UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  June 10, 2013

PRIMO WATER CORPORATION
(Exact name of registrant as specified in its charter)


Delaware
001-34850
30-0278688
(State or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)

104 Cambridge Plaza Drive
Winston-Salem, NC  27104
(Address of Principal Executive Offices)(Zip Code)

Registrant’s telephone number, including area code:  336-331-4000

Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
Item 5.02
Departure of Directors or Certain Offices; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
 
Matthew T. Sheehan Promotion and Employment Agreement
 
On June 10, 2013, Matthew T. Sheehan, the current Chief Operating Officer of Primo Water Corporation (the “Company”), was promoted to President and Chief Operating Officer.  Billy D. Prim will continue to serve as the Company’s Chief Executive Officer.
 
In connection with Mr. Sheehan’s promotion to President, the Company entered into an employment agreement with Mr. Sheehan (the “Employment Agreement”) on June 10, 2013. The Employment Agreement has an initial term expiring on June 10, 2016 with automatic one-year renewals and provides for an annual base salary of $300,000.  Mr. Sheehan will have a target bonus level under the Company’s Annual Incentive Plan of 75% of his base salary.  The Employment Agreement also provides Mr. Sheehan the right to participate in the Company’s Value Creation Plan and the right to receive at least 25% of the bonus pool awarded to all participants under the Value Creation Plan in any fiscal year.  A copy of the Value Creation Plan is filed with this Current Report on Form 8-K as Exhibit 10.1, and is incorporated herein by reference.  The Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 provides a detailed description of the Company’s Value Creation Plan.  Such description of the Value Creation Plan does not purport to be complete, however, and is qualified in its entirety by reference to the full text of the Value Creation Plan.

The Employment Agreement provides that if Mr. Sheehan is terminated without Cause or resigns for Good Reason (as such terms are defined in the Employment Agreement), Mr. Sheehan will receive (i) base salary through the termination date, (ii) any applicable prorated annual bonus, based on actual performance for the year of termination as determined by the Company’s Board in its discretion, (iii) any accrued but unpaid annual bonus for the fiscal year immediately preceding the year of termination, and (iv) any accrued vacation and any other amounts Mr. Sheehan is entitled to under the Company’s employee benefit plans.  If Mr. Sheehan 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 will remain eligible for an award under the Value Creation Plan 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 Value Creation Plan target at the time of such termination.

If the Company does not renew Mr. Sheehan’s Employment Agreement at the end of the initial term or any renewal term or Mr. Sheehan is terminated without Cause or resigns for Good Reason, Mr. Sheehan will receive an amount equal to the sum of (A) one year’s base salary plus (B) the average annual bonus (including amounts paid under the Value Creation Plan) earned by Mr. Sheehan for the most recent two fiscal years ending prior to the termination date.  Additionally, if the Company does not renew Mr. Sheehan’s Employment Agreement at the end of the initial term or any renewal term or Mr. Sheehan is terminated without Cause or resigns for Good Reason, Mr. Sheehan will receive continuation of health benefits or payment of COBRA health insurance premiums for up to 12 months following termination and any equity compensation awards granted by the Company (a) that were otherwise scheduled to vest within six months after the termination date for all options that have a monthly or quarterly vesting schedule and (b) that were otherwise scheduled to vest at the next vesting date for all options that have an annual vesting schedule shall vest immediately.

The Employment Agreement provides that if Mr. Sheehan is terminated without Cause or resigns for Good Reason (as such terms are defined in the Employment Agreement) in connection with or within two years of a Change of Control (as such term is defined in the Employment Agreement), Mr. Sheehan will receive in addition to any amounts otherwise payable under the Employment Agreement in connection with the termination of employment an amount equal to one-half times the sum of (A) one year’s base salary plus (B) the average annual bonus (including amounts paid under the Value Creation Plan) earned by Mr. Sheehan for the most recent two fiscal years ending prior to the termination date.  In such case, Mr. Sheehan will also be entitled to an additional six months of health benefits continuation or payment of COBRA health insurance premiums and immediate vesting of all outstanding unvested equity awards.
 

In connection with the entry into of the Employment Agreement, Mr. Sheehan was granted a long term incentive equity award in the form of a stock option to purchase 50,000 shares of the Company’s common stock, which will vest in four equal annual installments.

A copy of the Employment Agreement is filed with this Current Report on Form 8-K as Exhibit 10.2, and is hereby incorporated herein by reference. The foregoing description of the Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Employment Agreement.  A detailed biography for Mr. Sheehan is included in the Company’s Proxy Statement for the 2013 Annual Stockholder Meeting and is incorporated herein by reference.  A copy of the Company’s press release issued June 11, 2013 announcing Mr. Sheehan’s promotion and certain other promotions and additions to the Company’s senior management team is attached hereto as Exhibit 99.1 and incorporated herein by reference.

