EXHIBIT 10.2
May 13, 2006
WITHOUT PREJUDICE
HAND DELIVERED
John K. Sheppard
c/o Cott Corporation
207 Queen's Quay West, Suite 340
Toronto, ON M5J 1A7
Dear Mr. Sheppard:
RE: COTT CORPORATION ("COTT") -- TERMINATION OF EMPLOYMENT
We are writing to notify you that your employment with Cott is hereby terminated
without cause, effective May 13, 2006.
Cott appreciates your contribution to the corporation over the course of the
past four years and, with a view to resolving all matters on an amicable basis,
has prepared the following enhanced severance arrangements, which are more
generous than those to which you would have been entitled pursuant to your
March 11, 2004 Employment Agreement in the event of a without-cause termination.
The proposed severance arrangements are as follows:
1. DATE OF TERMINATION
The effective date of termination will be May 13, 2006 (the "Termination Date").
2. ACCRUED SALARY AND VACATION PAY
You will be paid your salary and accrued vacation pay to the Termination Date.
These payments will be less applicable statutory deductions and paid in a
lump-sum payment during the next pay period immediately following the
Termination Date.
3. SEVERANCE
(a) Severance -- We have agreed to pay you a lump-sum payment equal to two times
your base salary of $550,000.00 (which equals $1,100,000.00) plus two times your
target Bonus of $600,000.00 (which equals $1,200,000.00) for a total lump-sum
payment of $2,300,000.00, less applicable statutory deductions, to be paid
within 30 days of your termination of employment.
(b) Pro-rated Bonus for 2006 -- You will be entitled to received an additional
lump-sum payment representing a pro-rated bonus for 2006 in the amount of
$275,000.00, less applicable statutory deductions.
(c) Benefits -- Provided the insurer(s) and the applicable insurance policies
permit, Cott will continue your participation in Cott's group insurance benefit
plans as provided immediately prior to the Termination Date, for a period of
twenty-four (24) months from the Termination Date, or with respect to health
insurance benefits only until you attain age 55, provided, however, that such
benefits shall terminate on the date you obtain alternate employment that
provides comparable benefits, save and except the disability benefits which will
be continued for a period of two (2) weeks as required by the Employment
Standards Act, 2000. Cott will also reimburse you for the cost of replacing
existing short-term and long-term disability benefits with comparable benefits
until the earlier of the end of such twenty-four (24) month period or the date
you obtain alternate employment providing comparable benefits. Reimbursement
shall be made upon submission of proof of payment of the premium. Additionally,
following attainment of age 55, you and your spouse, and your daughter until her
21st birthday, shall be entitled to Health Insurance Benefits as defined and as
provided in Section 3.3(e) of your Employment Agreement.
4. EXPENSES
To the extent that you have incurred any proper travel, entertainment or other
business expenses, you will be reimbursed in accordance with Cott's policy. All
expense reports must be submitted by May 31, 2006.
5. STOCK OPTIONS/SHARE PURCHASE PLAN
All of your rights with respect to vested stock options that you hold personally
will continue after the termination of your employment, subject of course to the
provisions of the Cott's Restated 1986 Common Share Option Plan as amended (the
"Option Plan"), for 60 days following the Termination Date, and thereafter such
options shall be null and void.
All other rights under Cott's share purchase plans and other long-term incentive
plans, including, without limitation, all rights to unvested shares under the
Cott Corporation Executive Incentive Share Purchase Plan, shall terminate on the
Termination Date in accordance with those plans.
6. NO OTHER PAYMENTS
The payments, benefits and other entitlements set out in this letter constitute
your complete entitlement and Cott's complete obligations whatsoever, including
with respect to the cessation of your employment, whether at common law, statute
or contract. For greater certainty, we confirm that you are not entitled to any
further payment (including any bonus payments), benefits, perquisites,
allowances or entitlements earned or owing to you from Cott pursuant to any
employment or any other agreement, whether written or oral, whatsoever, all
having ceased on the Termination Date without further obligation from Cott. All
amounts paid or benefits provided to you pursuant to this letter shall be deemed
to include all amounts owing pursuant to the Employment Standards Act, 2000, and
such payments and benefits represent a greater right or benefit than that
required under the Employment Standards Act, 2000.
