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SUBORDINATION AND PLEDGE AGREEMENT
October 5, 2000
Whereas, VERMONT PURE HOLDINGS, LTD., (f/k/a VP Merger Parent, Inc.), a Delaware
corporation formerly named "VP Merger Parent, INC.", and whose principal
executive office is located at Xxxxxxxxx Xxxxxxxxxx Xxxx, Xxxxx 00, Xxxxxxxx,
Xxxxxxx 05060 ("HOLDINGS"), CRYSTAL ROCK SPRING WATER COMPANY, a Connecticut
corporation with an office at 0000 Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxx
00000 ("CRYSTAL ROCK"), PLATINUM ACQUISITION CORP., (f/k/a Vermont Pure
Holdings, Ltd.), a Delaware corporation with an office at Xxxxxxxxx XXXXXXXXXX
XXXX, XXXXX 00, XXXXXXXX, XXXXXXX 00000 ("PLATINUM") and VERMONT PURE SPRINGS,
INC., a Delaware corporation with an office AT XXXXXXXXX XXXXXXXXXX XXXX, XXXXX
00, XXXXXXXX, XXXXXXX 00000 ("VPS", and collectively with Holdings, Crystal Rock
and Platinum, the "OBLIGORS ") are now indebted to XXXXX X. XXXXX (the
"SUBORDINATE LENDER") and may from time to time hereafter become indebted to the
Subordinate Lender in further amounts; and
WHEREAS, Xxxx X. Xxxxxxxx, not individually but as Trustee of the Xxxxx X. Xxxxx
Life Insurance Trust, The Xxxx X. Xxxxx Insurance TRUST AND U/T/A DATED DECEMBER
16, 1991 F/B/O XXXX XXXXX ET. AL. IS ACTING AS AGENT (THE "AGENT") for
Subordinate Lender pursuant to certain of the Subordinated Loan Documents; and
WHEREAS, the Obligors have requested, and may from time to time hereafter
request, XXXXXXX BANK (the "BANK") to make or agree to make loans, extensions of
credit or other financial accommodations to the Obligors (the "LOANS"); and
WHEREAS, the Bank, as a condition to the making or continuation of the Loans,
has required the Subordinate Lender to execute and deliver this Subordination
and Pledge Agreement (together with all schedules and any exhibits attached
hereto and amendments or MOdifications hereto in effect from time to time, the
"AGREEMENT").
NOW, THEREFORE, in order to induce the Bank to make, or continue to make the
Loans and in consideration thereof, the Subordinate Lender agrees as follows:
A. DEFINITIONS. As used herein, the following terms shall have the following
meanings:
1. AFFILIATE. The term "AFFILIATE" means Xxxxxxx Financial Corporation and any
of its direct and indirect affiliates and subsidiaries.
2. BANK COLLATERAL. The term "BANK COLLATERAL" means the personal property of
the Obligors described in SCHEDULE A and any other real or personal
property of any of the Obligors in which the Bank or an Affiliate may
hereafter be granted a security interest, mortgage interest or other
similar interest.
3. COLLECTION ACTION. The term "COLLECTION ACTION" means to (i) exercise or
enforce any rights or remedies or assert any claims against the Bank
Collateral or Subordinated Lenders' Collateral; (ii) make any claim or
commence or initiate any action, lawsuit, case or proceeding against any of
the Obligors or join together or with any creditor other than, with its
consent, the Bank in any action, lawsuit, case or proceeding against the
Obligors (including, but not being limited to, proceedings under the
Bankruptcy Code); (iii) contact any account of any of the Obligors or
attach or take possession of any Bank Collateral or Subordinated Lenders'
Collateral or exercise any right of foreclosure or any right or remedy with
respect to any of the Obligors or the Bank Collateral or Subordinated
Lenders' Collateral; or (iv) take any other action prejudicial to or
inconsistent with the Bank's rights and first priority secured position
with respect to the Obligors or the Bank Collateral, including, without
limitation, that any action that will impede, interfere with, restrict, or
restrain the exercise by the Bank of its rights and remedies under the Loan
Documents or contest in any manner the perfection, priority or validity of
any lien held by the Bank in any of the Bank Collateral.
4. EVENT OF DEFAULT. THE TERM "EVENT OF DEFAULT" shall mean an Event of
Default under the Loan Agreement beyond any applicable grace and cure
period.
5. FINANCIAL COVENANT DEFAULT. The term "FINANCIAL COVENANT DEFAULT" shall
mean an Event of Default which results solely from the violation of any now
existing or hereafter arising financial covenant contained in the Loan
Agreement, including, by way of illustration, those specific financial
covenants set forth in Sections 6.16, 6.17, 6.18, 6.19, and 6.20 of the
Loan Agreement and any supplement, addition, modification or amendment to
those specific financial covenants.
6. LIABILITIES. The term "LIABILITIES" means any and all obligations and
indebtedness of every kind and description, now or hereafter existing,
whether such debts or obligations are primary or secondary, direct or
indirect, absolute or contingent, sole, joint or several, secured or
unsecured, due or to become due, contractual or tortious, arising by
operation of law, by overdraft, or otherwise, including, without
limitation, principal, interest, fees, late fees, expenses, attorneys' fees
and costs, and/or allocated fees and costs of the Bank's in-house legal
counsel, that have been or may hereafter be contracted or incurred.
7. LOAN AGREEMENT. The term "LOAN AGREEMENT" means that certain Loan and
Security Agreement among the Obligors and Bank dated the date hereof, and
any subsequent supplement, modification, renewal, extension or amendment
thereto.
8. LOAN DOCUMENTS. The term "LOAN DOCUMENTS" means the Loan Agreement and all
other credit accommodations, notes, loan agreements, and any other
agreements and documents, now or hereafter existing, creating, evidencing,
guarantying, securing or relating to any or all of the Senior Liabilities,
together with all amendments, modifications, renewals, or extensions
thereof.
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9. NON-COVENANT DEFAULT. The term "NON-COVENANT DEFAULT" means an Event of
Default other than a Financial Covenant Default.
10. OBLIGOR. The term "OBLIGOR" means the Holdings, Crystal Rock, Platinum, VPS
and each and every other maker, endorser, guarantor, or surety of or for
the Senior Liabilities.
11. SENIOR LIABILITIES. The term"SENIOR LIABILITIES" means all Liabilities of
the Obligors to the Bank and/or to any of the Affiliates including, without
limitation, any and all interest accruing on Senior Liabilities after the
commencement of any proceedings referred to in paragraph B.5. hereof,
notwithstanding any provision or rule of law which might restrict the
rights of the Bank, as against the Obligors and/or anyone else, to collect
such interest. For purposes of this Agreement, Senior Liabilities shall
include all Liabilities of the Obligors to the Bank, notwithstanding any
right or power of any of the Obligors and/or anyone else to assert any
claim or defense as to the invalidity or unenforceability of any such
Senior Liabilities.
12. SUBORDINATED LENDERS' COLLATERAL. The term "SUBORDINATED LENDERS"
COLLATERAL" means the personal property of the Obligors more fully
described in schedule B attached hereto.
13. SUBORDINATED LIABILITIES. The term "SUBORDINATED LIABILITIES" means all
Liabilities of the Obligors to the Subordinate Lender, including, without
limitation, all payments of principal and interest pursuant to that
Subordinated Promissory Note dated the date of this Agreement from Holdings
payable to the order of the Subordinated Lender in the original principal
amount of $5,200,000.00 (the "SUBORDINATED NOTE") and that Guaranty dated
the date of this Agreement from Platinum and VPS to Subordinate Lender
Guarantying Payments due under the Subordinated Note (the "SUBORDINATE
GUARANTY") but specifically excluding therefrom compensation from the
Obligors to the Subordinate Lender presently contemplated pursuant to the
existing employment agreement between any of the Obligors and the
Subordinate Lender, as the compensation clauses thereof may be amended from
time to time with the consent of the Bank, the normal reimbursement of
expenses in the ordinary course of business and indemnification of claims
arising solely from the Subordinate Lender's actions as an officer or
director of any of the Obligors.
14. SUBORDINATED LOAN DOCUMENTS. The term "SUBORDINATED LOAN DOCUMENTS" means
all credit accommodations, notes, loan agreements and any other agreements
and documents, now or hereafter existing, creating, evidencing,
guarantying, securing or relating to any or all of the Subordinated
Liabilities, together with all amendments, modifications, renewals or
extensions thereof.
B. SUBORDINATION AND PLEDGE.
1. SUBORDINATION TO SENIOR LIABILITIES.
(a) Except as hereinafter expressly set forth in this Agreement or
as the Bank may hereafter otherwise expressly consent in
writing, the payment of all Subordinated Liabilities shall be
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postponed and subordinated to the indefeasible payment in full of
all Senior Liabilities, and no payments or other distributions
whatsoever, including, without limitation, payments of interest
in respect of any Subordinated Liabilities shall be made, nor
shall any property or assets of the Borrower or other Obligor be
applied to the purchase or other acquisition or retirement of any
Subordinated Liabilities, nor given as collateral security to
secure repayment of same.
(B) Notwithstanding the provisions in paragraph B.1(A) above, and
subject to the other terms of this Agreement, the Subordinate
Lender may be granted a security interest in the Subordinated
Lenders' Collateral to secure the payments of principal and
interest and other amounts due pursuant to the Subordinated Note.
(C) Notwithstanding the provisions of paragraph B.1(A) above, so long
as no Event of Default exists and is continuing, and so long as
no event exists and is continuing which, with the giving of
notice or the passage of time or both, would constitute a Event
of Default, the Obligors may make the following payments
(including partial payments thereof), but only to the extent that
the making of such payments would not result in a Financial
Covenant Default: (i) regularly scheduled quarterly payments of
interest under the Subordinated Note, at a rate not in excess of
twelve per cent (12%) per annum, and past due regularly scheduled
quarterly payments of interest under the Subordinated Note which
were not paid when scheduled to be paid because of the terms of
this Agreement, including interest at a rate not in excess of
twelve per cent (12%) per annum on such past due amounts; and
(ii) regularly scheduled principal payments, together with
accrued but unpaid interest at a rate not in excess of twelve per
cent (12%) per annum, in accordance with the terms of the
Subordinated Note, commencing with the first regularly scheduled
principal payment more than three years after the date of this
Agreement and past due regularly scheduled principal payments
under the Subordinated Note which were not paid when scheduled to
be paid because of the terms of this Agreement, including
interest at a rate not in excess of twelve per cent (12%) per
annum on such past due amounts.
