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EXHIBIT 10.8
SUPPLEMENTAL BENEFIT PLAN FOR DESIGNATED EMPLOYEES OF
BOWATER INCORPORATED AND AFFILIATED COMPANIES
AS AMENDED AND RESTATED
EFFECTIVE FEBRUARY 26, 1999
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PREAMBLE
Establishment of Prior Plans
The Supplemental Benefit Plan of Bowater Incorporated (the "Bowater
Plan") was established effective December 31, 1971, for the benefit of
designated employees of Bowater Incorporated. The Supplemental Benefit
Plan for Designated Employees of Bowater Southern Paper Company and
Bowater Carolina Company, Divisions of Bowater Incorporated, and other
Participating Divisions of Bowater Incorporated (the "Southern Plan")
was established effective July 1, 1981, for the benefit of designated
employees of Bowater Southern Paper Company, Bowater Carolina Company
and certain other divisions of Bowater Incorporated.
Consolidation and Restatement of Plans
Each of the Bowater Plan and the Southern Plan provided that it could be
amended at any time and from time to time. The Bowater Plan and the
Southern Plan were amended and restated in their entirety effective
August 22, 1990. From and after the effective date thereof, the Bowater
Plan and the Southern Plan were deemed to be one plan. Anyone who was a
participant under either of these prior plans on the effective date of
this consolidation and restatement was a participant in this
Supplemental Benefit Plan for Designated Employees of Bowater
Incorporated and Affiliated Companies (the "Plan"). The continued
eligibility of such persons to participate in the Plan is determined by
the provisions hereof. The Plan was restated in its entirety as of
November 1, 1995, in order to incorporate previous amendments and to
clarify the meaning of certain provisions. The Plan is now being
restated in its entirety as of February 26, 1999, in order to
incorporate amendments that have been previously adopted.
Objective of Plan
The purpose of the Plan is to provide an inducement to key employees of
Bowater Incorporated (the "Corporation") and key employees of affiliated
companies to which the Board of Directors of Bowater Incorporated
extends the Plan to remain in the employment of the Employer (as
hereinafter defined) by providing retirement benefits supplemental to
those available under the Corporation's basic qualified benefit plans.
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Table of Contents
Page
Preamble ...........................................................i
ARTICLE I: DEFINITIONS
1.01 "Acquiring Person".........................................1
1.02 "Affiliate" and "Associate"................................1
1.03 "Affiliated Company".......................................1
1.04 "Age" .....................................................1
1.05 "Beneficial Owner".........................................1
1.06 "Board"....................................................2
1.07 "Cause"................................................... 2
1.08 "Change in Control"........................................2
1.09 "Child or Children" .......................................3
1.10 "Code".................................................... 3
1.11 "Committee"................................................3
1.12 "Compensation".............................................3
1.13 "Continuing Director"..................................... 3
1.14 "Corporation"..............................................3
1.15 "Disability"...............................................3
1.16 "Effective Date"...........................................3
1.17 "Eligible Dependents" .....................................4
1.18 "Employee" ................................................4
1.19 "Employer".................................................4
1.20 "ERISA"....................................................4
1.21 "Exchange Act".............................................4
1.22 "Final Average Monthly Compensation"...................... 4
1.23 "Normal Retirement Age"....................................4
1.24 "Normal Retirement Date" ..................................4
1.25 "Other Benefits" ..........................................4
1.26 "Participant"..............................................4
1.27 "Person".................................................. 4
1.28 "Plan".....................................................5
1.29 "Plan Administrator" ......................................5
1.30 "Plan Name"................................................5
1.31 "Retirement".............................................. 5
1.32 "Spouse" ..................................................5
1.33 "Years of Service" .......................................5
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ARTICLE 2: PARTICIPATION AND ELIGIBILITY FOR BENEFITS
2.01 Participation............................................. 5
2.02 Pension Plan Contingent Annuitant Option ..................6
2.03 Effect on Other Plans .....................................6
ARTICLE 3: AMOUNT OF RETIREMENT INCOME
3.01 Normal Retirement Benefits ................................6
3.02 Early Retirement Reduction................................ 6
3.03 Benefit Payments ..........................................6
3.04 Calculation of Deductions for Other Benefits ..............7
ARTICLE 4: DEATH AND DISABILITY BENEFITS
4.01 Spouse's Pre-Retirement Death Benefits.................... 7
4.02 Spouse's Post-Retirement Death Benefits ...................7
4.03 Children's Death Benefits .................................8
4.04 Disability Benefits .......................................8
ARTICLE 5: GROUP MEDICAL INSURANCE AND LIFE INSURANCE
5.01 Medical Insurance......................................... 9
5.02 Life Insurance............................................10
ARTICLE 6: COVENANTS OF EMPLOYEE
6.01 During Continuation of Employment.........................11
6.02 Following Termination of Employment.......................11
6.03 Remedy for Breach .......................................12
ARTICLE 7: OBLIGATION TO PAY BENEFITS
7.01 Employer Obligated to Pay.................................12
7.02 Amendment or Termination of the Plan......................12
7.03 Subsequent to a Change in Control of the Corporation......13
7.04 Transfers of Employment...................................13
ARTICLE 8: GENERAL PROVISIONS
8.01 Limitation of Rights of the Employee......................14
8.02 Discharge of Obligations..................................14
8.03 No Assignment of Benefits.................................15
8.04 Administrative Powers Relating to Payment.................15
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8.05 Multiple Claimants .......................................15
8.06 Administration............................................15
8.07 Indemnification...........................................16
8.08 Expenses..................................................16
8.09 Funding ..................................................16
8.10 Payment of Participant's Expenses.........................16
8.11 Governing Law ............................................16
8.12 Severability .............................................17
8.13 Named Fiduciary ..........................................17
ARTICLE 9: CLAIMS PROCEDURE
9.01 Submission of Claims .....................................17
9.02 Written Notice of Denied Claim ...........................17
9.03 Review of Decision Denying Claims ........................17
9.04 Hearing ..................................................17
9.05 Written Decision of Plan Administrator ...................17
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ARTICLE 1: DEFINITIONS
Unless the context clearly indicates otherwise, the following words and
phrases, when used herein with an initial capital letter, shall have the
following meanings. Wherever applicable the masculine pronoun shall include the
feminine pronoun and the singular shall include the plural.
