SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|_| Preliminary proxy statement
|X| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Vermont Pure Holdings, Ltd.
(Name of Registrant as Specified in Its Charter)
Timothy G. Fallon
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
|X| $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(j)(2).
|_| $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (1)
(4) Proposed maximum aggregate value of transaction:
|_| Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
- ------------------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE>
VERMONT PURE HOLDINGS, LTD.
Route 66, Catamount Industrial Park
Randolph, Vermont 05060
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 6, 1996
--------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of Vermont Pure Holdings, Ltd. ("Company") will be held at Vermont Technical
College, Randolph Center, Vermont on September 6, 1996 at 1:30 P.M. local time,
for the following purposes:
1. To elect seven directors to hold office until the Annual
Meeting of Stockholders in 1997 and until their
respective successors have been duly elected and
qualified;
2. To transact such other business as may properly come
before the meeting, and any adjournment(s) thereof.
The transfer books will not be closed for the Annual Meeting.
Only stockholders of record at the close of business on July 25, 1996 will be
entitled to notice of, and to vote at, the meeting and any adjournments thereof.
YOU ARE URGED TO READ THE ATTACHED PROXY STATEMENT, WHICH
CONTAINS INFORMATION RELEVANT TO THE ACTIONS TO BE TAKEN AT THE MEETING. IN
ORDER TO ASSURE THE PRESENCE OF A QUORUM, WHETHER OR NOT YOU EXPECT TO ATTEND
THE MEETING IN PERSON, PLEASE SIGN AND DATE THE ACCOMPANYING PROXY CARD AND MAIL
IT PROMPTLY IN THE ENCLOSED ADDRESSED, POSTAGE PREPAID ENVELOPE. YOU MAY REVOKE
YOUR PROXY IF YOU SO DESIRE AT ANY TIME BEFORE IT IS VOTED.
By Order of the Board of Directors
Robert C. Getchell
Secretary
Randolph, Vermont
July 30, 1996
<PAGE>
VERMONT PURE HOLDINGS, LTD.
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement and the enclosed form of proxy are furnished in
connection with solicitation of proxies by the Board of Directors ("Board") of
Vermont Pure Holdings, Ltd. ("Company") to be used at the Annual Meeting of
Stockholders of the Company to be held on September 6, 1996, and any adjournment
or adjournments thereof ("Annual Meeting"). The matters to be considered at the
Annual Meeting are set forth in the attached Notice of Meeting.
The Company's executive officers are located at Route 66, Catamount
Industrial Park, Randolph, Vermont 05060. This Proxy Statement and the enclosed
form of proxy are first being sent to stockholders on or about July 30, 1996.
Record Date and Outstanding Shares
The Board has fixed the close of business on July 25, 1996 as the
record date for the determination of stockholders entitled to notice of, and to
vote at, the Annual Meeting. Only stockholders of record at the close of
business on that date will be entitled to vote at the Annual Meeting or any and
all adjournments thereof. As of July 25, 1996, the Company had issued and
outstanding 9,678,268 shares of Common Stock, par value $.001 ("Common Stock")
comprising all of the Company's issued and outstanding voting stock. Each
stockholder of the Company will be entitled to one vote for each share of Common
Stock.
Solicitation and Revocation
Proxies in the form enclosed are solicited by and on behalf of the
Board. The persons named in the proxy have been designated as proxies by the
Board. Any proxy given pursuant to such solicitation and received in time for
the Annual Meeting will be voted as specified in such proxy. If no instructions
are given, proxies will be voted "FOR" the election of the nominees listed below
under "Election of Directors" and in the discretion of the proxies named on the
proxy card with respect to any other matters properly brought before the meeting
and any adjournments thereof. In such unanticipated event that any other matters
are properly presented at the Annual Meeting for action, the persons named in
the proxy will vote the proxies in accordance with their best judgment. Any
proxy given pursuant to this solicitation may be revoked by the stockholder at
any time before it is exercised by written notification delivered to the
Secretary of the Company, by voting in person at the Annual Meeting, or by
delivering another proxy bearing a later date. Attendance by a stockholder at
the Annual Meeting does not alone serve to revoke his or her proxy.
