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Exhibit 10.13
Execution Copy
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") dated as of May 5, 2000,
is by and between VP MERGER PARENT, INC. (to be renamed VERMONT PURE HOLDINGS,
LTD. following the "Effective Date," as defined below), a Delaware corporation
(the "Company"), VERMONT PURE SPRINGS, INC., a Delaware corporation that is a
direct or indirect wholly owned subsidiary of the Company (the "Operating
Company"), and XXXXXXX XXXXXX (the "Executive").
The Company, the Operating Company and the Executive agree as follows:
1. EMPLOYMENT.
1.1 GENERAL. The Company shall employ the Executive (either directly
or by employment with the Operating Company), and the Executive accepts
employment, as Chief Executive Officer of the Company, upon the terms and
conditions described herein. The Executive's employment hereunder will commence
on the effective date (the "Effective Date") of the merger between a wholly
owned subsidiary of the Company and Vermont Pure Holdings, Ltd., a publicly
traded Delaware corporation which will become a wholly owned subsidiary of the
Company and be renamed following the Effective Date, pursuant to the Agreement
and Plan of Merger and Contribution (the "Merger Agreement") by and among the
Company, such subsidiary, Crystal Rock Spring Water Company, a Connecticut
corporation ("Crystal Rock"), and the other parties listed therein, dated as of
the date hereof, and will continue for the Employment Term (as defined in
Section 2.1 hereof) unless terminated sooner as herein provided. During the
Employment Term, the Executive shall devote all of his business time, attention
and skills to the business and affairs of the Company, and will not undertake
any commitments that would interfere with or impair his performance of his
duties and responsibilities; it being understood, however, that the Executive
may serve as director of a company or companies that do not compete with any
business of the Company or its subsidiaries, or as a director or trustee of a
charitable organization or organizations, so long as such service does not
interfere with or impair his performance of his duties and responsibilities to
the Company.
Notwithstanding this Section 1.1 or any other provision of this
Agreement, this Agreement shall not be effective until the Effective Date, and
if the Effective Date does not occur on or before the date set forth in Section
10.1(e) of the Merger Agreement, this Agreement shall be of no force or effect.
1.2 DUTIES. The Executive shall at all times render his services at
the direction of the Board of Directors (the "Board of Directors"), and his
duties generally will include those required for the day to day and long term
planning, development, operation and advancement of the business of the Company,
the Operating Company, and their affiliates. The Company may assign to the
Executive such other executive and financial
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administrative duties for the Company or any affiliate of the Company as may be
determined by the Board of Directors, consistent with the Executive's status as
Chief Executive Officer. The Executive agrees to diligently use his best efforts
to promote and further the reputation and good name of the Company and perform
his services well and faithfully.
2. TERM AND TERMINATION.
2.1 TERM. The term of employment by the Company of the Executive
pursuant to this Agreement shall commence on the Effective Date and terminate on
the fifth anniversary of the Effective Date (the "Employment Term"), subject to
the provisions of Section 2.2.
2.2 EARLY TERMINATION. Notwithstanding anything to the contrary
contained in this Agreement, the Executive's employment may be terminated prior
to the end of the Employment Term only as set forth in this Section.
2.2.1 Termination Upon Resignation or Death of Executive. The
Executive's employment shall terminate upon the resignation or death of the
Executive. In case of termination pursuant to this Section 2.2.1, the Company
shall pay to the Executive (or, in case of his death, to his estate or his
beneficiary designated in writing), the base salary earned by the Executive
pursuant to Section 3, prorated through the date of resignation or death.
2.2.2 Termination Upon Disability of Executive. The
Executive's employment shall terminate by reason of the disability of the
Executive. For this purpose, "disability" shall mean the Executive's inability,
by reason of accident, illness or other physical or mental disability
(determined in good faith by the Board of Directors with the advice of a
qualified and independent physician), to perform satisfactorily the duties
required by his employment hereunder for any consecutive period of 120 calendar
days. In case of termination pursuant to this Section 2.2.2, the Executive shall
continue to receive his base salary prorated through the time of such
termination, less any amount the Executive receives during such period from any
Company-sponsored or Company-paid source of insurance, disability compensation
or government program.
