Amended & Restated Outside Directors Benefit Plan

EXHIBIT 10.2


AMENDED AND RESTATED


BOWATER INCORPORATED


OUTSIDE DIRECTORS BENEFIT PLAN GRANTOR TRUST


Effective April 15, 1998


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TABLE OF CONTENTS


ARTICLE I


Title-Purpose-Policy-Effect............................................. 1
1.1 Name........................................................... 1
1.2 Definitions.................................................... 1
1.3 Purpose........................................................ 5
1.4 Effect......................................................... 6


ARTICLE II


Valuation............................................................... 6
2.1 Valuation of Trust Fund........................................ 6


ARTICLE III


Administration of the Plans............................................. 6
3.1 Payments From Trust Fund....................................... 6
3.2 Participant Data............................................... 7
3.3 Creditors...................................................... 8
3.4 Reliance on Company............................................ 8
3.5 Responsibility for Plan Administration......................... 8
3.6 Trustee Not Responsible for Administration of Judgments........ 9


ARTICLE IV


Investment of Trust Assets.............................................. 9
4.1 Asset Managers................................................. 9
4.2 Investment Discretion.......................................... 10
4.3 Limitations on Investment Discretion........................... 10
4.4 Responsibility for Diversification............................. 10


ARTICLE V


Responsibility for Directed Funds....................................... 10
5.1 Responsibility for Selection of Agents......................... 10
5.2 Trustee Not Responsible for Investments in Directed Funds...... 11
5.3 Investment Vehicles............................................ 11
5.4 Reliance on Asset Manager...................................... 11
5.5 Merger of Funds................................................ 11
5.6 Notification of Company in Event of Breach..................... 12
5.7 Definition of Knowledge........................................ 12
5.8 Duty to Enforce Claims......................................... 12


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5.9 Restrictions on Transfer...................................... 12
5.10 Section 4.1(b) Controlling.................................... 12


ARTICLE VI


Powers of Asset Managers................................................ 13
6.1 General Powers................................................ 13
6.2 Additional Powers of Trustee.................................. 14
6.3 Annuity and Insurance Contracts............................... 15
6.4 Letters of Credit............................................. 17


ARTICLE VII


Records and Accounts of Trustees........................................ 17
7.1 Records....................................................... 17
7.2 Annual Account................................................ 17
7.3 Account Stated................................................ 17
7.4 Judicial Accountings.......................................... 17
7.5 Necessary Parties............................................. 17


ARTICLE VIII


Compensation, Taxes and Expenses........................................ 18
8.1 Compensation and Expenses..................................... 18
8.2 Taxes......................................................... 18


ARTICLE IX


Resignation or Removal of Trustee....................................... 19
9.1 Resignation or Removal........................................ 19
9.2 Designation of a Successor.................................... 19
9.3 Reserve for Expenses.......................................... 19


ARTICLE X


Amendment or Termination................................................ 20
10.1 Amendment of Agreement........................................ 20
10.2 Termination of Plan........................................... 20
10.3 Distribution of Residual Assets............................... 21
10.4 Distribution of Excess Assets................................. 21


ARTICLE XI


Prohibition Against Diversion........................................... 21
11.1 No Right of Alienation or Employment.......................... 21


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ARTICLE XII


Sufficiency of Trust Fund............................................... 22
12.1 Payment of Benefits.......................................... 22
12.2 Contribution to Fund......................................... 22


ARTICLE XIII


Authorities............................................................. 23
13.1 Company...................................................... 23
13.2 Investment Manager........................................... 23
13.3 Form of Communications....................................... 23
13.4 Continuation of Authority.................................... 24
13.5 No Obligation to Act on Unsatisfactory Notice................ 24


ARTICLE XIV


General Provisions...................................................... 24
14.1 Governing Law................................................ 24
14.2 Entire Agreement............................................. 24
14.3 Mistake...................................................... 24
14.4 Reliance on Experts.......................................... 24
14.5 Successor to the Trustee..................................... 24
14.6 Notices...................................................... 25
14.7 Plan Documents............................................... 25
14.8 No Waiver; Reservation of Rights............................. 25
14.9 Descriptive Headings......................................... 25
14.10 Counterparts................................................. 25


ARTICLE XV


Undertaking by Company.................................................. 25
15.1 Undertaking.................................................. 25
15.2 Limitation on Undertaking.................................... 26
15.3 Survival of Undertakings..................................... 26


LIST A....................................................................... 27


LIST B....................................................................... 28


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THIS GRANTOR TRUST AGREEMENT was initially made and entered into as of the 5th day of September, 1989, by and between BOWATER INCORPORATED, a Delaware corporation (the "Company"), and WACHOVIA BANK, N.A., a national banking association organized and existing under the laws of the United States (the "Trustee").


