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EXECUTION VERSION
 
EXHIBIT 10.34

THIS WARRANT IS INITIALLY BEING ISSUED TO DS WATERS OF AMERICA, INC. (THE
“INITIAL HOLDER”) AND NEITHER THIS WARRANT NOR ANY INTEREST HEREIN MAY BE
OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED BY THE INITIAL
HOLDER OR ANY SUBSEQUENT HOLDER WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY
IN EACH SUCH INSTANCE (WHICH CONSENT MAY NOT BE UNREASONABLY WITHHELD,
CONDITIONED OR DELAYED).  WITHOUT LIMITING THE FOREGOING, THIS WARRANT AND THE
SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.  THEY MAY NOT BE OFFERED,
SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND (B) IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS, ALL AS EVIDENCED BY A LEGAL OPINION TO SUCH EFFECT, WHICH
OPINION AND COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE COMPANY.

PRIMO WATER CORPORATION
 
WARRANT
 
January 1, 2014
Warrant Number DSW-1

 
THIS IS TO CERTIFY that DS Waters of America, Inc. and its permitted
transferees, successors and assigns (“Holder”) is entitled to purchase from
Primo Water Corporation, a Delaware corporation (the “Company”), at the Exercise
Price (as defined below), Four Hundred Seventy-Five Thousand (475,000) shares
(the “Aggregate Number”) of Common Stock (as defined below).  The Exercise Price
and Aggregate Number are subject to adjustment as set forth in Section 3.  This
Warrant is being issued to Holder in connection with, pursuant to, and as
further consideration for, that certain Strategic Alliance Agreement entered
into by and between the Company and the Holder on November 12, 2013.
 
Section 1.                      Definitions
 
“Aggregate Exercise Price” is defined in Section 2(a).
 
“Aggregate Number” is defined in the opening paragraph.
 
 “Business Day” means any day that is not a Saturday, Sunday or any other day on
which banks are required or authorized by law to be closed in Winston-Salem,
North Carolina.
 
 
 

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“Capital Transaction” means any merger, consolidation, share exchange,
recapitalization, reorganization, business combination, sale of securities (the
result of which is that the stockholders of the Company immediately prior to
such sale transaction are (after giving effect to such sale transaction) no
longer, in the aggregate, the beneficial owners (as such term is defined in Rule
13d-3 and Rule 13d-5 promulgated under the Securities Act), directly or
indirectly through one or more intermediaries, of more than fifty percent (50%)
of the voting power of the outstanding voting securities of the Company), or
other similar event, involving the Common Stock of the Company.
 
“Charter” means the Articles of Incorporation of the Company, as amended or
supplemented.
 
“Common Stock” means the Common Stock of the Company, $0.001 par value or any
other capital stock into which the foregoing is reclassified or reconstituted.
 
“Company” is defined in the opening paragraph.
 
“Convertible Securities” means evidences of indebtedness, shares of stock or
other securities that, directly or indirectly, are exchangeable for or
exercisable or convertible into Common Stock.
 
“Election to Purchase” is defined in Section 2(a).
 
“Exercise Amount” is defined in Section 2(a).
 
“Exercise Price” means the price per share of Common Stock at which shares of
Common Stock are purchasable pursuant to this Warrant which shall initially be
$3.04 per share, subject to adjustment as set forth in Section 3.
 
“Expiration Date” means the seventh (7th) anniversary of the date hereof.
 
“Holder” is defined in the opening paragraph.
 
“Other Securities” shall mean any stock and other securities of the Company or
any other Person which Holder at any time shall be entitled to receive, upon the
exercise of this Warrant or pursuant to Section 3, in lieu of or in addition to
Common Stock.
 
“Person” means any individual, corporation, limited liability company,
partnership, company, sole proprietorship, joint venture, trust, estate,
association, organization, labor union or other entity.
 
“Stock Combination” is defined in Section 3(a)(ii).
 
“Stock Dividend” is defined in Section 3(a)(i).
 
“Stock Subdivision” is defined in Section 3(a)(i).
 
“Warrant” means this warrant.
 