2.2.3 Termination Upon Mutual Consent. The Executive's
employment may be terminated by the mutual consent of the Company and the
Executive on such terms as they may agree.
2.2.4 Termination For Cause. The Executive's employment shall
terminate immediately on notice to the Executive upon a good faith finding of
the Board of Directors that the Executive has (i) willfully or repeatedly failed
in any material respect to perform his duties in accordance with the provisions
of this Agreement following 30 days' prior written notice to the Executive and
failure of the Executive to cure such deficiency, (ii) committed a breach of any
provision of Section 4 hereof, (iii) misappropriated assets or perpetrated fraud
against the Company, (iv) been convicted of a
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crime which constitutes a felony, or (v) been engaged in the illegal use of
controlled or habit forming substances. The preceding clauses (i)-(v) shall
constitute "Cause" for termination of the Executive hereunder. In the event of
termination for Cause pursuant to this Section 2.2.4, the Company shall pay the
Executive his base salary prorated through the date of termination.
Notwithstanding any other provision of this Agreement, the
Executive shall not be terminated for Cause unless and until the Executive has
had an opportunity to appear before the Board of Directors to hear and respond
to the allegations of Cause for his termination.
2.2.5 Termination by Company Without Cause. The Company may
terminate the Executive's employment at any time and for any reason, without
Cause, upon written notice to the Executive.
In the event of termination pursuant to this Section 2.2.5
during the Company's fiscal years ending October 2000 and October 2001, the
Company shall pay or provide to the Executive the following termination
benefits: (i) an amount equal to the product of (A) the sum of (x) the
Executive's annual base salary as of the termination date, plus (y) $150,000,
multiplied by (B) a fraction, the numerator of which shall be the lesser of 24
or the number of months remaining in the Employment Term ("Remaining Months"),
and the denominator of which shall be 12, payable over the lesser of 24 months
or the number of Remaining Months, in equal regular monthly installments, less
income taxes and other applicable withholdings, and (ii) the Executive's Fringe
Benefits (as defined below) for the lesser of 24 months or the number of
Remaining Months.
In the event of termination pursuant to this Section 2.2.5
during the Company's fiscal years ending October 2002, October 2003 and October
2004, the Company shall pay or provide to the Executive the following
termination benefits: (i) an amount equal to the product of (A) the sum of (x)
the Executive's annual base salary as of the termination date, plus (y)
$200,000, multiplied by (B) a fraction, the numerator of which shall be the
lesser of 24 or the number of months remaining in the Employment Term
("Remaining Months"), and the denominator of which shall be 12, payable over the
lesser of 24 months or the number of Remaining Months, in equal regular monthly
installments, less income taxes and other applicable withholdings, and (ii) the
Executive's Fringe Benefits (as defined below) for the lesser of 24 months or
the number of Remaining Months.
The obligation of the Company to provide "Fringe Benefits"
following any termination that is or is deemed to be without Cause shall mean
that the Executive's participation (including dependent coverage) in the life
and health insurance plans of the Company in effect immediately prior to the
termination shall be continued, or substantially equivalent benefits provided,
by the Company, at a cost to the Executive no greater than his cost at the date
of such termination, for the lesser of 24 months or the number of Remaining
Months. Notwithstanding the foregoing, if the Company shall be unable to provide
for the continuation of an insurance benefit (such as life insurance)
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because such benefit was provided pursuant to an insurance policy that does not
provide for the extension of such insurance benefit following termination of the
employment of the Executive, then the Executive may purchase insurance providing
such insurance benefit and, whether or not the Executive so elects to purchase
insurance, the Company's only obligation with respect to such insurance benefit
shall be to reimburse the Executive for his premium costs, up to a maximum
aggregate amount for all policies of insurance purchased by the Executive
pursuant to this sentence of $12,000 per annum, prorated for partial years. If
the Company is obligated pursuant to the so-called "COBRA" law to offer the
Executive the opportunity for a temporary extension of health coverage
("continuation coverage"), then the Executive shall elect continuation coverage,
and the premium cost of such coverage shall be borne by the Company and the
Executive as provided in the first sentence of this paragraph. Continuation
coverage provided pursuant to COBRA shall terminate in accordance with COBRA. To
the extent that any benefit required to be provided to the Executive by the
Company by reason of an actual or deemed termination for Cause shall be provided
to the Executive by any successor employer, the Company's obligation to provide
that benefit to the Executive shall be correspondingly offset or shall cease, as
the case may be. In no event shall the Company have any obligation to provide
Fringe Benefits after the expiration of the lesser of 24 months or the number of
Remaining Months. The Executive shall not be entitled to any expense allowance,
automobile allowance or relocation allowance following the termination of his
employment for any reason.
