NOTE PURCHASE AGREEMENT
Between
VERMONT PURE SPRINGS, INC.,
and
XXXXX XXXXXX
Relating to the Note of
EXCELSIOR SPRINGS WATER COMPANY, INC.
NOTE PURCHASE AGREEMENT
This Note Purchase Agreement, made and entered into this 27th day of
August, 1997 (the "Agreement") by and between VERMONT PURE SPRINGS, INC., a
Delaware corporation (the "Buyer") and XXXXX XXXXXX (the "Seller").
WITNESSETH:
WHEREAS, Excelsior Springs Water Company, Inc. (the "Company") is
engaged in the business of home and office delivery of water products;
WHEREAS, the Seller owns a promissory note (the "Note:) of the Company
with a face amount of $185,110.12 and unpaid and accrued interest of $89,769.76
through July 31, 1997;
WHEREAS, the Seller desires to sell his Note to the Buyer pursuant to
the terms and conditions set forth in this Agreement;
WHEREAS, the Buyer desires to purchase (the "Purchase") the Note from
the Seller on the terms and conditions set forth in this Agreement; and
WHEREAS, the persons owning all of the promissory notes of the Company
other than that owned by Seller ("Other Noteholders") and the persons owning all
of the stock of the Company (the "Stockholders") are also selling all of their
stock and notes to Seller as evidenced by individual Stock Purchase Agreement
(collectively, the "Stock Purchase Agreements") and Note Purchase Agreement
("collectively, the "Note Purchase Agreements") being executed contemporaneously
with this Agreement.
NOW, THEREFORE, the Buyer and the Seller, in consideration of the
agreements, covenants and conditions contained herein, hereby make the following
representations and warranties, give the following covenants and agree to be
legally bound hereby as follows:
ARTICLE I
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
OF THE SELLER
As an inducement to the Buyer to enter into this Agreement and to
consummate the transactions contemplated herein, the Seller represents and
warrants to the Buyer and agree as set forth in this Article I, and the Seller
acknowledges that the Buyer intends to rely on such representations and
warranties. The representations and warranties of the Seller are qualified by
the information set forth in the Schedules referred to in this Article I.
1.1 Authority. The Seller has the authority to execute, deliver
and perform his obligations under this Agreement. This Agreement, when executed
and delivered by the Seller
and assuming the due execution hereof by the Buyer, will constitute the valid,
legal and binding agreement of the Seller enforceable in accordance with its
terms. Except as described on Schedule 1.2 hereof, no consent, authorization,
approval, order, license, certificate or permit of or from or declaration or
filing with, any Federal, state, local or other governmental authority or any
court or other tribunal (collectively, the "Governmental Consents") is required
in connection with the execution, delivery or performance of this Agreement by
the Seller. Except as described on Schedule 1.1, no consent of any party to any,
contract, agreement, instrument, lease, license, arrangement or understanding is
required for the execution, delivery or performance of this Agreement by the
Seller. The execution, delivery and performance by the Seller do not (i)
violate, result in a breach of, conflict with or (with or without the giving of
notice or the passage of time or both) entitle any party to terminate, modify or
otherwise change, in any material respect, the rights or obligations of the
parties thereunder or call a default under any such contract, agreement,
instrument, lease, license, arrangement, or understanding, or (ii) violate,
result in a breach of or conflict, in any material respect, with any law, rule,
regulation, order, judgment or decree binding the Seller.
1.2 Brokers. The Seller has not paid or become obligated to pay any fee
or commission to any broker, finder or intermediary for or on account of the
transactions provided for in this Agreement. The Seller does not have any
agreement or obligation whatsoever with entities other than the Buyer regarding
any proposed acquisition of the Company by any such entity and the Seller is not
engaged in any negotiations with any such entity for any such acquisition.
1.3 Securities Laws.
(a) Seller acknowledges receipt of copies of the Annual
Report, the 1996 Form 10-K and the form 10-Q for the calendar quarter ending
March 31, 1997 of the Buyer.