1.01 "ACQUIRING PERSON" shall mean 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 (i) 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, (i) 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 (ii) 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.
1.02 "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 and Exchange Act of 1934.
1.03 "AFFILIATED COMPANY" shall mean any corporation that is a member of a
controlled group of corporations (as defined in Code Section 414(b))
which includes the Corporation; any trade or business (whether or not
incorporated) which is under common control (as defined in Code
Section 414(c)) with the Corporation; any organization (whether or
not incorporated) which is a member of an affiliated service group
(as defined in Code Section 414(m)) that includes the Corporation;
and any other entity required to be aggregated with the Corporation
pursuant to regulations under Code Section 414(o). With respect to
periods prior to July 23, 1984, Affiliated Company includes any
corporation that would have been an Affiliated Company prior to the
separation under United Kingdom law of Bowater Incorporated from
Bowater plc.
1.04 "AGE" shall mean an Employee's attained age in years and completed
months.
1.05 "BENEFICIAL OWNER" of Common Stock means (i) a Person who
beneficially owns such Common Stock, directly or indirectly, or (ii)
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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1.06 "BOARD" shall mean the Board of Directors of the Corporation, as
constituted from time to time.
1.07 "CAUSE" shall mean the Participant's gross negligence or willful
misconduct, which negligence or misconduct has a demonstrable and
material adverse effect upon the Corporation or an Affiliated
Company, provided that the Plan Administrator or the Employer shall
have given the Participant written notice of the alleged negligence
or misconduct and the Participant shall have failed to cure the
negligence or misconduct within thirty (30) days after receipt of the
notice. The Participant shall be deemed to have been terminated for
Cause effective upon the effective date stated in a written notice of
termination delivered by the Plan Administrator or the Employer to
the Participant setting forth in reasonable detail the facts and
circumstances claimed to provide the basis for the Participant's
termination.
1.08 "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 such 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 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; or
(d) the date on which less than 50% of the total membership of
the Board consists of Continuing Directors.
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1.09 "CHILD OR CHILDREN" of the Participant shall mean any child or
children who are issue of any marriage contracted by the Participant
(either before or after their birth) or who have been legally adopted
by the Participant by the age of twenty-one (21).
1.10 "CODE" shall mean the Internal Revenue Code of 1986, and any
amendments thereto.
1.11 "COMMITTEE" shall mean the Human Resources and Compensation Committee
of the Board of Directors of the Corporation.
1.12 "COMPENSATION" shall mean the entire cash compensation paid to, or
deferred for the benefit of, a Participant by the Employer as salary,
wages, commissions, overtime pay, regular bonuses paid under the
Bowater Incorporated Annual Incentive Plan, severance pay paid in
periodic installments, Employer contributions made pursuant to a
salary reduction agreement that are not includible in the gross
income of the Participant under Code Sections 125, 401(e)(3), 402(h)
or 403(b), and any compensation that is contributed to a plan
maintained by an Employer on behalf of the Participant under Code
Section 401(k), but excluding any non-cash remuneration, income
received upon the exercise of a stock option or stock appreciation
right, bonuses received under a long term cash incentive plan, other
special remuneration, and any benefits and credits under this or any
other employee benefit plan of the Employer.
1.13 "CONTINUING DIRECTOR" shall mean any member of the Board who (i) 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, (ii) is not
an Acquiring Person or an Affiliate or Associate of an Acquiring
Person, and (iii) is recommended or elected to succeed the Continuing
Director by a majority of the Continuing Directors.
1.14 "CORPORATION" shall mean Bowater Incorporated and any successor to
its business or assets, whether by purchase, merger, consolidation or
otherwise.
1.15 "DISABILITY" shall mean the status of being eligible for and
receiving the benefits provided under the Long-Term Disability Plan
of the Participant's Employer, provided that if a Participant is
enrolled in a Long-Term Disability Plan of the Corporation or an
Affiliated Company and the plan is discontinued while the Participant
is a Participant in the plan, for purposes of this Plan, the
Participant shall be deemed disabled at the time he would have been
eligible for benefits under the Long-Term Disability Plan in effect
immediately prior to its termination had that plan not been
terminated. The determination of whether and when a Participant would
have been eligible for benefits under any terminated plan shall be
made by the Plan Administrator in its sole discretion.
1.16 "EFFECTIVE DATE" shall mean the date on which the provisions of this
amended and restated Plan shall be effective, which is February 26,
1999, unless otherwise provided herein.
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1.17 "ELIGIBLE DEPENDENTS" shall mean those dependents of the Participant
that are considered eligible to receive medical benefits under the
Corporation's group medical benefit plan.
1.18 "EMPLOYEE" shall mean any individual employed by the Employer other
than an independent contractor.
1.19 "EMPLOYER" shall mean the Corporation and any subsidiary or
affiliated employer authorized by the Corporation to adopt and
participate in this Plan.