7. EMPLOYMENT AGREEMENT
You agree to execute the attached amendment to the Employment Agreement which
amends the Employment Agreement retroactive to January 1, 2005, which is
intended as good faith compliance
with section 409A of the U.S. Internal Revenue Code of 1986, as amended ("Code")
and the guidance issued to date thereunder
8. RESIGNATION & RELEASE
You will resign as an officer and director of Cott (and any affiliates,
subsidiaries and associated companies) with effect as of the Termination Date.
In this respect, you agree to execute and deliver the Resignation Notice
attached hereto as Schedule "1" and such further documentation as may be
required by Cott, in its sole discretion, in order to effect this resignation.
You agree to sign the Release in the form attached as Schedule "2" to this
letter.
9. YOUR CONTINUING OBLIGATIONS
(a) You will continue to abide by all of the applicable provisions of
your Employment Agreement, as amended which are intended to continue
following the cessation of your employment, including but not
limited to the Confidentiality, Non-Solicitation, and
Non-Competition covenants provided in Article 4, which in the case
of the Confidentiality covenant continues forever, and in the case
of the Non-Solicitation and Non-Competition covenants, will apply
for a period of twenty-four (24) months from the Termination Date.
You agree that in the event of a breach of any these covenants, Cott
will be entitled to, in addition to any of the remedies set out in
the Employment Agreement for the breach of these covenants,
discontinue any and all payments, benefits, and other entitlements
as set out in this letter, and you will forfeit any and all claims,
actions, demands, or payments whatsoever.
(b) You are required to return forthwith to Cott all of the property of
Cott in your possession or in the possession of your family or
agents including, without limitation, other wireless devices and
accessories, computer and office equipment, keys, passes, credit
cards, customer lists, sales materials, manuals, computer
information, software and codes, files and all documentation (and
all copies thereof) dealing with the finances, operations and
activities of Cott, its clients, employees or suppliers. You shall
be entitled to retain your blackberry and cell phone provided all
ongoing usage charges and invoices relating thereto from the date
hereof shall be from your own account.
(c) You will maintain the severance arrangements as set out in this
letter in the strictest confidence and will not disclose them except
to your immediate family, or to the extent that such disclosure may
be required by law, or to permit you to obtain tax planning, legal
or similar advice. Cott will also keep the terms of the settlement
confidential, except to the extent that such disclosure may be
required by law.
(d) You will execute and return the Release as attached to this letter
at Schedule "2", the terms of which are incorporated herein and the
delivery of which is a condition of any payment to you by Cott.
(e) You will agree to cooperate reasonably with Cott, and its legal
advisors, in connection with: (i) any business matters in which you
were involved; or (ii) any existing or potential claims,
investigations, administrative proceedings, lawsuits and other legal
and business matters which arose during your employment or involving
Cott; (iii) effecting compliance with respect to any regulatory
requirements; and (iv) completing any further documents required to
give effect to the terms set out in this letter with respect to
which you have knowledge of the underlying facts (including, but not
limited to, any further amendment to the Employment Agreement for
the purposes of good faith compliance with, or exemption from,
section 409A of the Code). In addition, you will not voluntarily
aid, assist or cooperate with any claimants or plaintiffs or their
attorneys or agents in any claims or lawsuits commenced in the
future against Cott, provided, however, that nothing in this letter
will be construed to prevent you from testifying at an
administrative hearing, a deposition/discovery, or in court in
response to a lawful subpoena in any litigation or proceedings
involving Cott.
10. TAXES
All payments referred to in this letter will be less applicable withholdings and
deductions, and you shall be responsible for all tax liability resulting from
your receipt of the payment and benefits referred to in this letter, except to
the extent that Cott has withheld funds for remittance to statutory authorities.
11. GENERAL
(a) Entire Agreement: The agreement confirmed by this letter constitutes
the entire agreement between you and Cott with reference to any of
the matters herein provided or with reference to your employment or
office with Cott, or the cessation thereof. All promises,
representations, collateral agreements, offers and understandings
not expressly incorporated in this letter agreement are hereby
superseded and have no further effect.
(b) Severability: The provisions of this letter agreement shall be
deemed severable, and the invalidity or unenforceability of any
provision set out herein shall not affect the validity or
enforceability of the other provisions hereof, all of which shall
continue in accordance with their terms.
