EMPLOYMENT AGREEMENT
THIS AGREEMENT, is made as of this 1st day of April, 1995, by and
between BOWATER INCORPORATED, a Delaware corporation having a mailing
address of 55 East Camperdown Way, Greenville, South Carolina 29602 (the
"Corporation"), and Patrick Duffy, residing at 23 Deverell Drive, North
Barrington, Illinois 60010 (the "Executive").
WHEREAS, the Corporation desires to employ the Executive as Senior
Vice President of the Corporation and President of its Coated Paper
Division; and
WHEREAS, the Executive is desirous of serving the Corporation in
such capacity;
NOW, THEREFORE, the parties hereto agree as follows:
1. Employment. During the term of this Agreement the Corporation
agrees to continue to employ the Executive, and the Executive agrees to
continue in the employ of the Corporation, in accordance with and
subject to the provisions of this Agreement.
2. Term.
(a) Subject to the provisions of subparagraphs (b) and
(c) of this Section 2, the term of this Agreement shall
begin on the Date hereof and shall continue thereafter
until terminated by either party by written notice given
to the other party at least thirty (30) days prior to the
effective date of any such termination. The effective
date of the termination shall be the date stated in such
notice, provided that if the Corporation specifies an
effective date that is more than (30) days following the
date of such notice, the Executive may, upon thirty (30)
days' written notice to the Corporation, accelerate the
effective date of such termination.
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(b) Notwithstanding Section 2(a), upon the occurrence of a
Change in Control as defined in the Severance Agreement
of even date herewith between the Corporation and the
Executive (the "Severance Agreement"), the term of this
Agreement shall be deemed to continue until terminated,
but in any event, for a period of not less than three
(3) years following the date of the Change in Control,
unless such termination shall be at the Executive's
election for other than "Good Reason" as that term
is defined in the Severance Agreement.
(c) Notwithstanding Section 2(a), the term of this
Agreement shall end upon:
(i) the death of the Executive;
(ii) the inability of the Executive to perform his duties
properly, whether by reason of ill-health, accident or
other cause, for a period of one hundred and eighty
(180) consecutive days or for periods totaling one
hundred and eighty (180) days occurring within any
twelve (12) consecutive calendar months; or
(iii) the executive's retirement on his early or normal
retirement date.
3. Position and Duties. Throughout the term hereof, the
Executive shall be employed as Senior Vice President of the Corporation
and President of its Coated Paper Division, with the duties and
responsibilities customarily attendant to that office, provided that the
Executive shall undertake such other and further assignments and
responsibilities of at least comparable status as the Board of Directors
may direct. The Executive shall diligently and faithfully devote his
full working time and best efforts to the performance of the services
under this Agreement and to the furtherance of the best interests of the
Corporation.
4. Place of Employment. The Executive will be employed at the
Corporation's facilities near Rock Hill, South Carolina, or at such
other place as the Corporation shall designate from time to time,
provided, however, that if the Executive is transferred to another place
of employment, necessitating a change in his residence,
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the Executive shall be entitled to financial assistance in accordance
with the terms of the Corporation's relocation policy then in effect.
5. Compensation and Benefits.
(a) Base Salary. The Corporation shall pay to the Executive a
base salary of $250,000 payable in substantially equal
periodic installments on the Corporation's regular payroll
dates. The Executive's base salary shall be reviewed at
least annually and from time to time may be increased (or
reduced, if such reduction is effected pursuant to
across-the-board salary reductions similarly affecting all
management personnel of the Corporation).
(b) Bonus Plan. In addition to his base salary, the Executive
shall be entitled to receive a bonus under the
Corporation's bonus plan in effect from time to time
determined in the manner, at the time, and in the amounts
set forth under such plan.
(c) Benefit Plans. The Corporation shall make contributions on
the Executive's behalf to the various benefit plans and
programs of the Corporation in which the Executive is
eligible to participate in accordance with the provisions
thereof as in effect from time to time.
(d) Vacations. The Executive shall initially be entitled to
five (5) weeks of paid vacation annually, and thereafter
shall be entitled to additional annual vacation, all as
provided for in the Corporate policy as in effect from
time to time, to be taken at such time or times as may be
approved by the Corporation.
(e) Expenses. The Corporation shall reimburse the Executive
for all reasonable expenses properly incurred, and
appropriately documented, by the Executive in connection
with the business of the Corporation.
