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EXHIBIT 10.3
 
Amended and Restated Employment Agreement
 
This Amended and Restated Employment Agreement (the “Agreement”) is made as of
June 10, 2013 between Primo Water Corporation, a Delaware corporation (the
“Company”), and Billy D. Prim (the “Executive”).
 

1. BACKGROUND

 

1.1 The Company is a rapidly growing provider of three- and five-gallon purified
bottled water exchange services, water bottle refill vending services, and water
dispensers sold through major retailers nationwide and in Canada.

 

1.2 The Company and the Executive previously entered into that certain
Employment Agreement, dated April 1, 2010.  The Company desires to retain the
employment of the Executive, and the Executive desires to remain employed by the
Company, on the terms and conditions set forth in this Agreement.

 

2. DEFINITIONS.  For purposes of this Agreement, the following terms have the
meanings set forth below.  Other defined terms have the meanings set forth in
the provisions of this Agreement in which they are used.

 

2.1 Board means Board of Directors of the Company.

 

2.2 Cause means (i) the continued willful failure by Executive to substantially
perform his duties with the Company, (ii) the willful engaging by Executive in
misconduct materially and demonstrably injurious to the Company or (iii)
Executive’s material breach of this Agreement; provided, that with respect to
any breach that is curable by Executive, as determined by the Board in good
faith, the Company has provided Executive written notice of the material breach
and Executive has not cured such breach, as determined by the Board in good
faith, within fifteen (15) days following the date the Company provides such
notice.

 

2.3 Change of Control is defined in Section 10.2.

 

2.4 COBRA means the Consolidated Omnibus Budget Reconciliation Act, as the same
may be amended from time to time, or any successor statute, together with any
applicable regulations in effect at the time in question.

 
2.5                Code means the Internal Revenue Code of 1986, as amended.
 
2.6                Company Group means Primo Water Corporation and its
subsidiaries.
 

2.7 Company Business is intentionally defined broadly in view of the Executive’s
senior position with the Company and access to Confidential Information related
to the Company Group’s business and business preparations; it means (1) any
business engaged in by the Company Group during the Executive’s Employment and
(a) in which the Executive materially participated, or (b) concerning which the
Executive had access to Confidential Information, or (2) any other business as
to which the Company Group has made demonstrable preparation to engage in during
such Employment and (i) in which preparation the Executive materially
participated, or (ii) concerning which preparation the Executive had access to
Confidential Information.

 

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2.8 Confidential Information means information about the Company Group or its
suppliers, clients, customers or other parties with which it has business
relationships (such as bottlers and distributors) that was learned by Executive
in the course of his employment by the Company, including (without limitation)
any proprietary knowledge (including business processes and methods), trade
secrets, data, formulae, information and supplier, client, customer, bottler and
distributor lists and all papers, resumes, and records (including computer
records) of the documents containing such information, but excludes information
which the Executive can show: (i) was in the Executive’s possession or within
the Executive’s knowledge before the Employment; or (ii) is or becomes generally
known to persons who could take economic advantage of it, other than officers,
directors, and employees of the Company Group, without breach of an obligation
to the Company; or (iii) the Executive obtained from a party having the right to
disclose it without violation of an obligation to the Company; or (iv) is
required to be disclosed pursuant to legal process (e.g., a subpoena), provided
that the Executive notifies the Company immediately upon receiving or becoming
aware of the legal process in question.

 
2.9                Effective Date is defined in Section 5.1.
 
2.10             Employment means the Executive’s employment with the Company.
 

2.11 Good Reason means: (a) a material reduction (without Executive’s express
written consent) in Executive’s duties or responsibilities; (b) the requirement
that Executive relocate to an employment location that is more than 50 miles
from his employment location on the Effective Date; or (c) the Company’s
material breach (without Executive’s express written consent) of this Agreement;
provided, that Executive has provided the Company written notice of the material
breach and the Company has not cured such breach within fifteen (15) days
following the date Executive provides such notice.

 

2.12 Position means the area of responsibility so identified on Exhibit A.  If
the Company in its sole discretion increases the Executive’s area of
responsibility, then such increased area of responsibility shall be deemed the
Position for all purposes hereunder.

 

2.13 Resign for Good Reason or Resignation for Good Reason means that all of the
following occur:

 

(a) the Executive notifies the Company in writing, in accordance with the notice
provisions of this Agreement, of the occurrence of one or more events
constituting Good Reason hereunder;

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(b) the Company fails to revoke, rescind, cancel, or cure the event (or if more
than one, all such events) that was the subject of the notification under
subparagraph (a) within thirty (30) days after such notice; and

 

(c) within ten (10) business days after the end of the thirty-day period
described in subparagraph (b), the Executive delivers to the Company a notice of
resignation in accordance with this Agreement.