2. PLEDGE OF SUBORDINATED LOAN DOCUMENTS. In order to secure the due and
punctual payment and performance of the Senior Liabilities, the
Subordinate Lender hereby pledges, transfers, assigns, and grants to
the Bank a continuing security interest in and lien upon the
Subordinated Loan Documents. The Subordinate Lender has endorsed and
delivered to the Bank physical possession of any of the Subordinated
Loan Documents which are instruments, including the Subordinated Note
and has executed Uniform Commercial Code financing statements and such
other documents and/or instruments as may be necessary or convenient
to perfect the security interests granted herein. Bank shall hold the
Subordinated Note and any other Subordinated Loan Documents which are
instruments delivered to the Bank as security for the due and punctual
payment and performance of the Senior Liabilities and notwithstanding
the possession of the Subordinated Note or such other Subordinated
Loan Documents by the Bank, the Subordinate Lender shall be entitled
to receive payments thereunder to the extent expressly permitted by
the terms of this Agreement. Upon payment in full of the Senior
Liabilities, the Bank will deliver to the Subordinate Lender in care
of Xxxxx X. Xxxxx the Subordinated Note and any other Subordinated
Loan Documents in its possession.
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3. SUBORDINATION OF SECURITY INTEREST OF SUBORDINATED LIABILITIES. Any
security interest now or hereafter held by the Subordinate Lender and
granted by any of the Obligors to secure any of the Subordinated
Liabilities, including the security interest described in paragraph
B.1(B), is hereby immediately made subordinate, junior and postponed
in priority and effect to the priority and effect of the security
interest purported to be created by any of the Loan Documents, as if
(and whether or not) the Bank's security interest had been perfected
by possession, by timely filing of financing statements, or by any
other means prior to the time the security interest with respect to
the Subordinated Liabilities is perfected, and prior to the filing of
any financing statements in connection with the Subordinated
Liabilities. The Subordinate Lender agrees to execute and deliver to
the Bank all instruments, including, without limitation, Forms UCC-3,
subordinations of lien, and subordinations of mortgage which, in the
reasonable opinion of the Bank, are necessary or convenient to
effectuate the purposes of this paragraph and this Agreement.
4. FURTHER ASSURANCES OF PLEDGE OF SUBORDINATED LIABILITIES. The
Subordinate Lender will (i) promptly notify the Bank of the creation
of any Subordinated Liabilities and of the issuance of any promissory
note or other instrument to evidence any Subordinated Liabilities;
(ii) cause any Subordinated Liabilities which are not already
evidenced by a promissory note or other instrument of the Obligors to
be so evidenced; (iii) as collateral security for the Senior
Liabilities, endorse, deliver and pledge to the Bank any and all
promissory notes and/or other instruments evidencing Subordinated
Liabilities, and otherwise assign and/or pledge to the Bank any or all
Subordinated Liabilities and the Subordinated Loan Documents, all in a
manner satisfactory to the Bank in its sole discretion, and (iv)
promptly give the Bank written notice of any default by any Obligor
under the Subordinated Note or any agreement securing Obligors'
obligations under any of the other Subordinated Loan Documents.
FURTHER ASSURANCES OF BANK. Bank will endeavor to deliver to the
Subordinate Lender in care of Xxxxx X. Xxxxx prompt notice of any
Event of Default or Financial Covenant Default under the Loan
Agreement or any of the other Loan Documents of which the Bank becomes
aware but the failure of the Bank to promptly deliver any such notice
will not affect any of the rights or obligations of the parties under
this Agreement.
5. RIGHTS OF BANK TO COLLECT SUBORDINATED LIABILITIES. In the event of,
and commencing with the date thereof, any dissolution, winding up,
liquidation, reorganization or other similar proceedings relating to
any Obligor or to any of their creditors, or to any of their property
(whether voluntary or involuntary, partial or complete, and whether in
bankruptcy, insolvency or receivership, or upon an assignment for the
benefit of creditors, or any other marshalling of the assets and
liabilities of any Obligor, or any sale of all or substantially all of
the assets of any Obligor, or otherwise), the Senior Liabilities shall
first be paid in full before the Subordinate Lender shall be entitled
to receive and/or to retain any payment or distribution in respect of
the Subordinated Liabilities; provided that the Subordinate Lender
shall be entitled to receive and retain any securities issued in
connection with reorganization proceedings which are junior in right
of repayment to the Senior Liabilities to the extent set forth herein,
are treated as Subordinated Liabilities hereunder and are subject to
all the provisions of this Agreement, and, in order to implement the
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foregoing (i) all payments and distributions of any kind or character
in respect of the Subordinated Liabilities to which any of the
Subordinate Lender would be entitled but for the provisions of this
Agreement (other than such junior securities) will be made directly to
the Bank; (ii) the Subordinate Lender shall promptly file a claim or
claims, in the form required in such proceedings, for the full
outstanding amount of the Subordinated Liabilities, and shall cause
said claim or claims to be approved and all payments and other
distributions in respect thereof (other than such junior securities)
to be made directly to the Bank; (iii) the Subordinate Lender hereby
irrevocably agrees that the Bank may, in its sole discretion, in the
name of the Subordinate Lender or otherwise, demand, xxx for, collect,
receive, and receipt for any and all such payments or distributions,
and file, prove, and vote or consent in any such proceedings with
respect to, any and all claims of the Subordinate Lender relating to
the Subordinated Liabilities; and (iv) the Subordinate Lender hereby
ratifies all of the foregoing acts or omissions on the Bank's part or
behalf and waives any claim, counterclaim or defense of the
Subordinate Lender which may be alleged to arise from such acts or
omissions.
6. PROTECTION OF BANK'S RIGHTS IN SUBORDINATED LIABILITIES. In the event
that the Subordinate Lender receives any payment or other distribution
of any kind or character from any Obligor or any other source
whatsoever in respect of any of the Subordinated Liabilities, other
than as expressly permitted by the terms of this Agreement, such
payment or other distribution shall be received in trust for the Bank
and promptly turned over by the Subordinate Lender to the Bank. The
Subordinate Lender will xxxx its books and records, and cause the
Obligors to xxxx their books and records, so as to clearly indicate
that the Subordinated Liabilities are subordinated in accordance with
the terms of this Agreement, and will cause to be clearly inserted in
any promissory note or other instrument which at any time evidences
any of the Subordinated Liabilities a statement to the effect that the
payment thereof is subordinated in accordance with the terms of this
Agreement. The Subordinate Lender will execute such further documents
and instruments and take such further action as the Bank may from time
to time reasonably request to carry out the intent of this Agreement.
The Subordinate Lender hereby irrevocably appoints the Bank its
attorney in fact, said appointment being coupled with an interest, to
execute such further documents and instruments and take such further
action on behalf of the Subordinate Lender as the Bank may from time
to time deem reasonable to carry out the intent of this agreement,
including, without limitation, the actions set forth in paragraph B.4.
hereof.
7.
TREATMENT OF PAYMENT OF SUBORDINATED LIABILITIES. All payments and
distributions received by the Bank in respect of the Subordinated
Liabilities, to the extent received in or converted into cash, may be
applied by the Bank first to the payment of any and all expenses
(including attorneys' fees and disbursements and the allocated fees,
expenses and cost of in-house counsel) paid or incurred by the Bank in
enforcing this Agreement or in endeavoring to collect or realize upon
any of the Subordinated Liabilities, and any balance thereof shall,
solely as between the Subordinate Lender and the Bank, be applied by
the Bank, in such order of application as the Bank may from time to
time select, toward the payment of any of the Senior Liabilities
remaining unpaid. As between the Obligors and any of their creditors,
no such payments or distributions of any kind or character shall be
deemed to be payments or distributions in respect of the Senior
Liabilities; and, notwithstanding any such payments or distributions
received by the Bank in respect of the Subordinated Liabilities and so
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applied by the Bank toward the payment of the Senior Liabilities, the
Subordinate Lender shall be subrogated to the then existing rights of
the Bank, if any, in respect of the Senior Liabilities, only at such
time as the Bank shall have received indefeasible payment of the full
amount of the Senior Liabilities.
8. WAIVERS. The Subordinate Lender hereby waives (i) any and all notice
of the receipt and acceptance by the Bank of this Agreement; (ii)
except as set forth in paragraph B.4, notice of the existence,
incurrence, or non-payment of all or any of the Senior Liabilities;
(iii) all diligence in collection or protection of or realization upon
any of the Senior Liabilities or any security therefor; and (iv) any
obligation with respect to the marshalling of assets by the Bank.
9. PROHIBITION ON CHANGES IN SUBORDINATED LIABILITIES.
(a) EXCEPT AS HEREIN SET FORTH IN PARAGRAPH B.9(B), the Subordinate
Lender will not without the prior written consent of the Bank (i)
cancel, waive, forgive, amend, modify, transfer or assign, or
attempt to enforce or collect, or subordinate to any Liabilities
other than the Senior Liabilities, any Subordinated Liabilities
or any rights in respect thereof; (ii) convert any Subordinated
Liabilities into stock or other securities in any of the
Obligors; (iii) take any Collection Action; (iv) commence, or
join with any other creditor in commencing, any bankruptcy,
reorganization or insolvency proceedings with respect to any of
the Obligors, or (v) take any other action prejudicial to or
inconsistent with the Bank's rights and first priority secured
position with respect to the Obligors, the Bank Collateral and
collateral for the Senior Liabilities.
(b) Notwithstanding the provisions of paragraph B.9(A), if any
default has occurred under any of the Subordinated Loan Documents
and such default has continued in existence for a period of one
hundred eighty (180) consecutive days after the Subordinated
Lenders have provided written notice of the existence of such
default to the bank (the "STANDSTILL PERIOD"), the Subordinated
Lender may proceed to take legal action against the Obligors for
the sole purpose of obtaining a judgment against the Obligors;
provided, however, at no time either before or after the
expiration of the Standstill Period, may any Subordinated Lender
take any action or Collection Action to enforce a security
interest in, liquidate or otherwise receive payment from any
collateral for the Senior Liabilities, including the Bank
Collateral or Subordinated Lenders' Collateral, unless and until
the Bank has been indefeasibly paid in full for all Senior
Liabilities.
10. CONTINUING AGREEMENT. This Agreement shall in all respects be a
continuing agreement and shall remain in full force and effect
notwithstanding, without limitation, the death, incompetency or
dissolution of the Subordinate Lender or that at any time or from time
to time all Senior Liabilities may have been paid in full if any of
the Loan Documents have not been terminated.
