EXHIBIT 4.19
FORM OF
GUARANTEE AGREEMENT
BETWEEN
BOWATER INCORPORATED
AND
THE BANK OF NEW YORK
Relating to the Preferred Securities of
BOWATER CAPITAL TRUST [__]
Dated as of [______ __], 200[3]
CROSS REFERENCE TABLE*
Section of Trust Indenture Act of
1939, as amended Section of Guarantee Agreement
---------------- ------------------------------
310(a)....................................................4.1(a)
310(b)...............................................4.1(c), 2.8
310(c)..............................................Inapplicable
311(a)....................................................2.2(b)
311(b)....................................................2.2(b)
311(c)..............................................Inapplicable
312(a)....................................................2.2(a)
312(b)....................................................2.2(b)
313..........................................................2.3
314(a).......................................................2.4
314(b)..............................................Inapplicable
314(c).......................................................2.5
314(d)..............................................Inapplicable
314(e).............................................1.1, 2.5, 3.2
314(f).......................................................3.2
315(a)....................................................3.1(d)
315(b).......................................................2.7
315(c).......................................................3.1
315(d)....................................................3.1(d)
316(a).............................................1.1, 2.6, 5.4
316(b).......................................................5.3
317(a)..............................................Inapplicable
317(b)..............................................Inapplicable
318(a)....................................................2.1(b)
318(b).......................................................2.1
318(c)....................................................2.1(a)
..........
* This Cross-Reference Table does not constitute part of the Guarantee Agreement
and shall not affect the interpretation of any of its terms or provisions.
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TABLE OF CONTENTS
PAGE
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ARTICLE 1 DEFINITIONS.............................................................................................1
Section 1.1. Definitions.................................................................................1
ARTICLE 2 TRUST INDENTURE ACT.....................................................................................3
Section 2.0. Trust Indenture Act; Application............................................................3
Section 2.1. List of Holders.............................................................................3
Section 2.2. Reports by the Guarantee Trustee............................................................4
Section 2.3. Periodic Reports to Guarantee Trustee.......................................................4
Section 2.4. Evidence of Compliance with Conditions Precedent............................................4
Section 2.5. Events of Default; Waiver...................................................................4
Section 2.6. Event of Default; Notice....................................................................4
Section 2.7. Conflicting Interests.......................................................................5
ARTICLE 3 POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE......................................................5
Section 3.1. Powers and Duties of the Guarantee Trustee..................................................5
Section 3.2. Certain Rights of Guarantee Trustee.........................................................6
Section 3.3. Indemnity...................................................................................8
ARTICLE 4 GUARANTEE TRUSTEE.......................................................................................8
Section 4.1. Guarantee Trustee; Eligibility..............................................................8
Section 4.2. Appointment, Removal and Resignation of the Guarantee Trustee...............................8
ARTICLE 5 GUARANTEE...............................................................................................9
Section 5.1. Guarantee...................................................................................9
Section 5.2. Waiver of Notice and Demand.................................................................9
Section 5.3. Obligations not Affected....................................................................9
Section 5.4. Rights of Holders..........................................................................10
Section 5.5. Guarantee of Payment.......................................................................10
Section 5.6. Subrogation................................................................................10
Section 5.7. Independent Obligations....................................................................10
Section 5.8. Subordination..............................................................................10
ARTICLE 6 COVENANTS..............................................................................................11
Section 6.1. Certain Covenants of the Guarantor........................................................11
ARTICLE 7 TERMINATION............................................................................................12
Section 7.1. Termination................................................................................12
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ARTICLE 8 SUBORDINATION OF GUARANTEE.............................................................................12
Section 8.1. Guarantee Subordinate to Senior Indebtendess...............................................12
Section 8.2. Guarantee Trustee To Effectuate Subordination..............................................12
Section 8.3. No Waiver of Subordination Provisions......................................................12
Section 8.4. Notice to Guarantee Trustee................................................................12
Section 8.5. Reliance on Judicial Order or Certificate of Liquidating Agent.............................13