Amended and Restated Employment Agreements
 
On June 10, 2013, the Company entered into Amended and Restated Employment Agreements with Billy D. Prim, the Company’s Chief Executive Officer, and Mark Castaneda, the Company’s Chief Financial Officer.

These Amended and Restated Employment Agreements are substantially identical to Mr. Prim’s and Mr. Castaneda’s April 2010 employment agreements that are described in detail in the Company’s Proxy Statement for the 2013 Annual Stockholder Meeting except that a provision has been added to each of the agreements that provides the executives the right to participate in the Company’s Value Creation Plan.  Mr. Prim’s Amended and Restated Employment Agreement provides him the right to receive at least 30% of the bonus pool awarded to all participants under the Value Creation Plan in any fiscal year and Mr. Castaneda’s Amended and Restated Employment Agreement provides him the right to receive at least 20% of the bonus pool awarded to all participants under the Value Creation Plan in any fiscal year.  If either Mr. Prim or Mr. Castaneda is terminated without Cause or resigns for Good Reason (as such terms are defined in the Amended and Restated Employment Agreements) or his employment is otherwise terminated due to death, disability, or retirement from the Company in good standing, such executive will 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 target at the time of such termination.

Copies of the Amended and Restated Employment Agreements with Mr. Prim and Mr. Castaneda are filed with this Current Report on Form 8-K as Exhibit 10.3 and Exhibit 10.4, respectively, and are hereby incorporated herein by reference. The foregoing description of the Amended and Restated Employment Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the Amended and Restated Employment Agreements.

 
Item 9.01
Financial Statements and Exhibits.
 
(d)
Exhibits
 
The following exhibits are filed herewith:
 
Exhibit No.
 
Exhibit Description
 
 
 
 
10.1
 
Primo Water Corporation Value Creation Plan (filed herewith)
10.2
 
Employment Agreement, dated June 10, 2013, by and between Primo Water Corporation and Matthew T. Sheehan (filed herewith)
10.3
 
Amended and Restated Employment Agreement, dated June 10, 2013, by and between Primo Water Corporation and Billy D. Prim (filed herewith)
10.4
 
Amended and Restated Employment Agreement, dated June 10, 2013, by and between Primo Water Corporation and Mark Castaneda (filed herewith)
99.1
 
Press release dated June 11, 2013 (filed herewith)
 
 
Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
PRIMO WATER CORPORATION
 
 
 
 
 
Date:  June 14, 2013
By:   
/s/ Mark Castaneda
 
 
Name:
Mark Castaneda
 
 
Title:
Chief Financial Officer
 
 
 
SECURITIES AND EXCHANGE COMMISSION
Washington, DC

EXHIBITS

CURRENT REPORT
ON
FORM 8-K

 
 
 
Date of Event Reported:
 
Commission File No:
June 10, 2013
 
001-34850

PRIMO WATER CORPORATION

EXHIBIT INDEX

Exhibit No.
 
Exhibit Description
 
 
 
 
 
Primo Water Corporation Value Creation Plan (filed herewith)
 
Employment Agreement, dated June 10, 2013, by and between Primo Water Corporation and Matthew T. Sheehan (filed herewith)
 
Amended and Restated Employment Agreement, dated June 10, 2013, by and between Primo Water Corporation and Billy D. Prim (filed herewith)
 
Amended and Restated Employment Agreement, dated June 10, 2013, by and between Primo Water Corporation and Mark Castaneda (filed herewith)
 
Press release dated June 11, 2013 (filed herewith)
 
 
EXHIBIT 10.1
 
Primo Water Corporation
Amended and Restated Value Creation Plan
 
 
Purpose of Plan
 
This Amended and Restated Value Creation Plan (the “ Plan ”) is established to assist Primo Water Corporation (the “ Company ”) in attracting and retaining highly qualified executive officers and motivating such executive officers to serve the Company and expend maximum effort to improve the business results and earnings of the Company, by providing to such persons an opportunity to earn incentive compensation based on the achievement by the Company of pre-established performance goals, as provided herein.  This Plan amends and restates in its entirety the Value Creation Plan established by the Company in May, 2012.
 