2.2.6 [Reserved; Intentionally Left Blank.]
2.2.7 [Reserved; Intentionally Left Blank.]
2.2.8 Termination in Connection with Change of Control. If the
employment of the Executive terminates for any reason, including termination by
the Executive, within 30 days following the occurrence of a "Change of Control"
(as defined in this Section 2.2.8), then the Company shall pay or provide to the
Executive the same termination benefits as if the Executive's employment had
been terminated without Cause pursuant to Section 2.2.5. A "Change of Control"
shall mean a change in control of the Company (and not any person or entity that
hereafter becomes a successor to all or substantially all of the business or
assets of the Company by reason of a Change of Control) and shall be deemed to
have taken place if: (i) a third person, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the beneficial
owner of shares of the capital stock of the Company having more than 50% of the
total number of votes that may be cast for the election of directors of the
Company, (ii) the sale or other disposition (excluding mortgage or pledge) of
all or substantially all of the assets of the Company, or (iii) the merger or
other business combination of the Company with or into another corporation or
entity pursuant to which the Company will not survive or will survive only as a
subsidiary of another corporation or entity, in either case with the
stockholders of the Company prior to the merger or other business combination
holding less than 50% of the voting shares of the merged or combined companies
or entities after such merger or other business combination. Notwithstanding the
foregoing, the following shall not be deemed to be a Change of Control for
purposes
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hereof: (i) the transactions contemplated by the Merger Agreement, (ii) any
transaction in which EITHER (x) the Executive, any "Stockholder" as defined in
the Merger Agreement, or any affiliate of any such Stockholder, is or becomes,
either alone or as a member of a "group" as defined in this Section, OR (y) the
Stockholders, together with their affiliates and considered in the aggregate as
a single entity, are or become, the beneficial owner or owners of shares of the
capital stock of the Company having more than 50% of the total number of votes
that may be cast for the election of directors of the Company, or (iii) any
transaction described in SEC Rule 13e-3(a)(3)(i) in which the Executive
participates as an "affiliate" of the Company within the meaning of that Rule,
without regard to whether the test in Rule 13e-3(a)(3)(ii) would be satisfied in
the transaction. The rights and obligations created by this Agreement with
respect to a Change of Control shall apply only with respect to the first Change
of Control after the date of execution of this Agreement, and not with respect
to any subsequent transaction.
2.2.9 No Other Termination Benefits. The Executive understands
and agrees that the termination payments and benefits described in Section 2.2
constitute all of the payments and benefits to which he (or his estate or
beneficiary) will be or become entitled to receive in case of termination of his
employment, and that such payments and benefits are in lieu of any and all other
payments and benefits of every kind or description to which he may be entitled,
including, without limitation, the right to receive a bonus payment or any
portion thereof. Any accrued but unpaid vacation compensation shall be payable
upon termination of employment.
2.2.10 No Duty to Mitigate; Termination of Benefits. The
Executive shall not be required to mitigate the amount of any compensation
payable to him pursuant to Section 2 hereof, whether by seeking other employment
or otherwise, nor shall any compensation earned by the Executive during the
period of continuance of any payments under Section 2 hereof reduce the amount
of compensation payable under Section 2.
