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EXHIBIT 10.7
BOWATER INCORPORATED
RETIREMENT PLAN FOR OUTSIDE DIRECTORS
(AMENDED AND RESTATED AS OF FEBRUARY 26, 1999)
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TABLE OF CONTENTS
-Page-
PREAMBLE .................................................................iii
ARTICLE 1: DEFINITIONS
1.01 "Affiliate".....................................................1
1.02 "Board".........................................................1
1.03 "Change in Control".............................................1
1.04 "Committee".....................................................3
1.05 "Company".......................................................3
1.06 "Continuous Service"............................................3
1.07 "Director"......................................................3
1.08 "Earnings"......................................................3
1.09 "Effective Date"................................................3
1.10 "Final Average Earnings"........................................3
1.11 "Inside Director"...............................................3
1.12 "Outside Director"..............................................3
1.13 "Participating Director"........................................3
1.14 "Plan"..........................................................4
1.15 "Retire"........................................................4
1.16 "Service".......................................................4
ARTICLE 2: ELIGIBILITY TO RETIRE
2.01 General Service Requirement.....................................4
2.02 Waiver of Service and Other Requirements........................4
ARTICLE 3: COMMENCEMENT OF RETIREMENT INCOME
3.01 Early Retirement................................................4
3.02 Normal Retirement...............................................4
3.03 Postponed Retirement............................................5
ARTICLE 4: AMOUNT OF RETIREMENT INCOME
4.01 Normal Retirement Benefits......................................5
4.02 Early Retirement Benefits.......................................5
4.03 Postponed Retirement Benefits...................................5
4.04 Benefit Payments................................................5
ARTICLE 5: DEATH AND DISABILITY BENEFITS..................................6
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ARTICLE 6: COVENANTS OF DIRECTOR
6.01 During Continuation of Service..................................6
6.02 Following Retirement............................................6
ARTICLE 7: REMEDIES OF THE COMPANY........................................6
ARTICLE 8: GENERAL PROVISIONS
8.01 Limitation of Rights of the Director............................7
8.02 Discharge of Obligations........................................7
8.03 No Assignment of Benefits.......................................7
8.04 Payments to Incompetents........................................7
8.05 Construction....................................................7
8.06 Amendment or Termination........................................8
8.07 Funding.........................................................8
8.08 Governing Law...................................................8
ARTICLE 9: CLAIMS PROCEDURE
9.01 Submission of Claims............................................9
9.02 Written Notice of Denied Claim..................................9
9.03 Review of Decision Denying Claim................................9
9.04 Hearing.........................................................9
9.05 Written Decision of Committee...................................9
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BOWATER INCORPORATED
RETIREMENT PLAN FOR OUTSIDE DIRECTORS
(Amended and Restated as of February 26, 1999)
PREAMBLE
Establishment of Plan
The Bowater Incorporated Retirement Plan for Outside Directors (the "Plan") was
established effective July 1, 1988, for the benefit of Directors of Bowater
Incorporated who are not employees of the Company. The Plan is hereby amended
and restated as of February 26, 1999, to incorporate all amendments made through
such date.
Objective of Plan
Bowater recognizes that its long-term success and achievements are significantly
influenced by the expertise and continuity of its leadership. In view of this,
the Company has adopted this Plan.
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BOWATER INCORPORATED RETIREMENT PLAN
FOR
OUTSIDE DIRECTORS
(Amended and Restated as of
February 26, 1999)
ARTICLE 1: DEFINITIONS
The following words and phrases, when used in this Plan with an initial capital
letter, unless the context clearly indicates otherwise, shall have the following
meanings. Wherever applicable the masculine pronoun shall include the feminine
pronoun and the singular shall include the plural.
1.01 AFFILIATE: Any company directly or indirectly controlled by,
controlling, or under common control with the Company.
1.02 BOARD: The Board of Directors of the Company.
1.03 CHANGE IN CONTROL: A Change in Control shall be deemed to have occurred
upon:
(a) The date that any Person is or becomes an Acquiring Person.
(b) The date that the Corporation's shareholders approve a merger,
consolidation or reorganization of the Corporation with
another corporation or other Person, unless, immediately
following such merger, consolidation or reorganization, (i) at
least 50% of the combined voting power of the outstanding
securities of the resulting entity would be held in the
aggregate by the shareholders of the Corporation as of the
record date for such approval (provided that securities held
by any individual or entity that is an Acquiring Person, or
who would be an Acquiring Person if 5% were substituted for
20% in the definition of such term, shall not be counted as
securities held by the shareholders of the Corporation, but
shall be counted as outstanding securities for purposes of
this determination), or (ii) at least 50% of the board of
directors or similar body of the resulting entity are
Continuing Directors.
