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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT made this 11th day of June, 1998.
B E T W E E N:
COTT CORPORATION,
a corporation incorporated under the laws of Canada
(hereinafter referred to as the "Corporation")
OF THE FIRST PART
- and -
XXXXX X. XXXXX III,
of the Town of Haverford, in the State of Pennsylvania
(hereinafter referred to as the "Executive")
OF THE SECOND PART
WHEREAS the Corporation and the Executive have agreed to enter into this
Employment Agreement to formalize in writing the terms and conditions reached
between them governing the Executive's employment;
NOW THEREFORE in consideration of the covenants and agreements herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, the parties hereto
agree as follows:
ARTICLE 1 - COMMENCEMENT AND TERM
1.1 TERM. Subject to earlier termination in accordance with Article 5 hereof,
the term of this Agreement shall commence on June 1, 1998 and shall continue for
a maximum term ending on January 31, 2002 (the "Term"). The Term shall renew
automatically for consecutive periods of one (1) year each, unless one party
gives notice to the other that it does not wish to renew the then current Term
(a "Notice of Non-Renewal"). To be effective, such Notice of Non-Renewal must be
received by the receiving party not later than one hundred and eighty (180) days
prior to the end of the relevant Term. In the event that a Notice of Non-Renewal
is delivered, this Agreement and the employment of the Executive shall
automatically end at the expiry of the then relevant Term without further
obligation by the Corporation (except for the provisions of Articles 4 and 5
which shall continue in accordance with their terms).
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ARTICLE 2 - EMPLOYMENT
2.1 POSITION. Subject to the terms and conditions hereof, the Executive shall be
employed by the Corporation in the office of President and Chief Executive
Officer of the Corporation and shall perform such duties and exercise such
powers and responsibilities of such office as are set forth in the Statement of
Responsibilities - Chief Executive Officer attached hereto which has been
approved by the board of directors, as are contained in the by-laws of the
Corporation and as are otherwise prescribed or specified from time to time by
the board of directors of the Corporation. The Executive shall also be appointed
as a director of the Corporation as soon as practicable following execution
hereof.
2.2 RESPONSIBILITIES. The Executive agrees to devote substantially all of his
business time and attention to the business and affairs of the Corporation, to
discharge the responsibilities assigned to the Executive, and to use the
Executive's best efforts to perform faithfully and efficiently such
responsibilities. Other than for the Corporation and any of its subsidiary or
related entities, or for directorships held by the Executive at the time of
execution of this Agreement, the Executive shall not serve as a director or in a
similar function with any other entities for the first 18 months of the Term
but, thereafter, the Executive shall be entitled to serve as a director on
external boards of directors, subject to the prior written approval of the
Corporation. Anything herein to the contrary notwithstanding, nothing shall
preclude the Executive from (i) serving on the boards of directors of a
reasonable number of trade associations and/or charitable organizations, (ii)
engaging in charitable activities and community affairs, and (iii) managing his
personal investments and affairs, provided that any or all of the foregoing
activities do not materially interfere with the proper performance of his duties
and responsibilities as the Corporation's President and Chief Executive Officer.
ARTICLE 3 - REMUNERATION
3.1 SALARY. During the Term, the Corporation shall pay the Executive a base
salary (the "Base Salary") to be fixed by the board of directors of the
Corporation from time to time, payable monthly in arrears. The Base Salary shall
be not less than $425,000 per annum and shall be reviewed no less frequently
than annually for increase in the discretion of the board of directors, it being
understood that there is no mutual expectation of the parties that Base Salary
will be increased during the period ending January 31, 2002.
3.2 BONUSES. The Executive shall be entitled to an annual performance-based
bonus (the "Bonus") with a target of one hundred percent (100%) of his Base
Salary as determined by the board of directors or a committee thereof, such
Bonus to be based on the achievement of specific objectives to be established
and mutually agreed upon on an annual basis. For the fiscal year ending January
31, 1999, the Corporation shall pay the Executive a bonus in the amount of
$175,000. Bonuses shall be earned and payable only upon completion of the
relevant fiscal year and provided the Executive shall continue to be actively
and continuously employed for the full duration thereof, unless otherwise
provided in Article 5.
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3.3 BENEFITS AND PERQUISITES.
(a) The Executive shall be entitled to participate in all of the
Corporation's group insurance benefit plans, currently including basic medical,
extended health, dental, long term disability, travel and accident insurance.
All plans are governed by their terms.
(b) The Corporation shall provide the Executive with supplemental
disability benefits which would pay the Executive, in the event of his
termination for Disability (as defined in Section 5.1(c)), an amount equal to
the sum of 60% of his Base Salary less the amount of any disability benefits
provided under the Corporation's long-term disability plans. In the event that
the Executive is totally or partially disabled and is not terminated for
Disability, the Corporation shall ensure that he continue to receive all
remuneration provided for under this Article 3.
(c) The Executive shall have the use of a leased automobile or an
automobile allowance, provided the cost to the Corporation shall not exceed a
monthly amount of $1,000.