(b) Seller acknowledges that any shares of Stock of Buyer
received by him pursuant to this Agreement (the "Shares") have been delivered to
them pursuant to an exemption from the registration requirements of the
Securities Act of 1933, as amended (the "Act") and may not be resold or
otherwise transferred unless registered under the Act or unless an exemption
from the registration requirements of the Act is available. Rule 144 under the
Act, permits sales or other transfers of unregistered securities by a holder
after a period of one (1) year from the date hereof. Subject to compliance with
restrictions regarding amounts which may be sold, the manner of sale and the
other terms and conditions of that Rule.
(c) Seller acknowledges that:
(i) the Shares being acquired by his are for his
own account, for investment and without a view to the distribution or resale
thereof;
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(ii) during the course of this transaction and
prior to his receipt of the Shares, he has had access to all information
concerning Buyer, its business and this transaction that it deemed necessary to
make the determination to acquire the shares; he or she has had access to
any additional information deemed necessary by it to verify the accuracy of
any information given to it; and he has received all information which they
have requested, and he has been given an opportunity to ask questions of, and
receive answers from representatives of the Buyer concerning the terms and
conditions of the Purchase, and all such questions have been answered to the
satisfaction of the Seller;
(iii) he has knowledge and experience in financial
matters and is capable of evaluating the risks of the Shares and making an
informed business decision with respect thereto;
(iv) Buyer may instruct any transfer agent for
its common stock not to permit transfer of the Shares to be made unless
specifically authorized by Buyer;
(v) the certificates for the Shares will be
legended to reflect the restrictions on the transferability of the Shares; and
(vi) he has been represented by legal counsel in
connection with the Agreement and the receipt of the Shares by him.
1.4 No Omissions. None of the representations or warranties of the
Seller contained herein and, none of the information contained in the Schedules
referred to in this Article I is false or misleading in any material respect or
omits to state a fact herein or therein, necessary to make the statements herein
or therein in the circumstances in which they were made not misleading in any
material respect.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE BUYER
As an inducement to the Seller to enter into this Agreement and to
consummate the transactions contemplated herein, the Buyer represents and
warrants to the Seller and agrees as follows:
2.1 Organization. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
2.2 Authority. This Agreement and the transactions contemplated herein
have been duly approved by all necessary corporate action on the part of the
Buyer. This Agreement, when executed and delivered by the Buyer, and assuming
due execution hereof by the Company and the Seller will constitute the valid and
binding agreement of the Buyer enforceable in
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accordance with its terms. Neither the execution nor the delivery of this
Agreement, nor the consummation of the transactions contemplated herein, nor
compliance with nor fulfillment of the terms and provisions hereof, will (i)
conflict with or result in a breach of the terms, conditions or provisions of or
constitute a default under the governing instruments of the Buyer, any
instrument, mortgage, agreement, judgment, order, award, decree or other
restriction to which the Buyer is a party or by which the Buyer is bound or any
statute or regulatory provisions affecting it or (ii) require the approval,
consent, or authorization of or any filing with or notification to any Federal,
state or local court, governmental authority or regulatory body. The Buyer has
full power and authority to purchase the Stock pursuant to this Agreement and to
do and perform all acts and things required to be done by the Buyer under this
Agreement.
2.3 Legal Proceedings. There is no legal, administrative or arbitration
proceeding action or suit pending or to Buyer's knowledge which, if adversely
determined, would materially and adversely affect the financial condition,
business or assets of the Buyer or the ability of the Buyer to consummate the
transactions contemplated herein.
