UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8712
BOWATER INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 62-0721803
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 East Camperdown Way, P.O. Box 1028, Greenville, SC 29602
(Address of principal executive offices) (Zip Code)
(803) 271-7733
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of May 3, 1995.
Class Outstanding at May 3, 1995
Common Stock, $1.00 Par Value 37,202,657 Shares
<PAGE>
BOWATER INCORPORATED
I N D E X
Page
Number
PART I FINANCIAL INFORMATION
1. Financial Statements:
Consolidated Balance Sheet at March 31, 1995
and December 31, 1994 3
Consolidated Statement of Operations for the
Three Months Ended March 31, 1995 and
April 2, 1994 4
Consolidated Statement of Capital Accounts
for the Three Months Ended March 31, 1995 5
Consolidated Statement of Cash Flows for the
Three Months Ended March 31, 1995 and April
2, 1994 6
Notes to Consolidated Financial Statements 7-8
2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-12
PART II OTHER INFORMATION
6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
(2)
<PAGE>
PART I BOWATER INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
<S> <C> <C>
ASSETS
Current assets:
Cash $ 7,991 $ 10,783
Marketable securities, at cost which approximates market 29,363 143,985
Accounts receivable, net 206,447 197,473
Inventories 157,802 151,097
Deferred income taxes 5,717 5,717
Other current assets 4,814 4,770
Total current assets 412,134 513,825
Timber and timberlands 426,431 426,354
Fixed assets, net 1,758,104 1,785,046
Intangible assets 54,098 54,721
Other assets 70,953 71,416
$ 2,721,720 $ 2,851,362
LIABILITIES AND CAPITAL
Current liabilities:
Current instalments of long-term debt $ 1,604 $ 1,604
Accounts payable and accrued liabilities 174,777 184,766
Income taxes payable 24,098 13,966
Dividends payable 10,395 10,276
Total current liabilities 210,874 210,612
Long-term debt, net of current instalments 934,653 1,116,887
Other long-term liabilities 159,951 157,936
Deferred income taxes 276,170 261,923
Minority interests in subsidiaries 144,080 142,087
Commitments and contingencies (See note 4.)
Redeemable LIBOR preferred stock 74,524 74,492
Shareholders' equity:
Series B convertible preferred stock 111,333 111,333
Series C cumulative preferred stock 81,892 81,892
Common stock 37,417 37,121
Additional paid-in capital 343,653 336,990
Retained earnings 373,436 344,852
Equity adjustment from foreign currency translation (5,294) (3,410)
Loan to ESOT (9,377) (9,643)
Treasury stock, at cost (11,592) (11,710)
Total shareholders' equity 921,468 887,425
$ 2,721,720 $2,851,362
</TABLE>
See accompanying notes to consolidated financial statements.
(3)
<PAGE>
BOWATER INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31, April 2,
1995 1994
<S> <C> <C>
Net sales $ 449,478 $ 308,892
Cost of sales 284,777 262,908
Depreciation, amortization and cost of timber harvested 44,638 42,161
Gross profit 120,063 3,823
Selling and administrative expense 22,810 18,563
Operating income (loss) 97,253 (14,740)
Other expense (income):
Interest income (1,849) (1,296)
Interest expense 23,304 24,919
Other, net (1,016) 109
20,439 23,732
Income (loss) before income taxes and minority interests 76,814 (38,472)
Provision for income taxes 29,577 (14,425)
Minority interests in net income (loss) of subsidiaries 2,184 (2,607)
Income (loss) before extraordinary charge 45,053 (21,440)
Extraordinary charge, net of taxes of $3,808 (6,084) ---
Net income (loss) $ 38,969 $ (21,440)
Earnings (loss) per common and common equivalent share:
Income (loss) before extraordinary charge $ 1.02 $ (0.67)
Extraordinary charge (0.15) ---
Net income (loss) $ 0.87 $ (0.67)
Average common and common equivalent shares outstanding 41,531 36,459
Earnings (loss) per common share - assuming full dilution:
Income (loss) before extraordinary charge $ 0.99 $ (0.67)
Extraordinary charge (0.14) ---
Net income (loss) $ 0.85 $ (0.67)
Average common and common equivalent shares outstanding 42,735 36,459
</TABLE>
See accompanying notes to consolidated financial statements.
(4)
<PAGE>
BOWATER INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CAPITAL ACCOUNTS
Three Months Ended March 31, 1995
(Unaudited)
(In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Series A Series B Series C Equity
LIBOR Convertible Cumulative Additional Adjustment -
Preferred Preferred Preferred Common Paid in Retained Foreign Loan to Treasury
Stock Stock Stock Stock Capital Earnings Currency ESOT Stock
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $74,492 $111,333 $81,892 $37,121 $336,990 $344,852 $(3,410) $(9,643) $(11,710)
Net income - - - - - 38,969 - - -
Dividends on common stock($.15 per share) - - - - - (5,518) - - -
Dividends on preferred stock
LIBOR ($.69 per share) - - - - - (1,035) - - -
Series B ($1.65 per share) - - - - - (2,013) - - -
Series C ($2.10 per share) - - - - - (1,785) - - -
Increase in stated value of LIBOR
preferred stock 32 - - - - (32) - - -
Common stock issued for exercise
of stock options - - - 296 6663 - - - -
Reduction in loan to ESOT - - - - - - - 266 -
Treasury stock used for employee
benefit and dividend reinvestment
plans - - - - - (2) - - 118
Foreign currency translation - - - - - - (1,884) - -
Balance at March 31, 1995 $74,524 $111,333 $81,892 $37,417 $343,653 $373,436 $(5,294) $(9,377) $(11,592)
</TABLE>
See accompanying notes to consolidated financial statements.
