Exhibit 10.5 January 1st, 1998
EMPLOYMENT AGREEMENT
B E T W E E N:
ROSEDALE DECORATIVE PRODUCTS LTD.
a company organized pursuant to the laws of
the Province of Ontario with head office at
214 Courtland Avenue
Concord, Ontario
L4K 4L3
(hereinafter referred to as "Rosedale" or the "Company")
OF THE FIRST PART;
- and -
SYDNEY ACKERMAN an individual residing
at 359 Lytton Blvd.
Toronto, Ontario
M5N 1R9
(hereinafter referred to as the "Employee")
OF THE SECOND PART;
- and -
ROSEDALE WALLCOVERINGS & FABRICS INC. and
ONTARIO PAINT & WALLPAPER LIMITED
OF THE THIRD PART
WHEREAS:
1. Rosedale and the Employee are desirous of entering into an employment
relationship for their mutual benefit;
2. Rosedale and the Employee wish to reduce to writing certain
obligations and rights in respect of said employment relationship.
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IN CONSIDERATION of the above and in further consideration of the mutual
promises and covenants set forth and the sum of $1,000.00 paid by Rosedale to
the Employee, (the receipt and sufficiency of which is hereby acknowledged) this
agreement (the "Agreement") witnesses that the parties agree as follows:
1. Job Title
Rosedale hereby agrees to employ the Employee and to continue to employ the
Employee as President of Rosedale, subject to the terms in this Agreement, who
shall perform such duties and exercise such responsibilities as are assigned
from time to time by the Board of Directors. In carrying out these duties and
responsibilities, the Employee shall comply with all policies, procedures, rules
and regulations, both written and oral, as are announced by Rosedale from time
to time and carry out said duties and responsibilities in a diligent, faithful
and honest manner.
2. Compensation
As compensation for all services provided for herein, Rosedale shall pay or
cause to be paid to the Employee, and the Employee shall accept:
a. A salary at an annual rate of $160,000 to be paid in regular
instalments in accordance with Rosedale's usual paying practices,
but not less frequently than monthly; and
b. A discretionary performance bonus, payable annually within six
(6) months of the end of each fiscal year end of Rosedale of
$10,000. The Employee shall qualify for such bonus beginning
with the fiscal year of Rosedale ending December 31, 1998. The
Bonus shall be based on achieving sales profitability and good
management (and other subjective criteria) as predetermined by
the Board of Directors or the Compensation Committee.
In the event that the Employee's employment is terminated for any reason,
the Employee's bonus entitlement shall be prorated and calculated as of the date
of termination whether by retirement, resignation, death or termination by
Rosedale or the Employee.
Salary and benefit payments hereunder shall be subject to such deductions
as Rosedale is from time to time required to make pursuant to law, government
regulations or by consent of the Employee.
The above annual salary shall be subject to an annual review with the Board
of Directors or the Compensation Committee but in no event shall the annual
salary be less than that paid in the previous fiscal year.
3. Participation in Stock Option Plan
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The Employee shall be entitled to be granted stock options, under the
Company Stock Option Plan, of up to 5% of the outstanding shares issued (as set
out in the said Plan) from time to time not to exceed 150,000 common shares.
4. Benefits
The Employee shall participate in all group benefit plans which are now or
may be established by Rosedale for its employees during the term of this
Agreement including without limitation:
a. Disability Insurance;
b. Life Insurance;
c. Medical Plan;
d. Hospitalization Plan;
e. Dental Plan; and
f. If, as and when Rosedale introduces a company pension plan, the
Employee shall be entitled to participate therein to the same extent
as all other senior employees of Rosedale.
5. Perquisites and Expenses
1) The Employees shall be reimbursed by Rosedale for all reasonable business
and promotional expenses incurred in connection with the employment of the
Employee provided for hereunder. Rosedale's obligation to so reimburse the
Employee for expenses shall be subject to the presentation to Rosedale by
the Employee of an itemized monthly account of such expenditures together
with supporting vouchers in accordance with Rosedale's policies as in
effect from time to time.