2.4 Agreement Not in Breach of Other Instruments. The execution,
delivery and performance of this Agreement and the Consulting Agreement by the
Buyer will not: (i) violate, conflict with or constitute a default under any
term or provision of the Certificate of Incorporation or By-laws of the Buyer;
(ii) result in a default or breach of or give rise to any right of termination,
cancellation or acceleration, under the terms, conditions or provisions of any
note, bond, mortgage, deed of trust, commitment, indenture, lease, guarantee,
authorization, franchise, license, permit, agreement, contract or any other
instrument or obligation to which the Buyer is a party or by which it or any of
its properties or assets have been bound; (iii) violate any law, order, rite,
injunction, decree, statute, rule or regulation applicable to the Buyer or its
properties or assets; (iv) result in the creation or imposition of any lien,
charge or encumbrance upon any of the assets of the Buyer; (v) terminate or
adversely affect any permit, license or authorization of a governmental
authority used or required by the Buyer in the conduct of its business. The
consent or approval by or notice to any governmental or regulatory authority is
required in connection with the execution and delivery of this Agreement or the
Consulting Agreement entered into with Seller as defined below, the consummation
of the transactions contemplated hereby or the fulfillment of the terms hereof
or thereof.
2.5 Brokers. Neither the Buyer nor its representatives have paid or
become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions provided for in this
Agreement.
2.6 No Omissions. None of the representations or warranties of the
Buyer contained herein and none of the other information or documents furnished
to the Seller or the Company by the Buyer or its representatives in connection
with this Agreement is false or misleading in any material respect or omits to
state a fact herein or therein necessary to make the statements herein or
therein not misleading in any material respect; to the best knowledge of the
Buyer, there is no fact which adversely affects, or in the future is likely to
adversely affect, the business
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or assets of the Buyer in any material respect which has not been disclosed in
writing to the Seller or the Company.
ARTICLE III
COVENANT OF THE SELLER
Non-Competition.
(a) In furtherance of the sale of the Stock to the Buyer, upon the
consummation of the transactions contemplated herein and more effectively to
transfer and protect the business of the Company, the Seller agrees that for a
period ending on the fifth anniversary of the date hereof, he will not (i)
directly or indirectly own, manage or operate a home and office water delivery
business anywhere in New York and any other state in which the Company presently
conducts its business, that sells to any of the Company's existing customers;
provided that ownership of not more than five percent (5%) of the issued and
outstanding shares of a class of securities of a corporation, the securities of
which are traded on a national securities exchange or in the over-the-counter
market, shall not be deemed ownership of the issuer of such shares for the
purposes of this paragraph; or (ii) induce or attempt to persuade any employee
or agent of the Company to terminate such employment or agency relationship in
order to enter into any such relationship with the Seller or any of his
subsidiaries or affiliates or to enter into any such relationship on behalf of
any other business organization in competition with the Company or the Buyer.
(b) Without limiting the right of the Buyer and any of its successors
or assigns to pursue all other legal and equitable rights available to them for
violation of the covenant set forth in Section 3.1(a) above by the Seller, it is
agreed that other remedies cannot fully compensate the Buyer and its successors
and assigns for such a violation and that the Buyer and its successors and
assigns shall be entitled to injunctive relief to prevent violation or
continuing violation hereof. It is the intent and understanding of each party
hereto that if, in any action before any court or agency legally empowered to
enforce this covenant, any term, restriction, covenant or promise is found to be
unreasonable and for that reason unenforceable, then such term, restriction,
covenant or promise shall be deemed modified to the extent necessary to make it
enforceable by such court or agency.
ARTICLE IV
ACTION PRIOR TO THE CLOSING DATE
The parties hereto agree to take the following actions between the date
hereof and the Closing Date:
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4.1 Confidential Nature of Information. The Buyer and the Seller agree
that, in the event that the transactions contemplated herein shall not be
consummated, each will treat in confidence all documents, materials and other
information which it shall have obtained during the course of the negotiations
leading to the execution of this Agreement, the investigation of the other party
hereto and the preparation of this Agreement and any other documents relating
hereto, and shall return to the other party all copies of non-public documents
and materials which have been furnished in connection therewith.
4.2 Accuracy of Representations and Warranties. The Seller shall
refrain from intentionally taking any action and shall cause the Company to
refrain from intentionally taking any action which would render any
representation and/or warranty contained in Article I of this Agreement
inaccurate at any time between the date hereof and the Closing Date. The Seller
will promptly notify the Buyer of any lawsuits, claims, proceedings or
investigations that, to the knowledge of the Seller, may be brought, asserted or
commenced against the Company, or its officers or directors.
