We're moving content over from an older government website. We'll align this page with the ontario.ca style guide in future updates.
Article 1: Definitions and principles of interpretation
1.1 Definitions
Whenever used in this Agreement, the following terms shall have the meanings set out below:
“2000 Framework Agreement” means the agreement dated June 1, 2000 entitled “Serving Ontario Beer Consumers: A Framework for Improved Co-operation and Planning” that was entered into between the LCBO and the Corporation at the direction, authorization and agreement of the Province of Ontario.
“Act” means the Business Corporations Act (Ontario).
“Affiliate” means, with respect to a party, any person, firm, corporation, partnership (including general partnerships, limited partnerships and limited liability partnerships), limited liability company, joint venture, business trust, association or other entity that directly or indirectly Controls, is Controlled by or is under common Control with such party.
“Agreement” means this Master Framework Agreement, including the Recitals and all Exhibits and Schedules, and all amendments or restatements as permitted, and references to “Article” or “Section” mean the specified Article or Section of this Agreement.
“AGRPPA” means the Alcohol and Gaming Regulation and Public Protection Act, 1996 (Ontario).
“Articles of Amendment” means the articles of amendment of the Corporation to give effect to the Capital Reorganization, substantially in the form of Exhibit A.
“Beer” has the meaning set out in the Liquor Licence Act (Ontario).
“Beer Ombudsman” means the independent beer ombudsman appointed from time to time by the majority of Independent Directors then in office pursuant to section 6.6 of the Shareholders Agreement.
“Board” means the board of directors of the Corporation constituted in accordance with the Shareholders Agreement.
“Brewer” means a Person that manufactures Beer.
“Business Day” means any day, other than a Saturday or Sunday, on which the principal commercial banks in Toronto, Ontario are open for commercial banking business during normal banking hours.
“Capital Reorganization” means the reorganization of the share capital of the Corporation, whereby all of the shares in the capital of the Corporation, with the exception of the First Equity Shares, are to be converted into Second Equity Shares pursuant to an amendment of the articles of the Corporation.
“Combination Store” means the retail stores operated by the LCBO that offer for sale Beer in all common package formats at the locations set out in Schedule 1.1 and at any additional locations established by the LCBO in accordance with the provisions set forth in Section 6.7.
“Consumer Retail Price” refers to the prices at which Beer is sold to the retail consumers in Ontario.
“Control” means:
(a) in relation to a corporation, the beneficial ownership at the relevant time of shares of such corporation carrying more than 50% of the voting rights ordinarily exercisable at meetings of shareholders of the corporation where such voting rights are sufficient to elect a majority of the directors of the corporation; and
(b) in relation to a Person that is a partnership, limited partnership, limited liability company or joint venture, the beneficial ownership at the relevant time of more than 50% of the ownership or voting interests of the partnership, limited partnership, limited liability company or joint venture in circumstances where it can reasonably be expected that the Person can direct the affairs of the partnership, limited liability company or joint venture;
and the words “Controlled by”, “Controlling” and similar words have corresponding meanings; the Person who Controls a Person shall be deemed to Control a corporation, partnership, limited liability company, joint venture or trust which is Controlled by such Person, and so on.
“Director” means a member of the Board.
“Eligible Qualifying Brewer” means a Qualifying Brewer that is (i) located or resident in the Province of Ontario and eligible to acquire First Equity Shares pursuant to the OSC Order, (ii) located or resident in a province or territory of Canada other than the Province of Ontario and eligible to acquire First Equity Shares pursuant to an exemption from prospectus requirements generally available under the applicable securities laws of that province or territory or (iii) neither located nor resident in Canada and that is eligible to acquire First Equity Shares pursuant to an exemption from the prospectus, registration or qualification requirements applicable under the securities laws of the jurisdiction outside of Canada in which the Qualifying Brewer is located or resident.
“First Equity Shares” means the First Equity Shares in the capital of the Corporation, issuable in series.
“Grocery Stores” will have the meaning set forth in applicable regulations.
“Independent Director” has the meaning set out in the Shareholders Agreement.
“Licensee” means a Person holding a liquor sales licence issued under the Liquor Licence Act (Ontario).
“New Beer Agreements” means this Agreement, the Shareholders Agreement, the ODRP Agreement, the Provincial Rights Agreement and the Termination Agreement.
