Document:

Exhibit 4.1

 

Exhibit 4.1

EDC TRANSACTION NO. SLA-0176

EXECUTION VERSION

DATED AS OF September 19, 2006

BOWATER CANADIAN FOREST PRODUCTS INC.

AND

EXPORT DEVELOPMENT CANADA

SOFTWOOD LUMBER AGREEMENT CASH DEPOSITS

PURCHASE AND SALE AGREEMENT

 

 

EDC TRANSACTION NO. SLA-0176

This SOFTWOOD LUMBER AGREEMENT CASH DEPOSITS PURCHASE AND SALE AGREEMENT dated as
of September 19, 2006 (the “Agreement”) is made

BETWEEN

BOWATER CANADIAN FOREST PRODUCTS INC.

1000 de la Gauchetiére West

Suite 2820

Montréal, QC

H3B 4W5

(hereinafter called the “Seller”)

AND

EXPORT DEVELOPMENT CANADA,

a corporation established by an Act of the

Parliament of Canada, having its head office at

Ottawa, Canada

(hereinafter called “EDC”)

WHEREAS pursuant to the Softwood Lumber Agreement negotiated between the Government
of Canada and the Government of the United States of America (as amended, the
“Softwood Lumber Agreement”), United States Customs and Border Protection (“USCBP”)
is required to liquidate certain entries of softwood lumber and, upon their
liquidation, to refund cash deposits of countervailing duty and anti-dumping duties
to the Seller as an importer of record, together with accrued interest on such cash
deposits;

AND WHEREAS Annex 2C of the Softwood Lumber Agreement contemplates, among other
things, that the Government of Canada or its agent will enter into an agreement
with importers of record for the purchase of the designated cash deposits to be
refunded by the USCBP and accrued interest on such deposits;

AND WHEREAS the Government of Canada has identified EDC as its agent for the
purposes described in Annex 2C of the Softwood Lumber Agreement;

AND WHEREAS this Agreement is entered into to set out the terms and conditions on which
EDC will purchase, and the Seller will sell, the right, title and interest of the Seller

 

 

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in the designated cash deposits to be refunded to the Seller, together with the
accrued interest on such cash deposits;

NOW THEREFORE in consideration of the mutual covenants herein set out, the
parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 — Definitions

In this Agreement, the following terms shall have the following respective meanings:

“ACH Agreement” has the meaning attributed to that term in the Softwood Lumber
Agreement;

“AD Order” means the Anti-Dumping Duty Order published as Certain
Softwood Lumber from Canada, 67 Fed. Reg. 36,068 (May 22, 2002), as
amended;

“Business Day” means any day, other than a Saturday or Sunday, or a
day that banks are lawfully closed for commercial banking business in Ottawa,
Ontario, Canada or a day on which banks are not required or authorized to close
in New York, New York, United States of America;

“CVD Order” means Countervailing Duty Order published as Certain
Softwood Lumber from Canada, 67 Fed. Reg. 36,070 (May 22, 2002), as
amended;

“Canadian
Dollars” and “CDN” means the lawful currency of Canada;

“covered entries” has the meaning attributed to that tem in the Softwood Lumber
Agreement;

“Dispute Rights” has the meaning attributed to that term in Section 3.03(a) hereof;

“Escrow Agent” means the U.S. financial institution designated by the Seller
that has entered into the Escrow Agreement with the Seller to receive and
disburse the Purchased Refund to EDC;

“Escrow Agreement” means the agreement entered into between the Seller, EDC and
the Escrow Agent, to receive and disburse the Purchased Refund to EDC,
substantially in the form attached as Schedule “D”;

 

 

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“Event Of Default” has the meaning attributed to it in Section 7.01 hereof;

“Irrevocable Power of Attorney” means the power of attorney granted by the
Seller to the Escrow Agent pursuant to the Escrow Agreement, substantially in
the form attached as Exhibit “A” to the Escrow Agreement;

“knowledge” means actual knowledge;

“Overnight Federal Funds Rate” means for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates per annum on
overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York;

“Purchase Date” means the date specified as such in the Purchase Notice, which
date must be a Business Day not later than one hundred and twenty (120) days
after the date the conditions precedent in Section 5.01 hereof have been
satisfied;

“Purchase Notice” means the notice substantially in the form attached hereto as
Schedule “A” and which, once executed and delivered, shall form part of this
Agreement, containing certain information completed by EDC, based upon
information provided to EDC by USCBP, and sent by EDC to the Seller;

“Purchase Price” means the aggregate amount of the cash deposits and accrued
interest up to and including the Purchase Date (but, for greater certainty, not
including interest accruing after the Purchase Date) to which USCBP has
determined the Seller is entitled as of the Purchase Date under the Softwood
Lumber Agreement, as described in the Purchase Notice;

“Purchased Refund” means the aggregate amount of all cash deposits and accrued interest to which USCBP has determined the Seller is entitled under the
Softwood Lumber Agreement, including accrued interest after the Purchase Date
up to and including the liquidation date of the related covered entries;

“Seller
Amount” means the Purchase Price specified in the Purchase Notice
minus the US Interests Amount specified in the Purchase Notice;

“Softwood Lumber Agreement” has the meaning attributed to that term in the
recitals hereto;

“US Dollars” and “USD” means the lawful currency of the United States of
America;

“US Government” means the Government of the United States of America, including
USCBP and other agencies and departments;

 

 

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“US Interests” means the Coalition for Fair Lumber Imports, the binational industry council, and
the meritorious initiatives foundation referred to in the Softwood Lumber Agreement; and

“US Interests Amount” means that portion of the Purchase Price as specified in the Purchase Notice
that, pursuant to this Agreement, the Seller has irrevocably directed EDC to pay to the US
Interests on its behalf, as computed by EDC in accordance with Section 3.01 (b) hereof.