 

2.14 Senior Executives means those officers of the Company who are designated
executive officers from time to time.

 

2.15 Termination Date means the effective date of the Executive’s termination of
Employment with the Company. For purposes of this Agreement, whether a
termination of Employment has occurred shall be determined consistent with the
requirements of Section 409A of the Code and the Company’s administrative
policies.

 

2.16 Tribunal means a court or other body of competent jurisdiction that is
deciding a matter relating to this Agreement.

 

3. EMPLOYMENT

 

3.1 Position.  Subject to the terms and conditions hereinafter set forth, the
Company hereby agrees to employ the Executive, and the Executive hereby agrees
to serve the Company, at the office and in the Position referred to on Exhibit
A.

 

(a) The Executive will (i) devote his full professional time, attention, and
energies to the business of the Company and will diligently and to the best of
his ability perform all duties incident to his Employment hereunder; (ii) use
his best efforts to promote the interests and goodwill of the Company; and
(iii) perform such other duties commensurate with the Position as the Board may
from time-to-time assign to the Executive.

 

(b) The Executive shall obtain the written consent of the Board prior to serving
on corporate, civic or charitable boards or committees.

 

(c) This Section 3.1 shall not be construed as (i) preventing the Executive from
serving on the corporate, civic or charitable boards or committees on which he
currently serves and which have been previously disclosed to the Company;
provided that in no event shall any such service require the provision of
substantial services by the Executive to the operations or the affairs of such
businesses or enterprises such that the provision thereof would materially
interfere with the performance of the Executive’s duties hereunder, or (ii)
preventing the Executive from investing his personal assets in any business that
does not compete with the Company or with any subsidiary or affiliate of the
Company, and managing such investments, provided that the form or manner of such
investment or the management thereof will not require substantial services on
the part of the Executive in the operation of the business in which such
investment is made such that the provision thereof would materially interfere
with the performance of the Executive’s duties hereunder.

 
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3.2 Office Space, Equipment, etc.  The Company shall provide the Executive with
office space, related facilities, equipment, and support personnel that are
commensurate with the Position.

 

3.3 Expense Reimbursement.  The Company will timely reimburse the Executive for
reasonable business expenses incurred by the Executive in connection with the
Employment in accordance with the Company’s then-current policies no later than
seventy-five (75) days following the date on which the Executive incurs such
expense(s).

 

4. COMPENSATION AND BENEFITS DURING EMPLOYMENT.  During the Employment, the
Company shall provide compensation and benefits to the Executive as follows.

 

4.1 Salary.  In consideration of the services to be rendered by Executive
pursuant to this Agreement, the Company shall pay, or cause to be paid, to
Employee a base salary (the “Base Salary”) as established by or pursuant to
authority granted by the Board.  Executive’s Base Salary as of the date of this
Agreement shall be the base salary as set forth on Exhibit A.  The Base Salary
shall be reviewed annually by or pursuant to authority granted by the Board in
connection with its annual review of executive compensation to determine if such
Base Salary should be increased (but not decreased) for the following year in
recognition of services to the Company, subject to the automatic annual cost of
living increase set forth on Exhibit A.  The Base Salary shall be payable at
such intervals in conformity with the Company’s prevailing practice as such
practice shall be established or modified from time to time.

 

4.2 Bonuses; Additional Compensation.

 

(a) Annual Bonus Compensation.  Executive will be eligible to receive bonuses
and awards of equity and non-equity compensation and to participate in annual
and long-term compensation plans of the Company in accordance with any plan or
decision that the Board, or any committee or other person authorized by the
Board, may in its sole discretion determine from time to time.

 

(b) Value Creation Plan.  The Executive shall be deemed a “Participant” for
purposes of the Company’s Value Creation Plan, as approved by the Company’s
Compensation Committee on May 14, 2013 and attached hereto as Exhibit B (the
“VCP”).  Notwithstanding anything in the VCP to the contrary, the Company agrees
as follows:

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(i) during the Employment Term, (A) the Executive will always be deemed a
“Participant” under the VCP and at no point during the Employment Term may the
Company or any representative of the Company (including the Compensation
Committee) remove him from participation in the VCP; (B) the Executive will
receive not less than thirty percent (30%) of the bonus pool award actually made
to all Participants under the VCP for any fiscal year under the VCP; and (C) any
such award shall be paid in accordance with the terms of the VCP; provided,
however, that such award shall be paid in the year following the year in which
the applicable Adjusted EBITDA target was achieved and no later than December 31
of such year;

 

(ii) in the event the Executive is terminated for Cause or resigns without Good
Reason, the Executive will forfeit all rights to an award for the fiscal year in
which such termination occurs under the VCP and thereafter; and

 

(iii) in the event the Executive is terminated without Cause or resigns for Good
Reason or his employment is otherwise terminated due to death, Disability, or
retirement from the Company in good standing, he shall remain eligible for an
award for the fiscal year in which such termination occurs and may receive a
full current-year award based on the Company’s progress towards the applicable
Adjusted EBITDA (as defined in the VCP) target at the time of such termination.
 Any such award shall be paid in accordance with the terms of the VCP; provided,
however, that such award shall be paid in the year following the year in which
the termination of employment occurs and no later than December 31 of such year.

