Document:

Exhibit 10.19

 

EXHIBIT
10.19

SEVERANCE COMPENSATION AGREEMENT

THIS
AGREEMENT made the
10th day of November, 1998.

BETWEEN:

ABITIBI-CONSOLIDATED INC., a company amalgamated under the laws of Canada

(the “Corporation”)

—and—

JACQUES VACHON, an individual residing in the City of Montreal, in the Province of Quebec

(the “Executive”)

RECITALS:

	A.	 	The Executive is a senior officer of the Corporation and is considered by the Board of
Directors of the Corporation to be a valued employee of the Corporation and has acquired
outstanding and special skills and abilities and an extensive background in and knowledge
of the Corporation’s business and the industry in which it is engaged.
	 
	B.	 	The Board of Directors recognizes that it is essential and in the best interests of the
Corporation and its shareholders that the Corporation retain the continuing dedication of
the Executive to his office and employment.
	 
	C.	 	The Board of Directors further believes that the past service of the Executive to the
Corporation requires that the Executive receive fair treatment, in the event of a change
in control of the Corporation.
	 
	D.	 	It is desirable to clarify the scope of the arrangements under this Agreement.

          NOW THEREFORE in consideration of these premises and the mutual covenants herein contained
and in consideration of the Executive continuing in office and in the employment of the
Corporation, the Corporation and the Executive hereby covenant and agree as follows:

 

 

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	1.	 	Definitions

	 	 	 	In this Agreement,
	 
	 	(a)	 	“Agreement” means this agreement and all schedules attached to this
agreement, in each case as they may be restated, amended or supplemented from time to
time, and the expressions “hereof, “herein”, “hereto”, “hereunder”, “hereby”, and
similar expressions refer to this agreement and, unless otherwise indicated,
references to sections are to sections in this agreement;
	 
	 	(b)	 	“Annual Compensation” means the aggregate of (i) the annual base salary of the
Executive, payable by the Corporation as at the end of the month immediately preceding
the month in which the termination of employment hereunder takes effect; and (ii) the
amount equal to the gross amount of the last bonus payment earned by the Executive
pursuant to the Key Executive Incentive Plan immediately preceding the termination of
the employment hereunder;
	 
	 	(c)	 	“Change of Control” means any of:

	 	(i)	 	the acquisition, directly or indirectly and by any means
whatsoever, by any person, or by a group of persons acting jointly or in
concert, of that number of Voting Shares which is equal to or greater than 35%
of the total issued and outstanding Voting Shares immediately after such
acquisition unless another person or group of persons has previously acquired
and continues to hold a number of Voting Shares which represents a greater
percentage than the first-mentioned person or group of persons;
	 
	 	(ii)	 	the election or appointment by any holder of Voting Shares, or
by any group of holders of Voting Shares acting jointly or in concert, of a
number of members of the Board of Directors of the Corporation equal to or
greater than one third of the members of the Board of Directors unless another
holder or group of holders has previously elected or appointed a greater
number of members of the Board of Directors and re-elects such greater number
of members at the same time as the first-mentioned holder or group of holders;
	 
	 	(iii)	 	any transaction or series of transactions, whether by way of
reconstruction, reorganization, consolidation, amalgamation, arrangement,
merger, transfer, sale or otherwise, whereby assets of the Corporation become
the property of any other person (other than a subsidiary of the Corporation)
if such assets which become the property of any other person have a fair market
value (net of the fair market value of any then existing liabilities of the
Corporation assumed by such other person as part of the same transaction) equal
to 50% or more of the Market Capitalization of the Corporation immediately
before such transaction; or

 

 

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	 	(iv)	 	the completion of any transaction or the first of a series of transactions
which would have the same or similar effect as any transaction or series of
transactions referred to in paragraphs (i), (ii) and (iii) above;

	 	(d)	 	“Disability” means the mental or physical state of the Executive such that:

