UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment No. )
Filed by
the Registrant
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Filed by
a Party other than the Registrant
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appropriate box:
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Preliminary
Proxy Statement
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Confidential, for Use of the
Commission only (as permitted by Rule
14a-6(e)(2))
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x
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Definitive
Proxy Statement
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¨
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Definitive
Additional Materials
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¨
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Soliciting
Material Pursuant to Sec.
240.14a-12
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VERMONT
PURE HOLDINGS, LTD
(Name
of Registrant as Specified In Its Charter)
Not
Applicable
(Name
of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment
of Filing Fee (Check the appropriate box)
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Fee
computed on table below per Exchange Act Rules 14a-6(i) (1) and
0-11.
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of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction
applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was
determined):
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maximum aggregate value of
transaction:
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box if any part of the fee is offset as provided by Exchange Act Rule
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previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its
filing.
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Schedule or Registration Statement
No.:
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VERMONT
PURE HOLDINGS, LTD.
1050
Buckingham Street
Watertown,
Connecticut 06795
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD MARCH 29, 2010
The Annual Meeting of Stockholders of
Vermont Pure Holdings, Ltd. will be held at the offices of Lamn, Krielow,
Dytrych & Co., 500 University Boulevard, Suite 215, Jupiter, Florida 33458
on Monday, March 29, 2010, at 10:00 a.m. local time, for the following
purposes:
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1.
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to
elect seven directors to serve until the Annual Meeting of Stockholders in
2011 and until their respective successors have been duly elected and
qualified; and
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2.
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to
transact such other business as may properly come before the meeting and
any adjournment(s) of the meeting.
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Our Board
of Directors recommends that you vote
FOR
the election of the
nominees for director set forth in the proxy statement accompanying this
Notice.
The
record date for the Annual Meeting is February 12, 2010. Only
stockholders of record at the close of business on February 12, 2010 will be
entitled to notice of, and to vote at, the meeting and any adjournments
thereof.
Important
Notice Regarding the Availability of Proxy Materials for the
Annual
Meeting of Stockholders to Be Held on March 29, 2010.
Pursuant to rules adopted by the
Securities and Exchange Commission, or the SEC, we have elected to provide
access to our proxy materials both by sending you this full set of proxy
materials, including a notice of annual meeting, proxy card and 2009 Annual
Report to Stockholders, and by notifying you of the availability of our proxy
materials on the Internet.
The notice of annual meeting, proxy
statement, proxy card and 2009 Annual Report to Stockholders are available at
http://www.vermontpure.com/proxy
.
In accordance with SEC
rules, the materials on the site are searchable, readable and printable and the
site does not have “cookies” or other tracking devices which identify
visitors.
All stockholders are invited to
attend the Annual Meeting. However, to assure your representation at
the meeting, whether or not you expect to attend the Annual Meeting in person,
please sign and date the accompanying proxy card and mail it promptly in the
enclosed envelope.
You may revoke your proxy if you so
desire at any time before it is exercised at the Annual
Meeting.
By Order
of the Board of Directors
Bruce S.
MacDonald
Secretary
Watertown,
Connecticut
March 1,
2010
VERMONT
PURE HOLDINGS, LTD.
___________________________
PROXY
STATEMENT
___________________________
General
Information
Our Board
of Directors is soliciting proxies to be voted at the 2010 Annual Meeting of
Stockholders to be held on March 29, 2010, and any adjournment(s) of the
meeting. Your vote is very important. For this reason, our
Board is requesting that you permit your common stock to be represented at the
Annual Meeting by the persons named as proxies for the Annual
Meeting. The matters to be considered at the Annual Meeting are set
forth in the Notice of Meeting.
Our
executive offices are located at 1050 Buckingham Street, Watertown, Connecticut
06795 and our telephone number is 860-945-0661. We are sending this
proxy statement and the enclosed proxy card to stockholders of record on or
about March 1, 2010.
Internet
Availability of Proxy Materials and Annual Report
These
proxy solicitation materials are available at
http://www.vermontpure.com/proxy
on or about March 1, 2010 to all stockholders entitled to vote at the Annual
Meeting. A copy of our Annual Report on Form 10-K for the fiscal year
ended October 31, 2009 will be made available at
http://www.vermontpure.com/proxy
concurrently with these proxy solicitation materials.
Record
Date and Outstanding Shares
The Board
has fixed the close of business on February 12, 2010 as the record date for the
determination of stockholders entitled to notice of, and to vote at, the Annual
Meeting. Only stockholders of record at the close of business on that
date will be entitled to vote at the Annual Meeting or any and all adjournments
of the meeting. As of February 12, 2010, we had 21,480,681 shares of
common stock outstanding. Each of our stockholders will be entitled
to one vote for each share of common stock held of record by that
stockholder.
Solicitation
and Revocation
When
proxies are properly voted, whether by telephone, via the Internet, or by
dating, executing and returning a proxy card, the shares they represent will be
voted at the Annual Meeting according to the instructions of the
stockholder. If no specific instructions are given, the shares will
be voted:
·
|
for
the election of the seven nominees for director listed in this proxy
statement to serve until the next annual meeting of stockholders or until
their respective successors have been duly elected and qualified;
and
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·
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at
the discretion of the proxy holders, upon such other business as may
properly come before the Annual Meeting or any
adjournment.
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Any proxy given in response to this
solicitation may be revoked by the stockholder at any time before it is
exercised by written notification delivered to our Secretary, by voting in
person at the Annual Meeting, or by delivering another proxy bearing a later
date.
Quorum
The
presence, in person or by proxy, of a majority of the shares of common stock
issued and outstanding and entitled to vote at the Annual Meeting will
constitute a quorum at the Annual Meeting. A proxy submitted by a
stockholder may indicate that all or a portion of the shares represented by such
proxy are not being voted with respect to a particular matter. The
shares subject to a proxy which are not being voted on a particular matter will
not be considered shares entitled to vote on such matter. These
shares, however, may be considered present and entitled to vote on other matters
and will count for purposes of determining the presence of a
quorum. If applicable, we also count abstentions in determining
whether a quorum exists.
Voting
If a
quorum is present at the Annual Meeting, the persons nominated for election as
director will be elected by a plurality of the shares of common stock voted at
the Annual Meeting. “Plurality” means that the nominees who receive
the highest number of votes will be elected as the directors for the ensuing
year.
Shares
Held by Brokers or Nominees
If your shares are held in a stock
brokerage account or by a bank or other nominee, you are considered the
beneficial owner of shares, which are held in “street name,” and these proxy
materials are being provided to you by your broker, bank or nominee, who is
considered the stockholder of record with respect to those shares. As
the beneficial owner, you have the right to direct your broker, bank or nominee
on how to vote and are also invited to attend the Annual
Meeting. However, since you are not the stockholder of record, you
may not vote these shares in person at the Annual Meeting, unless you request,
complete and deliver a proxy from your broker, bank or nominee. Your
broker, bank or nominee has sent you a voting instruction card for you to use in
directing the broker, bank or nominee how to vote your shares. If you
do not provide timely voting instructions, your broker, bank or nominee may have
discretionary authority to vote your shares on matters which are considered
routine. For non-routine matters, including the election of
directors, if you do not provide instructions, your broker, bank or nominee will
not vote your shares, which results in a “broker non-vote.”
Where
You May Obtain Additional Copies
You may promptly obtain additional
copies of the proxy materials and our 2009 Annual Report by sending a written
request to Bruce MacDonald, Chief Financial Officer, Vermont Pure Holdings,
Ltd., 1050 Buckingham Street, Watertown, Connecticut 06795, by contacting him at
802-658-9112, or by sending an e-mail with your request to
bmacdonald@crystalrock.com
. All
materials are also available online at
http://www.vermontpure.com/proxy
.