11. PERMITTED CHANGES IN SENIOR LIABILITIES. The Bank may, from time to
time, whether before or after any discontinuance of this Agreement, at
its sole discretion and without notice to the Subordinate Lender, take
any or all of the following actions: (i) retain or obtain a security
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interest in any property to secure any of the Senior Liabilities; (ii)
retain or obtain the primary or secondary obligation of any other
Obligor or Obligors with respect to any of the Senior Liabilities;
(iii) extend, renew (whether or not longer than the original period),
alter or exchange any of the Senior Liabilities; (iv) release or
compromise any obligation of any nature of any Obligor with respect to
any of the Senior Liabilities; and, (v) release its security interest
or lien in, allows its security interest or lien to be unperfected,
surrender, release or permit any substitution or exchange for, all or
any part of any property securing any of the Senior Liabilities, or
extend or renew for one or more periods (whether or not longer than
the original period) or release, compromise, alter or exchange any
obligations of any nature of any Obligor with respect to any such
property.
12. DISPOSITION OF ASSETS. The Subordinate Lender agree that any
disposition by the Bank of any collateral for the Senior Liabilities,
whether by collection, sale, or other manner of liquidation, after an
Event of Default under the Loan Documents, if conducted in a
commercially reasonable manner, may not be challenged or contested by
the Subordinate Lender on the grounds of commercial unreasonableness.
The Subordinate Lender agrees that the Bank may use such means of
collection and exercise such diligence with respect thereto as the
Bank, in its sole discretion, deems appropriate under the
circumstances and may enter into such compromise with and give such
releases and acquittances to account debtors or other obligors of the
Obligors' receivables as it determines in its sole discretion, without
obtaining the agreement or concurrence of or giving notice to the
Subordinate Lender and the Subordinate Lender hereby waive all right
to require that its agreement or consent be obtained or that it be
given notice. The Subordinate Lender further agrees that it will
release its security interest on any collateral (including the
Subordinated Lenders' Collateral) for the Senior Liabilities upon the
sale or other disposition thereof at the request of the Bank, whether
or not any proceeds therefrom will pay any of the Subordinated
Liabilities.
C. REPRESENTATIONS AND WARRANTIES. The Subordinate Lender hereby represents
and warrants that (i) the Subordinate Lender has the necessary power and
capacity to make and perform this Agreement and such making and performance
have been duly authorized by all necessary actions on the part of the
Subordinate Lender; (ii) the making and performance by the Subordinate
Lender of this Agreement does not and will not violate any provision of law
or regulation or result in the breach of, or constitute a default or
require any consent under, any indenture or other agreement or instrument
to which it is a party or by which any of its properties may be bound; and
(iii) this Agreement is the legal, valid and binding obligation of the
Subordinate Lender, enforceable against the Subordinate Lender in
accordance with its terms.
D. REMEDIES. Upon the occurrence of any Event of Default, or upon the breach
of any representation, covenant or agreement in this Agreement by any
Obligor or the Subordinate Lender, or in the event of the termination of
this Agreement, all of the Senior Liabilities shall, without notice or
demand, become immediately due and payable at the option of the Bank and
the Bank may immediately, without further notice, resort to all of its
rights and remedies herein, in any document (including the Loan Agreement
and any of the Loan Documents) by and between the Bank and any Obligor, or
in any in any instrument evidencing any obligation under any such document,
at law or in equity. The Bank agrees that it shall proceed, to the extent
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commercially reasonable, against all the assets of the Obligors before
liquidating the Subordinated Note.
E. MISCELLANEOUS.
1. REMEDIES CUMULATIVE; NO WAIVER. The rights, powers and remedies of the
Bank provided in this Agreement and any of the Loan Documents are
cumulative and not exclusive of any right, power or remedy provided by
law or equity. No failure or delay on the part of the Bank in the
exercise of any right, power or remedy shall operate as a waiver
thereof, nor shall any single or partial exercise preclude any other
or further exercise thereof, or the exercise of any other right, power
or remedy.
2. NOTICES. Notices and communications under this Agreement shall be in
writing and shall be given by (i) hand-delivery, (ii) first class mail
(postage prepaid), or (iii) reliable overnight commercial courier
(charges prepaid) to the addresses listed in this Agreement. Notice by
overnight courier shall be deemed to have been given and received on
the date scheduled for delivery. Notice by mail shall be deemed to
have been given and received three (3) calendar days after the date
first deposited in the United States Mail. Notice by hand-delivery
shall be deemed to have been given and received upon delivery. A party
may change its address by giving written notice to the other party as
specified herein.
3. COSTS AND EXPENSES. Whether or not the transactions contemplated by
this Agreement or the Loan Documents are fully consummated, the
Obligors shall promptly pay (or reimburse, as the Bank may elect) all
costs and expenses which the Bank has incurred or may hereafter incur
in connection with the negotiation, preparation, reproduction,
interpretation, perfection, protection of collateral, administration
and enforcement of this Agreement and the other Loan Documents, the
collection of all amounts due under this Agreement and the other Loan
Documents, and all amendments, modifications, consents or waivers, if
any, to the Loan Documents. The Obligors' reimbursement obligations
under this Paragraph shall survive any termination of this Agreement
or any other Loan Document and are deemed part of the Senior
Liabilities.
4. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the substantive laws of the State of Connecticut
without reference to conflict of laws principles.
5. INTEGRATION; AMENDMENT. This Agreement and the other Loan Documents
constitute the sole agreement of the parties with respect to the
subject matter hereof and thereof and supersede all oral negotiations
and prior writings with respect to the subject matter hereof and
thereof. No amendment of this Agreement, and no waiver of any one or
more of the provisions hereof shall be effective unless set forth in
writing and signed by the parties hereto.
6. SUCCESSORS AND ASSIGNS. This Agreement (i) shall be binding upon the
Subordinate Lender, the Obligors executing this Agreement and the Bank
and, where applicable, their respective heirs, executors,
administrators, successors and assigns, and (ii) shall inure to the
benefit of the Subordinate Lender, the Obligors and the Bank and,
where applicable, their respective heirs, executors, administrators,
successors and permitted assigns; provided, however, that the
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Subordinate Lender and the Obligors may not assign their rights or
obligations hereunder or any interest herein without the prior written
consent of the Bank, and any such assignment or attempted assignment
by the Subordinate Lender and/or any of the Obligors shall be void and
of no effect with respect to the Bank. The Bank may from time to time
sell or assign, in whole or in part, or grant participations in the
Loans and/or the Agreement and/or the obligations evidenced thereby.
The Subordinate Lender authorizes the Bank to provide information
concerning the Subordinate Lender and the Obligors to any prospective
purchaser, assignee or participant.
7. SEVERABILITY AND CONSISTENCY. The illegality, unenforceability or
inconsistency of any provision of this Agreement or any instrument or
agreement required hereunder shall not in any way affect or impair the
legality, enforceability or consistency of the remaining provisions of
this Agreement or any instrument or agreement required hereunder. The
Loan Documents and this Agreement are intended to be consistent.
However, in the event of any inconsistencies between and/or among this
Agreement and any of the Loan Documents, such inconsistency shall not
affect the validity or enforceability of this Agreement or any of the
Loan Documents. In the event of any inconsistency or ambiguity in this
Agreement or any of the Loan Documents, this Agreement and the Loan
Documents shall not be construed against any one party but shall be
interpreted consistent with the Bank's policies and procedures.
8. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The Subordinate Lender
irrevocably appoints Rapaport & Ellenthal, P.C., 000 Xxxxxx Xxxxxx,
Xxxxxxxx, XX 00000 as its attorneys upon whom may be served any notice,
process or pleading in any action or proceeding against it arising out
of or in connection with this Agreement. If service of process cannot be
delivered to the Subordinate Lender as specified by statute, the
Subordinate Lender agrees that, with court approval, it may be served by
regular or certified mail at the address set forth herein. The
Subordinate Lender hereby consents and agrees that (i) any action or
proceeding against it may be commenced and maintained in any court
within the State of Connecticut or in the United States District Court
for the District of Connecticut by service of process on Rapaport &
Ellenthal and (ii) the courts of the State of Connecticut and the United
States District Court for the District of Connecticut shall have
jurisdiction with respect to the subject matter hereof and the person of
the Subordinate Lender and the Subordinated Liabilities. The Subordinate
Lender agrees that any action brought by the Subordinate Lender on
account of this Agreement shall be commenced and maintained only in a
court in the federal judicial district or county in which the Bank has
its principal place of business in Connecticut.
10
9. PREJUDGMENT REMEDIES.
The Subordinate Lender hereby acknowledges that the transactions
contemplated herein constitute commercial transactions. Pursuant to
Section 52-278f of the Connecticut General Statutes, the Subordinate
Lender hereby waives and relinquishes all rights to notice and hearing
as provided in Sections 52-278a through 52-278g of said Connecticut
General Statutes prior to the securing of any prejudgment remedy against
the Subordinate Lender in connection with the Liabilities or any of the
instruments or documents executed in connection herewith.
10. PROVISIONS SOLELY FOR THE BENEFIT OF THE BANK.
The provisions of this Agreement are solely to define the relative
rights and obligations of the Bank and the Subordinate Lender, and no
other person or entity, including, without limitation, any of the
Obligors, shall have any rights hereunder or as a result of the
provisions hereof.
11. AGENT FOR SUBORDINATE LENDER.
The Agent hereby agrees to be bound by the terms and provisions of this
Agreement and agrees not to make any payment or distribution or to
otherwise take any action which is contrary to the provisions of this
Agreement.
12. JUDICIAL PROCEEDINGS; WAIVERS.
THE SUBORDINATE LENDER AND THE BANK ACKNOWLEDGE AND AGREE THAT (i) ANY
SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT OR
INSTITUTED BY THE BANK, THE SUBORDINATE LENDER OR ANY SUCCESSOR OR
ASSIGN OF THE BANK OR THE SUBORDINATE LENDER, ON OR WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE DEALINGS OF THE PARTIES WITH
RESPECT HERETO, OR THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A
JURY AND EACH PARTY WAIVES THE RIGHT TO TRIAL BY JURY; (ii) EACH WAIVES
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR
PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR
ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; AND (iii)
THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND THE
BANK WOULD NOT EXTEND CREDIT IF THE WAIVERS SET FORTH IN THIS SECTION
WERE NOT A PART OF THIS AGREEMENT.
11
IN WITNESS WHEREOF, the Subordinate Lender has executed and delivered to the
Bank this Agreement, as of the day and year first above written.
WITNESSED BY:
------------------------------------- --------------------------------------
Name: Xxxxx X. Xxxxx
Address: 0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
-------------------------------------
------------------------------------- -------------------------------------
Xxxx X. Xxxxxxxx, not individually but
as Trustee of the Xxxxx X. BakerLife
Insurance Trust, The Xxxx X.Xxxxx
Insurance Trust and u/t/a dated
------------------------------------- December 16,1991 f/b/o Xxxx Xxxxx
et. al., as Agent
Address: 0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
XXXXXXX BANK
------------------------------------ By:-----------------------------------
Xxxxxx X. Xxxxxxxxx
Its Vice President
----------------------------------- Address: 000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
STATE OF CONNECTICUT )
) ss: Hartford October _, 2000
COUNTY OF HARTFORD )
Personally appeared Xxxxx X. Xxxxx, signer and sealer of the foregoing
instrument and acknowledged the same to be his free act and deed, before me.