(5)
<PAGE>
BOWATER INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31, April 2,
1995 1994
<S> <C> <C>
Cash flow from (used for) operating activities:
Operating income (loss) $ 97,253 $ (14,740)
Depreciation, amortization and cost of timber harvested 44,638 42,161
Changes in working capital:
Receivables (8,974) 21,876
Inventories (6,705) (19,579)
Accounts payable and accrued liabilities (9,910) (7,923)
Other working capital (45) 3,282
Interest paid, net of capitalized interest (18,815) (18,267)
Interest received 1,849 1,296
Income taxes paid (1,387) (28,072)
Other income (expense), net (680) 809
97,224 (19,157)
Cash flow from (used for) investing activities:
Cash invested in fixed assets, timber and
timberlands (21,869) (26,671)
Disposition of fixed assets, timber and timberlands 1,233 878
(20,636) (25,793)
Cash flow from (used for) financing activities:
Issuance of Series B & C preferred stock, net of issuance costs 0 193,567
Cash dividends, including minority interests (10,052) (12,337)
Payments of long term debt (191,101) (405)
Stock options exercised 6,959 373
Other 192 406
(194,002) 181,604
Increase (decrease) in cash and marketable securities (117,414) 136,654
Cash and marketable securities:
Beginning of year 154,768 81,666
End of period $ 37,354 $ 218,320
</TABLE>
See accompanying notes to consolidated financial statements.
(6)
<PAGE>
BOWATER INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) The accompanying consolidated financial statements include the
accounts of Bowater Incorporated and Subsidiaries (the Company).
The consolidated balance sheet as of March 31, 1995 and the related
consolidated statements of operations, capital accounts and cash
flows for the interim periods ended March 31, 1995 and April 2, 1994
are unaudited. However, in the opinion of Company management, all
adjustments (consisting of normal recurring adjustments) necessary
for fair presentation of the interim financial statements have been
made. The results of the interim period ended March 31, 1995 are
not necessarily indicative of the results to be expected for the
full year.
(2) The composition of inventories at March 31, 1995 and December 31,
1994 was as follows (in thousands):
March 31, 1995 December 31, 1994
(Unaudited)
At lower of cost or market:
Raw materials $ 45,857 $ 37,597
Work in process 3,242 3,333
Finished goods 42,228 38,971
Mill stores and other supplies 81,419 80,723
172,746 160,624
Excess of current cost over
LIFO inventory value (14,944) (9,527)
$157,802 $151,097
(3) The Company's marketable securities are recorded at cost which
approximates market value. The securities are all investment grade
with maturities of fewer than 90 days and the Company has the intent
and ability to hold these securities until maturity.
(4) The Company is involved in various litigation relating to contracts,
commercial disputes, tax, environmental issues, workers'
compensation and other matters. The Company's management is of the
opinion that the ultimate disposition of these matters will not have
a material adverse effect on the Company's operations or its
financial condition taken as a whole.
(5) The calculation of earnings per share for the quarter ended March
31, 1995 includes a deduction of $2,852,000 for the dividend
requirements of the Company's LIBOR and Series C preferred stock and
the amortization of the difference between the net proceeds from the
LIBOR preferred stock and its mandatory redemption value. For the
quarter ended April 2, 1994, the calculation of loss per share
included a deduction of $3,038,000 for the same items, plus the
dividend requirements of the Company's Series B preferred stock.
The shares of Series B preferred stock are common stock equivalents.
However, due to the loss incurred in the first quarter of 1994, the
effect was antidilutive.
(7)
<PAGE>
BOWATER INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(6) Total interest expense during the first three months of 1995 and
1994 was $23,399,000 and $24,999,000 respectively. In 1995 and
1994, $95,000 and $80,000 of interest expense was capitalized,
respectively.
(7) On February 24, 1995, the Company commenced an offer to repurchase
its outstanding 8.5% Notes due December 15, 2001 having a face value
of $200 million. On March 7, 1995, the Company completed the offer
repurchasing approximately $182 million of the $200 million
principal amount of Notes previously outstanding. As a result, the
Company recorded an extraordinary charge of $6.1 million, net of
taxes of $3.8 million, for the premium and expenses relating to the
repurchase. On a fully diluted basis, the earnings per share effect
was $.14.
(8)
<PAGE>
BOWATER INCORPORATED AND SUBSIDIARIES
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Summary
Net income for the first quarter of 1995 totaled $39.0 million,
or $.85 per fully diluted share, on net sales of $449.5 million.
Included in net income for the quarter was an extraordinary charge of
$6.1 million, or $.14 per fully diluted share, for premium and expenses
related to the repurchase of approximately $182 million of the $200
million outstanding 8.5% Notes due December 15, 2001. For the first
quarter of 1994, the Company incurred a net loss of $21.4 million, or
$.67 per share, on net sales of $308.9 million.