Award Formula
 
· The Company will issue to eligible participants up to three (3) separate Equity/Cash Awards based on the Company’s achieving targets of at least $15 million, $20 million and $25 million in Adjusted EBITDA for any fiscal year between 2013 and 2018 (including fiscal 2018).  Once the Company achieves the $15 million Adjusted EBITDA target level for a given fiscal year, the Adjusted EBITDA target level would increase to $20 million for subsequent fiscal years; and once the Company thereafter achieves the $20 million Adjusted EBITDA target level for a given fiscal year, the Adjusted EBITDA target level would increase to $25 million for subsequent fiscal years.  The bonus issuance to the eligible participants will be (a) 15% for the $15 million Adjusted EBITDA target level, (b) 17.5% for the $20 million Adjusted EBITDA target level and (c) 20% (for the $25 million Adjusted EBITDA target level) of the incremental market cap appreciation (excluding additional share issuances), with the allocation of the pool among Participants (defined below) to be recommended by the CEO and determined and approved by the Compensation Committee in its sole discretion.  Market capitalization appreciation would be determined based on the (i) the Company’s closing stock price on the later to occur of May 11, 2012 or the date that is two trading days after public announcement of financial results for the fiscal year in which the last Adjusted EBITDA threshold was achieved, (ii) the number of shares outstanding on May 11, 2012, and (iii) the Company’s closing stock price on the date two trading days after public announcement of financial results for the fiscal year for which an award is being made.
 
o Example - $15 million  Adjusted EBITDA is attained for the first time in fiscal 2014:
 
5/11/12 Share price at start
 
$
1.39
 
3/17/15 Achieve $15 million Adjusted EBITDA for fiscal 2014
       
3/19/15 (closing share price – two days after announcing results)
  $
3.00 (ex)
 
Number of shares outstanding at 5/11/12
   
23,752,816
 
Value created ($3.00 - $1.39 x shares) (millions)
 
$
38.2
 
15% bonus pool of value created (millions)
 
$
5.7
 
Bonus pool to be split among Participants
       

o Example – Following attainment of $15 million Adjusted EBITDA for fiscal 2014, $20 million of Adjusted EBITDA is attained for the first time in fiscal 2016:
 
Share price at start (since last incentive)
 
$
3.00
 
3/16/17 Achieve $20 million Adjusted EBITDA for fiscal 2016
       
3/18/17 (closing share price – two days after announcing results)
  $
5.00 (ex)
 
Number of shares outstanding at 5/11/12
   
23,752,816
 
Incremental Value created ($5.00 - $3.00 x shares) (millions)
 
$
47.5
 
17.5% bonus pool of value created (millions)
 
$
8.3
 
Bonus pool to be split among Participants
       

o Example – Following attainment of $20 million Adjusted EBITDA for fiscal 2016, $25 million of Adjusted EBITDA is attained for the first time in fiscal 2018:
 
Share price at start (since last incentive)
 
$
5.00
 
3/16/19 Achieve $25 million Adjusted EBITDA for fiscal 2018
       
3/18/19 (closing share price – two days after announcing results)
  $
8.00 (ex)
 
Number of shares outstanding at 5/11/12
   
23,752,816
 
Incremental Value created ($8.00 - $5.00 x shares) (millions)
 
$
71.3
 
20% bonus pool of value created (millions)
 
$
14.3
 
Bonus pool to be split among Participants
       

o Example – $20 million Adjusted EBITDA is attained for the first time in fiscal 2015 (both the $15 million Adjusted EBITDA and $20 million EBITDA levels were attained in 2015 – no prior award under the Plan has been issued)
 
5/11/12 Share price at start
 
$
1.39
 
3/17/16 Achieve $20 million Adjusted EBITDA for fiscal 2015
       
3/19/16 (closing share price – two days after announcing results)
  $
6.00 (ex)
 
Number of shares outstanding at 5/11/12
   
23,752,816
 
Incremental Value created ($6.00 - $1.39 x shares) (millions)
 
$
109.5
 
17.5% bonus pool of value created (millions)
 
$
19.2
 
Bonus pool to be split among Participants
       
 
Calculation of Awards and Other Terms and Conditions:
 
· Award pool will be calculated effective at the market close on the second trading day after public announcement of year-end financial results (after completion of the audited financial statements), upon attaining  the targeted Adjusted EBITDA (as defined in the Company’s then current credit agreements).
 
· Awards may be paid in cash and/or equity (restricted stock) in the sole discretion of the Compensation Committee.
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· Award is dependent on the Company being in compliance (including via a waiver) with all applicable loan agreements, as such may be amended.
 
· The Compensation Committee shall review and approve, in its sole discretion, individual awards under the Plan promptly after the award pool is established, as described above.
 
· All equity awards made under this Plan shall be valued for such purpose at the closing price on the trading day prior to the payment date and issued under the Primo Water Corporation 2010 Omnibus Long-Term Incentive Plan (or any successor plan) (the “ Omnibus Plan ”).
 
Separation of Employment:
 
· A Participant who leaves the Company voluntarily, is dismissed for Cause (as defined in the Omnibus Plan), or is terminated by the Company shall forfeit all rights to his/her current-year award.
 