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(f) Perquisites. The Corporation shall make available to the
Executive all perquisites to which he is entitled by
virtue of his position.
6. Nondisclosure. During and after the term of this Agreement,
the Executive shall not, without the written consent of the Board of
Directors of the Corporation, disclose or use directly or indirectly,
(except in the course of employment hereunder and in furtherance of the
business of the Corporation or any of its subsidiaries and affiliates)
any of the trade secrets or other confidential information or
proprietary data of the Corporation or its subsidiaries or affiliates;
provided, however, that confidential information shall not include any
information known generally to the public (other than as a result of
unauthorized disclosure by the Executive) or any information of a type
not otherwise considered confidential by persons engaged in the same or
similar businesses.
7. Noncompetition. During the term of this Agreement, and for a
period of one (1) year after the date the Executive's employment
terminates, the Executive shall not, without the prior approval of the
Board of Directors of the Corporation, in the same or a similar capacity
engage in or invest in, or aid or assist anyone else in the conduct of
any business (other than the businesses of the Corporation and its
subsidiaries and affiliates) which directly competes with the business
of the Corporation and its subsidiaries and affiliates as conducted
during the term hereof. For the purposes of this Section 7, the direct
competitors of the Corporation shall be the companies listed on
Attachment A to this Agreement and their successors in the coated
groundwood paper business by acquisition or merger or otherwise. If any
court of competent jurisdiction shall determine that any of the
provisions of this Section 7 shall not be enforceable because of the
duration or scope thereof, the parties hereto agree that said court
shall have the power to reduce the duration and scope of such provision
to the extent necessary to make it enforceable and this Agreement in its
reduced form shall be valid and enforceable to the extent permitted by
law. The Executive acknowledges that the Corporation's remedy at law
for a breach by the Executive of the provisions of this Section 7 will
be inadequate. Accordingly, in the event of the breach or threatened
breach by the Executive of this Section 7, the Corporation shall be
entitled to injunctive relief in addition to any other remedy it may
have.
8. Severance Pay. If the Executive's employment hereunder is
involuntarily terminated for any reason other than those set forth in
Section 2(c) hereof, then unless the Corporation shall have terminated
the Executive for "Cause", the Corporation shall pay the Executive
severance pay in an amount equal to twenty-four (24) months of the
Executive's base salary on the effective date of the termination, plus
1/12 of the amount
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of the last bonus paid to the Executive under the
Corporation's bonus plan applicable to the Executive for each month in
the period beginning on January 1 of the year in which the date of the
termination occurs and ending on the date of the termination and for
each months' base salary to which the Executive is entitled under this
Section 8, provided, however, that any amount paid to the Executive by
the Corporation for services rendered subsequent to the thirtieth (30th)
day following the communication to the Executive of notice of
termination shall be deducted from the severance pay otherwise due
hereunder. Such payment shall be made in a lump sum within ten (10)
business days following the effective date of the termination. The
severance pay shall be in lieu of all other compensation or payments of
any kind relating to the termination of the Executive's employment
hereunder; provided that the Executive's entitlement to compensation or
payments under the Corporation's retirement plans, stock option or
incentive plans, savings plans or bonus plans attributable to service
rendered prior to the effective date of the termination shall not be
affected by this clause and shall continue to be governed by the
applicable provisions of such plans; and further provided that in lieu
hereof, at his election, the Executive shall be entitled to the benefits
of the Severance Agreement of even date hereof between the Corporation
and the Executive, if termination occurs in a manner and at a time when
such Severance Agreement is applicable. For purposes of this Agreement,
the term for "Cause" shall mean because of gross negligence or willful
misconduct by the Executive either in the course of his employment
hereunder or which has a material adverse effect on the Corporation or
the Executive's ability to perform adequately and effectively his duties
hereunder.