Product Line Information:
(Unaudited, $ in thousands)
Quarter Ended
March 31, April 2,
1995 1994
Net sales:
Newsprint $168,513 $138,293
Directory and uncoated
specialties 45,376 40,098
Coated paper 95,272 73,635
Pulp 56,736 21,958
Communication papers 67,067 45,383
Lumber, stumpage and
other products 41,429 21,993
Distribution costs (24,915) (32,468)
$449,478 $308,892
Operating income (loss) $ 97,253 $(14,740)
In the first quarter of 1995, the Company changed its
classification of mill handling expenses. These expenses are now
classified as a cost of sale. In the first quarter of 1994, the Company
classified these expenses as a distribution cost. For comparison
purposes, the first quarter 1994 amount for the line entitled
"Distribution costs" would be approximately $3.2 million lower. Prior
year financial statements have not been restated due to the prospective
nature of the change.
(9)
<PAGE>
BOWATER INCORPORATED AND SUBSIDIARIES
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Three Months Ended March 31, 1995 versus April 2, 1994
For the first quarter of 1995, the Company's operating income of
$97.3 million improved $112.0 million compared to the first quarter of
1994. Selling prices for all of the Company's major products increased
significantly in the first quarter of 1995 compared to the first quarter
of 1994. A detailed review of the Company's major product lines for the
first quarter of 1995 follows.
The Company's average transaction price for newsprint in the first
quarter of 1995 increased 28 percent compared to the same period last
year. During 1994, most North American newsprint producers, including
the Company, reduced the discounts allowed off list price by
approximately 20 percent or $137 per metric ton. These price increases
were a result of several conditions: The economic recovery taking place
in many countries around the world has led to increased demand; customer
inventory levels were low in 1994 and the first quarter of 1995, and the
supply of newsprint during 1994 and the first quarter of 1995 did not
increase. In the first quarter of 1995, the Company announced a
reduction in discounts allowed off list price and a list price increase,
effective May 1, 1995, totaling $125 per metric ton. Other North
American newsprint producers announced similar increases in the first
quarter of 1995.
During the first quarter of 1995, the Company's coated groundwood
paper average transaction prices increased 24 percent from the first
quarter of 1994. Effective October 1, 1994, the Company, along with
other coated groundwood producers, increased the list price of its
coated groundwood paper by $70 per short ton and on January 1, 1995,
reduced the discounts allowed off list price amounting to approximately
$100 per short ton. Low customer inventories coupled with strong demand
led to the price increases. Strong demand was evidenced by a 10 percent
increase in magazine advertising pages comparing the first quarter of
1995 to the first quarter of 1994. These market conditions enabled the
Company and other coated groundwood producers to implement an additional
list price increase of $100 per short ton, effective April 1, 1995.
Average transaction prices for market pulp also increased in the
first quarter of 1995. The Company's average transaction prices
increased nearly 89 percent compared to the first quarter of 1994. The
Company, along with other major producers of market pulp, increased
prices by $60 per metric ton on January 1, 1995 and an additional $75
per metric ton on March 1, 1995. The impetus for these price increases
came from several sources: NORSCAN (U.S., Canada, Finland, Norway, and
Sweden) shipments of softwood market pulp increased 3.6 percent during
the first three months of 1995 compared to the same period last year;
NORSCAN inventory levels at the end of March, 1995, decreased 16.8
percent compared to March, 1994 levels, and there was limited new market
pulp expansion in the first quarter of 1995, coupled with a worldwide
economic expansion, especially in the Far East and Europe. These
conditions created a supply/demand balance which allowed for price
increases. A third price increase of $85 per metric ton ($100 export)
has been announced by major pulp producers, effective June 1, 1995.
(10)
<PAGE>
BOWATER INCORPORATED AND SUBSIDIARIES
Management's Discussion and Analysis
of Financial Condition and Results of Operations
The Communication Papers Division operating results increased in the
first quarter of 1995 compared to the same period last year. Higher
average transaction prices and a higher volume of converted papers sold
in the first quarter of 1995, compared to the same period last year,
contributed to the increase.
Sales of the Company's lumber and stumpage products increased in the
first quarter of 1995 compared to the first quarter of 1994 due mainly
to a larger volume of product sold. Lumber prices remained stable and
in some cases decreased due to the slowdown in the housing market, while
stumpage prices increased.
Cost Reductions
The Company's variable costs for the first three months of 1995
increased compared to the first three months of 1994, due to increases
in commodity related raw material costs. Controllable fixed costs,
however, decreased comparing these same periods. The first quarter 1995
operating results benefited from cost reduction programs the Company
implemented over the past two years. Continuing these programs in the
second quarter of 1995, the Company recently announced a further
reduction in employment levels of approximately 20 percent of the
salaried workforce or 350 positions companywide. As a result of the
personnel reductions, the Company will record a pretax charge of
approximately $24 million ($.34 per fully diluted share after tax) in
the second quarter of 1995. In addition, the Company plans to continue
considering opportunities for asset monetization during the balance of
1995, including nonstrategic timberlands, the Company's Communication
Papers Division, and possibly other assets.
Income Taxes
The effective tax rate for the first quarter of 1995 was 38.5
percent versus 37.5 percent for the first quarter of 1994.
