EXHIBIT 10.12
Second Amendment to the
Bowater Incorporated Compensatory Benefits Plan
As Amended and Restated Effective February 26, 1999
WHEREAS, Bowater Incorporated (the "Company") previously amended and
restated the Bowater Incorporated Compensatory Benefits Plan as of February 26,
1999 (the "Plan");
WHEREAS, Section 10(a) of the Plan permits the Human Resources and
Compensation Committee of the Board of Directors of the Company (the "HRCC") to
amend the Plan; and
WHEREAS, the HRCC desires to amend the Plan to: (1) provide that amounts
earned, deferred and vested under the Plan as of December 31, 2004 are
grandfathered, within the meaning of, and as determined under, regulations
issued by the Department of the Treasury under Internal Revenue Code (the
"Code") Section 409A, (2) provide that the Company's President and Chief
Executive Officer shall not be eligible to participate in the Plan effective as
of May 1, 2006 pursuant to his Employment Agreement dated April 4, 2006, (3)
eliminate the Plan Administrator's discretion to pay benefits in installments
upon a participant's retirement or disability, and (4) provide that the
distribution of any portion of the Plan's benefits subject to Code Section 409A
shall be subject to a six-month delay in payment for any participant who
"separates from service" (within the meaning of Code Section 409A and the
Treasury Regulations promulgated thereunder) and is determined to be a "key
employee" (within the meaning of Code Section 409A and the Treasury Regulations
promulgated thereunder).
NOW, THEREFORE, the Plan is amended, effective as of the dates set forth
below, in the following respects:
1. Section 1 is amended, effective as of January 1, 2005, by adding a new
paragraph at the end thereto to read as follows:
"Notwithstanding any other provision of the Plan to the contrary, effective
as of January 1, 2005, any amounts that are earned and deferred under the Plan,
but not vested as of December 31, 2004, shall be subject to Internal Revenue
Code (the `Code') Section 409A and the Treasury Regulations promulgated
thereunder. For such amounts, the Plan shall be interpreted and administered
consistent with Code Section 409A and the Treasury Regulations promulgated
thereunder. Any amounts that are earned, deferred and vested under the Plan as
of December 31, 2004 are `grandfathered' (within the meaning of, and as
determined in accordance with, Section 409A of the Code and the Treasury
Regulations thereunder). Therefore, such grandfathered amounts are not subject
to Section 409A of the Code."
2. Section 3 is amended, effective as of May 1, 2006, by adding the
following sentence at the end thereto to read as follows:
"Notwithstanding the foregoing, effective as of May 1, 2006, the Company's
President and Chief Executive Officer shall not be an Eligible Employee in
accordance with his Employment Agreement dated April 4, 2006."
3. Section 7(a) is amended, effective as of January 1, 2005, to read as
follows:
"(a) Upon the Retirement or Disability of an Eligible Employee, the value
of such Eligible Employee's Book Account shall be distributed to the
Eligible Employee in a lump sum cash payment, subject to a six-month
delay in payment for any Eligible Employee who `separates from
service' (within the meaning of Code Section 409A and the Treasury
Regulations promulgated thereunder) upon Retirement and is determined
to be a `key employee' (within the meaning of Code Section 409A and
the Treasury Regulations promulgated thereunder). If payment is
subject to the six-month delay, payment shall be made on the first day
of the seventh month following the Eligible Employee's separation from
service."
4. Section 7(c) is amended, effective as of January 1, 2005, by amending
the first paragraph to read as follows:
"(c) Upon termination of Employment of an Eligible Employee other than by
Retirement, death or Disability, and other than by transfer to an
Affiliated Company, the vested value of such Eligible Employee's Book
Account shall be paid to him or her in a lump sum. Notwithstanding the
foregoing, distributions made to `key employees' (within the meaning
of Code Section 409A and the Treasury Regulations promulgated
thereunder) upon a `separation from service' (within the meaning of
Code Section 409A and the Treasury Regulations promulgated thereunder)
shall be made on the first day of the seventh month following the
Eligible Employee's separation from service. The vested value of an
Eligible Employee's Book Account shall include the entire value of
such Eligible Employee's Book Account if he or she has completed at
least three Years of Service upon such termination of Employment.
Notwithstanding the foregoing, the vested value of the Book Account
for Bruce Nunn shall be the value of his Book Account. An Eligible
Employee who has completed less than three Years of Service as of such
termination of Employment shall forfeit his or her entire Book
Account; provided, however that the Forfeiture shall be reinstated if
the Eligible Employee is reemployed by the Company, at any time before
he or she has five years of Break in Service. For purposes of this
Section 7(c), a change in control of the Company shall be deemed to
have occurred on the occurrence of any event(s) which constitute(s) a
`change in control' of the Company as defined herein."
* * *
IN WITNESS WHEREOF, the HRCC has caused this Second Amendment to the Plan
to be executed by a duly authorized officer this 11th day of May, 2006.
BOWATER INCORPORATED
By: /s/ James T. Wright
----------------------
James T. Wright
Title: Senior Vice President -
Human Resources