 

4.3 Other Benefits.  During the period of employment under this Agreement,
Executive shall be entitled to participate in all other benefits of employment
generally available to other Senior Executives and those benefits for which such
persons are or shall become eligible, when and as the Executive becomes eligible
therefore.  In addition, (i) the Executive shall be entitled to receive an
annual physical examination at Johns Hopkins or similar facility selected by the
Executive at the Company’s expense and (ii) the Company shall make reasonable,
good faith efforts to obtain long-term disability insurance coverage for the
Executive at the Company’s expense that, together with the Company’s other
long-term disability coverage for the Executive, provides the Executive with a
long-term disability benefit equal to 100% of Base Salary.

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5. TERMINATION OF EMPLOYMENT

 

5.1 Term of Agreement.  The term of the Employment for purposes of this
Agreement commenced on April 1, 2010 (the “Effective Date”) and shall continue
to the third anniversary of the Effective Date (the “Original Term”) and renew
automatically for successive one-year terms (each, a “Renewal Term”) unless
notice of non-renewal is given by either party to the other party at least
ninety (90) days prior to the end of the Original Term or any Renewal Term (the
“Expiration Date”); provided that the Employment may also be terminated prior to
such Expiration Date (i) by the Executive for any reason (i.e., with or without
Good Reason), (ii) by the Company for any reason (i.e., with or without Cause)
or (iii) due to the Disability or death of the Executive.

 

5.2 Termination in the Event of Disability.  In the event of the incapacity of
the Executive, by reason of mental or physical disability to perform his
material duties hereunder, for a period of 120 consecutive days or 180
non-consecutive days during any twelve (12) month period, as reasonably
determined by the Board or as certified by a qualified physician selected by the
Board (collectively, “Disability”), the Company may terminate the Executive’s
Employment effective upon written notice to the Executive.  Prior to the
termination of Executive’s Employment pursuant to this Section 5.2, during any
period that the Executive fails to perform his full-time duties with the Company
as a result of incapacity due to physical or mental illness, he shall continue
to receive his Base Salary, annual bonus and other benefits provided hereunder,
less the amount of any disability benefits received by the Executive during such
period under any disability plan or program sponsored by the Company.

 

5.3 Notice of Resignation; Waiver of Notice Period.  If the Executive resigns
from the Company, the Executive will give the Company at least four (4) weeks’
prior notice of resignation.  The Company may in its discretion waive any notice
period stated in the Executive’s notice of resignation, in which case the
Termination Date of the Employment will be the date of such waiver.

 

5.4 No Termination of Agreement Per Se.  Termination of the Employment will not
terminate this Agreement per se; to the extent that either party has any right
under applicable law to terminate this Agreement, any such termination of this
Agreement shall be deemed solely to be a termination of the Employment without
affecting any other right or obligation hereunder except as provided herein in
connection with termination of the Employment.

 

5.5 Payments Following Termination.

 

(a) If the Employment is terminated for any reason, either by the Company or by
the Executive’s resignation, then the Company shall pay the Executive the
following amounts as part of the Company’s next regular payroll cycle but in no
event later than thirty (30) days after the Termination Date, to the extent that
the same have not already been paid;

 

(i) any and all Base Salary and vacation pay earned through the Termination
Date; and

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(ii) any reimbursable expenses properly reported by the Executive.

 

(b) Unless the Executive resigns without Good Reason or the Employment is
terminated for Cause, then the Company shall pay (i) any applicable prorated
annual bonus, based on actual performance for the year of termination as
determined by the Board in its discretion when making bonus determinations for
other Senior Executives and payable at such time as annual bonuses are otherwise
determined for other Senior Executives and (ii) any accrued but unpaid annual
bonus for the fiscal year immediately preceding the year of termination.

 

6. SEVERANCE BENEFITS UPON CERTAIN TERMINATIONS

6.1 Severance Payment.  If (1) the Company does not renew the Agreement at the
end of the Original Term or any Renewal Term, (2) the Employment is terminated
by the Company other than for Cause or (3) the Executive resigns for Good
Reason, then:

(a) The Company shall pay to the Executive an amount equal to one times the sum
of (A) the highest Base Salary in effect (i) during the 12 months immediately
prior to the Termination Date or (ii) during the Employment, if the Employment
has lasted less than 12 months plus (B) the average annual bonus earned by the
Executive for the most recent two (2) fiscal years ending prior to the
Termination Date, such amount to be paid in cash or immediately-available funds
in a lump sum on the 60th day following the Termination Date.