Liquidity and Capital Resources
The Company's operations generated $97.2 million of cash in the
first quarter of 1995 compared to using $19.2 million in the same
quarter of last year. This improvement came from several sources, the
most significant of which was the $112 million improvement in operating
income. In addition, tax payments in the first quarter were $27 million
lower than the same quarter last year which included a tax assessment of
$29.4 million paid in 1994 for previous tax years. Off-setting this was
cash required for working capital which increased $28.0 million over the
same quarter in 1994. This increase is a combination of a higher level
of customer receivables offset by lower inventory levels, both of which
reflect the impact of improved business conditions on pricing and sales
for the Company's products.
(11)
<PAGE>
BOWATER INCORPORATED AND SUBSIDIARIES
Management's Discussion and Analysis
of Financial Condition and Results of Operations
The Company anticipates that the improvement in cash flow from
operations experienced in the first quarter will continue and will
exceed its capital spending and dividend requirements for 1995.
Capital spending in the first quarter of 1995 was $4.8 million below
spending levels in 1994. The largest single capital expenditure in 1995
will be $14 million to complete a new effluent treatment facility at
Bowater's Mersey mill. The Company expects total capital expenditures for
1995 to approximate $110 million and to be funded from internal cash flow.
In the first quarter of 1995, the Company prepaid approximately $182
million of its 8 1/2% notes due 2001 having a face value of $200
million. The transaction was accomplished using cash on hand at the
beginning of the year and cash generated during the quarter. As a
result of this transaction, cash and marketable securities fell from
$154.7 million at the beginning of the year to $37.4 million at the end
of the quarter. The Company intends to reduce debt further in 1995;
however, the amount and timing of additional debt reductions are subject
to, among other factors, the strength of the Company's cash flow.
(12)
<PAGE>
BOWATER INCORPORATED AND SUBSIDIARIES
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits (numbered in accordance with Item 601 of
Regulation S-K):
Exhibit No. Description
10.1 Cancellation of Severance Agreement and Modification of
Employment Agreement dated as of March 1, 1995, by and
between the Company and John C. Davis.
10.2 Cancellation of Severance Agreement and Modification of
Employment Agreement dated as of March 1, 1995, by and
between the Company and David E. McIntyre.
10.3 Cancellation of Severance Agreement and Modification of
Employment Agreement and Addendum dated as of February 23,
1995, by and between the Company and Phillip A. Temple.
10.4 Employment Agreement and Severance Agreement, each dated
as of April 1, 1995, by and between the Company and E.
Patrick Duffy.
10.5 Letter agreement dated May 1, 1995, by and between the
Company and H. David Aycock.
27.1 Financial Data Schedule (electronic filing only).
(b) Reports on Form 8-K:
None.
(13)
<PAGE>
BOWATER INCORPORATED AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
BOWATER INCORPORATED
By R. C. Lancaster
R. C. Lancaster
Senior Vice President and
Chief Financial Officer
By M. F. Nocito
M. F. Nocito
Vice President - Controller
Dated: May 12, 1995
(14)
<PAGE>
CANCELLATION OF SEVERANCE AGREEMENT
MODIFICATION OF EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st day of March
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 John C. Davis, of 11 Babbs Hollow,
Greenville, South Carolina 29607, (the "Executive").
WHEREAS, the Corporation now employs the Executive as Senior Vice
President - Pulp & Paper Sales pursuant to an Employment Agreement dated
August 25, 1988, and amended August 23, 1989, (the "Employment
Agreement") and a Severance Agreement dated August 25, 1988, and amended
August 23, 1989, (the "Severance Agreement"); and
WHEREAS, the Executive and the Corporation wish to continue the
Executive's employment until a specified and agreed upon date, whereupon
the Executive will retire from the employment of the Corporation and be
entitled to receive certain benefits;
NOW, THEREFORE, the parties hereto agree that the Severance
Agreement will be canceled and that the Employment Agreement will be
modified (by this "Modification") in the following respects:
1. Severance Agreement. The Severance Agreement is hereby
terminated as of the date hereof.
2. Employment Agreement. The Employment Agreement is hereby
modified as follows:
(a) Term. Section 2 of the Employment Agreement is amended to
read in its entirety as follows:
"2. Term.
The term of this Agreement, having begun on August 25,
1988, will continue from the date of this Modification until
July 31, 1995."
(b) Position and Duties. Section 3 of the Employment Agreement
is amended in its entirety to read as follows:
"Throughout the term hereof, the Executive will have the
employment status of an exempt employee. The Executive is
relieved as of the date hereof of the obligation to devote
his full working time to the performance of duties under this
Employment Agreement.
-1-
<PAGE>
The Corporation may, from time to time, retain the Executive
to perform certain services and duties as may be mutually
agreed upon by the Corporation and the Executive at a
compensation rate to be determined at that time."
(c) Compensation and Benefits. Section 5 of the Employment
Agreement is amended in its entirety to read as follows:
"5. Compensation and Benefits.
(a) Base Salary. The Corporation will pay to the
Executive a base salary at his current annual rate,
payable in substantially equal periodic installments on
the Corporation's regular pay dates. All applicable
taxes and other authorized deductions will be deducted
from each pay check.
(b) Bonus Plan. The Executive will not participate in
the Corporation's Annual Bonus Plan. In lieu thereof,
the Executive will be entitled to the bonus described in
Section 8(b) entitled "Severance Pay." The Executive
will be entitled to participate in the Corporation's
Long Term Cash Incentive Plan on a prorated basis as a
retired participant.