9. Retirement Benefits. The Corporation hereby confirms that the
Human Resources and Compensation Committee of the Board of Directors
("HRCC") (1) has agreed that the Executive is eligible to participate in
the Supplemental Benefit Plan for Designated Employees of Bowater
Incorporated and Affiliated Companies (the "Supplemental Benefit Plan"),
as amended and restated effective August 22, 1990, and as thereafter
amended from time to time, immediately upon commencement of employment;
and (2) in exercise of its authority to waive or amend the provisions of
the Supplemental Benefit Plan with respect to individual plan
participants, has agreed that, regardless of any other provision in the
Supplemental Benefit Plan or any other benefit plan to the contrary,
upon the termination of his employment by the Corporation other than for
"Cause" (as defined in Section 8 hereof) prior to his eligibility to
receive benefits under any qualified defined benefit pension plan
("Qualified D/B Plan") maintained by his "Employer" (as defined in the
Supplemental Benefit Plan), the Executive shall be entitled to receive
Normal Retirement Benefits under the Supplemental Benefit Plan based on
his "Continuous Employment" and "Earnings" (as those terms are defined
in the Supplemental Benefit Plan) as of his termination of employment,
such benefits to begin on his "Normal Retirement Date" (as defined in
the Supplemental Benefit Plan) without
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regard to his eligibility (then or ever) to receive benefits under any
such Qualified D/B Plan. The Executive, his "Surviving Spouse" and
"Children" (as those terms are defined in the Supplemental Benefit Plan)
shall be entitled to disability and pre- and post-retirement benefits as
provided in Article 4 of the Supplemental Benefit Plan, if, as to
"Disability," the Executive's "Disability" (as defined in the
Supplemental Benefit Plan) occurs prior to the termination of his
employment by the Corporation other than for "Cause" (as defined in
Section 8 hereof) or if, as to death, the Executive's death occurs while
he remains employed by the Corporation or after the termination of his
employment by the Corporation other than for "Cause" (as defined in
Section 8 hereof). If the Executive dies after his employment is
terminated under circumstances entitling him to benefit payments
hereunder, the benefit payable to a Surviving Spouse (or the benefit
that would have been payable to a Surviving Spouse for purposes of
determining benefits payable to Children if there is no Surviving
Spouse) shall be determined pursuant to the third paragraph of Section
4.02 of the Supplemental Benefit Plan. If the Executive is eligible to
receive benefits under the Supplemental Benefit Plan upon a termination
of his employment without reference to the provisions of this Section 9,
then the benefits to which the Executive, his Surviving Spouse and
Children are entitled under the Supplemental Benefit Plan shall be
determined without reference to these provisions.
10. Notices. Any notices required or permitted to be given under
this Agreement shall be in writing and shall be deemed to have been
given when delivered or mailed, by registered or certified mail, return
receipt requested to the respective addresses of the parties set forth
above, or to such other address as any party hereto shall designate to
the other party in writing pursuant to the terms of this Section 10.
11. Severability. The provisions of this Agreement are severable,
and the invalidity or unenforceability of any provision shall not affect
the validity or enforceability of any other provision.
12. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the substantive laws of the State of
Delaware.
13. Supersedure. This Agreement shall cancel and supersede all
prior agreements relating to employment between the Executive and the
Corporation, except the Severance Agreement.
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14. Waiver of Breach. The waiver by a party of a breach of any
provision of this Agreement shall not operate or be construed as a
waiver of any prior or subsequent breach by any of the parties hereto.
15. Binding Effect. The terms of this Agreement shall be binding
upon and inure to the benefit of the successors and assigns of the
Corporation and the heirs, executors, administrators and successors of
the Executive, but this Agreement may not be assigned by the Executive.
IN WITNESS WHEREOF, the Corporation and the Executive have executed
this Agreement as of the day and year first above written.
BOWATER INCORPORATED
/s/ Doris Simpson By /s/ Arnold M. Nemirow
Witness Arnold M. Nemirow
President and Chief Executive Officer
/s/ Carol D. Hinton /s/ Patrick Duffy
Witness Patrick Duffy
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SEVERANCE AGREEMENT
THIS AGREEMENT, made as of the 1st day of April, 1995, by and
between Bowater Incorporated, a Delaware corporation having a mailing
address of 55 East Camperdown Way, Greenville, South Carolina 29602 (the
"Corporation"), and Patrick Duffy, residing at 23 Deverell Drive, North
Barrington, Illinois 60010 (the "Executive"). WHEREAS, the Corporation
considers it essential to the best interests of its shareholders to
foster the continued employment of key management personnel; and
WHEREAS, the uncertainty attendant to a change in control of the
Corporation may result in the departure or distraction of management
personnel to the detriment of the Corporation and its shareholders; and
WHEREAS, the Board of Directors of the Corporation (the "Board")
has determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the
Corporation's management, including Executive, to their assigned duties
in the event of a change in control of the Corporation.