4.3 No Public Announcement. Neither the Seller nor the Buyer shall,
without the approval of the other, make any press release or other public
announcements or filing concerning the transactions contemplated by this
Agreement, except as and to the extent that any such party shall be so obligated
by law, in which case the other party shall be advised thereof and given an
opportunity to comment thereon.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER
The obligations of the Buyer under this Agreement to purchase and pay
for the Stock and the Notes shall, at the option of the Buyer, be subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
5.1 Buyer shall have entered into a Note Purchase Agreement
satisfactory to it with each of the Other Noteholders of the Company for the
purchase in the aggregate (including the Note being purchased hereunder) of all
of the issued and outstanding promissory notes of the Company, Buyer shall have
entered into a Stock Purchase Agreement satisfactory to it with each of the
Stockholders, and each of the Other Noteholders and Stockholders have performed
all of their obligations under their respective Stock Purchase Agreement and
Note Purchase Agreement and are ready, willing and able to deliver to Buyer
their stock and notes on the Closing Date.
5.2 There shall have been no material breach by the Seller in the
performance of any of its covenants and agreements herein, each of the
representations and warranties of the Seller contained in this Agreement shall
be true and correct in all material respects on the Closing Date as though made
on the Closing Date and there shall have been delivered to the Buyer a
certificate or certificates to that effect, dated the Closing Date and signed by
the Seller.
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ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER
The obligations of the Seller under this Agreement to deliver the Stock
shall, at the option of the Seller, be subject to the satisfaction, on or prior
to the Closing Date, of the following conditions:
There shall have been no material breach by the Buyer in the
performance of any of its covenants and agreements herein, each of the
representations and warranties of the Buyer contained or referred to in this
Agreement shall be true and correct in all material respects on the Closing Date
as though made on the Closing Date and there shall have been delivered to the
Seller a certificate or certificates to that effect, dated the Closing Date and
signed on behalf of the Buyer by its President.
ARTICLE VII
PURCHASE PRICE AND CLOSING
7.1 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place on August , 1997 or such other date
as shall be mutually agreed to by the Seller and the Buyer (the "Closing Date").
7.2 Purchase and Sale of the Note. On the Closing Date, the Seller
shall sell to the Buyer the Note, including all rights hereunder to receive
principal and interest (whether or not previously accrued) for the following
consideration: $130,000 cash payable by check of Buyer and that amount of shares
of Vermont Pure Springs Holding, Inc. ("Holding"), the parent of Buyer, equal to
$145,000 divided by the closing price of the stock of Holdings as reported in
The Wall Street Journal for the NASDAQ small cap market for the trading the day
immediately prior to the Closing Date, provided that if there are no trades on
such day the closing price shall be the mean between the closing "bid" and "ask"
prices for such day (the "Closing Date Price").
7.3 Deliveries by the Seller. At the Closing, the Seller shall sell,
assign, transfer and issue to the Buyer all of his Notes, and shall deliver, at
the Closing, the following:
(a) The original of the Note properly endorsed.
(b) An opinion dated the Closing Date hereof from counsel for
the Seller in form and substance satisfactory to the Buyer and its counsel, to
the effect that:
(i) The Seller has full power and authority to
execute and deliver the Agreement and to perform his obligations hereunder.
Neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated herein, requires the consent,
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approval or authorization of or any filing with or notification to any Federal,
state or local court, governmental authority or regulatory body not already
obtained or made, as the case may be.
(ii) To the best of such counsel's knowledge
there is no action, suit, proceeding or investigation pending or threatened
against the Seller which questions the legality, validity or propriety of this
Agreement or of any action taken or to be taken by the Seller pursuant to or
in connection with this Agreement.
(iii) The Seller is the lawful owner of the Note,
to the best of such counsel's knowledge, free and clear of all adverse claims,
with unrestricted right and power to transfer and deliver the Note to the Buyer.
