EXHIBIT 10.54
AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT, made as of the 9th day of June, 2000, by and between Bowater
Incorporated, a Delaware corporation having a mailing address of 00 Xxxx
Xxxxxxxxxx Xxx, X.X. Xxx 0000, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 (the
"Corporation"), and Xxxxx X. Xxxxxxx of 0 Xxxx'x Xxxxx, Xxxxxxxxxxxx, XX 00000
(the "Executive").
WHEREAS, the Corporation and the Executive have previously entered into a
Change in Control Agreement for the purpose of reinforcing and encouraging the
continued attention and dedication of members of the Corporation's management,
including the Executive, to their assigned duties in the event of a Change in
Control or potential Change in Control of the Corporation; and
WHEREAS, the Board of Directors of the Corporation (the "Board") has
determined that certain changes should be made to the Change in Control
Agreement to better achieve its objectives, and the Executive has agreed to such
changes;
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereto agree to amend and restate the
previous Change in Control Agreement as follows:
1. DEFINITIONS
The following terms shall have the meanings assigned to them below:
(a) "Accrued Compensation" shall mean all amounts earned or accrued
through the Termination Date but not paid as of the Termination Date
including (i) the Base Amount, (ii) reimbursement for reasonable and
necessary expenses incurred by the Executive on behalf of the
Corporation during the period ending on the Termination Date, (iii)
vacation pay, and (iv) any bonus award with respect to the
Corporation's fiscal year ended prior to the Termination Date.
(b) "Acquiring Person" shall mean the Beneficial Owner, directly or
indirectly, of securities representing 20% or more of the combined
voting power of the Corporation's then outstanding securities, not
including (except as provided in clause (i) of the next sentence)
securities of such Beneficial Owner acquired pursuant to an
agreement allowing the acquisition of up to and including 50% of
such voting power approved by two-thirds of the members of the Board
who are Board members before the Person becomes Beneficial Owner,
directly or indirectly, of securities representing 5% or more of the
combined voting power of the Corporation's then outstanding
securities. Notwithstanding the foregoing, (i) securities acquired
pursuant to an agreement described in the preceding sentence will be
included in determining whether a Beneficial Owner is an
Acquiring Person if, subsequent to the approved acquisition, the
Beneficial Owner acquires 5% or more of such voting power other than
pursuant to such an agreement so approved; and (ii) a Person shall
not be an Acquiring Person if such Person is eligible to and files a
Schedule 13G under the Exchange Act with respect to such Person's
status as a Beneficial Owner of all securities of the Corporation of
which the Person is a Beneficial Owner.
(c) "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.
(d) "Base Amount" shall mean the greater of (i) the Executive's annual
base salary at the rate in effect immediately prior to the Change in
Control and (ii) the Executive's annual base salary at the rate in
effect on the Termination Date.
(e) "Beneficial Owner" of securities shall mean (i) a Person who
beneficially owns such securities, directly or indirectly, or (ii) a
Person who has the right to acquire such securities (whether such
right is exercisable immediately or only with the passage of time)
pursuant to any agreement, arrangement or understanding (whether or
not in writing) or upon the exercise of conversion rights, exchange
rights, warrants, options or otherwise.
(f) "Bonus Amount" shall mean an amount equal to the maximum amount the
Executive could have been paid under the Corporation's annual or
other short term cash incentive plans in effect immediately prior to
the Change in Control for the fiscal year in which the Change in
Control occurred or, if higher, the maximum amount under such plans
in effect at the Termination Date based on the Executive's then base
salary and position.
(g) "Cause" shall mean and be limited to the Executive's gross
negligence, willful misconduct or conviction of a felony, which has
a demonstrable and material adverse effect upon the Corporation;
provided that if Cause exists by virtue of the Executive's gross
negligence or willful misconduct that is capable of being cured, the
Corporation shall give the Executive written notice of the alleged
negligence or misconduct and if the Executive cures the negligence
or misconduct within thirty (30) days after receipt of the notice,
such Cause shall cease to exist and the Corporation shall not
terminate the Executive's employment therefor. The Executive shall
be deemed to have been terminated for Cause as of the effective date
stated in a Notice of Termination delivered by the Corporation to
the Executive, which shall not be delivered before the end of the
thirty (30) day period described in the preceding sentence, if
applicable. The Notice of Termination must be accompanied by a
certified copy of a resolution duly adopted by the affirmative vote
of not less than three-quarters (3/4) of the membership of the Board
after reasonable notice to the Executive and an opportunity for the
Executive, with the Executive's counsel present, to be heard before
the Board, finding that, in the good faith opinion of the Board, the
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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.
