Exhibit 10.53



 





EXHIBIT 10.53




CHANGE IN CONTROL AGREEMENT



THIS AGREEMENT, made as of the 21 day of August 2006, by and between Bowater Incorporated, a
Delaware corporation having a mailing address of 55 East Camperdown Way, P.O. Box 1028, Greenville,
South Carolina 29602 (the “Corporation”), and David A. Spraley of 2287 Edgemere Lake Circle,
Marietta, Georgia 30062 (the “Executive”).




     WHEREAS, the Corporation considers it essential to the best interests of its stockholders to
foster the continued employment of key management personnel; and



     WHEREAS, the uncertainty attendant to a Change in Control of the Corporation may result in the
departure or distraction of management personnel to the detriment of the Corporation and its
stockholders; and



     WHEREAS, the Board of Directors of the Corporation (the “Board”) has determined that
appropriate steps should be taken to reinforce and encourage the continued attention and dedication
of members of the Corporation’s management, including Executive, to their assigned duties in the
event of a Change in Control of the Corporation.



     NOW THEREFORE, it is hereby agreed as follows:




	1.	 	DEFINITIONS
	 
	 	 	The following terms 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 Executive’s target amount
(100% times salary grade bonus percentage times base salary) 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 target 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 one hundred eighty (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 one hundred eighty (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 10 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 not
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. 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, (y) other than by reason of
the Executive’s death, or (z) 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;
	 
	 	(iii)	 	an amount equal to three (3) times the Bonus Amount;
	 
	 	(iv)	 	an amount equal to three (3) times the Employer Match;




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	 	(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 contribution or savings plans (excluding the Employer Match) 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 equal to the Bonus Amount; and
	 
	 	(B)	 	vesting requirements are waived;






	 	(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, provided that if any of the foregoing benefits or
payment is determined to be deferred compensation subject to Code Section
409A, benefits shall be provided or payment shall be made in accordance with
Code Section 409A or any guidance issued thereunder; and
	 
	 	(viii)	 	the Corporation shall pay for or provide the Executive individual
out-placement assistance as offered by a member firm of the Association of
Out-Placement Consulting Firms.






	 	 	Unless otherwise required in the next paragraph, amounts payable pursuant to subsections
(b)(i) – (vi) shall be made in a lump sum as soon as administratively feasible following
the Executive’s Termination Date, but in no event shall payment be made later than March 15
following the calendar year of the Executive’s Termination Date, unless otherwise required
by Internal Revenue Code Section 409A or any guidance issued thereunder.
	 
	 	 	Any amounts payable under this Agreement that are determined to be vested deferred
compensation under Code Section 409A shall be paid in a lump sum as of the first day of the
seventh month following the Executive’s Termination Date.




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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 such officer’s 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.
	 
	6.	 	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




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	 	 	offset by any compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, or be offset against any amount claimed to be owed by the
Executive to the Corporation, or otherwise.
	 
	7.	 	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.
	 
	8.	 	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.
	 
	9.	 	EXECUTIVE’S EXPENSES
	 
	 	 	The Corporation shall pay or reimburse the Executive for all costs, including reasonable
attorneys’, accountants’ and actuaries’ 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 will be
entitled pursuant to this Section 9 for costs that the Executive has incurred or will incur
during the ninety (90) days following such demand.
	 
	10.	 	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.
	 
	11.	 	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




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	 	 	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.
	 
	12.	 	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 or stock option
plans.
	 
	13.	 	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.
	 
	14.	 	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.
	 
	15.	 	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.
	 
	16.	 	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 that
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




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	 	 	court, federal or state, in an action brought to enforce this Agreement or any award of an
arbitrator hereunder which action is brought in the jurisdiction in which such arbitration
was conducted, or, if no arbitration was elected, in which arbitration could have been
conducted pursuant to this Section 16.
	 
	17.	 	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/ James T. Wright
	 

	 	 	 	 
	 

	 	Name: James T. Wright

Title: Executive VP — Human Resources

Date Signed: 8/18/06
	 
	 	 	 	 
	 

	 	/s/ David A. Spraley
	 

	 	 
	 

	 	Name: David A. Spraley

Date Signed: 8/21/06







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