	 	(i)	 	the directors of the Corporation, other than the Executive if he is a
director, unanimously determine that the Executive has been unable, due to illness,
disease, mental or physical disability or similar cause, to fulfil his obligations as
an employee or officer of the Corporation either for any consecutive 6 month period
or for any period of 12 months (whether or not consecutive) in any consecutive 24
month period; or
	 
	 	(ii)	 	a court of competent jurisdiction has declared the Executive to be mentally
incompetent or incapable of managing his affairs;

	 	(e)	 	“Good Reason” means:

	 	(i)	 	without the express written consent of the Executive, the assignment to the
Executive of any duties materially inconsistent with his positions, duties and
responsibilities with the Corporation immediately prior to the date hereof or any
removal of the Executive from, or any failure to reelect the Executive to, material
positions, duties and responsibilities with the Corporation, except in connection
with the termination of the Executive’s employment for Just Cause, Disability or
Retirement or as a result of the Executive’s death or by the Executive other than for
Good Reason;
	 
	 	(ii)	 	a reduction by the Corporation in the Executive’s salary as in effect on the
date hereof or as the same may be increased from time to time;
	 
	 	(iii)	 	the failure by the Corporation to continue in effect any incentive or
compensation plan, or any pension, life insurance, health and accident or disability
plan in which the Executive is participating at the date hereof, (or plans providing
the Executive with substantially similar benefits) unless such plans have been
replaced by new plans providing the Executive with benefits that are as good as or
better than the benefits provided in such plans, or the taking of any action by the
Company which would adversely affect the Executive’s participation in or materially
reduce the Executive’s benefits under any of such plans or deprive the Executive of
any material fringe benefit enjoyed by him at the date hereof;
	 
	 	(iv)	 	the requirement that the Executive be based anywhere other than the
Corporation’s principal executive offices except for required travel on the
Corporation’s business to an extent substantially consistent with the Executive’s
present travel obligations, or in the event the Executive consents to any such
relocation, the failure by the Corporation to pay (or reimburse the

 

 

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	 	 	 	Executive for) all reasonable moving expenses incurred by the Executive or to
indemnify the Executive against any excess in (A) the cost of a principal
residence in the new location which is comparable to the Executive’s principal
residence at the time of the relocation, over (B) the amount realized by the
Executive upon the sale of his principal residence at the time of the relocation;
or
	 
	 	(v)	 	any reason which would be considered to amount to constructive
dismissal by a court of competent jurisdiction;

	 	(f)	 	“Just Cause” means wilful failure of the Executive to properly carry out his duties after
written notice by the Corporation of the failure to do so and an opportunity for the
Executive to correct the same within a reasonable time from the date of receipt of such
written notice from the Corporation, or theft, fraud or dishonesty or material misconduct by
the Executive involving the property or affairs of the Corporation or the carrying out of the
Executive’s duties;
	 
	 	(g)	 	“Key Executive Incentive Plan” means any program adopted by the Corporation from time to
time with the intention or providing bonus or similar compensation to the executives of the
Corporation;
	 
	 	(h)	 	“Market Capitalization of the Corporation” at any time means the product of (i) the number
of outstanding common shares of the Corporation at that time, and (ii) the average of the
closing prices for the common shares of the Corporation on the principal securities exchange
(in terms of volume of trading) on which the common shares of the Corporation are listed at
that time for each of the last 10 days prior to such time on which the common shares of the
Corporation traded on such securities exchange;

	 	(i)	 	“person” means includes an individual, partnership, association, body corporate, trustee,
executor, administrator, legal representative and any national, provincial, state or
municipal government;
	 
	 	(j)	 	“Retirement” means the retirement or early retirement of the Executive in accordance with
the terms of the Retirement Agreement;
	 
	 	(k)	 	“Retirement Agreement” means any agreement between the Corporation and the Executive, under
which the Corporation agreed to pay the Executive a retirement allowance following his
retirement or early retirement from employment with the Corporation, in accordance with the
terms of that agreement and including any amendments made from time to time to such
agreement;
	 
