THIS INSTRUMENT IS SUBJECT TO THE SUBORDINATION AND PLEDGE
AGREEMENT, DATED AS OF OCTOBER __, 2000, AMONG THE INITIAL PAYEE
HEREOF, THE MAKER HEREOF, PLATINUM ACQUISITION CORP. (F/K/A
VERMONT PURE HOLDINGS, LTD.), VERMONT PURE SPRINGS, INC., ▇▇▇▇▇▇▇
BANK, AND THE "AGENT" REFERRED TO THEREIN, WHICH, AMONG OTHER
THINGS, SUBORDINATES THE MAKER'S OBLIGATIONS TO THE PAYEE TO THE
MAKER'S OBLIGATIONS TO THE HOLDERS OF SENIOR LIABILITIES, AS
DEFINED IN SUCH AGREEMENT.
SUBORDINATED PROMISSORY NOTE
US$3,511,111.00 October ___, 2000
This note is one of five promissory notes (the "▇▇▇▇▇ NOTES") executed and
delivered as of the date hereof by Vermont Pure HOLDINGS, LTD. (THE "MAKER"), a
Delaware corporation formerly named "VP Merger Parent, Inc.," pursuant to
Section 2.5.2 of the Agreement and Plan of Merger and Contribution dated as of
May 5, 2000, as amended, by and among (i) the Maker; (ii) Platinum Acquisition
Corp., a Delaware corporation formerly named "Vermont Pure Holdings, Ltd.";
(iii) VP Acquisition Corp., a Delaware corporation; (iv) Crystal Rock Spring
Water Company, a Connecticut corporation; and (v) ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, not individually but as Trustee
of the ▇▇▇▇▇ ▇. ▇▇▇▇▇ Life Insurance Trust, the ▇▇▇▇ ▇. ▇▇▇▇▇ Insurance Trust,
and U/T/A dated December 16, 1991 F/B/O ▇▇▇▇ ▇▇▇▇▇ et al., respectively (the
persons listed in this clause (v), COLLECTIVELY, THE "STOCKHOLDERS").
The maker hereby promises to pay to the order of ▇▇▇▇ ▇. ▇▇▇▇▇
(INCLUDING ANY SUBSEQUENT HOLDER OF THIS NOTE, THE "PAYEE"), the principal sum
of Three Million Five Hundred Eleven Thousand, One Hundred Eleven United States
Dollars (US$3,511,111.00), with interest on the unpaid principal sum from time
to time outstanding hereunder at an annual rate equal to the lesser of (i) with
respect to overdue amounts (except to the extent not paid when due because
payment is then prohibited pursuant to the terms of the Subordination Agreement,
as defined below, from and after the time due, seventeen per cent (17%),
compounded quarterly on each February 20, May 20, August 20, and November 20,
and with respect to all other amounts, twelve per cent (12%) simple interest;
and (ii) the maximum lawful rate of interest; in each case to be applied on the
basis of the actual number of days elapsed and a 365-day year.
Subject to acceleration as provided herein, payments in respect of this
Note will be made on the following schedule:
(i) Interest will be payable in arrears for the three-month
periods ended on each January 31, April 30, July 31, AND OCTOBER 31, IN
EACH CASE NOT MORE THAN 20 DAYS AFTER THE END OF SUCH THREE-MONTH
PERIOD (I.E., February 20, May 20, August 20, and November 20). In
addition to any other applicable rights or remedies of the Payee, any
interest not paid when due will thereafter bear interest at the
applicable rate stated above.
(ii) Commencing on the third anniversary of the date of this
Note, principal will be repayable quarterly on each February 20, May
20, August 20, and November 20 (in each case, together with all accrued
interest payable on such date) in accordance with the attached
amortization schedule.
(iii) The entire amount of indebtedness represented by this
Note will be due and payable not later than the seventh anniversary of
the date of this Note.
Any amount owing hereunder that is not paid because prohibited pursuant
to the terms of the Subordination Agreement, as in effect on the date hereof,
will be paid as soon as to do so is not so prohibited.