(c) The date the Corporation sells or otherwise transfers all or
substantially all of its assets to another corporation or
other Person, unless, immediately after such sale or transfer,
(i) at least 50% of the combined voting power of the
then-outstanding securities of the resulting entity
immediately following such transaction is held in the
aggregate by the Corporation's shareholders as determined
immediately prior to such transaction, (provided that
securities held by an individual or entity that is an
Acquiring Person, or who would be an Acquiring Person if 5%
were substituted for 20% in the definition of such
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term, shall not be counted as securities held by the
shareholders of the Corporation, but shall be counted as
outstanding securities for purposes of this determination),
any individual or entity that is an Acquiring Person, or who
would be an Acquiring Person if 5% were substituted for 20% in
the definition of such term, or (ii) at least 50% of the board
of directors or similar body of the resulting entity are
Continuing Directors.
(d) The date on which less than 50% of the total membership of the
Board consists of Continuing Directors.
For purposes of this definition:
(i) `Affiliate' and `Associate' shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934 (the
"Act").
(ii) `Acquiring Person' means the Beneficial Owner, directly or
indirectly, of Common Stock representing 20% or more of the
combined voting power of the Corporation's then outstanding
securities, not including (except as provided in clause (A) of
the next sentence) securities of such Beneficial Owner
acquired pursuant to an agreement allowing the acquisition of
up to and including 50% of such voting power approved by
two-thirds of the members of the Board who are Board members
before the Person becomes Beneficial Owner, directly or
indirectly, of Common Stock representing 5% or more of the
combined voting power of the Corporation's then outstanding
securities. Notwithstanding the foregoing, (A) securities
acquired pursuant to an agreement described in the preceding
sentence will be included in determining whether a Beneficial
Owner is an Acquiring Person if, subsequent to the approved
acquisition, the Beneficial Owner acquires 5% or more of such
voting power other than pursuant to such an agreement so
approved and (B) a Person shall not be an Acquiring Person if
such Person is eligible to and files a Schedule 13G with
respect to such Person's status as a Beneficial Owner of all
Common Stock of the Corporation of which the Person is a
Beneficial Owner.
(iii) A `Beneficial Owner' of Common Stock means (A) a Person who
beneficially owns such Common Stock, directly or indirectly,
or (B) a Person who has the right to acquire such Common Stock
(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.
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(iv) `Continuing Directors' means any member of the Board who (A)
was a member of the Board prior to the date of the event that
would constitute a Change in Control, and any successor of a
Continuing Director while such successor is a member of the
Board, (B) is not an Acquiring Person or an Affiliate or
Associate of an Acquiring Person, and (C) is recommended or
elected to succeed the Continuing Director by a majority of
the Continuing Directors.
(v) `Person' means any individual, firm, corporation, partnership,
trust or other entity.
1.04 COMMITTEE: The Executive Committee of the Board exclusive of any member
thereof who is at the time a "Participating Director" as that term is
hereinafter defined.
1.05 COMPANY: Bowater Incorporated.
1.06 CONTINUOUS SERVICE: Incumbency as a Director without interruption. For
the purpose hereof, Continuous Service shall include periods of
incumbency during disability or leave of absence granted by the
Company. Although incumbency while an Inside Director will not be
credited as Service, Service will not be deemed to be interrupted by
incumbency while an Inside Director.
1.07 DIRECTOR: Any individual who is elected and qualifies to serve as a
member of the Board. At all times of incumbency as a Director, an
individual is either an "Inside Director" or an "Outside Director" as
those terms are hereinafter defined.
1.08 EARNINGS: The regular retainer paid to a Director by the Company for
serving as a Director, excluding any reimbursement for out-of-pocket
expenses or fees paid for attendance at meetings of committees.
1.09 EFFECTIVE DATE: The date after which the provisions of this amended and
restated Plan shall be effective, which is February 26, 1999.
1.10 FINAL AVERAGE EARNINGS: The amount determined by dividing by four (4)
the annualized Earnings of a Director at the termination of his
Service.
1.11 INSIDE DIRECTOR: A Director who is an employee of the Company or any of
its Affiliates (but only during such times as such employment
continues).
1.12 OUTSIDE DIRECTOR: A Director who is not an Inside Director.
1.13 PARTICIPATING DIRECTOR: An Outside Director who continues to have
rights or contingent rights to benefits payable under this Plan, as
provided in Articles 2 and 3 and subject to the terms and conditions of
Articles 6 and 7.