“ODRP Agreement” means the Amended and Restated ODRP Agreement, substantially in the form of Exhibit B.
“Original Owners” has the meaning set out in the Recitals.
“OSC Order” means the decision of the Ontario Securities Commission rendered on ●, 2015 in response to an application filed by the Corporation pursuant to section 74(1) of the Securities Act (Ontario) confirming that the prospectus requirement contained in section 53(1) of the Securities Act (Ontario) will not apply to the issuance, from time to time, of First Equity Shares to Qualifying Brewers located or resident in the Province of Ontario.
“Pack-up Pricing” means the sale of Beer at a price that is less than the price determined by the applicable Brewer and approved by the Regulator that results from a discount or rebate offered to consumers for the purchase of (a) multiple Six-Packs or more than six Single Containers or (b) in the case of the sale of Beer in Combination Stores, in Test Stores participating in the Pilot Program or in additional LCBO stores if paragraph (e)(i) of Schedule 6.4 applies, multiple Twelve-Packs or more than twelve Single Containers, or any combination of the foregoing.
“Parties” means, collectively, the Original Owners, the Corporation and the Province, and “Party” means any one of them.
“Person” means any individual, sole proprietorship, partnership, firm, entity, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate, limited liability company, unlimited liability company, government, government regulatory authority, governmental department, agency, commission, board, tribunal, dispute settlement panel or body, bureau, court and, where the context requires, any of the foregoing when they are acting as trustee, executor, administrator or other legal representative.
“Production Year” means, in relation to a Sales Year, the 12-month period that ends on December 31 immediately before the beginning of the Sales Year.
“Provincial Rights Agreement” means the agreement between the Corporation and the Province substantially in the form of Exhibit C.
“Qualifying Brewer” means a Brewer that operates one or more facilities manufacturing Beer in Ontario, sells Beer Through the Corporation and satisfies the following criteria:
(a) it has a valid Ontario manufacturing licence issued by the Regulator;
(b) it has a valid Canadian manufacturing licence issued by the Canada Revenue Agency;
(c) it conducts the full brewing process up to the point of packaging, including mashing, lautering, boiling, hop separation and fermentation, in its Ontario Beer manufacturing facilities; and
(d) it either (A) does not produce Beer in any other jurisdiction or (B) its Ontario Beer manufacturing facilities have a minimum annual capacity of 10,000 hectolitres of Beer in the aggregate and a minimum annual production of 2,500 hectolitres of Beer in the aggregate.
“Regulator” means the LCBO, the Alcohol and Gaming Commission of Ontario and any other Ontario governmental authority or agent of the Province having jurisdiction over the sale, storage, distribution or consumption of beverage alcohol, or their successors.
“Sales Year” means a period of approximately 12 months:
(a) that begins on March 1 in a year or, if March 1 is a Saturday or Sunday, that begins on the following Monday; and
(b) that ends on the last day of February of the following year or, if the last day of February is a Friday or Saturday, that ends on the following Sunday.
“Second Equity Shares” means the Second Equity Shares in the capital of the Corporation.
“Shareholders Agreement” means the shareholders agreement relating to the Corporation, substantially in the form of Exhibit D.
“Single Container” means a bottle or can of Beer that includes a mechanism to indicate if the bottle has been tampered with (i.e., the single bottle is “tamper evident”).
“Six-Pack” means a SKU containing six or fewer Single Containers.
“SKU” means a stock-keeping unit (that is, a unit or package format in which Beer is sold, such as a Single Container, a Six-Pack, a Twelve-Pack, etc.) of an individual brand of a specific Brewer.
“Small Brewer” means, in respect of a Sales Year, a Brewer that meets each of the following qualifications in respect of the prior Production Year:
(a) it has worldwide production of Beer in the previous Production Year that was not more than 400,000 hectolitres or, if this is the first Production Year in which it manufactures Beer, worldwide production of Beer for the Production Year that is not expected to be more than 400,000 hectolitres;
(b) it is not a party to any agreement or other arrangement pursuant to which any Brewer that is not a Small Brewer manufactures Beer for it;
(c) is not a party to any agreement or other arrangement pursuant to which it manufactures Beer for any Brewer that is not a Small Brewer; and
(d) any Affiliate it has that manufactures Beer meets the qualifications set out in (a), (b)
and (c) above.