· A Participant who separates employment because of death, Disability (as defined in the Omnibus Plan), or retirement shall remain eligible for a current-year award.  In the event of a Participant’s retirement after June 30 of a given year, the Compensation Committee may in its discretion award the Participant a full current-year award based on the Company’s progress toward the applicable Adjusted EBITDA target at the time of such retirement.  For example, if the retirement occurs 3/4 of the way through a given year and if the Company has earned 3/4 of a certain Adjusted EBITDA target on the date of such retirement, the Compensation Committee may pay out a full award, in its discretion, in connection therewith.  In the case of a Participant’s death, any payments shall be made to the participant’s estate.
 
Change in Control:
 
· In the event of a Change in Control (as defined in the Omnibus Plan) that occurs on or after June 30 of a given year, the Company shall make a full current-year award based on the Company’s successful progress toward the applicable Adjusted EBITDA target at the time of such Change in Control.  For example, if a Change in Control occurs 3/4 of the way through a given year and if the Company has earned 3/4 of a certain Adjusted EBITDA target on the date of such Change in Control, the Company shall pay out a full award that would otherwise be payable in connection with the achievement of such Adjusted EBITDA target in connection with the Change in Control.
 
Eligibility:
 
· “ Participants ” shall mean any employee eligible to participate in the Plan as determined by Compensation Committee.
 
· The Board may add or remove employees in the Plan at any time without prior notice.
 
General Requirements:
 
· Nothing contained in this Plan shall give any employee the right to be retained in the employment of the Company or effect the right of the Company to relocate, change positions, or dismiss any employee.
3
· The Compensation Committee reserves the right, in its sole discretion, to make adjustments to the Plan or to individual awards when it believes the integrity, purpose and fairness of the Plan would be better served.  Any decisions of the Board shall be conclusive and binding on all parties.
 
· It is intended that the Plan be ongoing, however, it may be necessary for the Board to amend or terminate the Plan at any time without prior notification.
 
· This Plan will be in effect starting January 1, 2012 and will automatically terminate upon the earlier of (i) any payout based on the Company’s attaining $25 million in Adjusted EBITDA for any fiscal year including or prior to 2018 (which assumes previous payouts based on the Company’s attaining  $20 million and $15 million in Adjusted EBITDA for previous fiscal years); (ii) any payout based on the Company’s achieving $20 million or more in Adjusted EBITDA for fiscal 2018 (which assumes a previous payout based on the Company’s attaining  $15 million in Adjusted EBITDA for a previous fiscal year); (iii) any payout based on the Company’s achieving $15 million or more in Adjusted EBITDA for fiscal 2018, assuming there had been no previous payout under the Plan, or (iv) a final determination that the Company has not achieved the then-applicable Adjusted EBITDA target level under this Plan for fiscal 2018.
 
· To the extent the Company is subject to any tax deduction limits under Section 162(m) of the Internal Revenue Code, this Plan is intended to comply with the “performance-based compensation” requirements of Section 162(m) and will be administered and interpreted accordingly.
 
· To the extent applicable, this Plan shall be interpreted in accordance with Section 409A.  Notwithstanding any provision of this Plan to the contrary, in the event that the Company determines in good faith that any compensation or benefits payable under this Plan may not be either exempt from or compliant with Section 409A, the Company shall adopt such amendments to this Plan or adopt other policies or procedures (including amendments, policies and procedures with retroactive effect), or take any other commercially reasonable actions necessary or appropriate (i) to preserve the intended tax treatment of the compensation and benefits payable hereunder, to preserve the economic benefits of such compensation and benefits, and/or to avoid less favorable accounting or tax consequences for the Company and/or (ii) to exempt the compensation and benefits payable hereunder from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder; provided , however , that this provision does not, and shall not be construed so as to, create any obligation on the part of the Company to adopt any such amendments, policies or procedures or to take any other such actions or to indemnify any Participant for any failure to do so.
 
· The Company shall have the authority, duty, and power to withhold from any award under this Plan the amount of any applicable federal, state, and local tax required to be withheld by the Company pursuant to any applicable laws or regulations.
 
