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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): November 2, 2005
Vermont Pure Holdings, Ltd.
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(Exact Name of Registrant as Specified in Charter)
Delaware 000-31797 03-0366218
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
45 Krupp Drive, Williston, Vermont 05495
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (802) 860-1126
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(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
Exchange 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))
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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
Change in Board Compensation
At the meeting of our Board of Directors that was held November 2, 2005, the
Board voted to change the compensation payable to members of the Board for their
service as directors. Previously, non-employee directors received $1000 per
Board meeting ($400 per committee meeting) attended and $7,500 per year, subject
to reduction if the director failed to attend specified numbers of meetings. The
former chairman received an additional $10,000 annually. Non-employee directors
also received grants of 5,000 stock options per year, plus an additional 5,000
stock options per year if certain attendance criteria were met. On November 1,
2005 each non-employee director serving on that date was entitled to an
automatic option grant of 5,000 shares. All of the directors entitled to this
option refused the grant.
Commencing with our 2006 fiscal year, Board compensation for all services by
non-employee directors (currently, our chairman and three other directors) will
be $25,000 per year, payable quarterly in arrears. Directors who are also
employees will not receive any separate compensation for their service as
directors. Automatic option grants for directors were terminated as of November
2, 2005.
Indemnification Agreements
Effective November 2, 2005, we entered into Indemnification Agreements with two
newly appointed directors, John M. LaPides and Martin A. Dytrych. (See Item 5.02
of this Form 8-K for information about the appointment of Messrs. LaPides and
Dytrych to our Board.)
The Indemnification Agreements set forth the circumstances and procedures
pursuant to which we agree, by contract, to indemnify our directors and certain
officers against claims and losses arising from their services as directors or
officers. The agreements have an initial term of two years and are
self-renewing, so long as the indemnitee continues to be a director or officer,
for additional two-year terms unless we give at least six months' notice of
non-renewal to the director. Claims made with respect to acts or omissions
during any period in which the agreements are in force are covered, in
accordance with the provisions of the agreements, notwithstanding later
termination of the agreements. The agreements are substantially identical to the
form of Indemnification Agreement dated November 1, 2002 filed as Exhibit 10.27
to our Annual Report on Form 10-K for the fiscal year ended October 31, 2002.
ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPAL OFFICERS.
Appointment of Principal Officer
(c) At the meeting of our Board of Directors that was held November 2, 2005, the
Board appointed Peter Baker as our Chief Executive Officer, to serve at the
pleasure of the Board. Mr. Baker is currently our President as well.
Information about Mr. Baker's business experience is set forth under "Directors
and Officers" on pages 3-4 of our proxy statement dated March 9, 2005, which we
filed with the SEC on February 28, 2005. Information about the employment
agreement between Vermont Pure and Peter Baker is set forth under "Employment
Agreements and Change-in-Control Arrangements" on pages 7-9 of that same proxy
statement. Information about certain transactions between Vermont Pure and Peter
Baker and other members of the Baker family is set forth under "Certain
Transactions" on pages 22-23 of that same proxy statement. In each case, the
referenced information is incorporated herein. With respect to "Certain
Transactions," since the date of the proxy statement, we have paid an additional
$3,600,000 in principal amount of the subordinated notes, thereby reducing the
outstanding principal to the following amounts:
Note Holder Principal Amount
Henry Baker $3,088,889
John Baker 4,700,000
Peter Baker 4,700,000
Joan Baker 1,511,111
Ross Rapaport, trustee 0
The lead participant of our senior credit facility is now Bank of America
instead of Webster Bank, as we have previously disclosed.
Appointment of Directors
(d) We have previously disclosed in filings on Form 8-K the resignations,
effective November 1, 2005, of five of our directors and our former chief
executive officer, who was also a director. As discussed under Item 8.01 of this
Form 8-K, Vermont Pure Holdings, Ltd. has elected to be a "controlled company"
under American Stock Exchange rules, and in consequence there is no longer a
requirement that a majority of our Board consist of independent directors.
At the meeting of our Board of Directors that was held November 2, 2005, the
Board voted to reduce the number of directors constituting the full Board from
11 to 7 and appoint John M. LaPides and Martin A. Dytrych as directors to fill
the two vacancies, to serve until the annual meeting of stockholders to be held
with respect to our 2005 fiscal year. Both of these directors were also
appointed to the Audit Committee and the Compensation Committee of the Board,
along with Phillip Davidowitz, a continuing director. There was no prior
arrangement or understanding pursuant to which Messrs. LaPides and Dytrych were
appointed to the Board.
Mr. LaPides is the President of Snow Valley, Inc., a home and office refreshment
company located in Maryland that he established 25 years ago. He is a past
President of the International Bottled Water Association, where he has served 14
years as a director and nine years as a member of the IBWA executive committee.
He has also served as the director of InPhonic, Inc., a wireless solutions
company, and was a finalist in Ernst & Young's 2002 Entrepreneur of the Year
competition. Since 2001, Mr. LaPides
has been an Entrepreneur in Residence at the Dingman Center for Entrepreneurship
at the Robert Smith School of Business at the University of Maryland.
Mr. Dytrych is a certified public accountant and since 1981 has been with the
accounting firm Lamn, Krielow, Dyrtrych & Co., P.A., which is located in
Florida. He has been a stockholder of that firm since 1985. In addition to
attest work, Mr. Dytrych prepares corporate and individual tax returns and
advises clients in the areas of business and tax planning and consulting. He has
also testified as an expert on valuation issues on over 30 court cases. He is a
member of the AICPA, the Florida Institute of CPAs and the Association of
Certified Fraud Examiners. He is also a Diplomat of the American Board of
Forensic Accounting Examiners. Mr. Dytrych is "financially sophisticated" under
American Stock Exchange rules and is an "audit committee financial expert" under
applicable provisions of the federal securities laws.
ITEM 8.01 OTHER EVENTS.
Henry E. Baker, Peter K. Baker, John B. Baker and Ross S. Rapaport (as trustee),
all of whom are current directors of Vermont Pure Holdings, are members of a
group that has advised Vermont Pure that it has acquired a majority of the
company's issued and outstanding common stock.
As they have previously stated they would do in their Schedule 13D filings, upon
obtaining a majority interest the Baker family group requested that Vermont Pure
declare itself a "controlled company" under the Corporate Governance Rules of
the American Stock Exchange. We have made this election with AMEX. A controlled
company is exempted from certain rules otherwise applicable to companies whose
securities are listed on AMEX, including (1) the requirement that a the company
have a majority of independent directors; (2) the requirement that nominations
to the company's Board of Directors be either selected or recommended by a
nominating committee consisting solely of independent directors; and (3) the
requirement that officers' compensation be either determined or recommended by a
compensation committee consisting solely of independent directors.
See Item 5.02 of this Form 8-K for information about the reduction in the size
of the Board of Directors and the appointment of two new directors following
controlled company status. Vermont Pure now has three independent directors on a
Board of seven directors.
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SIGNATURES
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 thereunto duly authorized.
Vermont Pure Holdings, Ltd.
By: /s/ Bruce S. MacDonald
Bruce S. MacDonald
Chief Financial Officer
Date: November 8, 2005