W I T N E S S E T H :


WHEREAS, the Company established this Grantor Trust to serve as a funding vehicle for certain designated non-qualified benefit plans, agreements or arrangements and as a medium for holding amounts payable to eligible participants under the Bowater Incorporated Retirement Plan for Outside Directors and the Deferred Compensation Plan for Outside Directors of Bowater Incorporated (the "Plans"), and any plans, agreements or arrangements hereafter adopted by Bowater Incorporated and designated for participation in this Trust; and


WHEREAS, the Trustee has agreed to hold and administer all sums of money and such other property acceptable to the Trustee as shall from time to time be contributed, paid or delivered to it hereunder, IN TRUST, upon all of the terms and conditions of the Grantor Trust Agreement (the "Agreement"), and


WHEREAS, the Company and the Trustee desire to amend and restate the Agreement governing this Grantor Trust.


NOW THEREFORE, the Company and the Trustee hereby agree to continue the Bowater Incorporated Outside Directors Grantor Trust on the following terms and conditions as of April 15, 1998:


ARTICLE I


Title-Purpose-Policy-Effect


1.1 Name. The trust established hereunder shall be known as the Bowater Incorporated Outside Directors Benefit Plan Grantor Trust and is sometimes hereinafter referred to as the "Trust".


1.2 Definitions. Where used in this Agreement, unless the context otherwise requires or unless otherwise expressly provided:


(a) "Account Party" shall mean an officer of the Company designated to represent the Company for this purpose and any Person to whom the Trustee shall be instructed by the Company to deliver its annual account under Section 7.2.


(b) "Accounting Period" shall mean the twelve consecutive month period coincident with the calendar year or the shorter period in any year in which the Trustee accepts appointment as Trustee hereunder or ceases to act as Trustee for any reason.


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(c) "Agreement" shall mean all of the provisions of this instrument and of all other instruments amendatory hereof.


(d) "Asset Manager" shall mean the Trustee (other than for purposes of Article V), Company or Investment Manager, individually or collectively as the context shall require, but only with respect to those assets held in an Investment Account over which it exercises, or to the extent it is authorized to exercise, discretionary investment authority or control.


(e) "Bank Business Day" shall mean a day on which the Trustee is open for business.


(f) An individual or entity is a "beneficiary" if such individual or entity is receiving benefits, or entitled to receive benefits solely upon the lapse of time under any of the Plans in respect of a deceased participant.


(g) "Board of Directors" shall mean the Board of Directors of the Company.


(h) A "Change in Control" shall be deemed to have occurred upon:


(a) The date that any Person is or becomes an Acquiring
Person.


(b) The date that the Corporation's shareholders approve
a merger, consolidation or reorganization of the
Corporation with another corporation or other Person,
unless, immediately following such merger,
consolidation or reorganization, (i) at least 50% of
the combined voting power of the outstanding
securities of the resulting entity would be held in
the aggregate by the shareholders 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 shareholders of the
Corporation, but shall be counted as outstanding
securities for purposes of this determination), or
(ii) at least 50% of the board of directors or
similar body of the resulting entity are Continuing
Directors.


(c) The date the Corporation sells or otherwise transfers
all or substantially all of its assets to another
corporation or other Person, unless, immediately
after such sale or transfer, (i) at least 50% of the
combined voting power of the then-outstanding
securities of the resulting entity immediately
following such transaction is held in the aggregate
by the Corporation's shareholders as determined
immediately prior to such transaction (provided that
securities held by any individual or entity that is
an Acquiring Person, or who


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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 shareholders of the
Corporation, but shall be counted as outstanding
securities for purposes of this determination), or
(ii) at least 50% of the board of directors or
similar body of the resulting entity are Continuing
Directors.


