legality, validity or propriety of this
Agreement or of any action taken or to be taken by the Seller pursuant to or
in connection with this Agreement.
(iii) The Seller is the lawful owner of the Note,
to the best of such counsel's knowledge, free and clear of all adverse claims,
with unrestricted right and power to transfer and deliver the Note to the Buyer.
The Seller has executed and delivered to the Buyer such instruments as are
sufficient in form to vest good and marketable title to the Notes in the Buyer
free and clear of all adverse claims.
7.4 Deliveries of the Buyer. At the Closing, the Buyer shall deliver to
the Seller an opinion of Ledgewood Law Firm, P.C., counsel for the Buyer, in
form and substance satisfactory to the Seller and its counsel, to the effect
that (i) The Buyer is a corporation duly organized, validly existing and in good
standing under the laws State of Delaware; and (ii) this Agreement and the
transactions contemplated herein have been duly approved by all necessary
corporate action of the Buyer and such Agreement, assuming due execution by the
Seller, is the valid and binding agreement of the Buyer enforceable against the
Buyer in accordance with its terms except as enforcement of such agreement may
be limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally.
In giving such opinion, counsel for the Buyer may rely, as to matters
of fact, upon certificates of officers of the Buyer.
ARTICLE VIII
TERMINATION
8.1 Termination. This Agreement may be terminated by the Buyer if any
of the representations, warranties or covenants of the Company or the Seller
have been breached or if the purchase and sale has not been consummated, for any
reason, by August 31, 1997.
If this Agreement is terminated, each party shall pay its own expenses.
8
<PAGE>
ARTICLE IX
SURVIVAL OF OBLIGATIONS; INDEMNIFICATION; LEGAL FEES
9.1 Survival of Obligations. All representations and warranties made
herein by the Seller and his obligations to be performed pursuant to the terms
hereof, shall survive the Closing hereunder and shall terminate three years
after the Closing.
9.2 Legal Expenses. In the case of any action brought by any party
hereto under this Agreement, the prevailing party shall be entitled to be
reimbursed by the losing party an amount equal to all of the prevailing party's
reasonable legal or other professional fees and expenses. In the case of a
judgment of less than that sought in any formal complaint, the party obtaining
the judgment shall be deemed to be the prevailing party to the extent of the
amount of the judgment divided by the amount sought and shall be deemed to be
the losing party with respect to the balance of the claim.
ARTICLE X
MISCELLANEOUS
10.1 Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given (a) three (3) days after
having been sent by certified or registered mail, return receipt requested, (b)
one (1) business day after having been sent by regional recognized courier
guarantying next business day delivery, or (c) upon delivery if given by hand
delivery against written receipt, addressed as follows:
If to the Buyer:
Vermont Pure Springs, Inc.
70 West Red Oak Lane
White Plains, NY 10604
with a copy to:
Kevin F. Berry, Esq.
Ledgewood Law Firm
1521 Locust Street
Philadelphia, PA 19102
If to the Seller:
9
<PAGE>
With a copy to:
10.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Vermont without regard to
the provisions on conflicts of law.
10.3 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
10.4 Severability. In case any one or more of the provisions contained
herein shall, for any reason, be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause enforcement of the terms hereof to
be unreasonable.
10.5 Expenses. Except as expressly stated otherwise herein, each party
hereto shall pay its own expenses (including, without limitation, legal and
accounting fees and expenses) incident to its negotiation and preparation of
this Agreement and to its performance and compliance with the provisions
contained herein.
10.6 Titles and Headings. Titles and headings to Articles and Sections
herein are inserted for the convenience of reference only and are not intended
to be a part of or to affect the meaning or interpretation of this Agreement.
10.7 Schedules. The Schedules to this Agreement shall be construed with
and read as an integral part of this Agreement to the same extent as if the same
had been set forth verbatim herein.
10.8 Entire Agreement; Amendments and Waivers. This Agreement,
including the Schedules hereto, contains the entire understanding of the parties
hereto with regard to the subject matter contained herein. The parties hereto,
by mutual agreement in writing, may amend, modify and supplement this Agreement.
The failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the rights of
such party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
VERMONT PURE SPRINGS, INC.
Attest: By:
President
Witness: SELLER:
Roger Dunham
11
STOCK PURCHASE AGREEMENT
Between
VERMONT PURE SPRINGS, INC.,
and
ROGER DUNHAM
Relating to the Capital Stock of
EXCELSIOR SPRINGS WATER COMPANY, INC.
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement, made and entered into this 27th day of
August, 1997 (the "Agreement") by and between VERMONT PURE SPRINGS, INC., a
Delaware corporation (the "Buyer") and ROGER DUNHAM (the "Seller").
WITNESSETH:
WHEREAS, Excelsior Springs Water Company, Inc. (the "Company") is
engaged in the business of home and office delivery of water products;
WHEREAS, the Seller owns 3.24 shares of Company stock, representing
three percent (3%) of the stock of the Company;
WHEREAS, the Seller desires to sell his shares of stock of the Company
(the "Stock") to the Buyer pursuant to the terms and conditions set forth in
this Agreement;
WHEREAS, the Buyer desires to purchase (the "Purchase") the Stock from
the Seller on the terms and conditions set forth in this Agreement; and
WHEREAS, the persons owning all of the stock of the Company other than
that owned by Seller ("Other Stockholders") and the persons owning all of the
notes of the Company (the "Noteholders") are also selling all of their stock and
notes to Seller as evidenced by individual Stock Purchase Agreement
(collectively, the "Stock Purchase Agreements") and Note Purchase Agreement
("collectively, the "Note Purchase Agreements") being executed contemporaneously
with this Agreement.
NOW, THEREFORE, the Buyer and the Seller, in consideration of the
agreements, covenants and conditions contained herein, hereby make the following
representations and warranties, give the following covenants and agree to be
legally bound hereby as follows:
ARTICLE I
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
OF THE SELLER
As an inducement to the Buyer to enter into this Agreement and to
consummate the transactions contemplated herein, the Seller represents and
warrants to the Buyer and agree as set forth in this Article I, and the Seller
acknowledges that the Buyer intends to rely on such representations and
warranties. The representations and warranties of the Seller are qualified by
the information set forth in the Schedules referred to in this Article I.
1.1 Authority. The Seller has the authority to execute, deliver
and perform his obligations under this Agreement. This Agreement, when executed
and delivered by the Seller
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and assuming the due execution hereof by the Buyer, will constitute the valid,
legal and binding agreement of the Seller enforceable in accordance with its
terms. Except as described on Schedule 1.2 hereof, no consent, authorization,
approval, order, license, certificate or permit of or from or declaration or
filing with, any Federal, state, local or other governmental authority or any
court or other tribunal (collectively, the "Governmental Consents") is required
in connection with the execution, delivery or performance of this Agreement by
the Seller. Except as described on Schedule 1.1, no consent of any party to any,
contract, agreement, instrument, lease, license, arrangement or understanding is
required for the execution, delivery or performance of this Agreement by the
Seller. The execution, delivery and performance by the Seller do not (i)
violate, result in a breach of, conflict with or (with or without the giving of
notice or the passage of time or both) entitle any party to terminate, modify or
otherwise change, in any material respect, the rights or obligations of the
parties thereunder or call a default under any such contract, agreement,
instrument, lease, license, arrangement, or understanding, or (ii) violate,
result in a breach of or conflict, in any material respect, with any law, rule,
regulation, order, judgment or decree binding the Seller.
1.2 Brokers. The Seller has not paid or become obligated to pay any fee
or commission to any broker, finder or intermediary for or on account of the
transactions provided for in this Agreement. The Seller does not have any
agreement or obligation whatsoever with entities other than the Buyer regarding
any proposed acquisition of the Company by any such entity and the Seller is not
engaged in any negotiations with any such entity for any such acquisition.
1.3 Securities Laws.
(a) Seller acknowledges receipt of copies of the Annual
Report, the 1996 Form 10-K and the form 10-Q for the calendar quarter ending
March 31, 1997 of the Buyer.
(b) Seller acknowledges that any shares of Stock of Buyer
received by him pursuant to this Agreement (the "Shares") have been delivered to
them pursuant to an exemption from the registration requirements of the
Securities Act of 1933, as amended (the "Act") and may not be resold or
otherwise transferred unless registered under the Act or unless an exemption
from the registration requirements of the Act is available. Rule 144 under the
Act, permits sales or other transfers of unregistered securities by a holder
after a period of one (1) year from the date hereof. Subject to compliance with
restrictions regarding amounts which may be sold, the manner of sale and the
other terms and conditions of that Rule.