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1.14 PLAN: The Bowater Incorporated Retirement Plan for Outside Directors,
as restated herein, and as it may be amended from time to time.
1.15 RETIRE: To terminate incumbency as a Director for any reason other than
death under circumstances which entitle a terminating Participating
Director to receive retirement income under this Plan. A change in
status which does not interrupt Continuous Service under Section 1.06
shall not constitute a termination for the purposes of this Section.
1.16 SERVICE: Incumbency, measured in years and months to the nearest whole
month, as an Outside Director of the Company. (While credit for Service
is not given for incumbency as an Inside Director, Continuous Service
is not deemed interrupted by such incumbency. See Section 1.06.)
ARTICLE 2: ELIGIBILITY TO RETIRE
2.01 GENERAL SERVICE REQUIREMENT: Except as provided in Section 2.02, a
Participating Director shall not be eligible to Retire until he has
completed five (5) years of Service in Continuous Service.
2.02 WAIVER OF SERVICE AND OTHER REQUIREMENTS: Any Participating Director
who was a Director immediately prior to a Change in Control of the
Company who is removed from or not renominated to his directorship
following such Change in Control shall not be required to meet the
service requirement imposed by Section 2.01 hereof and shall be
eligible to Retire early pursuant to Section 3.01 without the consent
of the Company and without regard to his attained age at the time of
such retirement.
ARTICLE 3: COMMENCEMENT OF RETIREMENT INCOME
3.01 EARLY RETIREMENT: A Participating Director may, with the consent of the
Company, Retire on the first day of any month on or after his
attainment of age fifty-five (55) and the completion of five (5) years
of Service in Continuous Service, and may elect to commence receiving
benefits on or after that date.
3.02 NORMAL RETIREMENT: A Participating Director may, with the consent of
the Company, Retire on the first day of the month following his
attainment of age sixty-five (65) and the completion of five (5) years
of Service in Continuous Service and commence receiving benefits on
that date.
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3.03 POSTPONED RETIREMENT: A Participating Director who remains a Director
of the Company beyond attainment of age sixty-five (65) may Retire on
the first day of any month following his attainment of age sixty-five
(65) and the completion of five (5) years of Service in Continuous
Service but not later than the expiration of the final term on the
Board of Directors to which he was elected in accordance with Section
4.15 of the Company's By-laws. He may commence receiving benefits as of
the date he retires.
ARTICLE 4. AMOUNT OF RETIREMENT INCOME
4.01 NORMAL RETIREMENT BENEFITS: The normal retirement income benefit
payable under this Plan shall be a quarterly payment commencing as of
the first day of the month following the Participating Director's
sixty-fifth (65th) birthday equal to ten percent (10%) of the
Participating Director's Final Average Earnings multiplied by the
Participating Director's years of Service in Continuous Service up to a
maximum of 10 with proportionate credit for completed months.
4.02 EARLY RETIREMENT BENEFITS: If a Participating Director retires early
pursuant to Section 3.01 hereof, his retirement benefits will be based
on his accrued benefit determined under Section 4.01 as of the date of
his early retirement. Such benefits shall be actuarially reduced for
the period (if any) by which the commencement of benefits precedes the
first day of the month following the Participating Director's
sixty-fifth (65th) birthday. The mortality table used for purposes of
calculating the actuarial reduction hereunder shall be the Unisex
Pension Table, 1984 (set forward one year) and the assumed interest
rate shall be eight percent (8%) per annum.
4.03 POSTPONED RETIREMENT BENEFITS: In the event of postponed retirement
pursuant to Section 3.03 hereof, a Participating Director's retirement
benefits will be based on his accrued benefit determined under Section
4.01 as of the date of his termination of Service. Such benefits shall
commence as of the Participating Director's termination of Service, but
shall not be actuarially increased to reflect commencement subsequent
to the attainment of age sixty-five (65).
4.04 BENEFIT PAYMENTS: Retirement benefits payable pursuant to this Article
shall be paid in arrears as quarterly payments on the first day of each
calendar quarter. The first payment shall be paid on the first day of
the calendar quarter next following the date as of which benefits are
scheduled to commence pursuant to the provisions of Section 4.01, 4.02
or 4.03, as applicable. In any event, the last installment shall be
payable as of the first day of the month in which the Participating
Director dies and paid on the first day of the next following calendar
quarter.
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ARTICLE 5: DEATH AND DISABILITY BENEFITS
There are no death or disability benefits under this Plan.