Proposal
Election
Of Directors
The only proposal on the agenda for the
Annual Meeting is the election of seven directors for a one-year term beginning
at the Annual Meeting and ending at our 2011 Annual Meeting of
Stockholders. We know of no other matter to be presented at the
Annual Meeting. If any other matter should be presented at the Annual
Meeting upon which a vote properly may be taken, shares represented by all
proxies we receive will be voted on that matter in accordance with the best
judgment of the persons named in the proxies.
The Board has nominated the seven
incumbent directors to serve as candidates for election as director, to serve
until the next Annual Meeting of Stockholders and until their respective
successors have been duly elected and qualified. In case any of these
nominees should become unavailable for election to the Board, an event which is
not anticipated, the persons named as proxies, or their substitutes, will have
full discretion and authority to vote or refrain from voting for any other
nominee in accordance with their judgment.
Unless
otherwise specified in the form of proxy, the proxies solicited by the
management will be voted “FOR” the election of the seven
candidates.
The Board of Directors unanimously
recommends a vote FOR the election of Messrs. Rapaport, Henry Baker, Peter
Baker, John Baker, Davidowitz, Dytrych and Lapides.
Directors
The
following table sets forth information concerning each of our directors, two of
whom are current executive officers. Age information is as of
February 1, 2010. Henry E. Baker is the father of Peter K. Baker and
John B. Baker.
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Ross
S. Rapaport
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67
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Chairman
of the Board
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Henry
E.
Baker
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77
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Director,
Chairman Emeritus
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Peter
K.
Baker
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50
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Director,
Chief Executive Officer and President
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John
B.
Baker
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55
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Director
and Executive Vice President
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Phillip
Davidowitz
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78
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Director
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Martin
A.
Dytrych
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53
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Director
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John
M.
LaPides
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50
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Director
|
The
business experience during at least the last five years for each of these
individuals is as follows:
Ross S. Rapaport
became a
director in October 2000. Since June 2002, Mr. Rapaport has been of
counsel to Pepe & Hazard LLP, a law firm with offices in Hartford, Waterbury
and Southport, Connecticut, and Boston, Massachusetts, that we employ from time
to time.
He has
practiced in the area of corporate and general business law for more than 35
years. Mr. Rapaport has provided legal advice to Crystal Rock, which
became a subsidiary of Vermont Pure Holdings in 2000, since 1974 and serves as
trustee of the Baker family trusts.
Henry E. Baker
became a
director and our chairman emeritus in October 2000. From 1947 to
October 2000, he was employed at Crystal Rock. He was appointed
president of Crystal Rock and became chairman of its board of directors in
1965. Mr. Baker served on the board of directors of the International
Bottled Water Association, or IBWA, for two decades. He was inducted
into the Beverage World Bottled Water Hall of Fame in 1990.
Peter K. Baker
became a
director and our president in October 2000. In November 2005, he was
named our Chief Executive Officer while retaining his other
positions. From 1977 to October 2000, he was employed at Crystal
Rock, serving as its co-president from 1993 to 2000. He is currently
on the board of directors of the IBWA and served as its chairman during the
1998-1999 term.
John B. Baker
became our
executive vice president in October 2000 and a director in September
2004. From 1975 to October 2000, he was employed at Crystal Rock,
serving as its co-president from 1993 to 2000.
Phillip Davidowitz
became a
director in June 1998 and serves on our Audit and Compensation
Committees. Mr. Davidowitz, who is retired, was president of TSC
Clearing Services, Inc. from 1980 to 2001 and a member of the New York Stock
Exchange and vice chairman of Transatlantic Securities Company from 1988 to
2001. TSC Clearing Services was a wholly-owned subsidiary of
Transatlantic Securities Company. Transatlantic Securities Company
was a member of the New York Stock Exchange and executed orders for clients on
an agency basis only and cleared its own transactions.
John M. LaPides
became a
director in November 2005 and serves on our Audit and Compensation
Committees. He served as the President of Snow Valley, Inc. from
1987 to 2009, a home and office refreshment company located in Maryland that he
established. He is a past President of the IBWA, where he has served
15 years as a director and ten years as a member of the IBWA executive
committee. 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. Since 2009, he has served as
the principal in Shadow Point Capital, an investment banking and consulting
business.
Martin A. Dytrych
became a
director in November 2005 and serves on our Audit and Compensation
Committees. He is a certified public accountant and since 1981 has
been with the accounting firm Lamn, Krielow, Dytrych & Co.,
P.A. He has been a stockholder of that firm since
1985. Mr. Dytrych 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.
Corporate
Governance
We
believe that good corporate governance and fair and ethical business practices
are crucial not only to our proper operation, but also to building and
maintaining confidence in the integrity, reliability and transparency of the
securities markets. We take our responsibilities in this area very
seriously.
Independent
Directors
Board of
Directors.
Vermont Pure is a “controlled company” under the
Corporate Governance Rules of the New York Stock Exchange Amex market (NYSE
Amex), which means that a majority of our issued and outstanding voting stock is
controlled by a single person or related group of persons, and that the company
has elected controlled company status.
A controlled company is exempted from
certain rules otherwise applicable to companies whose securities are listed on
NYSE Amex, including (i) the requirement that a company have a majority of
independent directors, (ii) the requirement that nominations to the company’s
Board be either selected or recommended by a nominating committee consisting
solely of independent directors, and (iii) the requirement that officers’
compensation be either determined or recommended by a compensation committee
consisting solely of independent directors.
Under
NYSE Amex rules, no director qualifies as independent until the Board makes an
affirmative determination to that effect. In making this
determination, the Board must affirmatively conclude that the director does not
have a material relationship with us that would interfere with the exercise of
his or her independent judgment in carrying out the responsibilities of a
director. The Board considers, among other factors, the director’s
current and historic relationships with us and our competitors, suppliers,
customers and auditors, including compensation directly or indirectly paid to
the director; the director’s professional and family relationships with
management and other directors; the relationships that the director’s current
and former employers may have with us; and the relationships between us and
other companies of which the director may be a director or executive
officer.
We have
three independent directors on our Board. After considering the
factors described in the previous paragraph, the Board has determined that
Messrs. Davidowitz, Dytrych and LaPides are independent. NYSE Amex
rules require that the independent directors meet on a regular basis as often as
necessary to fulfill their responsibilities, including at least annually in
executive session. In addition to their meetings as members of the
Audit and Compensation Committees, of which they are the sole members, the
independent directors met three other times in person during fiscal year 2009,
in executive session each time with the Company’s outside counsel
present.
Chairman and Chief Executive
Officer.
The Chairman of the Board is Ross Rapaport, and the
Chief Executive Officer is Peter Baker. Although it is common for
major companies in the United States to have CEOs who also hold the position of
chairman of the board, a number of studies on corporate governance have
recommended that the positions be held by two different
persons. Neither Mr. Rapaport nor Mr. Baker is an independent
director.
Attendance
at Board, Committee and Stockholder Meetings
NYSE Amex
rules require that our Board of Directors meet at least
quarterly. During the fiscal year ended October 31, 2009, the Board
met four times in person and twice by telephone conference. The Audit
Committee met four times in person and four times by telephone conference, and
the Compensation Committee met three times in person. No incumbent
director attended fewer than 75% of the total number of meetings of the Board
and committees of the Board on which he served.
It is our policy that all members of
the Board of Directors attend the Annual Meeting of stockholders in person,
although we recognize that directors occasionally may be unable to attend for
personal or professional reasons. We generally hold a meeting of the
Board on the same date as the annual stockholder meeting. In 2009,
all directors attended the Annual Meeting in person or by
telephone.