	 	(l)	 	“Stock Option Plans” means the Abitibi-Consolidated Inc. Stock Option Plan and any similar
plan of the Corporation under which the Corporation from time to time grants options to
purchase Voting Shares of the Corporation and loans for the purpose of exercising such
options;

 

 

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	 	(m)	 	“subsidiary” has the meaning ascribed to it in the Canada Business
Corporations Act, as in force on the date hereof; and
	 
	 	(n)	 	“Voting Shares” means any securities of the Corporation ordinarily carrying
the right to vote at elections of directors.

	2.	 	Scope of Agreement

          The parties hereto intend that this Agreement set out their respective rights and obligations
in certain circumstances in which the Executive’s employment is terminated. This Agreement does
not purport to provide for any other terms of the Executive’s employment with the Corporation.

	3.	 	Position, Duties and Responsibilities of Executive

          The Executive shall continue to have the responsibilities and powers that he currently has or
such other responsibilities and powers as he and the Corporation may from time to time agree upon.
The Executive shall devote the whole of his working time to the Executive’s duties and shall use
his best efforts to promote the interests of the Corporation.

	4.	 	Termination of Employment by the Corporation for Just Cause

          The Corporation may terminate the Executive’s employment at any time without notice or further
obligations to the Executive under this Agreement for reasons of Just Cause. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated for Just Cause unless and
until there has been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of the Board of Directors
of the Corporation (excluding the Executive if the Executive is at that time a director of the
Corporation) at a meeting of the Board called and held for the purpose (after reasonable notice to
the Executive and an opportunity for the Executive, together with his legal counsel, to be heard
before the Board), finding that in the good faith opinion of the Board the Executive was guilty of
conduct constituting Just Cause and specifying the particulars thereof. The effective date of any
termination pursuant to this section shall be the date on which such resolution is given to the
Executive.

	5.	 	Termination of Employment by the Corporation Without Just Cause or by the
Executive for Good Reason

          If at any time within two years following a Change of Control the Executive’s employment is
terminated, (a) by the Corporation other than for Just Cause or (b) by the Executive in response
to a Good Reason, the following provisions shall apply:

	 	(a)	 	the Executive shall be entitled to receive, and the Corporation shall pay to
the Executive, immediately following termination, a cash amount equal to three times
the Annual Compensation of the Executive less required statutory deductions;

 

 

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	 	(b)	 	the Executive shall continue to receive until the earlier of (i) three years after the date
of termination or (ii) receipt of equivalent benefits from a new employer, all group benefits
(including health, dental, life and car allowance) other than disability insurance benefits
on the scale provided by the Corporation to the Executive as at the date of termination or in
lieu of such continued coverage, the Executive shall be entitled to receive a cash amount
equal to the value to the Executive (as determined by a chartered accountant or firm of
chartered accountants acceptable to the Corporation and the Executive) of such coverage for
such period of time;
	 
	 	(c)	 	the Executive will also be entitled to receive on termination the normal and any
supplementary pension benefits in effect on the date of termination according to the terms of
the Corporation’s registered pension plans and the Retirement Agreement or according to
similar provisions of any successor plan, of which the Executive is a member at the date of
termination (the “Retirement Plans”). The Executive’s total pension entitlement and
retirement options will be determined on the basis that the Executive had three years of
credited service and age under the Retirement Plans at his date of termination of employment
(over and above his actual years of credited service as otherwise determined). In addition,
such additional years of service shall be included for the purpose of determining final or
best average earnings assuming that the Executive’s monthly rate of salary at date of
termination would have continued unchanged during the period of additional service. For
Retirement Plans that include performance bonuses in the definition of pensionable earnings,
the average of the highest three actual bonuses earned in the five years immediately prior to
the date of termination shall be used for the purpose of determining final or best average
earnings. Any portion of the total pension entitlement of the Executive not eligible to be
paid under provisions of the registered pension plans of the Corporation shall be payable as
supplementary payments in accordance with the Retirement Agreement;
	 
