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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 7, 2021

 

 

RESOLUTE FOREST PRODUCTS INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-33776   98-0526415
(State or other jurisdiction
of incorporation)
  (Commission
File Number)
  (IRS Employer
Identification No.)

Resolute Forest Products Inc.

111 Robert-Bourassa Blvd., Suite 5000

Montreal, Quebec, Canada H3C 2M1

(Address, including zip code, of principal executive offices)

Registrant’s telephone number, including area code: (514) 875-2160

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

(Title of class)

 

(Trading
Symbol)

 

(Name of exchange
on which registered)

Common Stock, par value $0.001 per share   RFP   New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 


ITEM 8.01

OTHER ITEMS

The employment agreement and the change in control agreement (the “agreements”) between Resolute Forest Products Inc. (the “company”) and Remi G. Lalonde, president and chief executive officer of the company, have been entered into on April 7, 2021. The agreements reflect, in all material aspects, the terms outlined in the Current Report on Form 8-K filed on November 10, 2020, announcing the appointment of Remi G. Lalonde as president and chief executive officer of the company under Item 5.02.

A copy of the agreements is filed as exhibit 99.1 and is incorporated herein by reference.

 

ITEM 9.01

FINANCIAL STATEMENTS AND EXHIBITS

Exhibits

 

Exhibit
No.

  

Description

99.1    Executive Employment agreement between Remi G. Lalonde and Resolute Forest Products Inc., dated April 7, 2021.
99.2    Change in Control Agreement between Remi G. Lalonde and Resolute Forest Products Inc., dated April 7, 2021.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    RESOLUTE FOREST PRODUCTS INC.  
Date: April 9, 2021     By:  

    /s/ Jacques P. Vachon

 
          Name:   Jacques P. Vachon  
          Title:   Senior Vice President and Chief Legal Officer  

Exhibit 99.1

Execution Copy

EXECUTIVE EMPLOYMENT AGREEMENT

THIS AGREEMENT made as of the 1st day of March, 2021

B E T W E E N:

RESOLUTE FOREST PRODUCTS INC.,

a corporation existing under the laws of Delaware

(hereinafter referred to as the “Corporation”),

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REMI G. LALONDE, of Beaconsfield, Province of Québec,

(hereinafter referred to as the “Executive”).

WHEREAS the Executive has been in the employ of the Corporation (or its predecessors) since July 2009 and was until recently the Chief Financial Officer of the Corporation;

WHEREAS the Corporation has offered employment to the Executive in the capacity of President and Chief Executive Officer and the Executive has accepted such offer of employment; and

WHEREAS the Corporation and the Executive have agreed that the terms and conditions of such employment relationship shall be as set out herein, including the documents annexed hereto or referred to herein by reference;

NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the respective covenants and agreements of the parties herein contained and for other good and valuable consideration (the receipt and sufficiency of which are acknowledged by each party), the parties covenant and agree as follows:

ARTICLE 1

INTERPRETATION

 

1.1

Defined Terms

For the purposes of this Agreement, unless the context otherwise requires, the following terms shall have the respective meanings set out below and grammatical variations of such terms shall have corresponding meanings:

Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on the date hereof;

Annual Base Salary” has the meaning set out in Section 4.1;


Board” means the board of directors of the Corporation;

Business Day” means any day, other than a Saturday, Sunday or statutory holiday in the Province of Québec on which commercial banks in Montréal are open for business;

Cause” has the meaning set out in Section 5.2;

Change in Control” has the meaning ascribed thereto in the Change in Control Agreement being executed between the Executive and the Corporation in conjunction with this Agreement and of the same date;

Collateral Agreements” has the meaning set out in Section 1.5;

Common Shares” means the outstanding common shares in the capital of the Corporation at any time;

Confidential Information” has the meaning set out in Section 6.1;

Date of Termination” means the effective date of any termination of the Executive’s employment with the Corporation, such date being determined in accordance with the notice required pursuant to applicable law;

Eligible Pay” means Annual Base Salary as in effect at the Date of Termination and the lower of (i) the average of the last two (2) Incentive Awards paid to the Executive and (ii) 125% of the Executive’s target incentive (expressed in dollars) for the year in which the Date of Termination occurs;

Good Reason” has the meaning ascribed thereto in the Change in Control Agreement;

Improvements” has the meaning set out in Section 6.2(a);

Incentive Award” means the amount(s), if any, to which the Executive is entitled for the relevant period in question under a regular annual cash incentive plan or program of the Corporation established from time to time, including a STIP (as defined in Section 4.2), as same may be amended or replaced from time to time, it being understood that other cash recognition, non-recurring or multi-year incentive awards shall not be considered as an Incentive Award for the purpose hereof;

Non-Disclosure Period” has the meaning set out in Section 6.1;

Permanent Disability” has the meaning set out in Section 5.3;

Person” includes, without limitation, an individual, corporation, partnership, joint venture, association, trust, firm, unincorporated organization or other legal or business entity;

Prohibited Area” means the territorial limits of Canada and the United States;

 

- 2 -


Restricted Business” has the meaning set out in Section 6.3;

Restricted Period” means the period from the date hereof to (i) the Date of termination in the event of termination of this Agreement by the Corporation without Cause or termination of this Agreement by the Executive for Good Reason pursuant to the terms of the Change in Control Agreement or (ii) the end of the twelfth (12th) month following the Date of Termination in all other circumstances;

Subsidiary” has the meaning ascribed thereto in the Canada Business Corporations Act;

Voting Shares” means any securities of the Corporation ordinarily carrying the right to vote at elections of directors.

 

1.2

Rules of Construction

Except as may be otherwise specifically provided in this Agreement and unless the context otherwise requires, in this Agreement:

 

  (a)

the terms “Agreement”, “this Agreement”, “the Agreement”, “hereto”, “hereof”, “herein”, “hereby”, “hereunder” and similar expressions refer to this Agreement in its entirety and not to any particular provision hereof;

 

  (b)

references to an “Article”, “Section”, “Schedule” or “Exhibit” followed by a number or letter refer to the specified Article or Section of or Schedule or Exhibit to this Agreement;

 

  (c)

the division of this Agreement into articles and sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement;

 

  (d)

words importing the singular number only shall include the plural and vice versa and words importing the use of any gender shall include all genders;

 

  (e)

the word “including” is deemed to mean “including without limitation”;

 

  (f)

the terms “party” and “the parties” refer to a party or the parties to this Agreement;

 

  (g)

any reference to a statute, regulation or rule shall be construed to be a reference thereto as the same may from time to time be amended, re-enacted or replaced, and any reference to a statute shall include any regulations or rules made thereunder; and

 

  (h)

all dollar amounts refer to Canadian dollars unless expressly provided to the contrary.

 

- 3 -


1.3

Severability

If any provision of this Agreement, including the breadth or scope of the provisions contained in Article 6 (whether as to the Non-Disclosure Period, the Restricted Period, the Prohibited Area, or otherwise), shall be held by any court of competent jurisdiction to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the validity or enforceability of the remaining provisions, or part thereof, of this Agreement and such remaining provisions, or part thereof, shall remain enforceable and binding.

 

1.4

Prior Agreements

This Agreement cancels and replaces any prior written agreements between the Executive and the Corporation relating to the Executive’s employment except where herein expressly provided to the contrary. For greater certainty, it is expressly understood and agreed that the rights of the Executive under the DC Make-Up Program, as described in the Management Proxy Statement of the Corporation dated April 2, 2020 in respect of the Annual Meeting of Stockholders on May 12, 2020 (the “Management Proxy Statement”) including, without limitation, under the sections entitled “Retirement Plans and DC Make-Up Program” and “Pension Benefits” on pages 28, 29, 43, 44 and 45 of the English language version thereof, the Indemnification Agreement between the Corporation and the Executive dated May 31, 2018 pursuant to which the Executive is entitled to reimbursement of certain relocation expenses and the Indemnification Agreement between the Corporation and the Executive dated November 26, 2018, (collectively the “Indemnification Agreements”) shall all continue to subsist in accordance therewith and shall not be amended, modified or terminated as a consequence of this Agreement in a manner that adversely affects the Executive without his consent, not to be unreasonably withheld (unless otherwise required by law), and the Executive shall benefit from any and all improvements and benefits in his favour which are made thereto at any time, which rights of the Executive shall in no event be less than as set forth above or in annual statements received from time to time by the Executive.