 
4
EXHIBIT 10.2
 
Employment Agreement
 
This Employment Agreement (the “ Agreement ”) is made as of June 10, 2013 between Primo Water Corporation, a Delaware corporation (the “ Company ”), and Matt Sheehan, an individual (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.  The Company desires to employ the Executive, and the Executive desires to accept employment with 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 the Executive to substantially perform his duties with the Company, (ii) the willful engaging by the Executive in misconduct materially and demonstrably injurious to the Company or (iii) the Executive’s material breach of this Agreement; provided, however, that with respect to any breach that is curable by the Executive, as determined by the Board in good faith, the Company has provided the Executive written notice of the material breach and the 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 preparations to engage in during such Employment and (a) in which preparation the Executive materially participated, or (b) 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 the Executive in the course of his Employment (including during the period of employment pre-dating the Effective Date), including (without limitation):
 
(a) 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;
 
(b) 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;
 
(c) professional advice rendered to, 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;
 
(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.
2
 
The term Confidential Information shall not include any information that: (i) was in the Executive’s possession or within the Executive’s knowledge before the Employment; (ii) is or becomes generally known to persons other than officers, directors and employees of the Company Group without breach of this Agreement by the Executive; (iii) the Executive obtained from a party not known by the Executive to be prohibited from disclosing it in violation of an obligation to the Company; or (iv) is required to be disclosed pursuant to any law, rule, regulation, court order or other legal process (e.g., a subpoena), provided that the Executive notifies the Company promptly upon receiving or becoming aware of such requirement.
 
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 materially adverse change (without the Executive’s express written consent) in the 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 from the percentage set forth on Exhibit A; (d) the requirement that the Executive relocate to an employment location that is more than 50 miles from the Principal Office; (e) the Company’s material breach (without the Executive’s express written consent) of this Agreement; provided, however, that the 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 the Executive provides such notice; or (f) failure to require a successor to the Company, which does not assume this Agreement by operation of law, to expressly assume the terms of this Agreement.
 
2.12 Position means the title, duties and responsibilities 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;
 
(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.
3
 
2.14 Principal Office means the office of the Company located in Chicago, Illinois or Winston Salem, North Carolina, as determined in accordance with Section 3.3.
 
2.15 Senior Executives means those officers of the Company who are designated executive officers from time to time.
 
2.16 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.
 
2.17 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 Principal Office and in the Position.
 
(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.  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 Establishment of Chicago Office .  Promptly after the Effective Date, the Company will establish a company office in Chicago, Illinois.  The Chicago office will have reasonable IT and similar support and technology, including video-conferencing equipment.
 
3.3 Principal Office .  The “Principal Office” shall initially be the Company’s office in Chicago, Illinois.  The Executive may, in his sole discretion, elect to permanently relocate to the greater Winston Salem, North Carolina area, at which point the “Principal Office” shall be deemed to be the Company’s office located in Winston Salem, North Carolina.
4
 
3.4 Office Space, Equipment, etc .  The Company shall provide the Executive with an administrative assistant, office space, related facilities, equipment, and support personnel that are commensurate with the Position.
 
3.5 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 initial 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.
 
(a) Annual Bonus Compensation .  Executive shall be eligible to be considered for an annual, discretionary cash bonus each calendar year.  Executive’s target annual bonus percentage for each calendar year shall be as set forth on Exhibit A.  Executive acknowledges and agrees that any such annual bonus 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 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.
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(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 a signing bonus comprised of non-qualified stock options as set forth on Exhibit A (the “ Options ”) pursuant to the Company’s 2010 Omnibus Long-Term Incentive Plan.  The grant of such Options shall be subject to Compensation Committee approval, and the grant date for such Options shall be deemed to be the date of such approval.  Such Options 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.
 
(c) 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:
 
(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 twenty-five percent (25%) 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;
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(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.
 
(d) For the purposes of calculating any bonus for the Executive pursuant to this Section 4.2 for the fiscal year ended December 31, 2013, the Executive shall be deemed to have been employed as of January 1, 2013 and in no event shall any such bonus be prorated in relation to the Effective Date hereof.
 
4.3 Relocation Expenses .
 
(a) In the event the Executive elects to make the Company's Winston Salem, North Carolina office the Principal Office in accordance with Section 3.3, the Company shall reimburse the Executive for all reasonable and necessary direct costs associated with moving the Executive and his family and personal property to the greater Winston-Salem, North Carolina area.  Executive shall obtain three (3) quotes from different moving companies and allow the Company to select the moving company.  Such reimbursement shall be paid at the time, and only if, Executive relocates his primary residence to the greater Winston-Salem, North Carolina area and shall be based and contingent upon documented receipts for direct moving costs provided by Executive to the Company.
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(b) In addition, the Company shall provide Executive with a relocation stipend in the gross amount of $5,000 per month for up to six (6) months commencing on the date Executive completes his relocation to, and establishes primary residency within, the Winston-Salem, NC area.  All payments under this Section 4.3 shall be subject to deduction for any tax withholdings required under applicable law.  Executive agrees that if Executive terminates his Employment with the Company without Good Reason, or if the Company terminates Executive’s Employment for Cause, at any time before the first anniversary of the Effective Date, Executive shall repay the gross amount of all payments made to Executive pursuant to this Section 4.3 within thirty (30) days of the effective date of such termination.  Any taxes payable with respect to the payments under this Section 4.3 shall be the sole responsibility of Executive, and the Company will follow federal, state and local tax regulations with regard to reporting of such payments and required withholdings related to such payments.
 
