SETTLEMENT AGREEMENT
1. The parties to this Settlement Agreement are Vermont Pure Holdings, Ltd.
("Vermont Pure"), and Pristine Mountain Springs, Inc., Amsource LLC, Barton
Lord and ▇▇▇▇▇▇ ▇▇▇▇▇▇ (collectively, the "Debtors").
2. The Debtors shall pay to Vermont Pure the sum of One Million Two Hundred
Seventy Thousand Dollars ($1,270,000.00) no later than December 15, 1999.
One hundred fifty thousand dollars ($150,000.00) of this amount shall be
delivered to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ as escrow agent ("Escrow Agent"), pending
the resolution of issues described in paragraph three of this Settlement
Agreement. The balance of One Million One Hundred Twenty Thousand Dollars
($1,120,000.00) shall be delivered to Vermont Pure at its offices in
▇▇▇▇▇▇▇▇, Vermont.
3. Vermont Pure shall provide the Debtors with proof that Wesfield
Construction Company has been paid in cash or equivalent accepted by
Wesfield the sum of One Hundred Thirty Thousand Dollars ($130,000.00) in
connection with the June 18, 1999 disbursement by Marcon Capital
Corporation. If Vermont Pure cannot provide this proof by December 31,
1999, the Escrow Agent shall refund the Debtors the One Hundred Fifty
Thousand Dollars ($150,000.00) held in escrow. If Vermont Pure takes the
position that it has offered such evidence, the Debtors may elect by
written notice delivered to Vermont Pure by January 4, 2000, to offer
evidence to the contrary, so long as such offer of evidence is made on or
before January 15, 2000. The parties hereby appoint the mediator ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ to serve as arbitrator of any dispute between the parties on the
adequacy of such proof of payment to Wesfield. The decision of the
arbitrator (which shall be rendered by January 30, 2000 unless the
arbitrator determines that additional evidence is required) on the process
and substance for resolving such dispute shall be final, binding and
non-appealable. The parties shall split equally the cost of any
arbitration.
4. The Debtors hereby acknowledge that the assignment of all rights of
Amsource LLC under the Amended and Restated Spring Water License and Water
Supply Agreement, dated April 13, 1999 ("Water Supply Agreement"), to
Vermont Pure is final, absolute and irrevocable, and hereby irrevocably and
finally waive any objection to or argument against the enforcement by
Vermont Pure of that agreement according to its terms. The Debtors shall
execute a binding acknowledgement (the "Acknowledgement"), in a form
suitable for recording in Vermont land records, confirming all of the
rights provided to Vermont Pure under the Water Supply Agreement and this
Settlement Agreement, including (without limitation) rights to purchase
water on a priority basis and the rights of first refusal provided for in
the Water Supply Agreement. None of the Debtors shall take any action to
interfere with Vermont Pure's rights under the Water Supply Agreement.
5. Vermont Pure and the Debtors shall execute an Addendum to the Water Supply
Agreement providing that Amsource, LLC, shall have the right to purchase on
a priority equal to Vermont Pure's up to five million (5,000,000) gallons
per month from the Pristine Mountain Spring in Stockbridge (the "Spring").
By equal priority, this paragraph means that the parties shall have an
equal right, superior to any other party, to purchase in the aggregate the
first ten million (10,000,000) gallons per month from the Spring; any
shortfall in supply shall be borne equally by the parties. Vermont Pure
shall retain all other priority rights provided by the Water Supply
Agreement, and Pristine shall not convey priority rights in the Spring to
any other party. The rights provided to Amsource under the Addendum may
only be exercised by Amsource. Amsource's rights under the Addendum shall
be non-assignable, except that in the event that a majority of Amsource's
membership interests are transferred or conveyed by the Debtors, Amsource
may continue to exercise the rights provided by the Addendum.