(c) Benefit Plans. The Corporation will make
contributions on the Executive's behalf to the
Corporation's various benefit plans and programs (except
for long-term disability) in which the Executive is
eligible to participate in accordance with the
provisions thereof as in effect from time to time. The
Executive will continue to be responsible for all
required employee contributions.
(d) Vacations. The Executive will not be entitled to
accrue vacation from and after April 3, 1995.
(e) Expenses. The Corporation will reimburse the
Executive for all reasonable expenses properly incurred,
and appropriately documented, by the Executive in
connection with the business of the Corporation.
(f) Perquisites. The Executive will be entitled to the
following perquisites in accordance with the
Corporation's existing guidelines:
-2-
<PAGE>
(1) payment or reimbursement for financial
planning, asset allocation consultation services
through calendar year 1995;
(2) payment for personal income tax preparation
services for tax years through calendar year 1995;
and
(3) payment for the cost of an annual executive
physical examination through calendar year 1995."
(d) Noncompetition. Section 7 is amended to add an additional
sentence as follows:
"On January 15, 1996, the Executive shall be paid $350,000 as
consideration for the Executive's obligations and covenants
not to compete as described in this Section 7."
(e) Severance Pay. Section 8 of the Employment Agreement is
amended to read as follows:
"8. Terminal Leave of Absence and Severance Pay.
(a) Terminal Leave of Absence. The Executive will be
on a terminal paid leave of absence from the date hereof
through July 31, 1995. The Executive's entitlement to
compensation, benefits, or payments under the
Corporation's health, accident, life insurance,
retirement, stock option or incentive, and savings (but
not long-term disability) plans, policies or
arrangements will not, except as otherwise required by
law or regulation, be affected by the Executive's leave
of absence status and will continue to be governed by
the applicable provisions of such plans as though the
Executive had continued to render services in the active
employment of the Corporation to the end of the term of
this Agreement or event (such as the Executive's death)
that otherwise ends the term of this Agreement.
(b) Severance Pay. On August 14, 1995, the Executive
will be paid severance pay in the amount equal to twelve
(12) months of the Executive's base salary plus
15.5/12's of the amount of the last bonus paid to the
Executive (the amount paid in 1995 for calendar year
1994). All applicable taxes and other authorized
deductions will be deducted from this payment.
-3-
<PAGE>
This severance pay is in lieu of all other compensation
or payments of any kind relating to the termination of
the executive's employment hereunder." (f)
Ratification. In all respects, except as herein
provided, the Employment Agreement is hereby ratified
and confirmed.
3. Supplement Retirement Plan.
(a) Retirement Benefit. The period of any terminal leave
of absence is hereby designated as a "leave of absence with
the consent of the Participant's employer" which is intended
to be included within the definition of "Continuous
Employment" in the Supplemental Benefit Plan for Designated
Employees of Bowater Incorporated and Affiliated Companies as
Amended and Restated Effective August 22, 1990, (the
"Supplemental Benefit Plan") and compensation paid during the
terminal leave of absence is intended to be included within
the definition of "Earnings" in the Supplemental Benefit Plan
(without regard to whether such time is credited for benefit
accrual purposes under the Bowater Incorporated Employee
Retirement Plan or such compensation is includable within
that Plan's definition of "Compensation"). This instrument
confirms that if the Executive survives to July 31, 1995, he
will be eligible at that time to retire from the employment
of the Corporation without an early retirement reduction and
with 36 years, 6 months of "Continuous Employment." This
instrument further confirms that if the Executive's
Employment Agreement is terminated at any time by his death,
then (1) the Executive's surviving Spouse (as defined in the
Supplemental Benefit Plan) will be entitled to the sixty
(60%) percent Spouse's Pre-Retirement Death Benefit as
provided in the Supplemental Benefit Plan, determined by
reference to the benefit projected to July 31, 1995 at the
compensation herein provided; and (2) the Executive's
surviving Spouse (as defined in the Supplemental Benefit
Plan), or his estate if there is no surviving Spouse, will be
entitled to receive the balance of the payments described in
Section 8(b). The determination of the Corporation's Human
Resources and Compensation Committee of the Board of
Directors (the "HRCC") of the Executive's eligibility upon
retirement at the time herein provided (as well as his
Spouse's eligibility upon his death) to receive benefits from
the Supplemental Benefit Plan is hereby confirmed.
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(b) Waiver. The Corporation hereby waives the provisions of
Section 6.01 of the Supplemental Benefit Plan.
4. Stock Options. The HRCC has affirmed by their approval of
this Modification that the Executive will become fully vested in all
unvested stock options awarded pursuant to the Corporation's 1988 and
1992 Stock Option and Stock Incentive Plans as the date hereof.
Upon the Executive's retirement (at the completion of his
terminal leave of absence), the Executive, his heirs, executors and
administrators will be granted the longest period permissible within
which to exercise the rights granted to the Executive pursuant to the
Corporation's 1984, 1988 and 1992 Stock Incentive Plans consistent with
applicable law, regulation, Corporation policy and practice, and
provisions of the relevant plans and awards.
5. Expenses of Successful Contest. The Corporation will 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 successfully seeking to obtain or enforce any right or
benefit provided by his Employment Agreement, or this Modification
thereof.