 

(b) As a condition to making any such severance payment, the continuation of
insurance and related benefits under Section 6.2 below and the special equity
vesting under Section 6.3 below, the Company will require the Executive or his
legal representative(s) to first execute a release in form and substance
satisfactory to the Company, which contains a full release of all claims against
the Company and certain other provisions, including but not limited to a
reaffirmation of the covenants in Sections 8, 9.1 and 9.2.

 

6.2 Continuation of Insurance and Related Benefits.  If (1) the Company does not
renew the Agreement at the end of the Original Term or any Renewal Term, (2) the
Employment is terminated by the Company other than for Cause or (3) the
Executive resigns for Good Reason then:

 

(a) The Company shall, to the greatest extent permitted by applicable law and
the terms and conditions of the applicable insurance or benefit plan, maintain
the Executive and the Executive’s dependents as participants in the health,
dental, life, accident, disability and similar benefit plans offered to (and on
the same terms as) other Senior Executives until the 12-month anniversary of the
Termination Date.

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(b) To the extent that applicable law or the terms and conditions of the
applicable insurance or benefit plan do not permit the Company to comply with
subparagraph (a), the Company shall reimburse the Executive (if living) and the
Executive’s dependents, for all expenses incurred by any of them in maintaining
the same levels of coverage under COBRA, to the extent applicable, for the
period set forth in subparagraph (a) (not to exceed applicable COBRA
continuation coverage period), but solely to the extent that such expenses
exceed the deduction or amount that would have been required to be paid by the
Executive for such coverage if the Employment had not been terminated.  If the
period set forth in subparagraph (a) exceeds the applicable COBRA continuation
coverage period, then following such period, if any, the Company shall provide
the Executive (if living) and the Executive’s dependents with substantially
similar levels of coverage under an individual or group policy for the duration
of the time period specified in subparagraph (a).

 

(c) If the Executive dies before the expiration of the Company’s obligation
under this Section 6.2, then the Company shall, to the greatest extent permitted
by applicable law and the terms and conditions of the applicable insurance or
benefit plan, continue to maintain coverage for the Executive’s dependents under
all insurance plans referred to in this Section 6.2 for which such dependents
had coverage as of the date of the Executive’s death, at the same coverage
levels and for the same period of time as would have been required had the
Executive not died.

 

6.3 Equity Vesting.  If (1) the Company does not renew the Agreement at the end
of the Original Term or any Renewal Term, (2) the Employment is terminated by
the Company other than for Cause or (3) the Executive resigns for Good Reason,
then the Executive shall vest upon such termination of Employment in any
restricted stock, stock option or other equity compensation awards granted by
the Company that were otherwise scheduled to vest within six (6) months after
the Termination Date.  The provisions of this Section 6.3 shall control except
to the extent that the provisions of the applicable restricted stock, stock
option or other equity award are more favorable. Any post-employment exercise
period for vested stock options shall continue to be governed by the terms of
the applicable equity compensation plan and award agreement.

 

6.4 D&O Insurance, and Indemnification.  Through at least the sixth anniversary
of the Termination Date, the Company shall maintain coverage for the Executive
as a named insured on all directors’ and officers’ insurance maintained by the
Company for the benefit of its directors and officers on at least the same basis
as all other covered individuals and provide the Executive with at least the
same corporate indemnification as it provides to other Senior Executives.

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6.5 No Other Severance Benefits.  Other than as described above in Sections 6.1,
6.2 and 6.3 and as described below in Section 10, the Executive shall not be
entitled to any payment, benefit, damages, award or compensation in connection
with termination of the Employment, by either the Company or the Executive,
except as may be expressly provided in another written agreement, if any,
approved by the Board and executed by the Executive and the Company.  Neither
the Executive nor the Company is obligated to enter into any such other written
agreement.

6.6 No Waiver of ERISA-Related Rights.  Nothing in this Agreement shall be
construed to be a waiver by the Executive of any benefits accrued for or due to
the Executive under any employee benefit plan (as such term is defined in the
Employee Retirement Income Security Act of 1974, as amended) maintained by the
Company, if any, except that the Executive shall not be entitled to any
severance benefits pursuant to any severance plan or program of the Company
other than as provided herein.

 

6.7 Mitigation Not Required.  The Executive shall not be required to mitigate
the amount of any payment or benefit which is to be paid or provided by the
Company pursuant to this Section 6.  Any remuneration received by the Executive
from a third party following termination of the Employment shall not apply to
reduce the Company’s obligations to make payments or provide benefits hereunder.