(c) Seller acknowledges that:
(i) the Shares being acquired by him are for his
own account, for investment and without a view to the distribution or resale
thereof;
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(ii) during the course of this transaction and
prior to his receipt of Shares, he has had access to all information concerning
Buyer, its business and this transaction that it deemed necessary to make the
determination to acquire the shares; he or she has had access to any
additional information deemed necessary by it to verify the accuracy of any
information given to it; and he has received all information which they have
requested, and he has been given the opportunity to ask questions of, and
receive answers from representatives of the Buyer concerning the terms and
conditions of the Purchase, and all such questions have been answered to the
satisfaction of the Seller;
(iii) he has knowledge and experience in financial
matters and is capable of evaluating the risks of the Shares and making an
informed business decision with respect thereto;
(iv) Buyer may instruct any transfer agent for
its common stock not to permit transfer of the Shares to be made unless
specifically authorized by Buyer;
(v) the certificates for the Shares will be
legended to reflect the restrictions on the transferability of the Shares; and
(vi) he has been represented by legal counsel in
connection with the Agreement and the receipt of the Shares by him.
1.4 No Omissions. None of the representations or warranties of the
Seller contained herein and, none of the information contained in the Schedules
referred to in this Article I is false or misleading in any material respect or
omits to state a fact herein or therein, necessary to make the statements herein
or therein in the circumstances in which they were made not misleading in any
material respect.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE BUYER
As an inducement to the Seller to enter into this Agreement and to
consummate the transactions contemplated herein, the Buyer represents and
warrants to the Seller and agrees as follows:
2.1 Organization. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
2.2 Authority. This Agreement and the transactions contemplated herein
have been duly approved by all necessary corporate action on the part of the
Buyer. This Agreement, when executed and delivered by the Buyer, and assuming
due execution hereof by the Company and the Seller will constitute the valid and
binding agreement of the Buyer enforceable in
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accordance with its terms. Neither the execution nor the delivery of this
Agreement, nor the consummation of the transactions contemplated herein, nor
compliance with nor fulfillment of the terms and provisions hereof, will (i)
conflict with or result in a breach of the terms, conditions or provisions of or
constitute a default under the governing instruments of the Buyer, any
instrument, mortgage, agreement, judgment, order, award, decree or other
restriction to which the Buyer is a party or by which the Buyer is bound or any
statute or regulatory provisions affecting it or (ii) require the approval,
consent, or authorization of or any filing with or notification to any Federal,
state or local court, governmental authority or regulatory body. The Buyer has
full power and authority to purchase the Stock pursuant to this Agreement and to
do and perform all acts and things required to be done by the Buyer under this
Agreement.
2.3 Legal Proceedings. There is no legal, administrative or arbitration
proceeding action or suit pending or to Buyer's knowledge which, if adversely
determined, would materially and adversely affect the financial condition,
business or assets of the Buyer or the ability of the Buyer to consummate the
transactions contemplated herein.
2.4 Agreement Not in Breach of Other Instruments. The execution,
delivery and performance of this Agreement and the Consulting Agreement by the
Buyer will not: (i) violate, conflict with or constitute a default under any
term or provision of the Certificate of Incorporation or By-laws of the Buyer;
(ii) result in a default or breach of or give rise to any right of termination,
cancellation or acceleration, under the terms, conditions or provisions of any
note, bond, mortgage, deed of trust, commitment, indenture, lease, guarantee,
authorization, franchise, license, permit, agreement, contract or any other
instrument or obligation to which the Buyer is a party or by which it or any of
its properties or assets have been bound; (iii) violate any law, order, rite,
injunction, decree, statute, rule or regulation applicable to the Buyer or its
properties or assets; (iv) result in the creation or imposition of any lien,
charge or encumbrance upon any of the assets of the Buyer; (v) terminate or
adversely affect any permit, license or authorization of a governmental
authority used or required by the Buyer in the conduct of its business. The
consent or approval by or notice to any governmental or regulatory authority is
required in connection with the execution and delivery of this Agreement or the
Consulting Agreement entered into with Seller as defined below, the consummation
of the transactions contemplated hereby or the fulfillment of the terms hereof
or thereof.
2.5 Investment Purpose. The Buyer is acquiring the Stock for its own
account, for investment purposes only and not with a view to the distribution
thereof as that phrase has meaning under the Act and the rules and regulations
of the Securities and Exchange Commission (the "Commission"). The Buyer shall
not sell or make any other distribution of any of the shares in violation of the
provisions of any applicable laws and regulations, including, without limitation
the rules and regulations of the Commission and state securities or "blue sky"
laws.
2.6 Brokers. Neither the Buyer nor its representatives have paid or
become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions provided for in this
Agreement.
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2.7 No Omissions. None of the representations or warranties of the
Buyer contained herein and none of the other information or documents furnished
to the Seller or the Company by the Buyer or its representatives in connection
with this Agreement is false or misleading in any material respect or omits to
state a fact herein or therein necessary to make the statements herein or
therein not misleading in any material respect; to the best knowledge of the
Buyer, there is no fact which adversely affects, or in the future is likely to
adversely affect, the business or assets of the Buyer in any material respect
which has not been disclosed in writing to the Seller or the Company.
ARTICLE III
COVENANTS OF THE SELLER
3.1 Non-Competition.
(a) In furtherance of the sale of the Stock to the Buyer, upon
the consummation of the transactions contemplated herein and more effectively to
transfer and protect the business of the Company, the Seller agrees that for a
period ending on the fifth anniversary of the date hereof, he will not (i)
directly or indirectly own, manage or operate a home and office water delivery
business anywhere in New York and any other state in which the Company presently
conducts its business, that sells to any of the Company's existing customers;
provided that ownership of not more than five percent (5%) of the issued and
outstanding shares of a class of securities of a corporation, the securities of
which are traded on a national securities exchange or in the over-the-counter
market, shall not be deemed ownership of the issuer of such shares for the
purposes of this paragraph; or (ii) induce or attempt to persuade any employee
or agent of the Company to terminate such employment or agency relationship in
order to enter into any such relationship with the Seller or any of his
subsidiaries or affiliates or to enter into any such relationship on behalf of
any other business organization in competition with the Company or the Buyer.
(b) Without limiting the right of the Buyer and any of its
successors or assigns to pursue all other legal and equitable rights available
to them for violation of the covenant set forth in Section 3.1(a) above by the
Seller, it is agreed that other remedies cannot fully compensate the Buyer and
its successors and assigns for such a violation and that the Buyer and its
successors and assigns shall be entitled to injunctive relief to prevent
violation or continuing violation hereof. It is the intent and understanding of
each party hereto that if, in any action before any court or agency legally
empowered to enforce this covenant, any term, restriction, covenant or promise
is found to be unreasonable and for that reason unenforceable, then such term,
restriction, covenant or promise shall be deemed modified to the extent
necessary to make it enforceable by such court or agency.
3.2 Use of Trademarks. From the date hereof, the Seller shall not
have the right to use any of the trademarks, trade names, or applications
therefor heretofore exclusively used or
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owned by the Company or to use any trademarks or trade names similar thereto or
designs imitative thereof except as officers or agents of the Company in
connection with its business prior to the Closing. From the date hereof, Seller
shall have any right to use or to disclose, except in the ordinary course of
business of the Company, to any person, firm or corporation other than the
Buyer, its employees, agents and representatives, any trade or business secrets
or client lists or other proprietary information of the Company.
ARTICLE IV
ACTION PRIOR TO THE CLOSING DATE
The parties hereto agree to take the following actions between the date
hereof and the Closing Date:
4.1 Confidential Nature of Information. The Buyer and the Seller agree
that, in the event that the transactions contemplated herein shall not be
consummated, each will treat in confidence all documents, materials and other
information which it shall have obtained during the course of the negotiations
leading to the execution of this Agreement, the investigation of the other party
hereto and the preparation of this Agreement and any other documents relating
hereto, and shall return to the other party all copies of non-public documents
and materials which have been furnished in connection therewith.
4.2 Accuracy of Representations and Warranties. The Seller shall
refrain from intentionally taking any action and shall cause the Company to
refrain from intentionally taking any action which would render any
representation and/or warranty contained in Article I of this Agreement
inaccurate at any time between the date hereof and the Closing Date. The Seller
will promptly notify the Buyer of any lawsuits, claims, proceedings or
investigations that, to the knowledge of the Seller, may be brought, asserted or
commenced against the Company, or its officers or directors.