 

1.5

Related Plans, Policies and Agreements

In the event of any conflict or inconsistency between the provisions of this Agreement and any plans, policies and agreements of the Corporation or referred to herein, including without limitation a STIP, a LTIP and any related award agreements to be entered into by the Corporation and the Executive from time to time, (all of which are collectively referred to as “Collateral Agreements”), the provisions of this Agreement shall prevail and have priority. It is further acknowledged that in conjunction with this Agreement, the Executive and the Corporation are executing a Change in Control Agreement, the provisions of which shall govern all matters relating to the substance thereof except to the extent that they are in conflict or inconsistent with the provisions of this Agreement, in which event the provisions of this Agreement shall prevail and have priority.

 

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ARTICLE 2

EMPLOYMENT

 

2.1

Employment

The Corporation hereby agrees to employ the Executive in the capacity of President and Chief Executive Officer and the Executive hereby accepts such employment effective March 1st, 2021, all in accordance with and subject to the terms and conditions hereof.

 

2.2

Location of Executive

The Executive’s office will be located at the current offices of the Corporation at 111 boul. Robert-Bourassa, Suite 5000, in Montréal, Québec, provided that the Corporation may subsequently require that the Executive relocate to such other corporate office of the Corporation in the general area of Montréal as may be determined by the Board from time to time. The Executive will furthermore be required to travel to other locations from time to time, including offices, production facilities, customers and suppliers of the Corporation or of its Affiliates.

ARTICLE 3

DUTIES

 

3.1

Employment Duties

The Executive shall perform such duties and exercise such powers as are normally associated with and incidental and ancillary to the position of President and Chief Executive Officer, and shall perform such additional duties and exercise such additional powers as may from time to time be assigned to him by the Board, acting reasonably. Without limiting the foregoing, during the term of his employment hereunder, the Executive shall, to the best of his ability:

 

  (a)

devote his full time and attention during normal business hours and such other times as may be reasonably required to the business and affairs of the Corporation and its Affiliates and shall not, without the prior written consent of the Board, undertake any other business or occupation or public office that could detract from the proper and timely performance of his duties hereunder;

 

  (b)

perform diligently and faithfully those duties as are consistent with the position and status of President and Chief Executive Officer that may be assigned to the Executive;

 

  (c)

promote the interests and goodwill of the Corporation and its Affiliates and not knowingly do, or willingly permit to be done, anything to the prejudice, loss or injury of the Corporation or any of its Affiliates; and

 

- 5 -


  (d)

at all times keep the Corporation regularly informed (in writing if so requested) of his conduct of the business and affairs of the Corporation and provide such explanations of his conduct as the Board may require.

 

3.2

Board Membership

The Executive agrees to serve as a Director of the Corporation if elected, and further agrees to become a Director and/or Officer of the Corporation’s Subsidiaries or Affiliates as designated by the Corporation. Subject to approval of the Board, not to be unreasonably withheld, the Executive shall be permitted to serve as a director of one (1) public company that does not, directly or indirectly, compete with the Corporation and provided furthermore that no conflict of interest exists or would reasonably be expected to arise as a consequence thereof. In addition, the Executive shall be permitted to serve as a director of one or more private companies and not for profit entities, in each case that do not, directly or indirectly, compete with the Corporation and provided furthermore that no conflict of interest exists or would reasonably be expected to arise as a consequence thereof.

 

3.3

Reporting

The Executive shall report to the Board. The Executive shall report fully on the management and operations of the Corporation and shall advise to the best of his ability and in accordance with reasonable business standards on business matters that may arise from time to time during the term of this Agreement.

ARTICLE 4

COMPENSATION

 

4.1

Annual Base Salary

The annual base salary (“Annual Base Salary”) payable to the Executive for his services hereunder shall be $825,000 to be paid in semi-monthly instalments in arrears in accordance with the Company’s currency policy that assumes parity in Canadian and U.S. dollars, with a portion paid in Canadian dollars and a portion paid in U.S. dollars based on the geographic location of the Company’s pulp, paper and tissue production capacity as of the prior December 31. Based on the currency policy for 2021, 63.5% of the Executive’s base salary will be denominated in Canadian dollars and 36.5% will be denominated in U.S. dollars.

The Annual Base Salary shall be subject to a periodic increase adjustment if as and when determined by the Board from time to time at its discretion.

 

4.2

Short-Term Incentive Plan

In addition to the Annual Base Salary, the Executive shall be eligible to participate in each Short-Term Incentive Plan adopted by the Corporation prior to or following the date hereof from time to time, as amended, (a “STIP”), pursuant to which the Executive will

 

- 6 -


be eligible to receive discretionary Incentive Awards as recommended by the Human Resources and Compensation/Nominating and Governance Committee of the Board and approved by the Board. Under the STIP, the Executive’s target Incentive Award will be one hundred percent (100%) of the Annual Base Salary, with a maximum of one hundred and fifty percent (150%), it being understood that Incentive Awards are based on performance targets established by the Board and that Incentive Awards under each STIP adopted as aforesaid from time to time are discretionary and subject to modifications by the Board, including increases, decreases, cancellation, deferral or other conditions as determined by the Board, at its discretion, even if and after performance levels have been met.

 

4.3

Long-Term Incentive Plan

The Executive will be eligible to participate in each long-term incentive plan adopted by the Corporation prior to or following the date hereof from time to time, as amended, (a “LTIP”), and to receive grants thereunder as determined by the Board from time to time at its discretion, with an initial grant equivalent to two hundred twenty-five percent (225%) of the Executive’s Annual Base Salary, such grant having been awarded in November 2020 based on the Annual Base Salary to be effective as at March 1, 2021. The Executive will not be entitled to any adjustment for the number of shares or units covered by any grant outstanding as at the date hereof.

 

4.4

Retirement

For greater certainty, it is agreed that the Executive shall be entitled to participate in the Corporation’s registered defined contribution retirement plan for Canadian non-unionized employees and the DC Make-Up Program in accordance with their terms.

 

4.5

Fringe Benefits

During the term of the Executive’s employment hereunder, the Executive shall be entitled to participate in all medical, dental, disability and group life plans and other employee benefit programs established by the Corporation from time to time for the benefit of its non-unionized employees in Canada. The benefits will be provided in accordance with and subject to the terms and conditions of the applicable plan, fund or arrangement relating to such benefits in effect from time to time. The Executive acknowledges that the Corporation may amend the benefits from time to time as provided in the applicable plan, fund or arrangement provided such amendments are not materially adverse to the Executive. The Executive shall also be provided with membership dues for two club memberships for business purposes only during the term of employment and, in addition, an annual perquisite allowance of CA$ 50,000 to cover all perquisites including other club memberships, fiscal and financial advice and tax preparation by professionals selected by the Executive at his discretion. The Corporation will also provide at no cost to the Executive parking at the Corporation’s place of business in Montréal as well as a comprehensive annual medical examination at its expense for the Executive and his wife, which medical examination presently has a value of approximately CA$ 6,000, plus an annual medical referral of up to CA$ 1,000 and a medical concierge service of CA$ 1,500, all as described in the Management Proxy Statement.

 

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4.6

Vacation

The Executive shall be entitled to five (5) weeks plus an additional three (3) “floating” or discretionary days of paid vacation in each calendar year in accordance with the policies of the Corporation in effect from time to time applicable to its senior executives, to be taken during such calendar year subject to the need for the timely performance of the Executive’s responsibilities hereunder. In the event that the Executive’s employment is terminated, he shall be entitled to a pro-rated vacation leave with pay for the portion of the year in which such termination occurs that he has been actively employed. It is the responsibility of the Executive to make every reasonable effort, having regard to relevant personal and business considerations, to ensure that his vacation entitlement is taken in each calendar year as there shall be no carry forward of vacation entitlement to a year other than for which it has accrued without the permission of the Board.