NOW THEREFORE, it is hereby agreed as follows:
1. DEFINITIONS
The following terms when used herein shall have the meanings
assigned to them below:
(a) "Acquiring Person" shall mean any Person who is or becomes a
"beneficial owner" (as defined in Rule 13d-3 of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of securities of the Corporation
representing twenty percent (20%) or more of the combined
voting power of the Corporation's then outstanding
voting securities, unless such Person has filed Schedule
13G and all required amendments thereto with respect to
its holdings and continues to hold such securities for
investment in a manner qualifying such Person to utilize
Schedule 13G for reporting of ownership.
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(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date hereof.
(c) "Cause" shall mean and be limited to the Executive's gross
negligence, willful misconduct or conviction of a felony,
which negligence, misconduct or conviction has a demonstrable
and material adverse effect upon the Corporation, provided
that the Corporation shall have given the Executive written
notice of the alleged negligence or misconduct and the
Executive shall have failed to cure such negligence or
misconduct within thirty (30) days after his receipt of such
notice. The Executive shall be deemed to have been terminated
for Cause effective upon the effective date stated in a
written notice of such termination delivered by the
Corporation to the Executive and accompanied by a resolution
duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at
a meeting of the Board (after reasonable notice to the
Executive and an opportunity for the Executive, with his
counsel present, to be heard before the Board) finding that,
in the good faith opinion of the Board, the Executive was
guilty of conduct constituting Cause hereunder and setting
forth in reasonable detail the facts and circumstances claimed
to provide the basis for the Executive's termination, provided
that the effective date shall not be less than thirty (30)
days from the date such notice is given.
(d) "Change in Control" of the Corporation shall be deemed to
have occurred if:
(i) any Person is or becomes an Acquiring Person;
(ii) less than two-thirds (2/3) of the total membership of the
Board shall be Continuing Directors; or
(iii) the shareholders of the Corporation shall approve a
merger or consolidation of the Corporation or a plan of
complete liquidation of the Corporation or
an agreement for the sale or disposition
by the Corporation of all or substantially
all of the Corporation's assets.
(e) "Continuing Directors" shall mean any member of the Board who
was a member of the Board prior to the date hereof, and
any successor of a Continuing Director while such successor is
a member of the Board who is not an Acquiring Person or an
Affiliate or Associate of an Acquiring Person or of any such
Affiliate or Associate and is recommended or elected
2
to succeed the Continuing Director by a majority of the Continuing
Directors.
(f) "Disability" shall mean the Executive's total and permanent
disability as defined in the Corporation's long term
disability insurance policy covering the Executive
immediately prior to the Change in Control.
(g) "Good Reason" shall mean:
(i) an adverse change in the Executive's status, duties or
responsibilities as an executive of the Corporation
as in effect immediately prior to the Change in
Control;
(ii) failure of the Corporation to pay or provide the Executive
in a timely fashion the salary or benefits to which he
is entitled under any Employment Agreement between the
Corporation and the Executive in effect on the date of
the Change in Control, or under any benefit plans or
policies in which the Executive was participating at the
time of the Change in Control (including, without
limitation, any incentive, bonus, stock option,
restricted stock, health, accident, disability, life
insurance, thrift, vacation pay, deferred compensation
and retirement plans or policies);
(iii) the reduction of the Executive's salary as in effect on
the date of the Change in Control;
(iv) the taking of any action by the Corporation (including
the elimination of a plan without providing substitutes
therefor, the reduction of the Executive's awards
thereunder or failure to continue the Executive's
participation therein) that would substantially diminish
the aggregate projected value of the Executive's awards
or benefits under the Corporation's benefit plans or
policies described in Section 1(g)(ii) in
which the Executive was participating at the time of the
Change in Control;
(v) a failure by the Corporation to obtain from any
successor the assent to this Agreement contemplated
by Section 5 hereof; or
(vi) the relocation of the principal office at which the
Executive is to perform his services on behalf of the
Corporation to a location more than thirty-five (35)
miles from its location immediately prior to the
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Change in Control or a substantial increase in the
Executive's business travel obligations subsequent
to the Change in Control.