(d) The date on which less than two-thirds (2/3) of the
total membership of the Board consists of Continuing
Directors.


For purposes of this Section:


(i) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Securities
Exchange Act of 1934 (the "Act").


(ii) "Acquiring Person" means the Beneficial Owner,
directly or indirectly, of Common Stock 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 Common
Stock 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 with respect to such Person's
status as a Beneficial Owner of all Common Stock of
the Corporation of which the Person is a Beneficial
Owner.


(iii) A "Beneficial Owner" of Common Stock means (A) a
Person who beneficially owns such Common Stock,
directly or indirectly, or (B) a Person who has the
right to acquire such Common Stock (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.


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(iv) "Continuing Directors" means any member of the Board
who (A) was a member of the Board 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, (B) is
not an Acquiring Person or an Affiliate or Associate
of an Acquiring Person, and (C) is recommended or
elected to succeed the Continuing Director by a
majority of the Continuing Directors.


(v) "Person" means any individual, firm, corporation,
partnership, trust or other entity.


Notice to the Trustee from the Company that a Change in Control has occurred shall be binding and conclusive on the Trustee. The Trustee shall have no independent duty to investigate whether or not a Change in Control has occurred. In performing any of its obligations or taking any discretionary action under this Agreement which is dependent upon a Change in Control having occurred, the Trustee may rely on such notice and such notice shall be binding and conclusive on all Plan participants and beneficiaries.


(i) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, and Regulations issued thereunder.


(j) "Company" shall mean Bowater Incorporated or successor thereto.


(k) "Directed Fund" shall mean an Investment Account, or part thereof, subject to the discretionary management and control of the Company or any Investment Manager.


(l) "Discretionary Fund" shall mean any Investment Account, or part thereof, subject to the discretionary management and control of the Trustee.


(m) "Investment Account" shall mean each pool of assets in the Trust in which the Plans have an interest during an Accounting Period.


(n) "Investment Manager" shall mean a bank, as defined under the Investment Advisers Act of 1940, insurance company or investment adviser registered under the Investment Advisers Act of 1940.


(o) "Investment Vehicle" shall mean any common, collective or commingled trust, mutual fund, investment company, corporation functioning as an investment intermediary, insurance contract, letter of credit, partnership, joint venture or other entity or arrangement to which, or pursuant to which, assets of the Trust have been transferred or in which the Trust has an interest, beneficial or otherwise.


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(p) "Participant Data" shall mean certain information regarding the participants (or beneficiaries) under each Plan and the determination of the benefits under each Plan, including the following information: (i) name, address, date of birth, date of election as a Director (when applicable) and social security number; (ii) a schedule of the estimated payments under each Plan; and (iii) any other information regarding each Plan which the Trustee may reasonably request or which the Company may deem necessary.


(q) "Person" shall mean a natural person, trust, estate, corporation of any kind or purpose, mutual company, joint-stock company, unincorporated organization, association, partnership, joint venture, employee organization, committee, board, participant, beneficiary, trustee, partner, or venturer acting in an individual, fiduciary, or representative capacity, as the context may require.


(r) "Plan" or "Plans" shall mean, collectively, the Plans, and such other plans, agreements or arrangements maintained by the Company or to which the Company is a party and which have been designated by the Board of Directors for participation in this Trust, as are set forth on List A hereto.


(s) "Trust Fund" shall mean all cash and other property contributed, paid or delivered to the Trustee hereunder, all investments made therewith and proceeds thereof and all earnings and profits thereon, less payments, transfers or other distributions which, at the time of reference, shall have been made by the Trustee, as authorized herein. The Trust Fund shall include all evidences of ownership, interest or participation in an Investment Vehicle, but shall not, solely by reason of the Trust Fund's investment therein, be deemed to include any assets of such Investment Vehicle.


(t) "Trust" shall mean the grantor trust established under this Agreement.


(u) "Trustee" shall mean Wachovia Bank, N.A., as Trustee of the Trust and its successors.


(v) "Valuation Date" shall mean the last day of the Accounting Period, calendar quarter or any more frequent reporting date determined by the Company and agreed to by the Trustee.


(w) "Wachovia" shall mean Wachovia Bank, N.A.