For purposes of this definition:
(e) the following will be included in determining the amount of a Small Brewer’s worldwide production of Beer for a particular Production Year:
(i) all Beer manufactured during the Production Year by the Small Brewer, including Beer that is manufactured under contract for another Brewer, whether or not that other Brewer is a Small Brewer;
(ii) all Beer manufactured during the Production Year by an Affiliate of the Small Brewer, including Beer manufactured by the Affiliate under contract for another Brewer, whether or not that other Brewer is a Small Brewer; and
(iii) all Beer manufactured during the Production Year by another Small Brewer under contract for the Small Brewer or for an Affiliate of the Small Brewer; and
(f) an agreement or arrangement referred to in clause (b) of this definition does not include an agreement or arrangement that provides only for the final bottling or other packaging by a Brewer that is not a Small Brewer, including any incidental processes such as final filtration and final carbonation or the addition of any substance to the Beer that, if added, must be added at the time of final filtration.
The Board may on or before the date of this Agreement designate Qualifying Brewers, other than the Original Owners, to be Small Brewers for purposes of this Agreement. Once a Brewer qualifies as, or is so designated as, a Small Brewer it shall remain a Small Brewer for so long as it remains a Qualifying Brewer and does not become an Affiliate of a Brewer that is not a Small Brewer. As of the date of this Agreement, the Board has designated each of Brick Brewing Co. Limited and Moosehead Breweries Limited to be a Small Brewer.
“Standalone Outlet” will have the meaning set forth in applicable regulations.
“Term” means the Initial Term and any Renewal Term.
“Termination Agreement” means the agreement, substantially in the form of Exhibit E, between the Corporation and the LCBO pursuant to which the 2000 Framework Agreement is terminated as at the Effective Date.
“Through the Corporation” means, when used in relation to sales of Beer, sales by a particular Brewer and its Affiliates (including domestic and imported Beer manufactured by, produced for or distributed by that Brewer and its Affiliates) through the Corporation to licensees and retail consumers, and in respect of sales through the Corporation to the LCBO (including northern agency stores and retail partners), one-half of the volume of such sales, but for clarity excluding sales of Beer to or through New Outlets.
“Twelve-Pack” means SKUs containing twelve Single Containers.
1.2 Additional Definitions
(a) Unless there is something inconsistent in the subject matter or context, or unless otherwise provided in this Agreement, all other words and terms used in this Agreement that are defined in the Act shall have the meanings set out in the Act.
(b) Additional definitions used in this Agreement:
Definition: | Where Defined: |
---|---|
“Annual Volume Cap” | Schedule 6.5 |
“Appeal Arbitration Tribunal” | Schedule 8.1 |
“Arbitration Tribunal” | Schedule 8.1 |
“Consultant” | Schedule 6.4 |
“Corporation” | Page 1 |
“Cost of Service Rebate” | Schedule 6.5 |
“Council” | Recital B |
“Critical Breach” | 8.6(c)(iii) |
“Dispute” | 8.1(a) |
“Dispute Parties” | 8.1(b) |
“Effective Date” | 2.1 |
“Final Annual Volume Cap” | Schedule 6.5 |
“Final Award” | 8.6(b) |
“Initial Annual Volume Cap” | Schedule 6.5 |
“Initial Term” | 8.4 |
“Key Principles” | Recital D |
“Labatt” | Page 1 |
“LCBO” | Recital A |
“LCBO Notice” | 6.7(a) |
“Molson” | Page 1 |
“NAFTA” | 8.7(e) |
“New LCBO Outlet Notice” | 6.7(a) |
“New Outlets” | 6.5(b) |
“Notice” | 8.9 |
“Pilot Program” | Schedule 6.4 |
“Pooling-Eligible Brewer” | 7.2 |
“Province” | Page 1 |
“Renewal Term” | 8.4 |
“Sleeman” | Page 1 |
“TBS Average Service Fee” | Schedule 6.5 |
“Test Stores” | Schedule 6.4 |
“Twelve-Pack Study” | Schedule 6.4 |
1.3 Certain Rules of Interpretation
In this Agreement:
(a) Time - Time is of the essence in the performance of the Parties’ respective obligations.
(b) Currency - Unless otherwise specified, all references to money amounts are to the lawful currency of Canada.