 
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“Warrant Shares” means (a) the shares of Common Stock or Other Securities issued
or issuable hereunder and, (b) all other shares of the Company’s capital stock
issued with respect to such shares by way of stock dividend, stock split or
other reclassification or in connection with any Capital Transaction, or
acquired by way of any rights offering or similar offering made in respect of
the capital stock referred to in this clause (b) or the foregoing clause (a).
 
Section 2.          Exercise.
 
(a)         Right to Exercise; Exercise Amount.  At any time on or before the
Expiration Date, Holder may exercise this Warrant in whole or in part at any
time and from time to time by delivering this Warrant to the Company, together
with a duly executed Election to Purchase in the form attached hereto as Exhibit
A (the “Election to Purchase”), and payment of the Exercise Price for each share
to be purchased.  If the Expiration Date is not a Business Day, then this
Warrant may be exercised on or before the next succeeding Business Day.  The
aggregate Exercise Price (the “Aggregate Exercise Price”) to be paid for the
shares to be purchased (the “Exercise Amount”) shall equal the product of (i)
the Exercise Amount multiplied by (ii) the Exercise Price.
 
(b)         Payment of Aggregate Exercise Price.  Payment of the Aggregate
Exercise Price shall be made to the Company in cash.
 
(c)         Cashless Exercise. Anything elsewhere contained herein to the
contrary notwithstanding, in lieu of payment of the Aggregate Exercise Price,
Holder may exercise this Warrant in whole or in part at any time and from time
to time by presentation and surrender of this Warrant to the Company, together
with a Cashless Exercise Form in the form attached hereto as Exhibit B (or a
reasonable facsimile thereof) duly executed (a “Cashless Exercise”). Such
presentation and surrender shall be deemed a waiver of Holder’s obligation to
pay all or any portion of the Aggregate Exercise Price, as the case may be, in
cash. In the event of a Cashless Exercise, Holder shall exchange this Warrant
for the number of shares of Common Stock determined by multiplying the number of
shares of Common Stock for which this Warrant is being exercised by a fraction,
(i) the numerator of which shall be the difference between (A) the then current
market price per share of Common Stock, and (B) the Exercise Price, and (ii) the
denominator of which shall be the then current market price per share of Common
Stock. As used herein, the term “market price” on any relevant date means (x) if
the Common Stock is listed for trading on the New York Stock Exchange, the
American Stock Exchange, the NASDAQ Global Market, or the NASDAQ Global Select
Market, the closing sale price (or, if no closing sale price is reported, the
last reported sale price) of the Common Stock (regular way), (y) if the Common
Stock is not so listed but quotations for the Common Stock are reported on the
OTC Bulletin Board, the most recent closing price as reported on the OTC
Bulletin Board, or (z) otherwise, the fair market value of a share of Common
Stock as reasonably determined in good faith by the Board of Directors (or
similar governing body) of the Company and reasonably agreed to by Holder,
without discount for illiquidity or minority interest.
 
(d)         Issuance of Shares of Common Stock.  Upon receipt by the Company of
this Warrant accompanied by an Election to Purchase and payment of the Aggregate
Exercise Price or a Cashless Exercise Form, Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that certificates representing such shares of Common Stock may
not then be actually delivered.  Upon such surrender of this Warrant and, if
applicable, payment of the Aggregate Exercise Price, the Company shall issue and
deliver as soon as practicable (but in any event within five (5) Business Days)
to, or upon the written order of, Holder (and in such name or names as Holder
may designate) a certificate or certificates for the Exercise Amount.
 
 
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(e)         Fractional Shares.  The Company shall deliver whole shares of Common
Stock upon exercise of this Warrant (rounded down to the nearest whole number).
 
(f)          Partial Exercise.  Following any partial exercise of this Warrant,
the Company shall issue to Holder a Warrant in like form for the unexercised
portion thereof.
 
Section 3.          Adjustments to Exercise Price and Aggregate Number.  The
Exercise Price and the Aggregate Number shall be adjusted as provided in this
Section 3.  Upon each adjustment of the Exercise Price, the Aggregate Number
shall be adjusted by multiplying the Aggregate Number then in effect by a
fraction, the numerator of which shall be the Exercise Price immediately prior
to such adjustment, and the denominator of which shall be the Exercise Price
immediately following such adjustment.
 