Commissioner of the Superior Court
Notary Public
My Commission expires:
00
XXXXX XX XXXXXXXXXXX )
) ss: Hartford October _, 2000
COUNTY OF HARTFORD )
Personally appeared Xxxx X. Xxxxxxxx, not individually but as Trustee of the
Xxxxx X. Xxxxx Life Insurance Trust, the Xxxx X. Xxxxx Insurance Trust and U/T/A
dated December 16, 1991 F/B/O Xxxx Xxxxx et. al, as Agent, signer and sealer of
the foregoing instrument and acknowledged the same to be his free act and deed
as Trustee and Agent, before me.
Commissioner of the Superior Court
Notary Public
My Commission expires:
STATE OF CONNECTICUT )
) ss: Hartford October _, 2000
COUNTY OF HARTFORD )
Personally appeared Xxxxxx X. Xxxxxxxxx, Vice President of Xxxxxxx Bank, signer
and sealer of the foregoing instrument and acknowledged the same to be his free
act and deed as such officer and the free act and deed of Xxxxxxx Bank, before
me.
Commissioner of the Superior Court
Notary Public
My Commission expires:
13
The Obligors signing below hereby acknowledge receipt of a copy of the foregoing
Agreement, waive notice of acceptance thereof by the Bank, and agree to be bound
by the terms and provisions thereof. The Obligors signing below further agree to
make no payments or distributions, or grant any security interest, contrary to
the terms and provisions of this Agreement and to do every other act and thing
necessary or appropriate to carry out such terms and provisions. Upon the
occurrence of any Event of Default, or upon the breach of any representation,
covenant or agreement in this Agreement by any of the Obligors or the
Subordinated Lender, or in the event of the termination of this Agreement, all
of the Senior Liabilities shall, without notice or demand, become immediately
due and payable at the option of the Bank and the Bank may immediately, without
further notice, resort to all of its rights and remedies herein, in any document
(including the Loan Agreement and any of the Loan Documents) by and between the
Bank and any Obligor, or in any in any instrument evidencing any obligation
under any such document, at law or in equity.
Dated: As of the 5th day of October, 2000
VERMONT PURE HOLDINGS, LTD.
(f/k/a VP Merger Parent, Inc.)
By:-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
Address: Xxxxxxxxx Xxxxxxxxxx Xxxx
Xxxxx 00
Xxxxxxxx, XX 00000
CRYSTAL ROCK SPRING WATER COMPANY
By:-----------------------------------
Name: Xxxx X. Xxxxx
Title: President
Address: 0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
14
PLATINUM ACQUISITION CORP.
(f/k/a Vermont Pure Holdings, Ltd.)
By:______________________
Name: Xxxxxxx X. Xxxxxx
Title: President
Address: Xxxxxxxxx Xxxxxxxxxx Xxxx
Xxxxx 00
Xxxxxxxx, XX 00000
VERMONT PURE SPRINGS, INC.
By:______________________
Name: Xxxxxxx X. Xxxxxx
Title: President
Address: Xxxxxxxxx Xxxxxxxxxx Xxxx
Xxxxx 00
Xxxxxxxx, XX 00000
15
SCHEDULE A
Bank Collateral
"Collateral" means Receivables, Inventory, Equipment, Patents, Trademarks,
Investment Property, Additional Collateral, and the Premises.
"Additional Collateral" means (i) all General Intangibles (as such term is
defined in the Uniform Commercial Code as in effect in Connecticut on the date
of this Agreement) of every kind and description of the Obligors, including
without limitation federal, state and local tax refund claims of all kinds,
whether now existing or hereafter arising; (ii) all of Obligors' deposit
accounts, whether now owned or hereafter created, wherever located; (iii) all
monies, securities, instruments, cash and other property of Obligors and the
proceeds thereof, now or hereafter held or received by, or in transit to, Lender
from or for Obligors, whether for safekeeping, pledge, custody, transmission,
collection or otherwise, and all of Obligors' deposits (general or special,
balances, sums, proceeds and credits of Obligors with Lender at any time
existing); (iv) all interests in real property held or owned by Obligors,
including all leasehold interests; (v) all rights under contracts and license
agreements for water; (vi) all books, records, customer lists, ledger cards,
computer programs, computer tapes, disks, printouts and records, and other
property and general intangibles at any time evidencing or relating to any of
the foregoing, whether now in existence or hereafter created; (vii) all other
personal property and fixtures of the Obligors, whether now existing or
hereafter arising or created; and all proceeds of the foregoing and all proceeds
of any insurance on the foregoing.
"Equipment" means all Equipment, Farm Products and Fixtures (as such terms are
defined in the Uniform Commercial Code as in effect in Connecticut on the date
of this Agreement), including all machinery, equipment, furniture, fixtures,
tools, parts, supplies and motor vehicles, now owned and hereafter acquired, by
Debtor of whatsoever name, nature, kind or description, wherever located, and
all additions and accessions thereto and replacements or substitutions therefor,
and all proceeds thereof and all proceeds of any insurance thereon.
"Inventory" means all Inventory and Goods (as such terms are defined in the
Uniform Commercial Code as in effect in Connecticut on the date of this
Agreement) of whatsoever name, nature, kind or description now owned and
hereafter acquired by Debtor, wherever located, including without limitation all
contract rights with respect thereto and documents representing the same, all
goods held for sale or lease or to be furnished under contracts of service,
finished goods, raw materials, materials used or consumed by Debtor, parts,
supplies, and all wrapping, packaging, advertising and shipping materials and
any documents relating thereto, and all labels and other devices, names and
marks affixed or to be affixed thereto for purposes of selling or of identifying
the same or the seller or manufacturer thereof, and all right, title and
interest of Debtor therein and thereto, and all proceeds of the foregoing and
all proceeds of any insurance on the foregoing.
"Investment Property" means all investment property (as such term is defined in
the Uniform Commercial Code as adopted in Connecticut on the date of this
Agreement) of whatever type or nature now owned or hereafter acquired by the
Debtor, including without limitation, all certificated securities, all
uncertificated securities, all security entitlements, all security accounts, all
commodity contracts, all commodity accounts and all financial assets of every
type and nature and all rights thereto or therein, and all financial accounts of
every type and nature and all rights thereto or therein, and all proceeds and
products thereof, including without limitation, all insurance proceeds and
fidelity bond proceeds related thereto.
"Patents" means all of Debtor's right, title and interest, present and future,
in and to (a) all letters patent of the United States or any other country, all
right, title and interest therein and thereto, and all registrations and
recordings thereof, including without limitation applications, registrations and
recordings in the United States Patent and Trademark Office or in any similar
office or agency of the United States or any state thereof or any other country
or any political subdivision thereof, all whether now owned or hereafter
acquired by Debtor; and (b) all reissues, continuations, continuations-in-part
or extensions thereof and all licenses thereof; and all proceeds of the
foregoing and all proceeds of any insurance on the foregoing.
"Premises" means the following real property owned by Debtor:
Xxxxxxx Drive, Randolph, Vermont Chase Road, Randolph, Vermont Route 66
Factory, Randolph, Vermont North Xxxxxxxx Road, Randolph, Vermont 00.0
xxxxx, Xxxxx 00, Xxxxxxxx, Xxxxxxx 5.0 acres, Xxxxx 00, Xxxxxxxx,
Xxxxxxx
"Receivables" means (i) all of Debtor's now owned and hereafter acquired,
present and future, Accounts, Chattel Paper, Documents, Instruments, (as such
terms are defined in the Uniform Commercial Code as in effect in Connecticut on
the date of this Agreement) and contract rights, including without limitation
all obligations to Debtor for the payment of money, whether arising out of
Debtor's sale of goods or rendition of services or otherwise (all hereinafter
called "Accounts") and all proceeds of the foregoing and all proceeds of any
insurance on the foregoing; (ii) all of Debtor's rights, remedies, security and
liens, in, to and in respect of the Accounts, present and future, including
without limitation, rights of stoppage in transit, replevin, repossession and
reclamation and other rights and remedies of an unpaid vendor, lien or secured
party, guaranties or other contracts of suretyship with respect to the Accounts,
deposits or other security for the obligation of any debtor or Debtor in any way
obligated on or in connection with any Accounts, and credit and other insurance,
and all proceeds of the foregoing and all proceeds of any insurance on the
foregoing; and (iii) all of Debtor's right, title and interest, present and
future, in, to and in respect of all goods relating to, or which by sale have
resulted in, Accounts, including without limitation all goods described in
invoices or other documents or instruments with respect to, or otherwise
representing or evidencing any Accounts, and all returned, reclaimed or
repossessed goods, and all proceeds of the foregoing and all proceeds of any
insurance on the foregoing.
SCHEDULE B
Subordinated Lender Collateral
The following property, whether now existing or subsequently acquired,
and all additions, substitutions, accessions, replacements, proceeds, and
products thereof or thereto: all tangible and intangible assets and properties
of each of Vermont Pure Holdings, Ltd., a Delaware corporation formerly named
"VP Merger Parent, Inc.", Vermont Pure Springs, Inc., a Delaware corporation,
Platinum Acquisition Corp., f/k/a Vermont Pure Holdings (each a "Company"),
including without limitation all furniture, fixtures, equipment, raw materials,
inventory, other goods, accounts, contract rights, rights to the payment of
money, insurance refund claims and all other insurance claims and proceeds, tort
claims, chattel paper, documents, instruments, securities and other investment
property, deposit accounts, rights to proceeds of letters of credit and all
general intangibles including, without limitation, all tax refund claims,
license fees, patents, patent applications, trademarks, trademark applications,
trade names, copyrights, copyright applications, rights to xxx and recover for
past infringement of patents, trademarks and copyrights, computer programs,
computer software, engineering drawings, service marks, customer lists,
goodwill, and all licenses, permits, agreements of any kind or nature pursuant
to which any Company possesses, uses or has authority to possess or use property
(whether tangible or intangible) of others or others possess, use or have
authority to possess or use property (whether tangible or intangible) of such
Company, and all recorded data of any kind or nature, regardless of the medium
of recording including, without limitation, all software, writings, plans,
specifications and schematics (each of which terms has the meaning ascribed to
in the Uniform Commercial Code, as in effect in the State of Connecticut)
(collectively, the "COLLATERAL"); PROVIDED THAT notwithstanding the foregoing,
such grant of security interest shall not extend to, and the term "Collateral"
shall not include any cash and cash equivalents at any time owned by any
Company.