Section 1.02 — Rules of Interpretation

	(a)	 	The singular shall include the plural and vice versa.
	 
	(b)	 	References to a “person” shall be construed so as to include any individual, firm,
company, corporation, government, state or agency of a state or political subdivisions thereof
or any joint venture, association, partnership or unincorporated body of persons (whether or
not having separate legal personality).
	 
	(c)	 	Whenever any person is referred to, such reference shall be deemed to include the permitted
assignees and successors of such person, whether by operation of law, consolidation, merger,
sale, amalgamation or otherwise as applicable.
	 
	(d)	 	References to a specified Article, Section or Schedule shall be construed as references to
that specified Article or Section of, or Schedule to, this Agreement unless the context
otherwise requires.
	 
	(e)	 	References to any agreement or other instrument shall be deemed to
include such agreement or other instrument as it may from time to time be
modified, amended, supplemented or restated in accordance with its terms
and, where required hereunder, with the consent of EDC.
	 
	(f)	 	The terms “hereof’, “herein” and “hereunder” shall
be deemed to refer to this Agreement.
	 
	(g)	 	The headings of the Articles and Sections are inserted for convenience
only and shall not affect the construction or interpretation of this
Agreement.
	 
	(h)	 	All schedules attached hereto are deemed to form a part of this Agreement

 

 

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ARTICLE II

REPRESENTATIONS AND WARRANTIES

Section 2.01 — Representations and Warranties by Seller

(a) The Seller represents and warrants to EDC on the date hereof and is deemed
to represent and warrant on and as of the Purchase Date, that:

	 	(i)	 	the Seller is a corporation duly
incorporated and organized and validly existing under the laws of
Canada and has all necessary corporate power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder and the locations of its chief executive office and its
places of business are as set forth on Schedule “E” hereto;
	 
	 	(ii)	 	except as to any proceedings and “prior
disclosures” made under .19 U.S.C. §1592, disclosed on Schedule “C”
hereto, complete and accurate copies of which have been provided to
EDC and none of which involved any fraud on the part of the Seller,
there are no actions, petitions, suits or proceedings
pending, or, to the best of the knowledge of
the Seller, threatened against the Seller before any court,
tribunal or administrative or governmental agency which, if
adversely determined, would reasonably be expected to (i) adversely
affect the Seller’s ability to perform its obligations
under this Agreement or (ii) adversely affect EDC’s ability to
acquire or receive payment in full of the Purchased Refund; and
there are no judgments, decrees or orders of any court, tribunal or
administrative or governmental agency against or relating to the
Seller or any of its property or assets which, if adversely
determined, would reasonably be expected to
(i) adversely affect the Seller’s ability to perform its
obligations under this Agreement; or (ii) adversely affect EDC’s
ability to acquire or receive payment in full of the Purchased
Refund;
	 
	 	(iii)	 	except as to any proceedings and “prior
disclosures” referenced in clause (ii)above, there are no disputes between
the Seller and the US Government, and to the best of its knowledge,
there are no other circumstances which would reasonably be expected to
adversely affect (i) the Seller’s right to the Purchased Refund, or (ii)
EDC’s ability to acquire or receive payment in full of the Purchased
Refund;
	 
	 	(iv)	 	subject to the sale, assignment and transfer
contemplated by this Agreement, the Seller owns and has good and
valid right and title to the Purchased Refund. Ownership of and good
and valid right and title to the Purchased Refund shall vest in EDC
pursuant to this Agreement after the delivery of the Seller Amount
to Seller, free and clear of any lien, charge,
security interest, or encumbrance of any nature
whatsoever or of any other

 

 

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	 	 	 	right, claim or interest of any third party and free and clear of
all defenses, abatements, set-offs, counterclaims and deductions
of any nature, except to the extent expressly permitted by EDC or
otherwise contemplated hereby;
	 
	 	(v)	 	the Seller has not previously sold, assigned or
transferred any or all of its rights to collect duties on softwood
lumber imports including any of its rights in respect of the
Purchased Refund; and its rights to the Purchased Refund are, as of
the Purchase Date, free and clear of any lien, charge,
security interest, or encumbrance of any nature whatsoever or of any
other right, claim or interest of any third party;
	 
	 	(vi)	 	no Event of Default of the nature described in
Section 7.01(a) or (b) and to the best of the Seller’s knowledge,
after due inquiry, no Event of Default of the nature described in
Section 7.01(c) has occurred and is continuing;
	 
	 	(vii)	 	the Seller is in compliance with all
laws applicable to it relating to anticorruption and bribery;
	 
	 	(viii)	 	except as contemplated under the Softwood Lumber Agreement and
this Agreement, and except for the filing of an ACH
Agreement, to the best of the knowledge of the Seller, no consent,
approval or authorization of, or declaration, registration, filing
or qualification with, or giving of notice to, or taking of any
other action in respect of, any governmental authority or
agency on the part of the Seller is required in connection with
the execution, delivery or enforcement of this Agreement or the
Purchase Notice issued pursuant to this Agreement or the performance
hereof or the consummation of any of the transactions contemplated
thereof;
	 
	 	(ix)	 	the execution and delivery of this Agreement
and the performance of, and the compliance with the terms hereof by
the Seller (i) do not contravene or conflict with its constating
documents, by-laws or its resolutions; (ii) are not in violation of
any law, statute, rule, regulation or ordinance of Canada or any
political subdivision thereof; (iii) do not, as of the Purchase Date,
conflict with, or result in any breach of or constitute default under
any document, instrument or agreement to which it is a party to or by
which it is bound or its properties or assets are bound; and (iv)
will not result in or require the creation or imposition of
any lien, charge, security interest, encumbrance or other right,
claim or interest of any person other than EDC upon the Purchased
Refund whether created or imposed at law or pursuant to the terms of
any document, agreement or instrument to which the Seller
is subject or by which it or any of its properties or assets are
bound; and
	 
	 	(x)	 	the Seller has taken all necessary action
(corporate or otherwise) to authorize the execution, delivery and
performance of this Agreement, and

 

 

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	 	 	 	this Agreement has been duly authorized, executed and delivered by
the Seller.