Code
of Ethics
Our Board
of Directors has adopted a code of ethics that applies to all of our employees,
officers and directors. The code covers compliance with law; fair and
honest dealings with us, with competitors and with others; fair and honest
disclosure to the public; and procedures for compliance with the
code. Our code of ethics is available in the Investor Relations
section (under Directors and Officers) of our website located at
www.vermontpure.com
. A
copy of the code of ethics is also available to stockholders upon request,
addressed to Vermont Pure Holdings, Ltd., Attn: Bruce MacDonald, 1050 Buckingham
Street, Watertown, Connecticut 06795.
Stockholder
Communications
Our
stockholders may communicate directly with the members of the Board of Directors
or the chair of Board committees by writing directly to those individuals c/o
Vermont Pure Holdings, Ltd. at the following address: 1050 Buckingham Street,
Watertown, Connecticut 06795. Our policy is to forward, and not to
intentionally screen, any mail received at our corporate office that is sent
directly to an individual.
Director
Candidates and Nominating Process
Nominations.
As
previously noted, Vermont Pure is a “controlled company” under NYSE Amex
Corporate Governance Rules, which means that a majority of its issued and
outstanding voting stock is controlled by a single person or related group of
persons, and that the Company has elected controlled company
status. A controlled company is exempted from the requirement that
nominations to the Company’s Board be either selected or recommended by a
nominating committee consisting solely of independent
directors. Accordingly, nominations to our Board were made by the
full Board. The Board has nominated the seven incumbent directors to
serve as candidates for election as director, to serve until the next Annual
Meeting of Stockholders and until their respective successors have been elected
and qualified.
Nominations by
Stockholders.
Since 2000, we have had a by-law provision that
authorizes a stockholder of record to submit to us the name of any person whom
the stockholder wishes to nominate as a candidate for election to the
Board. In general, such a submission must be received by our
corporate secretary at our principal office in Watertown, Connecticut at least
90 days prior to the scheduled date of the Annual Meeting, and must contain all
information about the candidate that would be required to be disclosed in a
proxy statement prepared and filed under federal and state law, as well as the
proposed nominee’s consent to be named as a nominee and to serve if
elected. The stockholder must also provide information about his or
her identity and the number of shares owned. If the nomination is
made by a stockholder holding shares in “street name,” then the identity and
ownership information must be furnished about the beneficial owner of the
shares. A candidate submitted by a stockholder as a nominee need not
be nominated by the independent directors or by the full Board.
Our
by-laws do not obligate us to include information about the candidate in our
proxy materials, nor do the by-laws require us to permit the stockholder to
solicit proxies for the candidate using our proxy materials. The
by-laws relate only to the procedure by which a stockholder may nominate a
candidate for director. To date, no stockholder has proposed a
candidate pursuant to our by-laws. If a stockholder should propose a
candidate, we anticipate that the full Board, including the independent
directors, would evaluate that candidate on the basis of criteria reasonably
determined by the Board to be relevant to the requirements of the
position. For additional information, please refer to Section 4.5 of
our by-laws and the section entitled “Stockholder Proposals for the Next Annual
Meeting” in this Proxy Statement.
Policies and Procedures for the
Review and Approval of Transactions with Related Parties
Our Board has no formal policies and
procedures for the review and approval of transactions with related
parties. However, the Audit Committee has the responsibility of
reviewing and approving transactions with related parties. In
connection with the review of any related party transactions, the Audit
Committee considers, among other matters, the nature, timing and duration of the
transactions, the relationships of the parties to the transactions, whether the
transactions are in the ordinary course of the Company’s business, the dollar
value of the transactions and whether the transactions are in the interest of
the Company. The Audit Committee ratified the related party
transactions described below, to the extent they occurred or were materially
modified in fiscal 2009.
Related
Party Transactions
Subordinated Notes Held by
Significant Stockholders.
In October 2000, we issued the
stockholders of Crystal Rock (members of the Baker family and related family
trusts) subordinated promissory notes due in 2012 in the original principal
amount of $22,600,000. In fiscal 2004, we paid $5,000,000 in
principal on these notes with part of the proceeds from the sale of the assets
of our retail business. In fiscal 2005, we paid $3,600,000 in
principal on the notes in conjunction with the refinancing of our senior debt
facility. As part of the refinancing, we restructured the terms of
the subordinated notes. In 2009, we paid an additional $500,000 in
principal on the notes. The following table shows the holder, the
remaining principal amount on October 31, 2009 and the amount paid each holder
for interest during the fiscal year.
Related Party
|
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Principal Balance
|
|
|
Interest Paid
|
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Henry
E. Baker
|
|
$
|
4,600,000
|
|
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$
|
552,000
|
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John
B. Baker
|
|
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4,200,000
|
|
|
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550,167
|
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Peter
K. Baker
|
|
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4,700,000
|
|
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564,000
|
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Total
|
|
$
|
13,500,000
|
|
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$
|
1,666,167
|
|
As noted
above, Henry Baker is a director and his sons, John and Peter Baker, are
directors and executive officers.
The subordinated notes bear interest at
12%, compounded quarterly, with payments due on the 20th of February, May,
August and November. The notes mature in 2012 and we are required to
pay interest only until maturity. There is a balloon payment of the
full principal amount at maturity. The subordinated notes become due
and payable in case of liquidation, dissolution, insolvency, sale of the
business or acceleration of the senior debt. Our senior debt facility makes
funds available for repayment of the subordinated notes if we attain certain
financial criteria. There is no prepayment penalty for repaying the
subordinated notes.
The subordinated notes are secured by
all of our assets, but the subordinated notes and security interest are junior
and subordinated to the senior debt owed to and the security interest in favor
of Bank of America and its successors. Under the related
subordination agreement, we may pay, and the holders of the subordinated notes
may accept, quarterly interest payments so long as there is no default on the
senior debt and the payment would not cause such a default. The
holders of the subordinated notes can accrue unpaid interest, and we may pay
those amounts, if such payments would not result in a default on the senior
debt. The holders of the subordinated notes have pledged a continuing
security interest in the subordinated notes to Bank of America.
Related Party
Leases.
We lease a 67,000 square foot facility in Watertown,
Connecticut from Henry E. Baker, as trustee of the Baker Grandchildren's Trust,
and a 22,000 square foot facility in Stamford, Connecticut from Henry E.
Baker. Future annual rent payments for these leases will be as
follows:
Fiscal year ending
October 31,
|
|
Stamford
|
|
|
Watertown
|
|
2010
|
|
|
248,400
|
|
|
|
414,000
|
|
2011
|
|
|
-
|
|
|
|
452,250
|
|
2012
|
|
|
-
|
|
|
|
452,250
|
|
2013
|
|
|
-
|
|
|
|
461,295
|
|
2014
|
|
|
-
|
|
|
|
461,295
|
|
2015
|
|
|
-
|
|
|
|
470,521
|
|
2016
|
|
|
-
|
|
|
|
470,521
|
|
Total
|
|
$
|
248,400
|
|
|
$
|
3,182,132
|
|
The Watertown, Connecticut facility
contains a water purification and bottling plant, warehouse space, a truck
garage and office space. We lease this property on a “triple net”
basis, originally for a 10-year term that began in October 2000, with an option
to extend the lease for five more years. In fiscal 2009, we paid
$414,000 in rent.
We entered into an amendment of this
lease on August 29, 2007, following our decision to construct solar panels on
the roof of the facility, in order to generate a portion of our electricity
needs more cheaply than we currently pay for electricity. We
determined that the economic payback period for the solar panels would exceed
the remaining term of the lease unless we sought and obtained an amendment of
the lease. After finalizing the lease amendment, we entered into
agreements for the construction of the solar panels as well as grant agreements
from the State of Connecticut which subsidized the project in
part. We completed construction of the solar panels in
2008. Federal and state tax credits lowered the effective cost of the
project to us.