6. This Settlement Agreement does not effect any novation of any of the Loan
Documents (i.e., as that term is defined in the Debenture Purchase
Agreement and related documents, dated December 29, 1998) assigned by
Marcon Capital Corporation to Vermont Pure. In the event of a failure to
make the payments required or execute the Addendum and Acknowledgement
provided by this Settlement Agreement, Vermont Pure may enforce the terms
of this Settlement Agreement, or, at its sole election, any or all of the
Loan Documents. By making this Settlement Agreement, Vermont Pure is
postponing its enforcement of the Loan Documents in return for the actual
performance of the above-referenced obligations under the Settlement
Agreement. Provided, however, that if Vermont Pure elects to enforce the
Loan Documents instead of this Settlement Agreement, then, notwithstanding
Paragraph four above, the Acknowledgement shall be no longer enforceable,
and the parties shall be free to argue claims and positions regarding the
Water Supply Agreement. Further provided, that in the event Vermont Pure
elects to enforce this Settlement Agreement, it shall be entitled to
recover interest on all past due sums at the rate of 14 percent per year.
7. Vermont Pure and the Debtor shall stay all pending court actions unless
there is a failure to make the payment, or execute the Acknowledgement or
Addendum of this Settlement Agreement, at which point any party may, with
written notice to all other parties, pursue pending court actions, and
institute other proceedings. Simultaneously upon the payment of all money
required under this Settlement Agreement, and the execution and tendering
of the Acknowledgement and Addendum related to the Water Supply Agreement,
the parties shall jointly stipulate to the dismissal of all pending
litigation against each other with prejudice, and Vermont Pure shall
provide the Debtors with all original Loan Documents marked "paid and
satisfied", and shall execute all other documents provided by the Debtors
which are reasonably necessary to terminate any security interest provided
by the Loan Documents. Without limitation, the Loan Documents terminated by
Vermont Pure in such circumstance shall include all rights of conversion
into ownership interest in Amsource, LLC.
8. Upon the payment of all money required under this Settlement Agreement, and
the execution and tendering of the Acknowledgement and Addendum related to
the Water Supply Agreement, Vermont Pure shall indemnify the Debtors
against all claims made by Marcon arising out of or connected to the Loan
Documents or the operating agreement of Amsource, LLC, and the parties
shall exchange mutual releases, excepting only performance of the
obligations arising under this Settlement Agreement and Water Supply
Agreement. In the event any party prevails in an action to enforce the
terms of this Settlement Agreement, that party may recover its reasonable
costs of litigation, including attorneys' fees.
9. Vermont Pure hereby represents that it is fully authorized to make this
Settlement Agreement, and that it makes this Settlement Agreement freely
and voluntarily following the advice of counsel of its choice, and that
Vermont Pure's agreement is not based on any representation or warranty by
the Debtors, except those contained in this Settlement Agreement. The
Debtors hereby represent that Lincoln ▇▇▇▇▇▇▇▇▇ is no longer involved in
the management of Amsource. The Debtors further represent that they are
fully authorized to execute this Settlement Agreement on behalf of Amsource
and Pristine Mountain Springs, Inc., and that all Debtors make this
Settlement Agreement freely and voluntarily, following full advice of
counsel of their choosing, and not based on any representations or
warranties of Vermont Pure.
Dated at Boston Massachusetts, this first day of December, 1999.
/s/: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Vermont Pure Holdings, Ltd.
By ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, its President
/s/: ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Amsource, LLC
By ▇▇▇▇▇▇ ▇▇▇▇▇▇, President
/s/: ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Pristine Mountain Springs, Inc.
By ▇▇▇▇▇▇ ▇▇▇▇▇▇, President
/s/: ▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/: Barton Lord
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Barton Lord
Approved as to form:
/s/: ▇▇▇▇▇ ▇▇▇▇▇
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Vermont Pure Counsel, ▇▇▇▇▇ ▇▇▇▇▇
/s/: ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Vermont Pure Counsel, ▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/: ▇▇▇▇▇ ▇▇▇▇▇▇
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Amsource LLC Counsel, ▇▇▇▇▇ ▇▇▇▇▇▇
/s/: ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Amsource LLC Counsel, ▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/: M.B. ▇▇▇▇▇▇▇, Jr.
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Pristine Mountain Springs of Vermont, Inc. Counsel, M.B. ▇▇▇▇▇▇▇, Jr.
/s/: M.B. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇ Counsel, M.B. ▇▇▇▇▇▇▇
/s/: ▇▇▇▇▇ ▇▇▇▇▇▇
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Barton Lord Counsel, ▇▇▇▇▇ ▇▇▇▇▇▇
Witnessed by Mediator:
/s/: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