ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into on this 19th
day of December 1997, by and between VERMONT PURE HOLDINGS, LTD. ("VPH") a
Delaware corporation with its principal place of business in Randolph, Vermont
("Buyer") and VERMONT COFFEE TIME, INC. ("VCT"), a Vermont corporation with its
principal place of business at X.X. Xxx 000, 00X Xxxxxx X, Xxxxxxxxx, XX 00000
("Seller").
RECITALS
WHEREAS, VPH is a company engaged in the bottling and sale of natural
spring water with its manufacturing facility and principal place of business in
Xxxxxxxx Center, VT, and
WHEREAS, VCT is a company, engaged in the business of selling and
distributing coffee, water and related products, and renting cooler and
dispenser equipment for home and office customers (the "Business"), with its
principal place of business in Williston, VT, and
WHEREAS, both parties desire to enter into agreements by which VPH
shall purchase substantially all of the assets and assume certain of the
liabilities of the Business.
NOW THEREFORE, in consideration of the mutual promises contained
herein, the parties agree as follows:
I. ASSETS
A. Asset Purchase and Sale. Upon the terms and conditions of this
Agreement, at the Closing (defined below), Seller shall sell, convey, transfer,
assign and deliver to Buyer, and Buyer shall purchase, substantially all of the
property of Seller (except the Excluded Assets described below), wherever
located, tangible and intangible, consisting of the following assets: coolers,
coffee equipment, accounts receivable, vehicles, purchase orders, telephone
number, customer lists, and goodwill (the "Assets"), but excluding personal
items, mementos and an office chair ("Excluded Assets"), which shall remain the
property of Seller.
B. Liabilities. At the Closing, the Buyer shall assume by instrument of
assumption reasonably satisfactory to Seller's counsel, and shall pay and
discharge as they become due, all of the obligations and liabilities of Seller
identified and described in Exhibit "A" attached hereto (the "Assumed
Liabilities") and no others. Buyer shall defend, indemnify and hold harm-less
Seller and its successors and assigns from any claim, cost, expense or liability
arising from or pertaining to any of the Assumed Liabilities after the Closing.
C. Xxxx of Sale. Title to the Assets will be conveyed to Buyer
by Seller pursuant to
a Xxxx of Sale, free and clear of all liens and encumbrances except those which
secure any: of the Assumed Liabilities. The form of the Xxxx of Sale shall be
approved by Buyer's counsel prior to Closing.
D. Lease. At Closing, Seller shall assign to Buyer its right
title and interest under the Lease Agreement, dated March 1, 1996 (the "Lease")
between The Xxxxxx Group, as Lessor and the Seller, as Lessee, and Buyer will
assume all obligations of Seller under the Lease.
II. PURCHASE PRICE
In consideration of the transfer of the Assets, the Buyer will (I)
assume all of the Assumed Liabilities in accordance with Section I.B of this
Agreement, (ii) execute and deliver the Consulting Agreement in the form
attached as Exhibit "B" attached hereto and pay the fees required thereby, and
(iii) pay to Seller the total purchase price (the "Purchase Price") of
$1,431,564. The Purchase Price shall be paid as follows:
A. Deposit. A $50,000 cash deposit (the "Deposit") shall be delivered
in escrow to Seller's counsel, Xxxxx, Xxxxx & XxXxxxxx, P.C., as escrow agent
(the "Escrow Agent") upon the signing of this Agreement. The Deposit shall be
held in escrow and applied to the Purchase Price at the Closing. Upon
termination of this Agreement by Buyer for failure of any one or more of the
conditions precedent to Buyer's obligations, or upon breach of this Agreement by
Seller, the Deposit shall be delivered by the Escrow Agent to Buyer, and Buyer
shall be entitled to retain the Deposit as agreed and liquidated damages. Upon
termination of this Agreement by Seller for failure of any one or more of the
conditions precedent to Seller's obligations, or upon breach of this Agreement
by Buyer, the Deposit shall be delivered by the Escrow Agent to Seller, and
Seller shall be entitled to retain the Deposit as agreed and liquidated damages
B. Cash Payment at Closing $950,000 in cash or other immediately
available funds which shall be paid at Closing.
