Exhibit 10.43

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the or this “Amendment”), made and entered into on
the 6th day of March, 2018, by and between PRIMO WATER CORPORATION (the
“Company”), a Delaware corporation having its principal office at Winston-Salem,
North Carolina, and DAVID J MILLS (the “Executive”), an individual residing in
Winston-Salem, North Carolina.

 

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 in the United States and Canada.

 

 

1.2.

The Company and the Executive previously entered into that certain Change of
Control Severance Agreement in March of 2010. The Company desires to employ 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.

 

 

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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.

 

 

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 during the period of
employment pre-dating the Effective Date), 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 Executives 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 the Executive’s express
written consent) in Executive’s Position; (b) a reduction (without the
Executive’s express written consent) in the Executive’s Base Salary; provided,
however, a reduction in the Executive’s Base Salary of not more than twenty-five
percent (25%) applied at the same time as the same percentage reduction is
applied to the base salaries of all other senior executives shall not be deemed
“Good Reason”; (c) a reduction in the Executive’s target annual bonus percentage
set forth on Exhibit A; (d) the requirement that the Executive relocate without
the Executive’s express written consent) to an employment location that is more
than 50 miles from the Principal Office; or (e) 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.

 

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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 either or both events
constituting Good Reason hereunder within 90 days of the initial existence of
the events constituting Good Reason;

 

 

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.

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.

 

 

2.15.

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.

 

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b)

The Executive shall obtain the written consent of the Board prior to serving on
corporate, civic or charitable boards or committees. This Section 3.1 shall not
be construed as 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 in writing; provided that in no event shall
any such service or business activity 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 interfere in any respect with
the performance of the Executive’s duties hereunder.

 

 

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 Executive a base
salary (the “Base Salary”) as established by or pursuant to authority granted by
the Board.  Executive’s Base Salary shall be the base salary, as of the
Effective Date, 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.  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. 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.

 

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a)

Annual Bonus Compensation. The Executive will be eligible to participate in the
Company’s annual incentive plan (“Incentive Plan”), which provides Executives
bonus compensation based upon Company, team and individual goals. Payments under
the Incentive Plan are made in a combination of cash and equity as approved by
the Compensation Committee of the Board. . The Executive’s target annual bonus
percentage for each calendar year shall be as set forth on Exhibit A. Executive
acknowledges and agrees that: (i) the Board sets the annual bonus pool and the
size of the pool determines any adjustments to bonus targets for all Executives
for that calendar year and (ii) any such annual bonus compensation shall be
entirely within the discretion of the CEO and the Compensation Committee of the
Board based upon the achievement of goals (including without limitation
corporate, team and individual goals) and other discretionary factors as
determined by the Board and/or the Compensation Committee of the Board after
consultation with the CEO. Except as specifically set forth in this Agreement,
Executive shall not be eligible to be considered for, or to receive, an annual
bonus for any calendar year unless he remains employed with the Company through
completion of the audit for such calendar year. If Executive is terminated with
Cause or resigns without Good Reason, he shall not be entitled to receive any
annual bonus, even if a determination to award the Executive an annual bonus has
previously been made but such annual bonus has not yet paid.

 

 

b)

Equity Incentives.

 

 

(i)

The Board of Directors, upon the recommendation of the Compensation Committee,
or the Compensation Committee, may grant Executive from time to time options to
purchase shares of the Company’s common stock, and/or other equity awards
including without limitation restricted stock or restricted stock units, both as
a reward for past individual and corporate performance, and as an incentive for
future performance. Such options and/or other awards, if awarded, will be
pursuant to the Company’s then current equity incentive plan.