Quorum
The presence, in person or by proxy, of a majority of the shares of
Common Stock entitled to vote at the Annual Meeting will constitute a quorum at
the Annual Meeting. A proxy submitted by a stockholder may indicate that all or
a portion of the shares represented by such proxy are not being voted
("stockholder withholding") with respect to a particular matter. Similarly, a
broker may not be permitted to vote stock ("broker non-vote") held in street
name on a particular matter in the absence of instructions from the beneficial
owner of such stock. The shares subject to a proxy which are not being voted on
a particular matter (because of either stockholder withholding or broker
non-vote) will not be considered shares entitled to vote on such matter. These
shares, however, may be considered present and entitled to vote on other matters
and will count for purposes of determining the presence of a quorum, unless the
proxy indicates that such shares are not being voted on any matter at the Annual
Meeting, in which case such shares will not be counted for purposes of
determining the presence of a quorum.
<PAGE>
Voting
Under "Election of Directors," the persons nominated for election as
directors will be elected by a plurality of the shares voted at the Annual
Meeting. "Plurality" means that the nominees who receive the highest number of
votes cast "FOR" will be elected as the directors of the Company for the ensuing
year. Consequently, any shares not voted "FOR" a particular nominee (because of
either stockholder withholding or broker non-vote) will not be counted in such
nominee's favor.
Security Ownership of Certain Beneficial Owners
The table and accompanying footnotes on the following pages set forth
certain information as of July 25, 1996 with respect to the stock ownership of
(i) those persons or groups who beneficially own more than 5% of the Company's
Common Stock, (ii) each director and director-nominee of the Company, (iii) the
Company's Chief Executive Officer and each of the Company's next four most
highly compensated executive officers whose individual compensation exceeded
$100,000 in the year ended December 31, 1995, and (iv) all directors and
executive officers of the Company as a group (based upon information furnished
by such persons). Shares of Common Stock issuable upon exercise of options and
warrants which are currently exercisable or exercisable within 60 days of the
date of this Proxy Statement have been included in the following table.
Amount and Nature of Percentage of
Owner's Name and Address Beneficial Ownership Outstanding Shares Owned
Frank G. McDougall, Jr. 70,000(1) 0.7%
32 Hard Place
Quechee, Vermont 05059
Timothy G. Fallon 202,000(2) 2.0%
41 Sarles Street
Bretton Ridge Estates
Mt. Kisco, New York 10549
Robert C. Getchell 25,000(3) 0.2%
15 Clarina Nichols Lane
Quechee, Vermont 05050
David R. Preston 2,000(4) *
115-117 Stage Harbor Road
Chatham, MA 02633
Norman E. Rickard 22,000(3) 0.2%
1 Bretton Ridge Road
Mt. Kisco, NY 10549
Beat Schlagenhauf 20,000(3) 0.2%
Schlagenhauf & Partners, A.G.
Parkring 57
Postfach 524
8027 Zurich, Switzerland
Richard Worth 20,000(3) 0.2%
R.W. Frookies, Inc.
The Bay Complex, Bay Street
Sag Harbor, New York 11963
H. T. Ardinger 620,000(5) 6.4%
6800 West 115th Street
Overland Park, KS 66211
M. Dolores Paoli 687,500(6) 7.1%
1177 Summer Street
Stamford, CT 06905
All Officers and Directors 383,500(7) 3.8%
as a group (8 Individuals)
2
<PAGE>
* Less than .1%.
(1) Includes 70,000 shares of Common Stock issuable upon exercise of
immediately exercisable stock options. Does not include 30,000 shares
of Common Stock issuable upon exercise of stock options which vest in
the future.
(2) Includes 200,000 shares of Common Stock issuable upon exercise of
immediately exercisable stock options. Does not include 230,000 shares
of Common Stock issuable upon exercise of stock options which vest in
the future.
(3) Includes 20,000 shares of Common Stock issuable upon exercise of
immediately exercisable stock options. Does not include 40,000 shares
of Common Stock issuable upon exercise of stock options which vest in
the future.