ACCELERATION. At the Payee's option, the entire amount of indebtedness
represented by this Note will become due and payable immediately upon written
notice of acceleration given by the Payee to the Maker following any: (i)
liquidation or dissolution of the Maker, or other termination or winding-up of
its existence or business; (ii) sale of all or substantially all of the assets
or capital stock of the Maker; or (iii) acceleration of the due date of the
Senior Liabilities, as defined in the Subordination Agreement, or any other
indebtedness of the Maker for borrowed money.
In addition, the entire amount of indebtedness represented by this Note
will become due and payable, automatically and without any notice or other
action, immediately upon any: (i) appointment of a receiver for the Maker or its
assets; (ii) assignment by the Maker for the benefit of its creditors; or (iii)
institution by or against the Maker of any proceedings under bankruptcy,
insolvency, or similar laws, which in the case of any such institution against
the Maker, are not dismissed within 90 days.
For purposes of the preceding two paragraphs, any event of the types
described therein involving one or more of the Maker's subsidiaries will be
deemed to have occurred with respect to the Maker if such subsidiary (-ies)
represent more than 50% (by either book value or fair market value) of the
consolidated assets of the Maker and all of its consolidated subsidiaries.
PREPAYMENT. The Maker will have the right to prepay the unpaid
principal amount of this Note in full at any time, or in PART FROM TIME TO TIME,
ON 30 DAY'S PRIOR WRITTEN NOTICE TO THE PAYEE AND THE OTHER HOLDERS OF THE ▇▇▇▇▇
NOTES; PROVIDED, that by written notice executed by all holders of the ▇▇▇▇▇
Notes given to the Maker within 20 days following any such notice, such holders
may require the Maker to allocate the aggregate amount proposed to be repaid to
all of them among such holders in such proportions as they may specify.
Any prepayment of this Note will include all accrued and unpaid
interest on the principal amount prepaid.
If any prepayment of this Note is made before the third anniversary of
the date of this Note, the Maker will pay the Payee a premium equal to a
percentage of the principal amount prepaid, which percentage will be (i) three
per cent (3%) with respect to payments made during the first year this Note is
outstanding, (ii) two per cent (2%) with respect to payments made during the
second year this Note is outstanding, and (iii) one per cent (1%) with respect
to payments made during the third year this Note is outstanding.
MAKER'S WAIVER OF PRESENTMENT,ETC. The Maker hereby waives presentment,
notice, protest, and all other demands and notices.
NO WAIVER BY PAYEE. The failure of the Payee to exercise any of its
rights, remedies, powers, or privileges hereunder in any instance will not
constitute a waiver thereof in respect of that or any other instance.
ENFORCEMENT COSTS. The Maker will pay on demand all costs of
collection, including all court costs and attorneys' reasonable fees, paid or
incurred by the Payee in enforcing this Note and its rights hereunder.
PRO RATA PAYMENTS. Except to the extent provided above under the
caption "Prepayment," and except to the extent otherwise AGREED IN WRITING BY
ALL HOLDERS OF THE ▇▇▇▇▇ Notes, ANY PAYMENTS BY THE MAKER IN RESPECT OF THE
▇▇▇▇▇ NOTES WILL BE MADE PRO RATA in proportion to the respective amounts then
owing by the Maker in respect of each such note.
SUBORDINATION. THIS NOTE IS SUBJECT TO A SEPARATE SUBORDINATION AND
PLEDGE AGREEMENT (THE "SUBORDINATION AGREEMENT") dated as of October ___, 2000,
among the Payee, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, not individually but as Trustee of the ▇▇▇▇▇
▇. ▇▇▇▇▇ Life Insurance Trust, The ▇▇▇▇ ▇. ▇▇▇▇▇ Insurance Trust and u/t/a dated
December 16, 1991 f/b/o ▇▇▇▇ ▇▇▇▇▇ ▇▇.▇▇., as agent for the Payee and certain
other holders of indebtedness of the Maker (in such capacity, the "Agent"), the
Maker, Platinum Acquisition Corp. (f/k/a Vermont Pure Holdings, Ltd.), Vermont
Pure Springs, Inc., and ▇▇▇▇▇▇▇ Bank, which, among other things, (a)
subordinates the Maker's obligations to the Payee to the Maker's obligations to
the holders of Senior Liabilities, as defined in such agreement, and (b)
restricts the amount and payment of principal and interest hereunder and the
rights of the holder of the Note to enforce any provision hereof or to access
any collateral security for this Note. Neither this Note nor any rights
hereunder may be transferred (and any attempt to do so will be void) unless the
proposed transferee first becomes a party to the Subordination Agreement.