(h) "Change in Control" shall be deemed to have occurred upon:
(i) the date that any Person is or becomes an Acquiring Person;
(ii) the date that the Corporation's stockholders approve a merger,
consolidation or reorganization of the Corporation with
another corporation or other Person, unless, immediately
following such merger, consolidation or reorganization, (A) at
least 50% of the combined voting power of the outstanding
securities of the resulting entity would be held in the
aggregate by the stockholders of the Corporation as of the
record date for such approval (provided that securities held
by any individual or entity that is an Acquiring Person, or
who would be an Acquiring Person if 5% were substituted for
20% in the definition of such term, shall not be counted as
securities held by the stockholders of the Corporation, but
shall be counted as outstanding securities for purposes of
this determination), or (B) at least 50% of the board of
directors or similar body of the resulting entity are
Continuing Directors;
(iii) the date the Corporation sells or otherwise transfers all or
substantially all of the Corporation's assets to another
corporation or other Person, unless, immediately following
such sale or transfer, (A) at least 50% of the combined voting
power of the outstanding securities of the acquiring entity
would be held in the aggregate by the stockholders of the
Corporation as of the record date for such approval (provided
that securities held by any individual or entity that is an
Acquiring Person, or who would be an Acquiring Person if 5%
were substituted for 20% in the definition of such term, shall
not be counted as securities held by the stockholders of the
Corporation, but shall be counted as outstanding securities
for purposes of this determination), or (B) at least 50% of
the board of directors or similar body of the acquiring entity
are Continuing Directors; or
(iv) the date on which less than 50% of the total membership of the
Board consists of Continuing Directors.
(i) "Code" shall mean the United States Internal Revenue Code of 1986,
amended.
(j) "Continuing Directors" shall mean any member of the Board who (i)
was a member of the Board immediately prior to the date of the event
that would constitute a Change in Control, and any successor of a
Continuing Director while such successor is a member of the Board,
(ii) who is not an Acquiring Person or
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an Affiliate or Associate of an Acquiring Person and (iii) is
recommended or elected to succeed the Continuing Director by a
majority of the Continuing Directors.
(k) "Corporation" shall mean Bowater Incorporated; provided that, if the
Executive is employed by a subsidiary of the Corporation,
"Corporation" shall mean such subsidiary of the Corporation for
purposes of references to the Executive's compensation and benefits,
and the plans, programs and arrangements pursuant to which
compensation and benefits are provided.
(l) "Disability" shall mean a physical or mental condition that is
defined as a disability in the Corporation's long term disability
insurance plan covering the Executive immediately prior to the
Change in Control.
(m) "Employer Match" shall mean an amount equal to the maximum matching
contribution the Corporation could have made (regardless of actual
circumstances) on the Executive's behalf to the Corporation's
Statutory and non-Statutory defined contribution or savings plans
for the fiscal year in which the Change in Control occurred, or, if
higher, the maximum matching contribution the Corporation could have
made for the fiscal year in which the Executive's employment
terminated.
(n) "Exchange Act" shall mean the United States Securities Exchange Act
of 1934, as amended.
(o) "Good Reason" shall mean:
(i) a change in the Executive's status, title, position or
responsibilities (including in reporting line relationships)
that, in the Executive's reasonable judgment, represents a
substantial adverse change from the Executive's status, title,
position or responsibilities as in effect at any time within
180 days preceding the date of a Change in Control or at any
time thereafter; the assignment to the Executive of any duties
or responsibilities that, in the Executive's reasonable
judgment, are inconsistent with the Executive's status, title,
position or responsibilities as in effect at any time within
180 days preceding the date of a Change in Control or any time
thereafter; or any removal of the Executive from or failure to
reappoint or reelect the Executive to any office or position
held prior to the Change in Control, except in connection with
the termination of the Executive's employment for Disability,
Cause, as a result of the Executive's death or by the
Executive other than for Good Reason;
(ii) the failure by the Corporation to provide the Executive with
compensation and benefits, in the aggregate, at least equal
(in terms of benefit levels and/or reward opportunities which
opportunities will be evaluated in light of the performance
requirements therefor) to those provided for under the
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employee compensation and benefit plans, programs and
practices in which the Executive was participating at any time
within one-hundred eighty (180) days preceding the date of a
Change in Control or at any time thereafter;
(iii) the reduction of the Executive's salary as in effect on the
date of the Change in Control or any time thereafter;
(iv) a failure by the Corporation to obtain from any Successor its
assent to this Agreement contemplated by Section 12 hereof; or
(v) the relocation of the principal office at which the Executive
is to perform services on behalf of the Corporation to a
location more than thirty-five (35) miles from its location
immediately prior to the Change in Control or a substantial
increase in the Executive's business travel obligations
subsequent to the Change in Control.