The
future rent obligations under the amended lease are set forth in the table
above. As amended, the lease extends the original term from 2010 to
2016, with an option to extend the lease for five more years for a rent to be
negotiated or determined by appraisers selected by the parties. We
believe that the rent we pay for this facility is at least as favorable as we
could have obtained in an arm’s-length transaction.
The Stamford property includes
warehouse space, a truck garage and office space. We entered into
this lease in October 2000 and have an option to extend this 10-year “triple
net” lease for a negotiated rent for an additional five years. Either
party may terminate the lease prior to expiration upon nine months’ notice to
the other, but if we terminate, we must pay a termination fee equal to six
months’ rent. We believe that the rent we pay for this facility is at
least as favorable as we could have obtained in an arm’s-length
transaction. In fiscal 2009, we paid $248,400 in rent.
Henry E. Baker Employment
Agreement.
We had a written employment agreement with Henry
Baker that expired June 30, 2008. Currently Mr. Baker is employed by
us as an at-will employee in the discretion of management. He is
Chairman Emeritus of the Company and makes himself reasonably available to us
for consultation for at least 20 hours per calendar month. His base
annual salary is $47,000, subject to annual review by the Board, and we provide
him with use of a Company-owned automobile.
Other Related Party
Matters.
During fiscal 2009, Ross Rapaport, a director of the
Company, was associated with Pepe & Hazard LLP, a law firm which we engage
regularly for various legal matters. During fiscal 2009, we paid the
firm $69,000.
Committees
of the Board of Directors
Compensation
Committee
The
Compensation Committee of the Board is currently composed of three directors,
Messrs. Davidowitz, Dytrych and LaPides. The Committee is charged
with the responsibility of reviewing and approving our executive officers’
compensation and has the authority to approve discretionary grants of stock
options and restricted stock under our stock option and incentive plans, which
it administers. The Committee also determines the compensation to be
paid to Board members. In recent years, the Company, and the
Committee, have in large measure deemphasized the use of equity plans as part of
our compensation system.
Although
as a controlled company, we are not required to have an independent Compensation
Committee, we have decided to maintain that Committee’s
independence. For companies other than controlled companies, NYSE
Amex rules require that the compensation of the chief executive officer be
determined, or recommended to the Board for its determination, by either a
majority of independent directors or a wholly-independent Compensation
Committee. We intend to continue to use our existing Compensation
Committee, the members of which are independent, for this
purpose. NYSE Amex rules prohibit a CEO from being present during
voting or deliberations with respect to his
compensation. Compensation of all other executive officers is
required to be determined in the same manner, except that the CEO is permitted
to be present during voting or deliberations with respect to the compensation of
executive officers other than himself. NYSE Amex rules do not require
that a Compensation Committee have a written charter, and our Compensation
Committee does not have a written charter at this time.
For
fiscal 2009, compensation consultants had no role in determining or recommending
the amount or form of executive or director compensation.
Audit
Committee
Our Audit
Committee is currently composed of three directors, Messrs. Davidowitz, Dytrych
and LaPides. The primary purpose of the Audit Committee is to assist
the board in fulfilling its oversight responsibilities relating to (a) the
quality and integrity of our financial statements and other financial reports,
(b) our system of internal accounting controls, (c) the performance of our
independent auditors and (d) our compliance with legal and regulatory
requirements. The Committee meets privately with the independent
auditors, has the sole authority to retain and dismiss the independent auditors
and reviews their performance and independence from management. The
independent auditors have unrestricted access and report directly to the
Committee. The Audit Committee has the sole authority to approve
transactions that may involve actual or apparent conflicts of
interest. Additionally, the Audit Committee has responsibilities and
authority necessary to comply with rules under the Securities Exchange Act of
1934, or the Exchange Act, relating to (i) direct responsibility for the
appointment, compensation, retention and oversight of our accountants, (ii)
treatment of complaints and concerns relating to accounting, internal accounting
controls and auditing matters, (iii) the engagement of independent counsel and
other advisors, and (iv) determining appropriate funding for audit and
audit-committee related expenses. The Audit Committee has adopted a
written charter, a current copy of which is available in the Investor Relations
section (under Directors and Officers) of our website at
www.vermontpure.com
. A
copy of the charter is also available to stockholders upon request, addressed to
Vermont Pure Holdings, Ltd., Attn: Bruce MacDonald, 1050 Buckingham Street,
Watertown, Connecticut 06795.
Under
NYSE Amex rules, the Board is required to make certain findings about the
independence and qualifications of the members of the Audit
Committee. In addition to assessing the independence of the members
under the NYSE Amex rules, the Board also considered the requirements of Section
10A(m)(3) and Rule 10A-3 under the Exchange Act. As a result of its
review, the Board determined that Messrs. Davidowitz, Dytrych and LaPides, as
the members of the Audit Committee, are independent. Mr. Dytrych
serves as the Chair of the Audit Committee.
In
addition, the Board determined that:
·
|
each
member of the Audit Committee is, as required by NYSE Amex rules, able to
read and understand fundamental financial statements;
and
|
·
|
at
least one member of the Committee, Mr. Dytrych, is “financially
sophisticated” under the NYSE Amex rules and is an “audit committee
financial expert” under applicable provisions of the federal securities
laws.
|
Compensation
of Non-Employee Directors
The following table sets forth
information as to the total remuneration paid to our non-employee directors for
the fiscal year ended October 31, 2009.
Fiscal
2009 Non-Employee Director Compensation
1
Name
|
|
Fees
Earned or
Paid
in Cash
|
|
|
Total
|
|
(a)
|
|
(b)
|
|
|
(h)
|
|
Ross
R. Rapaport (2)
|
|
$
|
165,000
|
|
|
$
|
165,000
|
|
Phillip
Davidowitz
|
|
$
|
35,000
|
|
|
$
|
35,000
|
|
Martin
A. Dytrych
|
|
$
|
40,000
|
|
|
$
|
40,000
|
|
John
M. LaPides
|
|
$
|
35,000
|
|
|
$
|
35,000
|
|
_____________________
Notes:
(1)
|
Non-employee
directors receive (a) a $25,000 annual cash retainer, (b) an additional
$5,000 annual cash retainer for each Committee membership, and (c) an
additional $2,500 annual cash retainer for serving as Chair of a
Committee. For fiscal 2009, the Chairman of the Board received
an additional $20,000 for serving as Chairman. For fiscal 2010,
the Chairman will receive an additional $40,000 (instead of $20,000) for
serving as Chairman.
|
(2)
|
The
Compensation Committee decided to pay Mr. Rapaport an additional payment
of $120,000 for his services as a director in fiscal 2009 because of his
unusually significant involvement and services in assisting the Company
and its CEO in connection with major litigation involving the
Company.
|
Our
Executive Officers
We
currently have three executive officers, Peter Baker, John Baker, and Bruce
MacDonald. Biographical and other information about the Messrs.
Baker, who are also directors, is set forth above. Information about
Bruce MacDonald, our only other executive officer, is as follows:
Bruce S. MacDonald
has been
our chief financial officer and treasurer since May 1993. He has also
served as our corporate secretary since June 1999. From 1987 to May
1993, Mr. MacDonald was controller of Cabot Cooperative Creamery
Incorporated. As of February 1, 2010, Mr. MacDonald is 51 years
old.