1.20 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
1.21 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
1.22 "FINAL AVERAGE MONTHLY COMPENSATION" shall mean the average of the
Participant's Compensation for the highest thirty-six (36)
consecutive calendar months in the last sixty (60) months immediately
preceding his termination date and further divided by thirty-six
(36); except that (i) if the Participant earns Compensation in fewer
than sixty (60) months preceding his termination date, his "Final
Average Monthly Compensation" shall be based on Compensation for the
highest thirty-six (36) consecutive calendar months preceding his
termination date, and (ii) if the Participant earns Compensation in
fewer than thirty-six (36) consecutive calendar months preceding his
termination date, his "Final Average Monthly Compensation" shall be
based on Compensation for all months preceding his termination date.
1.23 "NORMAL RETIREMENT AGE" shall mean the day on which the Participant
attains his sixty-fifth (65th) birthday.
1.24 "NORMAL RETIREMENT DATE" shall mean the first day of the calendar
month coinciding with or next following the Participant's Normal
Retirement Age.
1.25 "OTHER BENEFITS" shall mean any benefits payable to a Participant, or
his Spouse or Children on behalf of the Participant, under the
Bowater Incorporated Benefits Equalization Plan or under any
qualified defined benefit pension plan of the Corporation or any
Affiliated Company.
1.26 "PARTICIPANT" shall mean anyone who is eligible to participate in the
Plan as provided in Article 2, and who continues to have rights or
contingent rights to benefits payable under this Plan, subject to the
terms and conditions of Article 6. A Participant whose employment is
terminated for Cause shall no longer be a Participant, and his Spouse
and Children will no longer be entitled to benefits.
1.27 "PERSON" means any individual, firm, corporation, partnership, trust
or other entity.
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1.28 "PLAN" shall mean this Supplemental Benefit Plan for Designated
Employees of Bowater Incorporated and Affiliated Companies, as stated
herein, and as it may be amended from time to time.
1.29 "PLAN ADMINISTRATOR" shall mean the Committee or any successor
appointed by the Board or its designee.
1.30 "PLAN NAME" shall be Supplemental Benefit Plan for Designated
Employees of Bowater Incorporated and Affiliated Companies.
1.31 "RETIREMENT" shall mean the status of having terminated employment
and being eligible for the payment of benefits either immediately or
at some future date under any qualified defined benefit pension plans
of the Participant's Employer and any Affiliated Company in which he
participates, provided a Participant whose employment is terminated
for Cause shall not be deemed to have retired for purposes of the
Plan.
1.32 "SPOUSE" shall mean the person legally married to a Participant and
from whom the Participant is not legally separated at the time of his
death.
1.33 "YEARS OF SERVICE" shall mean the Participant's aggregate period of
employment consisting of years of service and parts thereof as
computed, for benefit accrual purposes, according to the qualified
defined benefit pension plan of the Corporation; provided that "Years
of Service" for an Employee who is not a Participant hereunder as of
his termination date shall not include any period after the last date
on which he was a Participant.
ARTICLE 2: PARTICIPATION AND ELIGIBILITY FOR BENEFITS
2.01 PARTICIPATION: Employees of the Corporation who (i) are in salary
grades thirty-one (31) and above, or (ii) are designated as eligible
by the Committee, shall be Participants in the Plan. Should the Plan
be extended to an Affiliated Company that adopts the Plan, the
Committee shall designate which Employees of such Affiliated Company
shall participate in the Plan. Subject to the provisions of Section
7.04(a)(i), a Participant who ceases to be an Employee of the
Corporation or an Affiliated Company that has adopted the Plan or who
(a) is no longer in salary grade thirty-one (31) or above, or (b) is
designated by the Committee as no longer eligible to participate in
the Plan, will cease accruing benefits under the Plan, unless and
until the Participant again becomes eligible to be a Participant in
the Plan.
Notwithstanding the foregoing, the Employee's Compensation shall
continue to be included for purposes of determining his Final Average
Monthly Compensation under Article 3.
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2.02 PENSION PLAN CONTINGENT ANNUITANT OPTION: A Participant who is
married on the date benefits become payable under Section 3.03 must
have elected, and not subsequently revoked, a fifty percent (50%) or
higher contingent annuitant option (with his Spouse as contingent
annuitant) under all qualified defined benefit pension plans of his
Employer and any Affiliated Company in which he participates in order
for him, his Spouse or his Children to be eligible for benefits under
the Plan.
2.03 EFFECT ON OTHER PLANS: Although the Plan references the provisions of
other plans established by the Corporation and its Affiliated
Companies, the provisions of those plans will not be changed or
enlarged hereby.
ARTICLE 3: AMOUNT OF RETIREMENT INCOME
3.01 NORMAL RETIREMENT BENEFITS: Subject to the provisions of Sections
2.01, 2.02, 6.03, 7.02 and 7.04, a Participant (i) whose Retirement
occurs on or after his Normal Retirement Date, or (ii) whose
Retirement occurs before his Normal Retirement Date but who does not
commence receiving benefits under the qualified defined benefit
pension plan of his Employer or an Affiliated Employer in which he
participates until on or after his Normal Retirement Date, shall be
entitled to a monthly benefit equal to (a) plus (b) minus (c) below:
(a) Two-and-one-half percent (2-1/2%) of Final Average Monthly
Compensation for each Year of Service up to twenty (20)
Years of Service.
(b) One percent (1%) of Final Average Monthly Compensation for
each Year of Service greater than twenty (20) and up to
thirty (30) Years of Service.
(c) Any Other Benefits which may be payable in any month to
the Participant.
3.02 EARLY RETIREMENT REDUCTION: Subject to the provisions of Sections
2.01, 2.02, 6.03, 7.02 and 7.04, when a Participant commences
receiving benefits under a qualified defined benefit pension plan of
his Employer or an Affiliated Company prior to his Normal Retirement
Date, he also shall begin receiving the monthly benefit determined
under paragraphs (a) and (b) of Section 3.01 as of the date of
commencement, reduced by one-half of one percent (1/2%) for each
month by which the commencement of benefits precedes the
Participant's attainment of age sixty (60), less the amount
determined under Section 3.01(c). This amount shall not be increased
upon the Participant's attainment of age sixty (60).