C. Common Stock. Buyer shall issue to Seller at Closing, pursuant to a
Stock Issuance Agreement in a form reasonably satisfactory to Buyer, to be
executed and delivered by Buyer to Seller at Closing, shares of unregistered and
restricted common stock of VPH (the "Common Stock") with a fair market value on
the Closing Date of $181,564. The "fair market value" of the Common Stock shall
be determined by the closing price on the date prior to the Closing Date, as
reported on NASDAQ.
D. Promissory Note. Buyer shall execute and deliver to Seller at
Closing a promissory note (the "Note") in the form of Exhibit "C" attached
hereto in the principal amount of $250,000. The Note shall have a ten (10) year
amortization schedule, shall be repaid with interest at the New York Prime Rate,
shall mature five years after the Closing
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Date with a balloon payment at the end of the term, and shall be payable monthly
after closing. The Note shall be guaranteed by Vermont Pure Springs, Inc,. and
shall be secured by a security interest in all of the Assets, subject only to
prior liens and security interests of Buyers lender, Xxxxxxxxxx Bank, and the
Vermont Industrial Development Authority securing indebtedness financing Buyer's
purchase of the Assets.
The Purchase Price shall be allocated among the Assets by agreement of
the parties at the Closing. The parties agree that $100,000 of the Purchase
Price shall be allocated to vehicles and equipment.
III. EXCLUDED SECURITIES AND LIABILITIES
The securities of the Seller are expressly excluded from this
transaction. The Buyer shall not assume any liabilities or obligations of
Seller, other than the Assumed Liabilities set forth in Exhibit A. In
particular, but without limitation, the Buyer does not assume any liabilities of
Seller for income taxes, for any liability or payable to Seller's pension or
profit sharing plan, employment claims, or for any note payable to shareholders
of Seller.
IV. CONDUCT OF BUSINESS AND CONDITION OF PREMISES
PENDING SETTLEMENT
Prior to the Closing:
A. The Business of Seller will be conducted only in the ordinary
course, in accordance with all laws and regulations of the township, state, and
federal governments, and Seller shall not violate the terms of any existing
leases or contracts.
B. Seller will continue to operate the business in the manner heretofore
operated by Seller.
C. Seller will maintain in effect its existing insurance on the Assets and
the Business.
D. VCT will use their reasonable efforts to preserve VCT's organization,
to keep
available the services of employees, and to preserve friendly relations with its
customers and trade creditors. Seller shall make no representation or promises
with employees about future employment, but Buyer will consider existing
employees for resumption of duties as appropriate.
E. In the event that prior to the date of Closing, the Assets shall be
totally or substantially lost or damaged by fire or any other casualty, the
Buyer shall have the option to terminate this Agreement or waive the diminution
in value and close under this Agreement buying the Assets "as is", in which
latter event it shall be entitled to treat the proceeds of any insurance paid to
Seller by reason of such loss or damage (excepting insurance for lost profits,
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if any), as a payment on the Purchase Price or the Buyer shall have the right to
all insurance proceeds to apply the funds to repair and/or to reconstruct the
Assets.
V. CLOSING
A. The closing of the transactions contemplated hereby shall take place on
January 5, 1998 at 10:00 a.m. (the "Closing Date") at the offices of Xxxxx,
Xxxxx & XxXxxxxx, P.C., 000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000.
B. Time shall be of the essence of this Agreement.
C. Any closing adjustments shall be apportioned pro rata
as of the Closing Date.
D. At the Closing, Seller shall deliver each of the
following in proper form:
1. The xxxx of sale required by Section I.C. of
this Agreement.
2. Certificates of Title to any motor vehicles
included in the Assets, endorsed to Buyer.
3. The opinion of Seller's counsel required
by Section VIII.C.
4. An executed Assignment and Assumption
Agreement with respect to the Lease.
5. Authorizing Resolutions of Seller's Board of
Directors and Shareholder, certified by the
Secretary of Seller, approving this
Agreement and the transactions contemplated
hereby.
6. The executed Non-competition and Consulting
Agreement in the form of Exhibit B.