(4) Does not include 60,000 shares of Common Stock issuable upon exercise
of stock options which vest in the future.
(5) Includes 100,000 shares of Common Stock held in trust for Donna
Ardinger, Deborah Ardinger, Sharon Ardinger and Beverly Ardinger; and
70,000 shares of Common Stock held by H. T. Ardinger & Sons Co.
(6) Does not include 405,000 shares of Common Stock owned by Heights
Development Corp. ("HDC"), a corporation in which Ms. Paoli is a 15%
shareholder. Ms. Paoli's sister, Gloria Paoli, owns 85% of HDC. Ms.
Paoli disclaims beneficial ownership of the shares of Common Stock
owned by HDC.
(7) Includes 372,500 shares of Common Stock issuable upon exercise of
immediately exercisable stock options. Does not include 512,500 shares
of Common Stock issuable upon exercise of stock options which vest in
the future.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's officers, directors and persons who beneficially
own more than ten percent of a registered class of the Company's equity
securities ("ten percent stockholders") to file reports of ownership and changes
in ownership with the Securities and Exchange Commission (SEC") and the National
Association of Securities Dealers, Inc. Officers, directors and ten percent
stockholders are charged by SEC regulation to furnish the Company with copies of
all Section 16(a) forms they file.
Based solely on its review of the copies of such forms
received by it, the Company believes that during the Company's fiscal year ended
October 28, 1996, all required reports on Form 3 and 4 were filed on a timely
basis.
ELECTION OF DIRECTORS
The persons listed below have been designated by the Board as
candidates for election as directors to serve until the next annual meeting of
stockholders or until their respective successors have been elected and
qualified. Unless otherwise specified in the form of proxy, the proxies
solicited by the management will be voted "FOR" the election of these
candidates. In case any of these nominees become unavailable for election to the
Board, an event which is not anticipated, the persons named as proxies, or their
substitutes, shall have full discretion and authority to vote or refrain from
voting for any other nominee in accordance with their judgment.
3
<PAGE>
Name Age Position
Frank G. McDougall, Jr. 46 Chairman of the Board
Timothy G. Fallon 42 Chief Executive Officer, President
and Director
Robert C. Getchell 46 Secretary and Director
David R. Preston 55 Director
Norman E. Rickard 59 Director
Beat Schlagenhauf 43 Director
Richard Worth 45 Director
Frank G. McDougall, Jr. has been the Chairman of the Board since June
1994. Since January 1995, Mr. McDougall has been a part-time employee of the
Company. From December 1993 until January 1995, Mr. McDougall acted as a
consultant to the Company in the areas of management and government relations
and regulation through Frank McDougall Associates, a management company founded
in October 1993, of which Mr. McDougall was the founder and is the principal.
Since April 1996, Mr. McDougall has provided services through Frank McDougall
Associates as the Director of Corporate and Government Relations for the
Dartmouth Hitchcock Medical Center and the Lahey Hitchcock Clinic. From July
1990 to October 1993, Mr. McDougall was the Secretary of the Agency of
Development and Community Affairs of the State of Vermont.
Timothy G. Fallon has been the Chief Executive Officer and President
and a Director of the Company since November 1994. From January 1992 to November
1994, Mr. Fallon was the Senior Vice President Sales and Marketing for Cadbury
Beverages, Inc. From October 1989 to December 1991, Mr. Fallon was Vice
President of Sales for Canada Dry USA, a division of Cadbury Beverages, Inc.
From July 1984 to September 1989, Mr. Fallon served as Vice President - Sales
and Marketing for Pepsi Cola Bottling Company New York City, Inc.
Robert C. Getchell has been a director of the Company since December
1994. On December 6, 1995, Mr. Getchell was appointed the Secretary of the
Company. Mr. Getchell has been a principal of Getchell Professional Association,
a firm of certified public accountants in Quechee, Vermont, for more than the
past five years. In June 1996, Mr. Getchell was named the Chairman of the
Vermont Economic Development Authority.
David R. Preston has been a director of the Company since October 1995.
Mr. Preston has been a consultant and adjunct professor of Suffolk University in
Boston, Massachusetts since September 1994. From 1990 to September 1994, Mr.