3.03 BENEFIT PAYMENTS: Retirement benefits payable pursuant to this
Article shall be payable monthly on the first day of each month
commencing with the date on which benefit payments commence under any
qualified defined benefit pension plan of the Participant's Employer
or an Affiliated Company in which he participates and continuing
through the first day of the month in which the Participant dies or
is re-employed by the Employer.
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3.04 CALCULATION OF DEDUCTIONS FOR OTHER BENEFITS: If any Other Benefits
shall be due to the Participant, his estate, Spouse or Children in a
lump sum or over a period shorter or longer than the period herein
provided with respect to payments hereunder, or at different
intervals, or if they commence at a different time, then and in such
case, the aggregate of all Other Benefits shall for the purposes
hereof be actuarially converted into benefits payable over the
monthly periods provided for payments hereunder based on the
actuarial assumptions used in the Employer's qualified defined
benefit pension plan covering the Participant at the time benefits
commence hereunder in order to arrive at the deductions herein
provided for the Other Benefits.
ARTICLE 4: DEATH AND DISABILITY BENEFITS
4.01 SPOUSE'S PRE-RETIREMENT DEATH BENEFITS: Subject to the provisions of
Articles 6 and 7, the surviving Spouse of a Participant who dies
prior to his Retirement or who, at the time of his death, was
receiving a Disability benefit under Section 4.04 (excluding benefits
payable pursuant to the next to the last sentence of Section 4.04),
will be entitled to receive a monthly benefit, payable on the first
day of each month, commencing with the month following the
Participant's death. Payments shall cease with the payment for the
month in which the Spouse dies.
The amount of the Spouse's monthly benefit shall be sixty percent
(60%) of the projected monthly benefit the Participant would have
been entitled to receive under Section 3.01(a) and 3.01(b) calculated
in the manner hereinafter specified and reduced by any Other Benefits
which may be payable to the Spouse.
For purposes of determining such projected monthly benefit, the
Participant's rate of annual Compensation at the time of his death or
Disability will be assumed to have remained unchanged to his Normal
Retirement Date, and his Years of Service will be deemed to include
the period between his date of death and his Normal Retirement Date.
4.02 SPOUSE'S POST-RETIREMENT DEATH BENEFITS: Subject to the provisions of
Articles 6 and 7, the surviving Spouse of a Participant who dies
subsequent to his Retirement or who, at the time of his death, was
receiving a Retirement benefit pursuant to the next to the last
sentence of Section 4.04, will be entitled to receive a monthly
benefit, payable on the first day of each month commencing with the
month following the Participant's death. Payments shall cease with
the payment for the month in which the Spouse dies.
In the case of a Participant who, prior to his death, had commenced
receiving benefits under Article 3 or under the next to the last
sentence of Section 4.04, the amount of the Spouse's monthly benefit
shall be sixty percent (60%) of the total monthly benefit determined
under Sections 3.01(a) and 3.01(b) (or the next to the last sentence
of Section 4.04 where applicable) that was being paid to the
Participant at the time of his death, reduced by the amount of any
Other Benefits which may be payable to the Spouse.
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In the case of a Participant who had not commenced receiving benefits
under Article 3 or under the next to the last sentence of Section
4.04, the amount of the Spouse's monthly benefit shall be sixty
percent (60%) of (i) the total monthly benefit determined under
Section 3.01(a) and 3.01(b) reduced by (ii) one-half of one percent
(1/2%) for each month by which the date of the Participant's death
precedes the date on which the Participant would have attained age
sixty (60), less the amount of any Other Benefits which may be
payable to the Spouse.
4.03 CHILDREN'S DEATH BENEFITS: On the death of a Spouse who was receiving
benefits under Section 4.01 or Section 4.02, the Participant's
Children who are under the age of twenty-one (21) will be entitled to
receive collectively a monthly benefit, payable on the first day of
each month commencing with the month following the Spouse's death.
Notwithstanding the provisions of Section 3.04 hereof, subject to the
provisions of Articles 6 and 7, on the death of a Participant who is
not survived by a Spouse, the Participant's Children who are under
the age of twenty-one (21) will be entitled to receive collectively a
monthly benefit, payable on the first day of each month commencing
with the month following the Participant's death.
The amount of the Childrens' monthly benefit payable under this
Section 4.03 shall be twenty percent (20%) of the monthly benefit the
Spouse was receiving, or would have been entitled to receive (in
instances where there is no surviving Spouse), under Section 4.01 or
Section 4.02, as the case may be, multiplied by the number of
Children under age twenty-one (21) during the month. The maximum
Childrens' monthly benefit shall, however, in no case be more than
one hundred percent (100%) of the amount of the benefit to which the
Participant's surviving Spouse was or would have been entitled.
Benefits payable to Children of a Participant pursuant to this
Section shall be reduced proportionately as each Child attains the
age of twenty-one (21) years or sooner dies and shall terminate with
the payment on the first day of the month in which the last remaining
Child of the Participant attains the age of twenty-one (21) years or
sooner dies.
The benefits that a Child or Children are entitled to receive shall
accrue and be paid for the collective use and benefit of the Child or
Children under age twenty-one (21) to their duly appointed
conservator(s), guardian(s) or trustee(s) where applicable. If the
Children have different fiduciaries representing them, the payment to
each fiduciary on behalf of the Children shall be proportionate to
the number of Children each fiduciary represents. The receipt by the
fiduciaries of the amount of the benefit paid shall constitute a full
and complete discharge therefor to the Employer.