 

7. TAX WITHHOLDING.  Notwithstanding any other provision of this Agreement, the
Company may withhold from amounts payable under this Agreement, or under any
other agreement between the Executive and the Company, all federal, state, local
and foreign taxes that are required to be withheld by applicable laws or
regulations.

 

8. CONFIDENTIAL INFORMATION

 

8.1 Executive acknowledges that in the course of his employment by the Company,
the Company has provided him and will continue to provide him, prior to any
termination hereof, with certain Confidential Information and knowledge
concerning the operations of the Company Group which the Company desires to
protect.  This Confidential Information shall include, but is not limited to:

 

(a) terms and conditions of and the identity of the parties to the Company
Group’s agreements with its suppliers, clients, customers or other parties with
which it has business relationships (such as bottlers and distributors),
including but not limited to price information;

 

(b) management systems, policies or procedures, including the contents of
related forms and manuals;

 

(c) professional advice rendered or taken by the Company Group;

 

(d) the Company Group’s own financial data, business and management information,
processes, methods, strategies and plans and internal practices and procedures,
including but not limited to internal financial records, statements and
information, cost reports or other financial information;

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(e) proprietary software, systems and technology-related methodologies of the
Company Group and their clients;

 

(f) salary, bonus and other personnel information relating to the Company
Group’s personnel;

 

(g) the Company Group’s business and management development plans, including but
not limited to proposed or actual plans regarding acquisitions (including the
identity of any acquisition contacts), divestitures, asset sales, and mergers;

 

(h) decisions and deliberations of the Company Group’s committees or boards; and

 

(i) litigation, disputes, or investigations to which the Company Group may be
party and legal advice provided to Executive on behalf of the Company Group in
the course of Executive’s employment.

 

8.2 Executive understands that such information is confidential, and he agrees
not to reveal such information to anyone outside the Company so long as the
confidential or secret nature of such information shall continue.  Executive
further agrees that he will at no time use such information in competing with
all or any portion of the Company.  At such time as Executive shall cease to be
employed by the Company, he will surrender to the Company all papers, documents,
writing and other property produced by him or coming into his possession by or
through his employment and relating to the information referred to in this
paragraph, and the Executive agrees that all such materials will at all times
remain the property of the Company.

 

9. NONCOMPETITION AND NONSOLICITATION COVENANT

 

9.1 Noncompetition.  In return for the consideration stated in this Agreement,
including the receipt of Confidential Information by Executive and the promise
of the Company to provide the Executive with Confidential Information, the
Executive agrees that, during his Employment and for one (1) year after the
termination of Employment, Executive shall not directly or indirectly possess an
ownership interest in, manage, control, participate in, consult with, or render
services for any other person, firm, association or corporation, engaged in the
Company Business without the prior written consent of the Company, in the
Territory (defined below), because such activity would unavoidably and unfairly
compromise the Company’s legitimate, protectable business interests in its
Confidential Information, clients, employees, suppliers, and business
relationships.

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“Territory” means all of the following: (1) any state in which any entity in the
Company Group conducts Company Business at the time of enforcement of this
provision; (2) the United States of America; (3) North America; and (4) the
world.
 

9.2 Executive agrees that he shall not, either directly or indirectly, during
Executive’s Employment and for one (1) year after termination of Employment, in
any capacity whatsoever (either as an employee, officer, director, stockholder,
proprietor, partner joint venturer, consultant or otherwise) (a) solicit,
contact, call upon, communicate with, or attempt to communicate with any of the
Company Group customers or clients or potential customers or clients for the
purpose of selling products or providing services to such customer or client,
(b) sell products or provide any services to any customer or client or potential
customer or client of the Company Group, or (c) cause, or attempt to cause, any
of the Company’s suppliers, distributors, bottlers or other business partners to
cease doing business with the Company or to reduce the amount of business they
do with the Company.

 

9.3 Nonsolicitation.  Executive agrees that he shall not directly or indirectly
during Executive’s Employment and for one (1) year after termination of
Employment, either alone or through or in conjunction with any other person or
entity employ, solicit, induce, or recruit, any person employed by any member of
the Company Group at any time within the one (1) year period immediately
preceding such employment, solicitation, inducement or recruitment.

 

9.4 For the purposes of this Agreement, “potential customer” or “potential
client” shall be defined as those entities for which Executive has had access to
Confidential Information during his Employment, and “customer” or “client” shall
be defined as those entities with which any member of the Company Group has
conducted any business during the twelve (12) month period prior to termination
of the Employment.  For the purposes of this Agreement, “product” shall mean any
product sold by any member of the Company Group at any time within the one (1)
year period preceding termination of Executive’s Employment and “services” shall
mean activities performed by any member of the Company Group at any time within
the one (1) year period preceding termination of Executive’s Employment.