Compensation
of Executive Officers
Fiscal
2009 Summary Compensation Table
Name
and Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Non-Equity
Incentive Plan Compensation ($)
|
|
|
All
Other Compensation ($)
3
|
|
|
Total
($)
|
|
Peter
K. Baker
President
&CEO
|
|
|
2009
2008
|
|
|
$
|
320,000
$320,000
|
|
|
|
-0-
-0-
|
|
|
$
|
-0-
80,000
|
2
|
|
$
|
19,440
$19,867
|
|
|
$
|
339,440
$419,867
|
|
John
B. Baker
Executive
Vice President
|
|
|
2009
2008
|
|
|
$
|
320,000
$320,000
|
|
|
|
-0-
-0-
|
|
|
$
|
-0-
80,000
|
2
|
|
$
|
15,360
$15,567
|
|
|
$
|
335,360
$415,567
|
|
Bruce
S. MacDonald
CFO,
Treasurer, and Secretary
|
|
|
2009
2008
|
|
|
$
|
195,000
$195,000
|
|
|
$
|
-0-25,000
|
1
|
|
|
-0-
-0-
|
|
|
$
|
17,266
$24,155
|
|
|
$
|
212,266
$244,155
|
|
_____________________
Notes:
(1)
|
Mr.
MacDonald is eligible to receive a discretionary bonus at the end of each
fiscal year.
|
(2)
|
Reflects
achievement of approximately 100% of the 2008 target annual
EBITDA.
|
(3)
|
Represents
the cost, including insurance, fuel and lease payments, net of pro-rated
residual value, of a Company-provided automobile, life and disability
insurance premiums and Company 401(k) matching funds for respective
employees as follows:
|
Employee
|
Year
|
|
Auto Expense
|
|
|
Insurance
|
|
|
401K Matching
|
|
|
Total
|
|
Peter
K. Baker
|
2009
|
|
$
|
19,440
|
|
|
|
|
|
|
|
|
$
|
19,440
|
|
|
2008
|
|
$
|
19,867
|
|
|
|
|
|
|
|
|
$
|
19,867
|
|
John
B. Baker
|
2009
|
|
$
|
15,360
|
|
|
|
|
|
|
|
|
$
|
15,360
|
|
|
2008
|
|
$
|
15,567
|
|
|
|
|
|
|
|
|
$
|
15,567
|
|
Bruce
S. MacDonald
|
2009
|
|
$
|
11,645
|
|
|
$
|
3,361
|
|
|
$
|
2,260
|
|
|
$
|
17,266
|
|
|
2008
|
|
$
|
16,252
|
|
|
$
|
5,313
|
|
|
$
|
2,590
|
|
|
$
|
24,155
|
|
Employment
Agreements and Arrangements
We have employment agreements with our
three named executive officers.
The main provisions of the agreements
pertain to incentive payments and to termination of
employment. However, in negotiating their current agreements, the
Compensation Committee acted to eliminate “change of control” provisions from
Peter and John Baker’s employment agreements because there can be no change of
control of the Company without the agreement of the members of the Baker family
considered as a group.
Mr. MacDonald’s employment agreement,
in comparison, does contain what the Compensation Committee considers to be a
reasonable change of control provision. Providing severance and
benefits continuation allows the executive to assess business situations
objectively and without regard to the personal outcomes of implementing a sound
business decision for the Company. For example, the executive may not
objectively assess a merger opportunity if it would result in the executive
being terminated without the safety of income being provided post-termination,
even if the merger would produce very positive stockholder
value.
Peter
K. Baker and John B. Baker Employment Agreements
We
entered into three-year employment agreements with Peter Baker and John Baker as
of January 1, 2007. These agreements automatically extend on a
year-to-year basis unless either party gives written notice to the other, in
each case at least 180 days prior to the end of the then current term, of such
party’s election not to extend the term of the agreement. Currently
the expiration date is December 31, 2010, subject to earlier termination as set
forth in the agreement. Peter Baker is currently employed as our
Chief Executive Officer and President and John Baker is currently employed as
our Executive Vice President. Under the employment agreements, each
executive officer receives an initial base salary of $320,000, subject to annual
review by the Compensation Committee, and is also eligible to receive an
additional non-equity incentive payment. Effective September 10,
2009, the parties amended the employment agreements by changing the calculation
required to be made in connection with the determination of non-equity incentive
payments available under the agreements. The size of the incentive
payment ranges from $40,000 to $96,000, depending on our ability to achieve
stated levels of target EBITDA; no incentive payment is due if we do not have an
Adjusted EBITDA, as defined, that is at least 90% of our EBITDA target
level. Each executive officer earned $80,000 under this provision for
fiscal 2008 and nothing in fiscal 2009. Under the employment
agreements, we also provide each executive officer with an
automobile.
The
employment agreements with Messrs. Baker contain confidentiality provisions and
non-competition clauses that prohibit competition (a) during the term of his
employment and during any period that the executive officer is receiving
severance benefits, or (b) for a period of 12 months in the event he is
terminated without entitlement to severance benefits.
We can
terminate the employment of either of the Messrs. Baker at any time and for any
reason. If we terminate the executive officer’s employment without
“cause,” as defined in the employment agreement, before the employment agreement
otherwise expires, we would be required to pay him an amount equal to his annual
base salary at the termination date, plus fringe benefits, as defined in the
employment agreement, for the 12 months following the
termination. Generally, termination of employment by the company for
“cause” as defined in the employment agreements means (i) material breach of
agreements between the Company and the executive, (ii) willful refusal or
failure of the executive to perform his duties in accordance with the provisions
of the agreement, (iii) violation of confidentiality, (iv) fraud or theft of
Company property, (v) commission of a felony, or (vi) being engaged in the
illegal use of controlled or habit forming substances.
Bruce
S. MacDonald Employment Agreement
We
entered into a three-year employment agreement with Bruce S. MacDonald as of
January 1, 2007. This agreement automatically extends on a
year-to-year basis unless either party gives written notice to the other, in
each case at least 180 days prior to the end of the then current term, of such
party’s election not to extend the term of the agreement. Currently
the expiration date is December 31, 2010, subject to earlier termination as set
forth in the agreement. The employment agreement provides that Mr.
MacDonald will be our Chief Financial Officer, Vice President of Finance and
Treasurer. Under the employment agreement, Mr. MacDonald will receive
an initial base salary of $195,000, subject to annual review by the Compensation
Committee. In its sole discretion, the Compensation Committee may
(but is not required to) determine that we shall pay a bonus to Mr. MacDonald
after the end of our fiscal year. In fiscal 2008, Mr. MacDonald was
awarded a discretionary bonus under this provision of $25,000. Under
the employment agreement, we will reimburse Mr. MacDonald up to $15,000 in the
aggregate for the actual cost of purchasing insurance that we do not offer as an
employee benefit, if he elects to obtain it, and for leasing and operating an
automobile. We paid in excess of that allowance in fiscal 2008
because we elected to retain and provide to Mr. MacDonald a leased
automobile that had been used by a departed executive officer of the
Company. While this decision reduced the Company’s net costs, the
lease expense for that automobile was greater than that originally budgeted for
Mr. MacDonald.
The agreement with Mr. MacDonald
contains confidentiality provisions and a non-competition clause substantially
the same as those described above for the Messrs. Baker. We can
terminate the employment of Mr. MacDonald at any time and for any
reason. If we terminate Mr. MacDonald’s employment without “cause,”
as defined in the employment agreement, before the employment agreement
otherwise expires, or if Mr. MacDonald’s employment is terminated for any reason
or he elects to discontinue employment with the company within 30 days of a
“change of control,” we would be required to pay him an amount equal to his
annual base salary at the termination date, plus fringe benefits, as defined in
the employment agreement, for the 12 months following the
termination.
