EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT, is made as of this 24th day of September, 2001, by and
between BOWATER INCORPORATED, a Delaware corporation having a mailing address of
00 Xxxx Xxxxxxxxxx Xxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 (the "Corporation"),
Bowater Canada Forest Products Division ("Bowater Canada Division") a Canadian
corporation, and Xxxxxx Xxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxxxxxxxxx (Xxxxxx) X0X
0X0 (the "Executive").
WHEREAS, the Corporation desires to employ the Executive as Vice
President of the Corporation and as President of Bowater Canada Division; and
WHEREAS, the Executive is desirous of serving the Corporation in such
capacity;
NOW, THEREFORE, the parties hereto agree as follows:
1. Employment. During the term of this Agreement, the Corporation
agrees to employ the Executive through Bowater Canada Division and the Executive
agrees to be in the employ of Bowater Canada Division, in accordance with and
subject to the provisions of this Agreement.
2. Term.
(a) Subject to the provisions of subparagraphs (b) and
(c) of this Section 2, the term of this Agreement
shall begin on the date hereof and shall continue
thereafter until terminated by either party by
written notice given to the other party at least
thirty (30) days prior to the effective date of any
such termination. The effective date of the
termination shall be the date stated in such notice,
provided that if the Corporation specifies an
effective date that is more than thirty (30) days
following the date of such notice, the Executive may,
upon thirty (30) days' written notice to the
Corporation, accelerate the effective date of such
termination.
(b) Notwithstanding Section 2(a), upon the occurrence of
a Change in Control as defined in the Change in
Control Agreement between the Corporation and the
Executive (the "Change in Control Agreement"), the
term of this Agreement shall be deemed to continue
until terminated, but in any event, for a period of
not less
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than three (3) years following the date of the Change
in Control, unless such termination shall be at the
Executive's election for other than "Good Reason" as
that term is defined in the Change in Control
Agreement.
(c) Notwithstanding Section 2(a), the term of this
Agreement shall end upon:
(i) the death of the Executive;
(ii) the inability of the Executive to perform
his duties properly, whether by reason of
ill-health, accident or other cause, for a
period of one hundred and eighty (180)
consecutive days or for periods totaling one
hundred and eighty (180) days occurring
within any twelve (12) consecutive calendar
months; or
(iii) the Executive's retirement as of the
retirement date.
3. Position and Duties. Throughout the term hereof, the Executive
shall be employed as Vice President of the Corporation (subject to election by
the Board of Directors) and as President of Bowater Canada Division (Salary
Grade 36), with the responsibility for the operation of the paper xxxxx in
Donnacona, Dolbeau, Gatineau and Dalhousie, as well as forestry, lumber sales
and manufacturing operations in Quebec and New Brunswick, provided that the
Executive shall undertake such other and further assignments and
responsibilities of at least comparable status as the Board of Directors may
direct. The Executive shall diligently and faithfully devote his full working
time and best efforts to the performance of the services under this Agreement
and to the furtherance of the best interests of the Corporation. The Executive
shall report directly to the Chairman, President and Chief Executive Officer of
the Corporation.
4. Place of Employment. The Executive will be employed at the
offices of Bowater Canada Division in the Greater Montreal Metropolitan Area.
5. Compensation and Benefits.
(a) Base Salary. The Corporation shall pay to the
Executive a base salary of C$472,000.00 payable in
substantially equal periodic installments on the
Corporation's regular payroll dates. The
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Executive's base salary shall be reviewed at least
annually and from time to time may be increased (or
reduced, if such reduction is effected pursuant to
across-the-board salary reductions similarly
affecting all management personnel of the
Corporation).
(b) Incentive Plans.
(i) Annual Incentive Plan. In addition to his
base salary, the Executive shall be eligible
to receive an annual incentive award under
the Corporation's annual incentive plan in
effect from time to time determined in the
manner, at the time, and in the amounts set
forth under such plan. For the balance of
2001, the Executive shall be entitled to a
prorated incentive award based upon a target
incentive of 55%. Starting in 2002, the
target incentive will be determined by the
Executive's Salary Grade Level (the target
incentive for Salary Grade 36 is 50% for
2002).
(ii) LTIP. The Executive shall be eligible to
participate in the Bowater Incorporated
2000-2002 Long-Term Incentive Plan. The
Executive's award, if any, shall be prorated
based on his date of employment hereunder.
(iii) Stock-Based Incentive Compensation. Subject
to the approval of the Board of Directors,
the Executive shall be awarded a stock
option grant relating to 50,000 shares,
subject to the terms and conditions of the
Corporation's 2000 Stock Option Plan and the
regular Non-Qualified Stock Option
Agreement. Starting in the year 2002, the
Executive shall be eligible for an annual
award under a Bowater stock-based incentive
program, as modified from time to time, and
for so long as such program continues.
(c) Benefit Plans. The Corporation shall make
contributions on the Executive's behalf to the
various benefit plans and programs of Bowater Canada
Division in which the Executive is eligible to
participate in accordance with the provisions thereof
as in effect from time to time. For benefits
administration purposes, the Executive's past service
with Alliance Forest Products, Inc. ("AFP"), and its
predecessor shall be recognized.
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(d) Retirement Benefits. The Executive's retirement
benefits shall be computed based upon the terms of
the AFP supplemental pension plan as in effect on the
date hereof.
(e) Vacations. The Executive shall be entitled to paid
vacation (currently five weeks), in keeping with the
Corporate policy as in effect from time to time, to
be taken at such time or times as may be approved by
the Corporation.