Section 8.6. Guarantee Trustee not Fiduciary for Holders of Senior Indebtedness.........................13
Section 8.7. Rights of Guarantee Trustee as Holder of Senior Indebtedness; Preservation of Guarantee
Trustee's Rights......................................................................13
Section 8.8. Certain Conversions or Exchanges Deemed Payment............................................13
ARTICLE 9 MISCELLANEOUS..........................................................................................13
Section 9.1. Successors and Assigns.....................................................................13
Section 9.2. Amendments.................................................................................14
Section 9.3. Notices....................................................................................14
Section 9.4. Benefit....................................................................................15
Section 9.5. Interpretation.............................................................................15
Section 9.6. Governing Law..............................................................................15
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GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of [______ __], 200[3], is executed
and delivered by Bowater Incorporated, a Delaware corporation (the "Guarantor"),
and The Bank of New York, a New York banking corporation, as trustee (the
"Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Preferred Securities (as defined herein) of Bowater Capital
Trust [__], a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration of Trust"), dated as of [______ __], 200[3], among the Trustees
named therein, the Guarantor, as Depositor, and the Holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing _____________ of its [__]% Preferred Securities (liquidation preference
$[__] per preferred security) (the "Preferred Securities") representing
preferred undivided beneficial interests in the assets of the Issuer and having
the terms set forth in the Declaration of Trust;
WHEREAS, the Preferred Securities will be issued by the Issuer and the
proceeds thereof, together with the proceeds from the issuance of the Issuer's
Common Securities (as defined below), will be used to purchase the Debt
Securities (as defined in the Declaration of Trust) of the Guarantor which will
be deposited with The Bank of New York, as Property Trustee under the
Declaration of Trust, as trust assets;
WHEREAS, as incentive for the Holders to purchase Preferred Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth herein, to pay to the Holders of the Preferred Securities the
Guarantee Payments (as defined herein) and to make certain other payments on the
terms and conditions set forth herein; and
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders from time to time of the Preferred Securities.
ARTICLE 1
DEFINITIONS
Section 1.1. Definitions. As used in this Guarantee Agreement, the
terms set forth below shall, unless the context otherwise requires, have the
following meanings. Capitalized or otherwise defined terms used but not
otherwise defined herein shall have the meanings assigned to such terms in the
Declaration of Trust as in effect on the date hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct common control with such
specified Person, provided, however, that an Affiliate of the Guarantor shall
not be deemed to include the Issuer. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Common Securities" means the securities representing common beneficial
interests in the assets of the Issuer.
"Common Stock" shall mean the common stock, par value $1 per share, of
the Guarantor.
"Corporate Trust Office" means the office of the Guarantee Trustee
at which the corporate trust business of the Guarantee Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Agreement is located at the address of the Guarantee Trustee
set forth in Section 9.3.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement; provided, however,
that, except with respect to a default in payment of any Guarantee Payments, no
Event of Default shall be deemed to have occurred under this Guarantee Agreement
unless and until the Guarantor shall have received written notice of default and
shall not have cured such default within 60 days after receipt of such notice.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by or on behalf of the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration of Trust) required to be paid on
the Preferred Securities, to the extent the Issuer shall have funds available
therefor at such time; (ii) the redemption price set forth in the Declaration of
Trust, including premium, if any, all accrued and unpaid Distributions to the
date of redemption (the "Redemption Price"), with respect to any Preferred
Securities that are redeemable and are called for redemption by the Issuer to
the extent the Issuer shall have funds available therefor; and (iii) upon a
voluntary or involuntary termination, dissolution, winding-up or liquidation of
the Issuer (other than in connection with the distribution of Debt Securities
held by the Issuer to the holders of Preferred Securities), the lesser of (a)
the aggregate of the liquidation preference of $[__] per Preferred Security plus
accrued and unpaid Distributions on the Preferred Securities to the date of
payment, to the extent the Issuer shall have funds available to make such
payment, and (b) the amount of assets of the Issuer remaining available for
distribution to Holders in liquidation of the Issuer (in either case, the
"Liquidation Distribution").
"Guarantee Trustee" means The Bank of New York, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement and thereafter means each such
Successor Guarantee Trustee.
"Holder" means any holder, as registered on the books and records of
the Issuer, of any Preferred Securities; provided, however, that in determining
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor, the Guarantee Trustee or any Affiliate of the Guarantor
or the Guarantee Trustee.
"Indenture" means the Indenture dated as of [______ __], 200[3],
between the Guarantor and The Bank of New York, as trustee, as the same may be
supplemented and amended from time to time.
"List of Holders" has the meaning specified in Section 2.1(a).