(p) "Notice of Termination" shall mean a notice sent by either the
Executive or the Corporation to the other party terminating the
Executive's employment as of a certain date and setting forth the
reasons therefor.
(q) "Person" shall mean any individual, corporation, partnership, group,
association or other "person" as such term is used in Sections 13(d)
and 14(d) of the Exchange Act.
(r) "Pro Rata Bonus" shall mean an amount equal to the Bonus Amount
multiplied by a fraction, the numerator of which is the number of
months and partial months through the Termination Date and the
denominator of which is twelve (12).
(s) "Statutory Plan" shall mean a retirement plan that is intended to be
qualified (for purposes of United States tax law) or registered (for
purposes of Canadian tax law), as the case may be.
(t) "Successor" shall mean the direct or indirect successor by purchase,
merger, consolidation or otherwise, to all or substantially all of
the business and/or assets of the Corporation.
(u) "Termination Date" shall mean (i) in the case of the Executive's
death, the date of death, (ii) in the case of a termination by the
Executive in accordance with Section 3, the last day of employment
as set forth in the Notice of Termination given by the Executive,
(iii) in the case of a termination by the Corporation for Cause, a
date not less than thirty (30) days after receipt of the Notice of
Termination by the Executive, (iv) in the case of a termination by
the Corporation due to the Executive's Disability, the date not less
than thirty (30) days after receipt of the Notice of Termination by
the Executive, provided that the Executive shall not have returned
to the full-time performance of duties within thirty (30) days after
such receipt, and (v) in all other cases, the date specified in the
Notice
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of Termination or if no Notice of Termination is sent, the last day
of the Executive's employment (an Executive receiving periodic
severance pay is no longer considered employed for the purposes of
this Agreement).
2. TERM OF AGREEMENT
This Agreement shall commence as of the date hereof and shall continue in
effect until the date the Executive's employment is terminated (an
Executive being paid periodic severance benefits is no longer considered
employed for these purposes); provided, however, that if the Executive's
employment is terminated following, or in anticipation of, a Change in
Control, the term shall continue in effect until all payments and benefits
have been made or provided to the Executive hereunder.
3. EXECUTIVE'S RIGHT OF TERMINATION
After a Change in Control and for thirty-six (36) months thereafter, the
Executive shall have the right to terminate employment for Good Reason by
sending a Notice of Termination to the Corporation setting forth in
reasonable detail the facts and circumstances claimed to constitute Good
Reason. In addition, on the first (1st) anniversary date of the Change in
Control and for a period of thirty (30) days thereafter, the Executive
shall have the unconditional right to terminate employment by giving
written notice to the Corporation within such thirty (30) day period. If
the Executive's employment is terminated in accordance with the provisions
of this Section 3, the Executive shall be entitled to the compensation and
benefits described in Section 4(b) below.
4. COMPENSATION UPON CHANGE IN CONTROL FOLLOWED BY CERTAIN TERMINATIONS
If the Executive's employment with the Corporation shall be terminated
within thirty-six (36) months following a Change in Control, the Executive
shall be entitled to the following compensation and benefits:
(a) If the Executive's employment is terminated (i) by the
Corporation for Cause or Disability, (ii) by reason of the Executive's
death or (iii) by the Executive other than in accordance with Section 3,
the Corporation shall pay to the Executive the Accrued Compensation and,
if such termination is other than by the Corporation for Cause, the Pro
Rata Bonus, computed as of the applicable Termination Date.