(d) The Executive is not entitled to any other benefit or perquisite
other than as specifically set out in this Agreement or agreed to in writing by
the Corporation.
The Executive understands and acknowledges that the perquisites
contemplated by this Section 3.3 shall be recorded as taxable benefits within
the meaning of the Income Tax Act (Canada) and will have comparable treatment
under the United States Internal Revenue Code.
3.4 VACATION. The Executive shall be entitled to five weeks' vacation with pay
annually. Such vacation shall be taken at a time or times acceptable to the
Corporation having regard to its operations. Accumulated vacation may not be
carried except with the written approval of the Corporation.
3.5 EXPENSES.
(a) Consistent with its corporate policies as established from
time-to-time, the Corporation agrees to reimburse the Executive for all expenses
reasonably incurred in connection with the performance of his duties upon being
provided with proper vouchers or receipts.
(b) The Corporation agrees to reimburse to the Executive for legal and
accounting expenses incurred in the negotiation and documentation of his
employment arrangements with the Corporation to a maximum amount of $15,000
(such legal fees to be paid within 90 days).
(c) Although the Corporation's principal executive offices are located
in the Toronto, Ontario area, the Executive shall be under no obligation to
relocate his personal residence to the Toronto area. The Corporation shall
provide and maintain for the Executive suitable rental accommodations in the
Toronto area mutually acceptable
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to the Corporation and the Executive acting reasonably, and pay any costs
associated with the Executive's weekly commuting from Toronto to the Executive's
residences in Vero Beach and/or Philadelphia. The Executive's spouse shall be
entitled to make 12 round trips per year from her residence to Toronto at
Corporation's expense.
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3.6 SHARE OPTION.
(a) Effective on the date of this Agreement but conditional on the
Executive complying with the provisions of subparagraph 3.6(b) below, the
Corporation will grant and the Executive will accept an irrevocable option (the
"Option") to purchase 1,300,000 common shares in the capital of the Corporation
(the "Optioned Shares") at a price to be fixed by the Corporation's board of
directors but equal to the closing share price on The Toronto Stock Exchange on
the date prior to the public announcement of this Agreement. The Option may be
exercised on a cumulative basis in respect of one-sixth (1/6) of the total
Optioned Shares commencing on the sixth monthly anniversary of the date of
grant, and thereafter in respect of one-thirtieth (1/30) the total unvested
Optioned Shares on each of the next 30 monthly anniversaries of this Agreement.
The Option shall expire in respect of Optioned Shares not theretofore acquired
thereunder or in respect of which rights shall not otherwise have terminated on
the seventh annual anniversary of the date of grant.
(b) As a condition precedent of the exercise of the Option (or any
portion thereof), Subject to regulatory approval (which the Corporation
undertakes to seek), the Corporation agrees to issue and sell to the Executive
100,000 previously unissued common shares in its capital stock (the "Issued
Shares"), which will be issued as fully paid and non-assessable at an issue
price (the "Issue Price") equal to the closing market price on The Toronto Stock
Exchange on the date prior to the first public announcement of the Executive's
employment hereunder against cash payment by the Executive of an amount equal to
100,000 times the Issue Price. If such regulatory approval is not received the
Executive agrees to purchase on the open market 200,000 previously issued common
shares in the Corporation within 30 days of this Agreement (less the number of
such shares held by the Executive on the date of this Agreement) and to hold at
least that number of shares (as adjusted to reflect subdivisions, consolidations
or other share capital reorganizations) at the time of each exercise of the
Option, if the Executive is still an employee of the Corporation at the time of
such exercise, failing which the Option shall not be exercisable in respect of
the then unexercised portion thereof. If the Executive is required to purchase
common shares in the open market at a price in excess of the Issue Price, the
Corporation will reimburse the excess amount to the Executive (grossed up to
provide the Executive with an effective after-tax cost on the purchased shares
equal to the Issue Price). The Executive shall maintain no less than 200,000
common shares in the Corporation (adjusted as aforesaid) for the duration of his
employment with the Corporation and shall provide evidence of the shares held by
him as may be required by the Corporation from time-to-time.
(c) The Executive covenants that he will comply with all applicable
securities laws and the Corporation's Xxxxxxx Xxxxxxx Policy and Insider
Reporting Procedures (copies of which have been provided to the Executive) in
respect of the Optioned Shares issued to the Executive and other shares of the
Corporation acquired by the Executive.
(d) All of the Executive's rights in respect of the Option in the
Optioned Shares shall be governed by the terms and conditions set out in the
Restated 1986 Common Share Option Plan of the Corporation as amended through
September 4, 1997, as it may be amended from time to time, a copy of which has
been provided to the Executive, the provisions of which are incorporated into
this Agreement by reference.
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(e) The Executive understands that the Issued Shares have not been and
will not be registered under the United States Securities Act of 1933 (the
"Securities Act") or any applicable state securities laws and that the
contemplated sale is being made in reliance on a private placement exemption
under the 1933 Act.