"Majority in Liquidation Preference of the Securities" means, except as
provided by the Trust Indenture Act, a vote by the Holder(s), voting separately
as a class, of more than 50% of the liquidation preference of all the
outstanding Preferred Securities issued by the Issuer.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by (i) the Chairman, Chief Executive Officer, President or a
Vice President, and by (ii) the Treasurer, an Assistant Treasurer, the
Controller, the Secretary or an Assistant Secretary of such Person, and
delivered to the Guarantee Trustee. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Guarantee Agreement shall include:
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(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Responsible Officer" means, with respect to the Guarantee Trustee, any
officer within the Corporate Trust Office of the Guarantee Trustee who shall
have direct responsibility for the administration of this Guarantee, and also
means, with respect to a particular corporate trust matter, any officer within
the Corporate Trust Office of the Guarantee Trustee to whom any corporate trust
matter is referred because of such officer's knowledge of and familiarity with
the particular subject.
"Senior Indebtedness" has the meaning specified in the Indenture.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE 2
TRUST INDENTURE ACT
Section 2.0. Trust Indenture Act; Application.
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
Section 2.1. List of Holders.
(a) The Guarantor shall furnish or cause to be furnished to the
Guarantee Trustee (unless the Guarantee Trustee is acting as Securities
Registrar with respect to the Debt Securities under the Indenture) (i)
semi-annually, on or before __________ and _______ of each year, a list, in such
form as the Guarantee Trustee may reasonably require, of the names and addresses
of the Holders ("List of Holders") as of a date not more than 15 days prior to
the delivery thereof, and (ii) at such other times as the Guarantee Trustee may
request in writing, within 30 days after the receipt by the Guarantor of any
such request, a List of Holders as of a date not more than 15 days prior to the
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time such list is furnished, in each case to the extent such information is in
the possession or control of the Guarantor and is not identical to a previously
supplied list of Holders or has not otherwise been received by the Guarantee
Trustee. Notwithstanding the foregoing, the Guarantor shall not be obligated to
provide such List of Holders at any time the Preferred Securities are
represented by one or more certificates representing Global Securities (as
defined in the Indenture). The Guarantee Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under
Section 311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.
Section 2.2. Reports by the Guarantee Trustee. On or before ________ of
each calendar year, the Guarantee Trustee shall provide to the Holders such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Guarantee Trustee shall also comply with the requirements of Section 313(d)
of the Trust Indenture Act.
Section 2.3. Periodic Reports to Guarantee Trustee. The Guarantor shall
provide to the Guarantee Trustee, the Securities and Exchange Commission and the
Holders such documents, reports and information, if any, as required by Section
314 of the Trust Indenture Act and the compliance certificate required by
Section 314 of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.
Section 2.4. Evidence of Compliance with Conditions Precedent. The
Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with such conditions precedent, if any, provided for in this Guarantee Agreement
that relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.
Section 2.5. Events of Default; Waiver.
(a) The Holders of a Majority in Liquidation Preference of the
Preferred Securities may, by vote, on behalf of the Holders, waive any past
Event of Default and its consequences. Upon such waiver, any such Event of
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured, for every purpose of this Guarantee Agreement, but
no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent therefrom.
(b) Notwithstanding the provisions of subsection (a) of this Section
2.5, the right of any Holder of Preferred Securities to receive payment of the
Guarantee Payments in accordance with this Guarantee, or to institute suit for
the enforcement of any such payment, shall not be impaired without the consent
of each such Holder.
Section 2.6. Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the occurrence of
an Event of Default, transmit by mail, first class postage prepaid, to the
Holders, notices of all Events of Default known to the Guarantee Trustee, unless
such defaults have been cured before the giving of such notice, provided, that,
except in the case of a default in the payment of a Guarantee Payment, the
Guarantee Trustee shall be protected in withholding such notice if and so long
as the Board of Directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders.
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(b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default unless the Guarantee Trustee shall have received written
notice, or a Responsible Officer charged with the administration of the
Declaration of Trust shall have obtained written notice, of such Event of
Default.
Section 2.7. Conflicting Interests. The Declaration of Trust and the
Indenture shall be deemed to be specifically described in this Guarantee
Agreement for the purposes of clause (i) of the first proviso contained in
Section 310(b) of the Trust Indenture Act.
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
Section 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee for
the benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee Agreement to any Person except a Holder exercising his or her rights
pursuant to Section 5.4(iv) or to a Successor Guarantee Trustee on acceptance by
such Successor Guarantee Trustee of its appointment to act as Successor
Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall
automatically vest in any Successor Guarantee Trustee, upon acceptance by such
Successor Guarantee Trustee of its appointment hereunder, and such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered pursuant to the appointment of such Successor
Guarantee Trustee.