3. COMPENSATION. During the Employment Term, the Company shall pay, in
full payment for all of the Executive's services rendered hereunder, the
following compensation:
3.1 BASE SALARY. The Company shall pay the Executive an annual base
salary, less income taxes and other applicable withholdings, of $250,000 in
accordance with the Company's standard payroll installments. The Board of
Directors will review the annual base salary amount as soon as practicable after
the end of each fiscal year of Company to consider whether or not it should be
increased. Such determination shall be in the sole discretion of the Board of
Directors using such criteria as they deem relevant, including, but not limited
to, the performance of the Company and the Executive.
3.2 BONUSES.
3.2.1 Bonuses for Achievement of Goals. While the Executive is
employed by the Company, the Executive will be eligible to receive the bonuses
described in this Section 3.2.1. The incentive goals set forth in this Section
shall be
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based upon or derived from the Company's audited consolidated financial
statements prepared in accordance with generally accepted accounting principles
as reported on by the Company's independent accountants.
3.2.2 Fiscal Year 2000 and 2001 Budgeted Sales and Budgeted
EBITDA Bonuses. With respect to the Company's fiscal years ending October 2000
and October 2001:
(i) if the Company has actual annual sales which, expressed as
a percentage of target annual sales approved in the budget for that fiscal year
by the Board of Directors, are at least 95% of such target annual sales, then
there shall be a bonus as set forth in the following table. Bonuses under this
clause (i) are non-cumulative.
ACTUAL SALES DIVIDED BY TARGET SALES BONUS
------------------------------------ -------
less than 95% of target - $ -0-
at least 95% but less than 96% of target - 50,000
at least 96% but less than 97% of target - 55,000
at least 97% but less than 98% of target - 60,000
at least 98% but less than 99% of target - 65,000
at least 99% but less than 100% of target - 70,000
at least 100% but less than 101% of target - 75,000
at least 101% but less than 102% of target - 77,500
at least 102% but less than 103% of target - 80,000
at least 103% but less than 104% of target - 82,500
at least 104% but less than 105% of target - 85,000
at least 105% but less than 106% of target - 87,500
at least 106% but less than 107% of target - 90,000
at least 107% but less than 108% of target - 92,500
at least 108% but less than 109% of target - 95,000
at least 109% but less than 110% of target - 97,500
at least 110% of target or greater - 100,000
(ii) if the Company has actual annual earnings before
interest, taxes, depreciation and amortization ("EBITDA") which, expressed as a
percentage of target annual EBITDA approved in the budget for that fiscal year
by the Board of Directors, are at least 90% of such target annual EBITDA, then
there shall be a bonus as set forth in the following table. Bonuses under this
clause (ii) are non-cumulative.
ACTUAL EBITDA DIVIDED BY TARGET EBITDA BONUS
-------------------------------------- -------
less than 90% of target - $ -0-
at least 90% but less than 91% of target - 50,000
at least 91% but less than 92% of target - 52,500
at least 92% but less than 93% of target - 55,000
at least 93% but less than 94% of target - 57,500
at least 94% but less than 95% of target - 60,000
at least 95% but less than 96% of target - 62,500
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at least 96% but less than 97% of target - 65,000
at least 97% but less than 98% of target - 67,500
at least 98% but less than 99% of target - 70,000
at least 99% but less than 100% of target - 72,500
at least 100% but less than 102% of target - 75,000
at least 102% but less than 104% of target - 77,500
at least 104% but less than 106% of target - 80,000
at least 106% but less than 108% of target - 82,500
at least 108% but less than 110% of target - 85,000
at least 110% but less than 112% of target - 87,500
at least 112% but less than 114% of target - 90,000
at least 114% but less than 116% of target - 92,500
at least 116% but less than 118% of target - 95,000
at least 118% but less than 120% of target - 97,500
at least 120% of target or greater - 100,000
3.2.3 Fiscal Years 2002, 2003 and 2004 Budgeted Sales and
Budgeted EBITDA Bonuses. With respect to each of the Company's fiscal years
ending October 2002, October 2003 and October 2004:
(i) if the Company has actual annual sales which, expressed as
a percentage of target annual sales approved in the budget for that fiscal year
by the Board of Directors, are at least 95% of such target annual sales, then
there shall be a bonus as set forth in the following table. Bonuses under this
clause (i) are non-cumulative.