4.3 No Public Announcement. Neither the Seller nor the Buyer shall,
without the approval of the other, make any press release or other public
announcements or filing concerning the transactions contemplated by this
Agreement, except as and to the extent that any such party shall be so obligated
by law, in which case the other party shall be advised thereof and given an
opportunity to comment thereon.
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ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER
The obligations of the Buyer under this Agreement to purchase and pay
for the Stock and the Notes shall, at the option of the Buyer, be subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
5.1 Buyer shall have entered into a Stock Purchase Agreement
satisfactory to it with each of the Other Stockholders of the Company for the
purchase in the aggregate (including the Stock being purchased hereunder) of all
of the issued and outstanding common stock of the Company, Buyer shall have
entered into a Note Purchase Agreement satisfactory to it with each of the
Noteholders, and each of the Other Stockholders and Noteholders have performed
all of their obligations under their respective Stock Purchase Agreement and
Note Purchase Agreement and are ready, willing and able to deliver to Buyer
their stock and notes on the Closing Date.
5.2 There shall have been no material breach by the Seller in the
performance of any of its covenants and agreements herein, each of the
representations and warranties of the Seller contained in this Agreement shall
be true and correct in all material respects on the Closing Date as though made
on the Closing Date and there shall have been delivered to the Buyer a
certificate or certificates to that effect, dated the Closing Date and signed by
the Seller.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER
The obligations of the Seller under this Agreement to deliver the Stock
shall, at the option of the Seller, be subject to the satisfaction, on or prior
to the Closing Date, of the following conditions:
There shall have been no material breach by the Buyer in the
performance of any of its covenants and agreements herein, each of the
representations and warranties of the Buyer contained or referred to in this
Agreement shall be true and correct in all material respects on the Closing Date
as though made on the Closing Date and there shall have been delivered to the
Seller a certificate or certificates to that effect, dated the Closing Date and
signed on behalf of the Buyer by its President.
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ARTICLE VII
PURCHASE PRICE AND CLOSING
7.1 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place on August , 1997 or such other date
as shall be mutually agreed to by the Seller and the Buyer (the "Closing Date").
7.2 Purchase and Sale of the Stock.
On the Closing Date, the Seller shall sell to the Buyer the
Stock for the following consideration:
(i) cash payable by Buyer's check in the amount
of $45,000;
(ii) note payable to the Seller made by the Buyer
in the amount of $15,000 or a term of five (5) years at the prime rate of
interest as amended from time to time by Chase Manhattan, N.A. with equal
annual payments of principal and interest based on a 10- year amortization
and a balloon payment due at the expiration of the term of the note;
(iii) 3,000 shares of common stock of Vermont Pure
Holdings, Ltd. ("Holdings"), the parent corporation of Buyer.
7.3 Deliveries by the Seller. At the Closing, the Seller shall sell,
assign, transfer and convey to the Buyer all of his outstanding Stock of the
Company and shall deliver, at the Closing the following:
(a) A certificate or certificates representing all of the
Stock, together with fully executed and witnessed stock power (in blank)
attached thereto with signature guaranteed by an institution that is a
participant in the Securities Transfer Agents Medallion Program.
(b) An opinion dated the Closing Date hereof from counsel for
the Seller, in form and substance satisfactory to the Buyer and its counsel, to
the effect that:
(i) This Agreement has been duly and validly
executed and delivered by the Seller and such Agreement, assuming due execution
by the Buyer, is the valid and binding agreement of the Seller enforceable
against the Seller in accordance with its terms except as enforcement of such
agreement may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally.
(ii) The Seller has full power and authority to
execute and deliver the Agreement and to perform its obligations hereunder.
Neither the execution and delivery of this
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Agreement, nor the consummation of the transactions contemplated herein, (a)
violates or conflicts with or results in the breach of the terms, conditions or
provisions of, or constitutes a default under any agreement or instrument known
to such counsel to which the Seller is a party or by which he is bound or (b)
requires the consent, approval or authorization of or any filing with or
notification to any Federal, state or local court, governmental authority or
regulatory body not already obtained or made, as the case may be.
(iii) To the best of such counsel's knowledge
there is no action, suit, proceeding or investigation pending or threatened
against the Seller which questions the legality, validity or propriety of this
Agreement or of any action taken or to be taken by the Seller pursuant to or
in connection with this Agreement.
(iv) The Seller is the lawful owner of the Stock,
to the best of such counsel's knowledge, free and clear of all adverse claims,
with unrestricted right and power to transfer and deliver the Stock to the
Buyer. The Seller has executed and delivered to the Buyer such instruments as
are sufficient in form to vest good and marketable title to the Stock in the
Buyer free and clear of all adverse claims.
(c) The resignations immediately prior to the Closing of (i)
each director of the Company and (ii) each officer of the Company as requested
by the Buyer.
7.4 Deliveries of the Buyer. At the Closing, the Buyer shall deliver to
the Seller an opinion of Ledgewood Law Firm, P.C., counsel for the Buyer, in
form and substance satisfactory to the Seller and its counsel, to the effect
that (i) The Buyer is a corporation duly organized, validly existing and in good
standing under the laws State of Delaware; and (ii) this Agreement and the
transactions contemplated herein have been duly approved by all necessary
corporate action of the Buyer and such Agreement, assuming due execution by the
Seller, is the valid and binding agreement of the Buyer enforceable against the
Buyer in accordance with its terms except as enforcement of such agreement may
be limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally.
In giving such opinion, counsel for the Buyer may rely, as to matters
of fact, upon certificates of officers of the Buyer.
ARTICLE VIII
TERMINATION
8.1 Termination. This Agreement may be terminated by the Buyer if any
of the representations, warranties or covenants of the Company or the Seller
have been breached or if the purchase and sale has not been consummated, for any
reason, by August 31, 1997.
If this Agreement is terminated, each party shall pay its own expenses.
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ARTICLE IX
SURVIVAL OF OBLIGATIONS; INDEMNIFICATION; LEGAL FEES
9.1 Survival of Obligations. All representations and warranties made
herein by the Seller and his obligations to be performed pursuant to the terms
hereof, shall survive the Closing hereunder and shall terminate three years
after the Closing.
9.2 Legal Expenses. In the case of any action brought by any party
hereto under this Agreement, the prevailing party shall be entitled to be
reimbursed by the losing party an amount equal to all of the prevailing party's
reasonable legal or other professional fees and expenses. In the case of a
judgment of less than that sought in any formal complaint, the party obtaining
the judgment shall be deemed to be the prevailing party to the extent of the
amount of the judgment divided by the amount sought and shall be deemed to be
the losing party with respect to the balance of the claim.
ARTICLE X
MISCELLANEOUS
10.1 Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given (a) three (3) days after
having been sent by certified or registered mail, return receipt requested, (b)
one (1) business day after having been sent by regional recognized courier
guarantying next business day delivery, or (c) upon delivery if given by hand
delivery against written receipt, addressed as follows:
If to the Buyer:
Vermont Pure Springs, Inc.
70 West Red Oak Lane
White Plains, NY 10604
with a copy to:
Kevin F. Berry, Esq.
Ledgewood Law Firm
1521 Locust Street
Philadelphia, PA 19102
If to the Seller:
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With a copy to:
10.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Vermont without regard to
the provisions on conflicts of law.
10.3 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
10.4 Severability. In case any one or more of the provisions contained
herein shall, for any reason, be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause enforcement of the terms hereof to
be unreasonable.
10.5 Expenses. Except as expressly stated otherwise herein, each party
hereto shall pay its own expenses (including, without limitation, legal and
accounting fees and expenses) incident to its negotiation and preparation of
this Agreement and to its performance and compliance with the provisions
contained herein.
10.6 Titles and Headings. Titles and headings to Articles and Sections
herein are inserted for the convenience of reference only and are not intended
to be a part of or to affect the meaning or interpretation of this Agreement.
10.7 Schedules. The Schedules to this Agreement shall be construed with
and read as an integral part of this Agreement to the same extent as if the same
had been set forth verbatim herein.
10.8 Entire Agreement; Amendments and Waivers. This Agreement,
including the Schedules hereto, contains the entire understanding of the parties
hereto with regard to the subject matter contained herein. The parties hereto,
by mutual agreement in writing, may amend, modify and supplement this Agreement.
The failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the rights of
such party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
VERMONT PURE SPRINGS, INC.