 

4.7

Expenses

The Executive shall be reimbursed for all reasonable travel and other out-of-pocket expenses properly incurred by the Executive from time to time in connection with the carrying out of his duties hereunder in accordance with the Corporation’s travel and entertainment policy as amended from time to time. For all such expenses, the Executive shall furnish to the Corporation originals or true copies of all invoices or statements in respect of which the Executive seeks reimbursement. Any Corporation credit card shall be used only for expenses incurred in the course of carrying out the Executive’s duties.

The Executive shall furthermore be entitled to reimbursement of reasonable legal and financial/tax fees and expenses incurred by him in the negotiation and documentation of this Agreement and the Change in Control Agreement (the “Legal Fees”).

 

4.8

Deductions and Withholdings

The Corporation shall be entitled to make such deductions and withholdings from the Executive’s remuneration as may be required by law and as may be required by the Executive’s participation in or receipt of any benefit, stock option or other program contemplated hereby, and the Corporation’s obligations in respect thereof shall thereby be satisfied to the extent of such deductions and withholdings.

 

4.9

Compensation Exhaustive

For greater certainty, the Executive shall not be entitled to any salary, bonus, participation in profits or other remuneration, or payment or compensation in lieu thereof, except as expressly set forth in this Agreement or as otherwise agreed in writing by the parties.

 

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ARTICLE 5

TERMINATION OF EMPLOYMENT

 

5.1

Term of Employment

The employment of the Executive hereunder shall continue for an indefinite period until it is terminated in accordance with the provisions of this Article 5, and in all cases in a manner compliant with applicable law.

 

5.2

Cause

The Corporation may terminate the employment of the Executive at any time for Cause, effective immediately, by giving written notice of termination to the Executive setting out the basis for termination. “Cause” shall mean any of the following:

 

  (a)

any material breach of any provisions of this Agreement by the Executive or the wilful failure of the Executive to carry out his duties hereunder, to comply in all material respects with the rules and policies of the Corporation or to follow any reasonable instruction or directive of the Board that is consistent with the Executive’s duties and responsibilities under this Agreement, provided that the Executive shall have been provided with written notice thereof at least thirty (30) days prior to the Date of Termination and shall have failed to remedy such default or breach during such period of time;

 

  (b)

the Executive acting dishonestly or fraudulently in connection with the business of the Corporation, or the wilful gross misconduct of the Executive in the course of his employment hereunder, in each case resulting in adverse consequences to the Corporation or to any of its Affiliates;

 

  (c)

if the Executive or his spouse or any child under the age of majority makes any personal profit arising out of or in connection with any transaction to which the Corporation or any of its Affiliates is a party or with which the Corporation or any of its Affiliates is associated without making disclosure to and obtaining the prior written consent of the Board, or other material breach of the Executive’s fiduciary duties to the Corporation;

 

  (d)

the conviction of the Executive for, or a guilty plea by the Executive to, any criminal offence punishable by imprisonment that may reasonably be considered to be likely to adversely affect the Corporation or any of its Affiliates or their reputation, or the suitability of the Executive to perform his duties hereunder, including without limitation any offence involving fraud, theft, embezzlement, forgery, wilful misappropriation of funds or property, or other fraudulent or dishonest acts;

 

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  (e)

misconduct on the part of the Executive that is materially detrimental to the reputation or the business or financial position of the Corporation or to any of its Affiliates;

 

  (f)

personal misconduct by the Executive that is of such a serious and substantial nature that it is injurious to the reputation of the Corporation or of any of its Affiliates;

 

  (g)

the habitual inability by the Executive to carry out functions of his employment hereunder due to alcohol or drug related causes, provided that the Executive shall have been provided with written notice thereof at least thirty (30) days prior to the Date of Termination and shall have failed to remedy such alcohol or drug related causes during such period of time; or

 

  (h)

any serious reason pursuant to Article 2094 of the Civil Code of Québec.

Where any basis for termination falls under more than one category above at least one of which requires notice to remedy, the Executive shall benefit from such right to remedy regardless of the grounds stipulated in the notice of termination. Furthermore, for purposes of this provision, no act or omission on the part of the Executive shall be considered “wilful” unless it is done or omitted in bad faith or without reasonable belief that the act or omission was in the best interests of the Corporation. Any act or omission based upon a resolution duly adopted by the Board or advice of counsel for the Corporation shall be conclusively presumed to have been done or omitted in good faith and in the best interests of the Corporation. Cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity to be heard before the Board) determining that the employment of the Executive is to be terminated for Cause.

 

5.3

Termination Where Executive Disabled

If at any time the Executive is unable to perform his duties properly because of ill health, accident or otherwise, for a period or periods totalling at least twenty-six (26) weeks in any period of twelve (12) consecutive calendar months (“Permanent Disability”), the Corporation may terminate the Executive’s employment in accordance with the applicable corporate practices of the Corporation in effect at the time the Executive becomes permanently disabled. The Executive shall submit to such reasonable medical examinations as may be requested by a doctor or other medical practitioner selected jointly by the Executive and the Corporation in order to determine whether the condition or conditions suffered by the Executive constitute Permanent Disability. In no event shall the Executive be considered to have a Permanent Disability for the purposes of this Agreement unless the Executive is deemed disabled and eligible for benefits pursuant to the Company’s long-term disability plan and subject to satisfaction of the statutory duty to accommodate.

 

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5.4

Death

The Executive’s employment shall terminate automatically upon the death of the Executive.

 

5.5

Other Termination by the Corporation

The Corporation may terminate this Agreement (other than as provided in the foregoing provisions of this Article 5) at any time and for any reason if the Board, in its sole discretion, so determines, by giving three (3) months’ prior written notice of termination to the Executive, and as otherwise required by applicable law.

 

5.6

Other Termination by the Executive

The Executive may terminate his employment at any time and for any reason by giving three (3) months’ prior notice in writing to the Corporation. For greater certainty, such notice shall not be required in respect of termination by the Executive for Good Reason pursuant to the terms of the Change in Control Agreement.

 

5.7

Cessation of Duties

The Corporation shall have the right, at any time prior to the end of the applicable notice period pursuant to Sections 5.5 or 5.6, notwithstanding the provisions of the relevant Section, by giving written notice to the Executive, to require that the Executive cease to perform his duties and responsibilities and cease attending the Corporation’s premises immediately upon giving such notice and in such event, the employment of the Executive hereunder shall terminate on the termination date stipulated in the written notice of termination, it being understood that the Executive shall continue to receive the employment benefits during the balance of such three (3) month period. A termination by the Executive pursuant to Section 5.6 shall remain as such even if the Corporation exercises its right hereunder.

 

5.8

Severance Payments

The following severance pay provisions shall apply notwithstanding anything to the contrary in or inconsistent with the provisions of the Corporation’s Severance Policy — Chief Executive Officer and Direct Reports (“Severance Policy”):

 

  (a)

Upon termination of the Executive’s employment (i) for Cause pursuant to Section 5.2, or (ii) voluntarily by the Executive pursuant to Section 5.6 for any reason other than Good Reason, the Executive shall not be entitled to any pay in lieu of notice of termination, severance or similar payment in respect of such termination other than (A) accrued and unpaid Annual Base Salary earned by the Executive up to the Date of Termination and (B) vacation pay earned up to the Date of Termination and (C) in the event of early termination by the Corporation of the notice period in Section 5.6, the portion of the Annual Base Salary that would have otherwise been payable during such notice period, and (D) any amount of or entitlement to Incentive Awards, other awards, pension benefits and other benefits in accordance with any then applicable plans and agreements.

 

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  (b)

Upon termination of the Executive’s employment (i) as a result of the Permanent Disability of the Executive pursuant to Section 5.3, or (ii) by the death of the Executive pursuant to Section 5.4, the Executive (or his estate, as the case may be) shall be entitled to receive (A) accrued and unpaid Annual Base Salary earned by the Executive up to the Date of Termination, (B) vacation pay earned up to the Date of Termination and (C) any amount or entitlement to Incentive Awards, other awards, pension benefits and other benefits in accordance with any then applicable plans and agreements. In addition, any unvested stock option, SAR, full value award, including, without limitation, unrestricted stock, restricted stock or restricted stock units, performance stock or performance stock units, and deferred stock or deferred stock units and the like in the Corporation held by the Executive under a long term incentive plan adopted by the Corporation from time to time shall vest and shall remain exercisable by the Executive subject to and in accordance with the relevant plan and award agreements.