	(b)	 	EDC represents and warrants to the Seller on the date hereof and is
deemed to represent and warrant on and as of the Purchase Date, that:

	 	(i)	 	EDC is a corporation duly established and validly
existing under the laws of Canada; and
	 
	 	(ii)	 	EDC has full power and authority to execute,
deliver, and perform the terms and provisions of this Agreement, has
taken all necessary action (corporate or otherwise) to authorize the
execution, delivery and performance thereof, and this Agreement has
been duly authorized, executed and delivered by EDC.

Section 2.02 — Disclaimer

SUBJECT TO THE PROVISIONS OF SECTION 10.7, THE PROVISIONS OF THIS AGREEMENT SHALL
NOT COME INTO FORCE UNTIL SUCH DATE AS THE GOVERNMENT OF CANADA HAS
CONFIRMED TO EDC THAT THE SOFTWOOD LUMBER AGREEMENT IS IN FULL FORCE AND EFFECT.

ARTICLE III

PURCHASE AND SALE

Section 3.01 — Seller Undertakings

(a) On and subject to and in accordance with the terms and conditions set forth
herein and in the Purchase Notice, the Seller does hereby absolutely sell, assign
and transfer to EDC all of its rights, title, benefits and ownership interests in
and to the Purchased Refund, without recourse to the Seller except as specifically
provided for in Section 3.02(e) and Section 7.02, and subject to
Seller’s right of protest as set forth in Section 3.03(a), such sale being
conclusively completed upon the sending of the Purchase Notice by EDC and payment
of the Purchase Price as provided in Section 3.02 below, without any further act or
formality whatsoever.

(b) The Seller hereby irrevocably directs EDC, pursuant to the Softwood Lumber
Agreement, to pay to the US Interests out of the Purchase Price the Seller’s
applicable pro rata share of the USD 1 billion to be paid to the
US Interests (the “US Interests Amount”) as set out in the Purchase
Notice. The Seller’s applicable pro rata share shall be
computed by multiplying the Purchase Price by a fraction (i) the numerator of which
is USD 1 billion and (ii) the denominator of which is the aggregate amount of all
duties and

 

 

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accrued interest payable to all importers of record, as calculated and provided by USCBP under the
AD Order and the CVD Order as of the date of entry into force of the Softwood
Lumber Agreement.

(c) It is the understanding of the parties that, pursuant to the Softwood Lumber Agreement, and
providing it is in fill force and effect, the Government of Canada shall pay to the US Interests
any difference between the USD 1 billion and the aggregate amount which importers of record have
directed EDC to pay to US Interests.

(d) The
Seller waives any rights it may have against EDC for payment other
than as set out in the
Purchase Notice and any and all rights to contest the amounts of the Purchased Refund with EDC,
provided that the information in the Purchase Notice is consistent with information received by
EDC from USCBP in respect of the entries and accrued interest for covered entries, up to and
including the Purchase Date.

(e) The Seller shall enter into an ACH Agreement, Irrevocable Power of Attorney, Escrow Agreement
and any other documents that EDC may reasonably request the Seller to provide to facilitate the
payment of the Purchased Refund to EDC.

(f) The Seller agrees and acknowledges that (i) EDC may perform its obligations and effect its
rights hereunder and in respect of the Purchased Refund by or through agents, employees or
attorneys-in-fact, and (ii) EDC may assist generally in the selection of agents or other third
parties for purposes of effecting and consummating the transactions contemplated by the Softwood
Lumber Agreement, the Escrow Agreement, this Agreement and the other agreements and documents
contemplated hereby and thereby.

Section 3.02 — Purchase and Sale Procedures

Operation of Facility

	(a)	 	It is acknowledged and agreed by the parties hereto that the Purchased Refund shall
be purchased by EDC and sold by the Seller pursuant to this Agreement and the Purchase
Notice.
	 
	(b)	 	EDC shall deliver to the Seller, by facsimile or other electronic means, with a completed
Purchase Notice based on data concerning cash deposit amounts and accrued interest up to arid
including the Purchase Date provided to EDC by USCBP and the Seller hereby acknowledges and
agrees that it accepts such amounts for purposes of this Agreement. The Purchase Notice shall
specify the Purchase Price and the Purchase Date.
	 
	(c)	 	If EDC has delivered the Purchase Notice to the Seller, EDC shall purchase the Purchased
Refund on the Purchase Date for an amount equal to the Purchase Price

 

 

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	 	 	as specified in the Purchase Notice and subject to the terms and conditions
of this Agreement.
	 
	(d)	 	Upon payment of the Seller Amount by EDC to the Seller on the
Purchase Date, all right, title and interest of the Seller in and to the
Purchased Refund shall immediately be deemed to be assigned,
transferred and sold to EDC, as an absolute sale (and not as security), and
all of Seller’s right, title and interest in and to the
Purchased Refund shall indefeasibly and irrevocably vest in EDC automatically
without the necessity of any further instrument or formality, conveyance,
transfer or assignment thereof to EDC.
	 