 

9.5 Executive acknowledges and agrees that the restrictive covenants contained
herein are reasonable in time, territory and scope, and in all other respects.
 If a Tribunal determines that any of the restrictions set forth in this Section
9 are unreasonably broad or otherwise unenforceable under applicable law, then
(i) such determination shall be binding only within the geographical
jurisdiction of the Tribunal, and (ii) the restriction will not be terminated or
rendered unenforceable, but instead will be blue penciled or reformed (solely
for enforcement within the geographic jurisdiction of the Tribunal) to the
minimum extent required to render it enforceable.

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10. CHANGE OF CONTROL

 

10.1 Special Severance Benefits.

 

(a) If, during the specific time periods listed in subparagraph (b), the
Employment is terminated by any of the specific events listed there, then the
Executive will be entitled to the following benefits:

 

(i) The Company shall pay to the Executive an amount equal to one times the sum
of (A) the highest Base Salary in effect (i) during the 12 months immediately
prior to the Termination Date or (ii) during the Employment, if the Employment
has lasted less than 12 months plus (B) the average annual bonus earned by the
Executive for the most recent two (2) fiscal years ending prior to the
Termination Date, such amount to be paid in cash or immediately-available funds
in a lump sum on the 60th day following the Termination Date.

 

(ii) The continuation of insurance and other benefits set forth in Section 6.2
shall be extended by an additional 12 months.

 

(iii) The amount payable under subparagraph (i) is in addition to any severance
payments due to Executive under the provisions of Section 6.1 as a result of
such termination of Employment, and the continuation of insurance and other
benefits under subparagraph (ii) is in addition to the continuation of benefits
under the provisions of Section 6.2 as a result of such termination of
Employment.

 

(b) The specific termination events and time periods in which the Executive will
be entitled to the special severance benefits under Section 10.1(a)(i) above are
as follows:

 

(i) the Executive’s Employment is terminated by the Company, for any reason
other than Cause, at any time during the period beginning on the Change of
Control date and ending on the date two (2) years after the Change of Control
date; or

 

(ii) the Executive Resigns for Good Reason at any time during the period
beginning on the Change of Control date and ending on the date two (2) years
after the Change of Control date.

 

(c) In addition, all restricted stock, stock option or other equity compensation
awards granted by the Company that were unvested immediately prior to the Change
of Control date shall become fully vested as of the Change of Control date.  The
provisions of this Section 10.1(c) shall control except to the extent that the
provisions of the applicable restricted stock, stock option or other equity
award are more favorable.

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(d) As a condition to providing the Executive with the special severance
benefits under Sections 10.1(a)(i) and (ii), the Company will require the
Executive to first execute a release consistent with the requirements of Section
6.1(b).

 

10.2 A Change of Control shall occur when:

 

(a) Any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”) becomes the beneficial owner (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 50% or more of either (A) the
then-outstanding shares of common stock of the Company (the “Outstanding Company
Common Stock”) or (B) the combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however,
that, for purposes of this Section, the following acquisitions shall not
constitute a Change of Control:  (i) any acquisition directly from the Company,
(ii) any acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company, or (iv)
any acquisition pursuant to a transaction that complies with Sections
10.2(c)(A), (B) and (C).

 

(b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board;

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(c) There is consummation of a reorganization, merger, statutory share exchange
or consolidation or similar transaction involving the Company or any of its
subsidiaries, a sale or other disposition of all or substantially all of the
assets of the Company, or the acquisition of assets or stock of another entity
by the Company or any of its subsidiaries (each, a “Business Combination”), in
each case unless, following such Business Combination, (A) all or substantially
all of the individuals and entities that were the beneficial owners of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of the then-outstanding shares of common stock (or,
for a non-corporate entity, equivalent securities) and the combined voting power
of the then-outstanding voting securities entitled to vote generally in the
election of directors (or, for a non-corporate entity, equivalent governing
body), as the case may be, of the entity resulting from such Business
Combination (including, without limitation, an entity that, as a result of such
transaction, owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership immediately prior to such Business
Combination of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities, as the case may be, (B) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then-outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then-outstanding voting securities of such corporation, except to the extent
that such ownership existed prior to the Business Combination, and (C) at least
a majority of the members of the board of directors (or, for a non-corporate
entity, equivalent governing body) of the entity resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement or of the action of the Board providing for such Business
Combination; or

 

(d) The stockholders of the Company approve a complete liquidation or
dissolution of the Company.

 
Notwithstanding the foregoing, if it is determined that a payment hereunder is
subject to the requirements of Section 409A, the Company will not be deemed to
have undergone a Change of Control unless the Company is deemed to have
undergone a “change in control event” pursuant to the definition of such term in
Section 409A.
 

11. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY

 

11.1 Anything in this Agreement to the contrary notwithstanding in the event it
shall be determined that any payment or distribution by the Company to or for
the benefit of the Executive upon a Change of Control, whether paid or payable
or distributed or distributable pursuant to the terms of this Agreement or
otherwise (a “Payment”), would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties with respect to such excise tax
(such excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”), then the Executive shall be
entitled to receive an additional payment (a “Gross-Up Payment”) in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments. The Gross-Up Payment
shall be paid to the Executive no later than the end of the Executive’s taxable
year next following the Executive’s taxable year in which the Executive remits
the tax payment to the appropriate taxing authority.

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11.2 Subject to the provisions of this Section, all determinations required to
be made hereunder, including whether a Gross-Up Payment is required and the
amount of such Gross-Up Payment, shall be made by an independent accounting firm
selected by the Company from among the four (4) largest accounting firms in the
United States or any nationally recognized financial planning and benefits
consulting company (the “Accounting Firm”) (at the sole expense of the Company),
which shall provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the date of termination of the Executive’s
employment under this Agreement, if applicable, or such earlier time as is
requested by the Company.  If the Accounting Firm determines that no Excise Tax
is payable by the Executive, the Accounting Firm shall furnish the Executive
with an opinion that he has substantial authority not to report any Excise Tax
on his federal income tax return.  Any determination by the Accounting Firm
shall be binding upon the Company and the Executive, absent manifest error.  As
a result of the uncertainty in the application of Section 4999 of the Code, it
is possible that Gross-Up Payments may be miscalculated and may not cover the
full amount of Excise Taxes due (an “Underpayment”) consistent with the
calculations required to be made hereunder.  If the Company exhausts its
remedies pursuant hereto and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Company to or for the benefit of the Executive.

 

12. COMPLIANCE WITH SECTION 409A OF THE INTERNAL REVENUE CODE. To the extent
applicable, it is intended that this Agreement comply with the provisions of
Section 409A of the Code (hereinafter referred to as “Section 409A”). This
Agreement shall be administered in a manner consistent with this intent, and any
provision that would cause the Agreement to fail to satisfy Section 409A shall
have no force and effect until amended to comply with Section 409A.
Notwithstanding any provision of this Agreement to the contrary, in the event
any payment or benefit hereunder is determined to constitute nonqualified
deferred compensation subject to Section 409A, then to the extent necessary to
comply with Section 409A, such payment or benefit shall not be made, provided or
commenced until six months after Executive’s Termination Date. Lump sum payments
will be made, without interest, as soon as administratively practicable
following the six-month delay. Any installments otherwise due during the
six-month delay will be paid in a lump sum, without interest, as soon as
administratively practicable following the six-month delay, and the remaining
installments will be paid in accordance with the original schedule. For purposes
of Section 409A, the right to a series of installment payments shall be treated
as a right to a series of separate payments. Each separate payment in the series
of separate payments shall be analyzed separately for purposes of determining
whether such payment is subject to, or exempt from compliance with, the
requirements of Section 409A.

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13. EMPLOYEE HANDBOOKS, ETC.  From time to time, the Company may, in its
discretion, establish, maintain and distribute employee manuals or handbooks or
personnel policy manuals, and officers or other representatives of the Company
may make written or oral statements relating to personnel policies and
procedures.  The Executive will adhere to and follow all rules, regulations, and
policies of the Company set forth in such manuals, handbooks, or statements as
they now exist or may later be amended or modified.  Such manuals, handbooks and
statements do not constitute a part of this Agreement nor a separate contract,
and shall not be deemed as amending this Agreement or as creating any binding
obligation on the part of the Company, but are intended only for general
guidance.

 

14. OTHER PROVISIONS

 

14.1 This Agreement shall inure to the benefit of and be binding upon (i) the
Company and its successors and assigns and (ii) the Executive and the
Executive’s heirs and legal representatives, except that the Executive’s duties
and responsibilities under this Agreement are of a personal nature and will not
be assignable or delegable in whole or in part without the Company’s prior
written consent.

 

14.2 All notices and statements with respect to this Agreement must be in
writing and shall be delivered by certified mail return receipt requested; hand
delivery with written acknowledgment of receipt; or overnight courier with
delivery-tracking capability.  Notices to the Company shall be addressed to the
Company’s chief executive officer or chief financial or accounting officer at
the Company’s then-current headquarters offices.  Notices to the Executive may
be delivered to the Executive in person or to the Executive’s then-current home
address as indicated on the Executive’s pay stubs or, if no address is so
indicated, as set forth in the Company’s payroll records.  A party may change
its address for notice by the giving of notice thereof in the manner hereinabove
provided.