Preston was a division president at Kayser-Roth Corporation, a sock and hosiery
manufacturer, located in Greensboro, North Carolina. Mr. Preston is a retired
division president and corporate officer of the Gillette Company.
Norman E. Rickard has been a director of the Company since May 1995.
Mr. Rickard has been the President of Xerox Business Services of Xerox
Corporation since 1992. Mr. Rickard has been employed by Xerox Corporation since
1967 in various capacities, including Director of Business Effectiveness,
Director of the Worldwide Strategic Manufacturing project, Director of Staff
Operations and Vice President of Quality.
Beat Schlagenhauf has been a Director of the Company since July 1993.
Mr. Schlagenhauf has been a principal of Schlagenhauf & Partner, a portfolio
management company in Zurich, Switzerland, for more than the past five years.
Richard Worth has been a Director of the Company since June 1994. Mr. Worth
has been the Chief Executive Officer and President and a director of R.W.
Frookies, Inc., a manufacturer and marketer of cookies and snack products, since
1985. R.W. Frookies, Inc. currently is ranked the eighth largest cookie company
in the United States. From 1978 to 1985, Mr. Worth owned and operated Sorrell
Ridge, Inc., a manufacturer and marketer of jams.
Executive Compensation
The following tables show the cash compensation paid by the Company, as
well as certain other compensation paid or accrued, to each of the two named
executive officers (including the Chief Executive Officer) of the Company for
the fiscal years ended October 30, 1993, October 29, 1994 and October 28, 1995,
options granted to such executive officers during the fiscal year ended October
28, 1995, and the value of all options granted to such executive officers at the
end of the fiscal year ended October 28, 1995.
4
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name and Principal Position Other Long Term Compensation
Annual Annual --------------------------
Fiscal Compensation Compen- Options/ All Other
Year Salary ($) sation($) (#Shares) Compensation $
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Timothy G. Fallon(1) 1995 $172,000 $75,000 400,000 $14,400
Chief Executive Officer and President
- ----------------------------------------------------------------------------------------------------
M. Dolores Paoli(2) 1995 $100,000 -- 5,000 $22,000
Secretary, Treasurer and 1994 $100,000 -- 20,000 $22,000
General Counsel 1993 $100,000 -- 30,000 $22,000
====================================================================================================
<FN>
(1) Mr. Fallon commenced employment with the Company on November 4, 1994. The amounts under "Annual Compensation
Salary" and "Other Annual Compensation" represent payments associated with Mr. Fallon's employment agreement and
the amount under "All Other Compensation" represents a car allowance.
(2) Ms. Paoli resigned as Secretary, Treasurer and General Counsel of the Company on December 6, 1995. The amounts
under "All Other Compensation" represent a retirement benefit equal to $10,000 and car allowance of $12,000 paid
in each of the three fiscal years. No compensation has been paid to Ms. Paoli since her resignation.
</FN>
</TABLE>
- -------------------------------------------------------------------------------
OPTIONS/SHARES GRANTS IN LAST FISCAL YEAR
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Individual Grants
-------------------------------- Potential Realizable Value at
% of Total Assumed Annual Rates of Stock
Options/Shares Market Price Appreciation for Option
Granted to Exercise Price on Term(1)
Options/Shares Employees in Price Date of Expiration -----------------------------
Name Granted (#) Fiscal Year ($/Share) Grant ($) Date 0% ($) 5% ($) 10% ($)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Timothy G. Fallon
Chief Executive Officer 400,000 52% $2.25 $2.25 12/01/99 -0- $194,000 $417,600
and President
- --------------------------------------------------------------------------------------------------------------------------
Ms. Dolores Paoli(2)
Secretary, Treasurer and 5,000 8% $3.30 $3.00 11/3/98 -- -- --
General Counsel
==========================================================================================================================
<FN>
(1) Based on difference between aggregate market price on the date of grant and the aggregate exercise
prices of the options granted.
(2) Ms. Paoli resigned as Secretary, Treasurer and General Counsel of the Company on December 6, 1995 and as a result of
such resignation all the options granted to Ms. Paoli were cancelled pursuant to the terms of the option agreement.