 

  (c)

If the Executive’s employment is terminated pursuant to Section 5.5, other than within two years following a Change in Control (in which case the Change in Control Agreement shall govern and the Executive shall not be entitled to any payment pursuant to this Agreement), the Executive shall be entitled to receive:

 

  (i)

accrued and unpaid Annual Base Salary earned by the Executive up to the Date of Termination;

 

  (ii)

vacation pay earned up to the Date of Termination;

 

  (iii)

severance pay in an amount equal to two (2) years of Eligible Pay; and

 

  (iv)

any amount or entitlement to Incentive Awards, other awards, pension benefits and other benefits in accordance with the relevant plans and

Where the Executive’s employment is terminated in accordance with subparagraph (c) and the Executive is a Good Leaver by agreement of the parties, the Executive’s right to any unvested stock option, SAR, full value award, including, without limitation, unrestricted stock, restricted stock or restricted stock units, performance stock or performance stock units, and deferred stock or deferred stock units and the like in the Corporation held by the Executive under a long term incentive plan adopted by the Corporation from time to time shall, notwithstanding such entitlements are normally subject to pro rata vesting, fully vest and shall remain exercisable by the Executive subject to and in accordance with the relevant plan and award agreements as if the Executive were actively employed for the duration negotiated by the parties following the Date of Termination, provided however it shall be for a period not less than twelve (12) months following such date. The Executive shall also remain eligible for grants which occur during such period as if actively employed which shall likewise fully vest and remain exercisable.

 

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A “Good Leaver” means the Executive’s employment was terminated by the Corporation without Cause, and by agreement of the parties, the Executive continues to discharge assigned duties and responsibilities as determined by the Corporation during a transition and succession planning notice period, and satisfies such other conditions as may be negotiated at the time. The Executive must also comply with the restrictive covenants set out in Article 6 herein for the full term set out therein as well as during the period negotiated in the preceding paragraph , failing which all vesting shall immediately cease and such equity entitlements are forfeited without compensation or damages of any kind.

 

  (d)

Where the Executive Retires at least 6 months after the applicable grant dates, and is not subject to a Good Leaver agreement, the Executive’s rights in only those equity awards shall continue to vest. “Retires” (and similar corresponding terms) means the Executive voluntarily terminates employment being at least age 58 with at least 2 years of service, and having a combined age and service factor that equals or exceeds 62.5. Notwithstanding any provisions of this Agreement, the Retiring Executive is not eligible for any severance payments upon such Retirement.

All amounts payable to the Executive as a result of the termination of the Executive’s employment pursuant to any statute, regulation or other provision of law are included in and are not in addition to the amounts payable pursuant to this Section 5.8. Amounts payable pursuant to Section 5.8(c)(i), (ii) and (iii) shall be paid within seven (7) days of the date on which they become due; provided however that, if the sixtieth (60th) day following termination of employment falls in the subsequent calendar year, then the payment shall be the later of (i) the first (1st) business day of that subsequent year and (ii) the seventh (7th) day following the date on which the amounts payable pursuant to Section 5.8(c)(i), (ii) and (iii) become due. For greater certainty, the Corporation agrees that payment of undisputed claims will not be delayed should there exist any disputed claims. Resignation on Termination.

The Executive agrees that upon any termination of his employment with the Corporation he shall immediately tender his resignation from any position he may hold as an officer or director of the Corporation or any of its Affiliates. In the event of the Executive failing within three days to comply with his obligation hereunder, he hereby irrevocably authorizes and appoints any other director or officer of the Corporation as his agent and attorney to sign in his name and on his behalf any written resignations or other documents and do all other things necessary to give effect to such resignation.

 

5.9

Continuance in Effect

For greater certainty, notwithstanding any termination of the employment of the Executive, the provisions of this Agreement shall continue in full force and effect in accordance

 

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with their terms, including, without limitation, (i) the provisions of Article 6, (ii) rights to indemnification and insurance under the Indemnification Agreements, indemnification policy, Charter, By-Laws and directors’ and officers’ insurance policies maintained by the Corporation and (iii) rights to which the Executive is entitled by virtue of his participation in the employee benefits plans, policies and arrangements of the Corporation, all in accordance with the terms of the relevant plans and agreements.

ARTICLE 6

EXECUTIVE’S COVENANTS

 

6.1

Non-Disclosure

The Executive acknowledges and agrees that:

 

  (a)

in the course of performing his duties and responsibilities hereunder, he will have access to and will be entrusted with detailed confidential information and trade secrets concerning past, present, future and contemplated company strategy, plans and activities (including acquisition plans and activities), products, services, operations, technology, intellectual property, methodologies and procedures of the Corporation or its Affiliates, whether in written, printed, pictorial, diagrammatic, electronic or any other form or medium, including, without limitation, information relating to names, addresses, contact persons, preferences, needs and requirements of past, present and prospective clients, customers, suppliers and employees of the Corporation and its Affiliates (collectively, “Confidential Information”), the disclosure of any of which to competitors of the Corporation or of any of its Affiliates or to the general public, or the use of any of which by the Executive or any competitor of the Corporation or of any of its Affiliates, could reasonably be expected to be detrimental to the interests of the Corporation and its Affiliates;

 

  (b)

in the course of performing his duties and responsibilities hereunder, the Executive will be a representative of the Corporation and its Affiliates to its and their customers, clients and suppliers and as such will have significant responsibility for maintaining and enhancing the goodwill of the Corporation and its Affiliates with such customers, clients and suppliers and would not have, except by virtue of his employment with the Corporation, developed a close and direct relationship with the customers, clients and suppliers of the Corporation and its Affiliates; and

 

  (c)

the right to maintain the confidentiality of the Confidential Information, the right to preserve the goodwill of the Corporation and its Affiliates and the right to the benefit of the contacts and connections previously developed by the Executive with prospective clients, customers and others and any relationships that will be developed between the Executive and the customers, clients and suppliers of the Corporation and its Affiliates by virtue of the Executive’s employment with the Corporation constitute proprietary rights of the Corporation and its Affiliates which the Corporation and its Affiliates are entitled to protect.

 

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In accordance with the matters acknowledged and agreed to by the Executive above and in consideration of the payments and other benefits to be received by the Executive pursuant to this Agreement, the Executive hereby covenants and agrees with the Corporation that he will not, except with the specific prior written consent of the Board, either during the term of this Agreement or at any time within five (5) years thereafter (the “Non-Disclosure Period”), directly or indirectly, disclose to any Person or in any way make use of (other than for the benefit of the Corporation or its Affiliates), in any manner, any of the Confidential Information, provided that such Confidential Information shall be deemed not to include information which is or becomes generally available to the public other than as a result of disclosure by the Executive.

 

6.2

Intellectual Property

(a)    The Executive shall disclose to the Corporation or one or more of its Affiliates, as the Board may direct, all ideas, suggestions, discoveries, inventions and improvements (collectively, the “Improvements”) which he may make solely, jointly or in common with other employees, during the term of his employment with the Corporation and which relate to the business activities of the Corporation or its Affiliates. Any Improvements coming within the scope of the business of the Corporation or of any of its Affiliates made and/or developed by the Executive while in the employ of the Corporation, whether or not conceived or made during regular working hours, or whether or not the Executive is specifically instructed to make or develop the same, shall be for the benefit of the Corporation and/or its Affiliates and shall be considered to have been made by virtue of this Agreement and shall immediately become the exclusive property of the Corporation and/or its Affiliates.

(b)    The Executive shall assign, set over and transfer to the Corporation or one or more of its Affiliates, as the Board may direct, his entire right, title and interest in and to any and all the Improvements and to all patents, copyrights or other intellectual property rights (or applications therefor) which may be or have been filed and/or issued by or to him or on his behalf, and the Executive agrees to execute and deliver to the Corporation or any such Affiliate, any and all instruments necessary or desirable to accomplish the foregoing and, in addition, to do all lawful acts which may be necessary or desirable to assist the Corporation or any such Affiliate to obtain and enforce protection of the Improvements.

(c)    The Executive waives all moral rights in any Improvements and all work produced by the Executive during the term of this Agreement.