4.04 DISABILITY BENEFITS: In the event of the Disability of a Participant,
the Participant shall be entitled to a monthly supplemental
disability income benefit payable on the first day of each month
commencing with the month following the date of Disability equal to
(a) or (b) below:
(a) If the Participant is enrolled in and declared disabled
under the Employer's Long-Term Disability Plan, forty
percent (40%) of that portion of the
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Participant's Compensation as of the date of such
Disability in excess of the maximum Compensation covered
by the Long-Term Disability Plan divided by twelve (12),
less any Other Benefits that may be payable in any month
to the Participant as a consequence of his Disability.
(b) If the Participant was enrolled in his Employer's
Long-Term Disability Plan and the plan was discontinued
while the Participant was a Participant in the plan, forty
percent (40%) of that portion of the Participant's
Compensation as of the date of the termination of the
Long-Term Disability Plan in excess of the maximum
Compensation covered by the Long-Term Disability Plan as
of the termination date divided by twelve (12), less any
Other Benefits that may be payable in any month to the
Participant as a consequence of his Disability to the
extent Other Benefits had accrued as of the date of
termination of the Long-Term Disability Plan.
Supplemental disability income shall continue until the monthly
payment preceding the earliest of the Participant's Normal Retirement
Date, or death, or the date on which the Participant's Disability
ends. Upon the Participant's reaching his Normal Retirement Date, the
payments pursuant to this Section 4.04 shall cease, and the
Participant shall be entitled to retirement benefits calculated in
accordance with the provisions of Section 3.01 based upon his Final
Average Monthly Compensation on the date of such Disability and his
Years of Service to his Normal Retirement Date.
A Participant who is eligible for, but not enrolled in, his
Employer's Long-Term Disability Plan shall not be entitled to a
Disability benefit under the Plan.
ARTICLE 5: GROUP MEDICAL INSURANCE AND LIFE INSURANCE
5.01 MEDICAL INSURANCE: (a) If, under the group medical benefit plan
maintained by the Employer, a Participant has in effect medical
insurance as of the date of Retirement and is entitled to the
immediate payment of annuity benefits under his Employer's qualified
defined benefit pension plan:
(i) After Retirement of the Participant and until
midnight ending the day prior to the
Participant's 65th birthday, the Employer will
continue to provide to the Participant at its
sole cost and expense the medical insurance and
other medical benefits in effect immediately
prior to his Retirement subject to such changes
as may be made to the coverage offered to
active salaried exempt Employees of the
Employer from time to time.
(ii) Beginning immediately after midnight of the day
prior to the Participant's 65th birthday, the
Employer will provide to the Participant at its
sole cost and expense a supplemental medical
plan designed to supplement Parts A and B of
Medicare (or whatever the equivalent coverage
may be at some future date). The coverage
provided under this Section 5.01(a)(ii) may be
amended from time to time, either before or
after a Participant's Retirement.
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(b) After the Retirement or death of a Participant, the
medical insurance and other medical benefits provided
active salaried exempt Employees will be made available to
Eligible Dependents of the Participant at the Employer's
sole cost and expense until they reach the age of
sixty-five (65) or cease to qualify as Eligible
Dependents. Upon reaching the age of sixty-five (65), the
Participant's Eligible Dependents will be provided a
supplemental medical plan at the Employer's sole cost and
expense designed to supplement Parts A and B of Medicare
(or whatever the equivalent coverage may be at some future
date). The coverage provided under this Section 5.01(b)
may be amended from time to time.
(c) All medical insurance or other medical benefits provided
to any person pursuant to this Article shall be reduced by
the amount of corresponding employer-provided (or any
other third-party provided) medical insurance and medical
benefits provided to that person at any time under a group
or governmental plan.
5.02 LIFE INSURANCE: If, under a group life insurance program of the
Employer, the Participant has in effect basic group life insurance up
to the date of his Retirement and is entitled to the immediate
payment of annuity benefits under his Employer's qualified defined
benefit pension plan, the Employer will continue to carry life
insurance on the Participant's life after Retirement, with premiums
paid solely by the Employer, to the extent of, and in accordance
with, the following:
(a) Effective immediately after midnight of the day prior to
Retirement, the amount of basic group life insurance
coverage in effect for the Participant will be reduced by
fifty percent (50%).
(b) Effective immediately after midnight of the day prior to
the Participant's sixty-sixth (66th) birthday, the amount
of basic group life insurance coverage will be further
reduced by ten percent (10%) of the amount of
pre-Retirement coverage. The amount of basic group life
insurance coverage will be further reduced each succeeding
year effective immediately after midnight of the day prior
to the Participant's birthday by ten percent (10%) of the
pre-Retirement amount, provided that the amount of basic
group life insurance coverage shall not be reduced below
$10,000.
(c) If the Participant continues to be an Employee after his
Normal Retirement Age, the Employer will continue to
provide basic group life insurance for which the
Participant is eligible as an active Employee under the
group insurance program of the Employer until the
Participant's Retirement. Effective immediately after
midnight of the day prior to Retirement, the amount of
basic group life insurance coverage in effect will be
reduced by fifty percent (50%) plus ten percent (10%) for
every year by which the Participant's age at Retirement
exceeds sixty-five (65); provided, however, that the
amount of basic group life insurance in effect shall not
be reduced below $10,000. The amount of basic group life
insurance coverage in effect for the Participant (if in
excess of $10,000) will be further reduced each year
effective immediately after midnight of the day prior to
the Participant's birthday by ten percent (10%) of the
pre-Retirement amount, which
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reduction will be repeated until the amount of basic group
life annual insurance coverage reaches $10,000, which
amount will then continue unchanged until the
Participant's death.