(b) If an Event of Default actually known to the Responsible Officer of
the Guarantee Trustee has occurred and is continuing, the Guarantee Trustee
shall enforce this Guarantee Agreement for the benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. In case an Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer of the Guarantee Trustee, the Guarantee
Trustee shall exercise such of the rights and powers vested in it by this
Guarantee Agreement, and use the same degree of care and skill in its exercise
thereof, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred;
(A) the duties and obligations of the Guarantee
Trustee shall be determined solely by the express provisions
of this Guarantee Agreement, and the Guarantee Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Guarantee
Agreement; and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or
opinions furnished to the Guarantee Trustee and conforming to
the requirements of this Guarantee Agreement; but in the case
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of any such certificates or opinions that by any provision
hereof or of the Trust Indenture Act are specifically required
to be furnished to the Guarantee Trustee, the Guarantee
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the
Guarantee Trustee, unless it shall be proved that the Guarantee Trustee
was negligent in ascertaining the pertinent facts upon which such
judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in Liquidation Preference of the Securities relating to the
time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee, or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee Agreement;
and
(iv) no provision of this Guarantee Agreement shall require
the Guarantee Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if the
Guarantee Trustee shall have reasonable grounds for believing that the
repayment of such funds or liability is not reasonably assured to it
under the terms of this Guarantee Agreement or adequate indemnity
against such risk or liability is not reasonably assured to it.
Section 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, proxy, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Guarantee Agreement shall be sufficiently evidenced by an
Officers' Certificate unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting to take
any action hereunder, the Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on its
part, request and conclusively rely upon an Officers' Certificate
which, upon receipt of such request from the Guarantee Trustee, shall
be promptly delivered by the Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel of
its selection (such counsel to be reasonably acceptable to the
Guarantor), and the advice or opinion of such legal counsel with
respect to legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be
taken by it hereunder in good faith and in accordance with such advice
or opinion. Such legal counsel may be legal counsel to the Guarantor or
any of its Affiliates and may be one of its employees. The Guarantee
Trustee shall have the right at any time to seek instructions
concerning the administration of this Guarantee Agreement from any
court of competent jurisdiction.
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(v) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holder, unless such Holder
shall have provided to the Guarantee Trustee such adequate security and
indemnity as would satisfy a reasonable person in the position of the
Guarantee Trustee, against the costs, expenses (including attorneys'
fees and expenses) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable
advances as may be requested by the Guarantee Trustee; provided that,
nothing contained in this Section 3.2(a)(v) shall be taken to relieve
the Guarantee Trustee, upon the occurrence of an Event of Default, of
its obligation to exercise the rights and powers vested in it by this
Guarantee Agreement and use the same degree of care and skill in the
exercise thereof as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit and shall incur no liability or
additional liability of any kind by reason of such inquiry or
investigation (except to the extent that such liability is the result
of the Guarantee Trustee's own negligence). The Guarantor shall
reimburse the Property Trustee upon request for reasonable expenses
incurred by the Guarantee Trustee in any such inquiry or investigation.
(vii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through its agents or attorneys or any Affiliate, and the Guarantee
Trustee shall not be responsible for any misconduct or negligence on
the part of any such agent or attorney appointed with due care by it
hereunder.
(viii) Whenever in the administration of this Guarantee
Agreement the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking
any other action hereunder, the Guarantee Trustee (A) may request
instructions from the Holders of a Majority in Liquidation Preference
of the Securities, (B) may refrain from enforcing such remedy or right
or taking such other action until such instructions are received, and
(C) shall be protected in acting in accordance with such instructions.
(ix) The Guarantee Trustee shall have no duty to record, file
or register any instrument (including any financing or continuation
statement or any filing under tax or securities laws) or any duty to
rerecord, refile or reregister such instrument.
(x) The rights, privileges, protections, immunities and
benefits given to the Guarantee Trustee, including, without limitation,
its rights to be indemnified, are extended to, and shall be enforceable
by, the Guarantee Trustee in each of its capacities hereunder, and to
each agent, custodian or other Person employed by it to act hereunder.
(b) No provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty to act in accordance with such power and
authority.
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Section 3.3. Indemnity. The Guarantor agrees to indemnify the Guarantee
Trustee for, and to hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on the part of the Guarantee Trustee,
arising out of or in connection with the acceptance or administration of this
Guarantee Agreement, including the reasonable costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The Guarantee Trustee will
not claim or exact any lien or charge on any Guarantee Payment as a result of
any amount due to it under this Guarantee Agreement.