E. At the Closing, Buyer shall deliver each of the
following in proper form:
1. The Deposit.
2. The cash portion of the Purchase Price required by
Section II.B.
3. The Note, together with the guaranty of Vermont Pure
Springs, Inc.
4. An executed security agreement and executed financing
statements as necessary to perfect a security interest in
favor of Seller, securing the Note.
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5. The Common Stock, together with the execute
Stock Issuance Agreement.
6. The opinion of Buyer's counsel, as required
by Section IX.C.
7. Authorizing resolutions of Buyer's Board of
Directors, certified by the Secretary of Buyer,
approving this Agreement, the Note, the Stock
Issuance Agreement, and the transactions contemplated
hereby and thereby.
8. The executed assumption agreement with respect to
the Assumed Liabilities, and evidence of payment of
the accounts payable included in the Assumed
Liabilities.
9. The executed assignment and Assumption Agreement
with respect to the Lease.
10. The executed Non-Competition and Consulting
Agreement in the form of Exhibit B.
VI. SELLER'S WARRANTIES
A. The Seller represents and warrants to Buyer that as of the date of this
Agreement and as of the Closing Date, that:
1. The Seller is a corporation duly organized and existing in
good standing under the laws of the State of Vermont, with the corporate power
to own its assets and carry on its business as is now being conducted.
2. Seller has good and marketable title and the right of sole
possession and control of the Assets being sold pursuant to this Agreement, and
the Assets at the time of Closing will not be subject to any mortgages, pledges,
liens, encumbrances, security interest, or charges, except as permitted by
Section I.C.
B. The Seller represents that to the best of the Seller's knowledge, after
reasonable inquiry:
1. The Seller is in substantial compliance with all applicable
laws, ordinances, rules, regulations, and requirements of all governmental
authorities having jurisdiction thereof, and that Seller has substantially
complied with all laws, municipal ordinances, and regulations of all
governmental authorities having jurisdiction thereof.
2. There are no actions, suits, or proceedings pending or
threatened against
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Sellers, either at law or in equity, brought by any federal, state, or municipal
or other governmental agency, department, board, bureau, or other
instrumentality.
3. All federal, state, and local tax returns required to be
filed have been filed, all deficiencies proposed have either been paid or
settled or are included in an account for accrued taxes; all withholding,
unemployment, social security, excise interest have been paid or will be paid by
Seller after Settlement from funds set aside at Settlement.
4. Seller has provided to Buyer copies of its federal income
tax returns and related schedules for the years 1994, 1995, and 1996, and its
internally prepared profit/loss and balance sheets for the periods ending August
31, 1997 and October 31 1997. All such financial information is accurate and in
accordance with the books and records of the Company, and fairly represents the
financial condition, assets and liabilities of the Company for the periods, and
as of the dates indicated.
5. Neither Seller nor its sole shareholder has made any
agreement or taken any action which might cause anyone to become entitled to a
broker's fee or commission.
C. If Seller obtains any knowledge or information between the date
hereof and Closing, Making or indicating that any of the aforesaid warranties or
representations are no longer true, or indication that any of the
representations and conditions set forth in this Section VI hereof are not true
and cannot be made true by the Seller by the time of Closing, or will no longer
be true as of the date of Closing, Seller will promptly notify Buyer of such
change in circumstances.
VII. BUYER'S WARRANTIES
The Buyer represents and warrants to Seller as of the date of this
Agreement and the Closing Date that:
A. Buyer is a corporation duly organized and existing in good standing
under the laws of the State of Delaware with the full corporate power and
authority to own its assets, carry on its business as is now being conducted,
and to consummate the transactions contemplated by this Agreement.
B. This Agreement has been, and each and every other agreement and
document to be executed, delivered and performed by Buyer pursuant hereto,
including the Note, the Stock Issuance Agreement, and the other documents to be
delivered by Buyer at Closing, when executed and delivered by Buyer, will have
been duly authorized, executed and delivered by Buyer, and constitutes, or, when
executed and delivered by Buyer will constitute, legal, valid and binding
obligations of Buyer enforceable against Buyer in accordance with their terms.