	(e)	 	(i) In the event that the amount of the Purchased Refund paid to
EDC (excluding any accrued interest on the Purchased Refund from the Purchase
Date to the liquidation date of the related covered entries) is less than the
Purchase Price, the Seller shall pay EDC, promptly upon receipt of a written
request by EDC, the amount of any such shortfall amount plus the interest
thereon calculated at the rate per annum used by USCBP from the Purchase Date
to the date of receipt by EDC of such amount less the US Interests applicable
pro rata share of the shortfall amount. The US Interests applicable
pro rata share of the shortfall amount shall be computed by
multiplying the shortfall amount by a fraction (i) the numerator
of which is
USD 1 billion and (ii) the denominator of which is the aggregate amount of all
duties and accrued interest payable to all importers of record, as calculated
and proved by USCBP under the AD Order and the CVD Order as of the date of
entry into force of the Softwood Lumber Agreement.
	 
	 	 	(ii) In the event that the Purchased Refund is liquidated prior to the
Purchase Date set forth in the Purchase Notice, the Seller shall pay to EDC
the difference between (i) an amount equal to the interest that USCBP would
have paid for the period from the liquidation date to and including the
Purchase Date and (ii) an amount equal to interest at the Overnight Federal
Funds Rate on the Purchased Refund for the period from the liquidation date
to and including the Purchase Date.
	 
	(f)	 	(iii) In the event that EDC or the Escrow Agent is required to
return to USCBP any portion of the Purchased Refund, the Seller shall pay to
EDC or the Escrow Agent, promptly upon a written request by EDC, the amount of
such remittance, together with interest thereon from the date of such
remittance at the Overnight Federal Funds Rate less the US Interests applicable
pro rata share of the remittance. The US Interests applicable
pro rata share of the remittance shall be computed by multiplying the
remittance by a fraction (i) the numerator of which is USD 1 billion and (ii)
the denominator of which is the aggregate amount of all duties and accrued
interest payable to all importers of record, as calculated and proved by USCBP
under the AD Order and the CVD Order as of the date of entry into force of the
Softwood Lumber Agreement.

 

 

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Section 3.03 — Discrepancies and Disputes

	 	(a)	 	Nothing in this Agreement will constitute or be interpreted as a waiver or any other
relinquishment by the Seller of any right it may have to protest or otherwise dispute with
USCBP or any other applicable department or agency of the US Government that the amount of
any cash deposit to be refunded in respect of any covered entry or the calculation of
accrued interest thereon (any and all such rights herein called “Dispute Rights”) in order
to increase such amount. The Seller will deal directly with USCBP or such other applicable
department or agency of the US Government. in exercising and settling any
Dispute Right, and any additional amount payable by the US Government to the Seller in
respect of any disputed covered entry shall be paid directly to the Seller and shall
constitute property of the Seller.
	 
	 	(b)	 	The exercise of any Dispute Right by the Seller shall not impair, restrict or otherwise affect the
rights or obligations of EDC or the Seller under this Agreement.

Section 3.04 — No Assumption of Obligations

Notwithstanding any other agreement between EDC and the Seller to the contrary EDC shall not assume
or be liable for any actions whatsoever the Seller is required to take under the Softwood Lumber
Agreement or otherwise in connection with this Agreement, including without limitation, any breach
by the Seller of any such agreement, or any representation or warranty made by the Seller, arising
by operation of law or otherwise.

ARTICLE IV

PLACE AND MANNER OF PAYMENT

Section 4.01 — Place and Manner of Payment

All Seller Amount payments to be made by EDC to the Seller as provided for hereunder shall be made
in US Dollars, to the account specified in the Seller’s payment instructions provided pursuant to
Section 5.01(c)(vi) hereof, and all US Interests Amount payments to be made by EDC as directed by
the Seller shall be made in US Dollars to the three escrow accounts identified by the US Government
under the Softwood Lumber Agreement.

 

 

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ARTICLE V

CONDITIONS PRECEDENT

Section 5.01 — Conditions Precedent in Favour of EDC

EDC shall have no obligation to purchase the Purchased Refund pursuant to the terms hereof
until, and it shall be a condition precedent to such purchase that, each of the following
conditions shall be fulfilled to the reasonable satisfaction of EDC in its sole
discretion (provided, however, that it is agreed that these conditions are inserted for the
sole benefit of EDC and may be waived in whole or in part by EDC with or without conditions).

	(a)	 	EDC shall have received, within ten (10) days after the date of entry into force of the
Softwood Lumber Agreement, the documentation from USCBP as to the amount of the covered
entries and’ accrued interest necessary to enable EDC to complete the Purchase Notice.
	 
	(b)	 	Prior to September 27, 2006, EDC shall have received the following:

	 	(i)	 	this Agreement, including a duly completed Schedule “E”, executed by the Seller;
	 
	 	(ii)	 	copy of the ACH Agreement provided to USCBP, as executed by the Seller;
	 
	 	(iii)	 	copy of the Escrow Agreement executed by the Seller and the Escrow Agent; and
	 
	 	(iv)	 	copy of the Irrevocable Power of Attorney, executed by the Seller.