</FN>
</TABLE>
- -------------------------------------------------------------------------------
AGGREGATE YEAR-END OPTION VALUES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of unexercised options Value of unexercised in-the-money
at fiscal year-end (#) options at fiscal year-end ($)(1)
----------------------------- ----------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Timothy G. Fallon 100,000 300,000 -0- -0-
President and Chief Executive Officer
- -----------------------------------------------------------------------------------------------------------
M. Dolores Paoli(2) 5,000 -0- -0- -0-
Secretary, Treasurer and General Counsel
===========================================================================================================
<FN>
(1) As of October 28, 1995, the market value of a share of Common Stock was $1.50 which was less than
the per share exercise price of Mr. Fallon's option of $2.25.
(2) Ms. Paoli resigned as Secretary, Treasurer and General Counsel of the Company on December 6, 1995
and as a result of such resignation all the options granted to Ms. Paoli were cancelled pursuant to
the terms of the option agreement.
</FN>
</TABLE>
5
<PAGE>
The Company cannot determine, without unreasonable effort or expense,
the specific amount of certain personal benefits afforded to its employees, or
the extent to which benefits are personal rather than business. The Company has
concluded that the aggregate amounts of such personal benefits which cannot be
specifically or precisely ascertained do not in any event exceed, as to each
individual named in the preceding table, the lesser of $50,000 or 10% of the
compensation reported in the preceding table for such individual, or, in the
case of a group, the lesser of $50,000 for each individual in the group, or 10%
of the compensation reported in the preceding table for the group, and that such
information set forth in the preceding table is not rendered materially
misleading by virtue of the omission of the value of such personal benefits.
Executive Participation in Compensation Decisions and Compensation Committee;
Audit Committee
Compensation decisions during the period of inception of the Company
through the fiscal year ended October 28, 1995 were made by the Company's Board.
Each of the named executives in the Summary Compensation Table served as a
director during the periods indicated in the table and the footnotes thereto;
however, each of the executives during the periods reflected in the above
Summary Compensation Table was employed under a written employment agreement
which, in the case of Mr. Fallon, was entered into before he was a director of
the Company.
On January 13, 1995, the Board of the Company appointed a Compensation
Committee. The Compensation Committee is empowered to make recommendations to
the Board relating to the overall compensation arrangements for senior
management of the Company and any compensation plans in which officers and
directors of the Company are eligible to participate.
On May 12, 1995, the Compensation Committee reviewed the exercise
prices of the options previously granted to the executive officers and directors
of the Company in light of the market price of the Common Stock which had been
substantially less than the exercise price of the options for a considerable
part of 1994 and all of 1995 until the date of the meeting. The Compensation
Committee then recommended to the Board that all of the options granted to
executive officers and directors be repriced. After review, the Compensation
Committee believed the options represented incentive compensation for services
of such persons, and it was necessary to relate the exercise price of such
options more directly to the current market price of the Common Stock to provide
the necessary incentive component. In connection with its recommendation, the
Compensation Committee also considered the actual and projected sales, revenues
and expenses of the Company. As a result of the Compensation Committee's
recommendation to the Board, the Board regranted options to purchase an
aggregate of 753,000 shares of Common Stock on the same terms as originally
granted with the exceptions that the exercise prices of all such options be
reduced to the market price of $2.25 on May 12, 1995, and that options
previously granted to Mr. Timothy G. Fallon to purchase 133,332 shares of Common
Stock and options previously granted to Mr. Frank G. McDougall to purchase
70,000 shares of Common Stock of such shares were regranted as incentive options
under the Company's 1993 Performance Equity Plan, rather than as non-incentive
options, so as to take full advantage of the tax aspects of options available to
employees of the Company.