[GRAPHIC OMITTED]
SUBORDINATION AND PLEDGE AGREEMENT
October 5, 2000
Whereas, VERMONT PURE HOLDINGS, LTD., (f/k/a VP Merger Parent, Inc.), a Delaware
corporation formerly named "VP Merger Parent, INC.", and whose principal
executive office is located at Xxxxxxxxx Xxxxxxxxxx Xxxx, Xxxxx 00, Xxxxxxxx,
Xxxxxxx 05060 ("HOLDINGS"), CRYSTAL ROCK SPRING WATER COMPANY, a Connecticut
corporation with an office at 0000 Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxx
00000 ("CRYSTAL ROCK"), PLATINUM ACQUISITION CORP., (f/k/a Vermont Pure
Holdings, Ltd.), a Delaware corporation with an office at Xxxxxxxxx XXXXXXXXXX
XXXX, XXXXX 00, XXXXXXXX, XXXXXXX 00000 ("PLATINUM") and VERMONT PURE SPRINGS,
INC., a Delaware corporation with an office at Xxxxxxxxx Xxxxxxxxxx Xxxx, Xxxxx
00, Xxxxxxxx, Xxxxxxx 00000 ("VPS", and collectively with Holdings, Crystal Rock
and Platinum, the "OBLIGORS ") are now indebted to XXXXX X. XXXXX (the
"SUBORDINATE LENDER") and may from time to time hereafter become indebted to the
Subordinate Lender in further amounts; and
WHEREAS, Xxxx X. Xxxxxxxx, not individually but as Trustee of the Xxxxx X. Xxxxx
Life Insurance Trust, The Xxxx X. Xxxxx Insurance TRUST AND U/T/A DATED DECEMBER
16, 1991 F/B/O XXXX XXXXX ET. AL. IS ACTING AS AGENT (THE "AGENT") for
Subordinate Lender pursuant to certain of the Subordinated Loan Documents; and
WHEREAS, the Obligors have requested, and may from time to time hereafter
request, XXXXXXX BANK (the "BANK") to make or agree to make loans, extensions of
credit or other financial accommodations to the Obligors (the "LOANS"); and
WHEREAS, the Bank, as a condition to the making or continuation of the Loans,
has required the Subordinate Lender to execute and deliver this Subordination
and Pledge Agreement (together with all schedules and any exhibits attached
hereto and amendments or MOdifications hereto in effect from time to time, the
"AGREEMENT").
NOW, THEREFORE, in order to induce the Bank to make, or continue to make the
Loans and in consideration thereof, the Subordinate Lender agrees as follows:
A. DEFINITIONS. As used herein, the following terms shall have the following
meanings:
1. AFFILIATE. The term "AFFILIATE" means Xxxxxxx Financial Corporation and any
of its direct and indirect affiliates and subsidiaries.
2. BANK COLLATERAL. The term "BANK COLLATERAL" means the personal property of
the Obligors described in Schedule A and any other real or personal
property of any of the Obligors in which the Bank or an Affiliate may
hereafter be granted a security interest, mortgage interest or other
similar interest.
3. COLLECTION ACTION. The term "COLLECTION ACTION" means to (i) exercise or
enforce any rights or remedies or assert any claims against the Bank
Collateral or Subordinated Lenders' Collateral; (ii) make any claim or
commence or initiate any action, lawsuit, case or proceeding against any of
the Obligors or join together or with any creditor other than, with its
consent, the Bank in any action, lawsuit, case or proceeding against the
Obligors (including, but not being limited to, proceedings under the
Bankruptcy Code); (iii) contact any account of any of the Obligors or
attach or take possession of any Bank Collateral or Subordinated Lenders'
Collateral or exercise any right of foreclosure or any right or remedy with
respect to any of the Obligors or the Bank Collateral or Subordinated
Lenders' Collateral; or (iv) take any other action prejudicial to or
inconsistent with the Bank's rights and first priority secured position
with respect to the Obligors or the Bank Collateral, including, without
limitation, that any action that will impede, interfere with, restrict, or
restrain the exercise by the Bank of its rights and remedies under the Loan
Documents or contest in any manner the perfection, priority or validity of
any lien held by the Bank in any of the Bank Collateral.
4. EVENT OF DEFAULT. THE TERM "EVENT OF DEFAULT" shall mean an Event of
Default under the Loan Agreement beyond any applicable grace and cure
period.
5. FINANCIAL COVENANT DEFAULT. The term "FINANCIAL COVENANT DEFAULT" shall
mean an Event of Default which results solely from the violation of any now
existing or hereafter arising financial covenant contained in the Loan
Agreement, including, by way of illustration, those specific financial
covenants set forth in Sections 6.16, 6.17, 6.18, 6.19, and 6.20 of the
Loan Agreement and any supplement, addition, modification or amendment to
those specific financial covenants.
6. LIABILITIES. The term "LIABILITIES" means any and all obligations and
indebtedness of every kind and description, now or hereafter existing,
whether such debts or obligations are primary or secondary, direct or
indirect, absolute or contingent, sole, joint or several, secured or
unsecured, due or to become due, contractual or tortious, arising by
operation of law, by overdraft, or otherwise, including, without
limitation, principal, interest, fees, late fees, expenses, attorneys' fees
and costs, and/or allocated fees and costs of the Bank's in-house legal
counsel, that have been or may hereafter be contracted or incurred.
7. LOAN AGREEMENT. The term "LOAN AGREEMENT" means that certain Loan and
Security Agreement among the Obligors and Bank dated the date hereof, and
any subsequent supplement, modification, renewal, extension or amendment
thereto.
8. LOAN DOCUMENTS. The term "LOAN DOCUMENTS" means the Loan Agreement and all
other credit accommodations, notes, loan agreements, and any other
agreements and documents, now or hereafter existing, creating, evidencing,
guarantying, securing or relating to any or all of the Senior Liabilities,
together with all amendments, modifications, renewals, or extensions
thereof.
2
9. NON-COVENANT DEFAULT. The term "NON-COVENANT DEFAULT" means an Event of
Default other than a Financial Covenant Default.
10. OBLIGOR. The term "OBLIGOR" means the Holdings, Crystal Rock, Platinum, VPS
and each and every other maker, endorser, guarantor, or surety of or for
the Senior Liabilities.
11. SENIOR LIABILITIES. The term"SENIOR LIABILITIES" means all Liabilities of
the Obligors to the Bank and/or to any of the Affiliates including, without
limitation, any and all interest accruing on Senior Liabilities after the
commencement of any proceedings referred to in paragraph B.5. hereof,
notwithstanding any provision or rule of law which might restrict the
rights of the Bank, as against the Obligors and/or anyone else, to collect
such interest. For purposes of this Agreement, Senior Liabilities shall
include all Liabilities of the Obligors to the Bank, notwithstanding any
right or power of any of the Obligors and/or anyone else to assert any
claim or defense as to the invalidity or unenforceability of any such
Senior Liabilities.
12. SUBORDINATED LENDERS' COLLATERAL. The term "SUBORDINATED LENDERS"
COLLATERAL" means the personal property of the Obligors more fully
described in schedule B attached hereto.
13. SUBORDINATED LIABILITIES. The term "SUBORDINATED LIABILITIES" means all
Liabilities of the Obligors to the Subordinate Lender, including, without
limitation, all payments of principal and interest pursuant to that
Subordinated Promissory Note dated the date of this Agreement from Holdings
payable to the order of the Subordinated Lender in the original principal
amount of $5,200,000.00 (the "SUBORDINATED NOTE") and that Guaranty dated
the date of this Agreement from Platinum and VPS to Subordinate Lender
Guarantying Payments due under the Subordinated Note (the "SUBORDINATE
GUARANTY") but specifically excluding therefrom compensation from the
Obligors to the Subordinate Lender presently contemplated pursuant to the
existing employment agreement between any of the Obligors and the
Subordinate Lender, as the compensation clauses thereof may be amended from
time to time with the consent of the Bank, the normal reimbursement of
expenses in the ordinary course of business and indemnification of claims
arising solely from the Subordinate Lender's actions as an officer or
director of any of the Obligors.
14. SUBORDINATED LOAN DOCUMENTS. The term "SUBORDINATED LOAN DOCUMENTS" means
all credit accommodations, notes, loan agreements and any other agreements
and documents, now or hereafter existing, creating, evidencing,
guarantying, securing or relating to any or all of the Subordinated
Liabilities, together with all amendments, modifications, renewals or
extensions thereof.
B. SUBORDINATION AND PLEDGE.
1. SUBORDINATION TO SENIOR LIABILITIES.
(a) Except as hereinafter expressly set forth in this Agreement or
as the Bank may hereafter otherwise expressly consent in
writing, the payment of all Subordinated Liabilities shall be
3
postponed and subordinated to the indefeasible payment in full of
all Senior Liabilities, and no payments or other distributions
whatsoever, including, without limitation, payments of interest
in respect of any Subordinated Liabilities shall be made, nor
shall any property or assets of the Borrower or other Obligor be
applied to the purchase or other acquisition or retirement of any
Subordinated Liabilities, nor given as collateral security to
secure repayment of same.
(B) Notwithstanding the provisions in paragraph B.1(A) above, and
subject to the other terms of this Agreement, the Subordinate
Lender may be granted a security interest in the Subordinated
Lenders' Collateral to secure the payments of principal and
interest and other amounts due pursuant to the Subordinated Note.
(C) Notwithstanding the provisions of paragraph B.1(A) above, so long
as no Event of Default exists and is continuing, and so long as
no event exists and is continuing which, with the giving of
notice or the passage of time or both, would constitute a Event
of Default, the Obligors may make the following payments
(including partial payments thereof), but only to the extent that
the making of such payments would not result in a Financial
Covenant Default: (i) regularly scheduled quarterly payments of
interest under the Subordinated Note, at a rate not in excess of
twelve per cent (12%) per annum, and past due regularly scheduled
quarterly payments of interest under the Subordinated Note which
were not paid when scheduled to be paid because of the terms of
this Agreement, including interest at a rate not in excess of
twelve per cent (12%) per annum on such past due amounts; and
(ii) regularly scheduled principal payments, together with
accrued but unpaid interest at a rate not in excess of twelve per
cent (12%) per annum, in accordance with the terms of the
Subordinated Note, commencing with the first regularly scheduled
principal payment more than three years after the date of this
Agreement and past due regularly scheduled principal payments
under the Subordinated Note which were not paid when scheduled to
be paid because of the terms of this Agreement, including
interest at a rate not in excess of twelve per cent (12%) per
annum on such past due amounts.