ARTICLE 6: COVENANTS OF EMPLOYEE
6.01 DURING CONTINUATION OF EMPLOYMENT: As long as a Participant continues
as an Employee of the Employer, the Participant shall devote his
entire working time to the service of the Employer, except to the
extent that the Committee shall waive this provision.
6.02 FOLLOWING TERMINATION OF EMPLOYMENT: Upon termination of employment,
the Participant, until the earlier of his death or the date which is
five (5) years from the date of termination of employment:
(a) shall from time to time consult with the Corporation and
its Affiliated Companies in an advisory capacity if, and
when, the Participant is reasonably requested to do so by
the Corporation or any such Affiliated Company;
(b) shall not, without the written consent of the Committee,
compete directly or indirectly, or participate in any
business that competes directly or indirectly, with the
Corporation or any Affiliated Company in any geographic
area where the Corporation or any such Affiliated Company
is conducting or actively proposing to conduct its
business at the time of such termination of employment.
The foregoing shall include but not be limited to (i)
serving as an executive officer, employee, agent or
representative of, or consultant to, or having any direct
or indirect interest, as a stockholder, partner or joint
venturer or any other financial interest in, any business
that manufactures or markets products manufactured or
marketed by the Corporation or an Affiliated Company in
areas in which any of the foregoing is, at the time of
such termination of employment, marketing or actively
proposing to market such products, provided that ownership
by the Participant, directly or indirectly, of less than
five percent (5%) of the outstanding shares of stock of
any company listed on any national securities exchange
shall be deemed not to be a participation in a business;
and (ii) directly or indirectly soliciting customers or
employees of the Corporation or an Affiliated Company at
the time of the termination of employment or enterprises
or individuals that were customers or employees of the
Corporation or an Affiliated Company at any time during
the twelve-month period ending upon the termination of
employment or which were at such time being actively
solicited by the Corporation or an Affiliated Company to
become customers or employees of the Corporation or an
Affiliated Company;
(c) shall cooperate and assist in any litigation, arbitration
or similar proceeding in which the Corporation or any
Affiliated Company is a party or has an interest if, and
when, the Participant is reasonably requested to do so by
the Corporation or any such Affiliated Company (the
Corporation shall pay any out-of-pocket expenses); and
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(d) shall not, except with the written consent of the
Committee, or to the extent compelled by a court of
competent jurisdiction, disclose or use directly or
indirectly any trade secrets or other confidential
information or proprietary data of the Corporation or any
Affiliated Company; provided, however, that confidential
information shall not include any information known to the
public (other than as a result of unauthorized disclosure
by the Participant) or any information of a type not
otherwise considered confidential by persons engaged in
the same or similar businesses.
6.03 REMEDY FOR BREACH: If the Participant at any time fails to comply
with the requirements of Sections 6.01 or 6.02, the Employer's
obligation to pay or provide benefits hereunder to any Participant or
to the Participant's surviving Spouse or Children shall automatically
terminate and neither said Participant nor the Participant's
surviving Spouse, Children or any other person claiming any benefits
pursuant to the Participant's participation in the Plan shall have
any rights, claims or causes of action hereunder against the Board,
the Committee, the Corporation, the Plan Administrator, the Employer
or any Affiliated Company, any trust or other funding vehicle
maintained in respect of the Plan, or any person acting on their
behalf. The remedy provided in this Section 6.03 for breach by the
Participant of the provisions of Section 6.02 hereof shall be
exclusive; provided, however, that the Employer shall not be
precluded from pursuing any other remedies available to it under any
other plan or agreement with the Participant that contains
non-compete provisions and other restrictive covenants.
ARTICLE 7: OBLIGATION TO PAY BENEFITS
7.01 EMPLOYER OBLIGATED TO PAY: Except as otherwise provided in Articles 6
and 7, the Employer employing the Participant on the date of
termination of the Participant's employment shall be obligated to pay
or provide the benefits to which the Participant, his Spouse and
Children are entitled under the Plan.
7.02 AMENDMENT OR TERMINATION OF THE PLAN: The Committee reserves the
right at any time, and from time to time, to amend, in full or in
part, any or all of the provisions of the Plan, or to terminate the
Plan at any time. The right to amend the Plan shall include the right
to provide for additional benefits for a Participant or to waive the
applicability of certain Plan provisions to a Participant pursuant to
a separate contractual agreement. All amendments (including any
contractual agreements providing for additional benefits or waivers)
shall be authorized by the Committee and signed by a duly authorized
representative thereof. Notwithstanding the foregoing, however, no
such amendment or termination shall have the effect of reducing the
benefits:
(a) payable under Articles 3 and 4 hereof to a Participant
whose employment terminated prior to the effective date of
such amendment or termination of the Plan or payable to
such Participant's Spouse or Children; or
(b) to which a Participant, his surviving Spouse or Children
are entitled under Articles 3 and 4 hereof assuming, for
purposes of computing those benefits, that (i) the date of
the amendment or termination, as applicable, is the date
of the
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Participant's Retirement; (ii) the amount of Other
Benefits to which the Participant, his Spouse or Children
are entitled, includes only Other Benefits as had accrued
prior to the date of the amendment or termination; and
(iii) the Participant is not given credit in computing his
Years of Service under the last sentence of Section 4.01
or the next to last sentence of Section 4.04 for any
period subsequent to the date of the amendment or
termination; or
(c) to which any Participant and any Participant's surviving
Spouse or Children are entitled upon Retirement or death
under Article 5 hereof as in effect prior to any amendment
or termination, except as specifically allowed pursuant to
Section 5.01(a)(i) and the last sentences of Sections
5.01(a)(ii) and 5.01(b).