 

6.3

Non-Competition

The Executive represents and warrants that he is not subject to and will not bring any material that is subject to any non-competition, non-disclosure, discoveries and works or other agreements that would prevent or restrict him from rendering services to the Corporation pursuant to this Agreement. The Executive further represents and warrants that his employment and use of any material he brings will not violate the rights of any third party, including without limitation, pursuant to any non-competition or non-solicitation agreement.

 

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The Executive hereby agrees that he shall not (without the prior written consent of the Board which shall not be unreasonably withheld taking into account (i) the Executive’s career in the forest product industry and (ii) his non-disclosure obligations under Section 6.1) during the Restricted Period and within the Prohibited Area whether on his own account or in conjunction with or on behalf of any other Person, and whether as an employee, director, officer, shareholder, partner, principal, agent, or in any other capacity whatsoever other than as a consultant, in competition with the Corporation or any of its Affiliates, directly or indirectly, operate, manage, control, participate in, carry on, be employed by, be engaged in, perform services in respect of, be concerned with, be financially interested in or financially assist, or permit his name to be used in connection with the activities from time to time of the Corporation (the “Restricted Business”), including the manufacture, sale and/or dealing in newsprint, commercial printing, tissue and packaging papers, market pulp and wood products, as well as research into, development, production, manufacture, sale, supply, import, export or marketing of any product which is the same or similar to or competitive with any product researched, developed, produced, manufactured, sold, supplied, imported, exported or marketed by the Corporation or by any of its Affiliates in the context of the above described activities during the term of this Agreement.

Notwithstanding the foregoing restrictions, the Executive may acquire securities (i) of a class or series that is traded on any stock exchange or over the counter if such securities represent not more than two percent (2%) of the issued and outstanding securities of such class or series, (ii) of a mutual fund or other investment entity that invests in a portfolio the selection and management of which is not within the control of the investor, or (iii) held in a fully managed account where the Executive does not direct or influence in any manner the selection of any investment in such securities.

 

6.4

Non-Solicitation of Customers

The Executive hereby agrees that he shall not during the Restricted Period, whether on his own behalf or in conjunction with or on behalf of any other Person, directly or indirectly, except on behalf of the Corporation or its Affiliates, solicit, assist in soliciting, accept or facilitate the acceptance of the business of any Person (i) to whom the Corporation or its Affiliates has supplied goods or services at any time prior to the Date of Termination, or (ii) to whom the Corporation or any of its Affiliates has offered to supply goods or services prior to the Date of Termination, or (iii) to whom the Corporation or any of its Affiliates has provided details of the terms on which it would or might be willing to supply goods or services prior to the Date of Termination, or (iv) with whom the Corporation or any of its Affiliates has had any negotiations or discussions regarding the possible supply of goods or services prior to the Date of Termination.

 

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6.5

Non-Solicitation of Employees

The Executive hereby agrees that he will not during the Restricted Period, either on his own behalf or in conjunction with or on behalf of any other Person, directly or indirectly, except on behalf of or with the prior written consent of the Corporation or its Affiliates, (a) induce or solicit any Person who was employed by the Corporation or by any of its Affiliates during the immediately preceding six months to leave such employment; or (b) hire or accept into employment or otherwise engage or use the services of any Person who was so employed within the immediately preceding six months. Notwithstanding the foregoing, the general advertisement of open positions, not targeted at any individual, shall not be a violation of this provision.

 

6.6

Non-interference with Suppliers

The Executive hereby agrees that he will not during the Restricted Period, either on his own behalf or in conjunction with or on behalf of any other Person, directly or indirectly, interfere, seek to interfere, induce and/or incite another Person to interfere, or take steps to interfere with the continuance of supplies (or the terms relating to such supplies) from any suppliers who have been supplying products, materials or services to the Corporation or any of its Affiliates at any time during the term of this Agreement.

 

6.7

Applicability to Affiliates or Purchasers

The obligations undertaken by the Executive pursuant to this Article 6 may be enforced directly against the Executive by any Affiliate of the Corporation or any purchaser from the Corporation of all or any part of its business, to the extent applicable by their terms to such Affiliate or such purchased business, and shall, with respect to each Affiliate of the Corporation or such purchased business, constitute a separate and distinct covenant, and the invalidity or unenforceability of any such covenant shall not affect the validity or enforceability of the covenant in favour of the Corporation or any other Affiliate of the Corporation or any such purchaser. If for any reason any of the obligations of the Executive pursuant to this Article 6 cannot be directly enforced by an Affiliate or purchaser as contemplated hereby, the Executive acknowledges that such obligations may be enforced by the Corporation on behalf of such Affiliate or purchaser, as the case may be.

 

6.8

Provisions in the Event of Breach

The Executive agrees that, in the event of any actual or threatened breach by the Executive of any of the covenants or agreements contained in this Article 6, without prejudice to any and all other rights and recourses of the Corporation, the Corporation shall have the right to enforce the terms and provisions thereof by means of compelling specific performance and/or by means of injunction (including, without limitation, provisional, interlocutory and permanent). In addition, and without restriction to the foregoing, in the event of a breach by the Executive of any of the covenants or agreements contained in this Article 6, any payments otherwise payable to the Executive as severance pay pursuant to the provisions of Section 5.8(c)(iii) hereof shall be deemed to have been forfeited in their entirety by the Executive and the running of the Non-Disclosure Period and Restricted Period shall be stayed and shall recommence upon the date the Executive ceases to be in breach thereof, whether voluntarily or by injunction.

 

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6.9

Disclosure

During the term of this Agreement, the Executive shall promptly disclose to the Board full information concerning any interest, direct or indirect, of the Executive (whether as owner, shareholder, partner, lender or other investor, director, officer, employee, consultant or otherwise) or his spouse or child under the age of majority in any business which is reasonably known to the Executive to purchase or otherwise obtain services or products from, or to sell or otherwise provide services or products to the Corporation or to any of its Affiliates or to any of their respective suppliers or customers.

During the Non-Disclosure Period and the Restricted Period, the Executive shall inform any prospective employer of the existence of this Agreement and the obligations which it imposes upon the Executive under Sections 6.1, 6.2, 6.3, 6.4, 6.5 and 6.6.

 

6.10

Merger Transactions

The Executive shall not, during the term of this Agreement and during the Restricted Period, solicit, initiate or encourage proposals or offers from, or provide information relating to the Corporation or any of its Affiliates to, any Person in connection with or relating to any proposed acquisition or disposition of all or any material part of the issued and outstanding Common Shares or other securities of the Corporation or any of its Affiliates, or any proposed amalgamation, merger, sale of all or any material part of the assets of the Corporation or any of its Affiliates, take-over bid, reorganization, recapitalization, liquidation, winding-up, or other business combination or any similar transaction involving the Corporation or any of its Affiliates, without in each case the consent of the Board.

 

6.11

Consulting Services after Date of Termination

Notwithstanding the foregoing restrictions of this Article 6, the Executive may provide consulting services to any Person after the date of termination and within the Prohibited Area subject to his other obligations under Article 6 and provided furthermore that the Executive shall not become an employee of or enter into an employment agreement with a Restricted Business relating to the Prohibited Area during the Restricted Period.

 

6.12

Return of Materials

All files, forms, brochures, books, materials, written correspondence, memoranda, documents, manuals, computer disks, software products and lists (including financial and other information and lists of customers, suppliers, products and prices) pertaining to the Corporation or to any of its Affiliates and containing Confidential Information which may come into the possession or control of the Executive shall at all times remain the property of the Corporation or such Affiliate, as the case may be. Upon termination of the Executive’s employment hereunder for any reason, the Executive agrees to immediately return all such property of the Corporation

 

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or of any of its Affiliates in the possession of the Executive or directly or indirectly under the control of the Executive and to destroy all electronic copies thereof. The Executive agrees not to make, for his personal or business use or that of any other Person, reproductions or copies of any such property or other property of the Corporation or of any of its Affiliates.

