EXHIBIT 99.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") dated as of July 1, 2005, is
by and between VERMONT PURE HOLDINGS, LTD., a Delaware corporation (the
"Company"), CRYSTAL ROCK LLC, a Delaware limited liability company that is a
wholly owned subsidiary of the Company (the "Operating Company"), and XXXXX X.
XXXXX (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 Chairman Emeritus of the Company, upon the terms and conditions described
herein. The Executive's employment hereunder will commence on the date first
above written (the "Effective Date") 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 such business time,
attention and skills as are reasonably required 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.
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 the Chief
Executive Officer of the Company, and his principal obligation shall be to make
himself available to consult with and advise the Company on matters within his
areas of expertise for a period of 20 hours per calendar month. The Company may
assign to the Executive such other executive and 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 Chairman Emeritus. 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 at the
close of normal business hours on the business day immediately preceding the
third 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 crime which constitutes a felony,
or (v) been engaged in the illegal use of controlled or habit forming
substances. The preceding clauses (i)-(iv) 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, the Company
shall pay or provide to the Executive an amount equal to the product of (A) the
Executive's annual base salary as of the termination date, multiplied by (B) a
fraction, the
numerator of which shall be the number of months remaining in the Employment
Term ("Remaining Months"), and the denominator of which shall be 12, payable
over the Remaining Months, in equal regular monthly installments payable on the
first day of each month, less income taxes and other applicable withholdings.
2.2.6 Termination By Executive for Good Reason. The Executive may terminate
his employment at any time for Good Reason (as defined below) upon written
notice to the Company. In the event the Executive terminates his employment
hereunder for Good Reason, then such termination shall be treated as a
termination by the Company without Cause pursuant to Section 2.2.5.
For purposes of this Agreement, "Good Reason" shall mean any of the
following occurring without the specific prior written consent of the Executive:
(i) requiring the Executive to be permanently based more than 50 miles from his
present office location (excluding business-related travel to an extent
reasonably consistent with past practice); (ii) assignment to the Executive of
duties materially inconsistent with his position as Chairman Emeritus of the
Company; or (iii) any material breach by the Company of its obligations
hereunder, if such breach is not cured following 30 days' written notice from
the Executive.
2.2.7 Termination By Executive without Good Reason. The Executive may
terminate his employment at any time without Good Reason upon 30 days' written
notice to the Company.
In the event the Executive terminates his employment hereunder without Good
Reason, then the rights of the Executive to receive future compensation pursuant
to Section 3 hereof, and all other rights of the Executive hereunder, will cease
as of the date of such termination except as may be required by law.
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 an amount equal to the product of (A) the Executive's annual base
salary as of the termination date, multiplied by (B) a fraction, the numerator
of which shall be the lesser of 24 or the number of 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. 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) there
is a sale or other disposition (excluding mortgage or pledge) of all or
substantially all of the assets of the Company, or (iii) there is a 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 hereof: (i) any transaction in which either (x) the
Executive, any "Stockholder" as defined in that certain Agreement and Plan of
Merger and Contribution by and among the Company and the other parties listed
therein, dated as of May 5, 2000 (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.
2.2.11 Effect of the American Jobs Creation Act of 2004. The Executive
understands and agrees that, pursuant to Section 409A of the Internal Revenue
Code of 1986, as amended, as added to the Code by the American Jobs Creation Act
of 2004, amounts that are or may become payable to the Executive upon
termination of his employment hereunder are required to be suspended or delayed
for six months in order to satisfy the requirements of Section 409A.
Accordingly, any such payments shall be suspended and accrued for six months,
whereupon they shall be paid to the Executive in a lump sum and regular monthly
payments initiated or resumed.
2.2.12 Release. In addition, the Executive understands and agrees that the
Company's obligation to pay or provide the termination payments and benefits
described
herein is conditioned upon and subject to the execution and non-revocation by
the Executive of a form of release of claims against the Company, the principal
terms and conditions of which shall be as set forth in Exhibit A to this
Agreement.
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 $47,000 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 [Reserved; Intentionally Left Blank.]
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.
