ST. GEORGE 7 MONTH SECURED PURCHASE NOTE
ST.
XXXXXX 7 MONTH SECURED PURCHASE NOTE
This
Secured Purchase Note (the “Purchase Note”) is
executed June 18, 2009, by and between Drinks Americas Holdings, Ltd., a
Delaware corporation, (the “Company”) and St.
Xxxxxx Investments, LLC, an Illinois limited liability company, (the “Investor”).
All
capitalized terms not otherwise defined herein shall have the same meaning
ascribed to them in the Securities Purchase Agreement dated of even date
herewith.
RECITALS:
WHEREAS, the Company has
authorized the sale and issuance of a non-interest bearing note, a warrant and
common stock issuable upon full or partial satisfaction of the Note or exercise
of the warrant (collectively, the Drinks Debenture, the Warrant and the
Underlying Shares shall be referred to as the “Securities”) in
exchange for a loan by the Investor to the Company of Four Million Dollars
($4,000,000) (the “Loan
Amount”);
WHEREAS, as an inducement to
enter into this Agreement and as collateral for the Drinks Debenture, certain
Affiliates have agreed to pledge 12,000,000 shares of common stock of the
Company, of which 9,000,000 shares of the Collateral Shares shall have been
issued as of a date six (6) months or more prior to the date
hereof;
WHEREAS, as further inducement
to enter into this Agreement and as further security, J. Xxxxxxx Xxxxx has
agreed to provide a personal guaranty on a portion of the Loan Amount and all
interest and penalties;
WHEREAS, the Investor has paid
$375,000 in cash and issued to the Company ten (10) secured notes in the amount
of $250,000 each and one (1) secured note in the amount of $125,000, in exchange
for the delivery of the Securities and the Collateral Shares;
WHEREAS, at the Closing, the
Company desires to sell, and the Investor desires to purchase, the Warrant and
the Debenture upon the terms and conditions stated in this Purchase Note;
and
NOW, THEREFORE, in
consideration of the foregoing recitals and the mutual promises,
representations, warranties and covenants hereinafter set forth and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Note
(a) Amount. This Purchase
Note shall be in the amount of $250,000 (the “Loan”), which the
Investor shall deliver to the Company at the Closing.
(b) Interest. The
Loan shall bear interest at a rate of 5% per year and the interest will be
payable in full upon the maturity date unless sooner prepaid.
(c) Maturity
Date. The Purchase Note shall be due and payable in full and
in cash on the date that is fifty (50) months from the date hereof or August 18,
2013 or such earlier date as described in subsection 1(d), below (the “Maturity
Date”). The Investor shall be required to pay the full amount
of the Loan in cash, unless Investor is permitted to offset the amount then due
by any amount owed under the Drinks Debenture as provided by Section 3
below.
(d) Mandatory Prepayment
Date. Unless this Purchase Note has previously been satisfied
or offset by either the Company or Investor with another liability, the Investor
shall be required to satisfy the payment under this note at such time when the
following items are met: (i) the shares of common stock deliverable in full or
partial satisfaction of the Drinks Debenture may be sold pursuant to Rule 144
promulgated under the Securities Act of 1933, as amended, without limitation;
(ii) the seven (7) month anniversary from the date hereof has elapsed; (iii) the
amount outstanding under the Drinks Debenture is less than Three Million Five
Hundred Thousand Dollars ($3,500,000); and (iv) there is no Trigger Event or
Event of Default occurring, and be continuing, under the Drinks
Debenture.
(e) Recourse. The
Company shall have full recourse against the Investor in the event that this
Note is not paid when due.
2. Security
Interest. The re-payment of this Note is secured by the
Vermont Student Assistant Corp. Auction Rate Securities Bond with a face value
of $500,000 and owned by the Investor (the “Securities Bond”). The
Securities Bond is held by the Investor electronically and as of the Closing
shall be transferred to the escrow agent to be held pursuant to the terms of the
Securities Bond Pledge Agreement attached hereto as Exhibit A.
The
Investor shall have the authority to, with the prior written consent of the
Company, provided that such consent is not unreasonably withheld, to add
additional collateral or substitute collateral as it deems fit provided that the
fair market value of the collateral is not diminished.
3. Offset of Loan with Drinks
Debenture. In the occurrence of an event of default or a Trigger Event
under the Drinks Debenture, at either the Investor’s or the Company’s sole
option, such party, shall be entitled to satisfy all or any part of the amount
owed under this Loan by offsetting the amount owed against a portion of the
amount outstanding under the Drinks Debenture equal to 125% of the amount owed
under this Note which amount will satisfy a corresponding portion of the Drinks
Debenture. Such satisfaction of the Loan shall be considered an
offset of liabilities and shall be considered, in full or partial, payment and
satisfaction of the Loan.
4. Investor’s Representations
and Warranties. Investor warrants and represents as follows (and
acknowledges that all of these warranties and representations are material): (a)
The matters contained in this Purchase Note were true and complete in all
material respects as of the date of filing and remain true and complete as of
the date hereof; (b) Investor is authorized and legally and validly permitted to
participate in this transaction; (c) Investor has the authority to enter into
this Purchase Note; (d) all representations and warranties made in this Purchase
Note shall survive for a period of six (6) months following the Maturity Date;
and (e) the value of the assets pledged as security for the Investor’s
obligations hereunder is not less than the Loan.