6. Effectiveness Contingent Upon Release. This Modification
shall not be deemed effective unless and until the Executive has
executed a certain Waiver and Release Agreement and the seven-day
revocation period provided for therein has expired.
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 Its President
/s/ Carol D. Hinton /s/ John C. Davis
Witness John C. Davis
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<PAGE>
CANCELLATION OF SEVERANCE AGREEMENT
MODIFICATION OF EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st day of
March, 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 David E. McIntyre of 615 Roper
Mountain Road, Greenville, South Carolina 29615, (the "Executive").
WHEREAS, the Corporation now employs the Executive as Senior Vice
President - Pulp & Paper Manufacturing pursuant to an Employment
Agreement dated August 25, 1988, and amended August 23, 1989, (the
"Employment Agreement") and a Severance Agreement dated August 25, 1988,
and amended August 23, 1989, (the "Severance Agreement"); and
WHEREAS, the Executive and the Corporation wish to continue the
Executive's employment until a specified and agreed upon date, whereupon
the Executive will retire from the employment of the Corporation and be
entitled to receive certain benefits;
NOW, THEREFORE, the parties hereto agree that the Severance
Agreement will be canceled and that the Employment Agreement will be
modified (by this "Modification") in the following respects:
1. Severance Agreement. The Severance Agreement is hereby
terminated as of the date hereof.
2. Employment Agreement. The Employment Agreement is hereby
modified as follows:
(a) Term. Section 2 of the Employment Agreement is amended to
read in its entirety as follows:
"2. Term.
The term of this Agreement, having begun on August 25,
1988, will continue from the date of this Modification until
March 31, 1997."
(b) Position and Duties. Section 3 of the Employment Agreement
is amended in its entirety to read as follows:
"Throughout the term hereof, the Executive will have the
employment status of an exempt employee. The Executive is
relieved as of the date hereof of the obligation to devote
his full working time to the performance of duties under this
Employment Agreement.
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The Corporation may, from time to time, retain the Executive
to perform certain services and duties as may be mutually
agreed upon by the Corporation and the Executive at a
compensation rate to be determined at that time."
(c) Compensation and Benefits. Section 5 of the Employment
Agreement is amended in its entirety to read as follows:
"5. Compensation and Benefits.
(a) Base Salary. The Corporation will pay to the
Executive a base salary at his current annual rate,
payable in substantially equal periodic installments on
the Corporation's regular pay dates. All applicable
taxes and other authorized deductions will be deducted
from each pay check.
(b) Bonus Plan. In addition to the base salary, the
Executive will be entitled to an annual bonus (computed
on a prorated basis for 1997) equal to the amount paid
in 1995 for the calendar year 1994, to be paid at the
time bonus payments are made to other employees and
subject to all applicable withholding requirements.
This bonus is in lieu of any bonus to which the
Executive may have been entitled under the Corporation's
Annual Bonus Plan. The Executive will be entitled to
participate in the Corporation's Long Term Cash
Incentive Plan on a prorated basis (based on one year
and three months participation).
(c) Benefit Plans. The Corporation will make
contributions on the Executive's behalf to the
Corporation's various benefit plans and programs (except
for long-term disability) in which the Executive is
eligible to participate in accordance with the
provisions thereof as in effect from time to time. The
Executive will continue to be responsible for all
required employee contributions.
(d) Vacations. The Executive will not be
entitled to accrue vacation from and after April
1, 1995.
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(e) Expenses. The Corporation will reimburse the
Executive for all reasonable expenses properly incurred,
and appropriately documented, by the Executive in
connection with the business of the Corporation.
(f) Perquisites. The Executive will be entitled to the
following perquisites in accordance with the
Corporation's existing guidelines:
(1) payment or reimbursement for financial
planning, asset allocation consultation services
through calendar year 1997;
(2) payment for personal income tax preparation
services for tax years through calendar year 1997;
(3) payment for the cost of an annual executive
physical examination through calendar year 1997;
and
(4) payment for outplacement assistance or, in
lieu thereof, the sum of $30,000."
(d) Noncompetition. Section 7 of the Employment Agreement is
hereby deleted.
(e) Severance Pay. Section 8 of the Employment Agreement is
amended to read as follows:
"8. Terminal Leave of Absence. The Executive will be on a
terminal paid leave of absence from the date hereof through
March 31, 1997. This terminal paid leave of absence is in
lieu of any severance pay the Executive would otherwise be
entitled to. The Executive's entitlement to compensation,
benefits, or payments under the Corporation's health,
accident, life insurance, retirement, stock option or
incentive, and savings (but not long-term disability) plans,
policies or arrangements will not, except as otherwise
required by law or regulation, be affected by the Executive's
leave of absence status and will continue to be governed by
the applicable provisions of such plans as though the
Executive had continued to render services in the active
employment of the Corporation to the end of the term of this
Agreement or event (such as the Executive's death) that
otherwise ends the term of this Agreement."
(f) Ratification. In all respects, except as herein provided,
the Employment Agreement is hereby ratified and confirmed.