	(c)	 	Prior to the Purchase Date, EDC shall have received the following:

	 	(i)	 	the favourable legal opinion of counsel to the Seller substantially in
the form of Schedule “B”;
	 
	 	(ii)	 	a duly completed Schedule “C” satisfactory to EDC;
	 
	 	(iii)	 	the favourable legal opinions of counsel to EDC, in form and substance
satisfactory to EDC;
	 
	 	(iv)	 	duly completed and executed forms prepared by external counsel to EDC for
filing under the personal property security regime or other applicable similar
regime in the applicable jurisdiction(s), together with any search reports
conducted by external counsel to EDC and satisfactory .to EDC;

 

 

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	 	(v)	 	evidence of the release of any lien, charge, hypothec, mortgage or other
encumbrance or any nature whatsoever applicable to the Purchased
Refund;
	 
	 	(vi)	 	the Seller’s payment instructions;
	 
	 	(vii)	 	a certificate of incumbency from the Seller certifying the authority of
the person or persons who has or have, on behalf of the Seller, signed this
Agreement, the Escrow Agreement, the Irrevocable Power of Attorney and the ACH
Agreement; and
	 
	 	(viii)	 	such other documents as EDC may reasonably require to effectuate the purposes
of this Agreement.

	(d)	 	On and as of the Purchase Date:

	 	(i)	 	this Agreement, and the documents referred to in Section 5.01(a) (b) and
(c), shall not have been terminated;
	 
	 	(ii)	 	the Softwood Lumber Agreement is in full force and effect; and
	 
	 	(iii)	 	the representations and warranties of the Seller shall be true and correct
on and as of such date and there shall not exist or be continuing any Event of
Default.

Section 5.02 — Conditions Precedent in Favour of the Seller

The Seller shall have no obligation to sell the Purchased Refund pursuant to the terms of this
Agreement unless, and it shall be a condition precedent to such sale that:

	(a)	 	this Agreement has not been terminated; and
	 
	(b)	 	the Softwood Lumber Agreement is in full force and effect.

 

 

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ARTICLE VI

COVENANTS

Section 6.01 — Covenants of the Seller

The Seller covenants and agrees with EDC, from and after the date hereof and so long as any
part of the Purchased Refund has yet to be paid to EDC, that it shall:

	(a)	 	not commence any action against the US Government which EDC determines is likely
to adversely affect EDC’s rights with respect to the Purchased Refund, without EDC’s
consent;
	 
	(b)	 	take all steps and all actions as may be reasonably required or reasonably
deemed advisable by EDC to perfect or more fully evidence EDC’s rights, title, benefits
and ownership interests in the Purchased Refund purchased by it hereunder;
	 
	(c)	 	not make or consent to any modification or amendment or waive any term or
condition which would affect the payment terms for or reduce the amount of the Purchased
Refund or agree to any amendment or modification or termination of any document referred
to in Section 3.01 (e) hereof, in each case without EDC’s prior written consent;
	 
	(d)	 	notify EDC, immediately, upon becoming aware of the occurrence of any event or
circumstance which has adversely affected, or is likely to adversely affect the Seller’s ability to
perform all or any of its obligations hereunder;
	 
	(e)	 	not grant or assign to any person other than
EDC or, on or after the Purchase Date, suffer to exist any lien, charge,
security interest, or other encumbrance of any nature whatsoever or other right, claim or
interest of any third party on all or any part of the Purchased Refund, and shall not do
anything or take any action to prejudice any of the rights created hereunder or
purported to be created hereunder in favor of EDC;
	 
	(f)	 	forthwith advise EDC in writing of the occurrence or existence of any Event of
Default or any event or circumstance that, with the passage of time, the giving of notice
or both, would constitute an Event of Default of which the Seller may be or become aware
and of the acts being taken by the Seller to remedy such Event of Default;
	 
	(g)	 	maintain its corporate existence and maintain all material authorizations,
consents and approvals required to own its properties and assets and carry on its
business and to perform its obligations hereunder; and

 

 

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	(h)	 	at the request and expense of EDC take all necessary steps, including instituting proceedings
itself (or assisting EDC in the conduct of any such proceedings instituted by EDC) for the
purpose of collecting payment of all or any part of the Purchased Refund purchased
by EDC under this Agreement.

Section 6.02 — Seller’s Reservation

The Seller reserves the right to protest to USCBP the amount of any cash deposits and accrued
interest due from USCBP as provided in Section 3.03(a) hereof. The parties hereto acknowledge and
agree that in the event that the aggregate amount paid to EDC for the Purchased Refund is greater
than the sum of (i) the Purchase Price set forth in the relevant Purchase Notice delivered to
Seller hereunder and (ii) interest accrued with respect to the covered entities after the Purchase
Date, to and including the receipt of payment by EDC, Seller shall be entitled to receive from EDC
the amount of such excess, together with interest thereon at the Overnight Federal Funds Rate up
to, but not including, the date on which EDC remits the same to the Seller.

ARTICLE VII

EVENTS OF DEFAULT

Section 7.01- Events of Default

The occurrence of any one or more of the following events or circumstances shall constitute a
default (each an “Event of Default”) by the Seller under this Agreement:

	(a)	 	if any representation or warranty made by the Seller in this Agreement or in any document,
opinion of Seller’s counsel or certificate or other instrument furnished in connection with
this Agreement, or any such document, opinion or certificate, shall prove to have been
materially incorrect when made or deemed to be made which, in the reasonable opinion of EDC,
is likely to materially and adversely affect (i) the Seller’s ability to perform all or any
of its obligations under this Agreement or (ii) EDC’s ability to acquire or receive payment in
full of the Purchased Refund and, if capable of being remedied, is not remedied within 30 days
after notice by EDC to Seller to do so;
	 
	(b)	 	the failure by the Seller to perform any of its material obligations under this Agreement;
and
	 
	(c)	 	any other event occurs or circumstances arise (including any changes, modifications,
amendments to any of the representations or warranties set out in
Section 2.01 or if the
Seller is unable to make any such representations or warranties) which, in the reasonable
opinion of EDC, is likely to materially and adversely affect (i) the Seller’s ability to
perform all or any of obligations under

 

 

- 15 -

	 	 	this Agreement or (ii) EDC’s ability to acquire or receive payment in full of the Purchased
Refund and, if capable of being remedied, is not remedied within 30 days after notice by EDC to
Seller to do so.