 

 

(ii)

In connection with this Agreement, the Company will grant Executive an equity
award as set forth on Exhibit A (the “Equity Award”) pursuant to the Company’s
2010 Omnibus Long-Term Incentive Plan. The grant of such Equity Award shall be
subject to Compensation Committee approval, and the grant date for such Equity
Award shall be in accordance with the Company’s equity award policy. Such Equity
Award shall vest in accordance with the vesting schedule set forth on Exhibit A,
subject to acceleration of vesting as described herein and as may be set forth
in the grant agreements issued by the Company, as amended, provided, that in the
event of a conflict between any grant agreement and this Agreement, this
Agreement shall control.

 

 

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.

 

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5.

TERMINATION OF EMPLOYMENT

 

 

5.1.

Term of Agreement. The term of the Employment shall commence on the date hereof
(the “Effective Date”) and 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;

 

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(i)

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

 

 

(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 (1) 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, 9.2 and 9.3.

 

 

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 Executive benefit plan (as such term is defined in the
Executive 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
(including during the period of employment pre-dating the Effective Date of this
Agreement), 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;

 

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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;

 

 

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 (including during the period of employment pre-dating the
Effective Date) 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, Executives, suppliers, and business
relationships.

 

“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.

 

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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 Executive, 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.

 

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-half (1/2) 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.

 

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(ii)

The continuation of insurance and other benefits set forth in Section 6.2 shall
be extended by an additional six 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.

 

 

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).

 

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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 Executive
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 Executive 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.

 

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11.

ADJUSTMENTS TO PAYMENTS

 

 

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 Executive
or for Executive's benefit (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise) (the
“Payments”) would be subject to the excise tax imposed by Section 4999 (or any
successor provisions) of the Code, or any interest or penalty is incurred by
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, is hereinafter collectively referred to as the
“Excise Tax”), then the Payments shall be reduced (but not below zero) if and to
the extent that such reduction would result in Executive retaining a larger
amount, on an after-tax basis (taking into account federal, state and local
income taxes and the imposition of the Excise Tax), than if Executive received
all of the Payments. The Company shall reduce or eliminate the Payments, by
first reducing or eliminating the portion of the Payments which are not payable
in cash and then by reducing or eliminating cash payments, in each case in
reverse order beginning with payments or benefits which are to be paid the
farthest in time from the determination.

 

 

11.2.

All determinations required to be made under this Section, including whether and
when an adjustment to any Payments is required and, if applicable, which
Payments are to be so adjusted, 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”) which shall provide detailed
supporting calculations both to the Company and to Executive within fifteen (15)
business days of the receipt of notice from Executive that there has been a
Payment, or such earlier time as is requested by the Company. In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. If the Accounting Firm determines that no Excise Tax is
payable by Executive, it shall furnish Executive with a written opinion that
failure to report the Excise Tax on Executive's applicable federal income tax
return would not result in the imposition of a negligence or similar penalty.
Any determination by the Accounting Firm shall be binding upon the Company and
Executive.

 

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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.

 

13.

EXECUTIVE HANDBOOKS, ETC. From time to time, the Company may, in its discretion,
establish, maintain and distribute Executive 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.

 

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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 and Nonsolicitation Covenant).

 

 

14.4.

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.

 

 

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.

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

 

 

14.11.

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.

 

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14.12.

For the purposes of this Agreement, the Executive’s “Principal Office” shall be
the Company’s offices in Winston-Salem, North Carolina.

 

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.

 

Executed and effective as of the Effective Date.

 

Primo Water Corporation

 

Executive

 

             

 

 

 

By: /s/ Matt Sheehan

 

/s/ David J. Mills

 

Name: Matt Sheehan

 

David J. Mills

 

Title: President and CEO

 

 

 

 

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Exhibit A

 

 

Office

Winston-Salem, NC

   

Position

Chief Financial Officer, Secretary and Assistant Treasurer

   

Base Salary

$250,000

   

Target Bonus

Fifty percent (50%) of Base Salary as of January 1 of the applicable new
calendar year

   

Equity Award upon signing the Agreement

10,000

   

Vesting of Equity Award

4 years

 

+

 

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