Any circumstance described in this Section 1(g) shall
constitute Good Reason even if such circumstance would not
constitute a breach by the Corporation of the terms of the
Employment Agreement between the Corporation and the Executive
in effect on the date of the Change in Control. The Executive
shall be deemed to have terminated his employment for Good
Reason effective upon the effective date stated in a written
notice of such termination given by him to the Corporation
setting forth in reasonable detail the facts and circumstances
claimed to provide the basis for termination, provided that the
effective date may not precede, nor be more than sixty (60)
days from, the date such notice is given. The Executive's
continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstances
constituting Good Reason hereunder.
(h) "Normal Retirement Date" shall have the meaning given to such
term in the Corporation's basic qualified pension plan in which
the Executive is a participant as in effect on the date hereof
or any successor or substitute plan adopted prior to a Change
in Control.
(i) "Person" shall mean any individual, corporation, partnership,
group, association or other "person" as such term
is used in Section 13(d) and 14(d) of the Exchange Act.
2. TERM OF AGREEMENT
(a) The term of this Agreement shall initially be for the period
beginning on April 1, 1995, and ending on March 31, 1998. The term
of this Agreement shall automatically be extended on April 1,
1996, until March 31, 1999, without further action by the
parties, and shall be automatically extended by an
additional year on each succeeding April 1, unless either
the Corporation or the Executive shall have served notice
upon the other party prior to such April 1, of its or his
intention either that the term of this Agreement shall not
be extended, or that the Executive's Employment Agreement
is terminated, provided, however, that if a Change in
Control of the Corporation shall occur during the term of
this Agreement, this Agreement shall continue in effect
until terminated but in any event for a period of not less
than three (3) years from the date of the Change in
Control.
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(b) Notwithstanding Section 2(a), the term of this Agreement shall end
upon the termination of the Executive's employment if, prior to a
Change in Control of the Corporation, the Executive's employment
with the Corporation shall have terminated under the provisions of
any Employment Agreement between the Corporation and the Executive
then in effect.
3. COMPENSATION UPON CHANGE IN CONTROL FOLLOWED BY A
TERMINATION
If a Change in Control of the Corporation shall have occurred and,
during the term of this Agreement, the Executive's employment by the
Corporation is terminated for any reason other than his death, his
Disability, his retirement on his Normal Retirement Date, by the
Corporation for Cause, or by the Executive without Good Reason, the
Executive shall be under no further obligation to perform services for
the Corporation and shall be entitled to receive the following payments:
(a) The Corporation shall pay to the Executive his full base
salary through the effective date of the termination within five (5)
business days thereafter and all benefits and awards (including both the
cash and stock components) to which the Executive is entitled under any
benefit plans or policies in which the Executive was a
participant prior to the Change in Control, at the time such payments
are due pursuant to the terms of such benefit plans or policies as in
effect immediately prior to the Change in Control.
(b) At the election of the Executive, in addition to the
entitlements set forth in Section 3(a) but in lieu of any payment to
the Executive of any salary or severance payments or benefits to which
the Executive would be entitled under the provisions of any Employment
Agreement between the Corporation and the Executive then in effect, the
Corporation shall pay to the Executive, in a lump sum not later than ten
(10) business days following the effective date of the termination:
(i) an amount equal to two (2) times the Executive's
annual base salary on the effective date of the
termination or, if higher, immediately prior to the
Change in Control;
(ii) an amount equal to two (2) times the greater of (x)
the highest amount of the actual bonus awarded to
the Executive in the five (5) fiscal years
immediately preceding the year in which the Change
in Control occurred and (y) an amount
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equal to the amount the Executive would have been
awarded under the Corporation's bonus plan in effect
immediately prior to the Change in Control for the
fiscal year in which the Change in Control occurred
had the Executive continued to render services to
the Corporation at the same level of performance, at
the same level of salary, and in the same position
as immediately prior to the Change in Control;
(iii) an amount equal to two (2) times the greater of (x)
the largest annual contribution made by the
Corporation to the Corporation's Savings Plan on the
Executive's behalf during the five (5) fiscal years
immediately preceding the year in which the Change
in Control occurred and (y) an amount equal to the
contribution the Corporation would have made to said
Plan on the Executive's behalf for the fiscal year
in which the Change in Control occurred had he
participated in said Plan for the entire fiscal
year, received a base salary equal to the salary he
was receiving immediately prior to the Change in
Control and had he elected to contribute to the Plan
the same percentage of his base salary as he was
contributing on said date;
(iv) an amount equal to twenty percent (20%) of the
Executive's annual base salary on the effective date
of the termination or, if higher, immediately prior
to the Change in Control (as compensation for
medical, life insurance and other benefits lost as a
result of termination of the Executive's
employment); and
(v) For each full or partial month in the period
beginning on January 1 of the year in which the date
of the termination occurs and ending on the date of
the termination, one-twelfth of the greater of (x)
the highest amount of the actual bonus awarded to the
Executive in the five (5) fiscal years immediately
preceding the year in which the Change in Control
occurred and (y) an amount equal to the amount the
Executive would have been awarded under the
Corporation's bonus plan in effect immediately prior
to the Change in Control for the fiscal year in which
the Change in Control occurred had the Executive
continued to render services to the Corporation at
the same level of performance, at the same level of
salary,
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and in the same position as immediately prior to the
Change in Control.