2) The Employee shall be reimbursed for air travel expense (Business Class) in
connection with Rosedale's business.
3) The Employee shall be entitled to the use of a cellular phone to be
acquired by Rosedale at no cost to the Employee.
4) The Employee shall receive $20,000.00 per year additional compensation
including car allowance, insurance and retirement savings matched
contributions by the Company and such other perquisites as the Board of
Directors or Compensation Committee may establish from time to time.
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6. Vacation
The Employee shall be entitled to four (4) weeks' vacation with pay during
each full year of employment and to a pro-rated portion should employment
terminate for any reason or cause before the completion of the year.
7. Term
The term of this Agreement shall extend for a period of five (5) years
terminating, subject to the provisions of Sections 8 and 9 hereof, on the fifth
anniversary of the date of this Agreement (the "Termination Date"). The Company
shall have the option of renewing this Agreement for additional five (5) year
periods (under the same terms and conditions as herein provided excepting the
provisions contained in Section 3 hereof), by advising the Employee in writing
of its intention to renew not later than one hundred and eighty (180) days prior
to the Termination Date and no later than 180 days prior to the end of the last
year of any five year renewal period. In the event that the Company does not
renew this Agreement, the Company will pay the Employee the equivalent of lump
sum 3 years' salary plus the equivalent in benefits.
8. Termination
This Agreement may be terminated in the following manner in the specified
circumstances:
a. By the Employee resigning on giving twelve weeks' notice in writing to
Rosedale which may waive the notice, in whole or in part. On
resignation, the Employee shall receive a lump sum resignation
allowance of three years' salary plus the equivalent in benefits.
b. On death, the Employee's Estate shall receive a lump sum death benefit
of three years' salary.
c. At any time by Rosedale with Just Cause (as hereafter defined),
without any notice and without any payment in lieu of notice and
without any further obligations or liability whatsoever except to the
extent that the Employee is entitled to any notice or payment in lieu
thereof pursuant to the Employment Standards Act of Ontario and at no
time will the Employee will be entitled to any notice of termination,
or termination or severance payments in excess of the notice and/or
payments that are prescribed by the Employment Standards Act of
Ontario as it is amended from time to time.
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d. Subject to Section 9 hereof, by Rosedale, in the event there is no
Just Cause by providing the Employee with a lump sum payment in lieu
of notice of the equivalent of five (5) year's salary plus the
equivalent in benefits which shall include such notice or termination
pay in lieu of notice to which the Employee may be entitled under the
Employment Standards Act. It is agreed that Rosedale has no
obligation to provide any common law notice or severance payments in
addition to the termination payments set out herein. In the event
that the Employee has not completed any full year of employment
payment in lieu of notice shall be apportioned accordingly.
e. "Just Cause" is defined to mean conduct of the Employee which
includes:
1) a material breach of the provisions of the Agreement.
9. Change of Control
1) Notwithstanding Section 8 hereof, in the event that a transaction or series
of transactions resulting in the de facto change in control of Rosedale
Decorative Products Ltd. (the "Parent") which occurs during the term of the
Agreement including, inter alia:
a. The acquisition by any person beneficially, either directly or
indirectly, of more than 50% of the voting shares of the Parent;
b. The amalgamation, consolidation or merger with another body corporate
resulting in at least 50% of the voting shares of the surviving body
corporate being controlled by a new acquirer; or
c. The sale, directly or otherwise, of substantially all of the assets of
the Parent to a third party in a non-distress situation;
then Rosedale shall be obliged to pay to the Employee within 30 days of the
closing of the above noted transaction, a lump sum payment equal to the sum
of (the "Pay-out"):
(i) one and one-half times the Employee's annual salary paid or payable to
the Employee in respect of the then most recently completed fiscal
year of Rosedale.
such obligations being expressly subject to the following conditions:
(ii) that the Employee is not an equity partner of the group or entity
acquiring control.