The Seller has executed and delivered to the Buyer such instruments as are
sufficient in form to vest good and marketable title to the Notes in the Buyer
free and clear of all adverse claims.
7.4 Deliveries of the Buyer. At the Closing, the Buyer shall deliver to
the Seller an opinion of Ledgewood Law Firm, P.C., counsel for the Buyer, in
form and substance satisfactory to the Seller and its counsel, to the effect
that (i) The Buyer is a corporation duly organized, validly existing and in good
standing under the laws State of Delaware; and (ii) this Agreement and the
transactions contemplated herein have been duly approved by all necessary
corporate action of the Buyer and such Agreement, assuming due execution by the
Seller, is the valid and binding agreement of the Buyer enforceable against the
Buyer in accordance with its terms except as enforcement of such agreement may
be limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally.
In giving such opinion, counsel for the Buyer may rely, as to matters
of fact, upon certificates of officers of the Buyer.
ARTICLE VIII
TERMINATION
8.1 Termination. This Agreement may be terminated by the Buyer if any
of the representations, warranties or covenants of the Company or the Seller
have been breached or if the purchase and sale has not been consummated, for any
reason, by August 31, 1997.
If this Agreement is terminated, each party shall pay its own expenses.
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ARTICLE IX
SURVIVAL OF OBLIGATIONS; INDEMNIFICATION; LEGAL FEES
9.1 Survival of Obligations. All representations and warranties made
herein by the Seller and his obligations to be performed pursuant to the terms
hereof, shall survive the Closing hereunder and shall terminate three years
after the Closing.
9.2 Legal Expenses. In the case of any action brought by any party
hereto under this Agreement, the prevailing party shall be entitled to be
reimbursed by the losing party an amount equal to all of the prevailing party's
reasonable legal or other professional fees and expenses. In the case of a
judgment of less than that sought in any formal complaint, the party obtaining
the judgment shall be deemed to be the prevailing party to the extent of the
amount of the judgment divided by the amount sought and shall be deemed to be
the losing party with respect to the balance of the claim.
ARTICLE X
MISCELLANEOUS
10.1 Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given (a) three (3) days after
having been sent by certified or registered mail, return receipt requested, (b)
one (1) business day after having been sent by regional recognized courier
guarantying next business day delivery, or (c) upon delivery if given by hand
delivery against written receipt, addressed as follows:
If to the Buyer:
Vermont Pure Springs, Inc.
00 Xxxx Xxx Xxx Xxxx
Xxxxx Xxxxxx, XX 00000
with a copy to:
Xxxxx X. Xxxxx, Esq.
Ledgewood Law Firm
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
If to the Seller:
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With a copy to:
10.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Vermont without regard to
the provisions on conflicts of law.
10.3 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
10.4 Severability. In case any one or more of the provisions contained
herein shall, for any reason, be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause enforcement of the terms hereof to
be unreasonable.
10.5 Expenses. Except as expressly stated otherwise herein, each party
hereto shall pay its own expenses (including, without limitation, legal and
accounting fees and expenses) incident to its negotiation and preparation of
this Agreement and to its performance and compliance with the provisions
contained herein.
10.6 Titles and Headings. Titles and headings to Articles and Sections
herein are inserted for the convenience of reference only and are not intended
to be a part of or to affect the meaning or interpretation of this Agreement.
10.7 Schedules. The Schedules to this Agreement shall be construed with
and read as an integral part of this Agreement to the same extent as if the same
had been set forth verbatim herein.
10.8 Entire Agreement; Amendments and Waivers. This Agreement,
including the Schedules hereto, contains the entire understanding of the parties
hereto with regard to the subject matter contained herein. The parties hereto,
by mutual agreement in writing, may amend, modify and supplement this Agreement.
The failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the rights of
such party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
VERMONT PURE SPRINGS, INC.
Attest: By:
President
Witness: SELLER:
Xxxxx Xxxxxx
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