(b) If the Executive's employment with the Corporation shall be
terminated (x) by the Corporation for any reason other than for Cause or
Disability, or (y) by the Executive pursuant to the provisions of Section
3, the Executive shall be entitled to the following as of the applicable
Termination Date:
(i) the Accrued Compensation and the Pro-Rata Bonus;
(ii) an amount equal to three (3) times the Base Amount;
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(iii) an amount equal to three (3) times the Bonus Amount;
(iv) an amount equal to three (3) times the Employer Match;
(v) An amount equal to 30% of the Base Amount for certain lost
benefits;
(vi) An amount equal to the present value of the additional
retirement benefits the Executive would have earned under the
Corporation's defined benefit retirement plans (Statutory and
non-Statutory) for the three (3) years following the
Termination Date, computed assuming the following:
(A) the Executive's salary continues at the Base Amount with
a bonus or target bonus equal to the Bonus Amount;
(B) the payment of the Executive's retirement benefits
commences as of the later of (x) the Executive's age
three (3) years after the Termination Date or (y)
earliest retirement age (without regard to service)
allowed under the Statutory Plan applicable to the
Executive;
(C) all vesting requirements are waived;
(D) mortality and interest rate assumptions applicable to
the computation of lump sum values in the applicable
Statutory Plan are used; and
(E) the benefits are paid in the form of a single life
annuity;
(vii) As of the Executive's Termination Date, or, if later, when the
Executive attains age fifty (50), the Executive (and the
Executive's spouse or surviving spouse and dependents) will be
provided the retiree health care and life insurance coverage
provided by the Corporation to executive retirees as of the
date of the Change in Control. If and to the extent that the
benefits described in this paragraph cannot be provided under
the Corporation's plans or programs without the benefits
provided thereunder being taxable to the Executive, the
Corporation shall procure an insurance policy or policies on
substantially similar terms and conditions for the Executive
and the Executive's spouse or surviving spouse and dependents,
or if such policy or policies cannot be obtained, shall
provide a lump sum payment equal to the value of the lost
benefits; and
(viii) The Corporation shall pay for or provide the Executive
either: (i) individual out-placement assistance as offered by
a member firm of the Association of Out-Placement Consulting
Firms, or (ii) a cash payment of $20,000 in lieu of individual
outplacement services, as elected by the Executive at any time
within twelve (12) months after the Executive's termination of
employment.
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5. EXCISE TAX GROSS-UP
If any payment or benefit made available to the Executive in connection
with a Change in Control (including, without limitation, any payment made
pursuant to any long-term incentive plans, stock option or equity
participation right plans) or termination of the Executive's employment
following a Change in Control (in either category, a "Change in Control
Payment") is subject to the Excise Tax (as hereinafter defined), the
Corporation shall pay to the Executive additional amounts (the "Gross Up
Amounts") such that the total amount of all Change in Control Payments net
of the Excise Tax shall equal the total amount of all Change in Control
Payments to which the Executive would have been entitled if the Excise Tax
had not been imposed. For purposes of this Section 5, the term "Excise
Tax" shall mean the tax imposed by Section 4999 of the Code and any
similar tax that may hereafter be imposed.
The Gross Up Amounts due to the Executive under this Section 5 shall be
estimated by a nationally recognized firm of certified public accountants
(other than the firm that audited the financial statements of the
Corporation for the most recently preceding fiscal year) selected by the
individual holding the position of Chief Financial Officer immediately
before the Change in Control or his designee, at any time that the
Executive is to receive a Change in Control Payment. The Gross Up Amounts
will be based upon the following assumptions:
(a) all Change in Control Payments shall be deemed to be "parachute
payments" within the meaning of Section 280(G)(b)(2) of the Code,
and all "excess parachute payments" shall be deemed to be subject to
the Excise Tax except to the extent that, in the opinion of the
certified public accountants charged with estimating the Gross Up
Amounts for the Executive under this Section 5, such Change in
Control Payments are not subject to the Excise Tax; and
(b) 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 Gross Up Amount due the Executive with respect to any Change
in Control Payment pursuant to this Section 5 shall be paid to the
Executive in a lump sum not later than thirty (30) business days after
such Change in Control Payment is provided to the Executive. In the event
that the Gross Up Amount is less than the amount actually due to the
Executive under this Section 5, the amount of any such shortfall shall be
paid to the Executive within ten (10) days after the existence of the
shortfall is discovered. In the event the Gross Up Amount is more than the
amount actually due the Executive under this Section 5, the Executive
shall repay the amount of such overpayment to the Corporation within a
reasonable time after the overpayment is discovered.
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6. LUMP SUM PENSION OPTION
If the Executive is entitled to the payments and benefits in Section 4(b),
then, in accordance with the election requirements described in Section 7,
the Executive shall be entitled to elect a lump sum payment of the present
value of any retirement benefits to which the Executive is entitled under
any of the Corporation's non-Statutory retirement plans computed based
upon the same assumptions listed in Section 4(b)(vi) above, except
4(b)(vi)(A). The Corporation's non-Statutory retirement plans are hereby
deemed amended as necessary to conform to the provisions of this Section
6. To the extent that a payment on account of the foregoing may not be
made under a non-Statutory plan, the Corporation shall make such payment
separately in lieu of payment under such plan.