ACTUAL SALES DIVIDED BY TARGET SALES BONUS
------------------------------------ --------
less than 95% of target - $ -0-
at least 95% but less than 96% of target - 75,000
at least 96% but less than 97% of target - 80,000
at least 97% but less than 98% of target - 85,000
at least 98% but less than 99% of target - 90,000
at least 99% but less than 100% of target - 95,000
at least 100% but less than 101% of target - 100,000
at least 101% but less than 102% of target - 102,000
at least 102% but less than 103% of target - 104,000
at least 103% but less than 104% of target - 106,000
at least 104% but less than 105% of target - 108,000
at least 105% but less than 106% of target - 110,000
at least 106% but less than 107% of target - 112,000
at least 107% but less than 108% of target - 114,000
at least 108% but less than 109% of target - 116,000
at least 109% but less than 110% of target - 118,500
at least 110% of target or greater - 120,000
(ii) if the Company has actual annual EBITDA which, expressed
as a percentage of target annual EBITDA approved in the budget for that fiscal
year by the
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Board of Directors, are at least 90% of such target annual EBITDA, then there
shall be a bonus as set forth in the following table. Bonuses under this clause
(ii) are non-cumulative.
ACTUAL EBITDA DIVIDED BY TARGET EBITDA BONUS
-------------------------------------- --------
less than 90% of target - $ -0-
at least 90% but less than 91% of target - 75,000
at least 91% but less than 92% of target - 77,500
at least 92% but less than 93% of target - 80,000
at least 93% but less than 94% of target - 82,500
at least 94% but less than 95% of target - 85,000
at least 95% but less than 96% of target - 87,500
at least 96% but less than 97% of target - 90,000
at least 97% but less than 98% of target - 92,500
at least 98% but less than 99% of target - 95,000
at least 99% but less than 100% of target - 97,500
at least 100% but less than 102% of target - 100,000
at least 102% but less than 104% of target - 102,000
at least 104% but less than 106% of target - 104,000
at least 106% but less than 108% of target - 106,000
at least 108% but less than 110% of target - 108,000
at least 110% but less than 112% of target - 110,000
at least 112% but less than 114% of target - 112,000
at least 114% but less than 116% of target - 114,000
at least 116% but less than 118% of target - 116,000
at least 118% but less than 120% of target - 118,000
at least 120% of target or greater - 120,000
3.2.4 Special Bonus for Achieving Sales of $40,000,000. With
respect to the Company's fiscal years ending October 2000 and October 2001: if
the Company has annual sales equal to or in excess of $40,000,000, then there
shall be a bonus of $25,000. This bonus is payable only once.
3.2.5. Special Bonus for Achieving Sales of $50,000,000. With
respect to the Company's fiscal years ending October 2000 and October 2001: if
the Company has annual sales equal to or in excess of $50,000,000, then there
shall be a bonus of $50,000. This bonus is payable only once. The bonuses set
forth in Sections 3.2.4 and 3.2.5 are cumulative and may (but need not) be
earned in the same fiscal year, but in each case are payable only once.
3.2.6. Bonus for Achieving and Maintaining $5.00 Stock Price.
With respect to the period from November 1, 1999 to October 31, 2001: if the
closing price of the Company's Common Stock on its principal trading market
(currently the American Stock Exchange) is equal to or in excess of $5.00 per
share for 54 trading days in any period of 60 consecutive trading days, where a
"trading day" is a business day on which
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the principal trading market for the Company's Common Stock is open for trading,
then there shall be a bonus of $50,000. This bonus is payable only once.
3.2.7 Time of Bonus Payments. Each bonus required to be
paid to the Executive under this Section 3.2 shall be paid as soon as
practicable after the filing with the Securities and Exchange Commission of the
Company's Annual Report on Form 10-K or 10-KSB or successor form, as the case
may be. The bonus set forth in Section 3.2.6 shall be paid as soon as
practicable following the delivery to the Company's Chief Financial Officer of a
certificate in writing, signed by the Chairman (or if there is no Chairman, any
member) of the Compensation Committee of the Board of Directors, stating that
the conditions in Section 3.2.6 have been satisfied.