ARTICLE 4
GUARANTEE TRUSTEE
Section 4.1. Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of
at least $50,000,000, and shall be a corporation meeting the
requirements of Section 310(a) of the Trust Indenture Act. If such
corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining
authority, then, for the purposes of this Section and to the extent
permitted by the Trust Indenture Act, the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to be eligible to
so act under Section 4.1(a), the Guarantee Trustee shall immediately resign in
the manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act. The Declaration of Trust and the
Indenture shall not be deemed to constitute conflicting interests of the
Guarantee Trustee.
Section 4.2. Appointment, Removal and Resignation of the Guarantee
Trustee.
(a) Subject to Section 4.2(b) the Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed until a Successor
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Guarantee Trustee and delivered to
the Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold office until a
Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by an instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
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(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition, at the expense of the Guarantor, any court of
competent jurisdiction for appointment of a Successor Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Guarantee Trustee.
ARTICLE 5
GUARANTEE
Section 5.1. Guarantee. The Guarantor irrevocably and unconditionally
agrees, subject to Section 5.8 and Article 8, to pay in full to the Holders the
Guarantee Payments (without duplication of amounts theretofore paid by or on
behalf of the Issuer) and all amounts due to the Guarantee Trustee, as and when
due, regardless of any defense, right of set-off or counterclaim which the
Issuer may have or assert other than the defense of payment. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
Section 5.2. Waiver of Notice and Demand. The Guarantor hereby waives
notice of acceptance of the Guarantee Agreement and of any liability to which it
applies or may apply, presentment, demand for payment, any right to require a
proceeding first against the Guarantee Trustee, Issuer or any other Person
before proceeding against the Guarantor, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.
Section 5.3. Obligations not Affected. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee Agreement shall in
no way be affected or impaired by reason of the happening from time to time of
any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions (other than an extension of time for payment of
Distributions that results from the extension of any interest payment period on
the Debt Securities as so provided in the Indenture), Redemption Price,
Liquidation Distribution or any other sums payable under the terms of the
Preferred Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Preferred
Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Issuer granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
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(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders or the Guarantee Trustee to
give notice to, or obtain the consent of, the Guarantor with respect to the
happening of any of the foregoing.
Section 5.4. Rights of Holders. The Guarantor expressly acknowledges
that: (i) this Guarantee Agreement will be deposited with the Guarantee Trustee
to be held for the benefit of the Holders; (ii) the Guarantee Trustee has the
right to enforce this Guarantee Agreement on behalf of the Holders; (iii) the
Holders of a Majority in Liquidation Preference of the Securities have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of this Guarantee Agreement or to
direct the exercise of any trust or power conferred upon the Guarantee Trustee
under this Guarantee Agreement; (iv) any Holder may institute a legal proceeding
directly against the Guarantor to enforce its rights under this Guarantee
Agreement, without first instituting a legal proceeding against the Guarantee
Trustee, the Issuer or any other Person; and (v) if an Event of Default with
respect to the Debt Securities constituting the failure to pay interest or
principal on the Debt Securities on the date such interest or principal is
otherwise payable has occurred and is continuing, then any Holder shall have the
right, which is absolute and unconditional, to proceed directly against the
Guarantor to obtain Guarantee Payments without first waiting to determine if the
Guarantee Trustee has enforced this Guarantee Agreement or instituting a legal
proceeding against the Issuer, the Guarantee Trustee or any other Person.
Section 5.5. Guarantee of Payment. This Guarantee Agreement creates a
guarantee of payment and not of collection. This Guarantee Agreement will not be
discharged except by payment of the Guarantee Payments in full (without
duplication of amounts theretofore paid by the Issuer) or upon distribution of
Debt Securities to Holders as provided in the Declaration of Trust.
Section 5.6. Subrogation. The Guarantor shall be subrogated to all (if
any) rights of the Holders against the Issuer in respect of any amounts paid to
the Holders by the Guarantor under this Guarantee Agreement and shall have the
right to waive payment by the Issuer pursuant to Section 5.1; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any rights which it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts are due and unpaid under this
Guarantee Agreement. If any amount shall be paid to the Guarantor in violation
of the preceding sentence, the Guarantor agrees to hold such amount in trust for
the Holders and to pay over such amount to the Holders.