2. PLEDGE OF SUBORDINATED LOAN DOCUMENTS. In order to secure the due and
punctual payment and performance of the Senior Liabilities, the
Subordinate Lender hereby pledges, transfers, assigns, and grants to
the Bank a continuing security interest in and lien upon the
Subordinated Loan Documents. The Subordinate Lender has endorsed and
delivered to the Bank physical possession of any of the Subordinated
Loan Documents which are instruments, including the Subordinated Note
and has executed Uniform Commercial Code financing statements and such
other documents and/or instruments as may be necessary or convenient
to perfect the security interests granted herein. Bank shall hold the
Subordinated Note and any other Subordinated Loan Documents which are
instruments delivered to the Bank as security for the due and punctual
payment and performance of the Senior Liabilities and notwithstanding
the possession of the Subordinated Note or such other Subordinated
Loan Documents by the Bank, the Subordinate Lender shall be entitled
to receive payments thereunder to the extent expressly permitted by
the terms of this Agreement. Upon payment in full of the Senior
Liabilities, the Bank will deliver to the Subordinate Lender in care
of Xxxxx X. Xxxxx the Subordinated Note and any other Subordinated
Loan Documents in its possession.
4
3. SUBORDINATION OF SECURITY INTEREST OF SUBORDINATED LIABILITIES. Any
security interest now or hereafter held by the Subordinate Lender and
granted by any of the Obligors to secure any of the Subordinated
Liabilities, including the security interest described in paragraph
B.1(B), is hereby immediately made subordinate, junior and postponed
in priority and effect to the priority and effect of the security
interest purported to be created by any of the Loan Documents, as if
(and whether or not) the Bank's security interest had been perfected
by possession, by timely filing of financing statements, or by any
other means prior to the time the security interest with respect to
the Subordinated Liabilities is perfected, and prior to the filing of
any financing statements in connection with the Subordinated
Liabilities. The Subordinate Lender agrees to execute and deliver to
the Bank all instruments, including, without limitation, Forms UCC-3,
subordinations of lien, and subordinations of mortgage which, in the
reasonable opinion of the Bank, are necessary or convenient to
effectuate the purposes of this paragraph and this Agreement.
4. FURTHER ASSURANCES OF PLEDGE OF SUBORDINATED LIABILITIES. The
Subordinate Lender will (i) promptly notify the Bank of the creation
of any Subordinated Liabilities and of the issuance of any promissory
note or other instrument to evidence any Subordinated Liabilities;
(ii) cause any Subordinated Liabilities which are not already
evidenced by a promissory note or other instrument of the Obligors to
be so evidenced; (iii) as collateral security for the Senior
Liabilities, endorse, deliver and pledge to the Bank any and all
promissory notes and/or other instruments evidencing Subordinated
Liabilities, and otherwise assign and/or pledge to the Bank any or all
Subordinated Liabilities and the Subordinated Loan Documents, all in a
manner satisfactory to the Bank in its sole discretion, and (iv)
promptly give the Bank written notice of any default by any Obligor
under the Subordinated Note or any agreement securing Obligors'
obligations under any of the other Subordinated Loan Documents.
FURTHER ASSURANCES OF BANK. Bank will endeavor to deliver to the
Subordinate Lender in care of Xxxxx X. Xxxxx prompt notice of any
Event of Default or Financial Covenant Default under the Loan
Agreement or any of the other Loan Documents of which the Bank becomes
aware but the failure of the Bank to promptly deliver any such notice
will not affect any of the rights or obligations of the parties under
this Agreement.
5. RIGHTS OF BANK TO COLLECT SUBORDINATED LIABILITIES. In the event of,
and commencing with the date thereof, any dissolution, winding up,
liquidation, reorganization or other similar proceedings relating to
any Obligor or to any of their creditors, or to any of their property
(whether voluntary or involuntary, partial or complete, and whether in
bankruptcy, insolvency or receivership, or upon an assignment for the
benefit of creditors, or any other marshalling of the assets and
liabilities of any Obligor, or any sale of all or substantially all of
the assets of any Obligor, or otherwise), the Senior Liabilities shall
first be paid in full before the Subordinate Lender shall be entitled
to receive and/or to retain any payment or distribution in respect of
the Subordinated Liabilities; provided that the Subordinate Lender
shall be entitled to receive and retain any securities issued in
connection with reorganization proceedings which are junior in right
of repayment to the Senior Liabilities to the extent set forth herein,
are treated as Subordinated Liabilities hereunder and are subject to
all the provisions of this Agreement, and, in order to implement the
5
foregoing (i) all payments and distributions of any kind or character
in respect of the Subordinated Liabilities to which any of the
Subordinate Lender would be entitled but for the provisions of this
Agreement (other than such junior securities) will be made directly to
the Bank; (ii) the Subordinate Lender shall promptly file a claim or
claims, in the form required in such proceedings, for the full
outstanding amount of the Subordinated Liabilities, and shall cause
said claim or claims to be approved and all payments and other
distributions in respect thereof (other than such junior securities)
to be made directly to the Bank; (iii) the Subordinate Lender hereby
irrevocably agrees that the Bank may, in its sole discretion, in the
name of the Subordinate Lender or otherwise, demand, xxx for, collect,
receive, and receipt for any and all such payments or distributions,
and file, prove, and vote or consent in any such proceedings with
respect to, any and all claims of the Subordinate Lender relating to
the Subordinated Liabilities; and (iv) the Subordinate Lender hereby
ratifies all of the foregoing acts or omissions on the Bank's part or
behalf and waives any claim, counterclaim or defense of the
Subordinate Lender which may be alleged to arise from such acts or
omissions.
6. PROTECTION OF BANK'S RIGHTS IN SUBORDINATED LIABILITIES. In the event
that the Subordinate Lender receives any payment or other distribution
of any kind or character from any Obligor or any other source
whatsoever in respect of any of the Subordinated Liabilities, other
than as expressly permitted by the terms of this Agreement, such
payment or other distribution shall be received in trust for the Bank
and promptly turned over by the Subordinate Lender to the Bank. The
Subordinate Lender will xxxx its books and records, and cause the
Obligors to xxxx their books and records, so as to clearly indicate
that the Subordinated Liabilities are subordinated in accordance with
the terms of this Agreement, and will cause to be clearly inserted in
any promissory note or other instrument which at any time evidences
any of the Subordinated Liabilities a statement to the effect that the
payment thereof is subordinated in accordance with the terms of this
Agreement. The Subordinate Lender will execute such further documents
and instruments and take such further action as the Bank may from time
to time reasonably request to carry out the intent of this Agreement.
The Subordinate Lender hereby irrevocably appoints the Bank its
attorney in fact, said appointment being coupled with an interest, to
execute such further documents and instruments and take such further
action on behalf of the Subordinate Lender as the Bank may from time
to time DEEM REASONABLE TO CARRY OUT THE INTENT OF THIS AGREEMENT,
INCLUDING, WITHOUT LIMITATION, THE ACTIONS SET FORTH IN PARAGRAPH B.4.
hereof.
7.
TREATMENT OF PAYMENT OF SUBORDINATED LIABILITIES. All payments and
distributions received by the Bank in respect of the Subordinated
Liabilities, to the extent received in or converted into cash, may be
applied by the Bank first to the payment of any and all expenses
(including attorneys' fees and disbursements and the allocated fees,
expenses and cost of in-house counsel) paid or incurred by the Bank in
enforcing this Agreement or in endeavoring to collect or realize upon
any of the Subordinated Liabilities, and any balance thereof shall,
solely as between the Subordinate Lender and the Bank, be applied by
the Bank, in such order of application as the Bank may from time to
time select, toward the payment of any of the Senior Liabilities
remaining unpaid. As between the Obligors and any of their creditors,
no such payments or distributions of any kind or character shall be
deemed to be payments or distributions in respect of the Senior
Liabilities; and, notwithstanding any such payments or distributions
received by the Bank in respect of the Subordinated Liabilities and so
6
applied by the Bank toward the payment of the Senior Liabilities, the
Subordinate Lender shall be subrogated to the then existing rights of
the Bank, if any, in respect of the Senior Liabilities, only at such
time as the Bank shall have received indefeasible payment of the full
amount of the Senior Liabilities.
8. WAIVERS. The Subordinate Lender hereby waives (i) any and all notice
of the receipt and acceptance by the Bank of this Agreement; (ii)
except as set forth in paragraph B.4, notice of the existence,
incurrence, or non-payment of all or any of the Senior Liabilities;
(iii) all diligence in collection or protection of or realization upon
any of the Senior Liabilities or any security therefor; and (iv) any
obligation with respect to the marshalling of assets by the Bank.
9. PROHIBITION ON CHANGES IN SUBORDINATED LIABILITIES.
(a) EXCEPT AS HEREIN SET FORTH IN PARAGRAPH B.9(B), the Subordinate
Lender will not without the prior written consent of the Bank (i)
cancel, waive, forgive, amend, modify, transfer or assign, or
attempt to enforce or collect, or subordinate to any Liabilities
other than the Senior Liabilities, any Subordinated Liabilities
or any rights in respect thereof; (ii) convert any Subordinated
Liabilities into stock or other securities in any of the
Obligors; (iii) take any Collection Action; (iv) commence, or
join with any other creditor in commencing, any bankruptcy,
reorganization or insolvency proceedings with respect to any of
the Obligors, or (v) take any other action prejudicial to or
inconsistent with the Bank's rights and first priority secured
position with respect to the Obligors, the Bank Collateral and
collateral for the Senior Liabilities.
(b) Notwithstanding the provisions of paragraph B.9(A), if any
default has occurred under any of the Subordinated Loan Documents
and such default has continued in existence for a period of one
hundred eighty (180) consecutive days after the Subordinated
Lenders have provided written notice of the existence of such
default to the bank (the "STANDSTILL PERIOD"), the Subordinated
Lender may proceed to take legal action against the Obligors for
the sole purpose of obtaining a judgment against the Obligors;
provided, however, at no time either before or after the
expiration of the Standstill Period, may any Subordinated Lender
take any action or Collection Action to enforce a security
interest in, liquidate or otherwise receive payment from any
collateral for the Senior Liabilities, including the Bank
Collateral or Subordinated Lenders' Collateral, unless and until
the Bank has been indefeasibly paid in full for all Senior
Liabilities.
10. CONTINUING AGREEMENT. This Agreement shall in all respects be a
continuing agreement and shall remain in full force and effect
notwithstanding, without limitation, the death, incompetency or
dissolution of the Subordinate Lender or that at any time or from time
to time all Senior Liabilities may have been paid in full if any of
the Loan Documents have not been terminated.