(a)          Stock Dividends, Subdivisions and Combinations.  If at any time:
 
(i)        the number of shares of Common Stock outstanding is increased by a
stock dividend payable in shares of Common Stock (a “Stock Dividend”) or by a
subdivision or split-up of shares of Common Stock (a “Stock Subdivision”), then,
following the record date for the determination of holders of Common Stock
entitled to receive such Stock Dividend, or to be affected by such Stock
Subdivision, the Exercise Price shall be appropriately decreased so that the
Aggregate Number shall be increased in proportion to such increase in
outstanding shares.
 
(ii)       the number of shares of Common Stock outstanding is decreased by a
combination of the outstanding shares of Common Stock into a smaller number of
shares of Common Stock (a “Stock Combination”), then, following the record date
to determine shares affected by such Stock Combination, the Exercise Price shall
be appropriately increased so that the Aggregate Number shall be decreased in
proportion to such decrease in outstanding shares.
 
(b)         Adjustment Upon Capital Transaction.  If, at any time, there shall
occur any Capital Transaction, then Holder thereafter shall have the right to
receive upon exercise of this Warrant, upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore issuable upon exercise, such stock, securities, cash or
other assets which Holder would have been entitled to assuming full exercise of
this Warrant immediately prior thereto, at an Exercise Price economically
equivalent to the Exercise Price in effect immediately prior
thereto.  Notwithstanding the foregoing, in connection with a Capital
Transaction in which consideration is paid or distributed to the Company’s
stockholders and such consideration does not consist entirely of shares of
common stock of the acquiring or resulting corporation, the Company may in its
sole discretion cancel this Warrant upon consummation of the Capital Transaction
so long as the Holder is paid cash in respect of each share of Common Stock
subject to this Warrant in an amount equal to the excess, if any, of (i) the per
share price paid or distributed to stockholders in the transaction (with the
value of any non-cash consideration to be reasonably determined in good faith by
the Board of Directors (or similar governing body) of the Company and reasonably
agreed to by Holder) over (ii) the Exercise Price.  For avoidance of doubt, if
the amount determined pursuant to the preceding sentence is zero or less, this
Warrant may be cancelled without any payment therefore.
 
 
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(c)         Notice of Adjustment. Whenever the number or type of securities
issuable hereunder is adjusted, the Company shall promptly deliver to Holder a
certificate of adjustment, setting forth the number and type of securities after
adjustment, a brief statement of the facts requiring the adjustment and the
computation by which the adjustment was made.
 
(d)         Successive Adjustments. The provisions of this Section 3 shall be
applicable successively to each event described herein which may occur
subsequent to the issuance of this Warrant.
 
(e)         No Impairment. The Company will not, by amendment of its
incorporation documents or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder.
 
Section 4.          Notices of Corporate Action. If at any time prior to the
Expiration Date of the Warrant and prior to its exercise in full, any one or
more of the following events shall occur:
 
(a)         any taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend or other distribution which would entitle Holder to
receive any portion thereof pursuant to the terms of this Warrant or upon
exercise of this Warrant;
 
(b)         any Capital Transaction or transfer of all or substantially all the
assets of the Company to any other Person; or
 
(c)         any voluntary or involuntary dissolution, liquidation or winding-up
of the Company;
 
then the Company will mail to Holder a notice specifying (i) the date or
expected date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of such dividend,
distribution or right, (ii) the date or expected date on which any such Capital
Transaction, transfer, dissolution, liquidation or winding-up is to take place,
and (iii) the time, if any such time is to be fixed, as of which the holders of
record of Common Stock (or other securities) shall be entitled to exchange their
Common Stock (or other securities) for the cash, equity or other property
deliverable upon such event and a description in reasonable detail of the
transaction. Such notice shall be mailed at least twenty (20) days prior to the
date therein specified (or such lesser period of time (but in no event less than
three (3) Business Days) as is reasonably practicable under the circumstances).
 