7.03 SUBSEQUENT TO A CHANGE IN CONTROL OF THE CORPORATION: If, after a
Change in Control of the Corporation shall have occurred, a
Participant's employment is terminated for any reason other than
Retirement, death or Disability or for Cause, the Employer
nonetheless shall be unconditionally obligated notwithstanding the
provisions of Article 6, to pay or provide benefits to such
Participant and to the Participant's surviving Spouse and Children
under Articles 3 and 4 hereof that are not less than the benefits
that would be payable under such provisions assuming that:
(a) the date of the Change in Control were the date of the
Participant's Retirement;
(b) the amount of Other Benefits to which the Participant, his
Spouse or Children were entitled included only the Other
Benefits as had accrued prior to the date of the Change in
Control; and
(c) the Participant were not given credit in computing his
Years of Service under the last sentence of Section 4.01
or the next to last sentence of Section 4.04 for any
period subsequent to the date of the Change in Control.
7.04 TRANSFERS OF EMPLOYMENT:
(a) In the event a Participant is transferred to an Affiliated
Company that does not have a supplemental retirement
benefit plan:
(i) If the Affiliated Company to which the
Participant is transferred so agrees, the
Participant shall continue to accrue benefits
under the Plan, whereupon the Employer
employing the Participant immediately prior to
the transfer shall transfer to the Affiliated
Company all assets, if any, held by the
Employer for purposes of funding any liability
to the Participant hereunder, and the
Affiliated Company shall assume (and the
Employer employing the Participant immediately
prior to the transfer will be relieved of) all
liability for payment of benefits hereunder to
the Participant;
(ii) Otherwise, the responsibility for providing the
accrued benefits hereunder shall remain with
the Employer employing the Participant prior to
the transfer. The accrued benefits shall be
limited to the benefits that would
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be payable to the Participant, his Spouse and
Children under Section 7.02 had the Plan been
terminated with respect to the Participant on
the date of the transfer of employment.
(b) In the event a Participant is transferred to an Affiliated
Company that has a supplemental retirement plan that does
not give credit for Years of Service with the Corporation
and any other Affiliated Company prior to the date of the
transfer, the responsibility for providing the accrued
benefits hereunder shall remain with the Employer
employing the Participant prior to the transfer unless
there is a mutual agreement between the two employers that
the successor employer shall be responsible for providing
accrued benefits. The accrued benefits shall be limited to
the benefits that would be payable to the Participant, his
Spouse and Children under Section 7.02 had the Plan been
terminated with respect to the Participant on the date of
the transfer of employment.
(c) In the event a Participant is transferred to an Affiliated
Company that has a supplemental retirement plan that gives
credit for Years of Service with the Corporation and any
other Affiliated Company prior to the date of the
transfer, and if the Participant accepts designation as a
participant in that plan, the Participant shall be
entitled only to the benefits of the supplemental
retirement plan of the Employer employing the Participant
subsequent to the transfer, and the Employer employing the
Participant immediately prior to the transfer shall have
no further obligation hereunder; however, to the extent
that the benefits payable to the Participant on account of
service to an Employer prior to the date of the transfer
are less than the benefits that would be payable to the
Participant under Section 7.02(b) had the Plan been
terminated with respect to the Participant on the date of
the transfer of employment, the Employer employing the
Participant prior to the transfer shall be liable to the
Participant to the extent of any shortfall. If the
Participant does not accept designation as a participant
in the plan, then the Participant shall be treated as
though he had transferred to an Affiliated Company that
does not have a supplemental retirement benefit plan.
ARTICLE 8: GENERAL PROVISIONS
8.01 LIMITATION OF RIGHTS OF THE EMPLOYEE: Inclusion under the Plan shall
not give a Participant, his Spouse, or his Children 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
Employee a right to be continued in the service of the Corporation or
any Affiliated Company.
8.02 DISCHARGE OF OBLIGATIONS: The Employer and the Committee may at any
time fully and completely satisfy and discharge all its obligations
hereunder to the Participant, his Spouse or his Children by:
(a) delivering, or causing to be delivered, to the
Participant, his Spouse, or his Children a fully-paid
policy issued by a corporate insurer rated "A" or "A-plus"
in Best's Insurance Guide; or
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(b) instituting or amending a pension plan in which the
Participant is a Participant to provide an equal benefit;
or
(c) making some other arrangement for the Participant, his
Spouse, or his Children; provided that, in any case
mentioned in (a), (b), or (c) hereof, provision is made
for not less than the benefits to which the Participant,
his Spouse or his Children, as the case may be, may be
entitled under the provisions hereof; or
(d) entering into a contract with the Participant, containing
terms mutually agreed upon by the Employer and the
Participant, to provide benefits in lieu of those provided
hereunder.
8.03 NO ASSIGNMENT OF BENEFITS: None of the rights of the Participant or
of other beneficiaries under this Plan shall be assignable in whole
or in part either directly or by will or succession, but shall be
personal to the individual Participant, the Participant's surviving
Spouse, or the Participant's Children as the case may be.
8.04 ADMINISTRATIVE POWERS RELATING TO PAYMENTS: (a) If any person
eligible to receive payments under the provisions of this Plan is
under a legal disability or, by reason of illness or mental or
physical disability, is, in the opinion of the Plan Administrator,
unable to properly administer payments made pursuant to the Plan, the
Committee or its designee shall make payments in any of the following
ways:
(i) Directly to the person eligible to receive the
payments;
(ii) To the legal representative of such person
eligible to receive payments or;
(iii) To some relative by blood or marriage, or
friend, for the benefit of such person eligible
to receive payments.
(b) Any payment made pursuant to this Section shall be in
complete discharge of the obligation therefor under the
Plan.