SECURITY. This Note is secured pursuant to the terms of the Security
Agreement, dated as of October __, 2000, among the Maker, Platinum Acquisition
Corp., Vermont Pure Springs, Inc., the Payee, the original holders of the ▇▇▇▇▇
Notes, and the Agent.
GOVERNING LAW. This Note will be governed by and interpreted and
construed in accordance with the internal laws of the State of Connecticut
(without reference to principles of conflicts or choice of law).
[THE REST OF THIS PAGE IS INTENTIONALLY
LEFT BLANK.]
Executed and delivered on and as of the date first above written.
VERMONT PURE HOLDINGS, LTD.
(f/k/a VP Merger Parent, Inc.)
By----------------------------
Name:
Title:
AMORTIZATION SCHEDULE
▇▇▇▇ ▇. ▇▇▇▇▇
Loan Analysis Subordinated Debt Fixed Principal
7 Year Increasing Principal Year 1 -
Year 2 -
Beginning Principal $3,511,111.00 Year 3 -
Interest Rate 12.00% Year 4 310,717.79
Date of Note 10/5/2000 Year 5 466,076.68
Year 6 621,435.58
Year 7 1,087,512.26
Balloon 1,025,368.69
-----------------
3,511,111.00
=================
PAYMENT PAYMENT
PAYMENT # DATE AMOUNT INTEREST PRINCIPAL BALANCE
1 11/20/2000 29,259.26 29,259.26 - 3,511,111.00
2 2/20/2001 105,333.33 105,333.33 - 3,511,111.00
3 5/20/2001 105,333.33 105,333.33 - 3,511,111.00
4 8/20/2001 105,333.33 105,333.33 - 3,511,111.00
5 11/20/2001 105,333.33 105,333.33 - 3,511,111.00
6 2/20/2002 105,333.33 105,333.33 - 3,511,111.00
7 5/20/2002 105,333.33 105,333.33 - 3,511,111.00
8 8/20/2002 105,333.33 105,333.33 - 3,511,111.00
9 11/20/2002 105,333.33 105,333.33 - 3,511,111.00
10 2/20/2003 105,333.33 105,333.33 - 3,511,111.00
11 5/20/2003 105,333.33 105,333.33 - 3,511,111.00
12 8/20/2003 105,333.33 105,333.33 - 3,511,111.00
13 11/20/2003 183,012.78 105,333.33 77,679.45 3,433,431.55
14 2/20/2004 180,682.40 103,002.95 77,679.45 3,355,752.10
15 5/20/2004 178,352.01 100,672.56 77,679.45 3,278,072.65
16 8/20/2004 176,021.62 98,342.18 77,679.44 3,200,393.21
17 11/20/2004 212,530.97 96,011.80 116,519.17 3,083,874.04
18 2/20/2005 209,035.39 92,516.22 116,519.17 2,967,354.87
19 5/20/2005 205,539.82 89,020.65 116,519.17 2,850,835.70
20 8/20/2005 202,044.24 85,525.07 116,519.17 2,734,316.53
21 11/20/2005 237,388.40 82,029.50 155,358.90 2,578,957.63
22 2/20/2006 232,727.63 77,368.73 155,358.90 2,423,598.73
23 5/20/2006 228,066.86 72,707.96 155,358.90 2,268,239.83
24 8/20/2006 223,406.07 68,047.19 155,358.88 2,112,880.95
25 11/20/2006 335,264.50 63,386.43 271,878.07 1,841,002.88
26 2/20/2007 327,108.16 55,230.09 271,878.07 1,569,124.81
27 5/20/2007 318,951.81 47,073.74 271,878.07 1,297,246.74
28 8/20/2007 310,795.45 38,917.40 271,878.05 1,025,368.69
29 10/6/2007 1,056,129.75 30,761.06 1,025,368.69 -