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<PAGE>
3. Supplement Retirement Plan.
(a) Retirement Benefit. The period of any terminal leave of
absence is hereby designated as a "leave of absence with the
consent of the Participant's employer" which is intended to
be included within the definition of "Continuous Employment"
in the Supplemental Benefit Plan for Designated Employees of
Bowater Incorporated and Affiliated Companies as Amended and
Restated Effective August 22, 1990, (the "Supplemental
Benefit Plan") and compensation paid during the terminal
leave of absence is intended to be included within the
definition of "Earnings" in the Supplemental Benefit Plan
(without regard to whether such time is credited for benefit
accrual purposes under the Bowater Incorporated Employee
Retirement Plan or such compensation is includable within
that Plan's definition of "Compensation"). This instrument
confirms that if the Executive survives to March 31, 1997, he
will be eligible at that time to retire from the employment
of the Corporation with ten (10) years, six (6) months of
"Continuous Employment." This instrument further confirms
that if the Executive's Employment Agreement is terminated at
any time by his death, then (1) the Executive's surviving
Spouse (as defined in the Supplemental Benefit Plan), or the
Executive's estate if there is no surviving Spouse, will be
entitled to receive the balance of the compensation payable
herein pursuant to Sections 5(a) and 5(b) hereunder; and (2)
the Executive's surviving Spouse (as defined in the
Supplemental Benefits Plan) will be entitled to the sixty
(60%) percent Spouse's Pre-Retirement Death Benefit as
provided in the Supplemental Benefit Plan, determined by
reference to the benefit projected to March 31, 1997 at the
compensation levels herein provided. The determination of
the Corporation's Human Resources and Compensation Committee
of the Board of Directors (the "HRCC") of the Executive's
eligibility upon retirement at the time herein provided (as
well as his Spouse's eligibility upon his death) to receive
benefits from the Supplemental Benefit Plan is hereby
confirmed.
(b) Waiver. The Corporation hereby waives the provisions of
Sections 6.01 and 6.02(b) of the Supplemental Benefit Plan.
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<PAGE>
4. Stock Options. The HRCC has affirmed by their approval of
this Modification that the terminal leave of absence will not interrupt
or terminate employment for purposes of determining the Executive's
continued eligibility to become vested in, and to exercise, options
awarded pursuant to the Corporation's 1988 and 1992 Stock Option and
Stock Incentive Plans.
Upon the Executive's retirement at the completion of his
terminal leave of absence, the Executive, his heirs, executors and
administrators will be granted the longest period permissible within
which to exercise the rights granted to the Executive pursuant to the
Corporation's 1988 and 1992 Stock Incentive Plans consistent with
applicable law, regulation, Corporation policy and practice, and
provisions of the relevant plans and awards.
5. Effectiveness Contingent Upon Release. This Modification
shall not be effective unless and until the Executive has executed a
certain Waiver and Release Agreement (the "Release Agreement"), and the
seven-day revocation period provided for therein has expired. If the
Executive should breach the terms of the Release Agreement in the
future, this Modification shall immediately become null and void, and be
deemed canceled.
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 Nemirow
Witness Its President
/s/ Carol D. Hinton /s/ David E. McIntyre
Witness David E. McIntyre
Executive
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<PAGE>
<PAGE>
CANCELLATION OF SEVERANCE AGREEMENT
MODIFICATION OF EMPLOYMENT AGREEMENT AND ADDENDUM
THIS AGREEMENT is made and entered into as of this 23rd day of
February, 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 Phillip A.
Temple of 1175 Haywood Road, #9-0, Greenville, South Carolina 29681,
(the "Executive").
WHEREAS, the Corporation now employs the Executive as Vice
President - Human Resources and Administration pursuant to an Employment
Agreement dated March 15, 1993, (the "Employment Agreement") and a
Severance Agreement dated March 15, 1993, (the "Severance Agreement")
both modified by an Addendum to the Employment and Severance Agreements
dated March 15, 1993, (the "Addendum"); and
WHEREAS, the Executive and the Corporation wish to continue the
Executive's employment until a specified and agreed upon date, whereupon
the Executive will leave the employment of the Corporation and be
entitled to receive certain benefits;
NOW, THEREFORE, the parties hereto agree that the Severance
Agreement will be canceled as of June 30, 1995, and that the Employment
Agreement is hereby modified (by this "Modification") in the following
respects:
1. Severance Agreement. The Severance Agreement will be
terminated as of June 30, 1995.
2. Addendum and Employment Agreement. The Employment Agreement
is hereby modified as follows:
(a) Term. Section 2 of the Employment Agreement is amended to
read in its entirety as follows:
"2. Term.
The term of this Agreement, having begun on March 15,
1993, will continue from the date of this Modification until
December 31, 1995."
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<PAGE>
(b) Position and Duties. Section 3 of the Employment Agreement
is amended in its entirety to read as follows:
"3. Position and Duties.
"From February 23, 1995, through December 31, 1995, the
Executive will have the employment status of an exempt
employee. The Executive is relieved as of February 23, 1995,
of the obligation to devote his full working time to the
performance of duties under this Employment Agreement."
(c) Compensation and Benefits. Section 5 of the Employment
Agreement is amended in its entirety to read as follows:
"5. Compensation and Benefits.
(a) Base Salary. The Corporation will pay to the
Executive a base salary at his current annual rate,
payable in substantially equal periodic installments on
the Corporation's regular pay dates. All applicable
taxes and other authorized deductions will be deducted
from each pay check.