Attest: By:
President
Witness: SELLER:
Roger Dunham
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PROMISSORY NOTE
Borrower:VERMONT PURE HOLDINGS, LTD. (TIN: 13-3576606), VERMONT PURE SPRINGS,
INC. (TIN: 03-0330521) (TIN:
P.O. BOX C
RANDOLPH, VT 06060
Principal Amount: $3,564,461.93
Lender: CHITTENDEN TRUST COMPANY d/b/a CHITTENDEN BANK
Burlington
Two Burlington Square Burlington, VT 05401
Initial Rate: 9.000%
Date of Note: August 22, 1997
PROMISE TO PAY. VERMONT PURE HOLDINGS, LTD. (TIN: 13-3576606), VERMONT PURE
SPRINGS, INC. (TIN: 03-0330521) ("Borrower") promises to pay to CHITTENDEN TRUST
COMPANY dlb/a CHITTENDEN BANK ("Lender"), or order, In lawful money of the
United States of America, the principal amount of Three Million Five Hundred
Sixty Four Thousand Four Hundred Sixty One & 931100 Dollars ($3,564,461.93),
together with interest on the unpaid principal balance from August 22, 1997,
until paid In full.
PAYMENT. Subject to any payment changes resulting from changes In the Index,
Borrower will pay this loan In 47 principal payments of $29,726.00 each and one
final principal and interest payment of $2,184,184.18. Borrower's first
principal payment Is due September 1, 1997, and all subsequent principal
payments are due on the same day of each month after that. In addition, Borrower
will pay regular monthly payments of all accrued unpaid interest due as of each
payment date. Borrower's first interest payment Is due September 1, 1997, and
all subsequent Interest payments are due on the same day of each month after
that. Borrower's final payment due August 1, 2001, will be for all principal and
accrued interest not yet paid. Interest on this Note is computed on a 365/360
simple interest basis; that is, by applying the ratio of the annual interest
rate over a year of 360 days, multiplied by the outstanding principal balance,
multiplied by the actual number of days the principal balance is outstanding.
Borrower will pay Lender at Lender's address shown above or at such other place
as Lender may designate in writing. Unless otherwise agreed or required by
applicable law, payments will be applied first to accrued unpaid interest, then
to principal, and any remaining amount to any unpaid collection costs and late
charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an index which is the '7he Wall Street Journal
Prime Rate' (the "Index'). Lender will tell Borrower the current Index rate upon
Borrower's request. Borrower understands that Lender may make loans based on
other rates as well. The interest rate change will not occur more often than
each Day. The Index currently Is 8.500% per annum. The Interest rate to be
applied to the unpaid principal balance of this Note will be at a rate of 0.600
percentage points over the Index, resulting in an initial rate of 9.000% per
annum. NOTICE: Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law.
PREPAYMENT. Borrower may pay all or a portion of the amount owed earlier than it
is due. Early payments will not, unless agreed to by Lender in writing, relieve
Borrower of Borrower's obligation to continue to make payments under the payment
schedule. Rather, they will reduce the principal balance due and may result in
Borrower making fewer payments.
LATE CHARGE. If a payment is 15 days or more late, Borrower will be charged
6.000% of the unpaid portion of the regularly scheduled payment.
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DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. lb) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender. (c) Borrower defaults under any loan, extension of credit,
security agreement, purchase or sales agreement, or any other agreement, in
favor of any other creditor or person that may materially affect any of
Borrower's property or Borrower's ability to repay this Note or perform
Borrower's obligations under this Note or any of the Related Documents. (d) Any
representation or statement made or furnished to Lender by Borrower or on
Borrower's behalf is false or misleading in any material respect either now or
at the time made or furnished. (a) Borrower becomes insolvent, a receiver is
appointed for any part of Borrower's property, Borrower makes an assignment for
the benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (f) Any creditor tries
to take any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with Lender.
(g) Any guarantor dies or any of the other events described in this default
section occurs with respect to any guarantor of this Note. (h) A material
adverse change occurs in Borrower's financial condition, or Lender believes the
prospect of payment or performance of the Indebtedness is impaired. (I) Lender
in good faith deems itself insecure.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon default, including failure
to pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the variable interest rate on this Note to 2.500
percentage points over the Index. The interest rate will not exceed the maximum
rate permitted by applicable law. Lender may hire or pay someone else to help
collect this Note if Borrower does not pay. Borrower also will pay Lender that
amount. This includes, subject to any limits under applicable law, Lender's
attorneys' fees and Lender's legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated posi-judgment collection services. If not
prohibited by applicable law, Borrower also will pay any court costs, in
addition to all other sums provided by law. This Note has been delivered to
Lender and accepted by Lender in the State of Vermont. If there is a lawsuit,
Borrower agrees upon Lender's request to submit to the jurisdiction of the
courts of Chittenden County, the State of Vermont. Lender and Borrower hereby
waive the right to any jury trial in any action, proceeding, or counterclaim
brought by either Lender or Borrower against the other. This Note shall be
governed by and construed In accordance with the laws of the State of Vermont.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $25.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.
COLLATERAL. This Note is secured by A SECURITY AGREEMENT DATED 4/29/96, A
SECURITY AGREEMENT DATED 3/7/97, A SECURITY AGREEMENT DATED 7/17/97 AND A
SECURITY AGREEMENT OF EVEN DATE.
DOCUMENTATION FEE. Borrower agrees to pay a documentation fee of $8,750.00.
PURPOSE. The purpose of this loan is BUSINESS: HOME AND OFFICE ACQUISITION.
ADDITIONAL TERMS. Refer to Commitment Letter dated 8/19/97.
FINANCIAL STATEMENT SUBMISSION. Borrower agrees to provide to Lender, upon
request, any financial statements or information that Lender deems necessary.
The failure of Borrower to provide financial statements as required hereunder or
under the Loan Agreement, the Commitment Letter, or any other document related
to the Note is an event of default under the terms of this Note and is subject
to the remedies outlined in "Lender's Rights", above, including the right of
Lender to increase the interest rate on the Note.
<PAGE>
WAIVERS AND CONSENTS. Lender shall not be deemed to have waived any rights under
this Note (or under the Related Documents) unless such waiver is in writing and
signed by Lender. No delay or omission on the part of the Lender in exercising
any right shall operate as a waiver of such right or any other right. A waiver
by any party of a provision of this Note shall not constitute a waiver of or
prejudice the party's right otherwise to demand strict compliance with that
provision in the future or any other provision. No prior waiver by Lender, nor
any course of dealing between Lender and Borrower, shall constitute a waiver of
any of Lender's rights or any of Borrower's obligations as to any future
transactions. Whenever consent by Lender is required in this Note, the granting
of such consent by Lender in any instance shall not constitute continuing
consent to subsequent instances where such consent is required.
MULTIPLE ADVANCE CLOSED END FEATURE. This Note has a multiple advance closed end
feature. Once the total amount of principal has been advanced, Borrower is not
entitled to further loan advances. Advances under this Note may be requested
orally by Borrower or as provided in this paragraph. Lender may, but need not,
require that all oral requests be confirmed in writing. All communications,
instructions, or directions by telephone or otherwise to Lender are to be
directed to Lender's office shown above. MINIMUM ADVANCES OF $500.00. Borrower
agrees to be liable for all sums either: (a) advanced in accordance with the
instructions of an authorized person or (b) credited to any of Borrower's
accounts with Lender. The unpaid principal balance owing on this Note at any
time may be evidenced by endorsements on this Note or by Lender's internal
records, including daily computer print-outs. Lender will have no obligation to
advance funds under this Note if (a) Borrower or any guarantor is in default
under the terms of this Note or any agreement that Borrower or any guarantor has
with Lender, including any agreement made in connection with the signing of this
Note; (b) Borrower or any guarantor ceases doing business or is insolvent; (c)
any guarantor seeks, claims or otherwise attempts to limit, modify or revoke
such guarantor's guaranty of this Note or any other loan with Lender; (d)
Borrower has applied funds provided pursuant to this Note for purposes other
than those authorized by Lender; or (a) Lender in good faith deems itself
insecure under this Note or any other agreement between Lender and Borrower.
Parties authorized to request advances under this Note are listed in the
Authorization for Oral Requests Under
Commitment. The draw period for advances under this Note shall expire at 5:00
P.M. on 9/22/97.
HAZARDOUS SUBSTANCES. Except as disclosed to Lender in writing, no property of
Borrower ever has been, or ever will be so long as this Note remains in
effect, used for the generation, manufacture, storage, treatment, disposal,
release or threatened release of any hazardous waste or substance, as those
terms are defined in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
("CERCLA'), the Superfund Amendments and Reauthorization Act ("SARA"),
applicable state or Federal laws, or regulations adopted pursuant to any of
the foregoing. The representations and warranties contained herein are based
on Borrower's due diligence in investigating the properties for hazardous
waste. Borrower hereby (a) releases and waives any future claims against
Lender for indemnity or contribution in the event Borrower becomes liable for
cleanup or other costs under any such laws, and lb) agrees to indemnify and
hold harmless Lender against any and all claims and losses resulting from a
breach of this provision of this Note. This obligation to indemnify shall
survive the payment and satisfaction of this Note..