(c) Period of Review: You have twenty-one (21) days from the date set
forth above to consider this letter agreement, including
attachments. No change to this letter agreement, whether material or
immaterial, will initiate a new twenty-one (21) day period. If you
so desire, you may voluntarily and knowingly sign, but are not
required to sign, this letter agreement before the end of the
twenty-one (21) day period.
(d) Right to Revoke: You may revoke your acceptance of this letter
agreement at any time before the end of the seventh day after his
execution of the letter. In order for your revocation to be
effective, you must provide written notice of your intent to revoke
to Colin Walker at the following address prior to the end of the
seventh day after execution:
Cott Corporation
207 Queen's Quay West, Suite 340
Toronto, ON M5J 1A7
You understand that, in the event you revoke this letter agreement,
it shall be of no effect, and you shall forfeit all of the
consideration which is being provided to you in exchange for their
entering into this letter agreement, including but not limited to
Cott's promise to make the payments described herein.
(e) Full Understanding: By signing this letter, you confirm that: (i)
you have had an adequate opportunity to read and consider the terms
set out herein, including the Release attached, and that you fully
understand them and their consequences; (ii) you have been advised,
through this paragraph, to consult with legal counsel and have
obtained such legal or other advice as you consider advisable with
respect to this letter agreement, including attachments; and (iii)
you are signing this letter voluntarily, without coercion, and
without reliance on any representation, express or implied, by Cott,
or by any director, trustee, officer, shareholder, employee or other
representative of Cott.
(f) Arbitration: In the event any dispute arises between you and Cott
with respect to the interpretation, effect or construction of any
provisions of this Agreement, either Cott or you may refer the
matter to final and binding arbitration without right of appeal,
pursuant to the Arbitration Act, Ontario, for the disputed matters
to be determined by an arbitrator that is to be mutually agreed
upon, upon written notice to the other, whereupon, subject to the
availability of such an arbitrator, the arbitration hearing will
commence within 30 days of the said notice, without formality, with
the costs of the arbitration to be shared equally between the
parties, subject to such order for costs as the arbitrator may
determine in his or her sole discretion.
(g) Non-disparagement: You agree that you shall not disparage Cott, nor
any of its directors, officers, employees, or other representatives
in any manner, and shall in all respects avoid any negative
criticism of Cott.
(h) Currency: All dollar amounts set forth or referred to in this letter
refer to U.S. currency.
(i) Governing Law: The agreement confirmed by this letter shall be
governed by the laws of the Province of Ontario, Canada.
* * *
If this offer is acceptable to you once you have had an opportunity to review
it, please sign the acknowledgement below to confirm your acceptance of same and
return to Colin Walker.
If you have any questions regarding the terms set out in this letter, please
feel free to contact Colin Walker.
Yours very truly,
COTT CORPORATION
PER:
/s/ Frank E. Weise
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Enclosures:
1. Schedule "1" -- Resignation Notice
2. Schedule "2" -- Release
Acknowledgement and Acceptance
I acknowledge that I have had at least twenty-one (21) days to review this
letter and the attached Release and Resignation Notice and having been advised
to and had the opportunity to obtain independent legal advice and that the only
consideration for the Release is as referred to in this letter. I confirm that
no other promises or representations of any kind have been made to me to cause
me to sign this acknowledgement and acceptance.
/s/ John K. Sheppard
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John K. Sheppard
SCHEDULE "1"
RESIGNATION NOTICE
TO: COTT CORPORATION
AND TO: ALL AFFILIATES, SUBSIDIARIES AND ASSOCIATED CORPORATIONS THEREOF
AND TO: ALL DIRECTORS THEREOF
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I, JOHN K. SHEPPARD confirm my resignation as a director and from all offices
held by me of COTT CORPORATION, including all affiliates, subsidiaries, and
associated corporations, with effect as of May 13, 2006.