3.3 STOCK OPTIONS. The Executive shall be eligible to receive stock
options from time to time, as determined by the Compensation Committee of the
Board of the Directors of the Company. On the closing date of the transactions
contemplated by the Merger Agreement, and subject to the prior approval by the
Company's stockholders of an appropriate increase in the number of shares of the
Company's common stock covered by the Company's incentive stock option plans,
the Company shall grant to the Executive stock options (which are intended to be
incentive stock options) for the purchase of 500,000 shares of the Company's
common stock at an exercise price per share equal to the fair market value of
such common stock on such date, such options to vest at the rate of 100,000
shares on the each anniversary of the Effective Date and to have such other
customary terms and provisions as the Compensation Committee of the Company
shall determine to be applicable.
3.4 VACATION. The Executive shall be entitled to four (4) weeks of
vacation in each 12-month period during the Employment Term, with carryover from
year to year of unused vacation time. No more than two (2) weeks may be taken
consecutively.
3.5 EXECUTIVE BENEFIT PLANS. The Executive shall be entitled to
participate in all plans or programs sponsored by the Company for employees in
general, including without limitation, participation in any group health,
medical reimbursement, or life insurance plans.
3.6 EXPENSE ALLOWANCE. The Company shall reimburse the Executive for
all reasonable and necessary expenses incurred by him from time to time in the
performance of his duties hereunder, against receipts therefor in accordance
with the then effective policies and requirements of the Company.
3.7 DISABILITY AND OTHER INSURANCE; AUTOMOBILE ALLOWANCE. The Company
shall have no obligation to provide disability insurance to the Executive. The
Company agrees to provide an allowance of up to $25,000 per year, in the
aggregate, to reimburse the Executive for (i) the actual cost of premiums
incurred by the Executive for disability insurance obtained by the Executive;
(ii) the actual cost of premiums incurred by the Executive for any other
insurance which would not be available to the Executive under the Company's
customary benefit plans; and (iii) the actual cost of leasing and operating
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an automobile for use by the Executive during the Executive's employment with
the Company. The Executive may determine in his reasonable judgment how to
allocate the allowance between disability insurance premiums, other insurance
premiums and automobile leasing expense.
3.8 ELECTION AS A DIRECTOR AND MEMBER OF THE EXECUTIVE COMMITTEE.
Subject only to the fiduciary duties of its directors, the Company will use its
best efforts to nominate and cause the Executive to be elected as a member of
the Board of Directors and a member of the Executive Committee, if any, of the
Board of Directors during the Employment Term.
4. PROTECTION OF CONFIDENTIAL INFORMATION; NON-COMPETE
4.1 ACKNOWLEDGEMENTS. The Executive acknowledges that:
(a) The Executive has obtained and, during his employment by the
Company, will obtain secret and confidential information concerning the business
of the Company and its affiliates, including, without limitation, customer lists
and sources of supply, their needs and requirements, the nature and extent of
contracts with them, and related cost, price and sales information.
(b) The Company and its affiliates will suffer substantial and
irreparable damage which will be difficult to compute if, during the period of
his employment with the Company or thereafter, the Executive should enter a
competitive business or should divulge secret and confidential information
relating to the business of the Company and its affiliates heretofore or
hereafter acquired by him in the course of his employment with the Company.
(c) The provisions of this Agreement are reasonable and necessary
for the protection of the business of the Company and its affiliates.
4.2 CONFIDENTIALITY. The Executive agrees that he will not at any time,
either during the Employment Term or thereafter, divulge to any person, firm or
corporation any information obtained or learned by him during the course of his
employment with the Company, with regard to the operational, financial, business
or other affairs of the Company and its affiliates, and their respective
officers and directors, including, without limitation, trade secrets, customer
lists, sources of supply, pricing policies, operational methods or technical
processes, except (i) in the course of performing his authorized duties
hereunder, (ii) with the Company's express written consent; (iii) to the extent
that any such information is lawfully in the public domain other than as a
result of the Executive's breach of any of his obligations hereunder; or (iv)
where required to be disclosed by court order, subpoena or other government
process. In the event that the Executive shall be required to make any
disclosure pursuant to the provisions of clause (iv) of the preceding sentence,
the Executive promptly, but in no event more than 48 hours after learning of
such subpoena, court order, or other government process, shall notify the
Company, by personal delivery or by fax, confirmed by mail, to the Company
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and, if the Company so elects and at the Company's expense, the Executive shall:
(a) take all reasonably necessary steps requested by the Company to defend
against the enforcement of such subpoena, court order or other government
process, and (b) permit the Company to intervene and participate with counsel of
its choice in any proceeding relating to the enforcement thereof.