	 	(d)	 	if at the date of termination of the Executive’s employment, the Executive holds options for
the purchase of shares under the Stock Option Plans, all options so held shall, unless the
Executive has breached the terms of section 13 hereof, (i) immediately vest to the extent they
have not already vested at such date and (ii) (A) continue to be held, in both cases,
notwithstanding the terms of the Stock Option Plans, on the same terms and conditions as if
the Executive continued to be employed by the Corporation or (B) if the Executive so elects in
writing within 90 days after the date of termination, shall be purchased by the Corporation at
a cash purchase price equal to the amount by which the aggregate “fair market value” of the
shares subject to such options exceeds the aggregate option price for such shares, provided
that for this purpose “fair market value” means the greater of (i) the average of the closing
prices for the shares of the same class of the Corporation on the principal securities
exchange (in terms of volume of trading) on which such shares are listed at the time of
termination for each of the last 10 days prior to such time on which such shares traded on
such securities exchange, and (ii) if a Change of Control occurred within two years prior to
the date of termination, the average value of the

 

 

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	 	 	 	consideration paid to the shareholders of the Corporation in connection with the
transactions resulting in the Change of Control;
	 
	 	(e)	 	if at the date of the termination of the Executive’s employment, the Executive
owes any money to the Corporation pursuant to loans to the Executive for the purchase
of shares under the Stock Option Plans or for assisting the Executive to purchase
property, such loans shall, notwithstanding the terms of any other agreement between
the Corporation and the Executive respecting these loans, be repayable by the
Executive in the same manner and at the same time as if the Executive continued to be
employed by the Corporation following such termination, provided that if the Executive
has breached the terms of section 13 hereof, the loans shall become immediately due on
the date of such breach and shall be repaid forthwith.

For greater certainty, this section 5 applies with respect to each Change of Control until this
Agreement has been terminated in accordance with section 14 hereof. In addition, with respect to a
particular Change of Control, this section 5 expires two years following such Change of Control
unless this Agreement is otherwise terminated in accordance with section 14 hereof. This section 5
does not apply in the event of the termination of the employment of the Executive as a result of
death, Disability or Retirement or by the Executive otherwise than in response to a Good Reason or
by the Corporation for Just Cause. If the Executive or the Corporation intend to terminate the
Executive’s employment as contemplated in this section, the party having such intention shall give
the other notice thereof and the effective date of such termination shall be the date on which
such notice is given to the other party.

	6.	 	Disability

          In the event of Disability of the Executive, this Agreement may be terminated by the
Corporation on thirty days’ notice. Notwithstanding anything contained in this Section 6, the
Executive shall be entitled to all benefits provided under the disability and pension plans of the
Corporation applicable to the Executive at the date of this Agreement.

	7.	 	 No Obligation to Mitigate

          The Executive shall not be required to mitigate the amount of any payment or benefit provided
for in section 5 of this Agreement by seeking other employment or otherwise, nor shall the amount
of any payment provided for in section 5(a) be reduced by any compensation earned by the Executive
as a result of employment by another employer after termination or otherwise.

	8.	 	Binding on Successors

	 	(a)	 	The Corporation will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Corporation, by agreement in form and substance
satisfactory to the Executive, to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Corporation would be required to
perform it if no such succession had taken place. Failure of the Corporation to
obtain such

 

 

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	 	 	 	agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle the Executive to compensation from the Corporation
on the same terms and conditions as the Executive would be entitled hereunder if the
Executive terminated his employment for Good Reason. As used in this Agreement,
“Corporation” shall mean the Corporation as hereinbefore defined and any successor
to its business and/or assets as aforesaid which executes and delivers the agreement
provided for in this section 9(a) or which otherwise becomes bound by all the terms
and provisions of this Agreement by operation of law.
	 