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VIII. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
All obligations of the Buyer under this Agreement are subject to
fulfillment, prior to or at Closing, of each of the following conditions:
A. Representation and Warranties. The representations and
warranties of Seller contained in this Agreement being true at the time of
Closing as though such representations and warrantees were made at such time.
B. Compliance With Agreement. Seller shall have performed and
complied with all agreements and conditions required by this
Agreement to be performed or complied with by, prior to, or
at, closing.
C. Opinion of Counsel. Seller shall have delivered to Buyer, in
form and content satisfactory to Buyer's counsel, an opinion
of its counsel issued to Buyer to the effect that:
(i) Seller has been duly incorporated and is existing as
a corporation in good standing under the laws of the State of Vermont;
(ii) This transaction and its terms do not violate any
provisions of Seller's Articles of Incorporation or Bylaws;
(iii) Seller has taken all shareholder, director and other
actions necessary to authorize the transactions contemplated by the parties
hereto;
(iv) Seller has the authority to carry on the business
presently being conducted by Company;
(v) Seller has full power and authority to sell, assign
and transfer the Assets sold pursuant to this Agreement.
E. Seller's Shareholder Approval. Seller shall have obtained the
necessary Shareholder approval for this transaction.
F. Non-Compete and Consulting Agreement. Buyer and Xx. Xxx
Xxxxxx shall execute and deliver at Closing the Consulting and Non-Compete
Agreement attached as Exhibit "B".
IX. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
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All obligations of the Seller under this Agreement are subject to
fulfillment, prior to or at Closing, of each of the following
conditions:
A. Representation and Warranties. The representations and
warranties of Buyer contained in this Agreement being true at the time
of Closing as though such representations and warrantees were made at
such time.
B. Compliance With Agreement. Buyer shall have performed and
complied with all agreements and conditions required by this Agreement
to be performed or complied with by, prior to, or at, Closing.
C. Opinion of Counsel. Buyer shall have delivered to Seller, in
form and content satisfactory to Buyer's counsel, an opinion of its
counsel issued to Seller to the effect that:
(1) Buyer has been duly incorporated and is existing as a
corporation in good standing under the laws of the State of
Delaware;
(ii) This transaction and performance of its terms do not
violate any provisions of Seller's Articles of Incorporation
or Bylaws or any contract or agreement to which the Buyer is a
party or by which it is bound;
(iii) Buyer has taken-.all corporate actions necessary to
authorize the transactions contemplated by the parties hereto.
D. Buyer shall have delivered all of the matters required to be
delivered by Buyer under Section V.E of this Agreement.
X. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
A. Seller and its directors, shall not, during the term of this
Agreement or at any time for a period of five (5) years following
closing, unless authorized to do so in writing by the Buyer, directly
or indirectly disclose or permit to be known to, or used for the
benefit of, any person, corporation, or other entity (outside of the
employ of the Company), or itself, any confidential information. For
the purposes of this Section, the term confidential information shall
include, but not be limited to, confidential or proprietary knowledge
or information with respect to the conduct or details of the Seller's
business including, but not limited to, lists of customers of the
Buyer's business, pricing strategies, or marketing methods.
Confidential information does not include matters which are generally
known outside of the Buyer, public knowledge or in the public domain.
B. All confidential information described in this Section shall
be the exclusive property of the Buyer.
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C. The provisions of this Section shall survive the closing and
shall continue for a period of five (5) years.
XI. RESTRICTIVE COVENANT
In order to protect the Buyer in its full beneficial use and enjoyment
of the goodwill, assets, business relationships, marketing techniques and other
know-how acquired as a result of this Agreement, for a period of five (5) years
after the closing of this Agreement, Seller, including its officers and
directors, will not, within the United States of America, directly or indirectly
compete with the Buyer in the home/office distribution of distilled water,
spring or carbonated water, or coffee/tea products and will not either:
(i) solicit any persons or entities known to be customers
of the Buyer to purchase any of the aforementioned products; or
(ii) solicit or induce any employee of the buyer to leave such
employment to take a position with Seller or with any company for which any
officer or director then works.
XII. GOVERNING LAW
This Agreement shall be construed, interpreted and enforced in accordance with
the laws of the State of Vermont.