4.4 Fringe Benefits, Perquisites, Health Care and Benefit Plans . During the Employment, the Executive shall be eligible to receive all fringe benefits and perquisites and to participate in all health care and benefit programs normally available to other Senior Executives of the Company (subject to all applicable eligibility and contribution policies and rules), as may be in effect from time to time, including such insurance programs as may be implemented by the Company.  The Executive's family shall be entitled to participate in all health care insurance programs implemented by the Company and made available to the families of other Senior Executives.
 
4.5 Other Benefits .  During the period of employment under this Agreement, the 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.
 
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.
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5.2 Termination in the Event of Disability .  In the event of the incapacity of the Executive, by reason of mental or physical disability that materially interferes with his ability 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; provided, however, that if a determination of Disability is made by the Board and the Executive disagrees with such determination, the Board and the Executive shall agree upon and appoint a qualified physician who shall evaluate the Executive and determine whether the Executive meets the definition of Disability, which decision shall be binding upon the Company and 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 without Good Reason, 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
 
(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 to the Executive (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, (ii) any accrued but unpaid annual bonus for the fiscal year immediately preceding the year of termination, and (iii) any accrued vacation and any other amounts the Executive is entitled to under the employee benefit plans.  Any such payments shall be made as part of the first payroll cycle following the Termination Date and in no event later than thirty (30) days after the Termination Date.
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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) one year’s Base Salary, which such Base Salary shall be 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) (i) the average annual bonus earned by the Executive pursuant to Section 4.2 for the most recent two (2) fiscal years ending prior to the Termination Date or (ii) if the Executive has not been employed by the Company for at least two (2) full fiscal years, the greater of (A) the annual bonus that the Executive earned for the immediately preceding fiscal year (if any) and (B) the bonus that the Executive would have been entitled to receive for the fiscal year in which the termination occurs pursuant to Section 4.2(a) as though the Executive had been employed for the full twelve (12) months of the fiscal year prorated based on the number of days the Executive was employed by the Company in such fiscal year.  Such amount shall be paid in cash or immediately-available funds in a lump sum on the 60 th 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 (a) that were otherwise scheduled to vest within six (6) months after the Termination Date for all options that have a monthly or quarterly vesting schedule and (b) that were otherwise scheduled to vest at the next vesting date for all options that have an annual vesting schedule.  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, 6.3 and 6.4 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 (including during the period of employment pre-dating the Effective Date), the Company has provided him and will continue to provide him, prior to any termination hereof, with certain Confidential Information which the Company desires to protect.
 
8.2 Executive understands that the Confidential Information is confidential, and he agrees not to reveal the Confidential 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 the Confidential 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 Confidential Information, and the Executive agrees that all such materials will at all times remain the property of the Company.
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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 in the Territory without the prior written consent of the Company, 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.
“ 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) Canada; and (4) North America.
9.2 Non-interference .  Executive agrees that he shall not, either directly or indirectly, during Executive’s Employment and for one (1) year after the 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 Potential Clients for the purpose of selling Products or providing Services to such Customer or Client or Potential Customer or Potential Client, (b) sell Products or provide any Services to any Customer or Client or Potential Customer or Potential 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 .  The Executive agrees that he shall not directly or indirectly during the Executive’s Employment and for one (1) year after the 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.
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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 or confidential information of such potential customer or client 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 the 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 the termination of the 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 the 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) times the sum of (A) one year’s Base Salary, which such Base Salary shall be 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) (i) the average annual bonus earned by the Executive pursuant to Section 4.2 for the most recent two (2) fiscal years ending prior to the Termination Date (ii) if the Executive has not been employed by the Company for at least two (2) full fiscal years, the greater of (A) the annual bonus that the Executive earned for the immediately preceding fiscal year (if any) and (B) the bonus that the Executive would have been entitled to receive for the fiscal year in which the termination occurs pursuant to Section 4.2(a) as though the Executive had been employed for the full twelve (12) months of the fiscal year prorated based on the number of days the Executive was employed by the Company in such fiscal year.  Such amount shall be paid in cash or immediately-available funds in a lump sum on the 60 th 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, and not in lieu of, 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 or its successor in interest, 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.
 