4.3 RETURN OF PROPERTY. Upon termination of his employment with the
Company, or at any time the Company may so request, the Executive will promptly
deliver to Company all memoranda, notes, records, reports, manuals, drawings,
blueprints and other documents (and all copies thereof) relating to the business
of the Company and its affiliates and all property associated therewith, which
he may then possess or have under this control.
4.4 NON-COMPETITION. During the Employment Term and for a period equal
to the time during which Executive receives severance payments for benefits
pursuant to Section 2 of this Agreement or for a period of 12 months in the
event the Executive is terminated without entitlement to severance benefits
herein, the Executive shall not, without the prior written permission of the
Company, in the United States, its territories and possessions, directly or
indirectly, (i) enter into the employ of or render any services to any person,
firm or corporation engaged in any Competitive Business (as defined below); (ii)
engage in any Competitive Business for his own account; (iii) become associated
with or interested in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee,
consultant, advisor or in any other relationship or capacity; (iv) employ or
retain, or have or cause any other person or entity to employ or retain, any
person who was employed or retained by the Company or its affiliates while the
Executive was employed by the Company; or (v) solicit, interfere with, or
endeavor to entice away from the Company or its affiliates any of their
customers or sources of supply. However, nothing in this Agreement shall
preclude the Executive from investing his personal assets in the securities of
any Competitive Business if such securities are traded on a national stock
exchange or in the over-the-counter market and if such investment does not
result in his beneficially owning, at any time, more than 4.9% of the
publicly-traded equity securities of such competitor. "Competitive Business"
shall mean any business or enterprise which (a) designs, sells, manufactures,
markets and/or distributes spring or purified water products or still spring or
purified water beverages, or (b) engages in any other business in which Company
or its affiliates is involved at any time during the 12-month period immediately
prior to the termination of the Executive's employment.
4.5 ENFORCEMENT. If the Executive commits a breach, or threatens to
commit a breach, of any of the provisions of Section 4, the Company shall have
the right and remedy to have the provisions of this Agreement specifically
enforced by any court having jurisdiction over the matter, it being acknowledged
and agreed by the Executive that the services being rendered hereunder to the
Company are of a special, unique and extraordinary character and that any such
breach or threatened breach will cause irreparable injury to the Company and
that money damages will not provide an adequate
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remedy to the Company. Such right and remedy shall be in addition to, and not in
lieu of, any other rights and remedies available to the Company under law or
equity.
4.6 BLUE PENCILING. If any provision of Section 4 is held to be
unenforceable because of the scope, duration or area of its applicability, the
tribunal making such determination shall have the power to modify such scope,
duration or area, or all of them, and such provision or provisions shall then be
applicable in such modified form.
5. REPRESENTATIONS OF EXECUTIVE. The Executive represents and warrants
to the Company that the Executive is not a party to or bound by any agreement,
understanding or restriction that would or may be breached by the Executive's
execution and full performance of this Agreement. The Executive expressly
undertakes and agrees that none of his acts or duties hereunder that will
violate any obligations he may have to any prior employer (or will impose on the
Company any liability to any prior employer) and that he has complied with all
requirements of notice applicable to the termination of any prior employment
before he commenced his employment with the Company. The Executive further
represents and warrants that he has delivered to the Company complete copies of
all employment agreements, understanding and restrictions to which he has been
subject at any time during the last five years.
6. CONSTRUCTION OF THIS AGREEMENT.
6.1 CHOICE OF LAW. This Agreement is to be construed pursuant to the
laws of the State of Delaware, without regard to the laws affecting choice of
law.
