Exhibit 10.2
WARRANT AGREEMENT
AGREEMENT, dated as of the 1st day of December, 1996, by and between
VERMONT PURE HOLDINGS, LTD. ("Company") and XXXXXX X. XXXXXX ("Holder") the
president of Corporate Investors Network, Inc. ("Network").
WHEREAS, on December 1, 1996 ("Date of Grant"), the Company agreed to issue
a warrant to Holder, [subject to approval of the Board of Directors of the
Company,] to purchase up to 20,000 shares of the common stock, $.001 par value
("Common Stock"), said warrant being issued in respect of Network's services to
the Company pursuant to that certain Consulting Agreement entered into between
Network and the Company as of December 1, 1996 (the "Consulting Agreement")
pursuant to which Network will render financial public relations and consulting
services to the Company for a period of up to three years until November 30,
1999.
NOW THEREFORE, in consideration of the covenants herein contained, the
parties hereto hereby agree as follows:
1 . Issuance. The Company, subject to approval of the Board of Directors of
the Company, hereby issues to the Holder the right to purchase up to an
aggregate of 20,000 shares of Common Stock on the terms and conditions herein
set forth (such right being referred to as the "Warrant").
2. Vesting and Purchaser Price. The Holder shall have the right to purchase
the Common Stock subject to this Warrant as follows: (I) 5,000 shares will be
exercisable at $2.00 per share at such time as the Company's Common Stock has a
last sale price for five consecutive trading days equal to or in excess of $2.00
at any time prior to December 1, 1999, (ii) 5,000 additional shares will be
exercisable at $3.00 per share at such time as the Company's Common Stock has a
last sale price for five consecutive trading days equal to or in excess of $3.00
at any time prior to December 1, 1999, (iii) 5,000 additional shares will be
exercisable at $4.00 per share at such time as the Company's Common Stock has a
last sale price for five consecutive trading days equal to or in excess of $4.00
at any time prior to December 1, 1999 and (iv) 5,000 additional shares will be
exercisable at $5.00 per share at such time as the Company's Common Stock has a
last sale price for five consecutive trading days equal to or in excess of $5.00
at any time prior to December 1, 1999. The last sale price will be as reported
by The Nasdaq Stock Market or any other national exchange on which the Company's
Common Stock is traded.
3. Exercise and Term. The Holder has the right to purchase the shares of
Common Stock subject to this Warrant for a period of five years from the date
that the shares of Common Stock become purchasable hereunder. If none of the
shares of Common Stock become purchasable prior to December 1, 1999, then this
Warrant shall terminate in full. In addition, if the Consulting Agreement shall
be terminated prior to December 1, 1999, for any reason, this Warrant will
terminate as to any shares of Common Stock that are not purchasable hereunder on
such date of termination.
4. Payment of Exercise Price. The purchase price for the shares of Common
Stock pursuant to which the Warrant is exercised, will be paid in full at the
time of exercise, in cash by certified check or wire transfer, unless other wise
agreed to in writing by the Company. Exercise of any Warrant hereunder shall be
by written notice to the Company at its principal place of business, specifying
the number of shares of Common Stock being purchased and accompanied by payment
of the purchase price and any withholding tax obligations imposed on the Company
by reason of the exercise of the Warrant. In the event that the tax obligation,
if any, is not paid, the Company will be permitted to treat as payment of any
withholding tax amount due, the exercise of that number of whole shares of
Common Stock equal to the amount of the tax due divided by the fair market value
of the Common Stock as of the date the Warrant is exercised, and the Company
will be permitted to deduct such number of shares of Common Stock from the total
number being exercised. Certificates representing the shares as to which the
Warrant shall have been exercised shall be registered in the name of the person
exercising the Warrant.
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5. Rights of Stockholder. The Holder shall not have any of the rights of a
stockholder with respect to the Common Stock covered by the Warrant until the
date of the issuance of a stock certificate for shares of Common Stock purchased
hereunder.
6. Transferability. Unless consented to in writing by the Company, this
Warrant and the rights conferred may not be transferred, assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of this Warrant or
any right conferred hereby, or upon the levy of any attachment or similar
process on the rights conferred hereby, without the written consent of the
Company, this Warrant and the rights conferred hereby shall immediately become
null and void. Before the Company consents to any transfer, assignment, pledge
or hypothecation of this Warrant, the transferee, assignee or pledgee of the
Warrant shall agree to be bound by the terms of this Warrant and deliver such
other certificates and agreements as the Company reasonably requests.
7. Restricted Nature of Securities. This Warrant and the shares of Common
Stock receivable on the exercise of the Warrant are not registered under the
Securities Act of 1933, as amended (the "Act"). As a condition to the sale of
Common Stock on the exercise of the Warrant, the person exercising the Warrant
may be required by the Company to give it such documents, including such
appropriate investment representations as may be required by Counsel for the
Company and such additional agreements as the Counsel for the Company may
determine, as a condition to the acceptance of the exercise of any Warrant
hereunder.