	 	(b)	 	This Agreement shall enure to the benefit of and be enforceable by the
Executive’s successors or legal representatives but otherwise it is not assignable. If
the Executive should die while any amounts would still be payable to the Executive
hereunder if the Executive had continued to live, all such amounts unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to the
Executive’s estate.

	9.	 	Expenses

          The Corporation agrees to pay all legal fees and expenses incurred by the Executive as a
result of the termination of his employment in circumstances covered by this Agreement (including
all such fees and expenses, if any, incurred in contesting or disputing any such termination or in
seeking to obtain or enforce any right or benefit provided by this Agreement).

	10.	 	Entire Agreement

          Except for the Executive’s rights to continued participation in the Corporation’s employee
benefit plans, including, without limitation, the Corporation’s Stock Option Plans, this Agreement
constitutes the entire agreement between the parties hereto pertaining to the subject matter
hereof. No amendment or waiver of this Agreement shall be binding unless executed in writing by
both parties hereto.

	11.	 	Confidential Information

          In the event of termination of employment of the Executive, the Executive agrees to keep
confidential all information of a confidential or proprietary nature concerning the Corporation,
its subsidiaries and affiliates and their respective operations, assets, finances, business and
affairs and further agrees not to use such information for personal advantage, provided that
nothing herein shall prevent disclosure of information which is publicly available or which is
required to be disclosed under appropriate statutes, rules or law or legal process.

	12.	 	Choice of Law

          This Agreement shall be governed and interpreted in accordance with the laws of the Province
of Ontario and the courts of the Province of Ontario shall be the sole and proper forum with
respect to any suits brought with respect to this Agreement.

 

 

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	13.	 	Non-Competition

          The Executive agrees that in the event of his termination of service with the Corporation
under circumstances entitling him to benefits under this Agreement, the Executive will not,
without approval of the Board of Directors, undertake or carry on, either alone or in partnership,
or either on his own account or on behalf of or as agent or employee or director of any person or
persons, firm or corporation (other than the Corporation), or be employed or interested or engaged
(other than as a holder of securities) in any business in competition with that carried on by the
Corporation at the date of termination.

	14.	 	Notices

          Any notice or other communication required or permitted to be given hereunder shall be in
writing and shall be given by prepaid first-class mail, by facsimile or other means of electronic
communication or by hand-delivery as hereinafter provided. Any such notice or other communication,
if mailed by prepaid first-class mail at any time other than during a general discontinuance of
postal service due to strike, lockout or otherwise, shall be deemed to have been received on the
fourth business day following the sending, or if delivered by hand shall be deemed to have been
received at the time it is delivered to the applicable address noted below either to the
individual designated below or to an individual at such address having apparent authority to
accept deliveries on behalf of the addressee. Notice of change of address shall also be governed
by this section. In the event of a general discontinuance of postal service due to strike,
lock-out or otherwise, notices or other communications shall be delivered by hand or sent by
facsimile or other means of electronic communication and shall be deemed to have been received in
accordance with this section. Notices and other communications shall be addressed as follows:

	 	(a)	 	if to the Executive:
	 
	 	(b)	 	if to the Corporation:
	 
	 	 	 	Abitibi-Consolidated Inc.
	 
	 	 	 	Attention:      Chairman of the Board of Directors 

Telecopier:

	15.	 	Termination

          This Agreement shall terminate immediately on the occurrence of any of the following events:
(i) the date of death of the Executive; (ii) voluntary resignation by the Executive

 

 

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from the Corporation otherwise than in response to a Good Reason; (iii) the giving of notice by
the Corporation in the event of Disability as contemplated by section 6 hereof; (iv) termination
for Just Cause; (v) termination of employment of the Executive at any time when there has been no
Change of Control or more than two years after the immediately preceding Change of Control; or
(vi) satisfaction by the Corporation of its obligations under section 5 of this Agreement in the
event of termination of the Executive in the circumstances contemplated by section 5.