(f) The Executive has had access to such information concerning the
Corporation as he has considered necessary in connection with its investment
decision to acquire the Issued Shares and has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment in the Issued Shares and is able to bear the economic
risks of such investment.
(g) The Executive is an Accredited Investor as confirmed in the
Accredited Investor Questionnaire attached hereto as Exhibit A and is acquiring
the Issued Shares for his own account, and not with a view to any resale,
distribution or other disposition of the Issued Shares in violation of the
United States securities laws or applicable state securities laws.
(h) The Executive understands that if he decides to offer, sell or
other-wise transfer any of the Issued Shares, such Shares may be offered, sold
or otherwise transferred only, (i) to the Corporation, (ii) outside the United
States in accordance with Rule 904 of Regulation S under the 1933 Act, or (iii)
inside the United States in accordance with the exemption from registration
under the 1933 Act provided by Rule 144 thereunder, if available, or (iv)
pursuant to an effective registration statement, and that the certificate
representing the Issued Shares will bear a legend to the foregoing effect.
ARTICLE 4 - COVENANTS OF THE PARTIES
4.1 CONFIDENTIALITY.
(a) The Executive acknowledges that in the course of carrying out,
performing and fulfilling his obligations to the Corporation hereunder, the
Executive will have access to and will be entrusted with information that would
reasonably be considered confidential to the Corporation or its Affiliates, the
disclosure of which to competitors of the Corporation or its Affiliates or to
the general public, will be highly detrimental to the best interests of the
Corporation or its Affiliates. Such information includes, without limitation,
trade secrets, know-how, marketing plans and techniques, cost figures, client
lists, software, and information relating to employees, suppliers, customers and
persons in contractual relationship with the Corporation. Except as may be
required in the course of carrying out his duties hereunder, the Executive
covenants and agrees that he will not disclose, for the duration of this
Agreement or at any time thereafter, any of such information to any person,
other than to the directors, officers, employees or agents of the Corporation
that have a need to know such information, nor shall the Executive use or
exploit, directly or indirectly, such information for any purpose other than for
the purposes of the Corporation (subject to his rights and obligations under
Section 3.6), nor will he disclose nor use for any purpose, other than for those
of the Corporation or its Affiliates or any other information which he may
acquire during his employment with respect to the business
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and affairs of the Corporation or its Affiliates. Notwithstanding all of the
foregoing, the Executive shall be entitled to disclose such information if
required pursuant to a subpoena or order issued by a court, arbitrator or
governmental body, agency or official, provided that the Executive shall first
have:
(i) notified the Corporation;
(ii) consulted with the Corporation on the advisability of taking
steps to resist such requirements;
(iii) if the disclosure is required or deemed advisable, cooperate
with the Corporation in an attempt to obtain an order or other
assurance that such information will be accorded confidential
treatment.
(b) For the purposes of this Agreement, "Affiliate" shall mean, with
respect to any person or entity (herein the "first party"), any other person or
entity that directs or indirectly controls, or is controlled by, or is under
common control with, such first party. The term "control" as used herein
(including the terms "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to: (i) vote 50% or more of the
outstanding voting securities of such person or entity, or (ii) otherwise direct
or significantly influence the management or policies of such person or entity
by contract or otherwise.
4.2 INVENTIONS. The Executive acknowledges and agrees that all right, title and
interest in and to any information, trade secrets, advances, discoveries,
improvements, research materials and data bases made or conceived by the
Executive prior to or during his employment relating to the business or affairs
of the Corporation, shall belong to the Corporation. In connection with the
foregoing, the Executive agrees to execute any assignments and/or
acknowledgements as may be requested by the board of directors from time to
time.
4.3 CORPORATE OPPORTUNITIES. Any business opportunities related to the business
of the Corporation which become known to the Executive during his employment
hereunder must be fully disclosed and made available to the Corporation by the
Executive, and the Executive agrees not to take or attempt to take any action if
the result would be to divert from the Corporation any opportunity which is
within the scope of its business.
4.4 RESTRICTIVE COVENANTS
(a) The Executive will not at any time, without the prior written
consent of the Corporation, during the Term of this Agreement or for a period of
24 months after the termination of this Agreement or the Executive's employment
(regardless of the reason for such termination), either individually or in
partnership, jointly or in conjunction with any other person or persons, firm,
association, syndicate, company or corporation, whether as agent, shareholder,
employee, consultant, or in any manner whatsoever, directly or indirectly:
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(i) anywhere in the Territory, engage in, carry on or otherwise
have any interest in, advise, lend money to, guarantee the
debts or obligations of, permit the Executive's name to be
used in connection with any business which is competitive to
the Business or which provides the same or substantially
similar services as the Business;
(ii) for the purpose of competing with any business of the
Corporation, solicit, interfere with, accept any business
from or render any services to anyone who is a client or a
prospective client of the Corporation or any Affiliate at
the time Executive ceased to be employed by the Corporation
or who was a client during the 12 months immediately
preceding such time;
(iii) solicit or offer employment to any person employed or
engaged by the Corporation or any Affiliate at the time the
Executive ceased to be employed by the Corporation or who
was an employee or during the 12 month period immediately
preceding such time.