ARTICLE 7

GENERAL

 

7.1

Reasonableness of Restrictions and Covenants

The Executive hereby confirms and agrees that the covenants and restrictions pertaining to the Executive contained in this Agreement, including, without limitation, those contained in Article 6, are reasonable and valid and hereby further acknowledges and agrees that the Corporation and its Affiliates would suffer irreparable injury in the event of any breach by the Executive of his obligations under any such covenant or restriction. Accordingly, the Executive hereby acknowledges and agrees that damages would be an inadequate remedy at law in connection with any such breach and that the Corporation and its Affiliates shall therefore be entitled, in addition to any other right or remedy which they may have at law, in equity or otherwise, to temporary and permanent injunctive relief enjoining and restraining the Executive from any such breach.

 

7.2

Amendments and Waivers

No amendment or waiver of any provision of this Agreement shall be binding on any party unless consented to in writing by such party. No waiver of any provision of this Agreement shall constitute a waiver of any other provision, nor shall any waiver of any provision of this Agreement constitute a continuing waiver unless otherwise expressly provided.

 

7.3

Successors and Assigns

This Agreement shall enure to the benefit of and shall be binding on and enforceable by and against the heirs, executors, administrators and legal personal representatives of the Executive and the successors and permitted assigns of the Corporation. This Agreement is personal to the Executive and none of his rights may be assigned, made subject to a security interest or otherwise disposed of or encumbered, nor may any of his obligations be delegated or transferred, except as permitted in writing by the Board, or in accordance with the written policies, governance procedures and management practices of the Corporation, if any, as approved by the Board from time to time.

Without in any manner limiting the generality of the foregoing, the obligations of the Corporation pursuant to this Agreement shall be binding upon and may be enforced by the Executive against any Affiliate of the Corporation or any purchaser from or successor (in fact or in law) or assignee of the Corporation of all or any significant part of its business, to the extent applicable by their terms to such Affiliate, purchaser or successor or assignee, and shall, with respect to each such Affiliate, purchaser or successor or assignee, constitute a separate and distinct covenant, and the invalidity or unenforceability of any such covenant shall not affect the validity or enforceability of the covenant in favour of the Executive.

 

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7.4

Notices

(a)    Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be delivered or sent in person, by courier, by registered mail, charges prepaid, or by fax in the case of the Corporation and by electronic mail in the case of the Executive, addressed as follows:

 

  (i)

If to the Executive:

Email: remi.lalonde@resolutefp.com

 

  (ii)

If to the Corporation:

Resolute Forest Product Inc.

111 boul. Robert-Bourassa

Suite 5000

Montréal, Québec H3C 2M1

Attention:        Chief Legal Officer

Fax number:    514-394-3644

(b)    Any such notice or other communication shall be deemed to have been given and received on the day on which it was delivered or transmitted (or, if such day is not a Business Day or if delivery or transmission is made on a Business Day after 5:00 p.m. at the place of receipt, then on the next following Business Day) or, if mailed, on the third (3rd) Business Day following the date of mailing; provided, however, that if at the time of mailing or within three (3) Business Days thereafter there is or occurs a labour dispute or other event which might reasonably be expected to disrupt the delivery of documents by mail, any notice or other communication hereunder shall be delivered or transmitted by any aforesaid permitted means of communication.

(c)    Any party may at any time change its address for service from time to time by giving notice to the other parties in accordance with this Section 7.4.

 

7.5

Entire Agreement

This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether written or oral. There are no conditions, covenants, agreements, representations, warranties or other provisions, express or implied, collateral, statutory or otherwise, relating to the subject matter hereof except as provided herein.

 

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7.6

Rules and Policies

In addition to this Agreement, all written rules and policies of the Corporation adopted by the Board from time to time apply to the Executive except to the extent that they are inconsistent with the express provisions of this Agreement, in which case such provisions will prevail.

 

7.7

Governing Law

This Agreement shall be interpreted and enforced in accordance with, and the respective rights and obligations of the parties shall be governed by, the laws of the Province of Quebec and the federal laws of Canada applicable in that province, without regard to the principles of conflict of laws.

 

7.8

Acknowledgements

The Executive acknowledges that:

 

  (a)

the Executive has had sufficient time to review and consider this Agreement thoroughly;

 

  (b)

the Executive has read and understands the terms of this Agreement and the Executive’s obligations hereunder;

 

  (c)

the Executive has been given an opportunity to obtain independent legal advice, or such other advice as the Executive may desire, concerning the interpretation and effect of this Agreement; and

 

  (d)

this Agreement is entered into voluntarily and without any pressure.

 

7.9

Counterparts

This Agreement and all documents contemplated by or delivered under or in connection with this Agreement may be executed and delivered in any number of counterparts, with the same effect as if all parties had signed and delivered the same document, and all counterparts shall be construed together to be an original and will constitute one and the same agreement.

 

7.10

Language

The parties have requested that this Agreement and all related documents be drawn up in English only. Les parties aux présentes ont exigé que le présent contrat et tous les documents qui s’y rattachent soient rédigés en anglais seulement.

IN WITNESS WHEREOF this Agreement has been executed by the parties as of the date first above written.

 

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        RESOLUTE FOREST PRODUCTS INC.

 

/s/ Alain Rhéaume

Per: Alain Rhéaume
Chair of the Human Resources and Compensation/Nominating and Governance Committee
Date of signing : March 24, 2021

 

/s/ Remi G. Lalonde                                                       
REMI G. LALONDE
Date of signing : April 7, 2021

 

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Exhibit 99.2

Execution Copy

CHANGE IN CONTROL AGREEMENT

THIS AGREEMENT, made as of the 1st day of March, 2021, by and between Resolute Forest Products Inc., a Delaware corporation having its principal address at 111 Boul. Robert-Bourassa, Suite 5000, Montreal, Quebec H3C 2M1 (the “Corporation”), and Remi G. Lalonde (the “Executive”).

WHEREAS the Executive has been in the employ of the Corporation or its predecessors since July 2009 and as of the date hereof will become the President and Chief Executive Officer of the Corporation; and

WHEREAS the Corporation and the Executive have entered into an Executive Employment Agreement as of the date hereof setting forth the terms of the Executive’s employment (the “Employment Agreement”); and

WHEREAS the Executive is considered by the Board of Directors of the Corporation (the “Board”) to be a valued member of management of the Corporation who has outstanding skills and abilities and an extensive background in the Corporation’s business; and

WHEREAS the uncertainty attendant to a Change in Control of the Corporation may result in the departure or distraction of management personnel, including the Executive, to the detriment of the Corporation; and

WHEREAS the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Corporation’s management, including the Executive, to their assigned duties in the event of a Change in Control of the Corporation; and

WHEREAS this Agreement is entered into as part of the Executive’s compensation as provided in the Employment Agreement and to maintain or increase the profitability of the Corporation; and

WHEREAS except where otherwise provided herein, defined terms as used herein have the meanings set forth in the Employment Agreement.

NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration, the parties hereto agree as follows:

1.    DEFINITIONS

The following terms shall have the meanings assigned to them below:

 

  (a)

“Base Amount” shall mean the Executive’s Annual Base Salary at the rate in effect on the Termination Date.


  (b)

“Beneficial Owner” of securities shall mean (i) a Person who beneficially owns such securities, directly or indirectly, or (ii) a Person who has the right to acquire such securities (whether such right is exercisable immediately or only with the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, warrants, options or otherwise.

 

  (c)

“Change in Control” means any of the following:

 

  (i)

the acquisition, directly or indirectly and by any means whatsoever, by any person, or by a group of persons acting jointly or in concert, of that number of Voting Shares which is equal to or greater than 50% of the total issued and outstanding Voting Shares immediately after such acquisition;

 

  (ii)

the election or appointment by any holder of Voting Shares, or by any group of holders of Voting Shares acting jointly or in concert, of a number of members of the Board of Directors of the Corporation equal to or greater than one-half (50%) of the members of the Board of Directors;

 

  (iii)

any transaction or series of transactions, whether by way of reconstruction, reorganization, consolidation, amalgamation, arrangement, merger, transfer, sale or otherwise, whereby assets of the Corporation become the property of any other person (other than a subsidiary of the Corporation) if such assets which become the property of any other person have a fair market value (net of the fair market value of any then existing liabilities of the Corporation assumed by such other person as part of the same transaction) equal to 50% or more of the Market Capitalization of the Corporation immediately before such transaction; or

 

  (iv)

the completion of any transaction or the first of a series of transactions which would have the same or similar effect as any transaction or series of transactions referred to in paragraphs (i), (ii) and (iii) above.