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5. Event of Default. In
addition to any other “Events of Default” set forth elsewhere in this Purchase
Note, the following shall constitute Events of Default under this Purchase Note:
(a) any representation or warranty of the Investor is not accurate; (b) Investor
fails to satisfy its obligation under this Purchase Note on or before the
Maturity Date; or (c) Investor files or has filed against Investor any
bankruptcy proceeding. If an Event of Default occurs hereunder, the Investor
will be responsible for all costs incurred by the company in collection of this
note, including reasonable legal fees, which costs will constitute part of the
obligations of the Investor hereunder. This note constitutes
one of a series of 11 notes issued by the Investor to the Company on the date
hereof. An Event of Default occurring under one of such notes shall
constitute an Event of Default under all of such notes.
6. Remedies. Upon the
occurrence of an Event of Default pursuant to this Purchase Note, the Company
may, at its sole and exclusive option, do any or all of the following, either
concurrently or separately: (a) accelerate the maturity of this Purchase Note
and demand immediate payment in full, whereupon the outstanding principal amount
of the Purchase Note and all obligations of Company to Investor hereunder,
together with accrued interest thereon and accrued charges and costs, including
costs incurred by the Company with respect to the collection of this Purchase
Note (including reasonable legal fees), if any, shall become immediately due and
payable without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived; (b) offset, recoup or exercise any other
legal remedy to offset any liabilities due by the Investor, including but not
limited to any offset of this Purchase Note against the Drinks Debenture , at
the 125% rate provided under Section 3 hereof; (c)
exercise all legally available rights and privileges; and (d) take appropriate
recourse on the collateral.
7. Miscellaneous.
(a) As
used in this Purchase Note, “Investor” shall mean all persons signing this
Purchase Note and borrowing money from Company or any of its successors or
assigns. The word “including” means “including (but not limited to)” unless
specifically stated to the contrary.
(b) Governing Law; Consent to
Jurisdiction; Waiver of Jury Trial. This Purchase Note shall
be governed by, and construed in accordance with, the internal laws of the State
of Illinois, without reference to the choice of law provisions
thereof. The Company and, by accepting this Purchase Note, the
Investor, each irrevocably submits to the exclusive jurisdiction of the courts
of the State of Illinois located in Xxxx County and any United States District
Court for the Northern District of Illinois for the purpose of any suit, action,
proceeding or judgment relating to or arising out of this Purchase Note and the
transactions contemplated hereby. Service of process in connection
with any such suit, action or proceeding may be served on each party hereto
anywhere in the world by the same methods as are specified for the giving of
notices under this Purchase Note. The Company and, by accepting this
Purchase Note, the Investor, each irrevocably consents to the jurisdiction of
any such court in any such suit, action or proceeding and to the laying of venue
in such court. The Company and, by accepting this Purchase Note, the
Investor, each irrevocably waives any objection to the laying of venue of any
such suit, action or proceeding brought in such courts and irrevocably waives
any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum. EACH OF THE COMPANY AND, BY ITS
ACCEPTANCE HEREOF, THE WARRANTHOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL
BY JURY IN ANY LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT
COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
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(c) All
notices required under this Purchase Note shall be in writing and addressed to
Investor at 000 Xxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000 and to
Company at 000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxxx 00000. Notice shall
be mailed by certified mail, return receipt requested, postage properly prepaid,
or hand delivered. Notice shall be deemed given, received, and effective 3 days
from the date of mailing or on the date of delivery. Either party may change the
address for notice by giving the other party notice of the new address in
compliance with this section.
(d) This
Purchase Note contains the entire agreement between the parties relating to the
subject matter of this Purchase Note.
(e) This
Purchase Note will inure to the benefit of and be binding upon the parties and
their successors, representatives, and assigns.
(f) Investor
agrees to perform any and all further acts and to execute and deliver any and
all additional documents which may be reasonably necessary to carry out the
terms of this Purchase Note or correctly set forth the terms of this Purchase
Note.
(g) Investor
may assign any right, benefit, or obligation of Investor under this Purchase
Note without Company’s prior written approval.
(h) Neither
party is an agent or representative of the other. Investor is solely responsible
for procuring and providing all personnel, facilities, materials, and services
necessary to perform Investor’s obligations under this Purchase Note. Nothing in
this Purchase Note shall be construed to create a partnership or joint venture
between the Investor and Company, and Investor acknowledges and agrees that the
sole relationship of the parties is that of Investor and Company.
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[SIGNATURE
PAGE TO ST. XXXXXX 7 MONTH NOTE]
IN WITNESS WHEREOF, the
parties have executed this Purchase Note on the above date.
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INVESTOR:
ST.
XXXXXX INVESTMENTS, LLC
Name:_________________________
Xxxx
Xxxx, Managing Partner
COMPANY:
By:____________________________
J.
Xxxxxxx Xxxxx
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