11. PERMITTED CHANGES IN SENIOR LIABILITIES. The Bank may, from time to
time, whether before or after any discontinuance of this Agreement, at
its sole discretion and without notice to the Subordinate Lender, take
any or all of the following actions: (i) retain or obtain a security
7
interest in any property to secure any of the Senior Liabilities; (ii)
retain or obtain the primary or secondary obligation of any other
Obligor or Obligors with respect to any of the Senior Liabilities;
(iii) extend, renew (whether or not longer than the original period),
alter or exchange any of the Senior Liabilities; (iv) release or
compromise any obligation of any nature of any Obligor with respect to
any of the Senior Liabilities; and, (v) release its security interest
or lien in, allows its security interest or lien to be unperfected,
surrender, release or permit any substitution or exchange for, all or
any part of any property securing any of the Senior Liabilities, or
extend or renew for one or more periods (whether or not longer than
the original period) or release, compromise, alter or exchange any
obligations of any nature of any Obligor with respect to any such
property.
12. DISPOSITION OF ASSETS. The Subordinate Lender agree that any
disposition by the Bank of any collateral for the Senior Liabilities,
whether by collection, sale, or other manner of liquidation, after an
Event of Default under the Loan Documents, if conducted in a
commercially reasonable manner, may not be challenged or contested by
the Subordinate Lender on the grounds of commercial unreasonableness.
The Subordinate Lender agrees that the Bank may use such means of
collection and exercise such diligence with respect thereto as the
Bank, in its sole discretion, deems appropriate under the
circumstances and may enter into such compromise with and give such
releases and acquittances to account debtors or other obligors of the
Obligors' receivables as it determines in its sole discretion, without
obtaining the agreement or concurrence of or giving notice to the
Subordinate Lender and the Subordinate Lender hereby waive all right
to require that its agreement or consent be obtained or that it be
given notice. The Subordinate Lender further agrees that it will
release its security interest on any collateral (including the
Subordinated Lenders' Collateral) for the Senior Liabilities upon the
sale or other disposition thereof at the request of the Bank, whether
or not any proceeds therefrom will pay any of the Subordinated
Liabilities.
C. REPRESENTATIONS AND WARRANTIES. The Subordinate Lender hereby represents
and warrants that (i) the Subordinate Lender has the necessary power and
capacity to make and perform this Agreement and such making and performance
have been duly authorized by all necessary actions on the part of the
Subordinate Lender; (ii) the making and performance by the Subordinate
Lender of this Agreement does not and will not violate any provision of law
or regulation or result in the breach of, or constitute a default or
require any consent under, any indenture or other agreement or instrument
to which it is a party or by which any of its properties may be bound; and
(iii) this Agreement is the legal, valid and binding obligation of the
Subordinate Lender, enforceable against the Subordinate Lender in
accordance with its terms.
D. REMEDIES. Upon the occurrence of any Event of Default, or upon the breach
of any representation, covenant or agreement in this Agreement by any
Obligor or the Subordinate Lender, or in the event of the termination of
this Agreement, all of the Senior Liabilities shall, without notice or
demand, become immediately due and payable at the option of the Bank and
the Bank may immediately, without further notice, resort to all of its
rights and remedies herein, in any document (including the Loan Agreement
and any of the Loan Documents) by and between the Bank and any Obligor, or
in any in any instrument evidencing any obligation under any such document,
at law or in equity. The Bank agrees that it shall proceed, to the extent
8
commercially reasonable, against all the assets of the Obligors before
liquidating the Subordinated Note.
E. MISCELLANEOUS.
1. REMEDIES CUMULATIVE; NO WAIVER. The rights, powers and remedies of the
Bank provided in this Agreement and any of the Loan Documents are
cumulative and not exclusive of any right, power or remedy provided by
law or equity. No failure or delay on the part of the Bank in the
exercise of any right, power or remedy shall operate as a waiver
thereof, nor shall any single or partial exercise preclude any other
or further exercise thereof, or the exercise of any other right, power
or remedy.
2. NOTICES. Notices and communications under this Agreement shall be in
writing and shall be given by (i) hand-delivery, (ii) first class mail
(postage prepaid), or (iii) reliable overnight commercial courier
(charges prepaid) to the addresses listed in this Agreement. Notice by
overnight courier shall be deemed to have been given and received on
the date scheduled for delivery. Notice by mail shall be deemed to
have been given and received three (3) calendar days after the date
first deposited in the United States Mail. Notice by hand-delivery
shall be deemed to have been given and received upon delivery. A party
may change its address by giving written notice to the other party as
specified herein.
3. COSTS AND EXPENSES. Whether or not the transactions contemplated by
this Agreement or the Loan Documents are fully consummated, the
Obligors shall promptly pay (or reimburse, as the Bank may elect) all
costs and expenses which the Bank has incurred or may hereafter incur
in connection with the negotiation, preparation, reproduction,
interpretation, perfection, protection of collateral, administration
and enforcement of this Agreement and the other Loan Documents, the
collection of all amounts due under this Agreement and the other Loan
Documents, and all amendments, modifications, consents or waivers, if
any, to the Loan Documents. The Obligors' reimbursement obligations
under this Paragraph shall survive any termination of this Agreement
or any other Loan Document and are deemed part of the Senior
Liabilities.
4. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the substantive laws of the State of Connecticut
without reference to conflict of laws principles.
5. INTEGRATION; AMENDMENT. This Agreement and the other Loan Documents
constitute the sole agreement of the parties with respect to the
subject matter hereof and thereof and supersede all oral negotiations
and prior writings with respect to the subject matter hereof and
thereof. No amendment of this Agreement, and no waiver of any one or
more of the provisions hereof shall be effective unless set forth in
writing and signed by the parties hereto.
6. SUCCESSORS AND ASSIGNS. This Agreement (i) shall be binding upon the
Subordinate Lender, the Obligors executing this Agreement and the Bank
and, where applicable, their respective heirs, executors,
administrators, successors and assigns, and (ii) shall inure to the
benefit of the Subordinate Lender, the Obligors and the Bank and,
where applicable, their respective heirs, executors, administrators,
successors and permitted assigns; provided, however, that the
9
Subordinate Lender and the Obligors may not assign their rights or
obligations hereunder or any interest herein without the prior written
consent of the Bank, and any such assignment or attempted assignment
by the Subordinate Lender and/or any of the Obligors shall be void and
of no effect with respect to the Bank. The Bank may from time to time
sell or assign, in whole or in part, or grant participations in the
Loans and/or the Agreement and/or the obligations evidenced thereby.
The Subordinate Lender authorizes the Bank to provide information
concerning the Subordinate Lender and the Obligors to any prospective
purchaser, assignee or participant.
7. SEVERABILITY AND CONSISTENCY. The illegality, unenforceability or
inconsistency of any provision of this Agreement or any instrument or
agreement required hereunder shall not in any way affect or impair the
legality, enforceability or consistency of the remaining provisions of
this Agreement or any instrument or agreement required hereunder. The
Loan Documents and this Agreement are intended to be consistent.
However, in the event of any inconsistencies between and/or among this
Agreement and any of the Loan Documents, such inconsistency shall not
affect the validity or enforceability of this Agreement or any of the
Loan Documents. In the event of any inconsistency or ambiguity in this
Agreement or any of the Loan Documents, this Agreement and the Loan
Documents shall not be construed against any one party but shall be
interpreted consistent with the Bank's policies and procedures.
8. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The Subordinate Lender
irrevocably appoints Rapaport & Ellenthal, P.C., 000 Xxxxxx Xxxxxx,
Xxxxxxxx, XX 00000 as its attorneys upon whom may be served any notice,
process or pleading in any action or proceeding against it arising out
of or in connection with this Agreement. If service of process cannot be
delivered to the Subordinate Lender as specified by statute, the
Subordinate Lender agrees that, with court approval, it may be served by
regular or certified mail at the address set forth herein. The
Subordinate Lender hereby consents and agrees that (i) any action or
proceeding against it may be commenced and maintained in any court
within the State of Connecticut or in the United States District Court
for the District of Connecticut by service of process on Rapaport &
Ellenthal and (ii) the courts of the State of Connecticut and the United
States District Court for the District of Connecticut shall have
jurisdiction with respect to the subject matter hereof and the person of
the Subordinate Lender and the Subordinated Liabilities. The Subordinate
Lender agrees that any action brought by the Subordinate Lender on
account of this Agreement shall be commenced and maintained only in a
court in the federal judicial district or county in which the Bank has
its principal place of business in Connecticut.
10
9. PREJUDGMENT REMEDIES.
The Subordinate Lender hereby acknowledges that the transactions
contemplated herein constitute commercial transactions. Pursuant to
Section 52-278f of the Connecticut General Statutes, the Subordinate
Lender hereby waives and relinquishes all rights to notice and hearing
as provided in Sections 52-278a through 52-278g of said Connecticut
General Statutes prior to the securing of any prejudgment remedy against
the Subordinate Lender in connection with the Liabilities or any of the
instruments or documents executed in connection herewith.
10. PROVISIONS SOLELY FOR THE BENEFIT OF THE BANK.
The provisions of this Agreement are solely to define the relative
rights and obligations of the Bank and the Subordinate Lender, and no
other person or entity, including, without limitation, any of the
Obligors, shall have any rights hereunder or as a result of the
provisions hereof.
11. AGENT FOR SUBORDINATE LENDER.
The Agent hereby agrees to be bound by the terms and provisions of this
Agreement and agrees not to make any payment or distribution or to
otherwise take any action which is contrary to the provisions of this
Agreement.
12. JUDICIAL PROCEEDINGS; WAIVERS.
THE SUBORDINATE LENDER AND THE BANK ACKNOWLEDGE AND AGREE THAT (i) ANY
SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT OR
INSTITUTED BY THE BANK, THE SUBORDINATE LENDER OR ANY SUCCESSOR OR
ASSIGN OF THE BANK OR THE SUBORDINATE LENDER, ON OR WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE DEALINGS OF THE PARTIES WITH
RESPECT HERETO, OR THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A
JURY AND EACH PARTY WAIVES THE RIGHT TO TRIAL BY JURY; (ii) EACH WAIVES
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR
PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR
ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; AND (iii)
THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND THE
BANK WOULD NOT EXTEND CREDIT IF THE WAIVERS SET FORTH IN THIS SECTION
WERE NOT A PART OF THIS AGREEMENT.
11
IN WITNESS WHEREOF, the Subordinate Lender has executed and delivered to the
Bank this Agreement, as of the day and year first above written.
WITNESSED BY:
------------------------------------- --------------------------------------
Name: Xxxxx X. Xxxxx
Address: 0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
-------------------------------------
------------------------------------- -------------------------------------
Xxxx X. Xxxxxxxx, not individually but
as Trustee of the Xxxxx X. BakerLife
Insurance Trust, The Xxxx X.Xxxxx
Insurance Trust and u/t/a dated
------------------------------------- December 16,1991 f/b/o Xxxx Xxxxx
et. al., as Agent
Address: 0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
XXXXXXX BANK
------------------------------------ By:-----------------------------------
Xxxxxx X. Xxxxxxxxx
Its Vice President
----------------------------------- Address: 000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
STATE OF CONNECTICUT )
) ss: Hartford October _, 2000
COUNTY OF HARTFORD )
Personally appeared Xxxxx X. Xxxxx, signer and sealer of the foregoing
instrument and acknowledged the same to be his free act and deed, before me.