(b) For the purposes of this Agreement:
(i) "Territory" shall mean Canada, the United States and the
United Kingdom;
(ii) "Business" shall mean the business of manufacturing, selling
and distributing non-alcoholic beverages.
(c) Nothing in this Agreement, shall prohibit or restrict the Executive
from holding or becoming beneficially interested in up to one (1%) percent of
any class of securities in any corporation provided that such class of
securities are listed on a recognized stock exchange in Canada or the United
States.
4.5 GENERAL PROVISIONS
(a) The Executive acknowledges and agrees that in the event of a breach
of the covenants, provisions and restrictions in this Article 4, the
Corporation's remedy in the form of monetary damages will be inadequate and that
the Corporation shall be and is hereby authorized and entitled, in addition to
all other rights and remedies available to it, to apply for and obtain from a
court of competent jurisdiction interim and permanent injunctive relief and an
accounting of all profits and benefits arising out of such breach.
(b) The parties acknowledge that the restrictions in this Article 4 are
reasonable in all of the circumstances and the Executive acknowledges that the
operation of restrictions contained in this Article 4 may seriously constrain
his freedom to seek other remunerative employment. If any of the restrictions
are determined to be unenforceable as going beyond what is reasonable in the
circumstances for the protection of the interests of the Corporation but would
be valid, for example, if the scope of their time periods or geographic areas
were limited, the parties consent to the
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court making such modifications as may be required and such restrictions shall
apply with such modifications as may be necessary to make them valid and
effective.
(c) Each and every provision of these Sections 4.1, 4.2, 4.3, 4.4 and
4.5 shall survive the termination of this Agreement or the Executive's
employment hereunder (regardless of the reason or such termination).
ARTICLE 5 - TERMINATION OF EMPLOYMENT
5.1 TERMINATION BY THE CORPORATION FOR JUST CAUSE, DISABILITY OR DEATH OR
NON-RENEWAL OF TERM
(a) The Corporation may terminate this Agreement and the Executive's
employment hereunder without payment of any compensation either by way of
anticipated earnings or damages of any kind at any time for Just Cause,
Disability or death of the Executive, or at the expiry of the term subsequent to
the delivery of a Notice of Non-Renewal.
(b) "Just Cause" shall mean:
(i) misconduct or dishonesty in the discharge of his duties
hereunder;
(ii) theft or misappropriation of the Corporation's property;
(iii) alcoholism or addiction to a substance which materially
impairs the Executive's ability to perform his duties
hereunder;
(iv) breach of fiduciary duties;
(v) incompetence or gross negligence in the performance of the
Executive's duties; or
(vi) the Executive commits a material breach of this Agreement
and fails to remedy same, after notice from the Corporation,
within a period which is reasonable in the circumstances.
(c) For the purposes of this Agreement, "Disability" shall have
occurred if the Executive has been unable due to illness, disease, or mental or
physical disability (in the opinion of a qualified medical practitioner who is
satisfactory to the Executive and the Corporation acting reasonably), to fulfil
his obligations hereunder either for any consecutive six (6) month period or for
any period of 9 months (whether or not consecutive) in any consecutive 12 month
period, or the Executive has been declared by a court of competent jurisdiction
to be mentally incompetent or incapable of managing his affairs.
If the Executive and the Corporation cannot agree on a qualified
medical practitioner, each party shall select a medical practitioner, and the
two practitioners shall select a third who shall be the approved medical
practitioner for this purpose.
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5.2 TERMINATION BY THE EMPLOYER WITHOUT CAUSE. If the Executive's employment is
terminated by the Corporation for any reason other than for Just Cause,
Disability or death of the Executive, or expiry of the Term subsequent to the
delivery of a Notice of Non-Renewal, then the following provisions shall apply:
(a) The Corporation shall pay forthwith to the Executive or as he may
direct, a lump sum amount equal to the greater of:
(i) the Base Salary and the Bonus, calculated as the
average of the Bonuses paid or payable to the Executive
in respect of the most recent two completed fiscal
years (except, in the event that two fiscal years have
not been completed as of the date of termination, in
which case the most recent Bonus shall be utilized, and
that the Bonus payable in respect of the fiscal year
ending January 31, 1999 shall be pro-rated) for the
balance of the Term; or
(ii) 24 months' Base Salary and Bonus (based on the average
of the Bonuses paid or payable to the Executive in
respect of the most recent two completed fiscal years
except, in the event that two fiscal years have not
been completed as of the date of termination, in which
case the most recent Bonus shall be utilized, and the
Bonus payable in respect of the fiscal year ending
January 31, 1999 shall be pro-rated); and
(iii) apro rated Bonus for the year in which Executive's
termination occurs (calculated on the same basis as
indicated in Section 5.2(a)(i) above).