	16.	 	Copy of Agreement

          The Executive hereby acknowledges receipt of a copy of this Agreement duly signed by the
Corporation.

          IN WITNESS WHEREOF the parties hereto have duly executed and delivered this Agreement.

	 	 	 	 	 
	 	ABITIBI-CONSOLIDATED INC.

 	 
	 	By:  	(name unrecognizable)
 	 
	 	 	c/s 	 
	 	 	 	 
	 
	 	 	 
	 	  	                                                     (name unrecognizable)
 	 
	 	 	DIRECTOR   	 
	 	 	 	 
	 
	 	 	 
	Witness:(name unrecognizable) 	  	/s/ JACQUES VACHON
 	 
	 	 	JACQUES VACHONExhibit 10.20

 

EXHIBIT
10.20

October 19, 2007

Mr. W. Eric Streed

5324 Kimblewick Cove

Dunwoody, GA 30338

Re: Offer letter

Dear Eric,

We are pleased to offer you the position of Senior Vice-President, Supply Chain in the
new AbitibiBowater, Inc. The following are details as agreed upon on this date:

Location: Montreal, Quebec, Canada

Effective Date:

The effective date is the closing of the merger. This offer is contingent on the
conclusion of the merger, your being authorized to work in Canada and subject to
approval of the Human Resources and Compensation Committee (“HRCC”) of the new company
of various compensation items.

Compensation:

Your annual base salary, effective the date of the merger, will be US$340,000. You will
be eligible to participate in a short-term incentive plan with a target level of 50% of
your base salary.

We will request that the HRCC approve base compensation and incentive targets for the
new executive team and approve several compensation redesigns. We expect to terminate
the current 2007 Annual Incentive Plan on the Closing Date and to pay the resulting
bonus as soon as practicable. We will substitute a new plan for the remainder of 2007
and all of 2008, emphasizing the achievement of synergies.

Additionally, for executives at your level, we will request an equity award tied to
synergy achievement. We anticipate continuing annual equity grants of similar value as
you currently receive and a target level of ownership of common shares may be required.
Previous equity awards will rollover into the new company and will be paid according to
the initial payout schedule.

You will also be eligible for a perquisite allowance of US$12,000 per year and an additional
benefit value of up to US$5,000 for US tax preparation.

1/2

 

Others:

	 	(1)	 	You will participate in the company’s pension and benefit plans.
	 
	 	(2)	 	Following the merger, the new company intends to harmonize certain benefits offered
to salaried employees, including senior executives, which may lead to changes in the current benefits. You will be informed about any changes at the appropriate time.
	 
	 	(3)	 	Subject to the approval of the HRCC, you will be covered by an employment agreement and a new Change in Control agreement.
	 
	 	(4)	 	In addition, you will be eligible for the company’s international relocation policy
to assist you with your move to Montreal. In order to facilitate the process, we have assigned Paula
Ferreira to facilitate and coordinate all aspects of your relocation. Please feel free to
contact her at your earliest convenience at (514) 954-2988 or ferreirap@bowater.com. The
relocation benefits will include a lump sum of $103,826 as a housing and cost of living offset, which
will be payable only when you begin the relocation process and will be subject to Canadian
taxes. This payment includes an amount attributable to the higher Canadian tax rate. Please
refer to the enclosed policy for more details.

We are excited about the prospects of the combination of the two companies and look forward to
having you joining us on the leadership team. It will be a challenge.

Please acknowledge receipt of this offer letter and agreement with its terms by signing the two
originals and returning one copy to Jim Wright.

Yours truly

/s/ Jim T. Wright 
Jim T. Wright

Senior Vice-President, Human Resources

I accept this offer:

	 	 	 	 	 
	/s/ W. Eric Streed
	 	 	 	 
	 

W. Eric Streed

	 	 

Date
	 	 

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