Section 5.7. Independent Obligations. The Guarantor acknowledges that
its obligations hereunder are independent of the obligations of the Issuer with
respect to the Preferred Securities and that the Guarantor shall be liable as
principal and debtor hereunder to make Guarantee Payments pursuant to the terms
of this Guarantee Agreement notwithstanding the occurrence of any event referred
to in subsections (a) through (g), inclusive, of Section 5.3 hereof.
Section 5.8. Ranking. [This Guarantee Agreement will constitute an
unsecured obligation of the Guarantor and will rank pari passu with the Debt
Securities. If an Event of Default under the Declaration of Trust has occurred
and is continuing, the rights of holders of Common Securities to receive any
guarantee payments from the Guarantor shall be subordinate to the rights of
Holders to receive Guarantee Payments under this Guarantee.]
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ARTICLE 6
COVENANTS
Section 6.1. Certain Covenants of the Guarantor.
(a) The Guarantor covenants and agrees that if and so long as (i) the
Issuer is the holder of all the Debt Securities, (ii) a Tax Event (as defined in
the Declaration of Trust) in respect of the Issuer has occurred and is
continuing and (iii) the Guarantor has elected, and has not revoked such
election, to pay Additional Sums (as defined in the Declaration of Trust) in
respect of the Preferred Securities and Common Securities, the Guarantor will
pay to the Issuer such Additional Sums.
(b) The Guarantor covenants and agrees that it will not (i) declare or
pay any dividends on or make any distributions with respect to, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any shares of
the Guarantor's capital stock or (ii) make any payment of principal, interest or
premium, if any, on or repay or repurchase or redeem any Debt Securities
(including guarantees of indebtedness for money borrowed) of the Guarantor that
rank pari passu with or junior to the Debt Securities as to the payment of
dividends or distribution of assets upon liquidation (other than, in the case of
either clause (i) or clause (ii), (a) any dividend, redemption, liquidation,
interest, principal or guarantee payment by the Guarantor where the payment is
made by way of securities (including capital stock) that rank pari passu with or
junior with respect to the payment of dividends or distribution of assets upon
liquidation to the securities on which such dividend, redemption, interest,
principal or guarantee payment is being made, (b) payments under this Agreement,
(c) purchases of Common Stock related to the issuance of Common Stock under any
of the Guarantor's benefit plans for its directors, officers or employees, (d)
as a result of a reclassification of the Guarantor's capital stock or the
exchange or conversion of one series or class of the Guarantor's capital stock
for another series or class of the Guarantor's capital stock, (e) issuance of
Common Stock upon the retraction of Exchangeable Shares issued by Bowater Canada
Inc. and (f) the purchase of fractional interests in shares of the Guarantor's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged) if at such time (x) there
shall have occurred any event of which the Guarantor has actual knowledge that
(A) with the giving of notice or the lapse of time, or both, would constitute an
"Event of Default" under the Indenture with respect to the Debt Securities and
(B) in respect of which the Guarantor shall not have taken reasonable steps to
cure, (y) the Guarantor shall be in default with respect to its payment of any
obligations under this Guarantee or (z) the Guarantor shall have given notice of
its selection of any extension period under the terms of the Indenture with
respect to the Debt Securities and shall not have rescinded such notice, or such
extension period, or any extension thereof, shall be continuing.
(c) The Guarantor covenants and agrees (i) to maintain directly or
indirectly 100% ownership of the Common Securities, provided that certain
successors which are permitted by the Indenture may succeed to the Guarantor's
ownership of the Common Securities, (ii) not to voluntarily terminate, wind-up
or liquidate the Issuer, except (a) in connection with a distribution of the
Debt Securities to the holders of the Preferred Securities or (b) in connection
with certain mergers, consolidations or amalgamations permitted by the
Declaration of Trust, (iii) to use its reasonable efforts, consistent with the
terms and provisions of the Declaration of Trust, to cause the Issuer to remain
classified as a grantor trust for United States Federal income tax purposes,
(iv) for so long as Preferred Securities are outstanding, not to convert Debt
Securities except pursuant to a notice of conversion delivered to the Conversion
Agent (as defined in the Declaration of Trust) by a Holder, [(v) if the
Preferred Securities or Debt Securities are convertible into Common Stock (a) to
maintain the reservation for issuance of the number of shares of Common Stock,
if any, that would be required from time to time upon the conversion of all the
Debt Securities or Preferred Securities then outstanding and (b) to deliver
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shares of Common Stock upon an election by the Holders to convert such Preferred
Securities into Common Stock], and (vi) to honor any obligations relating to the
conversion or exchange of the Preferred Securities into or for Common Stock or
Debt Securities.