(vi) If a payment may be increased by reference to an
alternate calculation which cannot be made by the
time the payment is due, payment of the lesser,
known amount shall be made when due, and if any
additional amount becomes due, such additional
amount shall be paid within ten (10) days after the
information upon which calculation of such payment
is dependent first becomes available.
The amount of all payments due to the Executive
pursuant to this Section 3(b) shall be reduced by 1/24 for each full
calendar month by which the date which is two (2) years from the
effective date of the Executive's termination extends beyond the
Executive's Normal Retirement Date.
Upon entering into this Agreement and for a period of
fourteen (14) days following each anniversary of the date hereof (the
"Election Period"), the Executive may, in writing, direct the
Corporation to pay any amounts to which he is entitled under this
Section 3(b) in equal annual installments (not to exceed ten (10) annual
installments), with the first such installment payable within ten (10)
business days of the effective date of the termination and each
successive instal lment payable on the anniversary of the effective
date of the termination or the next following business day if such date
is not a business day (the "Deferred Payment Election"). A Deferred
Payment Election, once made, cannot be revoked except during an Election
Period; provided, however, no Deferred Payment Election can be made or
revoked by the Executive during an Election Period that occurs after a
Change in Control or at a time when, in the judgment of the Corporation,
a Change in Control may occur within sixty (60) days of such Election
Period.
(c) The Corporation shall pay or provide to the Executive or his
widow or children, as the case may be, such amounts and benefits
as may be required so that the pension and other post-retirement
benefits paid or made available to the Executive, his widow, and
his children are equal to those, if any, which would have been
paid under the Corporation's Basic and Supplemental Pension
(Benefit) Plans in effect immediately prior to the Change in
Control, assuming the Executive continued in the employ of the
Corporation at the same compensation until the second
anniversary of the effective date of the termination of the
Executive's employment or until his Normal Retirement Date,
whichever is earlier. Notwithstanding any conflicting
restrictions in the
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Plans or the fact of the termination of the Executive's
employment, until the Executive's Normal Retirement Date, the
Executive or his widow and his children shall maintain a
continuing right to receive the pension and other benefits under
the above Plans with payments to begin upon retirement and to
elect an imputed retirement on the Executive's 50th birthdate or
any of his birthdates thereafter until his Normal Retirement
Date, such election to be made by so notifying the Corporation
within one (1) year after termination of his employment.
(d) The Corporation shall pay for or provide the Executive
individual out-placement assistance as offered by a member
firm of the Association of Out-Placement Consulting Firms.
(e) If any payment or benefit to or for the benefit of the
Executive in connection with a Change in Control of the Corporation or
termination of the Executive's employment following a Change in Control
of the Corporation (whether pursuant to the terms of this Agreement, or
any other plan or arrangement or agreement with the Corporation, any
Person whose actions result in a Change in Control of the Corporation or
any Affiliate or Associate of the Corporation or any such Person) is
subject to the Excise Tax (as hereinafter defined), the Corporation
shall pay to the Executive an additional amount such that the total
amount of all such payments and benefits (including payments made
pursuant to this Section 3(e)) net of the Excise Tax and all other
applicable federal, state and local taxes shall equal the total amount
of all such payments and benefits to which the Executive would have been
entitled, but for this Section 3(e), net of all applicable federal,
state and local taxes except the Excise Tax. For purposes of this
Section 3(e), the term "Excise Tax" shall mean the tax imposed by
Section 4999 of the Internal Revenue Code of 1986 (the "Code") and any
similar tax that may hereafter be imposed.