 

  (d)

“Disability” shall mean a physical or mental condition that is defined as a disability in the Corporation’s long term disability insurance plan covering the Executive immediately prior to the Change in Control.

 

  (e)

“Employer Contributions” shall mean an amount equal to the maximum contributions the Corporation could have made (regardless of actual circumstances) on the Executive’s behalf under the registered defined contribution retirement plan for Canadian non-unionized employees and the DC Make-Up Program for the fiscal year in which the Executive’s Termination Date occurs.

 

  (f)

“Good Reason” shall mean:

 

  (i)

a material change either in the Executive’s status, title, position or responsibilities (including in reporting line relationships) or in the business for which the Executive is responsible that represents a substantial adverse

 

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  change from the Executive’s status, title, position or responsibilities or of the business as in effect immediately preceding the date of a Change in Control or at any time within twenty-four (24) months thereafter; the assignment to the Executive of any duties or responsibilities that are materially inconsistent with the Executive’s status, title, position or responsibilities as in effect immediately preceding the date of a Change in Control or at any time within twenty-four (24) months thereafter; or any removal of the Executive from or failure to reappoint or reelect the Executive to any material office or position held immediately preceding the date of a Change in Control; or at any time within twenty-four (24) months thereafter;

 

  (ii)

a material reduction in compensation and benefits, in the aggregate, (in terms of benefit levels and/or reward opportunities which opportunities will be evaluated in light of the performance requirements therefor) to those provided for under the employee compensation and benefit plans, programs and practices in which the Executive was participating immediately preceding the date of the Change in Control or at any time within twenty-four (24) months thereafter;

 

  (iii)

a material reduction of the Executive’s Annual Base Salary as in effect immediately preceding the date of the Change in Control or any time within twenty-four (24) months thereafter;

 

  (iv)

a failure by the Corporation to obtain from any Successor its assent to this Agreement contemplated by Section 10 hereof; or

 

  (v)

a material change in the geographic location at which the Executive is to perform services on behalf of the Corporation from the location immediately prior to the Change in Control.

 

  (g)

“Incentive Amount” shall mean an amount equal to the lesser of (i) the average of the last two Incentive Awards paid to the Executive prior to the Termination Date, or (ii) 125% of the Executive’s target incentive (expressed in dollars) for the year in which the Termination Date occurs.

 

  (h)

“Market Capitalization of the Corporation” at any time means the product of (i) the number of outstanding Common Shares of the Corporation at that time, and (ii) the average of the closing prices for the Common Shares of the Corporation on the principal securities exchange (in terms of volume of trading) on which the Common Shares of the Corporation are listed at that time for each of the last 10 business days prior to such time on which the Common Shares of the Corporation traded on such securities exchange.

 

  (i)

“Notice of Termination” shall mean a notice sent by either the Executive or the Corporation to the other party terminating the Executive’s employment as of a certain date and setting forth the reasons therefor.

 

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  (j)

“Successor” shall mean the direct or indirect successor by purchase, merger, consolidation or otherwise, to all or substantially all of the business and/or assets of the Corporation.

 

  (k)

“Termination Date” shall mean (i) in the case of the Executive’s death, the date of death, (ii) in the case of a termination by the Executive in accordance with Section 3, the last day of employment as set forth in the Notice of Termination given by the Executive, (iii) in the case of a termination by the Corporation for Cause, a date not less than thirty (30) days after receipt of the Notice of Termination by the Executive, (iv) in the case of a termination by the Corporation due to the Executive’s Disability, the date not less than thirty (30) days after receipt of the Notice of Termination by the Executive, provided that the Executive shall not have returned to the full-time performance of duties within thirty (30) days after such receipt, and (v) in all other cases, the date specified in the Notice of Termination or if no Notice of Termination is sent, the last day of the Executive’s active employment (an Executive receiving periodic severance pay is no longer considered employed for the purposes of this Agreement).

2.    TERM OF AGREEMENT

This Agreement shall commence as of the date hereof and terminate on the occurrence of any of the following events: (i) the date of death of the Executive; (ii) voluntary resignation by the Executive from the Corporation otherwise than in response to a Good Reason; (iii) the giving of notice by the Corporation in the event of Disability; (iv) termination for Cause; (v) termination of employment of the Executive at any time when there has been no Change in Control or more than two years after the immediately preceding Change in Control; or (vi) satisfaction by the Corporation of its obligations under Section 4 of this Agreement in the event of termination of the Executive in the circumstances contemplated by Section 4. The specific date of termination shall be as set forth in the definition of Termination Date.

For greater certainty, Section 4 applies with respect to each separate Change in Control until the Agreement has been terminated. In addition, with respect to a particular Change in Control, Section 4 expires twenty-four (24) months following such Change in Control unless this Agreement is otherwise terminated.

3.    EXECUTIVES RIGHT OF TERMINATION

After a Change in Control and for twenty-four (24) months thereafter, the Executive shall have the right to terminate employment for Good Reason as set forth below. If the Executive’s employment is terminated in accordance with the provision of this Section 3, the Executive shall be entitled to the compensation and benefits described in Section 4 below. In order to resign for Good Reason, the Executive must notify the Corporation in writing not more than thirty (30) days after the occurrence of one or more events asserted to constitute Good Reason, describing such event or events in reasonable detail (a “Good Reason Notice”). If the Corporation fails to cure all events identified in the Good Reason Notice within thirty (30) days after receiving the Good Reason Notice by restoring the Executive to the position he would have been in had the event not occurred (including payment of any lost compensation or benefits), the Executive may resign for

 

- 4 -


Good Reason by submitting a Notice of Termination not more than one hundred eighty (180) days after the end of such thirty (30) day period. For avoidance of doubt, the failure of the Executive to notify the Corporation of an event constituting Good Reason, or to resign as a result of such event having occurred and not having been cured, shall not constitute a waiver of any of the Executive’s other rights with respect to such event, including without limitation the right to maintain an action for breach of contract, or preclude the Executive from resigning for Good Reason upon the subsequent occurrence of any of the events described above, including an event of the same type.

4.    COMPENSATION UPON CHANGE IN CONTROL FOLLOWED BY CERTAIN TERMINATIONS

If the Executive’s employment with the Corporation shall be terminated within twenty-four (24) months following a Change in Control (i) by the Corporation for any reason other than for Cause or Disability, or (ii) by the Executive for Good Reason pursuant to Section 3 (each, a “Qualifying Termination”), the Executive shall be entitled to the compensation and benefits set forth in this Section 4. If either a Notice of Termination is given by the Corporation, or an event constituting the basis for the Executive’s resignation for Good Reason occurs (and is not subsequently cured within thirty (30) days as described above) prior to the end of such twenty-four (24) month period, the Executive’s termination shall be considered to have terminated within such twenty-four (24) month period regardless of the actual Termination Date.

If a Qualifying Termination occurs, the Executive shall be entitled to the following as of the applicable Termination Date:

 

  (a)

A single lump sum, paid as soon as practicable, but in no event later than sixty (60) days after the Executive’s Termination Date, equal to the sum of the following less applicable withholding taxes:

 

  (i)

an amount equal to the Base Amount multiplied by 2.5;

 

  (ii)

an amount equal to the Incentive Amount multiplied by 2.5;

 

  (iii)

an amount equal to the Employer Contributions multiplied by 2.5;

 

  (iv)

a cash payment of $20,000 in lieu of individual outplacement services; and

The payment of severance hereunder is intended to meet the short-term deferral exception under Section 409A of the US Internal Revenue Code of 1986, as amended (the “Code”), and shall be interpreted and administered consistent with this intent, to the extent applicable.