(b) The Corporation shall, to the extent it may do so legally and in
compliance with the Corporation's benefit plans in existence from time to time,
continue all group insurance benefits at a level equivalent to those provided to
the Executive immediately prior to the termination for a period until the date
which is the latest of:
(i) the expiry of the Term; or
(ii) 24 months following the date of termination.
provided that, (a) the benefits contemplated by this sub-paragraph shall
terminate on the date the Executive obtains alternate employment providing
comparable benefits; and (b) if the Corporation cannot continue any particular
group insurance benefit, the Corporation shall reimburse the Executive for any
expenses incurred by the Executive to replace such group insurance benefit.
5.3 TERMINATION BY THE EXECUTIVE FOR GOOD REASON.
(a) The Executive may terminate this Agreement at any time for Good
Reason upon the occurrence, without the express written consent of the
Executive, of any of the following:
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(i) a reduction in the Executive's then current Base Salary
or target award opportunity under the Corporation's
annual bonus plan or long-term performance incentive or
the termination or material reduction of any employee
benefit or perquisite enjoyed by him (other than as
part of an across-the-board reduction applicable to all
executive officers of the Corporation);
(ii) the failure to elect or reelect the Executive to any of
the positions described in Section 2.1 above (other
than the position of director of the Corporation) or
removal of him from any such position;
(iii) a material diminution in the Executive's duties or the
assignment to the Executive of duties which are
materially inconsistent with his duties or which
materially impair the Executive's ability to function
as the President and Chief Executive Officer of the
Corporation;
(iv) the failure to continue the Executive's participation
in any incentive compensation plan unless a plan
providing a substantially similar opportunity is
substituted;
(v) the failure of the Corporation to obtain the assumption
in writing of its obligation to perform this Agreement
by any successor to all or substantially all of the
assets of the Corporation within 15 days after a
written request to that effect by the Executive
following a merger, consolidation, sale or similar
transaction, unless the Executive shall have received
the opinion of counsel to the Corporation that such
transaction does not have an adverse legal affect on
the rights of the Executive hereunder;
which, in any of the foregoing events, has not been remedied or cured
by the Corporation within a reasonable period after notice from the
Executive.
(b) In the event Executive terminates this Agreement for Good Reason,
he shall be entitled to the same payments and benefits as provided in Section
5.2 above.
5.4 TERMINATION UPON A CHANGE OF CONTROL.
(a) If, following a Change in Control, the Executive's employment is
terminated without Just Cause or the Executive terminates his employment for
Good Reason, the Executive shall be entitled to the payments and benefits
provided in this Section 5.4. Also, immediately following a Change in Control,
all amounts, entitlements or benefits in which Executive is not vested shall
become fully vested. The Executive may terminate his employment at any time for
Good Reason upon the occurrence of a Change of Control by providing written
notice to the Corporation within six months of the occurrence of such Change of
Control and the effective date of such termination and the termination of the
Executive's employment shall be 30 days from the date of such written notice.
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(b) For the purposes of this Agreement, a "Change of Control" shall
mean: (i) the occurrence, at any time during the Term of any person or group of
persons acting jointly or in concert acquiring more than 50% of the outstanding
voting shares in the Corporation, whether by way of takeover bid, merger,
amalgamation or otherwise; (ii) a sale by the Corporation of all or
substantially all of the Corporation's undertaking and assets; or (iii) the
voluntary liquidation, dissolution or winding-up of the Corporation, in
connection with which a distribution is made to the holders of the Corporation's
common shares.
(c) In the event of termination of the Executive's employment pursuant
to this Section 5.3, then the following provisions shall apply:
(i) The Corporation shall pay forthwith to the Executive or
as he may direct, a lump sum amount equal to 36 months
Basic Salary plus the average of the Bonuses paid or
payable to the Executive in respect of the most recent
two completed fiscal years (except in the event that
two fiscal years have not been completed as of the date
of termination, in which case the most recent Bonus
shall be utilized, and further, it is recognized that
the Bonus payable in respect of the fiscal year ending
January 31, 1999 shall be pro-rated); and
(ii) The Corporation shall continue, to the extent it may do
so legally and in compliance with the Corporation's
benefit plans in existence from time to time, all group
and insurance benefits at a level equivalent to those
provided to those provided to the Executive immediately
prior to the termination for a period of 36 months
following the date of termination, provided that, if
the Corporation cannot continue any particular group
insurance benefit, the Corporation shall reimburse the
Executive for any expenses incurred by the Executive to
replace such group insurance benefit.