XIII. TERMS TO SURVIVE: SEVERABILITY
The terms of this Agreement, including but not limited to the
warranties, representations and covenants made by the parties hereto, shall
survive for a period of one (1) year from the Closing Date. In the event that
any term or provision hereof or the application thereof to persons or
circumstances shall to any extent be invalid or unenforceable, then the
remainder of this Agreement shall not be affected thereby and each term or
provision hereof shall be valid and enforced to the fullest extent permitted by
law.
XIV. ENTIRE AGREEMENT
This Agreement, including the Preambles, and any other documents or
exhibit incorporated herein by reference sets forth the entire understanding of
the parties. It shall not be changed or terminated orally. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
but all of which together, shall constitute one and the same document.
XV. NOTICE
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Notices required under this Agreement shall be in writing,
sent by certified mail and facsimile to the
representatives of the parties as follows:
Vermont Pure Holdings, Ltd.
Xxxxx 00
Xxxxxxxx Xxxxxx, XX 000000
Att.: Xxxxxxx X. Xxxxxx
Facsimile (000) 000-0000
With copy to: Xxxxx X. Xxxxx, Esquire Ledgewood Law Firm
0000 Xxxxxx Xxxxxx Xxxxxxxxxxxx, XX 00000 Facsimile (000)-000-0000
To Seller: Vermont Coffee Time, Inc.
Att.. Xxx Xxxxxx, President
0 Xxxxx Xxxx xx.. Xxxxxxxxx, Xxxxxxx 00000
IN WITNESS whereof, the parties hereto have executed this Agreement as of the
day, month and year first above written.
WITNESS VERMONT PURE HOLDINGS, LTD.
By: /S/Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President and CEO
WITNESS VERMONT COFFEE TIME, INC.
By: /S/Xxx Xxxxxx
Name: Xxx Xxxxxx
Title: President
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Exhibit A to Asset Purchase Agreement
Schedule of Assumed Liabilities
For purposes of this Agreement, the term "Assumed Liabilities" shall
mean and include (i) all liabilities and obligations of Seller reflected on the
Balance Sheet of Seller as of October 31, 1997 (the "Balance Sheet') , attached
hereto as Schedule A-1, except the liability identified on the Balance Sheet as
"Note Payable to Xxx Xxxxxx", and (ii) all unpaid liabilities and obligations of
Seller incurred in its operations in the ordinary course of business from
October 31, 1997 to the Closing Date which would appear as current liabilities
on a balance sheet prepared in accordance with generally accepted accounting
principles, consistently applied.
Date Vermont Coffee Time, Inc.
Oct 31, 1997 Balance Sheet
For All Locations
As of October 31,1997
Current Last
Year Year
LIABILITIES AND EQUITY
Taxes Payable
Sales Tax 0.00 1,023.64
Total Taxes Payable 0.00 1,023.64
OTHER PAYABLES
Cooler Deposit Liability - Adjust (30.00) 0.00
Cafeteria/Healthcare #47 1,105.98 14.00
Accounts Payable 103,285.55 0.00
Bottle Depostis payable 46,648.00 51,041.47
Bottle Deposits payable - Adjust (5,191.39) 0.00
Total Other Payables 145,818.14 51,055.47
Notes Payable
Xxxxxxxxxx Bank Van (538.23) 11,313.05 16,468.31
Xxxxxxxxxx Bank Van (494.21) 10,805.71 15,459.88
Xxxxxxxxxx Bank (887.42) 27,499.33 0.00
Xxxxxxxxxx Bank Line of Credit 0.00 1,934.91
Ford Credit (528.48) 2,597.54 8,536.35
Xxxxxxxxxx Bank (577.13) 6,888.35 12,609.98
N/P Xxx Xxxxxx 158,230.56 162,688.44
Ebco Finance (130.85) 720.25 0.00
Ebco Finance (476.79) 4,409.22 0.00
Ebco Finance (399.32) 4,059.14 0.00
Ebco Finance (401.65) 4,451.32 0.00
Ebco Finance (419.91) 0.00 801.39
Ebco Finance (225.35) 0.00 636.70
Ebco Finance (938.95) 0.00 9,519.27
Ebco Finance (212.93) 781.35 0.00
Ebco Finance (212.93) 976.70 0.00
Ebco Finance (191.73) 876.50 0.00
Total Notes Payable 233,612.02 228,736.23
Equity
Retained Earnings (200,386.17) (167,356.83)
Common Stock 138,163.32 138,163.32
Exhibit C to Purchase and Sale Agreement
PROMISSORY NOTE
$250,000 January _, 1998
FOR VALUE RECEIVED, Vermont Pure Holdings, Ltd. (the "Borrower") hereby
promises to pay to the order of Vermont Coffee Time, Inc. (the "Lender"), the
principal sum of Two Hundred Fifty Thousand Dollars ($250,000) (the "Loan"),
together with interest on the unpaid principal balance payable at the rate and
in the manner specified herein.