(b) Bonus Plan. The Executive will not be eligible to
participate in the 1995 Annual Bonus Plan. In lieu
thereof, the Executive will be entitled to the bonus
provided for in Section 8 entitled "Severance Pay." The
Executive will be eligible to participate in the
Corporation's Long Term Cash Incentive Plan on a
prorated basis (based on eighteen months'
participation).
(c) Benefit Plans. The Corporation will make
contributions on the Executive's behalf to the
Corporation's various benefit plans and programs (except
for long-term disability) in which the Executive is
eligible to participate in accordance with the
provisions thereof as in effect from time to time. The
Executive will continue to be responsible for all
required employee contributions.
(d) Vacations. The Executive is entitled to payment
for all accrued vacation as of July 1, 1995. The
Executive will not be entitled to accrue vacation from
and after July 1, 1995.
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<PAGE>
(e) Expenses. The Corporation will reimburse the
Executive for all reasonable expenses properly incurred,
and appropriately documented, by the Executive in
connection with the business of the Corporation."
(d) Severance Pay. Section 8 of the Employment Agreement is
amended in its entirety to read as follows:
"8. Terminal Leave of Absence and Severance Pay.
(a) Terminal Leave of Absence. The Executive will be
on a terminal paid leave of absence from February 23,
1995, through December 31, 1995. The Executive's
entitlement to compensation, benefits, or payments under
the Corporation's health, accident, life insurance,
retirement, stock option or incentive, and savings (but
not long-term disability) plans, policies or
arrangements will not, except as otherwise required by
law or regulation, be affected by the Executive's leave
of absence status and will continue to be governed by
the applicable provisions of such plans as though the
Executive had continued to render services in the active
employment of the Corporation to the end of the term of
this Agreement or event (such as the Executive's death)
that otherwise ends the term of this Agreement.
(b) Severance Pay. On July 1, 1995, the Executive will be
paid severance pay in the amount equal to eighteen (18)
months of the Executive's base salary plus 30/12 times
the amount of the bonus paid to the Executive in 1995
for calendar year 1994. All applicable taxes and other
authorized deductions will be deducted from this
payment. (Of the total bonus amount, 12/12's of the
bonus to be paid is attributable to calendar year 1995,
and will be included in the computation of "Final
Average Earnings" within the meaning of the Supplemental
Benefit Plan for Designated Employees of Bowater
Incorporated and Affiliated Companies, and therefore in
the computation of the retirement benefit to which the
Executive is entitled pursuant to the provisions of
Section 3 hereof.)"
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<PAGE>
(e) Ratification. In all respects, except as herein provided,
the Employment Agreement is hereby ratified and confirmed.
3. Addendum Benefits. The Corporation hereby confirms that, as
of January 1, 1996, the Executive will be entitled to the benefits
described in Sections 3 and 4 of the Addendum.
4. Stock Options. The Bowater Incorporated incentive stock
option agreements dated March 15, 1993, and January 25, 1995, between
the Executive and the Corporation are hereby amended to vest and make
exercisable as of April 26, 1995, all remaining stock option grants not
presently exercisable. The terminal leave of absence will not interrupt
or terminate employment for purposes of determining the Executive's
continued eligibility to exercise options awarded pursuant to the
Corporation's 1992 Stock Option and Stock Incentive Plan.
5. Effectiveness Contingent Upon Release and Approval by HRCC.
This Modification shall not be effective unless and until (a) it has
been approved by the Human Resource and Compensation Committee (the
"HRCC") of the Board of Directors; and (b) the Executive has executed a
certain Waiver and Release Agreement, (the "Release Agreement") at the
request and for the benefit of the Corporation, and the seven-day
revocation period provided for therein has expired. If the Executive
should breach the terms of the Release Agreement in the future, this
Modification will immediately become null and void, and be deemed
canceled.
IN WITNESS WHEREOF, the Corporation and the Executive have
executed this Agreement as of the day and year first above
written.
BOWATER INCORPORATED
/s/ Carol D. Hinton By /s/ A. P. Gammie
Witness Its
/s/ Wendy C. Shiba /s/ Phillip A Temple
Witness Phillip A. Temple
Executive
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<PAGE>
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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<PAGE>
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.
3
(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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<PAGE>
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
7
<PAGE>
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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<PAGE>
(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
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<PAGE>
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
3
<PAGE>
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.
4
<PAGE>
(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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<PAGE>
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,
6
<PAGE>
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
7
<PAGE>
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
<PAGE>
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.
9
<PAGE>
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.
11
<PAGE>
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
11
<PAGE>
May 1, 1995
Mr. H. David Aycock
2675 Trotter Road
Florence, SC 29501
Dear David:
Confirming our recent discussions, Bowater wishes to retain your
consulting services with regard to the management transition that is
taking place within the company. In particular, we believe your
experience at Nucor will be of specific value as we carry out our 1995
objectives of divisionalization, downsizing and cost containment.
We propose that you be compensated for these services at the rate of
$5,000 per month, in exchange for which you will make yourself
reasonably available, subject to adequate prior notice, for whatever
time during the month may reasonably be required.
We propose that this arrangement extend through the remainder of
1995, but that it be terminable during that time on 30 days' prior
notice from either of us to the other.
If this proposal is acceptable to you, I would appreciate your
signing the enclosed copy in the space provided and returning it to me.
Sincerely,
/s/ Arnold Nemirow
/s/ H. David Aycock
H. David Aycock
5/1/95
Date
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