Exhibit 10.2

 

    Domtar Corporation     Head Office     395 de Maisonneuve Blvd. West    
Montreal, QC H3A 1L6     Operations Center     100 Kingsley Park Dr.     Fort
Mill, SC 29715-6476    

 

August 9, 2007

      STRICTLY CONFIDENTIAL

Mr. Marvin D. Cooper

Executive Vice-President and

Chief Operating Officer

Domtar Corporation

100 Kingsley Park Dr.

Fort Mill, South Carolina 29715-6476

U.S.A.

Dear Marvin,

We are pleased to confirm the terms of your employment with Domtar Corporation
(the “Company”). As of March 7, 2007, your employment with the Company will
continue on the terms set forth herein.

1. Duties. You will serve as Chief Operating Officer of the Company, with such
duties and responsibilities as are customarily assigned to individuals holding
such positions and such other duties and responsibilities consistent with the
positions of Chief Operating Officer as may be specified by the President and
Chief Executive Officer of the Company. You will report directly to the
President and Chief Executive Officer of the Company and will devote all of your
skill, knowledge and full working time solely and exclusively to the
conscientious performance of your duties hereunder, other than authorized
vacation time and absence for sickness or disability.

2. Term. The terms of this letter agreement shall apply to your employment with
the Company from the date hereof through and including the date of the Company’s
annual shareholders meeting held in 2009 (such meeting, the “2009 AGM” and such
employment term, the “Employment Term”) or until earlier terminated in
accordance with Section 8.

3. Base Salary. Your base salary while you are employed during the Employment
Term will be at an annualized rate of US$ 660,000 (the “Base Salary”), which
amount may be increased by the Board in from time to time in its sole
discretion. Your Base Salary shall be payable at the same time as the Company
pays salary to its other senior executives.

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4. Annual Incentive Bonus. While you are employed during the Employment Term,
you will be eligible to participate in the Domtar Corporation Annual Incentive
Plan (the “Annual Incentive Plan”). Your target annual bonus under the Annual
Incentive Plan will be 65% of Base Salary, and your maximum annual bonus will be
130% of Base Salary. Actual bonus payments will be determined based on
performance results versus the applicable targets established by the Board of
Directors of the Company (the “Board”). Any annual bonus with respect to a
particular year will be payable promptly following the receipt of the Company’s
audited financial statements for such year and in any event within two and a
half months of the end of such year.

5. Long Term Incentive Awards. The Company will grant to you the long-term
incentive awards set forth in Sections 5(i) and (ii) below at the same time as
long-term incentives are granted to other senior executives in 2007 as long as
you remain employed through that date. The awards will be granted pursuant to,
and will be subject to, the terms and conditions of the Domtar Corporation 2007
Omnibus Incentive Plan (the “Omnibus Plan”) and the applicable award agreement
between you and the Company. Capitalized terms used in this Section 5 without
definition shall have the meanings set forth in the applicable award agreement,
or if not defined in the applicable award agreement, in the Omnibus Plan.

(i) Time-vested Restricted Stock Units with a fair market value on the date of
grant equal to US$1,550,000

(ii) Synergy Performance-vested Restricted Stock Units with a fair market value
on the date of grant equal to US$1,550,000

You hereby acknowledge and agree that the grants of Restricted Stock Units made
to you on June 27, 2007 satisfy the Company’s obligations under this Section 5
and that, notwithstanding anything to the contrary contained in the applicable
award agreement between you and the Company dated as of such date (i) in
connection with the termination of your employment due to Retirement with prior
approval of the Board or by the Company for reasons other than death, Disability
or Cause, in each case on or prior to the 2009 AGM, none of your Time-vested
Restricted Stock Units will vest until the date of the 2009 AGM (at which time
such awards will vest in full and without proration), (ii) in connection with
the termination of your employment due to Retirement with prior approval of the
Board or by the Company for reasons other than death, Disability or Cause, in
each case on or prior to the earlier to occur of the Vesting Date and the 2009
AGM, your Synergy Performance-vested Restricted Stock Units shall be deemed
vested on the Vesting Date to the same extent as if your Service had continued
until such date, subject to achievement of the Goals, provided that nothing
contained herein shall accelerate the time of settlement of any Restricted Stock
Units, (iii) the Company shall deliver to you one share of Stock or the cash
value thereof, as elected by you, in settlement of each outstanding Restricted
Stock Unit that has vested in accordance with the terms of the applicable award
agreement, as amended by this agreement and (iv) settlement of your Time-vested
Restricted Stock Units will not occur earlier than the 2009 AGM.

 

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6. Employee Benefits. While you are employed during the Employment Term, you
will be eligible to participate in the employee benefit plans and programs
(other than retirement plans) generally available to the Company’s employees as
in effect from time to time, on the same basis as the Company’s other employees,
subject to the terms and provisions of such plans and programs. You will receive
four weeks paid vacation per year.

7. Expenses. The Company will reimburse you for all reasonable expenses incurred
by you in connection with your performance of services under this letter
agreement in accordance with the Company’s policies, practices and procedures.