CREDIT REPORTS. Any credit investigation information furnished to Lender by
any person, organization or credit reporting agency is authorized by Borrower
for the purpose of originating, reviewing the performance of, or collecting
this Note.
SALE OF ASSETS OR CHANGE IN OWNERSHIP. Borrower agrees and covenants that it
will not sell, lease, assign, transfer or otherwise dispose of any of its now
owned or hereafter acquired assets other than in the normal course of
business, and that the ownership of the borrowing entity will not change
during the period of this loan, including any extensions, modifications or
renewals thereof, without the prior written consent of Lender.
<PAGE>
LIMITATION ON RIGHT OF SETOFF. Lender agrees that it will exercise its right
of setoff, as described above, only in the event of default under the terms of
the Note or any related document, including (without limitation) the Business
Loan Agreement, any Guaranty, any Mortgage, any Security Agreement, any Pledge
Agreement, or any Letter of Credit Reimbursement or similar agreement.
ADDITIONAL EVENT OF DEFAULT. Borrower will be in default if Borrower (or any
Grantor) fails to keep the Collateral insured.
ADDITIONAL LENDER'S RIGHTS. In the event of default, Lender may demand more
security or new parties obligated to pay the Note in return for not using any
other remedy.
BANKRUPTCY ARREARAGES. If Borrower files a petition under the Bankruptcy Code
and seeks to pay any amount which is past due under this Note, Mortgage and
Security Agreement as of the date of filing of the petition through a Chapter
1 1 or 13 plan, Borrower agrees to pay Lender Interest on the amounts past due
(arrearages) at the Interest Rate. Interest will be calculated on the total
amount past due as of the date of filing of the petition (this may include
Interest on past due Interest and late charges) for the time required to pay
the past due amounts through the bankruptcy case.
AUTO-PAY FEATURE. If this loan contains an automatic payment option and the
automatic payment option is stopped for any reason, the discount will cease
and the rate will be increased to reflect termination of the discount.
PRIOR NOTE. NOTE #42.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person
who signs, guarantees or endorses this Note, to the extent allowed by law,
waive presentment, demand for payment, protest and notice of dishonor. Upon
any change in the terms of this Note, and unless otherwise expressly stated in
writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length
of time) this loan, or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the
party with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE
NOTE.
BORROWER:
VERMONT PURE HOLDINGS, LTD. (TIN: 13-3576606), VERMONT PURE SPRINGS, INC.
(TIN: 03- 0330521)
VERMONT PURE HOLDINGS, LTD. by BRUCE MACDONALD, CHIEF FINANCIAL OFFICER
VERMONT PURE SPRINGS, INC. by BRUCE MACDONALD, CHIEF FINANCIAL OFFICER
COMMERCIAL SECURITY AGREEMENT
Borrower: VERMONT PURE HOLDINGS, LTD. (TIN:
Lender: CHITTENDEN TRUST COMPANY dtbla CHITTENDEN BANK
13-3576606), VERMONT PURE SPRINGS, INC. (TIN: Burlington
03-0330521) (TIN: ) Two Burlington Square
P.O. BOX C Burlington, VT 05401
RANDOLPH, VT 05060
THIS COMMERCIAL SECURITY AGREEMENT Is entered Into between VERMONT PURE
HOLDINGS, LTD. (TIN: 13-3576606), VERMONT PURE SPRINGS, INC. (TIN: 03-0330521)
(referred to below as "Grantor"); and CHITTENDEN TRUST COMPANY d/b/a CHITTENDEN
BANK (referred to below as "Lender"). For valuable consideration, Grantor grants
to Lender a security interest in the Collateral to secure the Indebtedness and
agrees that Lender shall have the rights stated in this Agreement with respect
to the Collateral, In addition to all other rights which Lender may have by law.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.
Agreement. The word 'Agreement" means this Commercial Security Agreement, as
this Commercial Security Agreement may be amended or modified from time to
time, together with all exhibits and schedules attached to this Commercial
Security Agreement from time to time.
Collateral. The word "Collateral" means the following described property of
Grantor, whether now owned or hereafter acquired, whether now existing or
hereafter arising, and wherever located:
All inventory, accounts, equipment, general intangibles and fixtures
In addition, the word "Collateral" includes all the following, whether now owned
or hereafter acquired, whether now existing or hereafter arising, and wherever
located:
(a) All attachments, accessions, accessories, tools, parts, supplies, Increases,
and additions to and all replacements of and substitutions for any property
described above.
(b)All products and produce of any of the property described in this Collateral
section.
<PAGE>
(c)All accounts, general intangibles, instruments, rents, monies,
payments, and all other rights, arising out of a sale, lease, or other
disposition of any of the property described in this Collateral section.
(d) All proceeds (including insurance proceeds) from the sale, destruction,
loss, or other disposition of any of the property described in this Collateral
section.
(e) All records and data relating to any of the property described in this
Collateral section, whether in the form of a writing, photograph,
microfilm, microfiche, or electronic media, together with all of Grantor's
right, title, and interest in and to all computer software required to
utilize, create, maintain, and process any such records or data on
electronic media.
Event of Default. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section titled
"Events of Default."
Grantor. The word "Grantor" means VERMONT PURE HOLDINGS, LTD. (TIN:13-3576606),
VERMONT PURE SPRINGS, INC. (TIN: 03- 0330521). its successors and assigns.
Guarantor. The word "Guarantor' means and includes without limitation each and
all of the guarantors, sureties, and accommodation parties in connection with
the Indebtedness.
Indebtedness. The word 'Indebtedness" means the indebtedness evidenced by the
Note, including all principal and interest, together with all other indebtedness
and costs and expenses for which Grantor is responsible under this Agreement or
under any of the Related Documents. In addition, the word "Indebtedness"
includes all other obligations, debts and liabilities, plus interest thereon, of
Grantor, or any one or more of them, to Lender, as well as all claims by Lender
against Grantor, or any one or more of them, whether existing now or later;
whether they are voluntary or involuntary, due or not due, direct or indirect,
absolute or contingent, liquidated or unliquidated; whether Grantor may be
liable individually or jointly with others; whether Grantor may be obligated as
guarantor, surety, accommodation party or otherwise; whether recovery upon such
indebtedness may be or hereafter may become barred by any statute of
limitations; and whether such indebtedness may be or hereafter may become
otherwise unenforceable.
<PAGE>
Lender. The word "Lendee'means CHITTENDEN TRUST COMPANY d/b/a CHITTENDEN BANK,
its successors and assigns.
Note. The word "Note" means the note or credit agreement dated August 22, 1997,
in the principal amount of $3,564,461.93 from VERMONT PURE HOLDINGS, LTD.
(TIN: 13-3576606), VERMONT PURE SPRINGS, INC. (TIN: 03-0330521) to Lender,
together with all renewals of, extensions of, modifications of, refinancings of,
consolidations of and substitutions for the note or credit agreement.
Related Documents. The words 'Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Indebtedness.
RIGHT OF SETOFF. Grantor hereby grants Lender a contractual possessory security
interest in and hereby assigns, conveys, delivers, pledges, and transfers all of
Grantor's right, title and interest in and to Grantor's accounts with Lender
(whether checking, savings, or some other account), including all accounts held
jointly with someone else and all accounts Grantor may open in the future,
excluding, however, all IRA and Keogh accounts, and all trust accounts for which
the grant of a security interest would be prohibited by law. Grantor authorizes
Lender, to the extent permitted by applicable law, to charge or setoff all
Indebtedness against any and all such accounts.
OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as follows:
Perfection of Security Interest. Grantor agrees to execute such financing
statements and to take whatever other actions are requested by Lender to
perfect and continue Lender's security interest in the Collateral. Upon
request of Lender, Grantor will deliver to Lender any and all of the
documents evidencing or constituting the Collateral, and Grantor will note
Lender's interest upon any and all chattel paper if not delivered to Lender
for possession by Lender. Grantor hereby appoints Lender as its irrevocable
attorney-in-fact for the purpose of executing any documents necessary to
perfect or to continue the security interest granted in this Agreement.