 

14.3 If the Executive Resigns for Good Reason because of (i) the Company’s
failure to pay the Executive on a timely basis the amounts to which he is
entitled under this Agreement or (ii) any other breach of this Agreement by the
Company, then the Company shall pay all amounts and damages to which the
Executive may be entitled as a result of such failure or breach, including
interest thereon at the maximum non-usurious rate and all reasonable legal fees
and expenses and other costs incurred by the Executive to enforce the
Executive’s rights hereunder and the Executive will be relieved of all
obligations under Section 9 (noncompetition).

 

14.4 This Agreement amends and restates in its entirety the Employment Agreement
between the parties dated as of April 1, 2010.  This Agreement sets forth the
entire present agreement of the parties concerning the subjects covered herein
except for any equity incentive award agreements between the Company and the
Executive.  There are no promises, understandings, representations, or
warranties of any kind concerning those subjects except as expressly set forth
herein or therein.

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14.5 Any modification of this Agreement must be in writing and signed upon the
express consent of all parties. Any attempt to modify this Agreement, orally or
in writing, not executed by all parties will be void.

 

14.6 If any provision of this Agreement, or its application to anyone or under
any circumstances, is adjudicated to be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability will not affect any other
provision or application of this Agreement which can be given effect without the
invalid or unenforceable provision or application and will not invalidate or
render unenforceable such provision or application in any other jurisdiction.

 

14.7 This Agreement will be governed and interpreted under the laws of the State
of North Carolina.

 

14.8 No failure on the part of any party to enforce any provisions of this
Agreement will act as a waiver of the right to enforce that provision.

 

14.9 Termination of the Employment, with or without Cause, will not affect the
continued enforceability of this Agreement.

 

14.10 In the event that the Executive incurs any attorneys’ fees in protecting
or enforcing his rights under this Agreement or under any employee benefit plans
or programs sponsored by the Company in which the Executive is a participant,
the Company shall reimburse the Executive for such reasonable attorneys’ fees
and for any other reasonable expenses related thereto. Such reimbursement shall
be made within thirty (30) days following final resolution of the dispute or
occurrence giving rise to such fees and expenses.  In no event shall the
Executive be entitled to receive the benefits provided for in this Section 14.10
in the event his Employment is terminated by the Company for Cause.

 

14.11 Section headings are for convenience only and shall not define or limit
the provisions of this Agreement.

 

14.12 This Agreement may be executed in several counterparts, each of which is
an original. It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other counterparts.  A
copy of this Agreement manually signed by one party and transmitted to the other
party by FAX or in image form via email shall be deemed to have been executed
and delivered by the signing party as though an original.  A photocopy of this
Agreement shall be effective as an original for all purposes.

 
By signing this Agreement, the Executive acknowledges that the Executive (1) has
read and understood the entire Agreement; (2) has received a copy of it; (3) has
had the opportunity to ask questions and consult counsel or other advisors about
its terms; and (4) agrees to be bound by it.
 
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Executed and effective as of the date first written above.
 
Primo Water Corporation
Executive
  By: /s/ Mark Castaneda /s/ Billy D. Prim   Name:   Mark Castaneda
Billy D. Prim
Title: Chief Financial Officer

 
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Exhibit A
 
Office
Winston Salem, NC
   
Position
Chairman and CEO
   
Base Salary
$400,000*

 
*Base Salary shall be subject to an annual automatic cost of living increase
effective each January 1 during the period of Employment determined by
multiplying the most recent Base Salary times a fraction (not less than one)
whose numerator shall be the Consumer Price Index (the “CPI”) [All Urban
Consumers, South Region Average (1982-84 = 100); All Items, Bureau of Labor
Statistics of The United States Department of Labor], for the month of November
next preceding the applicable January 1, and whose denominator shall be the CPI
for the month of November for the immediately preceding year.  If the quotient
obtained in the foregoing fraction shall be a number less than one, the Base
Salary shall not be decreased.  In the event (i) the CPI ceases to use the
1982-84 average of 100 as the base of calculation, or (ii) a substantial change
is made in the quality or quantity of the items utilized in determining the CPI,
or (iii) the publishing of the CPI shall be discontinued for any reason, the
United States Department of Labor shall be requested to furnish a new index
comparable to the CPI, together with the information which will make possible
the conversion of such new index to replace the CPI for the purposes of
computing the Base Salary as provided for herein.  If for any reason the United
States Department of Labor does not furnish such an index and information, the
parties hereto shall thereafter accept and use, as determined by the Board, such
other index or comparable statistics to measure the cost of living as shall be
computed and published by (i) an agency of the United States Government, (ii) a
reasonable financial periodical or (iii) a recognized authority mutually
selected by the Company and the Executive.
 
 

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