8. Termination of Employment.

(a) If the Company terminates your employment during the Employment Term for any
reason other than Cause or if you retire with the approval of the Board during
the Employment Term, the Company will pay you severance benefits in an aggregate
amount equal to your Base Salary for the remainder of the Employment Term, any
such payments to which you become entitled pursuant to this Section 8(a) to
commence on the first payroll date on or after the later of the first day of the
calendar month following, and 28 days after, your separation from service within
the meaning of section 409A (“Section 409A”) of the Internal Revenue Code of
1986, as amended and the regulations promulgated thereunder (a “Separation from
Service”). You shall also be entitled to receive an amount equal to your annual
incentive bonus (calculated on the basis of actual performance criteria for, and
as if you had remained employed through the end of, the applicable year(s))
remaining in the Employment Term), if any, payable, in the case of each such
bonus payment, on the later of the date that annual incentive bonuses are paid
to other Company employees and 28 days after your Separation from Service.

Notwithstanding anything else contained in this letter agreement to the
contrary, if you are a “specified employee” within the meaning of Section 409A,
any payment required to be made to you hereunder upon or following the date of
termination of your employment shall be delayed until after the six month
anniversary of your Separation from Service to the extent necessary to comply
with, and avoid imposition on you of any tax penalty imposed under,
Section 409A. Should payments be delayed in accordance with the preceding
sentence, the accumulated payment that would have been made but for the period
of the delay shall be paid in a single lump sum during the 10 day period
following the six month anniversary of the date of termination of your
employment.

For purposes of this agreement, if, as of September 30, 2009, the 2009 AGM has
not occurred, it shall be deemed to have occurred on such date.

 

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(b) Any benefits payable to you pursuant to this section will be in full
satisfaction of all liabilities to you under this letter agreement and with
respect to any other claim you may have in conjunction with your termination of
employment. These benefits will not be subject to any offset, mitigation or
other reduction as a result of your receiving salary or other benefits by reason
of your securing other employment, but payment of such amounts shall be subject
to a general release in form and substance reasonably satisfactory to the
Company.

(c) For these purposes, “Cause” means (i) your willful failure to perform
substantially your duties as an officer and employee of the Company (other than
due to physical or mental illness), (ii) your engaging in serious misconduct
that is injurious to the Company, (iii) your having been convicted of a crime
that constitutes a felony (iv) your unauthorized disclosure of Confidential
Information or (v) your material breach of any other provision of this letter
agreement.

9. Unauthorized Disclosure. During your employment with the Company and at all
times thereafter, you will not, except with the express consent of the Board of
Directors or its authorized representative, disclose any confidential or
proprietary trade secrets, customer lists, drawings, designs, information
regarding product development, marketing plans, sales plans, manufacturing
plans, management organization information, operating policies or manuals,
business plans, financial records, packaging design or other financial,
commercial, business or technical information (a) relating to the Company or any
of its affiliates or (b) that the Company or any of its affiliates may receive
belonging to suppliers, customers or others who do business with the Company or
any of their respective affiliates (collectively, “Confidential Information”) to
any third person unless such Confidential Information has been previously
disclosed to the public or is in the public domain (other than by reason of your
breach of this letter agreement).

10. General Provisions.

(a) No provisions of this letter agreement may be modified, waived or discharged
unless such modification, waiver or discharge is approved by the Company’s Board
of Directors and is agreed to in a writing signed by you and such Company
officer as may be specifically designated by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this letter agreement to be
performed by such other party will be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.

(b) No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof, have been made by either party, other
than as set forth expressly in this letter agreement. This letter agreement
codifies all of your entitlements following a termination of your employment
with the Company and supersedes and replaces any and all prior agreements or
understandings, whether written

 

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or oral, which may have existed in relation to your employment with the Company.
The invalidity or unenforceability of any one or more provisions of this letter
agreement will not affect the validity or enforceability of any other provision
of this letter agreement, which will remain in full force and effect. This
letter agreement may be executed in one or more counterparts, each of which will
be deemed to be an original but all of which together will constitute one and
the same instrument.

(c) All amounts payable to you hereunder will be paid net of any and all
applicable income or employment taxes required to be withheld therefrom under
applicable U.S. or non-U.S. federal, state or local laws or regulations.

(d) The validity, interpretation, construction and performance of this letter
agreement will be governed by the laws of the state of South Carolina, without
giving effect to its conflict of laws provisions.

If the foregoing accurately sets forth the terms of your employment with the
Company, please so indicate by signing below and returning one signed copy of
this letter agreement to me.

Sincerely,

 

/s/ Harold H. MacKay     /s/ Brian M. Levitt Harold H. MacKay     Brian M.
Levitt Chairman of the Board of Directors     Chairman of the Human Resources
Committee

 

ACCEPTED AND AGREED

as of this 9th day of August, 2007

/s/ Marvin D. Cooper Marvin D. Cooper

 

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