For the avoidance of doubt, if the Executive’s employment is terminated in connection with the closing of a transaction that constitutes a Change of Control, either by the Company immediately prior to the closing of such transaction or by the successor in interest by refusing to assume this Agreement in its entirety, the Executive will be entitled to the special severance benefits under Section   10.1(a)(i)
 
(c) In addition, all then-outstanding restricted stock, stock option or other equity compensation awards granted by the Company that were unvested immediately prior to the Change of Control shall, become fully vested immediately prior to the Change of Control.  Immediately prior to the Change of Control, all stock options (to the extent then vested or vesting upon such Change of Control) will be deemed canceled and the Company shall pay, or cause to be paid, to the Executive cash for all such options in an amount equal to the product of (i) the positive difference (if any) between the price per share (or distribution per share, if applicable) in such Change of Control transaction less the exercise price(s) of such stock options and (ii) the number of shares underlying such stock options.   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)(i), (ii) and (iii).
 
(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, (i) 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, (ii) 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 (iii) 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. 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.
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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 the Executive within fifteen (15) business days of the receipt of notice from the 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, the 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 the Executive with a written opinion that failure to report the Excise Tax on the 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 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 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 and the Invention Assignment and Non-Disclosure Agreement between the Company and the Executive (provided, however, that in the event of any conflict between the latter agreement and this Agreement, the terms and conditions of this Agreement shall prevail).  Without limiting the foregoing, the parties agree that this Agreement supersedes and replaces in its entirety that certain letter agreement between the Company and the Executive dated December 1, 2012.  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 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.
 
By signing this Agreement, the Executive acknowledges that the Executive: (a) has received a copy of it; (b) has read and understood the entire Agreement; (c) has had the opportunity to ask questions and consult counsel or other advisors about its terms; and (d) agrees to be bound by it.
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Executed and effective as of the Effective Date.
 
Primo Water Corporation
Executive
 
By: /s/ Billy Prim
/s/ Matt Sheehan
Name:    Billy Prim
Matt Sheehan
Title: Chief Executive Officer

Exhibit A
 
     
 
Office
Winston Salem, NC or Chicago, Illinois, determined in accordance with Section 3.3
   
 
Position
President and Chief Operating Officer
   
 
Base Salary
$300,000*
   
 
Target Bonus
Seventy-five percent (75%) of Base Salary as of January 1 of the applicable new calendar year
   
 
Signing Bonus Options
50,000
   
 
Vesting of Options
Annual vesting at the rate of 25% per year, over four years
     

*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.
 
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.
 
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 60 th 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 60 th 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.
 
 
EXHIBIT 10.4
 
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 Mark Castaneda (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.
 
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.  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.
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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.  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:
 
(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 twenty percent (20%) 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;
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(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.
 
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.
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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
 
(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.
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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 60 th 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.
 
(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).
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(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.
 
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.
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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;
 
(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;
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(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.
 
“ 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.
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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 60 th 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 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;
 
(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
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(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. 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.
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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.
 
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. 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.
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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.
 
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.
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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.
 
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 date first written above.
 
Primo Water Corporation
Executive
 
By:   /s/ Billy D. Prim /s/ Mark Castaneda         
Name:    Billy D. Prim
Mark Castaneda
Title: Chief Executive Officer

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Exhibit A
 
   
Office
Winston Salem, NC
   
Position
Chief Financial Officer, Secretary and Asst. Treasurer
   
Base Salary
$250,000
 
 
EXHIBIT 99.1
 
 
News Release
 
FOR IMMEDIATE RELEASE
 
Contact :
Mark Castaneda
Primo Water Corporation
Phone: (336) 331-4047
E-mail: mcastaneda@primowater.com


Primo Water Announces Promotions and Additions to Senior Management Team
 
-  Matt Sheehan Promoted to President and Chief Operating Officer -
-  Richard Belmont Promoted to Senior Vice President and General Manager of Consumer Innovation and Global Sourcing -
-  Mary Leonard Joins Primo Water as Senior Vice President and General Manager of U.S. Water -
 
Winston-Salem, N.C., June 11, 2013   — Primo Water Corporation (NASDAQ: PRMW), a leading provider of multi-gallon purified bottled water and water dispensers, today announced that Matt Sheehan who is currently the Company’s Chief Operating Officer, has been promoted to President and Chief Operating Officer and Richard (“Rick”) Belmont has been promoted to Senior Vice President and General Manger of Consumer Innovation and Global Sourcing; Mr. Belmont previously was the Company’s General Manger, Water Dispensers.  In addition, Mary Leonard joined the Company as Senior Vice President and General Manger of U.S. Water.

“We look forward to Matt’s continued contributions with the addition of his new role as President. In his short time with Primo Water, Matt has had a very positive impact on our business by applying his extensive experience in developing high growth services to retailers through solid operational capabilities. Rick Belmont has been a key member of our team since 2006 and an integral part of Primo’s innovation in water dispensers.  We look forward to his continued contributions in his role as Senior Vice President of Consumer Innovation,” stated Billy D. Prim, Primo Water’s Chief Executive Officer.