Section 7.02 — Remedies

Without limiting any other remedy or recourse otherwise available to EDC by law or contract,
upon the occurrence of an Event of Default under Section 7.01(a), (b), or (c), EDC may by
written notice to the Seller terminate this Agreement and be entitled to the return of the
Purchase Price with interest thereon at the Overnight Federal Funds Rate for the period from
the Purchase Date to and including the date of such return of the Purchase Price and, in such
event, EDC shall sell back, re-assign, re-transfer and return to the Seller (i) all the rights,
title, benefits and ownership interests in and to the Purchased Refund as and to the extent
sold, assigned and transferred by the Seller to EDC pursuant to Section 3.01(a) hereof and as
and to the extent then outstanding and (ii) the amount of all payments, if any, of any part of
the Purchased Refund received by EDC (the “Paid Amount”), the parties agreeing to automatic
set-off between the Purchase Price and the Paid Amount, if any.

ARTICLE VIII

COSTS AND EXPENSES

Section 8.01 — Costs and Expenses

(a) EDC will be responsible for:

	 	(i)	 	all costs and expenses incurred by it in connection with the negotiation,
preparation and execution of this Agreement (including legal fees and expenses of
EDC’s counsel but excluding legal fees and expenses of the Seller’s counsel or counsel
for any industry association);
	 
	 	(ii)	 	all of EDC’s costs of administration of this Agreement, including costs
associated with obtaining information from USCBP and costs and legal expenses relating
to the filing, recording or registration of documents under personal property security
or other legislation in any jurisdiction to document, perfect or protect EDC’s rights
in respect of the Purchased Refund; and
	 
	 	(iii)	 	all reasonable fees and expenses of the Escrow Agent and other reasonable costs
and expenses of the Escrow Agent relating to the Escrow Agreement.

 

 

- 16 -

(b) The Seller will be responsible for all reasonable out-of-pocket expenses of EDC (including
reasonable legal fees and disbursements of external counsel but excluding costs of ordinary
administration) in connection with any amendment requested by Seller of, preservation of rights
under, or enforcement of this Agreement.

(c) All expenses for which the Seller is responsible under paragraph (b) above will be payable to
EDC in Canadian Dollars or US Dollars no later than ten (10) Business Days after EDC’s request for
payment (with reasonable supporting documents).

(d) The Seller agrees to indemnify and hold harmless EDC from and against any and all liabilities
or damages, including, but not limited to, reasonable costs and expenses of litigation such as
counsel fees, resulting from third party claims relating to or arising from any breach of
the provisions of this Agreement by the Seller, including, but not limited to, a breach of the
Seller’s representations and warranties contained herein.

ARTICLE IX

NOTICE

Section 9.01 — Notice

All demands, notices and other communications provided for hereunder shall be in writing and sent
by registered mail, commercial courier, telefax or any other electronic mail service or delivered
in person and shall be deemed to have been given and received, if delivered in person, upon
delivery, if sent by registered mail, the third Business Day following the date of mailing, and, if
transmitted by telefax, or any other electronic mail service, the Business Day following the date
of transmission. The mailing address and telefax numbers of each of the parties for such purposes
shall respectively be:

For the Seller,

BOWATER CANADIAN FOREST PRODUCTS INC.

1000 de la Gauchetiére West

Suite 2820

Montréal, QC

H3B 4W5

Attention: Linda Gauvin

Telefax: 514-954-2167

Email: gauvinl@bowater.com

 

 

- 17 -

For EDC,

EXPORT DEVELOPMENT CANADA

151 O’Connor Street

Ottawa, Canada K1A 1K3

Attention: Softwood Lumber Agreement

Loans Services

Telefax: 1-877-336-5464

Email: softwood.lumber@edc.ca

or such other address or numbers as to which either party may, but upon not less than
ten (10) Business Days prior written notice from time to time notify the other.

ARTICLE X

MISCELLANEOUS

Section 10.01 — Further Assurances

The Seller and EDC hereby agree to do such further acts and things, and to execute and deliver to
the other party such additional consents and instruments, as may be reasonably required or deemed
advisable to carry into effect the purposes of this Agreement.

Section 10.02 — Entire Agreement

Except as expressly contemplated or provided herein, this Agreement, including without limitation,
all Schedules and the Purchase Notice, constitutes the whole and entire agreement between the
parties and cancels and supersedes any prior agreements, undertakings, declarations,
representations, written or verbal, relating to the subject matter hereof. None of the terms
hereof shall be modified except by instrument in writing, duly signed by each of the parties, and
in the case of any amendment or modification to Section 3.01(c) with the consent of the Government
of Canada and the Government of the United States of America.

Section 10.03 — Governing Law

This Agreement shall be governed by, and construed in accordance with the laws of the Province of
Ontario and the laws of Canada applicable therein and the Seller hereby irrevocably submits to the
non-exclusive jurisdiction of the Courts of the Province of Ontario.

 

 

- 18 -

Section 10.04 — Successors and Assigns

This Agreement shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. The Seller may not assign (other than as
collateral security) nor transfer all or any part of its rights or obligations hereunder without
the prior written consent of EDC.