Outstanding Equity Awards at Fiscal
2009 Year-End
Name
|
At
the End of Fiscal
Year
|
|
Number
of
Securities
Underlying Unexercised Options
(#)
Exercisable
|
|
|
Option
Exercise Price
($)
|
|
Option
Expiration
Date
1
|
(a)
|
|
|
(b)
|
|
|
(e)
|
|
(f)
|
Bruce
S. MacDonald
|
2009
|
|
|
100,000
|
|
|
$
|
3.25
|
|
10/5/2010
|
|
|
|
|
10,000
|
|
|
$
|
3.62
|
|
6/7/2011
|
|
|
|
|
50,500
|
|
|
$
|
2.36
|
|
1/20/2015
|
_____________________
Notes:
(1)
All
options have a ten year term. The option grant dates are ten years
prior to the expiration dates.
Potential
Post-Employment Payments
Under the
terms of each of Peter and John Baker’s employment agreements, if either
officer’s employment were to be terminated by the Company without cause (as
defined), then he would be entitled to an amount equal to his annual base salary
at the termination date, plus fringe benefits (as defined), for the 12 months
following the termination. Based upon fiscal year 2009 information,
the amount of severance pay would be $320,000 plus the value of fringe benefits
($13,583 for Peter Baker and $10,874 for John Baker), for a total of $333,582
for Peter Baker and $330,874 for John Baker, payable in each case as
follows: 50% of the severance pay on the six-month anniversary of the
termination date, followed by 8.3333% of the severance pay each month for six
additional months in equal installments, in each case less taxes and other
applicable withholdings, plus the value of the fringe benefits in 12 equal
monthly installments. Neither officer would receive post-employment
payments if he were to resign voluntarily or be terminated with
cause. Payment of all severance and benefits are subject to the
execution and delivery of a satisfactory release form by the
officer.
Under the
terms of Mr. MacDonald’s employment agreement, if he were to be terminated by
the Company without cause (as defined) or if, within 30 days of a change of
control (as defined), he were terminated for any reason or elected to
discontinue employment with the Company, then he would be entitled to an amount
equal to his annual base salary at the termination date, plus fringe benefits
(as defined), for the 12 months following the termination. Based upon
fiscal year 2009 information, the amount of severance pay would be $195,000 and
the value of the fringe benefits would be approximately $10,874, for a total of
$205,874, payable as follows: 50% of the severance pay on the six-month
anniversary of the termination date, followed by 8.3333% of the severance pay
each month for six additional months in equal installments, in each case less
taxes and other applicable withholdings, plus the value of the fringe benefits
in twelve equal monthly installments. Mr. MacDonald also has
outstanding stock options as set forth in the Outstanding Equity Awards At
Fiscal Year-End table. All of his stock options were vested as of
October 31, 2009. However, these options would not have any value as
of October 31, 2009 because the exercise price of the options exceeded the
market price of the Company’s stock as of October 31, 2009. Mr.
MacDonald would receive no post-employment payments if, absent a change of
control, he were to resign voluntarily or be terminated with
cause. Payment of all severance and benefits are subject to Mr.
MacDonald signing a satisfactory release form.
Security
Ownership Of Certain Beneficial Owners
And
Management
Stock
Owned by Directors, Executive Officers and Greater-Than-5%
Stockholders
The
following table sets forth information as of February 12, 2010
with respect to the
beneficial stock ownership of (i) those persons or groups known by us to
beneficially own more than 5% of our common stock, (ii) each of our directors
and nominees for director, (iii) the persons named in the Summary Compensation
Table, and (iv) all of our directors and current executive officers as a group
(based upon information furnished by such persons). As of February
12, 2010, there were 21,480,681
shares
of common stock outstanding.
Names
and Addresses of Beneficial Owners
1
|
|
Number
of Shares Owned
2
|
|
|
Right
to Acquire
3
|
|
|
Total
Shares Beneficially Owned
|
|
|
Percent
of Class
4
|
|
Henry
E. Baker, John B. Baker, Peter K. Baker and Ross S. Rapaport, individually
and
as a trustee, as a group
5
|
|
|
10,852,155
|
|
|
|
83,000
|
|
|
|
10,935,155
|
|
|
|
49.5
|
%
|
Ross
S. Rapaport, individually and as trustee
6
|
|
|
4,039,358
|
|
|
|
83,000
|
|
|
|
4,122,358
|
|
|
|
18.7
|
%
|
Henry
E. Baker
|
|
|
1,065,219
|
|
|
|
-
|
|
|
|
1,065,219
|
|
|
|
4.8
|
%
|
Peter
K. Baker
|
|
|
2,871,289
|
|
|
|
-
|
|
|
|
2,871,289
|
|
|
|
13.0
|
%
|
John
B. Baker
|
|
|
2,876,289
|
|
|
|
-
|
|
|
|
2,876,289
|
|
|
|
13.0
|
%
|
Phillip
Davidowitz
|
|
|
5,000
|
|
|
|
53,000
|
|
|
|
58,000
|
|
|
|
0.3
|
%
|
Martin
A. Dytrych
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
John
M. LaPides
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Bruce
S. MacDonald
|
|
|
49,035
|
|
|
|
160,500
|
|
|
|
209,535
|
|
|
|
1.0
|
%
|
All
executive officers and directors as a group (8 persons)
|
|
|
10,906,190
|
|
|
|
296,500
|
|
|
|
11,202,690
|
|
|
|
50.8
|
%
|
_______________________
Notes:
(1)
|
The
business address of the group constituting a greater-than-5% stockholder
and each officer and director is c/o Vermont Pure Holdings, Ltd., 1050
Buckingham Street, Watertown, Connecticut
06795.
|
(2)
|
Unless
otherwise noted, each person or group identified possesses sole voting and
investment power with respect to the shares listed, subject to community
property laws where applicable. Excludes shares that may be
acquired through the exercise of stock options or other
rights.
|
(3)
|
Represents
the shares that can be acquired through the exercise of stock options
within 60 days of the date of this
table.
|
(4)
|
Percentages
in this column are determined in accordance with SEC Rule
13d-3. Based upon stock actually owned (that is, excluding
Company options held by Mr. Rapaport and by all other Company option
holders), the Baker Family Group currently owns a majority (50.5%) of the
Company’s issued and outstanding common
stock.
|
(5)
|
Information
is based on a Schedule 13D/A filed with the SEC on September 16, 2005 by
Henry E. Baker, John B. Baker, Ross S. Rapaport, as an individual and in
his capacity as a trustee (the Baker Family Group). As of that
date, the Baker Family Group held 10,815,855 shares, as
follows: Henry Baker has sole voting and dispositive power with
respect to 1,065,219 shares, John Baker has sole voting and dispositive
power with respect to 2,876,289 shares, Peter Baker has sole voting and
dispositive power with respect to 2,871,289 shares, and Mr. Rapaport has
sole voting and dispositive power with respect to 4,003,058 shares
(including (i) 3,910,018 shares held as a trustee U/T/A dated 12/16/91
F/B/O Joan Baker et al., Peter K. Baker Life Insurance Trust, and John B.
Baker Life Insurance Trust, (ii) 10,040 shares held individually and (iii)
83,000 shares issuable pursuant to stock options held
individually). Subsequent to the filing of Schedule 13D/A, Mr.
Rapaport, in his capacity as trustee U/T/A dated 12/16/91 F/B/O Joan Baker
et al., purchased an additional 119,300 shares in the open market,
bringing the total beneficially owned by the Baker Family Group to
10,935,155 shares.
|
(6)
|
Shares
owned include 4,005,472 shares of common stock U/T/A dated 12/16/91 F/B/O
Joan Baker et. al.. of which Mr. Rapaport is trustee; 11,923 shares for
each of Peter K. Baker and John B. Baker Life Insurance Trusts, of which
Mr. Rapaport is trustee; and 10,040 individually owned by Mr.