/S/ JOHN K. SHEPPARD
-------------------------
JOHN K. SHEPPARD
SCHEDULE "2"
RELEASE
FROM: JOHN K. SHEPPARD ("SHEPPARD")
TO: Cott Corporation ("Cott"), its respective affiliates, associates,
subsidiaries, parents and related organizations and all of their
respective past and present shareholders, partners, directors,
officers, employees, contractors, consultants, agents, representatives,
trustees, administrators, attorneys and insurers (all collectively
referred to as "Releasees")
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1. In consideration of the terms as set out in the letter from Cott to
Sheppard dated May , 2006 (the "Agreement"), the receipt and
sufficiency of which consideration are hereby acknowledged, and
except for the obligations owed to Sheppard and referred to in the
Agreement, Sheppard hereby remises, releases and forever discharges
Cott and the other Releasees of and from all manner of actions,
causes of action, suits, debts, dues, accounts, bonds, contracts,
liens, claims and demands whatsoever which against the Releasees he
now has, ever had or hereafter can, shall or may have for or by
reason of any cause, matter or thing whatsoever existing to the
present time, and particularly and without limiting the generality
of the foregoing, of and from all claims and demands of every nature
and kind in any way related to or arising from Sheppard's employment
or other engagement with Cott or the termination of such employment,
engagement or other agreements, including all damages, salary,
remuneration, commission, vacation pay, overtime pay, termination
pay, severance pay, notice of termination, profit-sharing, stock
options or other equity, bonuses, proceeds of any insurance or
disability plans, pension or retirement benefits, or any other
fringe benefit or perquisite of any kind whatsoever and including
any claims Sheppard may have under any United States, Canada, state,
province, or local statute or ordinance, including without
limitation, the U.S. Age Discrimination in Employment Act, the U.S.
Civil Rights Acts of 1964 and 1991, the U.S. Family and Medical
Leave Act, the U.S. Employee Retirement Income Security Act
("ERISA"); the Florida Civil Rights Act of 1992; any contract or
agreement (except the Agreement); and any common law principle. The
payments, benefits, and other entitlements referred to in the
Agreement are deemed to satisfy all requirements or money owing
under all applicable laws including without limitation, any and all
wages, vacation pay, termination and severance pay under the
Employment Standards Act, 2000.
2. Sheppard confirms that the Agreement has been entered into by the
parties for the purposes of fully and finally settling and
compromising all possible claims that Sheppard might have against
the Releasees and, therefore, in this respect, Sheppard covenants
and agrees not to file any complaint or initiate any proceeding
under the Employment Standards Act, 2000, under the Ontario Human
Rights Code, under the Workplace Safety and Insurance Act, under the
Occupational Health & Safety Act, under the Labour Relations Act,
under the Pay Equity Act, or pursuant to any other applicable law or
legislation, including the statutes and laws set forth and/or
referenced in the preceding paragraph, in any jurisdiction governing
or related to Sheppard 's employment or other engagement with Cott.
In the event that Sheppard hereafter makes any claim or demand or
commences or
threatens to commence any action, claim or proceeding or to make any
complaint against Cott in this respect, this Release may be raised
as an estoppel and complete bar to any such action, claim or
proceeding. Sheppard confirms that he has no right to
re-instatement, re-call or re-employment with any of the Releasees,
and Sheppard waives and releases all rights he had or may have had
in this regard. This paragraph shall not release any rights that may
not legally be waived.
3. Sheppard further agrees not to make or assist in the commencement of
any claims (expressly including any cross-claim, counterclaim, third
party action or application) against any other person or corporation
who might claim contribution or indemnity against the persons or
corporations discharged by this Release, including under the
provisions of the Negligence Act or any other statute.
4. With the exception of disclosure to Sheppard's immediate family or
to his legal or professional advisors (but provided any such person
agrees not to disclose such information to any other person),
Sheppard agrees that the terms and contents of this Release, the
consideration included in the Agreement, the contents of the
negotiations and discussions resulting in this Release, and any
dispute resolved by this Release, shall all remain privileged and
confidential and shall not be disclosed except to the extent
required by law or as otherwise agreed to in writing by Cott.
5. This Release shall be binding upon Sheppard and his heirs,
executors, administrators, successors and assigns and shall enure to
the benefit of Cott and to the benefit of all of the Cott's heirs,
executors, administrators, successors and assigns.
6. Sheppard acknowledges that he has had an opportunity to review this
Release for no less than twenty-one (21) days and the right to
revoke his acceptance of the Release for a period of seven (7) days
after his execution of the Release. Sheppard also acknowledges that
he has been advised to and has in fact obtained independent legal
advice and that the only consideration for this Release is as
referred to above. Sheppard further confirms that no other promises
or representations of any kind have been made to Sheppard to cause
him to sign this Release.