(c) Headings - Headings of Articles and Sections are inserted for convenience of reference only and shall not affect the construction or interpretation of this Agreement.
(d) Consent - Whenever a provision of this Agreement requires an approval or consent and such approval or consent is not delivered within the applicable time period, then, unless otherwise specified, the Party whose consent or approval is required shall be conclusively deemed to have withheld its consent or approval.
(e) Time Periods - Unless otherwise specified, time periods within or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the period commences and including the day which the period ends and by extending the period to the next Business Day following if the last day of the period is not a Business Day.
(f) Business Day - Whenever any payment to be made or action to be taken under this Agreement is required to be made or taken on a day other than a Business Day, such payment shall be made or action taken on the next Business Day following.
(g) Governing Law - This Agreement is a contract made under and shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable in the Province of Ontario.
(h) Including - Where the word “including” or “includes” is used in this Agreement, it means “including (or includes) without limitation”.
(i) No Strict Construction - The language used in this Agreement is the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against any Party.
(j) Number and Gender - Unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders.
(k) Severability - If, in any jurisdiction, any provision of this Agreement or its application to any Party or circumstance is restricted, prohibited or unenforceable, such provision shall, as to such jurisdiction, be ineffective only to the extent of such restriction, prohibition or unenforceability without invalidating the remaining provisions of this Agreement and without affecting the validity or enforceability of such provision in any other jurisdiction or without affecting its application to other Parties or circumstances.
(l) Statutory References - A reference to a statute includes all regulations made pursuant to such statute and, unless otherwise specified, the provisions of any statute or regulation that amends, supplements or supersedes, or is the successor of, any such statute or any such regulation.
1.4 Accounting Principles
Wherever in this Agreement reference is made to generally accepted accounting principles, such reference shall be deemed to be to International Financial Reporting Standards as issued by the International Accounting Standards Board, applicable as at the date on which the relevant calculation or action is made or taken or required to be made or taken in accordance with such standards.
1.5 Agreement Binding
(a) Each of the Corporation and each of the Original Owners represents and warrants that this Agreement constitutes a valid and legally binding obligation of it that is enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency and other laws of general application limiting the enforceability of creditors’ rights and to the fact that equitable remedies are available only in the discretion of the court.
(b) Subjection to Section (c), the Province represents and warrants that it has all necessary capacity, power and authority to enter into and to carry out the provisions of this Agreement and this Agreement has been duly authorized, executed and delivered by the Province and constitutes a legal, valid and binding obligation enforceable against the Province in accordance with the terms of this Agreement, subject to the qualifications on remedies against the Crown set out in the Proceedings Against the Crown Act (Ontario) and the courts’ general discretion with respect to equitable remedies.
(c) The Minister of Finance of Ontario or another Minister of the Crown will propose to the Cabinet and/or the Legislative Assembly of the Province any laws or other approvals deemed necessary or desirable to implement, monitor and enforce the provisions of this Agreement. Any statutory amendments so proposed shall be subject to approval by the Legislative Assembly of the Province. Nothing in this Agreement shall derogate from current or future legislative or regulatory authority under the Liquor Control Act (Ontario), Liquor Licence Act (Ontario), AGRPPA or any other statute or regulation of the Province, subject to the right of the Corporation and of the Original Owners to the remedies set out in Section 8.6 if legislative or regulatory changes result in a failure of the Province to meet its obligations under this Agreement.
(d) The obligations of the Corporation and of the Original Owners pursuant to this Agreement are premised upon, and shall be conditional upon, the Cabinet and/or the Legislative Assembly of the Province adopting or granting any laws or other approvals required for the implementation of the matters contemplated by this Agreement in all material respects.
1.6 Recitals, Exhibit and Schedules
The Recitals to this Agreement, and the Exhibit and Schedules to this Agreement, as listed below, are an integral part of this Agreement:
Exhibit A - Articles of Amendment
Exhibit B - ODRP Agreement
Exhibit C - Provincial Rights Agreement
Exhibit D - Shareholders Agreement
Exhibit E - Termination Agreement
Schedule 1.1 - Existing Combination Store Locations
Schedule 6.4 - Pilot Program
Schedule 6.5 - New Private Retail Outlets
Schedule 8.1 - Arbitration Procedures