Section 10.05 — Counterparts

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be
an original and all of which shall constitute together but one and the same instrument.

Section 10.06 — Confidentiality

EDC will not disclose the Purchase Notice, or any information provided to EDC of the type
referenced in Section 2.01(a)(ii) hereof, to any third party without the prior written consent of
the other party, except to the Escrow Agent and to the respective employees, officers, directors
of EDC and the Escrow Agent, and to their respective legal and financial advisors on a “need to
know basis” (on the condition that any such financial advisor agree in writing not to disclose
such terms). The obligation of EDC to maintain confidentiality of such matters shall be subject to
the requirements of applicable law, regulation or legal process and of Canada’s international
commitments, including without limitation, in respect of the WTO Agreement on Subsidies and
Countervailing Measures. EDC shall also be entitled to disclose any matters in relation to the
transaction contemplated herein to the Government of Canada and the Auditor General of Canada and
to make publicly available the following information, required for the purpose of EDC’s Disclosure
Policy: the name of the Seller; the service provided by EDC (i.e. “Purchase of Purchased Refund”)
under such Agreement; and a general description of the commercial transaction under the Agreement.

Section 10.07 — Automatic Termination

The parties agree that this Agreement shall automatically terminate, without either party taking
any further action, should the Softwood Lumber Agreement not come into full force and effect by
March 31, 2007.

Section 10.08 — Language

The parties agree that it is their express wish that this Agreement and Schedules be drawn up and
signed in the English language only. Les parties aux présentes conviennent que

 

 

- 19 -

c’est
leur volonté expresse que la présente convention et les annexes soient rédigées et
signées en langue anglaise seulement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their respective officers duly authorized as of the date first above written.

BOWATER CANADIAN FOREST PRODUCTS INC.

	 	 	 	 	 	 	 	 	 	 
	By: Vice-President	 	 	 	By: Vice-President
	 
	 	 	 	 	 	 	 	 
	Signature:

	 	/s/ Pierre Monahan
	 	 	 	Signature:
	 	/s/ Linda Gauvin
	 

	 	 
	 	 	 	 	 	 
	(Print Name):

	 	Pierre Monahan
	 	 	 	(Print Name):
	 	Linda Gauvin

EXPORT DEVELOPMENT CANADA

By:

Signature:

(Print Name):

Signature:

(Print Name):

 

 

- 20 -

EXPORT DEVELOPMENT CANADA

	 	 	 	 	 
	By:

	 	/s/ Stephen Davis
	 	 
	 

	 	 	 	 
	 

	 	Name: Stephen Davis	 	 
	 

	 	Title: Senior Risk Transfer Manger	 	 
	 
	 	 	 	 
	By:

	 	/s/ Hal Miller	 	 
	 

	 	 	 	 
	 

	 	Name: Hal Miller	 	 
	 

	 	Title: Manager, Small Business Product Solutions	 	 

 

 

- 20 -

Schedule “A” to the Softwood Lumber Agreement Cash Deposits Purchase and Sale Agreement
dated as of BLANK made between EDC and [Seller-IOR].

SCHEDULE “A”

PURCHASE NOTICE

[INSERT DATE]

TO: [Seller Name]

			
	RE:	 	Softwood Lumber Agreement Cash Deposits Purchase and Sale Agreement dated as of
[insert date], between EDC and [Seller-IOR] (the “Agreement”)

We hereby notify you that EDC will purchase, pursuant to and subject to all the terms and
conditions of the Agreement, the Purchased Refund on the Purchase Date for the Purchase
Price set forth below and confirm that EDC will pay to the Seller the Seller Amount and pay
to the US Interests, the US Interest Amount on Seller’s behalf, in accordance with the
Agreement:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Duties Paid by the Seller	 	Accrued Interest	 	Purchase Price	 	US Interests	 	Seller Amount	 	 	 	 
	up to and including	 	up to and including	 	(sum of column 1	 	Amount (portion of	 	(portion of	 	Purchase	 	Seller’s
	[BLANK]	 	the Purchase Date	 	and column 2)	 	Purchase Price)	 	Purchase Price)	 	Date	 	wire Instructions
	 	 	 	 	 	 	 	 	 	 	 	 	 

All capitalized teens used herein and not otherwise defined have the meanings given to
them in the Agreement.

Dated the                     day of                                         ,    
                .

EXPORT DEVELOPMENT CANADA

By:                                                             

Name:

Title:

 

 

-21-

By:                                                             

Name:

Title

 

 

- 22 -

Schedule “B” to the Softwood Lumber Agreement Cash Deposits Purchase and Sale Agreement dated as of
BLANK made between EDC and BLANK.

OPINION OF COUNSEL TO SELLER

To: Export Development Canada

      151 O’Connor Street

      Ottawa, Ontario K1A 1K3

      Attention: Risk Transfer

      Citibank, N.A. as Escrow Agent

      388 Greenwich Street (14thFloor)

      New York, NY 10013

      Attention:

Dear Sirs/Mesdames:

			
	Re:	 	Purchase by Export Development Canada (“EDC”) of certain of
Payment Obligations to BLANK (the “Seller”) under the Softwood
Lumber Agreement Cash Deposits Purchase and Sale Agreement
dated as of [] between EDC and the Seller (the “Purchase and
Sale Agreement”).

			
		 	EDC Transaction No. SLA-BLANK

In my capacity as legal counsel to the Seller, I have been asked to give an opinion to EDC and the
Escrow Agent in connection with the purchase by EDC of certain obligations owed to the Seller under
the Purchase and Sale Agreement.