The Holder represents that it has received and carefully reviewed the
Company's Annual Report on Form lo-KSB for the fiscal year ended October 28,
1995, Quarterly Reports on Form 10-QSB for the quarters ended in January, April
and July, 1996, and Report to Stockholders and related proxy materials for the
Company's Annual Meeting, held on September 6, 1996, and has been granted the
opportunity to obtain any additional, publicly available information relating to
the Company and ask questions of executives of the Company that it deems
necessary to verify the accuracy and completeness of the information provided to
it. Holder represents that it is acquiring this Warrant and will acquire the
Common Stock on its exercise solely for its own account, for the purpose of
investment and not with a view to or for resale in connection with any
distribution thereof, except in compliance with the Act, any applicable state
securities laws and the rules and regulations thereunder. Holder represents that
its knowledge and experience in financial and business matters is such that it
is capable of evaluating an investment in the Warrant and that its financial
condition is such that it can bear the economic risks of acquiring and holding
this Warrant.
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8. Sales Under Securities Act. Anything in this Agreement to the contrary
notwithstanding, the Holder hereby agrees that it shall not sell, transfer by
any means or otherwise dispose of this Warrant or the shares of Common Stock
acquired by him upon exercise of the Warrant hereunder without registration
under the Act, or in the event that they are not so registered, unless (a) an
exemption from the Act is available thereunder, and (b) the Holder has furnished
the Company with notice of such proposed transfer, and the Counsel -for the
Company, in its reasonable opinion, shall deem such proposed transfer to be so
exempt, or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably satisfactory to
the Counsel for the Company, that in such counsel's opinion such proposed
transfer shall be so exempt.
9. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its transfer agent
against the transfer of the shares of Common Stock issuable under the Warrant
hereof in the absence of registration under the Act or an exemption therefrom
provided herein.
(b) The certificates evidencing shares of Stock to be issued upon the
exercise of the Warrant may bear the following legends:
"The shares represented by this certificate have been acquired for
investment and have not been registered under the Securities Act of 1933,
as amended. The shares may not be sold or transferred in the absence of
such registration or an exemption therefrom under said Act."
"The shares represented by this certificate have been acquired
pursuant to an warrant agreement dated December 1, 1996, a copy of which is
on file with the Company, and may not be transferred, pledged or disposed
or exempt in accordance with the terms and conditions thereof."
10. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company are increased,
decreased, changed into or exchanged for a different number or kind of stock or
securities of the Company through stock dividend, stock split or reverse stock
split, or stock of a different par value or without par value through amendment
to the Company's Certificate of Incorporation, an appropriate and proportionate
adjustment shall be made in the number and/or kind of securities allocated to
this Warrant, without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding portion of this Warrant, but with a
corresponding adjustment in the price for each share of Common Stock or other
unit of any security remaining covered by this Warrant.
(b) Adjustments under this paragraph shall be made by the Board of
Directors, whose determination as to what adjustments shall be made, and the
extent thereof, shall be final, binding and conclusive. No fractional shares of
Stock shall be issued under any such adjustment.
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11. Miscellaneous Provisions.
(a) Applicable Law. This Agreement will be deemed to have been made and
delivered in New York City and will be governed as to validity, interpretation,
construction, effect and in all other respects by the internal laws of the State
of New York. The Company and the Holder each hereby (I) agrees that any legal
suit, action or proceeding arising out of or relating to this Agreement shall be
instituted exclusively in New York State Supreme Court, County of New York, or
in the United States District Court for the Southern District of New York, (ii)
waives any objection to the venue of any such suit, action or proceeding and the
right to assert that such forum is not a convenient forum for such suit, action
or proceeding, (iii) irrevocably consents to the jurisdiction of the New York
State Supreme Court, County of New York, and the United States District Court
for the Southern District of New York in any such suit, action or proceeding and
(iv) agrees to accept and acknowledge service or any and all process which may
be served in any such suit, action or proceeding in New York State Supreme
Court, County of New York or in the United States District Court for the
Southern District of New York and agrees that service of process upon it mailed
by certified mail to its address shall be deemed in every respect effective
service of process upon in any suit, action or proceeding.
(b) Amendment. This Agreement may only be amended by a written instrument
executed by the Company and by the Holder.
(C) Entire Agreement. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings of the parties, oral and written, with
respect to the subject matter hereof.
(d) Execution in Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
(e) Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed duly given when delivered by
hand or mailed by registered or certified mail, postage prepaid, return receipt
requested, as follows:
If to the Holder, to: Xxxxxx X. Xxxxxx
c/o Corporate Investors Network, Inc.
00 Xxxxxxxx - Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
If to Company, to: Vermont Pure Holdings, Ltd.
Xxxxx 00
Xxxxxxxxx Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
(f) Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
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(g) Severagility. Any provision of this Agreement which is held by a court
of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction(s) shall be, as to such jurisdiction(s), ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all personal pronouns
used in this Agreement, whether in the masculine, feminine or neuter gender,
shall include all other genders.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the date first above written.
VERMONT PURE HOLDINGS, LTD.
By: \ S \ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx, President
By: \ S \ XXXXXX X. XXXXXX
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Xxxxxx X. Xxxxxx, Managing Director
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