ARTICLE 6: COVENANTS OF DIRECTOR
6.01 DURING CONTINUATION OF SERVICE: As long as a Director continues in
Service, the Director shall devote his best efforts and undivided
loyalty to the Company, and devote such time to his tasks as a Director
as shall be required to discharge his obligations to the best of his
abilities.
6.02 FOLLOWING RETIREMENT: If a Participating Director's Service to the
Company terminates under circumstances which obligate the Company to
make quarterly payments under the provisions of Article 4, the
Participating Director shall not, for a period of five (5) years
thereafter, serve as a principal, director, officer or employee of a
corporation or other entity which competes directly or indirectly with
the Company or any of its Affiliates in any geographic area where the
Company or any of its Affiliates is conducting or actively proposing to
conduct its business, and shall be available to the Company at the
mutual convenience of the parties, from time to time, to consult with
the Company in an advisory capacity if, and when, the Participating
Director is reasonably requested to do so by the Company.
ARTICLE 7: REMEDIES OF THE COMPANY
Upon the occurrence of any one or more of the following circumstances:
(a) If the Director's Service is terminated whether by the
Director, by the Company or its shareholders, for any reason
prior to the Director's completion of five (5) years of
Service in Continuous Service;
(b) If the Participating Director is at any time removed from
incumbency as a Director for reasons deriving from his gross
negligence or misconduct, detrimental to the business
interests of the Company, or for criminal conduct of any type
(regardless of the effect thereof on the business interest of
the Company); or
(c) If the Participating Director at any time fails to comply with
the requirements of Article 6 hereof;
then and in any such event the Company's obligation to pay or provide
benefits hereunder to any such Participating Director shall
automatically cease and terminate, and neither said Participating
Director nor any other person claiming any benefit pursuant to said
Participating Director's participation in this Plan shall have any
rights, claims or causes of action hereunder against the Board, the
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Company or any person acting on their behalf. The Company's sole remedy
for breach by the Participating Director of the provisions of Article 6
hereof shall be to cease paying or providing benefits pursuant to the
provisions of this Article 7, but this shall not preclude the Company
from recovering from a Participating Director damages inflicted on the
Company or its affiliates by conduct of a Participating Director which
renders the Participating Director liable to the Company independently
of the fact that such conduct constitutes a breach of the Participating
Director's covenants in Article 6 hereof.
ARTICLE 8: GENERAL PROVISIONS
8.01 LIMITATION OF RIGHTS OF THE DIRECTOR: Inclusion under the Plan shall
not give a Director any right or claim to a benefit, except as
specifically defined in this Plan. The establishment of the Plan shall
not be construed as giving any Director a right to be continued in
Service as a Director of the Company.
8.02 DISCHARGE OF OBLIGATIONS: The Company may at any time fully and
completely satisfy and discharge all its obligations hereunder to a
Participating Director by:
(a) delivering, or causing to be delivered, to the Participating
Director a fully-paid annuity policy issued by a corporate
insurer, providing quarterly or more frequent payments equal
to (or greater than) the amount the Company is obligated to
pay hereunder, or
(b) making some other comparable arrangement for the Participating
Director; provided that provision is made for not less than
the benefits to which the Participating Director may be
entitled under the provisions hereof, whether or not such
rights are enforceable at the time.
8.03 NO ASSIGNMENT OF BENEFITS: None of the rights of the Participating
Director under this Plan shall be assignable in whole or in part either
inter vivos or by will or succession, but shall be personal to the
individual Participating Director.
8.04 PAYMENTS TO INCOMPETENTS: In the event that any quarterly payment
hereunder becomes payable to a person adjudicated to be incompetent,
payment thereof to the guardian or legal representative of such person
shall constitute full and complete compliance herewith and entitle the
Company to discharge with respect thereto.
8.05 CONSTRUCTION: Subject to the provisions of Article 9, the decision of
the Committee on all matters concerning the interpretation and
administration of this Plan shall be final. Each Director agrees, as a
condition to participation herein, to be bound by all actions and
interpretations regarding this Plan by the Committee.
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Neither the Board, the Committee, any individual Director nor any
persons acting on their behalf shall be subject to any liability to any
Director or other person in the construction and administration of this
Plan.