The amount of the payment to the Executive under this Section 3(e)
shall be estimated by a nationally recognized firm of certified public
accountants (other than the Corporation's independent auditors) based
upon the following assumptions:
(i) all payments and benefits to or for the benefit of the
Executive in connection with a Change in Control of the
Corporation or termination of the Executive's employment
following a Change in Control of the Corporation shall be
deemed to be "parachute payments" within the meaning of
Section 280G(b)(2) of the Code, and all "excess parachute
payments" shall be deemed to be subject
8
to the Excise Tax unless, in the opinion of tax counsel
selected by the firm of certified public accountants
charged with estimating the payment to the Executive under
this Section 3(e), such payments or benefits are not
subject to the Excise Tax; and
(ii) the Executive shall be deemed to pay federal, state and
local taxes at the highest marginal rate of taxation for
the applicable calendar year.
The estimated amount of the payment due the Executive
pursuant to this Section 3(e) shall be paid to the Executive in a lump
sum not later than thirty (30) business days following the effective
date of the termination. In the event that the amount of the estimated
payment is less than the amount actually due to the Executive under this
Section 3(e), the amount of any such shortfall shall be paid to the
Executive within ten (10) days after the existence of the shortfall is
discovered.
(f) The Executive shall not be required to mitigate the amount
of any payment provided in this Section 3, nor shall any payment or
benefit provided for in this Section 3 be offset by any compensation
earned by the Executive as the result of employment by another employer,
by retirement benefits, or by offset against any amount claimed to be
owed by the Executive to the Corporation, or otherwise.
(g) If any payment to the Executive required by this Section 3
is not made within the time for such payment specified
herein, the Corporation shall pay to the Executive
interest on such payment at the legal rate payable from
time to time upon judgments in the State of Delaware from
the date such payment is payable under terms hereof until
paid.
4. EXECUTIVE'S EXPENSES
The Corporation shall pay or reimburse the Executive for all
costs, including reasonable attorney's fees and expenses of either
litigation or arbitration, incurred by the Executive in contesting or
disputing any termination of his employment following a Change in
Control or in seeking to obtain or enforce any right or benefit provided
by this Agreement.
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5. BINDING AGREEMENT
This Agreement shall inure to the benefit of and be enforceable
by the Executive, his heirs, executors, administrators, successors and
assigns. This Agreement shall be binding upon the Corporation, its
successors and assigns. The Corporation shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of
the Corporation expressly to assume and agree to perform this Agreement
in accordance with its terms. The Corporation shall obtain such
assumption and agreement prior to the effectiveness of any such
succession.
6. NOTICE
Any notices and all other communications provided for herein
shall be in writing and shall be deemed to have been duly given when
delivered or mailed, by certified or registered mail, return receipt
requested, postage prepaid addressed to the respective addresses set
forth on the first page of this Agreement or to such other address as
either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective
only upon receipt. All notices to the Corporation shall be addressed to
the attention of the Board with a copy to each of the General Counsel,
the Vice President-Human Resources and Administration and the Secretary
of the Corporation.
7. AMENDMENTS; WAIVERS
No provision of this Agreement may be modified, waived or
discharged except in a writing specifically referring to such provision
and signed by the party against which enforcement of such modification,
waiver or discharge is sought. No waiver by either party hereto of the
breach of any condition or provision of this Agreement shall be deemed a
waiver of any other condition or provision at the same or any other
time.
8. GOVERNING LAW
The validity, interpretation, construction and performance of
this Agreement shall be governed by the substantive laws of the State of
Delaware.
9. VALIDITY
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and
effect.
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10. ARBITRATION
If the Executive so elects, any dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively
by arbitration in the city nearest to the Executive's principal
residence (or, at the Executive's election, in the city within the state
in which the Executive's principal residence is located nearest to such
principal residence) which has an office of the American Arbitration
Association by one arbitrator in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction. The
Corporation hereby waives its right to contest the personal jurisdiction
or venue of any court, federal or state, in an action brought to enforce
this Agreement or any award of an arbitrator hereunder which action is
brought in the jurisdiction in which such arbitration was conducted, or,
if no arbitration was elected, in which arbitration could have been
conducted pursuant to this provision.
11. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together
will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the day and year first above written.
BOWATER INCORPORATED
/s/ Doris Simpson By /s/ Arnold M. Nemirow
Witness Arnold M. Nemirow
President and Chief Executive Officer
/s/ Carol D. Hinton /s/ E. Patrick Duffy
Witness Patrick Duffy
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