(iii)In the event that the termination of the Executive's
employment is for one of the reasons set forth in this
Section 5.4 and the aggregate of all payments or
benefits made or provided to the Executive under this
Section 5.4 and under all other plans and programs of
the Corporation (the "Aggregate Payment") is determined
to constitute a Parachute Payment, as such term is
defined in Section 280G(b)(2) of the United States
Internal Revenue Code, the Corporation shall pay to the
Executive, prior to the time any excise tax imposed by
Section 4999 of the Internal Revenue Code ("Excise
Tax") is payable with respect to such Aggregate
Payment, an additional amount which, after the
imposition of all income and excise taxes thereon, is
equal to the Excise Tax on the Aggregate Payment. The
determination of whether the Aggregate Payment
constitutes a Parachute Payment and, if so, the amount
to be paid to the Executive and the time of payment
pursuant to this 5.4(c)(iii) shall be made by an
independent auditor (the "Auditor") jointly selected by
the Corporation and the Executive and paid by the
Corporation. The Auditor shall be a
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nationally recognized United States public
accounting firm which has not, during the two
years preceding the date of its selection, acted
in any way on behalf of the Corporation or any
Affiliate thereof. If the Executive and the
Corporation cannot agree on the firm to serve as
the Auditor, then the Executive and the
Corporation shall each select one accounting firm
and those two firms shall jointly select the
accounting firm to serve as the Auditor.
(iv) In the event of any termination of employment
under this Article 5, the Executive shall be under
no obligation to seek other employment and there
shall be no offset against amounts due to the
Executive under this Agreement on account of any
remuneration attributable to any subsequent
employment that he may obtain except as
specifically provided in this Article 5.
(v) Nature of Payments. Any amounts due under this
Article 5 are in the nature of severance payments
considered to be reasonable by the Corporation and
are not in the nature of a penalty.
5.5 VOLUNTARY RESIGNATION. In the event the Executive wishes to resign his
employment voluntarily, he shall provide six months' notice in writing to the
Corporation. The Corporation may waive such notice in whole or in part by paying
the Executive's Base Salary and continuing his group benefits and perquisites to
the effective date of resignation.
5.6 PAYMENT TO DATE OF TERMINATION. Regardless of the reasons for the
termination, the Corporation shall make payment to the Executive to the
effective date of termination for all Base Salary, any accrued but unpaid
vacation entitlements, any earned but unpaid Bonus and any other amounts earned,
accrued or owing to the Executive but not yet paid as well as other or
additional benefits in accordance with applicable plans or programs of the
Corporation.
5.7 RETURN OF PROPERTY. Upon any termination of this Agreement, the Executive
shall forthwith deliver or caused to be delivered to the Corporation all books,
documents, computer disks and diskettes and other electronic data, effects,
money, securities or other property belonging to the Corporation or for which
the Corporation is liable to others, which are in the possession, charge,
control or custody of the Executive.
5.8 RELEASE. The Executive acknowledges and agrees that the payments pursuant to
this Article shall be in full satisfaction of all terms of termination of his
employment, including termination pay and severance pay pursuant to the
Employment Standards Act (Ontario) as amended from time to time. Except as
otherwise provided in this Article, the Executive shall not be entitled to any
further termination payments, damages or compensation whatsoever. As a condition
precedent to any payment pursuant to this Article, the Executive agrees to
deliver to the Corporation prior to any such payment, a full and final release
from all actions or claims in connection therewith in favour of the Corporation,
its affiliates, subsidiaries, directors, officers, employees and agents, in a
form reasonably satisfactory to the Corporation.
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5.9 SET-OFF. Upon termination, howsoever caused, the Executive authorizes the
Corporation to deduct from any payment due to him pursuant to this Agreement,
any amounts owed to the Corporation howsoever caused, including by reason of
purchases, advances, loans, or in recompense for damages to or lawful property
and equipment. This provision shall be applied so as not to conflict with any
applicable legislation.
5.10 PROVINCIAL LEGISLATION. All payments made and notice given pursuant to this
Article 5 shall include notice of termination and severance pay as defined in
the Employment Standards Act (Ontario) as it may from time to time be amended,
the provisions of which are deemed to be incorporated into this Agreement and
shall prevail to the extent greater.
ARTICLE 6 - DIRECTORS AND OFFICERS
6.1 RESIGNATION. If the Executive is a director or officer at the relevant time,
the Executive agrees that after termination of his employment with the
Corporation he will tender his resignation from any position he may hold as an
officer or director of the Corporation or any of its affiliated or related
companies.
6.2 INSURANCE. The Corporation shall maintain such directors' and officers'
liability insurance for the benefit of the Executive in accordance with
corporate policies and as generally provided to the directors of the
Corporation.