 

  (b)

As of the Executive’s Termination Date, the Executive (and the Executive’s spouse or surviving spouse and dependents) will be provided the maximum health care (including medical, prescription drug and dental) and the maximum life insurance coverage provided by the Corporation to other executives as of the date of the Change in Control for the earlier of thirty-six (36) months after the Termination Date or the date on which the Executive is covered by a subsequent employers’

 

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  health care and life insurance programs that are no less equivalent. The amount of premiums that the Executive is required to pay for such coverage shall not exceed the amount paid by executives who are active employees on the Termination Date and thereafter. If and to the extent that the benefits described in this paragraph cannot be provided under the Corporation’s plans or programs, the lump sum payment described in subsection (a) shall be increased by an amount calculated so that the amount of such payment, after payment of all applicable income taxes, equals the present value of the difference between the full premium cost without employer subsidy of the lost benefits and the amount of premium the Executive would have been required to pay.

5.    EQUITY AWARDS

Notwithstanding anything in the applicable equity plan or any award agreement to the contrary, if, upon a Change in Control, the Executive holds options for the purchase of shares, or restricted shares or restricted share units (RSU’s) or performance share units (PSU’s) (“Equity Awards”), all Equity Awards so held shall, unless the Executive breaches the terms of Article 6 of the Employment Agreement (as qualified by Article 14 of this Agreement in the event of a Qualifying Termination), (i) immediately vest to the extent they have not already vested at such date and (ii) continue to be held, in all cases, notwithstanding the terms of the Equity Award plans, on the same terms and conditions as if the Executive continued to be employed by the Corporation.

6.    DISABILITY

In the event of Disability of the Executive, this Agreement may be terminated by the Corporation on thirty days’ notice. Notwithstanding anything contained in this Section 6, the Executive shall be entitled to all benefits provided under any disability and pension plans of the Corporation applicable to the Executive at the date of Disability.

7.    NO MITIGATION REQUIRED

The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement, nor shall any payment or benefit provided for in this Agreement be offset by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, or otherwise.

8.    EXECUTIVES EXPENSES

The Corporation shall pay or reimburse the Executive for all costs, including reasonable attorney’s, accountants’ and actuary’s fees and expenses, incurred by the Executive (i) to confirm the Executive’s rights to and amounts of payments hereunder, (ii) to contest or dispute any termination of the Executive’s employment following a Change in Control or seek to obtain or enforce any right or benefit provided by this Agreement in litigation or arbitration, or (iii) in connection with any audit by a taxing authority related to any payment or benefit hereunder, or any subsequent contest or litigation relating to the tax treatment of such payment or benefit. Notwithstanding the foregoing, if the Executive does not prevail in a lawsuit or arbitration pertaining to this Agreement, the Executive shall repay to the Corporation all fees and expenses relating to such proceeding that have been previously paid by the Corporation.

 

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9.    CODE SECTION 280G

Unless the parties agree otherwise, notwithstanding anything in this Agreement to the contrary, if the aggregate amount of the benefits and payments under this Agreement, and other payments and benefits which the Executive has the right to receive from the Corporation (including the value of any equity rights which become vested upon a Change in Control) (the “Total Payments”) would constitute a “parachute payment” as defined in Section 280G of the US Internal Revenue Code of 1986, as amended, such that the Executive would be subject to the excise tax under Code Section 4999 of the Code, then the Accounting Firm (defined below in this Section 9) shall determine which of the following has a greater aggregate value for the Executive, which greater value shall be paid to the Executive:

 

  (a)

The after-tax amount that would be retained by the Executive (after taking into account all required income taxes payable by the Executive and the amount of any excise taxes that would be payable by the Executive under Code Section 4999 (the “Excise Taxes”)) if the Executive were to receive the Total Payments, or

 

  (b)

The after-tax amount that would be retained by the Executive (after taking into account all federal, state and local income taxes payable by the Executive) if the Executive were to receive the Total Payments reduced to the largest amount that would result in no portion of the Total Payments being subject to Excise Taxes (the “Reduced Payments”).

If the Total Payments are payable to the Executive, the Corporation shall not reimburse the Executive for any Excise Taxes imposed on the Executive or provide any such other compensation (whether through a tax gross-up or otherwise) to mitigate the effects of the Excise Taxes. If the Executive is to receive Reduced Payments, the Total Payments payable will be reduced or eliminated in the following order: (1) cash payments, (2) taxable benefits, (3) nontaxable benefits and (4) accelerated vesting of equity awards.

The determination of whether the Executive will receive the Total Payments or the Reduced Payments, and the calculation of the amount of the Reduced Payments, if applicable, shall be performed by a nationally recognized certified public accounting firm selected by the Corporation (the “Accounting Firm”). In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Corporation may appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Corporation.

10.    BINDING AGREEMENT

This Agreement shall inure to the benefit of and be enforceable by the Executive, and the Executive’s heirs, executors, administrators, successors and assigns. This Agreement shall be binding upon the Corporation, its Successors and assigns. The Corporation shall require any Successor to assume and agree to perform this Agreement in accordance with its terms. The Corporation shall obtain such assumption and agreement prior to the effectiveness of any such succession.

 

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11.    SOLE SEVERANCE; OTHER BENEFITS

If the Executive receives the payments and benefits due under Section 4, such payments and benefits shall be in lieu of any other severance amounts to which the Executive may be entitled under any other severance arrangement, including under any employment agreement, severance pay plan, or applicable legislation entitling the Executive to severance benefits. For greater certainty, the payments under Section 4 are in satisfaction of the Executive’s entitlement to a retiring allowance. However, the parties acknowledge that the benefits paid hereunder are only exclusive as to other severance payments and that the Executive may be entitled to other benefits or payments triggered by a Change in Control under certain other of the Corporation’s benefit or compensation arrangements, including, without limitation, any long term incentive plans or equity incentive award plans.

12.    AMENDMENTS; WAIVERS

Except as otherwise provided below, no provision of this Agreement may be modified, waived or discharged, except in a writing specifically referring to such provision and signed by the party against which enforcement of such modification, waiver or discharge is sought. No waiver by either party hereto of the breach of any condition or provision of this Agreement shall be deemed a waiver of any other condition or provision at the same or any other time. Notwithstanding the foregoing, the Board or a committee thereof may amend (or terminate) this Agreement if (a) the Board or such committee reasonably and in good faith determines that such amendment is necessary either (i) to comply with the requirements of any law or regulation applicable to the Corporation or (ii) to conform the Agreement to prevailing corporate practices for companies comparable to the Corporation, provided any such amendment or termination is not adopted less than ninety (90) days prior to or after a Change in Control, (b) the same amendment is made to all other Change in Control Agreements between the Corporation and similarly situated executives, and (c) the Executive is notified in writing of the amendment and the reason for its adoption not more than thirty (30) days after it is adopted.

13.    VALIDITY

The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

14.    CONTINUANCE IN EFFECT

In the event of a Qualifying Termination, the Executive’s covenants pursuant to Sections 6.3 (Non-Competition), 6.4 (Non-Solicitation of Customers), 6.5 (Non-Solicitation of Employees), 6.6 (Non-Interference with Suppliers) and 6.10 (Merger Transactions) of the Employment Agreement shall extinguish on the Date of Termination. Except as expressly provided for in the preceding sentence and for greater certainty, notwithstanding any Termination of the Executive, the provisions of the Employment Agreement shall continue in full force and effect in accordance with their terms, including, without limitation, (i) the provisions of Article 6, (ii) rights

 

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to indemnification and insurance under the Indemnification Agreement, Charter, By-Laws and directors’ and officers’ insurance policies maintained by the Corporation and (iii) the rights to which the Executive is entitled by virtue of his participation in the employee benefits plans, policies and arrangements of the Corporation, all in accordance with the terms of the relevant plans and agreements.

15.    GENERAL

The provisions of Sections 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9 and 7.10 of the Employment Agreement are hereby incorporated by reference as if herein recited at length.

16.    LANGUAGE

The parties have requested that this Agreement and all related documents be drawn up in English only. Les parties aux présentes ont exigé que le présent contrat et tous les documents qui s’y rattachent soient rédigés en anglais seulement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.

 

RESOLUTE FOREST PRODUCTS INC.   THE EXECUTIVE
Per:  

 

/s/ Alain Rhéaume

   

/s/ Remi G. Lalonde

  Alain Rhéaume     Remi G. Lalonde
 

Chair of the Human Resources and

Compensation/Nominating and

Governance Committee

 

Date of signing : March 24, 2021

   

 

Date of signing : April 7, 2021

 

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