6.2 INVALID AGREEMENT PROVISIONS. Should any provision of this
Agreement become legally unenforceable, no other provision of this Agreement
shall be affected, and this Agreement shall continue as if the Agreement had
been executed absent the unenforceable provision.
6.3 NO OTHER AGREEMENTS. This Agreement represents the full agreement
between the Company and the Executive with respect to the subject matter hereof
and the Company and the Executive have made no agreements, representations or
warranties relating to the subject matter of this Agreement that are not set
forth herein. This Agreement supersedes any and all other agreements, oral or
written, that may define the employment relationship between the Executive and
the Company or the Operating Company. When effective, this Agreement also
supersedes any and all employment agreements between the Executive, the
Operating Company and Vermont Pure Holdings, Ltd. (which is to be renamed
following the Effective Date) ("Old Holdings"), which is a signatory to this
Agreement solely for the purpose of terminating, as of the Effective Date, and
without liability to any party thereto, any and all such employment agreements
between Old Holdings, the Operating Company, and the Executive. Nothing in this
Agreement confers any rights or remedies on any person or entity or than the
parties hereto.
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6.4 NOTICES. All notices provided for in this Agreement shall be in
writing and shall be deemed to be given when delivered personally to the party
to receive the same, when transmitted by electronic means or when mailed first
class, postage prepaid by certified mail, return receipt requested, addressed to
the party to receive the same at the applicable addresses set forth below or
such other address as the party to receive the same shall have specified by
written notice give in the manner provided for in this Section. All notices
shall be deemed to have been given as of the date of personal delivery,
transmittal or mailing thereof.
If to the Executive: Xx. Xxxxxxx Xxxxxx, 000 Xxxxxx Xxxxxx,
Xxxxxxx Xxxxx Xxxxxxx, Mount Kisco, New York 10549, with a copy to: Xxxxx X.
Xxxxx, Esq., Ledgewood Law Firm, P.C., 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000.
If to the Company: Vermont Pure Holdings, Ltd., Xxxxx 00,
Xxxxxxxxx Xxxx, Xxxxxxxx Xxxxxx, Xxxxxxx 00000, Attention: Chairman of the
Board, with a copy to: Xxxx Xxxxxx, Esquire, Xxxxx, Xxxx & Xxxxx LLP, Xxx Xxxx
Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
6.5 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the Company's successors and assigns.
6.6 DISPUTES AND CONTROVERSIES. The parties hereto agree that in case
of any dispute, controversy or claim arising out of or relating to this
Agreement, other than pursuant to Sections 4 and 6 hereof, the dispute,
controversy or claim shall be determined by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. The place
of the arbitration shall be Boston, Massachusetts. Any arbitration award shall
be based upon and accompanied by a written opinion containing findings of fact
and conclusions of law. The determination of the arbitrator(s) shall be
conclusive and binding on the parties hereto, and any judgment upon the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction.
6.7 COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered will be an
original, but all of which together will constitute one and the same agreement.
In pleading or proving this Agreement, it will not be necessary to produce or
account for more than one such counterpart.
6.8 WAIVERS; AMENDMENTS. No waiver of any breach or default hereunder
will be valid unless in a writing signed by the waiving party. No failure or
other delay by any party exercising any right, power, or privilege hereunder
will be or operate as a waiver thereof, nor will any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power, or privilege. No amendment or modification of this Agreement
will be valid or binding unless in a writing signed by both the Executive, the
Company and the Operating Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the date first written above.
COMPANY: VP MERGER PARENT, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: CEO and President
OPERATING COMPANY: VERMONT PURE SPRINGS, INC.
By: /s/ Xxxxx XxXxxxxxx
---------------------------------
Name: Xxxxx XxXxxxxxx
Title: Director
EXECUTIVE: /s/ Xxxxxxx Xxxxxx
------------------------------------
XXXXXXX XXXXXX
OLD HOLDINGS: VERMONT PURE HOLDINGS, LTD.
(solely for purposes of Section
6.3 hereof)
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: CEO and President