On July 24, 1996, the Board of Directors reviewed the compensation of
the directors of the Company. The review covered the annual and meeting fees
paid to the outside directors, the options held by each director and the need to
provide for adequate compensation in light of the frequency of meetings and the
amount of time the individuals have been devoting and will be devoting to the
activities of the Board of Directors of the Company. As a result of this review,
the Board granted to each current director options to purchase up to 30,000
shares of Common Stock, vesting at the rate of 10,000 options on July 24 in each
of 1997, 1998 and 1999. Of these options, Mr. Fallon received 20,000 options as
incentive options and Mr. McDougall received 30,000 options as incentive
options, each under the 1993 Performance Equity Plan. Each of the options is
exercisable at $2.50 per share and expires on July 24, 2006.
On January 13, 1995, the Board of the Company appointed an Audit
Committee. The Audit Committee, among other things, is empowered to recommend to
the Board the engagement of the independent auditors and to review the scope and
procedures of the activities of the independent auditors and the reports on
their audits. The Audit Committee will meet periodically with the independent
auditors and management to review their work and confirm that they are properly
discharging their responsibilities.
6
<PAGE>
Employment Arrangements
On November 4, 1994, the Company entered into an employment agreement
with Mr. Timothy G. Fallon which expires November 1, 1998. Pursuant to the
agreement, Mr. Fallon acts as the Chief Executive Officer and President of the
Company. The annual base salary is $172,000, which will be reviewed annually by
the Board. In addition, Mr. Fallon received single sum payments of $75,000 on
January 2, 1995 and $50,000 on January 2, 1996. Mr. Fallon is entitled to an
incentive bonus of $50,000 if in any fiscal year the Company has annual sales in
excess of $12,500,000. The incentive bonus will be increased to $75,000 if the
annual sales of the "Vermont PureTM" brand are in excess of $20,000,000. Mr.
Fallon is also entitled to a supplemental bonus of $100,000 in any year that the
Company and its consolidated subsidiaries as they existed on November 4, 1994,
has positive net income before the supplemental bonus. Pursuant to the
agreement, Mr. Fallon is prohibited from competing with the Company for a period
of two years following the termination of the agreement. In connection with the
employment agreement, the Company granted Mr. Fallon an option to purchase up to
400,000 shares of Common Stock. The exercise price was reduced on May 12, 1995
by the Board from $3.00 to $2.25, the then market price of the Common Stock, and
options to purchase 133,332 shares of Common Stock were converted from
non-incentive to incentive stock options. Options to purchase 100,000 shares of
Common Stock become exercisable on each of November 4, 1994, 1995, 1996 and 1997
and remain exercisable until the close of business on December 1, 1999. As of
the date of this Proxy Statement, Mr. Fallon has the right to purchase 200,000
shares of Common Stock. The Company has granted Mr. Fallon the right to demand
that the Company register for public sale the shares of Common Stock underlying
the options.
The Company engaged Mr. Frank G. McDougall, Jr., a Director of the
Company, as a consultant on a nonexclusive basis principally in the areas of
management and government relations and regulation from December 1993 until
January 1995. Mr. McDougall was paid $30,000 per year and was reimbursed for his
expenses for these services. In January 1995, Mr. McDougall became a part-time
employee of the Company and currently is paid a salary of $40,000 per year and
provided a leased car to the value of $8,500 per year .
Stock Options
In 1991, the Company adopted the 1991 Stock Option Plan ("1991 Plan")
which authorized the granting of non-qualified stock options for up to a maximum
of 800,000 shares of Common Stock. Currently there are issued non-qualified
stock options to acquire up to 2,000 shares of Common Stock under the 1991 Plan.
Most of the previously outstanding options granted under the 1991 Plan were
retired due to employee terminations and under the repurchase plan approved by
the Board on January 13, 1995. The 1991 Plan has been suspended and no further
options will be granted under the plan.
On November 3, 1993, the Board adopted the 1993 Performance Equity Plan
("1993 Plan"). The 1993 Plan authorizes the granting of awards for up to
1,000,000 shares of Common Stock to the Company's key employees, officers,
directors and consultants. Awards consist of stock options (both non-qualified
options and options intended to qualify as "incentive" stock options under
Section 422 of the Internal Revenue Code of 1986, as amended ("Code"),
restricted stock awards, deferred stock awards, stock appreciation rights and
other stock based awards, as described in the 1993 Plan. The 1993 Plan was
effective as of November 3, 1993 and approved by the stockholders on August 24,
1994. At July 25, 1996, under the 1993 Plan, there were granted options to
purchase an aggregate of 476,332 shares of Common Stock at prices ranging from
$1.75 to $3.75 per share, exercisable from vesting until various expiration
dates between 1998 and 2001. Under these options, currently an aggregate of
438,332 shares of Common Stock may be purchased by the optionholders as
incentive options and 38,000 shares of Common Stock may be purchased by an
optionholder as non-incentive options. The table below sets forth those options
granted under the 1993 Plan to directors and officers of the Company.