Section 5.          Reservation of Shares; Validly Issued Shares. The Company
will at all times reserve and keep available out of its authorized shares solely
for the purpose of issuance upon the exercise of this Warrant as herein
provided, such number of its duly authorized shares of Common Stock, or Other
Securities deliverable upon the exercise of this Warrant, as shall be sufficient
to enable the Company at any time to fulfill all of its obligations
hereunder.  The Company covenants and agrees that the shares of Common Stock or
Other Securities which shall be so issuable will, upon issuance, be duly
authorized and issued, fully paid and non-assessable, free from all taxes, liens
and charges with respect to the issue or delivery thereof and otherwise free of
all other security interests, encumbrances and claims of any nature whatsoever
other than those created by Holder.
 
 
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Section 6.          Transfers of the Warrant; Replacement of Warrant
 
(a)         Register.  The Company shall initially record this Warrant on a
register to be maintained by the Company with its other stock books and, subject
to Section 6(b) and (c), thereafter shall transfer this Warrant on such register
when this Warrant is:  (i) surrendered for transfer in accordance with the terms
hereof; and (ii) properly endorsed and accompanied by appropriate
instructions.  Upon any such transfer, a new Warrant or Warrants shall be issued
to the transferee and Holder (in the event that this Warrant is only partially
transferred) and the surrendered Warrant shall be canceled.
 
(b)         Transfers.  This Warrant is initially being issued to the Initial
Holder and neither this Warrant nor any interest herein may be offered, sold,
pledged, hypothecated or otherwise transferred by the Initial Holder or any
subsequent Holder without the prior written consent of the Company in each such
instance (which consent may not be unreasonably withheld, conditioned or
delayed).  Any such offer, sale, pledge, hypothecation or transfer shall also be
subject to the securities law restrictions set forth in the legend on the first
page of this Warrant.
 
(c)         Restrictive Legend.  Except as otherwise provided in this subsection
(c), each certificate for Warrant Shares initially issued upon the exercise of
this Warrant and each certificate for Warrant Shares issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted with
a legend in substantially the following form:
 
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. THEY MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND (B) IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, ALL AS EVIDENCED BY
A LEGAL OPINION TO SUCH EFFECT, WHICH OPINION AND COUNSEL SHALL BE REASONABLY
SATISFACTORY TO THE COMPANY.

Notwithstanding the foregoing, the legend requirements of this Section 6(c)
shall terminate as to any particular Warrant Shares when the Warrant Shares are
transferred pursuant to an effective resale registration statement, or the
Company shall have received from the Holder thereof an opinion of counsel in
form and substance reasonably acceptable to the Company that such legend is not
required in order to ensure compliance with the Securities Act.  Whenever the
restrictions imposed by this Section 6(c) shall terminate, the Holder or
subsequent transferee, as the case may be, shall be entitled to receive from the
Company a certificate for the Warrant Shares without the subject restrictive
legends.
 
 
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Section 7.          Representations and Warranties of the Company.
 
(a)         The Company hereby represents, warrants and covenants to Holder as
follows: (i) the Company has full authority and power to enter into this Warrant
and perform its obligations hereunder, including the issuance of the Warrant
Shares upon exercise hereof; (ii) this Warrant constitutes the valid and binding
obligation of the Company enforceable against it in accordance with its terms,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, and (iii) the execution, delivery and performance
of this Warrant, and the consummation by the Company of the transactions
contemplated hereby (including, without limitation, the issuance of the Warrant
Shares), (X) does not and will not violate in any material respect laws, rules
or regulations of the United States or any state or other jurisdiction
applicable to the Company or require the Company to obtain any approval, consent
or waiver of, or to make any filing with, any Person that has not been obtained
or made, and (Y) does not and will not result in a breach of, constitute a
default under, accelerate any obligation under or give rise to a right of
termination of any material indenture or loan or credit agreement or any other
material agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which the Company is a party or by which the property of
the Company is bound or affected, or result in the creation or imposition of any
mortgage, pledge, lien security interest or other charge or encumbrance on any
of the assets of the properties of the Company.
 