Mr. Sheehan was promoted to President and Chief Operating Officer of Primo Water, effective June 10, 2013. He joined the Company in December 2012 as Chief Operating Officer. Prior to joining Primo Water, Mr. Sheehan was most recently with Coinstar, Inc. where he was instrumental in building the Redbox business, which was acquired by Coinstar in 2009. Mr. Sheehan held several roles at Redbox/Coinstar, most recently, as a Senior Venture Advisor, where he advised certain ventures within the Coinstar portfolio on long-term strategy, retail and distribution execution, and technology utilization. From 2008 to 2011, Mr. Sheehan built and led the first Redbox automated retail venture as Vice President, General Manager.

Mr. Belmont was promoted to Senior Vice President of Consumer Innovation, effective June 10, 2013. Since January 2012, he has served as the Company’s General Manager, Water Dispensers and served previously as Vice President, Products from March 2010 until January 2012 and Vice President, Marketing from September 2009 until March 2010. Prior to joining Primo Water, Mr. Belmont served in several roles at Blue Rhino Corporation.

Ms. Leonard brings over 30 years of experience in transportation, logistics, and growth management and has extensive experience in operations in the United States and Europe. Most recently, Ms. Leonard served as Chief Performance Officer for Coinstar, Inc. (NASDAQ: CSTR), where she was responsible for customer service, strategic internal communications, kiosk deployment operations, and properties and facilities management, among other responsibilities. From 2006 to 2010, she served as Senior Vice President, Operations at Redbox, which was acquired by Coinstar in 2009.  At Redbox, Ms. Leonard was responsible for strategy development and tactical execution of all facets of operations. Prior to Redbox, from 2002 to 2006, Ms. Leonard held positions of increasing responsibility at RR Donnelley Logistics. From 1977 to 2002, Ms. Leonard held positions of increasing responsibility at Federal Express. Ms. Leonard earned a Bachelor of Science – Finance from DePaul University.

“I continue to be excited about our business and future potential for creating long term value through growth and improved operating results.   With that, we are thrilled to welcome Mary to the Primo management team.  Having worked with Mary for years while building Redbox together, I know first-hand Mary's ability to impact an organization on several levels: productivity, growth, efficiency and culture.   We will benefit from her extensive experience managing operations and logistics, as well as very large teams, for leading high growth retail brands.  We look forward to her contributions as we continue to focus on execution and cost improvements to our core business,” stated Matt Sheehan, Primo Water’s President and Chief Operating Officer.

Ms. Leonard said, “As this is such an exciting time for Primo Water, I am delighted to be joining the team!  I very much look forward to leveraging my operation, transportation and logistics experience as we position the business for long term growth and profitability.”

About Primo Water Corporation
 
Primo Water Corporation (Nasdaq: PRMW) is a leading provider of multi-gallon purified bottled water, self-serve filtered drinking water and water dispensers sold through major retailers throughout the United States and Canada. Learn more about Primo Water at www.primowater.com.

Forward-Looking Statements
 
Certain statements contained herein are not based on historical fact and are "forward-looking statements" within the meaning of the applicable securities laws and regulations. Generally, these statements can be identified by the use of words such as "anticipate," "believe," "could," "estimate," "expect," "feel," "forecast," "intend," "may," "plan," "potential," "project," "should," "would," "will," and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Owing to the uncertainties inherent in forward-looking statements, actual results could differ materially from those stated herein. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the loss of major retail customers of the Company or the reduction in volume or change in timing of purchases by major retail customers, lower than anticipated consumer and retailer acceptance of and demand for the Company's Exchange and Refill services and its water dispensers, changes in the Company's relationships with its independent bottlers, distributors and suppliers, the entry of a competitor with greater resources into the marketplace and competition and other business conditions in the water and water dispenser industries in general, the Company's experiencing product liability, product recall or higher than anticipated rates of warranty expense or sales returns associated with product quality or safety issues, the loss of key Company personnel, changes in the regulatory framework governing the Company's business, the Company's inability to efficiently and effectively integrate acquired businesses with the Company's historical business, the Company's inability to efficiently expand operations and capacity to meet growth, the Company's inability to develop, introduce and produce new product offerings within the anticipated timeframe or at all, the Company's inability to comply with its covenants in its credit facilities, the failure of lenders to honor their commitments under the Company's credit facilities, as well as other risks described more fully in the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K filed on March 22, 2013 and its subsequent filings under the Securities Exchange Act of 1934. Forward-looking statements reflect management's analysis as of the date of this press release. The Company does not undertake to revise these statements to reflect subsequent developments, other than in its regular, quarterly earnings releases.

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