1 . Interest Rate. Commencing on the date hereof, interest shall
accrue on the unpaid principal balance of the Loan outstanding from time to time
at a fixed rate of [the New York Prime Rate on the date of the Note].
2. Interest Calculation. The interest required to be paid
pursuant to this Note shall be computed daily on the basis of 360 days per year
for the actual number of days elapsed on the actual outstanding balance.
3. Principal and Interest Payments. The Borrower shall
repay this Note in consecutive installments of principal and interest in the
amount of $ per month beginning 199 and payable on the same day of each month
thereafter. [Monthly payments based on 10 year amortization schedule]
4. Term; Maturity Date. Unless earlier payable in accordance with the
terms of this Note, the entire unpaid principal balance of the Loan and all
accrued and unpaid interest thereon (including interest on accrued interest as
described in paragraph 3 above) shall be due and payable in full on [date five
years after note date].
5. Method and Place of Payment. All payments of principal and
interest shall be payable in lawful money of the United States of America to the
Lender at [specify place and address for payment] or at such other place as the
Lender may designate in writing to the
Borrower.
6. Prepayment. The Borrower shall have the right to prepay all or
any portion of the outstanding principal balance of this Note without prepayment
premium
7. Late Charge The Borrower shall pay to the Lender a late
charge of five percent (5 %) of any payment not received by the Lender within
fifteen (15) days after such payment is due. Charges will be assessed on day
sixteen (16).
8. Default: Acceleration: At the option of the Lender, this Note and
the indebtedness evidenced hereby shall become immediately due and payable
without further notice or demand, and notwithstanding any prior waiver of any
breach or default or other indulgence, upon the occurrence at any time of any
one or more of the following events: (I) default, in making any payment of
principal, interest, or any other charges due hereunder; and (ii) any other
violation, breach, or default of or under this Note, and continuing uncured
beyond the applicable grace period, or, if no grace period is specified, beyond
30 days from the date the Lender gives written notice to the Borrower specifying
the breach, violation, or default.
9. Remedies Upon Default: Upon any default by the Borrower, the Lender
may pursue any and all remedies provided at law, and in equity, including but
not limited to pursuing the Lenders' rights in any collateral which secures this
note. The Lender's remedies set forth above are not exclusive of any other
available remedy or remedies, but each remedy shall be cumulative and shall be
in addition to any other remedy given in this Note. The exercise of any remedy
or remedies shall not be an election of remedies. The remedies and rights of the
Lender may be exercised concurrently, alone, in any combination, or in any order
that the Lender deems appropriate.
10. Obligations Joint and Several: If there is more than one maker
of this Note, the obligations of each maker shall be joint and several.
11. Payment of Costs of Collection: The Borrower further agrees that if
this Note is placed in the hands of an attorney for collection, or if this debt
or any part thereof is collected by any attorney or by legal proceedings of any
kind, reasonable attorneys' fees and all costs and expenses incident upon such
collection shall be added to the amount due upon this Note and be collectible as
a part hereof.
12. Security: This Note, and the interest and all other
indebtedness evidenced by this Note, are secured by a security interest in
certain assets under a Security Agreement of even date from Borrower to Lender.
13. Governing Law: This Note is to be governed by and construed
in accordance with the laws of the State of Vermont.
IN THE PRESENCE OF THE FOLLOWING WITNESSES:
(witness only)
"BORROWER"
By:
Its:Duly Authorized Agent
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