7. Sheppard acknowledges that this Release, the settlement of any
dispute between Sheppard and Cott, or the payment of any monies to
Sheppard, shall not constitute an admission of liability on the part
of Cott, which liability is denied.
8. Sheppard agrees that he alone shall be responsible for all tax
liability resulting from his receipt of the payments referred to in
the Agreement, except to the extent that Cott has withheld funds for
remittance to statutory authorities. Sheppard agrees to indemnify
and save Cott harmless from any and all amounts payable or incurred
by Cott (save and except any penalties and interest that are
attributable to Cott's not having deducted sufficient funds by its
own direction) if it is subsequently determined that any greater
amount should have been withheld in respect of income tax or any
other statutory withholding.
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SIGNED, SEALED AND DELIVERED THIS 16 DAY OF MAY, 2006.
Signature illegible /s/ John K. Sheppard
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Witness JOHN K. SHEPPARD
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AMENDMENT TO EMPLOYMENT AGREEMENT
BETWEEN COTT CORPORATION AND
JOHN K. SHEPPARD
WHEREAS, Cott Corporation ("Corporation") and John K. Sheppard
("Executive") entered into an Employment Agreement dated March 11, 2004; and
WHEREAS, the Corporation and Executive desire to amend such Employment
Agreement effective as of January 1, 2005, in good faith compliance with section
409A of the United States Internal Revenue Code of 1986, as amended, and the
guidance issued thereunder to date;
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:
1. Section 3.3(e) is hereby amended, effective January 1, 2005, by
striking the phrase "other than for Good Reason" from the first sentence thereof
and by deleting the penultimate sentence thereof.
2. Section 5.2(a) prior to subsection (i) thereof is hereby amended,
effective January 1, 2005, to read as follows:
(a) If the Executive's employment is terminated by the
Corporation, including delivery by the Corporation of a Notice of
Termination, for any reason other than for Just Cause, Disability, or
death of the Executive, then the Corporation shall pay forthwith to the
Executive within 30 days of such termination, a lump sum amount equal
to:
* * * * *
3. Section 5.2(b) is hereby amended, effective January 1, 2005, to read
as follows:
(b) In the event of the termination of the Executive's
employment under this Section 5.2, 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 24 months following the date of termination, provided that the
benefits contemplated by this subparagraph shall terminate on the date
the Executive obtains alternate employment providing comparable
benefits.
4. Section 5.3 is deleted, effective January 1, 2005.
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5. Section 5.4(a) is hereby amended to read as follows, effective
January 1, 2005:
(a) If, following a Change in Control, the Executive's
employment is terminated by the Corporation without Just Cause, the
Executive shall be entitled to the payments and benefits provided in
this Section 5.4.
6. Section 5.4(c)(i) is hereby amended, effective January 1, 2005, by
replacing "or as he may direct" with "within 30 days of such termination of
employment."
7. Section 5.4(c)(ii) is hereby amended, effective January 1, 2005, to
read as follows:
(ii) The Corporation shall provide benefits as provided under
Section 5.2(b) substituting 36 months for 24 months thereunder.
8. The first sentence of Section 5.4(c)(iv) is hereby amended,
effective January 1, 2005, to read as follows:
In the event that any payment or other amount (a "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 of
1986, as amended (a "Parachute Payment"), the Corporation shall pay to
the Executive, no later than March 15 of the calendar year following
the calendar year in which such termination of employment occurred, an
additional amount which, after the imposition of all income and excise
taxes thereon, is equal to the aggregate of all excise taxes imposed by
Section 4999 of the Internal Revenue Code ("Excise Taxes") on all
Payments such that the Executive is in the same position as if no
Excise Taxes had been imposed with respect to any Payment.
9. Section 5.6(b) is hereby deleted, effective January 1, 2005.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
COTT CORPORATION
Per: /s/ Frank E. Weise
----------------------
Frank E. Weise
I have authority to bind the Corporation
SIGNED, SEALED AND DELIVERED )
in the presence of )
)
)
Signature illegible /s/ John K. Sheppard l/s
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JOHN K. SHEPPARD
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