ST. GEORGE 7 MONTH SECURED
PURCHASE NOTE
This Secured Purchase Note (the “
Purchase Note ”) is executed June 18, 2009, by and
between Drinks Americas Holdings, Ltd., a Delaware corporation,
(the “ Company ”) and St. George Investments,
LLC, an Illinois limited liability company, (the “
Investor ”).
All capitalized terms not otherwise defined
herein shall have the same meaning ascribed to them in the
Securities Purchase Agreement dated of even date
herewith.
RECITALS :
WHEREAS , the Company has authorized the sale and
issuance of a non-interest bearing note, a warrant and common stock
issuable upon full or partial satisfaction of the Note or exercise
of the warrant (collectively, the Drinks Debenture, the Warrant and
the Underlying Shares shall be referred to as the “
Securities ”) in exchange for a loan by the Investor
to the Company of Four Million Dollars ($4,000,000) (the “
Loan Amount ”);
WHEREAS , as an inducement to enter into this Agreement
and as collateral for the Drinks Debenture, certain Affiliates have
agreed to pledge 12,000,000 shares of common stock of the Company,
of which 9,000,000 shares of the Collateral Shares shall have been
issued as of a date six (6) months or more prior to the date
hereof;
WHEREAS , as further inducement to enter into this
Agreement and as further security, J. Patrick Kenny has agreed to
provide a personal guaranty on a portion of the Loan Amount and all
interest and penalties;
WHEREAS , the Investor has paid $375,000 in cash and
issued to the Company ten (10) secured notes in the amount of
$250,000 each and one (1) secured note in the amount of $125,000,
in exchange for the delivery of the Securities and the Collateral
Shares;
WHEREAS , at the Closing, the Company desires to sell,
and the Investor desires to purchase, the Warrant and the Debenture
upon the terms and conditions stated in this Purchase Note;
and
NOW, THEREFORE , in consideration of the foregoing recitals and
the mutual promises, representations, warranties and covenants
hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1.
The Note
(a)
Amount . This Purchase Note shall be in the amount of
$250,000 (the “ Loan ”), which the Investor
shall deliver to the Company at the Closing.
(b)
Interest . The Loan shall bear interest at a rate
of 5% per year and the interest will be payable in full upon the
maturity date unless sooner prepaid.
(c)
Maturity Date . The Purchase Note shall be due
and payable in full and in cash on the date that is fifty (50)
months from the date hereof or August 18, 2013 or such earlier date
as described in subsection 1(d), below (the “ Maturity
Date ”). The Investor shall be required to pay
the full amount of the Loan in cash, unless Investor is permitted
to offset the amount then due by any amount owed under the Drinks
Debenture as provided by Section 3 below.
(d)
Mandatory Prepayment Date . Unless this Purchase
Note has previously been satisfied or offset by either the Company
or Investor with another liability, the Investor shall be required
to satisfy the payment under this note at such time when the
following items are met: (i) the shares of common stock deliverable
in full or partial satisfaction of the Drinks Debenture may be sold
pursuant to Rule 144 promulgated under the Securities Act of 1933,
as amended, without limitation; (ii) the seven (7) month
anniversary from the date hereof has elapsed; (iii) the amount
outstanding under the Drinks Debenture is less than Three Million
Five Hundred Thousand Dollars ($3,500,000); and (iv) there is no
Trigger Event or Event of Default occurring, and be continuing,
under the Drinks Debenture.
(e)
Recourse . The Company shall have full recourse
against the Investor in the event that this Note is not paid when
due.
2.
Security Interest . The re-payment of this Note
is secured by the Vermont Student Assistant Corp. Auction Rate
Securities Bond with a face value of $500,000 and owned by the
Investor (the “Securities Bond”). The
Securities Bond is held by the Investor electronically and as of
the Closing shall be transferred to the escrow agent to be held
pursuant to the terms of the Securities Bond Pledge Agreement
attached hereto as Exhibit A.
The Investor shall have the authority to, with
the prior written consent of the Company, provided that such
consent is not unreasonably withheld, to add additional collateral
or substitute collateral as it deems fit provided that the fair
market value of the collateral is not diminished.
3.
Offset of Loan with Drinks Debenture . In the occurrence of
an event of default or a Trigger Event under the Drinks Debenture,
at either the Investor’s or the Company’s sole option,
such party, shall be entitled to satisfy all or any part
of