The plural of any term shall have a meaning corresponding to the singular thereof as so defined and any neuter or masculine pronoun used herein shall include the masculine or feminine, as the context may require.


1.3 Purpose. The Trust is established as a grantor trust within the meaning of Sections 671 through 677 of the Code, to hold the interests of participants and their beneficiaries in the Plans. Except as may otherwise be permitted by law and the terms of the Plans or pursuant to the terms of this Agreement, at no time prior to the satisfaction of all liabilities with respect to


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participants and their beneficiaries under the Plans shall any portion of the Trust Fund be used for, or diverted to, any purposes other than for the exclusive benefit of such participants and their beneficiaries, and for defraying the reasonable expenses of administering each such Plan. The establishment of the Trust is intended to provide a funding vehicle for the payment of benefits under the Plans and is not intended to relieve the Company of its duties under the Plans to the participants therein.


1.4 Effect. All Persons at any time interested in the Plans shall be bound by the provisions of this Agreement and, in the event of any conflict between this Agreement and the provisions of the Plans or any other instrument or agreement forming part of each such Plan, the provisions of this Agreement shall control.


ARTICLE II


Valuation


2.1 Valuation of Trust Fund. The Trustee shall determine the value of the assets of the Trust Fund as of each Valuation Date. In addition, prior to a Change in Control and for the convenience of the Company and without imposing any obligation on the Trustee, the Company may request the Trustee to include in its periodic reports under this Article II or its annual account under Section 7.2 assets which do not constitute part of the Trust Fund. Assets will be valued at their market values at the close of business on the Valuation Date, or, in the absence of readily ascertainable market values, at such values as the Trustee shall determine in accordance with methods consistently followed and uniformly applied. Anything in this Agreement to the contrary notwithstanding, with respect to assets constituting part of a Directed Fund or assets included at the request of the Company as hereinabove provided, the Trustee may rely, for all purposes of this Agreement, on the latest valuation and transaction information submitted to it by the Persons responsible for the investment of such assets even if such information predates the Valuation Date. The Company will cause such Persons to provide the Trustee with all information needed by the Trustee to discharge its obligations to value such assets and to account under this Agreement.


ARTICLE III


Administration of the Plans


3.1 Payments From Trust Fund. (a) Subject to Sections 3.2, 3.3 and 6.3(b), the Trustee, upon receipt of direction from the Company prior to a Change in Control, shall pay moneys directly to or for the benefit of participants and their beneficiaries, or to a paying or disbursing agent (which may be the Company) for the benefit of participants and their beneficiaries. Prior to a Change in Control, the Company may direct that moneys be paid to the Company or an affiliate or subsidiary thereof, however, only if and only to the extent that such payment is for the reimbursement of moneys paid under the Plan to a participant or beneficiary


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which could have been paid from the Trust Fund. After a Change in Control, the Trustee may follow the directions of the Company as noted in the preceding sentence only upon receipt of evidence that such amounts have been paid to a participant or beneficiary in lieu of a payment from the Trust Fund. Any such payment to the Company or an affiliate or subsidiary thereof shall be deemed a payment for the benefit of a participant or beneficiary. Any assets disbursed or paid over by the Trustee pursuant to the foregoing provisions of this Section 3.1, or pursuant to Section 3.3 hereof, shall no longer be part of the Trust Fund.


(b)(1) In the event it shall be determined prior to a Change in Control that the participants in the Plans and/or beneficiaries of the Trust Fund, prior to the payment of benefits hereunder, are subject to any tax under the terms of the trust created hereunder, then the Trustee, upon a receipt of written direction from the Company, shall make payments from the Trust Fund to such persons, in such manner and in such amounts as the Company shall direct, for the purpose of paying the amount of Federal, State and Local tax and interest and any penalties thereon which such participants and/or beneficiaries may incur arising out of such determination. In the event such a determination is made after a Change in Control occurs, then each participant or beneficiary who is subject to such tax, may direct the Trustee, in writing, to make payments from the Trust Fund for the purpose set forth in the preceding sentence and shall deliver to the Trustee evidence of such determination. In the event a final judicial determination is made after a Change in Control occurs that a participant or beneficiary, prior to the payment of benefits hereunder, is subject to any tax under the terms ...