 
(b)         The authorized capital of the Company as of the date hereof consists
of 70,000,000 shares of Common Stock and 10,000,000 shares of preferred stock,
par value $.001 per share.
 
Section 8.          Miscellaneous.
 
(a)         No Voting Rights.  Prior to the exercise of this Warrant, Holder
shall not be entitled to any voting or other rights as a stockholder of the
Company as a result of being a holder of the Warrant except as expressly
provided herein.
 
(b)         Replacement Warrant.  If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue and deliver in exchange and substitution for
and upon cancellation of the mutilated Warrant, or in lieu of and in
substitution for the Warrant lost, stolen or destroyed, a new Warrant in like
form and representing an equivalent right or interest, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction of such Warrant and upon receipt of indemnity reasonably
satisfactory to the Company.
 
(c)         Delays, Omissions and Indulgences.  No delay or omission to exercise
any right, power or remedy accruing to Holder upon any breach or default of the
Company hereunder shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach or default, or any acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring.
 
 
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(d)         Notices.  Any notice pursuant to this Warrant must be in writing and
sent by email followed by a “hard copy” via overnight mail to the parties as
follows (or to such other address as may be specified by the parties in
accordance with this Notice section):
 
 
(A)
If to the Company:

 
 
Primo Water Corporation

 
104 Cambridge Plaza Drive

 
Winston-Salem, NC  27104

 
Attention: Chief Executive Officer

 
Email:  bprim@primowater.com

 
 
With a copy to:

 
 
K&L Gates LLP

 
4350 Lassiter at North Hills Avenue

 
Suite 300

 
Raleigh, North Carolina 27609

 
Attention:  D. Scott Coward, Esq.

 
Email:  scott.coward@klgates.com

 
(B)
If to the Holder:

 
 
DS Waters of America, Inc.

 
5660 New Northside Drive, Suite 500

 
Atlanta, GA  30328

 
Attention: Chief Executive Officer

 
Email:  tharrington@water.com

 
 
With a copy to:

 
 
DS Waters of America, Inc.

 
5660 New Northside Drive, Suite 500

 
Atlanta, GA  30328

 
Attention: Chief Legal Officer

 
Email:  rowens@water.com

 
(e)         Successors and Assigns.  Subject to Section 5(b) hereof, this
Warrant shall be binding upon and inure to the benefit of the Company and Holder
and their respective permitted successors and assigns.
 
(f)          Amendments and Waivers.  No amendment of any provision of this
Warrant will be valid unless the amendment is in writing and signed by Holder
and the Company.  No waiver of any provision of this Warrant will be valid
unless the waiver is in writing and signed by the waiving party.  The failure of
any Person at any time to require performance of any provision of this Warrant
will not affect its rights at a later time to enforce such provision.  No waiver
by any Person of any breach of this Warrant will be deemed to extend to any
other breach hereunder or affect in any way any rights arising by virtue of any
other such occurrence.
 
 
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(g)         Severability.  Any provision of this Warrant that is determined by
any court of competent jurisdiction to be invalid or unenforceable will not
affect the validity or enforceability of any other provision hereof or the
invalid or unenforceable provision in any other situation or in any other
jurisdiction. Any provision of this Warrant held invalid or unenforceable only
in part or degree will remain in full force and effect to the extent not held
invalid or unenforceable.
 
(h)         Governing Law.  This Warrant will be governed by the laws of the
State of North Carolina without giving effect to any choice or conflict of law
principles of any jurisdiction.
 
(i)           Entire Agreement.  This Warrant constitutes the entire agreement
between the Company and the Holder with respect to the subject matter hereof and
supersedes all prior agreements (whether written or oral and whether express or
implied) between the Company and the Holder to the extent related to the subject
matter hereof.
 
[Signature Page To Follow]
 
 
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EXECUTION VERSION
 
 
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as
of the date first above written.
 

 
PRIMO WATER CORPORATION
           
By:
/s/ Billy D. Prim
     
Name:  Billy D. Prim
     
Title:  CEO
 

 
 

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