8.06 AMENDMENT OR TERMINATION: The Company reserves the right at any time,
and from time to time, by action of a majority of the Committee at a
meeting at which all members thereof are present and voting or the
required notice of which contained an accurate summary of the action
proposed for vote, to amend, in whole or in part, any or all of the
provisions of this Plan including the right to terminate the Plan at
any time; provided, however, that no such amendment or termination
shall affect adversely benefits under this Plan already being paid or
having become unconditionally payable pursuant to the terms hereof
either due to Participating Director's completion of Five (5) years of
Service in Continuous Service prior to the date of such amendment or
termination, or because the Participating Director was removed from or
not renominated to his directorship (whether before or after such
amendment or termination) under circumstances entitling the
Participating Director to Retire.
8.07 FUNDING: The Company's obligations under this Plan shall be unfunded,
and the Company shall not be obligated under any circumstances to fund
its obligations under this Plan. The Company may, however, at its sole
and exclusive option, informally fund all or a part of this Plan. If
the Company decides upon such informal funding, the manner, continuance
or discontinuance of such informal funding shall be the sole and
exclusive decision of the Company.
If the Company shall decide to purchase life insurance on the lives of
Participants, the Company (or, in any event a nominee, agent or
fiduciary of the Company whose duty it is to deliver or pay over such
policies to the Company or its creditors in the event of insolvency)
shall be the owner of such insurance, and the form and amount of such
insurance shall be the sole and exclusive decision of the Company.
If the Company decides to formally fund this Plan through the purchase
of insurance, any Participating Director shall agree to submit to
medical examinations, supply any information, and execute any documents
required by the insurance company or companies to which the Company may
have applied for such insurance.
8.08 GOVERNING LAW: To the extent not preempted by the Employee Retirement
Income Security Act of 1974, as amended from time to time, this Plan
shall be governed by and interpreted in accordance with the laws of the
State of Connecticut and, subject to Section 8.06 above, shall be
binding upon the Company and its successors, including any successor
which acquires all or substantially all of the assets of the Company.
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ARTICLE 9: CLAIMS PROCEDURE
9.01 SUBMISSION OF CLAIMS: Claims for benefits under the Plan shall be
submitted in writing to the Committee or a person designated by the
Committee for this purpose. Written notice of the disposition of a
claim shall be furnished to the claimant within 90 days after the
application therefor is filed. (The 90-day notice period shall,
however, be extended for an additional 90 days if the Committee
determines that such an extension of time is necessary to process the
claim and so advises the claimant in writing within 90 days after
receipt of the claim, which writing shall also indicate the special
circumstances requiring an extension of time and the date by which the
Committee expects to render the final decision.)
9.02 WRITTEN NOTICE OF DENIED CLAIM: The Committee shall provide adequate
notice in writing to any person whose claim for benefits has been
denied. Such notice shall set forth the specific reason or reasons for
the denial and shall be written in a manner calculated to be understood
by the recipient. Such notice shall also refer specifically to
pertinent Plan provisions on which the denial is based; shall describe
any additional material or information necessary for the claimant to
perfect the claims; and shall explain why such material or information
is necessary. Such notice shall also explain the Plan's claims review
procedure.
9.03 REVIEW OF DECISION DENYING CLAIM: The Committee shall afford to any
person whose claim for benefits has been denied a reasonable
opportunity for a full and fair review of the decision denying the
claim. The claimant or his duly authorized representative shall request
such review in writing not more than 90 days after receipt by the
claimant of written notification of denial of a claim. Within ten days
after, or as part of, a timely request for review, the claimant may
submit issues and comments in writing and may review pertinent
documents.
9.04 HEARING: Upon receipt of a timely request for review the Committee may,
in its discretion, appoint one or more of its members to hear the
claimant's request and inquire into the merits of the matter. Such
member(s) shall meet promptly with the claimant and/or his duly
authorized representative and hear such arguments and/or examine such
documents as the claimant or his representative shall present. The
member(s) shall then report his (their) findings to the Committee
orally or in writing.
9.05 WRITTEN DECISION OF COMMITTEE: A decision of the Committee on review of
a claim shall be in writing and shall include specific reasons for the
decision, written in a matter calculated to be understood by the
claimant. Such decision shall include specific references to the
pertinent Plan provision on which the decision is based. The decision
shall be made promptly and not later than 60 days after a request for
review, unless special circumstances require an extension. In such
case, the claimant shall be so advised in writing prior to the
expiration of
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the initial 60-day period and a decision shall be rendered as soon as
possible, but not later than 120 days after receipt of a request for
review.
IN WITNESS WHEREOF, the Company has caused this document to be executed
by its duly authorized officer as of February 26, 1999.
BOWATER INCORPORATED
By: /s/ James T. Wright
------------------------------------
Name: James T. Wright
Title: Vice President - Human Resources
Date Signed: June 2, 1999
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