8.05 MULTIPLE CLAIMANTS: If two or more persons other than the Participant
shall claim to be entitled to any payment hereunder on the ground
that any one or more of such persons is the surviving Spouse or a
Child of the Participant, payment to one or more of those persons as
shall in the opinion of the Employer be entitled thereto shall
discharge all obligations of the Employer hereunder in respect of
that payment.
8.06 ADMINISTRATION: The Plan Administrator shall have full authority to
control and manage the operation and administration of the Plan,
including the right to appoint other fiduciaries, to appoint or
employ individuals to assist in the administration of the Plan and
any other agents it deems advisable (including legal and actuarial
counsel) and to delegate to others any administrative procedures that
are necessary for the administration of the Plan. Subject to the
provisions of Article 9, the decision of the Plan Administrator on
all matters concerning the interpretation and administration of this
Plan shall be final. Neither the Board, the Corporation, the
Committee, the Plan Administrator, any
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Affiliated Company, nor any persons acting on their behalf shall be
subject to any liability to any Participant or other person in
connection with the construction and administration of this Plan.
8.07 INDEMNIFICATION: The Corporation shall indemnify each member of the
Committee, the Board of Directors, and the Plan Administrator (if
different from the Committee), or any of their delegees, against
costs, expenses and liabilities, including attorney's fees, incurred
in connection with any action, suit or proceeding instituted against
them or any one of them because of any act of omission or commission
performed by them or any one of them as a director, committee member
or Plan Administrator, or designee or delegee thereof, as the case
may be, while acting in good faith and exercising his judgment for
the best interest of the Plan.
Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the
Corporation, notify the Corporation of the commencement thereof, and
the omission so to notify the Corporation will relieve it from the
liability hereunder, but not from any other liability which it may
have to such person. The Corporation shall be entitled to participate
at its own expense in the defense or to assume the defense of any
action brought against any party indemnified hereunder.
In the event the Corporation elects to assume the defense of any such
suit, such defense shall be conducted by counsel chosen by it and
reasonably satisfactory to the indemnified party, and the indemnified
party shall bear the fees and expenses of any additional counsel
retained by him.
8.08 EXPENSES: Any expenses reasonably incurred by the Committee, the
Board, or the Plan Administrator (if different from the Committee),
or their designees, in the performance of their duties shall be paid
by the Corporation. Reasonable expenses include the cost of insurance
obtained to protect the Committee, the Board, the Plan Administrator,
or their designees, from personal liability resulting from their
actions taken in a fiduciary capacity with respect to this Plan.
8.09 FUNDING: The Employer's obligations under this Plan shall be
unfunded, and the Employer shall not be obligated under any
circumstances to fund its obligations under this Plan.
8.10 PAYMENT OF PARTICIPANT'S EXPENSES: The Employer shall pay or
reimburse a Participant for all costs, including reasonable
attorneys' fees and expenses of litigation and/or arbitration,
incurred by the Participant in seeking to obtain or enforce any right
or benefit provided by the Plan, provided that the Participant is the
prevailing party in any such litigation or arbitration proceeding.
8.11 GOVERNING LAW: To the extent not preempted by ERISA, this Plan shall
be governed by and interpreted in accordance with the substantive
laws of the State of Delaware and shall be binding upon the
Corporation.
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8.12 SEVERABILITY: The provisions of this Plan are severable, and the
invalidity or unenforceability of any provision shall not affect the
validity or enforceability of any other provision.
8.13 NAMED FIDUCIARY: The Plan Administrator is the named fiduciary.
ARTICLE 9: CLAIMS PROCEDURE
9.01 SUBMISSION OF CLAIMS: Claims for benefits under the Plan shall be
submitted in writing to the Plan Administrator or a person designated
by the Plan Administrator for this purpose. Written notice of the
disposition of a claim shall be furnished the claimant within ninety
(90) days after the application therefor is filed. The ninety-day
notice period shall, however, be extended for an additional ninety
(90) days if the Plan Administrator determines that an extension of
time is necessary to process the claim and so advises the claimant in
writing within ninety (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 Plan Administrator
expects to render the final decision.
9.02 WRITTEN NOTICE OF DENIED CLAIM: The Plan Administrator or its
designee shall provide adequate notice in writing to any person whose
claim for benefits has been denied. The 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. The 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 claim; and
shall explain why the additional material or information is
necessary. The notice shall also explain the Plan's claims review
procedure.
9.03 REVIEW OF DECISION DENYING CLAIM: The Plan Administrator or its
designee 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 a review in writing not more than ninety
(90) days after receipt by the claimant of written notification of
denial of a claim. Within ten (10) 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 Plan
Administrator or its designee may hear the claimant's request and
inquire into the merits of the matter. The Plan Administrator or its
designee shall meet promptly with the claimant and/or his duly
authorized representative and hear arguments and/or examine documents
the claimant or his representative present.
9.05 WRITTEN DECISION OF PLAN ADMINISTRATOR: A decision of the Plan
Administrator or its designee on review of a claim shall be in
writing and shall include specific reasons for the decision, written
in a manner calculated to be understood by the claimant. The decision
shall include specific references to the pertinent Plan provisions on
which the decision is based. The decision shall be made promptly and
not later than sixty (60) days after a request for review, unless
special circumstances require an
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extension. In that case, the claimant shall be so advised in writing
prior to the expiration of the initial sixty (60) day period and a
decision shall be rendered as soon as possible, but not later than
one hundred and twenty (120) days after receipt of a request for
review.
IN WITNESS WHEREOF, the Corporation has caused this document to be
executed by its duly authorized officer this 11th day of May 1999, but effective
as of February 26, 1999.
BOWATER INCORPORATED
By: /s/ James T. Wright
-------------------------------------
Name: James T. Wright
Title: Vice President - Human Resources
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