MODIFICATION OF EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st day
of October, 1995, by and between Bowater Incorporated, a Delaware
corporation having a mailing address of 00 Xxxx Xxxxxxxxxx Xxx,
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 (the "Corporation"), and Xxxxxx
X. Xxxxxxxxx, of 000 Xxxxxxx Xxx, Xxxxx, XX 00000 (the
"Executive").
WHEREAS, the Corporation now employs the Executive pursuant
to an Employment Agreement dated as of July 1, 1993 (the
"Employment Agreement") and a Severance Agreement dated as of
July 1, 1993 (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 may retire from the employment of
the Corporation and be entitled to receive certain benefits;
NOW, THEREFORE, the parties hereto agree to the following:
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 will end on
September 30, 1997, unless terminated earlier by the
Executive's death."
(b) Position and Duties. Section 3 of the Employment
Agreement is amended in its entirety to read as follows:
"3. Position and Duties. 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 his
Employment Agreement."
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(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 in substantially equal periodic installments
on the Corporation's regular pay dates. All
applicable taxes and other authorized deductions
will be deducted from each paycheck.
(b) Bonus Plan. In addition to the base salary,
the Executive will be entitled to a bonus equal
to 33/12 times the bonus amount paid in 1995 for
the calendar year 1994, to be paid on November 1,
1995, and subject to all applicable withholding
requirements. This bonus is in lieu of any bonus
for which the Executive may have been eligible
under the Corporation's 1995, 1996 or 1997 Annual
Incentive Plans. The Executive will be eligible
to receive a prorated award under the Long Term
Cash Incentive Plan based upon twenty-one (21)
months' of 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 and business
travel accident insurance) 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 be entitled
to be paid for all vacation accrued as of
September 30, 1995, but will no longer accrue
vacation from and after September 30, 1995.
(e) Perquisites. The Executive will be entitled
to Key Executive outplacement assistance from
Right Associates until he has secured new
employment,and to all other executive perquisites
to which he is currently entitled through
September 30, 1997."
(d) Noncompetition. Section 7 of the Employment
Agreement is hereby deleted.
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(e) Severance Pay. Section 8 of the Employment
Agreement is amended in its entirety 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 September 30, 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, life
insurance, retirement, stock option, and savings (but
not long-term disability or business travel accident
insurance) 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."
(f) Governing Law. Section 11 is hereby amended in its
entirety to read as follows:
"11. Governing Law. The Employment Agreement and
this Modification of Employment Agreement shall be
governed by and interpreted in accordance with the
substantive laws of the State of Delaware."
(g) Ratification. In all respects, except as herein
provided, the Employment Agreement is hereby ratified and
confirmed.
3. Supplemental Retirement Plan.
(a) Retirement Benefit. The period of the 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. This instrument further confirms
that if the Executive's Employment Agreement as amended hereunder
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(b) of the Employment
Agreement as amended hereunder; and (2) the Executive's surviving
Spouse (as defined in the Supplemental Benefit Plan) will be
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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 September 30, 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 any time after the expiration of
the term of this Agreement (as well as his Spouse's eligibility
upon his death) to receive benefits from the Supplemental Benefit
Plan is hereby confirmed. Specifically, the HRCC hereby confirms
that the Executive shall be entitled to group medical insurance
and life insurance benefits pursuant to Article 5 of the
Supplemental Benefit Plan upon expiration of the term of this
Agreement, regardless of whether the Executive postpones
receiving retirement benefits under Article 3 of the Supplement
Benefit Plan until a later time. The HRCC further confirms that
the Executive shall be entitled to postpone receiving retirement
benefits under Article 3 of the Supplemental Benefit Plan until
the Executive commences receiving retirement benefits under the
Corporation's qualified defined benefit pension plan. Retirement
benefits paid to the Executive under Article 3 of the
Supplemental Benefit Plan shall be computed as of the date that
such retirement benefits commence, not as of the termination date
of this Agreement.
(b) Waiver. The Corporation hereby waives the provisions
of Sections 6.01 and 6.02(b) of the Supplemental Benefit Plan.
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 1984, 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 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. 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, the Employment Agreement and the Severance
Agreement shall immediately become null and void, and be deemed
canceled.
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6. Binding Agreement. Except as provided in Section 5
above, this Modification and the Employment Agreement shall inure
to the benefit of and be enforceable by the Executive, his heirs,
executors, administrators, successors and assigns. This
Modification and the Employment Agreement shall be binding upon
the Corporation, its successors and assigns.
IN WITNESS WHEREOF, the Corporation and the Executive have
executed this Agreement as of the day and year first above
written.
BOWATER INCORPORATED
By /s/ XXXXXXX X. XXXXXX /s/ XXXXXX X. XXXXXXXXX
Name: Xxxxxxx X. Xxxxxx Xxxxxx X. Xxxxxxxxx
Title: Vice President-Human Resources
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