7
<PAGE>
<TABLE>
<CAPTION>
Number of Exercise
Name Shares Price Grant Date Expiration Date
<S> <C> <C> <C> <C>
Timothy G. Fallon
Chief Executive Officer, 133,332 $2.25 May 12, 1995 December 1, 1999
President and Director 20,000 $2.50 July 24, 1996 July 24, 2006
70,000 $2.25 May 12, 1995 Various dates in
Frank G. McDougall 1999 and 2000
Chairman of the Board 30,000 $2.50 July 24, 1996 July 24, 1996
Bruce MacDonald 25,000 $3.25 June 22, 1994 June 15, 1999
Executive Vice President 20,000 $1.75 December 6, 1995 December 6, 2000
and Chief Financial Officer 10,000 $2.12 June 7, 1996 June 7, 2001
</TABLE>
The Company has granted options to acquire an aggregate of 1,226,668
shares of Common Stock of the Company not under any stock option plan at prices
ranging from $1.75 to $6.00. All of these options are non-incentive options. Of
these options, 546,668 have been granted to directors and officers of the
Company and 682,000 have been granted to other persons or entities. The table
below sets forth those options granted to directors and officers of the Company.
<TABLE>
<CAPTION>
Number of Exercise
Name Shares Price Grant Date Expiration Date
<S> <C> <C> <C> <C>
Timothy G. Fallon
Chief Executive Officer, 266,668 $2.25 May 12, 1995 December 1, 1999
President and Director 10,000 $2.50 July 24, 1996 July 24, 2006
20,000 $2.25 May 12, 1995 January 13, 2000
Robert C. Getchell, Director 10,000 $2.12 June 7, 1996 June 7, 2001
30,000 $2.50 July 24, 1996 July 24, 2006
20,000 $1.75 December 6, 1995 December 6, 2000
David R. Preston, Director 10,000 $2.12 June 7, 1996 June 7, 2001
30,000 $2.50 July 24, 1996 July 24, 2006
20,000 $2.25 May 12, 1995 May 12, 2000
Norman E. Rickard, Director 10,000 $2.12 June 7, 1996 June 7, 2001
30,000 $2.50 July 24, 1996 July 24, 2006
20,000 $2.25 May 12, 1995 September 1, 1999
Beat Schlagenhauf, Director 10,000 $2.12 June 7, 1996 June 7, 2001
30,000 $2.50 July 24, 1996 July 24, 2006
20,000 $2.25 May 12, 1995 September 1, 1999
Richard Worth, Director 10,000 $2.12 June 7, 1996 June 7, 2001
30,000 $2.50 July 24, 1996 July 24, 2006
</TABLE>
Compensation of Outside Directors
Directors who are employees of the Company do not receive any fees for
attending Board meetings. Directors who are not employees of the Company, in
addition to options set forth above, receive $5,000 each year, $2,500 payable on
July 1 and $2,500 payable on January 1, provided the directors participate in
80% or more of the meetings of the Board for the six months prior to the July 1
and January 1 payment date, and $500 for each meeting of the Board attended.