ARTICLE 7
TERMINATION
Section 7.1. Termination. This Guarantee Agreement shall terminate and
be of no further force and effect upon the earliest of (i) full payment of the
Redemption Price, if any, of all Preferred Securities, (ii) the distribution of
Debt Securities to the Holders in exchange for all of the then outstanding
Preferred Securities, (iii) full payment of the amounts payable in accordance
with the Declaration of Trust upon liquidation of the Issuer [or (iv) the
distribution, if any, of Common Stock to the holders of the Preferred Securities
in respect of the conversion of all such holders' Preferred Securities into
Common Stock]. Notwithstanding the foregoing, this Guarantee Agreement will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder must restore payment of any sums paid with respect to Preferred
Securities or this Guarantee Agreement.
ARTICLE 8
SUBORDINATION OF GUARANTEE
Section 8.1. [Guarantee Payments Subordinate to Senior Indebtedness.
The Guarantor covenants and agrees, and each Holder, by its acceptance thereof,
likewise covenants and agrees, that the payment of the Guarantee Payments
pursuant to this Guarantee Agreement is hereby expressly made subordinate and
subject in right of payment to the prior payment in full in cash of all amounts
then due and payable in respect of all of the Guarantor's Senior Indebtedness to
the same extent as payments of the Guarantor on the Debt Securities are
subordinated to the Guarantor's Senior Indebtedness pursuant to the Indenture,
and that the subordination is for the benefit of the holders of Senior
Indebtedness.]
Section 8.2. Guarantee Trustee To Effectuate Subordination. Each Holder
by his or her acceptance of Preferred Securities authorizes and directs the
Guarantee Trustee on his or her behalf to take such action as may be necessary
or appropriate to acknowledge or effectuate the subordination provided in this
Article and appoints the Guarantee Trustee as his or her attorney-in-fact for
any and all such purposes.
Section 8.3. No Waiver of Subordination Provisions. No right of any
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Guarantor or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Guarantor
with the terms, provisions and covenants of this Guarantee Agreement, regardless
of any knowledge thereof that any such holder may have or be otherwise charged
with.
Section 8.4. Notice to Guarantee Trustee. The Guarantor shall give
written notice as soon as commercially practicable to the Guarantee Trustee of
any fact actually known to the Guarantor which would prohibit the making of any
payment to or by the Guarantee Trustee in respect of the Guarantee Payment.
Notwithstanding the provisions of this Article or any other provision of this
Guarantee Agreement, the Guarantee Trustee shall not be charged with knowledge
of the existence of any facts which would prohibit the making of any payment to
or by the Guarantee Trustee in respect of the Guarantee Payment, unless and
until the Guarantee Trustee shall have received written notice thereof from the
Guarantor or a person representing itself as a holder of Senior Indebtedness or
from any trustee, agent or representative therefor (whether or not the facts
contained in such notice are true).
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Section 8.5. Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets of the Guarantor in connection
with the occurrence of an Event of Default under the Declaration of Trust, the
Guarantee Trustee, subject to the provisions of Article 3, and the Holders shall
be entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which a Proceeding is pending, or a certificate of the trustee
in bankruptcy, receiver, liquidating trustee, custodian, assignee for the
benefit of creditors, agent or other Person making such payment or distribution,
delivered to the Guarantee Trustee or to the Holders, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other indebtedness of the
Guarantor, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article.
Section 8.6. Guarantee Trustee not Fiduciary for Holders of Senior
Indebtedness. With respect to the holders of Senior Indebtedness, the Guarantee
Trustee undertakes to perform or observe only such of its obligations and
covenants as are set forth in this Article 8, and no implied covenants or
obligations with respect to the holders of the Senior Indebtedness shall be read
into this Guarantee Agreement against the Guarantee Trustee. The Guarantee
Trustee shall not be deemed to owe any fiduciary duty to the holders of such
Senior Indebtedness and, subject to the provisions of Section 3.2, the Guarantee
Trustee shall not be liable to the holder of any Senior Indebtedness if it shall
pay over or deliver to Holders, the Guarantor, or any other person, money or
assets to which any holder of such Senior Indebtedness shall be entitled by
virtue of this Article 8 or otherwise.