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 understands and agrees that he
does not qualify for, and will not be eligible to participate in, the Company's
group health, medical reimbursement, or life insurance plans. With regard to the
Executive's prior coverage, the Company understands that the Executive has
waived will waive continuation coverage under the so-called "COBRA" law, which
provides the opportunity for a temporary extension of health benefits.
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 Automobile Allowance. The Company agrees to provide an allowance of
up to $12,000 per year to reimburse the Executive for the actual cost of leasing
and operating an automobile for use by the Executive during the Executive's
employment with the Company.
3.8 Election as a Director. 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 during the
Employment Term. If the Executive's employment is terminated for any reason,
then such termination shall not in any way affect the Executive's right to be
elected to the Board of Directors as set forth in the
preceding sentence so long as the Executive and the Stockholders (as defined in
the Merger Agreement) and/or their respective affiliates continue to hold in the
aggregate at least 40% of the shares of outstanding capital stock of the
Company.
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 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 the time during which such severance
payments are accruing but suspended as provided in Section 2.2.11) 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 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. Nothing in this Agreement confers any rights or remedies on any
person or entity or than the parties hereto.
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. Xxxxx X. Xxxxx, c/o Xxxxxxx Rock Spring Water
Company, 0000 Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000, with a copy to:
Xxxx X. Xxxxxxxx, Esquire, Pepe & Hazard LLP, 00 Xxxxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxxxx 00000.
If to the Company: Vermont Pure Holdings, Ltd., 00 Xxxxx Xxxxx, X.X. Xxx
000, Xxxxxxxxx, Xxxxxxx 00000, Attention: Chairman of the Board, with a copy to:
Xxxx Xxxxxx, Esquire, Xxxxx Xxxx LLP, 000 Xxxxxxx Xxxxxxxxx, 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 the Executive, the
Company and the Operating Company.
IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date first written above.
COMPANY:
VERMONT PURE HOLDINGS, LTD.
By: /s/ Xxxxx X. Xxxxxxx
----------------------
Name: Xxxxx X. Xxxxxxx
Title: Chairman of the Board
OPERATING COMPANY:
CRYSTAL ROCK LLC
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------
Name: Xxxxxxx Xxxxxx
Title: Chief Executive Officer
EXECUTIVE:
/s/ Xxxxx X. Xxxxx
--------------------
Xxxxx X. Xxxxx
EXHIBIT A
Terms of Release
As a condition to the Company's obligation to pay or provide termination
payments or benefits, the Executive irrevocably and unconditionally releases,
acquits and forever discharges the Company, its affiliated and related
corporations and entities, and each of their predecessors and successors, and
each of their agents, directors, officers, trustees, attorneys, present and
former employees, representatives, and related entities (collectively referred
to as the "Released Entities") from any and all charges, complaints, claims,
liabilities, obligations, promises, agreements, controversies, damages, actions,
causes of action, suits, rights, demands, costs, losses, damages and expenses
(including attorneys' fees and costs actually incurred) arising out of or in
connection with his employment with or termination from the Company, which the
Executive now has, owns or holds, or claims to have, own or hold, or which at
any time heretofore, had owned or held, or claimed to have owned or held, or
which the Executive at any time hereafter may have, own or hold, or claim to
have owned or held against the Released Entities, based upon, arising out of or
in connection with his employment with or termination from the Company up to the
date of this Release, including but not limited to, claims or rights under any
federal, state, or local statutory and/or common law in any way regulating or
affecting the employment relationship, including but not limited to Title VII of
the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age
Discrimination in Employment Act and any other federal, state, local statutory
and/or common law regulating or affecting the employment relationship. The
Executive acknowledges and understands that the termination payment or benefits
to be provided to the Executive constitute a full, fair and complete payment for
the release and waiver of all of the Executive's possible claims arising out of
or in connection with his employment with or termination from the Company.
The Executive acknowledges that he has been provided at least twenty-one
(21) days to consider whether to sign this Release, that he has been advised to
consult with an attorney of his choosing concerning this Release, and that he
has executed and delivered this Release and waived any claims knowingly and
willingly. The Executive may revoke this Release within seven (7) days after it
is signed, and it shall not become effective or enforceable until such seven (7)
day revocation period has expired.