Commissioner of the Superior Court
Notary Public
My Commission expires:
00
XXXXX XX XXXXXXXXXXX )
) ss: Hartford October _, 2000
COUNTY OF HARTFORD )
Personally appeared Xxxx X. Xxxxxxxx, not individually but as Trustee of the
Xxxxx X. Xxxxx Life Insurance Trust, the Xxxx X. Xxxxx Insurance Trust and U/T/A
dated December 16, 1991 F/B/O Xxxx Xxxxx et. al, as Agent, signer and sealer of
the foregoing instrument and acknowledged the same to be his free act and deed
as Trustee and Agent, before me.
Commissioner of the Superior Court
Notary Public
My Commission expires:
STATE OF CONNECTICUT )
) ss: Hartford October _, 2000
COUNTY OF HARTFORD )
Personally appeared Xxxxxx X. Xxxxxxxxx, Vice President of Xxxxxxx Bank, signer
and sealer of the foregoing instrument and acknowledged the same to be his free
act and deed as such officer and the free act and deed of Xxxxxxx Bank, before
me.
Commissioner of the Superior Court
Notary Public
My Commission expires:
13
The Obligors signing below hereby acknowledge receipt of a copy of the foregoing
Agreement, waive notice of acceptance thereof by the Bank, and agree to be bound
by the terms and provisions thereof. The Obligors signing below further agree to
make no payments or distributions, or grant any security interest, contrary to
the terms and provisions of this Agreement and to do every other act and thing
necessary or appropriate to carry out such terms and provisions. Upon the
occurrence of any Event of Default, or upon the breach of any representation,
covenant or agreement in this Agreement by any of the Obligors or the
Subordinated Lender, or in the event of the termination of this Agreement, all
of the Senior Liabilities shall, without notice or demand, become immediately
due and payable at the option of the Bank and the Bank may immediately, without
further notice, resort to all of its rights and remedies herein, in any document
(including the Loan Agreement and any of the Loan Documents) by and between the
Bank and any Obligor, or in any in any instrument evidencing any obligation
under any such document, at law or in equity.
Dated: As of the 5th day of October, 2000
VERMONT PURE HOLDINGS, LTD.
(f/k/a VP Merger Parent, Inc.)
By:-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
Address: Xxxxxxxxx Xxxxxxxxxx Xxxx
Xxxxx 00
Xxxxxxxx, XX 00000
CRYSTAL ROCK SPRING WATER COMPANY
By:-----------------------------------
Name: Xxxx X. Xxxxx
Title: President
Address: 0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
14
PLATINUM ACQUISITION CORP.
(f/k/a Vermont Pure Holdings, Ltd.)
By:______________________
Name: Xxxxxxx X. Xxxxxx
Title: President
Address: Xxxxxxxxx Xxxxxxxxxx Xxxx
Xxxxx 00
Xxxxxxxx, XX 00000
VERMONT PURE SPRINGS, INC.
By:______________________
Name: Xxxxxxx X. Xxxxxx
Title: President
Address: Xxxxxxxxx Xxxxxxxxxx Xxxx
Xxxxx 00
Xxxxxxxx, XX 00000
15
SCHEDULE A
Bank Collateral
"Collateral" means Receivables, Inventory, Equipment, Patents, Trademarks,
Investment Property, Additional Collateral, and the Premises.
"Additional Collateral" means (i) all General Intangibles (as such term is
defined in the Uniform Commercial Code as in effect in Connecticut on the date
of this Agreement) of every kind and description of the Obligors, including
without limitation federal, state and local tax refund claims of all kinds,
whether now existing or hereafter arising; (ii) all of Obligors' deposit
accounts, whether now owned or hereafter created, wherever located; (iii) all
monies, securities, instruments, cash and other property of Obligors and the
proceeds thereof, now or hereafter held or received by, or in transit to, Lender
from or for Obligors, whether for safekeeping, pledge, custody, transmission,
collection or otherwise, and all of Obligors' deposits (general or special,
balances, sums, proceeds and credits of Obligors with Lender at any time
existing); (iv) all interests in real property held or owned by Obligors,
including all leasehold interests; (v) all rights under contracts and license
agreements for water; (vi) all books, records, customer lists, ledger cards,
computer programs, computer tapes, disks, printouts and records, and other
property and general intangibles at any time evidencing or relating to any of
the foregoing, whether now in existence or hereafter created; (vii) all other
personal property and fixtures of the Obligors, whether now existing or
hereafter arising or created; and all proceeds of the foregoing and all proceeds
of any insurance on the foregoing.
"Equipment" means all Equipment, Farm Products and Fixtures (as such terms are
defined in the Uniform Commercial Code as in effect in Connecticut on the date
of this Agreement), including all machinery, equipment, furniture, fixtures,
tools, parts, supplies and motor vehicles, now owned and hereafter acquired, by
Debtor of whatsoever name, nature, kind or description, wherever located, and
all additions and accessions thereto and replacements or substitutions therefor,
and all proceeds thereof and all proceeds of any insurance thereon.
"Inventory" means all Inventory and Goods (as such terms are defined in the
Uniform Commercial Code as in effect in Connecticut on the date of this
Agreement) of whatsoever name, nature, kind or description now owned and
hereafter acquired by Debtor, wherever located, including without limitation all
contract rights with respect thereto and documents representing the same, all
goods held for sale or lease or to be furnished under contracts of service,
finished goods, raw materials, materials used or consumed by Debtor, parts,
supplies, and all wrapping, packaging, advertising and shipping materials and
any documents relating thereto, and all labels and other devices, names and
marks affixed or to be affixed thereto for purposes of selling or of identifying
the same or the seller or manufacturer thereof, and all right, title and
interest of Debtor therein and thereto, and all proceeds of the foregoing and
all proceeds of any insurance on the foregoing.
"Investment Property" means all investment property (as such term is defined in
the Uniform Commercial Code as adopted in Connecticut on the date of this
Agreement) of whatever type or nature now owned or hereafter acquired by the
Debtor, including without limitation, all certificated securities, all
uncertificated securities, all security entitlements, all security accounts, all
commodity contracts, all commodity accounts and all financial assets of every
type and nature and all rights thereto or therein, and all financial accounts of
every type and nature and all rights thereto or therein, and all proceeds and
products thereof, including without limitation, all insurance proceeds and
fidelity bond proceeds related thereto.
"Patents" means all of Debtor's right, title and interest, present and future,
in and to (a) all letters patent of the United States or any other country, all
right, title and interest therein and thereto, and all registrations and
recordings thereof, including without limitation applications, registrations and
recordings in the United States Patent and Trademark Office or in any similar
office or agency of the United States or any state thereof or any other country
or any political subdivision thereof, all whether now owned or hereafter
acquired by Debtor; and (b) all reissues, continuations, continuations-in-part
or extensions thereof and all licenses thereof; and all proceeds of the
foregoing and all proceeds of any insurance on the foregoing.
"Premises" means the following real property owned by Debtor:
Xxxxxxx Drive, Randolph, Vermont Chase Road, Randolph, Vermont Route 66
Factory, Randolph, Vermont North Xxxxxxxx Road, Randolph, Vermont 00.0
xxxxx, Xxxxx 00, Xxxxxxxx, Xxxxxxx 5.0 acres, Xxxxx 00, Xxxxxxxx,
Xxxxxxx
"Receivables" means (i) all of Debtor's now owned and hereafter acquired,
present and future, Accounts, Chattel Paper, Documents, Instruments, (as such
terms are defined in the Uniform Commercial Code as in effect in Connecticut on
the date of this Agreement) and contract rights, including without limitation
all obligations to Debtor for the payment of money, whether arising out of
Debtor's sale of goods or rendition of services or otherwise (all hereinafter
called "Accounts") and all proceeds of the foregoing and all proceeds of any
insurance on the foregoing; (ii) all of Debtor's rights, remedies, security and
liens, in, to and in respect of the Accounts, present and future, including
without limitation, rights of stoppage in transit, replevin, repossession and
reclamation and other rights and remedies of an unpaid vendor, lien or secured
party, guaranties or other contracts of suretyship with respect to the Accounts,
deposits or other security for the obligation of any debtor or Debtor in any way
obligated on or in connection with any Accounts, and credit and other insurance,
and all proceeds of the foregoing and all proceeds of any insurance on the
foregoing; and (iii) all of Debtor's right, title and interest, present and
future, in, to and in respect of all goods relating to, or which by sale have
resulted in, Accounts, including without limitation all goods described in
invoices or other documents or instruments with respect to, or otherwise
representing or evidencing any Accounts, and all returned, reclaimed or
repossessed goods, and all proceeds of the foregoing and all proceeds of any
insurance on the foregoing.
SCHEDULE B
Subordinated Lender Collateral
The following property, whether now existing or subsequently acquired,
and all additions, substitutions, accessions, replacements, proceeds, and
products thereof or thereto: all tangible and intangible assets and properties
of each of Vermont Pure Holdings, Ltd., a Delaware corporation formerly named
"VP Merger Parent, Inc.", Vermont Pure Springs, Inc., a Delaware corporation,
Platinum Acquisition Corp., f/k/a Vermont Pure Holdings (each a "Company"),
including without limitation all furniture, fixtures, equipment, raw materials,
inventory, other goods, accounts, contract rights, rights to the payment of
money, insurance refund claims and all other insurance claims and proceeds, tort
claims, chattel paper, documents, instruments, securities and other investment
property, deposit accounts, rights to proceeds of letters of credit and all
general intangibles including, without limitation, all tax refund claims,
license fees, patents, patent applications, trademarks, trademark applications,
trade names, copyrights, copyright applications, rights to xxx and recover for
past infringement of patents, trademarks and copyrights, computer programs,
computer software, engineering drawings, service marks, customer lists,
goodwill, and all licenses, permits, agreements of any kind or nature pursuant
to which any Company possesses, uses or has authority to possess or use property
(whether tangible or intangible) of others or others possess, use or have
authority to possess or use property (whether tangible or intangible) of such
Company, and all recorded data of any kind or nature, regardless of the medium
of recording including, without limitation, all software, writings, plans,
specifications and schematics (each of which terms has the meaning ascribed to
in the Uniform Commercial Code, as in effect in the State of Connecticut)
(collectively, the "COLLATERAL"); provided that notwithstanding the foregoing,
such grant of security interest shall not extend to, and the term "Collateral"
shall not include any cash and cash equivalents at any time owned by any
Company.