Rapaport.
|
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires our officers, directors and persons who
beneficially own more than 10% of a registered class of our common stock to file
reports of ownership and changes in ownership with the SEC. Officers,
directors and ten-percent stockholders are charged by the SEC to furnish us with
copies of all Section 16(a) forms they file.
Based
solely upon a review of Forms 3, 4 and 5 and amendments to those forms furnished
to us during fiscal 2009, and, if applicable, written representations that a
Form 5 was not required, we believe that all Section 16(a) filing requirements
applicable to our officers, directors and ten-percent stockholders were
fulfilled in a timely manner.
Information
About our Audit Committee and Independent Registered Public Accounting
Firm
Audit
Committee Report
The following is a report of the
Audit Committee describing the policies and procedures that it employed in
reviewing the Company’s financial statements for the year ended October 31,
2009 and related matters. The information set forth in this report is
not “soliciting material” and is not “filed” with the SEC or subject to
Regulation 14A under, or the liabilities of Section 18 of, the Securities
Exchange Act of 1934, except to the extent we specifically request that the
information be treated as soliciting material or specifically incorporate it by
reference into a document filed under the Securities Act of 1933 or the
Securities Exchange Act of 1934.
In
accordance with its written charter, the primary role of the Audit Committee is
to assist our Board in fulfilling its oversight responsibilities by reviewing
the financial information proposed to be provided to stockholders and others,
the internal control systems and disclosure controls established by management
and the Board, the audit process and the independent auditors’ qualifications,
independence and performance.
Management
is responsible for the internal controls and preparation of the Company’s
financial statements. The Company’s independent registered public accounting
firm, Wolf & Company, P.C., is responsible for performing an audit of its
consolidated financial statements including an evaluation of its internal
controls in accordance with the standards of the Public Company Accounting
Oversight Board (United States) (PCAOB) and issuing an opinion on the financial
statements. The Audit Committee has met and held discussions with management and
the independent registered public accounting firm regarding the Company’s
internal controls, financial reporting practices and audit
process.
The Audit
Committee has reviewed and discussed the Company’s audited consolidated
financial statements and its internal controls over financial reporting for the
fiscal year ended October 31, 2009 with management and the independent
registered public accounting firm. As part of this review, the Audit Committee
discussed with Wolf & Company, P.C. the communications required by the
standards of the PCAOB, including those described in Statement on Auditing
Standards No. 61, “Communication with Audit Committees.”
The Audit
Committee has received from Wolf & Company, P.C. a written statement
describing all relationships between that firm and the Company that might bear
on the independent registered public accounting firm’s independence, consistent
with Independence Standards Board Standard No. 1, “Independence Discussions
with Audit Committees.” The Audit Committee has discussed the written
statement with the independent registered public accounting firm, and has
considered whether the independent registered public accounting firm’s provision
of consultation and other non-audit services to the Company is compatible with
maintaining the registered public accounting firm’s independence.
Based on
the above-mentioned reviews and discussions with management and the independent
registered public accounting firm, the Audit Committee recommended to the Board
that the Company’s audited consolidated financial statements and assertions on
internal controls over financial reporting be included in its Annual Report on
Form 10-K for the year ended October 31, 2009 for filing with the
SEC.
Martin
Dytrych, Chair
Philip Davidowitz
John LaPides
Current
Independent Registered Public Accounting Firm
The Audit
Committee engaged Wolf & Company, P.C. as our independent registered public
accounting firm to perform an audit of our consolidated financial
statements, including an evaluation of our internal controls, in
accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB) for the fiscal years ended October 31, 2009 and
2008. A representative of Wolf & Company, P.C. is expected to be
available at the Annual Meeting via conference telephone and will have an
opportunity to make a statement if he desires to do so. He is also
expected to be able to respond to appropriate questions.
The Audit
Committee has selected Wolf & Company as the independent registered public
accounting firm to audit our financial statements for fiscal 2010.
Independent
Registered Public Accounting Firm Fees
The
following is a summary of the fees for professional services rendered by Wolf
& Company for the fiscal years ended October 31, 2009 and 2008:
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Audit
fees
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$
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156,500
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$
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155,000
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Audit-related
fees
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1,600
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-
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Tax
fees
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-
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-
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All
other fees
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-
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-
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Total
fees
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$
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158,100
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$
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155,000
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Audit Fees:
Audit
fees were for professional services rendered for the audit of our annual
financial statements, the review of quarterly financial statements and the
preparation of statutory and regulatory filings.
Audit-Related
Fees:
Audit-related fees were for professional services
rendered in connection with employee benefit plan audits, accounting
consultations, due diligence and audits in connection with
acquisitions.
Tax Fees:
Tax fees
consist of fees billed for professional services for tax compliance, tax
planning and tax advice. These services include assistance regarding
federal and state tax compliance and planning, tax audit defense, and mergers
and acquisitions. Commencing in fiscal year 2006, we used a different
accounting firm for tax services than the firm that performs our audit
services.
All Other
Fees:
All other fees includes assistance with miscellaneous
reporting requirements and interpretation of technical issues.
The Audit
Committee considered and determined that the provision of non-audit services
provided by Wolf & Company, P.C. is compatible with maintaining the firm’s
independence.
The Audit
Committee engaged Blum, Shapiro & Company P.C. for tax and tax advisory
services for fiscal year 2009.
Pre-Approval
Policies and Procedures
At
present, our Audit Committee approves each engagement for audit and non-audit
services before we engage Wolf & Company, P.C. to provide those
services.
Our Audit
Committee has not established any pre-approval policies or procedures that would
allow our management to engage Wolf & Company, P.C. to provide any specified
services with only an obligation to notify the Audit Committee of the engagement
for those services. None of the services provided by Wolf &
Company, P.C. for fiscal 2009 was obtained in reliance on the waiver of the
pre-approval requirement afforded in SEC regulations.
Whistleblower
Procedures
In our Code of Ethics, our Audit
Committee has adopted procedures for the treatment of complaints regarding
accounting, internal accounting controls or auditing matters, including
procedures for the confidential and anonymous submission by our directors,
officers and employees of concerns regarding questionable accounting, internal
accounting controls or auditing matters.
Other
Matters
Other
Business
Neither
the Company nor our Board intends to propose any matters of business at the
meeting other than those described in this proxy statement. Neither
we nor our Board know of any matters to be proposed by others at the
meeting.
Solicitation
of Proxies
We are
soliciting proxies in the enclosed form and paying the cost of the
solicitation. In addition to the use of the mails, we may solicit
proxies personally or by telephone or telegraph using the services of our
directors, officers and regular employees at nominal cost. We will
reimburse banks, brokerage firms and other custodians, nominees and fiduciaries
for expenses incurred in sending proxy material to beneficial owners of our
common stock.
Stockholder
Proposals for the Next Annual Meeting
In order
to be eligible for inclusion in our proxy statement and proxy card for the
annual meeting scheduled to be held in 2011, stockholder proposals must comply
with SEC Rule 14a-8 and any other applicable rules and must be delivered to our
principal executive offices at least 120 days prior to the anniversary of the
date of mailing of this proxy statement. This proxy statement was
sent to stockholders on or about March 1, 2010, so the date by which proposals
are required to be received under Rule 14a-8 will be October 31,
2010.
Section
3.7 of our by-laws requires that a stockholder who wishes to bring an item of
business before the annual meeting must provide notice of such item of business
to us at our principal executive offices not less than 90 days before the date
for such meeting. We currently anticipate that next year’s annual
meeting will take place at approximately the same time of the year, or on or
about April 1, 2011. In that case, the deadline for submission of
notice will be January 1, 2011. Section 4.5 of our by-laws imposes
the same deadline on the nomination by a stockholder of a candidate for election
to the board of directors. For a meeting scheduled on April 1, 2011,
any proposal or nomination submitted after January 1, 2011 will be
untimely. Our by-laws contain a number of other substantive and
procedural requirements which should be reviewed by any interested
stockholder. Finally, SEC rules require us to disclose in our proxy
materials certain information about candidates for nomination to the Board who
are recommended by a stockholder or group of stockholders owning more than 5% of
our common stock. The deadline for notice to us of such a
recommendation is 120 days prior to the anniversary of the date this proxy
statement was mailed to stockholders, or October 31, 2010.