Lender may at any time, and without further authorization from Grantor, file
a carbon, photographic or other reproduction of any financing statement or
of this Agreement for use as a financing statement. Grantor will reimburse
Lender for all expenses for the perfection and the continuation of the
perfection of Lender's security interest in the Collateral. Grantor promptly
will notify Lender before any change in Grantor's name including any change
to the assumed business names of Grantor. This is a continuing Security
Agreement and will continue in effect even though all or any part of the
Indebtedness is paid In full and even though for a period of time Grantor
may not be Indebted to Lender.
No Violation. The execution and delivery of this Agreement will not violat
any law or agreement governing Grantor or to which Grantor is a
<PAGE>
party, and its certificate or articles of incorporation and bylaws do not
prohibit any term or condition of this Agreement.
Enforceability of Collateral. To the extent the Collateral consists of
accounts, chattel paper, or general intangibles, the Collateral is
enforceable in accordance with its terms, is genuine, and complies with
applicable laws concerning form, content and manner of preparation and
execution, and all persons appearing to be obligated on the Collateral have
authority and capacity to contract and are in fact obligated as they appear
to be on the Collateral. At the time any account becomes subject to a
security interest in favor of Lender, the account shall be a good and valid
account representing an undisputed, bona fide indebtedness incurred by the
account debtor, for merchandise held subject to delivery instructions or
theretofore shipped or delivered pursuant to a contract of sale, or for
services theretofore performed by Grantor with or for the account debtor;
there shall be no setoffs or counterclaims against any such account; and no
agreement under which any deductions or discounts may be claimed shall have
been made with the account debtor except those disclosed to Lender in
writing.
Location of the Collateral. Grantor, upon request of Lender, will deliver to
Lender in form satisfactory to Lender a schedule of real properties and
Collateral locations relating to Grantor's operations, including without
limitation the following: (a) all real property owned or being purchased by
Grantor; (b) all real property being rented or leased by Grantor; (c) all
storage facilities owned, rented, leased, or being used by Grantor; and (d) all
other properties where Collateral is or may be located. Except in the ordinary
course of its business, Grantor shall not remove the Collateral from its
existing locations without the prior written consent of Lender.
Removal of Collateral. Grantor shall keep the Collateral (or to the extent the
Collateral consists of intangible property such as accounts, the records
concerning the Collateral) at Grantor's address shown above, or at such other
locations as are acceptable to Lender. Except in the ordinary course of its
business, including the sales of inventory, Grantor shall not remove the
Collateral from its existing locations without the prior
written consent of Lender. To the extent that the Collateral consists of
vehicles, or other titled property, Grantor shall not take or permit any
action which would require application for certificates of title for the
vehicles outside the State of Vermont, without the prior written consent
of Lender.
<PAGE>
Transactions Involving Collateral. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business, Grantor shall not
sell, offer to sell, or otherwise transfer or dispose of the Collateral.
While Grantor is not in default under this Agreement, Grantor may sell
inventory, but only in the ordinary course of its business and onfy to
buyers who qualify as a buyer in the ordinary course of business. A sale
in the ordinary course of Grantor's business does not include a transfer
in partial or total satisfaction of a debt or any bulk sale. Grantor shall
not pledge, mortgage, encumber or otherwise permit the Collateral to be
subject to any lien, security interest, encumbrance, or charge, other than
the security interest provided for in this Agreement, without the prior
written consent of Lender. This includes security interests even if junior
in right to the security interests granted under this Agreement. Unless
waived by Lender, all proceeds from any disposition of the Collateral (for
whatever reason) shall be held in trust for Lender and shall not be
commingled with any other funds; provided however, this requirement shall
not constitute consent by Lender to any sale or other disposition. Upon
receipt, Grantor shall Immediately deliver any such proceeds to Lender.
Title. Grantor represents and warrants to Lender that it holds good and
marketable title to the Collateral, free and clear of all liens and
encumbrances except for the lien of this Agreement. No financing statement
covering any of the Collateraf is on file in any public office other than
those which reflect the security interest created by this Agreement or to
which Lender has specifically consented. Grantor shall defend Lender's
rights in the Collateral against the claims and demands of all other
persons.
Collateral Schedules and Locations. As often as Lender shall require, and
insofar as the Collateral consists of accounts and general intangibles,
Grantor shall deliver to Lender schedules of such Collateral, including
such information as Lender may require, including without limitation names
and addresses of account debtors and agings of accounts and general
intangibles. Insofar as the Collateral consists of inventory and
equipment, Grantor shall deliver to Lender, as often as Lender shall
require, such lists, descriptions, and designations of such Collateral as
Lender may require to identify the nature, extent, and location of such
Collateral. Such information shall be submitted for Grantor and each of
its subsidiaries or related companies.
Maintenance and Inspection of Collateral. Grantor shall maintain all
tangible Collateral in good condition and repair. Grantor will not commit
or permit damage to or destruction of the Collateral or any part of the
Collateral. Lender and its designated representatives and agents shall
have the right at all reasonable times to examine, inspect, and audit the
Collateral wherever located. Grantor shall immediately notify Lender of
all cases involving the return, rejection, repossession, loss or damage of
or to any Collateral; of any request for credit or adjustment or of any
other dispute arising with respect to the Collateral; and generally of all
happenings and events affecting the Collateral or the value or the amount
of the Collateral.
Taxes, Assessments and Liens. Grantor will pay when due all taxes,
assessments and liens upon the Collateral, its use or operation, upon this
Agreement, upon any promissory note or notes evidencing the Indebtedness,
or upon any of the other Related Documents. Grantor may withhold any such
payment or may elect to contest any lien if Grantor is in good faith
conducting an appropriate proceeding to contest the
<PAGE>
obligation to pay and so long as Lender's interest in the Collateral is
not jeopardized in Lender's sole opinion. If the Collateral is subjected
to a lien which is not discharged within fifteen (15) days, Grantor shall
deposit with Lender cash, a sufficient corporate surety bond or other
security satisfactory to Lender in an amount adequate to provide for the
discharge of the lien plus any interest, costs, attorneys' fees or other
charges that could accrue as a result of foreclosure or sale of the
Collateral. In any contest Grantor shall defend itself and Lender and
shall satisfy any final adverse judgment before enforcement against the
Collateral. Grantor shall name Lender as an additional obligee under any
surety bond furnished in the contest proceedings.
Compliance With Governmental Requirements. Grantor shall comply promptly
with all laws, ordinances, rules and regulations of all governmental
authorities, now or hereafter in effect, applicable to the ownership,
production, disposition, or use of the Collateral. Grantor may contest in
good faith any such law, ordinance or regulation and withhold compliance
during any proceeding, including appropriate appeals, so long as Lender's
interest in the Collateral, in Lender's opinion, is not jeopardized.
Hazardous Substances. Grantor represents and warrants that the Collateral
never has been, and never will be so long as this Agreement remains a lien
on the Collateral, used for the generation, manufacture, storage,
transportation, treatment, disposal, release or threatened release of any
hazardous waste or substance, as those terms are defined in the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA'), the
Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99,499
("SARA'), the Hazardous Materials Transportation Act, 49 U.S.C. Section
1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901, et seq., or other applicable state or Federal laws, rules,
or regulations adopted pursuant to any of the foregoing. The terms
"hazardous waste" and 'hazardous substance" shall also include, without
limitation, petroleum and petroleum by-products or any fraction thereof
and asbestos. The representations and warranties contained herein are
based on Grantor's due diligence in investigating the Collateral for
hazardous wastes and substances. Grantor hereby (a) releases and waives
any future claims against Lender for indemnity or contribution in the
event Grantor becomes liable for cleanup or other costs under any such
laws, and (b) agrees to indemnify and hold harmless Lender against any and
all claims and losses resulting from a breach of this provision of this
Agreement. This obligation to indemnify shall survive the payment of the
Indebtedness and the satisfaction of this Agreement.
Maintenance of Casualty Insurance. Grantor shall procure and maintain all
risks insurance, including without limitation fire, theft and liability
coverage together with such other insurance as Lender may require with
respect to the Collateral, in form, amounts, coverages and basis
reasonably acceptable to Lender and issued by a company or companies
reasonably acceptable to Lender. Grantor, upon request of Lender, will
deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulations that
coverages will not be cancelled or diminished without at least ten (10)
days' prior written notice to Lender and not including any disclaimer of
the insurer's liability for failure to give such a notice. Each insurance
policy also shall include an endorsement providing that coverage in favor
of Lender will not be impaired in any way by any act, omission or default
of Grantor or any other person. In connection with all policies covering
assets in which Lender holds or is offered a security interest, Grantor
will provide Lender with such loss payable or other endorsements as Lender
may require. If Grantor at any time faifs to obtain or maintain any
insurance as required under this Agreement, Lender may (but shall
<PAGE>
not be obligated to) obtain such insurance as Lender deems appropriate,
including if it so chooses 'single interest insurance," which will cover
only Lender's interest in the Collateral.