For the
purposes of my opinion, I have reviewed original executed copies or copies certified to my
satisfaction of the following:

	(a)	 	the Purchase and Sale Agreement;
	 
	(b)	 	the form of Purchase Notice from EDC to the Seller annexed to the Purchase and Sale
Agreement, in respect of the purchase of certain Purchased Refunds under the Agreement (the
“Purchase Notice”);
	 
	(c)	 	corporate documentation of Seller required to authorize the Seller to enter into the
Agreements (true copies of such documents are attached hereto);
	 
	(d)	 	Escrow Agreement;

 

 

- 23 -

	(e)	 	Irrevocable Power of Attorney;
	 
	(f)	 	the ACH Agreement; and
	 
	(g)	 	[other relevant documents and laws].

I have also examined such other documents as I have considered necessary or desirable in order
that I may give this opinion.

Expressions defined in the Purchase and Sale Agreement shall have the same meaning when used
in this opinion and every reference to “Agreements” shall be deemed to refer to the Purchase
and Sale Agreement as executed by the Seller and EDC as well as the Purchase Notice, the
Escrow Agreement, the ACH Agreement and the Irrevocable Power of Attorney.

I am of the opinion that:

	1.	 	the Seller is a [corporation/partnership/other] duly [incorporated] and organized and
validly existing under the laws of BLANK;
	 
	2.	 	the Seller has full power and authority to execute, deliver and perform the terms and
provisions of the Agreements, has taken all necessary action (corporate or otherwise) to
authorize the execution, delivery and performance of the Agreements to which it is a
party, and such Agreements have been duly authorized, executed and delivered by the
Seller;
	 
	3.	 	the execution and delivery of the Agreements to which it is a parry and the performance
of, and the compliance with the terms thereof:

	 	(i)	 	do not contravene or conflict with its constating documents, by-laws or
its resolutions;
	 
	 	(ii)	 	are not in violation of any law, statute, rule, regulation or ordinance of
[Canada/the United States] or [insert relevant province or state]; and
	 
	 	(iii)	 	do not require any consents or approvals of any governmental authority or
agency of [Canada) the United States] or [relevant province/state] whatsoever.

This
opinion is given for the benefit of EDC and the Escrow Agent and may not be relied upon by anyone else other than EDC and the Escrow Agent and this opinion is
limited to

 

 

- 24 -

the matters stated herein and does not extend to and is not to be read as extending by implication
to any other matters not specifically referred to herein.

Yours truly

By:

 

 

- 25 -

Schedule “C” to the Softwood Lumber Agreement Cash Deposits Purchase and Sale Agreement
dated as of BLANK made between EDC and [Seller-IOR].

Disclosures
of 19 U.S.C. § 1592 proceedings, including “prior disclosures”

      Description

NONE

 

 

- 26 -

Schedule “D” to the Softwood Lumber Agreement Cash Deposits Purchase and Sale Agreement dated
as of BLANK made between EDC and [Seller-IOR].

ESCROW AGREEMENT

 

 

- 27 -

Schedule “E” to the Softwood Lumber Agreement Cash Deposits Purchase and Sale Agreement dated as of
BLANK made between EDC and [Seller-IOR].

LOCATIONS OF SELLER’S CHIEF EXECUTIVE OFFICE AND PLACES OF

BUSINESS

See attached

 

 

SCHEDULE “E” TO THE SOFTWOOD LUMBER AGREEMENT

CASH DEPOSITS PURCHASE AND SALE AGREEMENT

DATED AS OF

BETWEEN EDC AND BOWATER CANADIAN FOREST PRODUCTS INC.

Bowater Canadian Forest Products Inc.

Chief Executive Office :

1000 De La Gauchetiere St. West

Suite 2820

Montreal, QC H3B 4W5

Places of business:

79Main St.

Gatineau, QC J8P 4X6

168-170
Principale St.

Maniwak i, QC J9E 1Z7

200 Dequen St.

Dolbeau-Mistassini, QC G8L 5M8

1 –4th Avenue

Dolbeau-Mistassini, QC G8L 2R4

1 Laberge St.

St. Felicien, QC G8K 2R7

1 Notre Dame St.

Donnacona, QC G3M 1E7

2001 Neebing Ave.

Thunder Bay, ON P7E 6S3

256 Darrel Ave.

Thunder Bay, ON P75 1L7

Affiliates

Bowater Mitis Inc.

Chief Executive Office :

1 Mitis St.

Price, QC GOJ 1Z0

Places of business:

2977 St. Joseph Rd N.

Girardville, QC GOW 1RO

Bowater Mersey Inc.

Chief Executive Office :

3691 Highway #3

Liverpool, NS BOT 1KO

Places of business:

283 Oakhill Rd.

Bridgewater, NS B4V 3J5Exhibit 10.1

 

Exhibit 10.1

CHANGE IN CONTROL AGREEMENT

THIS AGREEMENT, made as of the 7th 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 W. Eric Streed of 5234 Kimblewick Cove, Dunwoody,
Georgia 30338 (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

2

 

	 	 	 	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

3

 

	 	 	 	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

4

 

	 	 	 	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

5

 

	 	 	 	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

8

 

	 	 	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

9

 

	 	 	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

10

 

	 	 	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:

Title:
	 	James T. Wright

Sr. Vice President — Human Resources
	 

	 	Date Signed:          
           
	 
	 	 	 	 
	 

	 	/s/ W. Eric Streed
	 

	 	 
	 

	 	Name: W. Eric Streed
	 

	 	Date Signed:           
          

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