Availability
Of Form 10-K
In
addition to being available at
http://www.vermontpure.com/proxy
,
copies of our Annual Report on Form 10-K for the fiscal year ended October 31,
2009, including our financial statements but excluding the exhibits to the Form
10-K, are being provided, without charge, to each stockholder solicited by this
proxy statement. The Form 10-K includes a list of the exhibits that
were filed with it, and we will furnish a copy of any such exhibit to any person
who requests it upon the payment of our reasonable expenses in providing the
requested exhibit. For further information, contact Bruce S.
MacDonald, Chief Financial Officer, Vermont Pure Holdings, Ltd., 1050 Buckingham
Street, Watertown, Connecticut 06795, telephone 802-658-9112. Our
Annual Report on Form 10-K and our other filings with the SEC, including the
exhibits, are available for free on our website (
www.vermontpure.com
) and the
SEC’s website (
www.sec.gov
).
ANNUAL
MEETING OF STOCKHOLDERS OF
VERMONT
PURE HOLDINGS, LTD.
March
29, 2010
NOTICE OF INTERNET
AVAILABILITY OF PROXY MATERIAL:
The
Notice of Meeting, Proxy Statement and Proxy Card
are
available at
http://www.vermontpure.com/proxy
Please
sign, date and mail
your
proxy card in the
envelope
provided as soon
as
possible.
↓
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Please
detach along perforated line and mail in the envelope
provided.
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↓
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■
20700000000000001000
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0 032910
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PLEASE SIGN, DATE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK
INK AS SHOWN HERE
x
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1.
Election of the following directors:
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2.
In their discretion, the proxies are authorized to vote upon such other
business
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NOMINEES:
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as may come before
the meeting or any adjournment thereof.
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m
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Henry E.
Baker
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FOR ALL
NOMINEES
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m
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John B. Baker
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m
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Peter K.
Baker
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WITHHOLD
AUTHORITY
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m
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Phillip
Davidowitz
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FOR ALL
NOMINEES
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m
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Martin A.
Dytrych
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m
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John M.
LaPides
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FOR ALL EXCEPT
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m
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Ross S.
Rapaport
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(See
instructions below)
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INSTRUCTIONS:
To
withhold authority to vote for any individual nominee(s), mark
“FOR ALL
EXCEPT”
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and
fill in the circle next to each nominee you wish to withhold, as shown
here:
●
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I
PLAN ON ATTENDING THE ANNUAL MEETING
o
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To
change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method.
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o
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Signature
of Stockholder
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Date:
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Signature
of Stockholder
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Date:
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Note:
Please sign exactly as
your name or names appear on this Proxy. When shares are held jointly, each
holder should sign. When signing as executor, administrator, attorney, trustee
or guardian, please give full title as such. If the signer is a corporation,
please sign full corporate name by duly authorized officer, giving full title as
such. If signer is a partnership, please sign in partnership name by authorized
person.
ANNUAL
MEETING OF STOCKHOLDERS OF
VERMONT
PURE HOLDINGS, LTD.
March
29, 2010
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PROXY VOTING
INSTRUCTIONS
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INTERNET
-
Access
“
www.voteproxy.com
”
and follow the
on-screen instructions. Have your proxy card available when you access the
web page, and use the Company Number and Account Number shown on your
proxy card.
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TELEPHONE
-
Call
toll-free
1-800-PROXIES
(1-800-776-9437) in the United States or
1-718-921-8500
from
foreign countries from any touch-tone telephone and follow the
instructions. Have your proxy card available when you call and use the
Company Number and Account Number shown on your proxy
card.
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Vote
online/phone until 11:59 PM EST the day before the meeting.
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COMPANY
NUMBER
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MAIL
-
Sign,
date and mail your proxy card in the envelope provided as soon as
possible.
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ACCOUNT
NUMBER
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IN PERSON
-
You
may vote your shares in person by attending the Annual
Meeting.
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NOTICE OF INTERNET AVAILABILITY
OF PROXY MATERIAL:
The Notice of meeting, Proxy Statement and
Proxy
Card
are available at
http://www.vermontpure.com/proxy
|
↓
|
Please
detach along perforated line and mail in the envelope provided IF you are
not voting via telephone or the Internet.
|
↓
|
■
20700000000000001000
0
|
|
|
032910
|
PLEASE SIGN, DATE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN
HERE
x
|
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|
1.
Election of the following directors:
|
|
2.
In their discretion, the proxies are authorized to vote upon such other
business
|
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|
NOMINEES:
|
|
as may come before
the meeting or any adjournment thereof.
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m
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Henry E.
Baker
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FOR ALL
NOMINEES
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m
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John B. Baker
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m
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Peter K.
Baker
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WITHHOLD
AUTHORITY
|
m
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Phillip
Davidowitz
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FOR ALL
NOMINEES
|
m
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Martin A.
Dytrych
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m
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John M.
LaPides
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FOR ALL EXCEPT
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m
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Ross S.
Rapaport
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(See
instructions below)
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INSTRUCTIONS:
To
withhold authority to vote for any individual nominee(s), mark
“FOR ALL
EXCEPT”
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|
and
fill in the circle next to each nominee you wish to withhold, as shown
here:
●
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I
PLAN ON ATTENDING THE ANNUAL MEETING
o
|
To
change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method.
|
o
|
|
Signature
of Stockholder
|
|
Date:
|
|
Signature
of Stockholder
|
|
Date:
|
|
Note:
Please sign exactly as
your name or names appear on this Proxy. When shares are held jointly, each
holder should sign. When signing as executor, administrator, attorney, trustee
or guardian, please give full title as such. If the signer is a corporation,
please sign full corporate name by duly authorized officer, giving full title as
such. If signer is a partnership, please sign in partnership name by authorized
person.
VERMONT
PURE HOLDINGS, LTD.
PROXY
SOLICITED
BY THE BOARD OF DIRECTORS
FOR
THE ANNUAL MEETING TO BE HELD ON MARCH 29, 2010
As
an alternative to completing this form, you may enter your vote instruction by
telephone at 1-800-PROXIES, or via the Internet at
WWW.VOTEPROXY.COM
and
follow the simple instructions. Use the Company Number and Account Number shown
on your proxy card.
The
undersigned stockholder(s) of VERMONT PURE HOLDINGS, LTD., a Delaware
corporation (the "Company"), hereby appoints Ross S. Rapaport and Peter K.
Baker, or either of them, with full power of substitution and to act without the
other, as the agents, attorneys and proxies of the undersigned, to vote the
shares of stock held by the undersigned or which the undersigned may be entitled
to vote at the Annual Meeting of Stockholders of the Company to be held on March
29, 2010 and at all adjournments thereof (the "Meeting"), with all powers the
undersigned would possess if personally present. This proxy will be voted in
accordance with the instructions given on the reverse and in the discretion of
the proxies upon all other matters that may properly come before the Meeting. IF
NO INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR ALL OF THE NOMINEES FOR
DIRECTOR.
The
undersigned hereby acknowledges receipt of a copy of the accompanying Notice of
Annual
Meeting of Stockholders and Proxy Statement for the Meeting and hereby revokes
all proxies, if any, heretofore given by the undersigned to others for said
Meeting.
(Continued
and to be signed on the reverse side)
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