10. Retirement
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The employee shall have the option to retire upon reaching 60 years of age
to be exercised by a written notice to Rosedale at least 6 months before the
Employee's sixtieth birthday. On retirement the Employee shall receive a lump
sum retiring allowance of three years' salary plus the equivalent in benefits.
11. Confidentiality
The Employee acknowledges that while employed by Rosedale he will acquire
information about certain matters which are confidential in nature and which
are, and shall remain, the property of Rosedale. Such information includes, but
is not limited to, customer lists, customer information, training manuals,
business practices, marketing plans, pricing policies, technical proprietary and
non proprietary information, financial information, personnel matters and the
like. The Employee agrees to treat such information as confidential and agrees
not to directly or indirectly disclose it to any third party either during his
employment except to the extent necessary to perform his duties and without
exception following the termination of this Agreement unless it is otherwise in
the public domain.
12. Non-Competition and Non-Solicitation
Upon the termination of the Employee's employment without just cause with
Rosedale and for a period of three (3) years thereafter:
a. The Employee shall not engage in a similar business to that of
Rosedale within North America, either directly or indirectly as a
principal, agent, shareholder, partner or employee; and
b. The Employee further agrees that he shall not assist any person, firm,
corporation or other entity, either directly or indirectly, in
soliciting the customers of Rosedale following his termination from
Rosedale; and
c. The Employee also agrees that he will not, directly or indirectly,
hire or induce any employee of Rosedale to resign his or her
employment with Rosedale or to assist any other person in so doing;
If the Employee is terminated with Just Cause, Article 12 shall not be
applicable to the Employee.
13. Duties and Evaluation
1) The Employee's duties to Rosedale hereunder shall include, without
limitation, the management, direction and supervision of the operations of
Rosedale ensuring the effective carriage of its business. The Employee agrees
that he will at all times perform these duties faithfully, industriously and to
the best of his skill, ability, experience and talents. The Employee will
perform his duties in a manner which is in the best interests of Rosedale and in
accordance
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with Rosedale's current and long term objectives and procedures, as such may be
amended from time to time by the Board of Directors of Rosedale.
2) The Board of Directors of Rosedale and the Employee shall establish a
performance appraisal process which will establish the criteria against which
the Employee will be evaluated by the Board. Evaluations of the Employee shall
be conducted annually and the results of such evaluation shall be communicated
in writing or otherwise to the Employee.
14. Severability
In the event that any provision of the Agreement 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 of the Agreement.
15. Governing Law
This Agreement shall be governed by, and construed in accordance with, the
laws of the Province of Ontario.
16. Whole Agreement
The terms and conditions set out above represent the entire Agreement
between the parties. Any modification to this Agreement must be in writing and
signed by the parties hereto or it shall be void and of no effect.
17. Independent Legal Advice
The Employee acknowledges that he has obtained or has had an opportunity to
obtain independent legal advice in connection with this Agreement and further
acknowledges that he has read, understands and agrees to be bound by all of the
terms and conditions herein contained.
18. Notice
Any notice or other communication required or permitted to be given under
this Agreement shall be in writing and may be delivered personally or by prepaid
registered mail, addressed to the appropriate party at the addresses above
noted.
19. Third Parties
The undersigned third parties jointly and severally agree to fund where and
when necessary all of the financial obligations of Rosedale hereunder to the
Employee.
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SIGNED, SEALED AND DELIVERED
in the presence of:
ROSEDALE DECORATIVE PRODUCTS LTD.
Per:
--------------------------------------------------
Authorized Signatory
Per:
- --------------------------- --------------------------------------------------
Witness Sidney Ackerman
ONTARIO PAINT & WALLPAPER ROSEDALE WALLCOVERINGS & FABRICS INC.
LIMITED
Per: Per:
- --------------------------- --------------------------------------------------
President President
Per: Per:
- --------------------------- --------------------------------------------------
Secretary Secretary