6.3 INDEMNIFICATION. The Corporation agrees that, if the Executive is made a
party, or is threatened to be made a party, to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a "Proceeding"), by
reason of the fact that he is or was a director, officer or employee of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, member, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether or not the basis of such Proceeding
is the Executive's alleged action in an official capacity while serving as a
director, officer, member, employee or agent, the Executive shall be indemnified
and held harmless by the Corporation to the fullest extent legally permitted or
authorized by the Corporation's certificate of incorporation or bylaws or
resolutions of the Corporation's Board of Directors or, if greater, by the laws
of the Province of Ontario, and the Federal Laws of Canada applicable to the
Corporation, against all cost, expense, liability, and loss (including, without
limitation, attorney's fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
the Executive in connection therewith, and such indemnification shall continue
as to the Executive even if he has ceased to be a director, member, employee or
agent of the Corporation or other entity and shall inure to the benefit of the
Executive's heirs, executors and administrators. The Corporation shall advance
to the Executive all reasonable costs and expenses incurred by him in connection
with a Proceeding within 20 days after receipt by the Corporation of a written
request for such advance. Such request shall include an undertaking by the
Executive to repay the amount of such advance if it shall ultimately be
determined that he is not entitled to be indemnified against such costs and
expenses.
ARTICLE 7 - ARBITRATION
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7.1 All matters in difference between the parties in relation to this Agreement,
shall be referred to the arbitration of a single arbitrator, if the parties
agree upon one, otherwise to three arbitrators, one to be appointed by the
Corporation and one to be appointed by the Executive and a third to be chosen by
the first two arbitrators named before they enter upon the business of
arbitration. The arbitration shall be conducted in accordance with the
Arbitrations Act (Ontario) as it may from time to time be amended. The award and
determination of the arbitrator or arbitrators or any of two of three
arbitrators shall be binding upon the parties and their respective heirs,
executors, administrators and assigns.
ARTICLE 8 - CONTRACT PROVISIONS
8.1 HEADINGS. The headings of the Articles and paragraphs herein are inserted
for convenience of reference only and shall not affect the meaning or
construction hereof.
8.2 INDEPENDENT ADVICE. The Corporation and the Executive acknowledge and agree
that they have each obtained independent legal advice in connection with this
Agreement and they further acknowledge and agree that they have read, understand
and agree with all of the terms hereof and that they are executing this
Agreement voluntarily and in good faith.
8.3 GENDER. Words denoting any gender include both genders.
8.4 GOVERNING LAW. This Agreement shall be construed and interpreted in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein. Each of the parties hereby irrevocably attorns to the
jurisdiction of the courts of the Province of Ontario with respect to any
matters arising out of this Agreement.
8.5 ENTIRE AGREEMENT. This Agreement, together with the plans and documents
referred to herein, constitutes and expresses the whole agreement of the parties
hereto with reference to any of the matters or things herein provided for or
herein before discussed or mentioned with reference to such employment of the
Executive. All promises, representations, collateral agreements and
understandings not expressly incorporated in this Agreement are hereby
superseded by this Agreement.
8.6 SEVERABILITY. If any provision contained herein is determined to be void or
unenforceable in whole or in part, it shall not be deemed to affect or impair
the validity of any other provision herein and each such provision is deemed to
be separate and distinct.
8.7 NOTICE. Any notice required or permitted to be given under this Agreement
shall be in writing and shall be properly given if personally delivered,
delivered by facsimile transmission (with confirmation of receipt) or mailed by
prepaid registered mail addressed as follows:
(a) in the case of the Corporation:
16
Cott Corporation
000 Xxxxx'x Xxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Chairman
(b) in the case of the Executive:
to the last address of the Executive
in the records of the Corporation
and its subsidiaries
or to such other address as the parties may from time to time specify by notice
given in accordance herewith. Any notice so given shall be conclusively deemed
to have been given or made on the day of delivery, if personally delivered, or
if delivered by facsimile transmission or mailed as aforesaid, upon the date
shown on the facsimile confirmation of receipt or on the postal return receipt
as the date upon which the envelope containing such notice was actually received
by the addressee.
8.8 SUCCESSORS. This Agreement shall enure to the benefit of and be binding upon
the parties hereto and their respective personal or legal representatives,
heirs, executors, administrators, successors and assigns.
8.9 TAXES. All payments under this Agreement shall be subject to withholding of
such amounts, if any, relating to tax or other payroll deductions as the
Corporation may reasonably determine and should withhold pursuant to any
applicable law or regulation.
8.10 CURRENCY. All dollar amounts set forth or referred to in this Agreement
refer to U.S. currency.
8.11 COUNTERPARTS. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original but all of which together shall constitute one
and the same instrument.
17
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
COTT CORPORATION
Per: /s/ Fraser X. Xxxxx
I have authority to bind the Corporation
SIGNED, SEALED & DELIVERED )
in the presence of )
)
Xxxx X. Xxxxxxxxx )
) /s/ Xxxxx X. Xxxxx
XXXXX X. XXXXX III
18
EXHIBIT A
ACCREDITED INVESTOR QUESTIONNAIRE
The undersigned, as a purchaser of Common Shares (collectively the "Securities")
of Cott Corporation (the "Corporation"), has represented that the undersigned is
an "accredited investor" as defined in Rule 501 of Regulation D promulgated
under the Securities Act of 1933, as amended (the "1933 Act"). The undersigned
has indicated below the categories which it, he or she satisfies, or if he or
she is purchasing for the account of another accredited investor, which such
accredited investor satisfies.