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Certain Relationships and Related Transactions
Condor Ventures, Inc. ("Condor") has been a consultant to the Company
since January 1990. In October 1993, the Company entered into a consulting
agreement under which Condor renders consulting services (generally marketing,
demographic and product positioning studies, as well as public relations and
management advice) on a non-exclusive basis for a period of five years. The
services are provided by Mr. Adnan A. Durrani who is the President of Condor, a
former director of the Company and the spouse of M. Dolores Paoli, a holder of
more than five percent of outstanding Common Stock of the Company. During the
term of the agreement, Condor is paid $100,000 annually. In addition, the
Company paid Condor $50,000 on the effective date of the agreement for services
rendered during the period from November 1, 1992 to October 1, 1993. Under the
agreement, the Company granted Condor an option to purchase up to 125,000 shares
of Common Stock at an exercise price of $5.00 per share, which exercise price
was reduced to $2.25 on May 12, 1995, by the Board. Options to purchase 93,750
shares of Common Stock are currently exercisable and options to purchase 31,250
shares of Common Stock become exercisable on October 1, 1996. Once exercisable,
the option remains exercisable until October 2003. The Company has granted
Condor certain "piggyback" and demand registration rights for the Common Stock
issued upon exercise of the options until 2005.
INDEPENDENT ACCOUNTANTS
The Company has selected Feldman, Radin & Co., P.C., of New
York City, as its independent accountants for the year ending October 27, 1996.
A representative of Feldman, Radin & Co., P.C., is expected to be present at the
meeting with an opportunity to make a statement if he desires to do so and is
expected to be available to respond to appropriate question.
SOLICITATION OF PROXIES
The solicitation of proxies in the enclosed form is made on
behalf of the Company and the cost of this solicitation is being paid by the
Company. In addition to the use of the mails, proxies may be solicited
personally or by telephone or telegraph using the services of directors,
officers and regular employees of the Company at nominal cost. Banks, brokerage
firms and other custodians, nominees and fiduciaries will be reimbursed by the
Company for expenses incurred in sending proxy material to beneficial owners of
the Company's stock.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the
annual meeting for the 1997 fiscal year must be received at the Company's
offices by May 9, 1997 for inclusion in the proxy materials relating to that
meeting.
OTHER BUSINESS
Action may be taken on the business to be transacted at the
meeting on the date provided in the Notice of the Annual Meeting or any date or
dates to which an original or later adjournment of such meeting may be
adjourned. As of the date of this Proxy Statement, the management does not know
of any other matters to be presented at the meeting. If, however, other matters
properly come before the meeting, whether on the original date provided in the
Notice of Annual Meeting or any dates to which any original or later adjournment
of such meeting may be adjourned, it is intended that the holders of the proxy
will vote in accordance with their best judgment.
By Order of the Board of Directors
Robert C. Getchell
Secretary
Randolph, Vermont
July 30, 1996
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VERMONT PURE HOLDINGS, LTD. - PROXY
Solicited By The Board Of Directors
for Annual Meeting To Be Held on September 6, 1996
P The undersigned Stockholder(s) of VERMONT PURE HOLDINGS, LTD.,
a Delaware corporation ("Company"), hereby appoints Frank G. McDougall,
Jr. and Timothy G. Fallon, or either of them, with full power of
substitution and to act without the other, as the agents, attorneys
and proxies of the undersigned, to vote the shares standing in the
R name of the undersigned at the Annual Meeting of Stockholders of the
Company to be held on September 6, 1996 and at all adjournments
thereof. This proxy will be voted in accordance with the instructions
given below. If no instructions are given, this proxy will be voted
O FOR all of the following proposals.
1. Election of the following Directors:
X FOR all nominees listed below WITHHOLD AUTHORITY to vote
except as marked to the for all nominees listed
contrary below |_| below |_|
Y Frank G. McDougall, Jr., Timothy G. Fallon, Robert C. Getchell,
David R. Preston, Norman E. Rickard, Beat Schlagenhauf and
Richard Worth
INSTRUCTIONS: To withhold authority to vote for any individual
nominee, write that nominee's name in the space
below.
-----------------------------------------------------
2. In their discretion, the proxies are authorized to vote upon
such other business as may come before the meeting or any
adjournment thereof.
|_| I plan on attending the Annual Meeting.
Date _____________________________, 1996
----------------------------------------
Signature
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Signature if held jointly
Please sign exactly as name appears above.
When shares are held by joint tenants,
both should sign. When signing as
attorney, executor, administrator, trustee
or guardian, please give full title as
such. If a corporation, please sign in
full corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
10
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