(f) Expenses. Bowater Canada Division shall reimburse the
Executive for all reasonable expenses properly
incurred, and appropriately documented, by the
Executive in connection with the business of the
Corporation.
(g) Perquisites. Bowater Canada Division shall make
available to the Executive all perquisites to which
he is entitled by virtue of his position, including
an annual flexible perquisites budget totaling
$30,000 to pay for among other things, company rental
car costs, private club memberships, etc.
6. Nondisclosure. During and after the term of this Agreement,
the Executive shall not, without the written consent of the Board of Directors
of the Corporation, disclose or use directly or indirectly, (except in the
course of employment hereunder and in furtherance of the business of the
Corporation or any of its subsidiaries and affiliates) any of the trade secrets
or other confidential information or proprietary data of the Corporation or its
subsidiaries or affiliates; provided, however, that confidential information
shall not include any information known generally to the public (other than as a
result of unauthorized disclosure by the Executive) or any information of a type
not otherwise considered confidential by persons engaged in the same or similar
businesses.
7. Noncompetition. During the term of this Agreement and for a
period of one (1) year after the date the Executive's employment terminates, the
Executive shall not, within the territory of Canada and the United States,
without the prior approval of the Board of Directors of the Corporation or its
delegate, in the same or a similar capacity engage in or invest in, or aid or
assist anyone else in the conduct of any business (other than the businesses of
the Corporation and its subsidiaries and affiliates) which directly competes
with the business of the Corporation and its subsidiaries and affiliates as
conducted during the term hereof in the fields of forest and timber management
or the sale of newsprint, pulp, coated and uncoated groundwood papers, forest,
lumber or
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related products. If any court of competent jurisdiction shall determine that
any of the provisions of this Section 7 shall not be enforceable because of the
duration or scope thereof, the parties hereto agree that said court shall have
the power to reduce the duration and scope of such provision to the extent
necessary to make it enforceable and this Agreement in its reduced form shall be
valid and enforceable to the extent permitted by law. The Executive acknowledges
that the Corporation's remedy at law for a breach by the Executive of the
provisions of this Section 7 will be inadequate. Accordingly, in the event of
the breach or threatened breach by the Executive of this Section 7, the
Corporation shall be entitled to injunctive relief in addition to any other
remedy it may have.
8. Severance Pay. If the Executive's employment hereunder is
involuntarily terminated for any reason other than those set forth in Section
2(c) hereof, then unless the Corporation shall have terminated the Executive for
"Cause", the Corporation shall pay the Executive severance pay in an amount
equal to twenty-four (24) months of the Executive's base salary on the effective
date of the termination, plus 1/12 of the Executive's target incentive under the
Corporation's annual incentive plan as of the date of termination applicable to
the Executive, for each month in the period beginning on January 1 of the year
in which the date of the termination occurs and ending on the date of the
termination and for each months' base salary to which the Executive is entitled
under this Section 8, provided, however, that any amount paid to the Executive
by the Corporation for services rendered subsequent to the thirtieth (30th) day
following the communication to the Executive of notice of termination shall be
deducted from the severance pay otherwise due hereunder. Such payment shall be
made in a lump sum within ten (10) business days following the effective date of
the termination. The severance pay shall be in lieu of all other compensation or
payments of any kind relating to the termination of the Executive's employment
hereunder; provided that the Executive's entitlement to compensation or payments
under the Corporation's (or Bowater Canada Division's) retirement plans, stock
option or stock-based incentive plans, or savings plans attributable to service
rendered prior to the effective date of the termination shall not be affected by
this clause and shall continue to be governed by the applicable provisions of
such plans; and further provided that in lieu hereof, at his election, the
Executive shall be entitled to the benefits of the Change in Control Agreement
between the Corporation and the Executive, if termination occurs in a manner and
at a time when such Change in Control Agreement is applicable. For purposes of
this Agreement, the term for "Cause" shall mean because of gross negligence or
willful misconduct by the Executive either in the course of his employment
hereunder or which has a material adverse effect on the Corporation or the
Executive's ability to perform adequately and effectively his duties hereunder.
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9. Notices. Any notices required or permitted to be given under
this Agreement shall be in writing and shall be deemed to have been given when
delivered or mailed, by registered or certified mail, return receipt requested
to the respective addresses of the parties set forth above, or to such other
address as any party hereto shall designate to the other party in writing
pursuant to the terms of this Section 9.
10. Severability. The provisions of this Agreement are severable,
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of any other provision.
11. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the substantive laws of the Province of Quebec.
12. Supersedure. This Agreement shall cancel and supersede all
prior agreements relating to employment between the Executive and the
Corporation, except for the terms outlined in the Corporation's letter offering
employment to the Executive dated July 13, 2001, to the extent such terms are
not included herein.
13. Waiver of Breach. The waiver by a party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
prior or subsequent breach by any of the parties hereto.
14. Binding Effect. The terms of this Agreement shall be binding
upon and inure to the benefit of the successors and assigns of the Corporation
and the heirs, executors, administrators and successors of the Executive, but
this Agreement may not be assigned by the Executive.
15. French/English Language. The present contract has been drafted
in the English language at the request of the parties and both parties are
agreeable that it be so. Les parties ont convenu que le present contrat soit
redige en langue anglaise et sont d'accord a ce sujet.
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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/ Xxxxxx X. Xxxxxxx /s/ Xxxxxx Xxxxxxx
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Xxxxxx X. Xxxxxxx Xxxxxx Xxxxxxx
Chairman and Chief Executive Officer
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