Application of Insurance Proceeds. Grantor shall promptly notify Lender of
any loss or damage to the Collateral. Lender may make proof of loss if
Grantor fails to do so within fifteen (15) days of the casualty. All
proceeds of any insurance on the Collateral, including accrued proceeds
thereon, shall be held by Lender as part of the Collateral. If Lender
consents to repair or replacement of the damaged or destroyed Collateral,
Lender shall, upon satisfactory proof of expenditure, pay or reimburse
Grantor from the proceeds for the reasonable cost of repair or
restoration. If Lender does not consent to repair or replacement of the
Collateral, Lender shall retain a sufficient amount of the proceeds to pay
all of the Indebtedness, and shall pay the balance to Grantor. Any
proceeds which have not been disbursed within six (6) months after their
receipt and which Grantor has not committed to the repair or restoration
of the Collateral shall be used to prepay the Indebtedness.
Insurance Reserves. Lender may require Grantor to maintain with Lender
reserves for payment of insurance premiums, which reserves shall be
created by monthly payments from Grantor of a sum estimated by Lender to
be sufficient to produce, at least fifteen (15) days before the premium
due date, amounts at least equal to the insurance premiums to be paid. If
fifteen (15) days before payment is due, the reserve funds are
insufficient, Grantor shall upon demand pay any deficiency to Lender. The
reserve funds shall be held by Lender as a general deposit and shall
constitute a non-4nterest-bearing account which Lender may satisfy by
payment of the insurance premiums required to be paid by Grantor as they
become due. Lender does not hold the reserve funds in trust for Grantor,
and Lender is not the agent of Grantor for payment of the insurance
premiums required to be paid by Grantor. The responsibility for the
payment of premiums shall remain Grantor's sole responsibility.
Insurance Reports. Grantor, upon request of Lender, shall furnish to
Lender reports on each existing policy of insurance showing such
information as Lender may reasonably request including the following: (a)
the name of the insurer; lb) the risks insured; (c) the amount of the
policy; (d) the property insured; (a) the then current value on the basis
of which insurance has been obtained and the manner of determining that
value; and (f) the expiration date of the policy. In addition, Grantor
shall upon request by Lender (however not more often than annually) have
an independent appraiser satisfactory to Lender determine, as applicable,
the cash value or replacement cost of the Collateral.
GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, proaded that Grantor's right to possession
and beneficial use shall not apply to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender's security interest in
such Collateral. Until otherwise notified by Lender, Grantor may collect any of
the Collateral consisting of accounts. At any time and even though no Event of
Default exists, Lender may exercise its rights to collect the accounts and to
notify account debtors to make payments directly to Lender for application to
the Indebtedness. If Lender at any time has possession of any Collateral,
whether before or after an Event of Default, Lender shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral if
Lender takes such action for that purpose as Grantor shall request or as Lender,
in Lender's sole discretion, shall deem appropriate under the circumstances, but
failure to honor any request by Grantor shall not of itself be deemed
<PAGE>
to be a failure to exercise reasonable care. Lender shall not be required to
take any steps necessary to preserve any rights In the Collateral against prior
parties, nor to protect, preserve or maintain any security interest given to
secure the Indebtedness.
EXPENDITURES BY LENDER. It not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security Interests, encumbrances, and
other claims, at any time levied or placed on the Collateral. Lender also may
(but shall not be obligated to) pay all costs for insuring, maintaining and
preserving the Collateral. All such expenditures incurred or paid by Lender for
such purposes will then bear interest at the rate charged under the Note from
the date incurred or paid by Lender to the date of repayment by Grantor. All
such expenses shall become a part of the Indebtedness and, at Lender's option,
will (a) be payable on demand, (b) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due
during either (i) the term of any applicable insurance policy or (ii) the
remaining term of the Note, or (c) be treated as a balloon payment which will be
due and payable at the Note's maturity. This Agreement also will secure payment
of these amounts. Such right shall be in addition to all other rights and
remedies to which Lender may be entitled upon the occurrence of an Event of
Default.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
Default on Indebtedness. Failure of Grantor to make any payment when due on the
Indebtedness.
Other Defaults. Failure of Grantor to comply with or to perform any other term,
obligation, covenant or condition contained in this Agreement or in any of the
Related Documents or in any other agreement between Lender and Grantor.
Default In Favor of Third Parties. Should Borrower or any Grantor default under
any loan, extension of credit, security agreement, purchase or sales agreement,
or any other agreement, in favor of any other creditor or person that may
materially affect any of Borrower's property or Borrower's or any Grantor's
ability to repay the Loans or perform their respective obligations under this
Agreement or any of the Related Documents.
False Statements. Any warranty, representation or statement made or furnished to
Lender by or on behalf of Grantor under this Agreement, the Note or the Related
Documents is false or misleading in any material respect, either now or at the
time made or furnished.
Defective Collateralization. This Agreement or any of the Related Documents
ceases to be in full force and affect (including failure of any collateral
documents to create a valid and perfected security interest or lien) at any time
and for any reason.
<PAGE>
Insolvency. The dissolution or termination of Grantcr's existence as a going
business, the insolvency of Grantor, the appointment of a receiver for any part
of Grantor's property, any assignment for the benefit of creditors, any type of
creditor workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Grantor.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Grantor or by any governmental agency against
the Collateral or any other collateral securing the Indebtedness. This includes
a garnishment of any of Grantor's deposit accounts with Lender.
Events Affecting Guarantor. Any of the preceding events occurs with respect to
any Guarantor of any of the Indebtedness or such Guarantor dies or becomes
incompetent.
Adverse Change. A material adverse change occurs in Grantor's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.
Insecurity. Lender, in good faith, deems itself insecure.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the Vermont Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and
remedies:
Accelerate Indebtedness. Lender may declare the entire Indebtedness,
including any prepayment penalty which Grantor would be required to pay,
immediately due and payable, without notice.
Assemble Collateral. Lender may require Grantor to deliver to Lender all or
any portion of the Collateral and any and all certificates of title and
other documents relating to the Collateral. Lender may require Grantor to
assemble the Collateral and make it available to Lender at a place to be
designated by Lender. Lender also shall have full power to enter upon the
property of Grantor to take possession of and remove the Collateral. If the
Collateral contains other goods not covered by this Agreement at the time of
repossession, Grantor agrees Lender may take such other goods, provided that
Lender makes reasonable efforts to return them to Grantor after
repossession.
Sell the Collateral. Lender shall have full power to sell, lease, transfer,
or otherwise deal with the Collateral or proceeds thereof in its own name or
that of Grantor. Lender may sell the Collateral at public auction or private
sale. Unless the Collateral threatens to decline speedily in value or is of
a type customarily sold on a recognized market, Lender will give Grantor
reasonable notice of the time after which any private sale or any other
intended disposition of the Collateral is to be made. The requirements of
reasonable notice shall be met if such notice is given at least ten (10)
days before the time of the sale or disposition. All expenses relating to
the disposition of the Collateral, including without limitation the expenses
of retaking, holding, insuring, preparing for sale and selling the
Collateral, shall become a part of the Indebtedness secured by this
Agreement and shall be payable on demand, with interest at the Note rate
from date of expenditure until repaid.
Appoint Receiver. To the extent permitted by applicable law, Lender shall have
the following rights and remedies regarding the appointment of a receiver: (a)
Lender may have a receiver appointed as a matter of right, (b) the receiver may
be an employee of Lender and may serve without bond, and (c) all fees of the
receiver and his or her attorney shall become part of the Indebtedness secured
by this Agreement and shall be payable on demand, with interest at the Note rate
from date of expenditure until repaid.
<PAGE>
Collect Revenues, Apply Accounts. Lender, either itself or through a receiver,
may collect the payments, rents, income, and revenues from the Collateral.
Lender may at any time in its discretion transfer any Collateral into its own
name or that of its nominee and receive the payments, rents, income, and
revenues therefrom and hold the same as security for the Indebtedness or apply
it to payment of the Indebtedness in such order of preference as Lender may
determine. Insofar as the Collateral consists of accounts, general intangibles,
insurance policies, instruments, chattel paper, choses in action, or similar
property, Lender may demand, collect, receipt for, settle, compromise, adjust,
sue for, foreclose, or realize on the Collateral as Lender may determine,
whether or not Indebtedness or Collateral is then due. For these purposes,
Lender may, on behalf of and in the name of Grantor, receive, open and dispose
of mail addressed to Grantor; change any address to which mail and payments are
to be sent; and endorse notes, checks, drafts, money orders, documents of title,
instruments and items pertaining to payment, shipment, or storage of any
Collateral. To facilitate collection, Lender may notify account debtors and
obligors on any Collateral to make payments directly to Lender.