7. DEFERRAL OR LUMP SUM ELECTION
During each December after the date of this Agreement (the "Election
Period"), the Executive may, in writing, direct the Corporation to pay any
amounts to which the Executive is entitled under Section 4(b) in equal
annual installments not to exceed ten (10), with each installment
including accrued interest at the Federal short-term rate (as set under
Section 1274(d) of the Code as in effect at the time such installment is
paid), with the first such installment payable within ten (10) business
days of the Termination Date and each successive installment payable on
the anniversary of the Termination Date (the "Deferred Payment Election").
During the Election Period, the Executive may also elect to be paid the
amount described in Section 6 in a lump sum (the "Lump Sum Election").
Neither a Deferred Payment Election nor a Lump Sum Election, once made,
can be revoked except during an Election Period. Notwithstanding the
foregoing, however, no Deferred Payment Election or Lump Sum 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 after
such Election Period.
8. NO MITIGATION REQUIRED
The Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement, nor shall any payment or benefit provided
for in this Agreement be offset by any compensation earned by the
Executive as the result of employment by another employer, by retirement
benefits (provided that the foregoing shall not cause Section 6 to result
in a duplication of benefits provided under any retirement plan), or be
offset against any amount claimed to be owed by the Executive to the
Corporation, or otherwise.
9. INTEREST
If any payment to the Executive required by this Agreement 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 the terms hereof until paid.
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10. NON-COMPETE CANCELLATION
If the Executive is entitled to the payments and benefits described in
Section 4(b), then any agreement by the Executive not to compete with the
Corporation or its Affiliates after the Executive's Termination Date shall
be null and void and any such agreement shall be deemed to be amended
accordingly.
11. EXECUTIVE'S EXPENSES
The Corporation shall pay or reimburse the Executive for all costs,
including reasonable attorney's, accountants' and actuary's fees and
expenses, incurred by the Executive (i) to confirm the Executive's rights
to and amounts of payments hereunder, (ii) to contest or dispute any
termination of the Executive's employment following a Change in Control or
seek to obtain or enforce any right or benefit provided by this Agreement
in litigation or arbitration, or (iii) in connection with any audit by a
taxing authority related to any payment or benefit hereunder, or any
subsequent contest or litigation relating to the tax treatment of such
payment or benefit. Upon demand therefor, the Corporation shall advance to
the Executive any amount as to which the Executive reasonably believes he
or she will be entitled pursuant to this Section 11 for costs that the
Executive has incurred or will incur during the ninety (90) days following
such demand.
12. BINDING AGREEMENT
This Agreement shall inure to the benefit of and be enforceable by the
Executive, and the Executive's heirs, executors, administrators,
successors and assigns. This Agreement shall be binding upon the
Corporation, its Successors and assigns. The Corporation shall require any
Successor 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.
13. NOTICE
Any notices and all other communications provided for herein shall be in
writing and shall be delivered personally or sent by facsimile
transmission (with written confirmation sent at the same time), prepaid
air courier or prepaid certified or registered mail. Any such notice shall
be deemed to have been given (a) when received, if delivered in person,
sent by facsimile transmission, or sent by prepaid air courier, or (b)
three (3) business days following the mailing thereof, if mailed by
prepaid certified or registered mail, return receipt requested, 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 the General Counsel.
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14. SOLE SEVERANCE; OTHER BENEFITS
If the Executive is paid the entitlements due under Section 4(b), such
payments shall be in lieu of any other severance amounts to which the
Executive may be entitled under any other severance arrangement, including
under any employment agreement, severance pay plan, or applicable
legislation entitling the Executive to severance benefits. However, the
parties acknowledge that the benefits paid hereunder are only exclusive as
to other severance payments and that the Executive may be entitled to
other benefits or payments triggered by a Change in Control under certain
other of the Corporation's benefit or compensation arrangements,
including, without limitation, any long term incentive plans, stock option
plans or equity participation rights plans. This Agreement supercedes any
Change in Control Agreement previously in effect between the Executive and
the Corporation.
15. 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.
16. GOVERNING LAW
The validity, interpretation, construction and performance of this
Agreement shall be governed by the substantive laws of the State of
Delaware without regard to the choice of law provisions thereof.
17. 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.
18. 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 Greenville, South Carolina, or at the Executive's election in the city
nearest to the Executive's 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
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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 Section 18.
19. 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
By /s/ Xxxxxx X. Xxxxxxx
---------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman and Chief Executive
Officer
/s/ Xxxxx X. Xxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxx
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