The undersigned understands that the Corporation is relying on this information
in determining to sell securities to the undersigned in a manner exempt from the
registration requirements of the 1933 Act and applicable state securities laws.
(a) ACCREDITED INVESTOR STATUS
The undersigned represents and warrants that he is [CHECK EACH
APPLICABLE ITEM]:
(a) A bank, as defined in Section 3(a)(2) of the 1933 Act, or
savings and loan association or other institution as defined
in Section 3(a)(5)(A) of the 1933 Act, whether acting in its
individual or fiduciary capacity.
(b) A broker or dealer registered pursuant to Section 15 of the
United States Securities Exchange Act of 1934, as amended.
(c) An insurance company (as defined in Section 2(13) of the
1933 Act).
(d) An investment company registered under the United States
Investment Company Act of 1940 (the "1940 Act").
(e) A business development company (as defined in Section
2(a)(48) of the 1940 Act).
(f) A Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or (d) of
the United States Small Business Investment Act of 1958.
(g) A plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or
its political subdivisions, for the benefit of its
employees, if such plan has total assets in excess of U.S.
$5,000,000.
(h) An employee benefit plan within the meaning of the United
States Employee Retirement Income Security Act of 1974
("ERISA") (1) whose investment decision is made by a plan
fiduciary as defined in Section 3(21) of ERISA, which is
either a bank, savings and loan association,
19
insurance company or registered investment advisor, or (2)
having total assets in excess of U.S. $5,000,000, or (3) if
a self-directed plan, with investment decisions made solely
by persons that are accredited investors.
(i) A private business development company (as defined in
Section 202(a)(22) of the United States Investment Advisers
Act of 1940).
(j) An organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific
purpose of acquiring the securities offered, having total
assets in excess of U.S. $5,000,000.
(k) A director or executive officer of the Company.
(l) A natural person with individual net worth, or joint net
worth with his spouse, at the time of purchase in excess of
U.S. $1,000,000.
(m) A natural person with an individual income in excess of U.S.
$200,000 in each of the last two years or joint income with
his spouse in excess of U.S. $300,000 in each of those
years, and who reasonably expects to reach the same income
level in the current year.
(n) A trust, with total assets in excess of U.S. $5,000,000, not
formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated
person as described in section Rule 506 (b)(2)(ii) of the
0000 Xxx.
(o) An entity in which all of the equity owners are accredited
investors.
As used in this questionnaire, the term "net worth" means the excess of total
assets over total liabilities. In computing net worth for the purpose of
paragraph (1) above, the principal residence of the investor must be valued at
cost, including cost of improvements, or at recently appraised value by an
institutional lender making a secured loan, net of encumbrances. In determining
income, an investor should add to adjusted gross income any amount attributable
to tax exempt income received, losses claimed as a limited partner in any
limited partnership, deductions claimed for depletion, contributions to an XXX
or Xxxxx retirement plan, alimony payments, and any amount by which income from
long-term capital gains has been reduced in arriving at adjusted gross income.
IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the
day of June ___, 1998.
Signature
/s/ Xxxxx X. Xxxxx, III
Printed or Typed Name
20
XXXXX X. XXXXX, III
Social Security or Taxpayer I.D. Number
COTT CORPORATION
STATEMENT OF RESPONSIBILITIES
- CHIEF EXECUTIVE OFFICER -
The Chief Executive Officer of Cott Corporation (the "Corporation") shall be
responsible for directing the Corporation with the objective of providing
maximum profit and return on invested capital, establishing short-term and
long-term objectives, plans, performance standards and policies subject to the
approval of the Board of Directors. To that end, the Chief Executive Officer
will be ultimately responsible for:
- Preparing, at least annually, a statement of objectives, plans,
performance standards and policies for the Corporation, which shall be
reviewed by the Human Resources, Compensation and Corporate Governance
Committee and shall be approved by the Board of Directors.
- Ensuring that the Corporation's material operating plans, performance
standards and policies are uniformly understood and properly
interpreted and administered by subordinates.
- Presenting proposed operating and capital expenditure budgets for
review and approval by the Board of Directors.
- Directing all investigations and negotiations pertaining to material
acquisitions or dispositions, mergers and joint ventures.
- Representing the Corporation as appropriate in its relationship with
major customers, suppliers, competitors, commercial and investment
bankers, investment analysts, the media, security holders, government
agencies, professional associations, unions, employees and the public
generally.
- Analyzing the operating results of the Corporation and its principal
divisions relative to established objectives and taking appropriate
steps to correct unsatisfactory conditions.
- Making recommendations to the Human Resources, Compensation and
Corporate Governance Committee as regards Senior Officer succession
planning and compensation.
- Insuring the adequacy and soundness of the Corporation's financial
structure and reviewing projections of working capital requirements.
21
- Delegating any or all of the above-noted responsibilities and
maintaining ultimate supervisory responsibility to ensure that they
are performed.