Obtain Deficiency. If Lender chooses to sell any or all of the Collateral,
Lender may obtain a judgment against Grantor for any deficiency remaining on the
Indebtedness due to Lender after application of all amounts received from the
exercise of the rights provided in this Agreement. Grantor shall be liable for a
deficiency even if the transaction described in this subsection is a sale of
accounts or chattel paper.
Other Rights and Remedies. Lender shall have all the rights and remedies of a
secured creditor under the provisions of the Uniform Commercial Code, as may be
amended from time to time. In addition, Lender shall have and may exercise any
or all other rights and remedies it may have available at law, in equity, or
otherwise.
Cumulative Remedies. All of Lender's rights and remedies, whether evidenced by
this Agreement or the Related Documents or by any other writing, shall be
cumulative and may be exercised singularly or concurrently. Election by Lender
to pursue any remedy shall not exclude pursuit of any other remedy, and an
election to make expenditures or to take action to perform an obligation of
Grantor under this Agreement, after Grantor's failure to perform, shall not
affect Lender's right to declare a default and to exercise its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters set
forth in this Agreement. No alteration of or amendment to this Agreement
shall be effective unless given in writing and signed by the party or
parties sought to be charged or bound by the alteration or amendment.
Applicable Law. This Agreement has been delivered to Lender and accepted by
Lender in the State of Vermont. If there is a lawsuit, Grantor agrees upon
Lender's request to submit to the jurisdiction of the courts of Chittenden
County, the State of Vermont. Lender and Grantor hereby waive the right to
any jury trial in any action, proceeding, or counterclaim brought by either
Lender or Grantor against the other. This Agreement shall be governed by and
construed in accordance with the laws of the State of Vermont.
Attorneys' Fees; Expenses. Grantor agrees to pay upon demand all of Lender's
costs and expenses, including attorneys' fees and Lender's legal expenses,
incurred in connection with the enforcement of this Agreement. Lender may pay
someone else to help enforce this Agreement, and Grantor shall pay the costs and
expenses of such enforcement. Costs and expenses include Lender's attorneys'
fees and legal expenses whether or not there is a lawsuit, including attorneys'
fees and legal expenses for bankruptcy proceedings (and including efforts to
modify or vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Grantor also shall pay all court costs and
such additional fees as may be directed by the court.
<PAGE>
Caption Headings.Caption headings in this Agreement are for convenience purposes
only and are not to be used to interpret or define the provisions of this
Agreement. Notices. All notices required to be given under this Agreement shall
be given in writing, may be sent by telefacsimile, and shall be effective when
actually delivered or when deposited with a nationally recognized overnight
courier or deposited in the United States mail, first class, postage prepaid
addressed to the party to who the notice is to be given at the address shown
above. Any party may change its address for notices.
under ihis Agreement by giving formal written notice lo the other parties,
specifying that the purpose of the notice is to change the party's address. To
the extent permitted by applicable law, if there is more than one Grantor,
notice to any Grantor will constitute notice to all Grantors. For notice
purposes, Grantor will keep Lender informed at all times of Grantor's current
address(es).
Power of Attorney. Grantor hereby appoints Lender as its true and lawful
a3orney-4n-fact, irrevocably, with full power of substitution to do the
following: (a) to demand, collect, receive, receipt for, sue and recover all
sums of money or other property which may now or hereafter become due, owing
or payable from the Collateral; (b) to execute, sign and endorse any and all
claims, instruments, receipts, checks, drafts or warrants issued in payment
for the Collateral; (c) to settle or compromise any and all cfaims arising
under the Collateral, and, in the place and stead of Grantor, to execute and
deliver its release and settlement for the claim; and (d) io file any claim
or claims or to take any action or institute or take part in any
proceedings, either in its own name or in the name of Grantor, or otherwise,
which in the discretion of Lender may seem to be necessary or advisable.
This power is given as security for the Indebtedness, and the authority
hereby conferred is and shall be irrevocable and shall remain in full force
and effect until renounced by Lender.
<PAGE>
Severability. If a court of competent jurisdiction finds any proosion of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of this
Agreemeni in all other respects shall remain valid and enforceable.
Successor Interests. Subject to the limitations set forth above on transfer
of the Collateral, this Agreement shall be binding upon and inure to the
benefit of the parties, their successors and assigns.
Waiver. Lender shall nol be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of
a provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or
any other provision of this Agreement. No poor waiver by Lender, nor any
course of dealing between Lender and Grantor, shall constitute a waiver of
any of Lender's rights or of any of Grantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender In any instance shall not
constitute continuing consent to subsequent instances where such consent is
required and in all cases such consent may be granted or withheld in the
sole discretion of Lender.
LIMITATION ON RIGHT OF SETOFF. Lender agrees that it will exercise its right of
setoff, as described above, only in the event of default under the terms of the
Note or any related document, including (without limitation) the Business Loan
Agreement, any Guaranty, any Mortgage, any Security Agreement, any Pledge
Agreement, or any Letter of Credit Reimbursement or similar agreement.
ADDITIONAL EVENTS OF DEFAULT. Additionaf events of default include: a) the
Grantor changing its name or assuming an additional name without first notifying
Lender or b) the Grantor failing to plant, cultivate and harvest crops in due
season.
<PAGE>
ADDITIONAL RIGHTS AND REMEDIES ON DEFAULT. Lender may demand more security or
new parties obligated to pay any debt Borrower owes to Lender as a condition cf
giving up any other remedy.
LIMITATION ON GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Lender
agrees that it will not exercise its rights to collect the accounts and to
notify account debtors to make payments directly to Lender for application to
the Indebtedness unless an event of default occurs under the terms of the
Security Agreement, Note, or related documents.
TITLE DISCLOSURE. Borrower will provide to Lender written disclosure of any
lions and encumbrances on the collateral in addition to Lender's lien and such
disclosure will serve to qualify, and not contradict, the representations and
warranties of the Title provision above.
HAZARDOUS SUBSTANCES DISCLOSURE. Borrower will provide to Lender written
disclosure of any prior use of the collateral for the generation, manufacture,
storage, transportation, treatment, disposal, release or threatened release of
any hazardous waste or substance. This disclosure shall serve to qualify, and
not contradict, the representations and warranties cf the Hazardous Substances
provision above.
BANKRUPTCY ARREARAGES. If Borrower files a petition under the Bankruptcy Code
and seeks to pay any amount which is past due under this Note, Mortgage and
Security Agreement as cf the date of filing of the petition through a Chapter 1
1 or 13 plan, Borrower agrees to pay Lender Interest on the amounts past due
(arrearages) at the Interest Rate. Interest will be calculated on the total
amount past due as of the date of filing of the petition (this may include
Interest on past due Interest and late charges) for the time required to pay the
past due amounts through the bankruptcy case.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AUGUST 22,
1997.
GRANTOR:
VERMONT PURE HOLDINGS, LTD. (TIN: 13-3576606), VERMONT PURE SPRINGS, INC.
(TIN: 03-0330521)
VERMONT PURE HOLDINGS, LTD. by BRUCE MACDONALD, CHIEF FINANCIAL OFFICER
VERMONT PURE SPRINGS, INC. by BRUCE MACDONALD, CHIEF FINANCIAL OFFICER
LENDER:
CHITTENDEN TRUST COMPANY dib/a CHITTENDEN BANK
By:
Authorized Officer
Exhibit 10.7 Schedule of Stock and Note Purchase Agreement Information
With the exception of the stock purchase agreement with David Eger, which is
filed as exhibit 10.1, the stock purchase agreements and note purchase
agreements between Vermont Pure and Excelsior were substantially the same for
all stock and note holders. The following schedule sets forth the pertinent
information that differs from agreement to agreement:
Principal Cash Note Shares
Noteholders Purchased Paid Issued Issued
----------- --------- ---- ------ ------
Louis Eger $85,481 37,260
Rita Eger $85,460 37,260
Arthur Woefle $75,000 43,836
Martin Fenton $5,000 $5,000
John Baker $109,000 $50,000
Roger Dunham $263,185 $130,000 63,562
Stockholders
------------
Roger Dunham $45,000 $15,000 3,000
Drew Abrams $30,000 $10,000 2,000
Brad Keene $15,000 $ 5,000 1,000