Section 8.7. Rights of Guarantee Trustee as Holder of Senior
Indebtedness; Preservation of Guarantee Trustee's Rights. The Guarantee Trustee
in its individual capacity shall be entitled to all the rights set forth in this
Article with respect to any Senior Indebtedness which may at any time be held by
it, to the same extent as any other holder of Senior Indebtedness, and, subject
to the requirements of the Trust Indenture Act, nothing in this Guarantee
Agreement shall deprive the Guarantee Trustee of any of its rights as such
holder.
Section 8.8. Certain Conversions or Exchanges Deemed Payment. For the
purpose of this Article only, (a) the issuance and delivery of junior securities
upon any conversion or exchange of Debt Securities shall not be deemed to
constitute a payment or distribution on account of the principal of (or premium,
if any) or interest (including any Additional Interest) on the Debt Securities
or on account of the purchase or other acquisition of Debt Securities, and (b)
the payment, issuance or delivery of cash (including any payments for fractional
shares), property or securities (other than junior securities) upon conversion
or exchange of any Debt Securities shall be deemed to constitute payment on
account of the principal of such security. For the purpose of this Section, the
term "junior securities" means (i) shares of any stock of any class of the
Guarantor and (ii) securities of the Guarantor which are subordinated in right
of payment to all Senior Indebtedness which may be outstanding at the time of
issuance or delivery of such securities to substantially the same extent as, or
to a greater extent than, the Debt Securities which are so subordinated as
provided in this Article.
ARTICLE 9
MISCELLANEOUS
Section 9.1. Successors and Assigns. All guarantees and agreements
contained in this Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Preferred Securities then outstanding. Except in
connection with a consolidation, merger or sale involving the Guarantor that is
permitted under Article VIII of the Indenture and pursuant to which the assignee
agrees in writing to perform the Guarantor's obligations hereunder, the
Guarantor shall not assign its obligations hereunder.
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Section 9.2. Amendments. Except with respect to any changes which do
not adversely affect the rights of the Holders in any material respect (in which
case no consent of the Holders will be required), this Guarantee Agreement may
only be amended with the prior approval of the Holders of not less than a
Majority in Liquidation Preference of the Securities. The provisions of Article
6 of the Declaration of Trust concerning meetings of the Holders shall apply to
the giving of such approval. The Guarantor shall furnish the Guarantee Trustee
with an Officers' Certificate and an Opinion of Counsel to the effect that any
amendment of this Agreement is authorized and permitted.
Section 9.3. Notices. Any notice, request or other communication
required or permitted to be given hereunder shall be in writing, duly signed by
the party giving such notice, and delivered, telecopied or mailed by first class
mail as follows:
(a) if given to the Guarantor, to the address set forth below or such
other address as the Guarantor may give notice of to the Holders:
Bowater Incorporated
00 Xxxx Xxxxxxxxxx Xxx (29601)
X.X. Xxx 0000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Phone No: 000-000-0000
Facsimile No: 000-000-0000
Attention: General Counsel
(b) if given to the Issuer, in care of the Guarantee Trustee, at the
Issuer's (and the Guarantee Trustee's) address set forth below or such other
address as the Guarantee Trustee on behalf of the Issuer may give notice of to
the Holders:
Bowater Capital Trust [__]
x/x Xxxxxxx Xxxxxxxxxxxx
00 Xxxx Xxxxxxxxxx Xxx (29601)
X.X. Xxx 0000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Phone No: 000-000-0000
Facsimile No: 000-000-0000
Attention: General Counsel
with a copy to:
The Bank of New York
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Phone No.: [_______________]
Facsimile No.: 000-000-0000
Attention: Corporate Trust Administration
(c) if given to any Holder, at the address set forth on the books and
records of the Issuer.
All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
14
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
Section 9.4. Benefit. This Guarantee Agreement is solely for the
benefit of the Holders and is not separately transferable from the Preferred
Securities.
Section 9.5. Interpretation. In this Guarantee Agreement, unless the
context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not defined
in the preamble hereto have the respective meanings assigned to them in Section
1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections
are to Articles and Sections of this Guarantee Agreement unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa; and
(g) the masculine, feminine or neuter genders used herein shall include
the masculine, feminine and neuter genders.
Section 9.6. Governing Law. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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This Guarantee Agreement is executed as of the day and year first above
written.
BOWATER INCORPORATED
By:
--------------------------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Guarantee Trustee
By:
--------------------------------------------
Name:
Title:
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