EXHIBIT 10.79
Your
retirement
program
Defined contribution program
Executive employees in Canada
Effective January 1, 2009

 

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INTRODUCTION
This booklet summarizes the defined contribution retirement program for
executive employees of AbitibiBowater in Canada, effective January 1, 2009.
The defined contribution retirement program (or “retirement program”) is a
competitive program that enables you to save for retirement. It is comprised of
two plans: the defined contribution plan (or “DC Plan”) and the defined
contribution supplemental executive retirement plan (or “DC SERP”). The DC Plan
is subject to a tax limit while the supplemental plan allows you to receive the
pension benefits you accrue based on your entire earnings.
The DC Plan is a registered plan, which means that it is funded and follows
pension legislation. In fact, the Company sponsors two defined contribution
plans: the Defined Contribution Pension Plan for Non-Unionized Employees of
Abitibi-Consolidated Inc., which originally came into effect on January 1, 2002,
and the DC Retirement Plan (2003) for Non-Unionized Employees of Bowater, which
originally came into effect on January 1, 2003. The provisions of both plans
have been harmonized as of January 1, 2009, and are referred to in this booklet
as “the DC Plan”.
Under the DC Plan, your contributions, along with the Company’s matching
contributions, accumulate in an account in your name, and are allocated among
the investment funds of your choice. The account balance varies over time with
these contributions and the related investment return (positive or negative).
The plan offers a range of investment funds to meet your needs and your
financial goals.
The DC SERP is an unfunded plan that is paid through the Company’s operating
expenses, and is not governed by pension legislation. The goal of the DC SERP is
to provide benefits to highly compensated employees whose retirement savings
would otherwise be limited in the DC Plan by the Canadian Income Tax Act
maximum. In other words, it supplements your benefit under the DC Plan.
For a quick overview of the program’s provisions, you can consult page 3 of this
booklet. More detailed explanations are provided in the sections that follow.
However, please note that the official documents and applicable legislation
prevail at all times.
For information on your retirement benefits for your years of service before
January 1, 2009, please refer to your previous communication materials on the
program.
If you have any questions, please contact the head of the Pension and Benefits
Department located at the head office.

 

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WHAT’S INSIDE

         
Overview
    3  
 
       
Eligibility
    5  
 
       
Contributions
    5  
 
       
Eligible Earnings
    6  
Tax limits
    6  
Contributions: Example 1
    6  
Contributions: Example 2
    6  
Withdrawal of contributions
    7  
 
       
Vesting
    7  
 
       
DC Plan
    7  
DC SERP
    7  
 
       
How your money grows
    8  
 
       
DC Plan
    8  
DC SERP
    9  
 
       
Termination or retirement
    10  
 
       
DC Plan
    10  
DC SERP
    11  
 
       
Death benefits
    12  
 
       
DC Plan
    12  
DC SERP
    12  
 
       
Other key events
    13  
 
       
Disability
    13  
Maternity, paternity or parental leave (including adoption)
    13  
Marriage breakdown
    13  
 
       
Non-compete / confidentiality provisions
    14  
DC SERP
    14  
 
       
Plan administration
    14  
 
       
DC Plan
    14  
DC SERP
    15  
Consulting the plan text
    16  
 
       
Other information
    17  
 
       
Beneficiary designation
    17  
Benefits from other Company pension plans
    17  
DC SERP funding
    17  
Fiscal year
    18  
Reimbursements for special cases
    18  
Transfers from other plans
    18  
 
       
Appendix — Definitions
    19  

 

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OVERVIEW
Here is an overview of the provisions of the retirement program (DC Plan and DC
SERP) for service starting January 1, 2009. Please refer to the corresponding
sections of this booklet for details.

     
ELIGIBILITY
  You participate in the retirement program if you are employed in a position
corresponding to salary grade 29 (Level 29) or above, you are listed on the
Canadian payroll, and you are not accumulating benefits in the defined benefit
SERP sponsored by the Company.
 
   
CONTRIBUTIONS
  You are required to make contributions of 5% of your eligible earnings, up to
the US Compensation Limit.
 
   
 
  The Company makes contributions of 10.5% of your eligible earnings, and an
additional contribution (based on your salary grade), that is equal to:
 
   
 
 
v   10% for salary grade 33 and above and direct reports to the CEO (for a total
of 20.5%); or
 
 
 
v   12% for the CEO (for a total of 22.5%).
 
   
 
  Your eligible earnings include your base salary as well as your paid bonus
under the annual incentive plan. Your paid bonus excludes any special bonuses
unless authorized by the Company.
 
   
VESTING
  DC Plan
 
   
 
  You are immediately fully vested in your DC account.
 
   
 
  DC SERP
 
   
 
  Vesting is gradual and depends on your age. You become fully vested upon an
involuntary termination without cause or upon death.
 
   
NON-COMPETE / CONFIDENTIALITY PROVISIONS
  Your right to receive any money from the DC SERP is subject to the respect of
the terms of the non-compete / confidentiality provisions stipulated under the
DC SERP plan text.
 
   
HOW YOUR MONEY GROWS
  DC Plan
Contributions in the DC Plan accumulate in an account in your name, and are
allocated among the investment funds of your choice. The account balance varies
over time with these contributions and the related investment return (positive
or negative). The DC Plan offers a range of investment funds to meet your needs
and your financial goals.
 
   
 
  DC SERP
 
   
 
  You do not have investment options for the DC SERP. Each year, the Company
will credit your DC SERP account with interest at a rate equal to the average
rate of return on the balanced funds offered in the DC Plan during the year.
However, in the year of termination of employment, interest will be credited as
if the contributions for the year were made at mid-year.

 

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TERMINATION OF EMPLOYMENT OR RETIREMENT
  DC Plan

v   If your employment terminates, you can transfer your account balance to a
locked-in retirement savings vehicle on a tax-sheltered basis.
 
   
 
 
v   Upon retirement, your income will depend on the following factors:

   -  Your account balance at retirement (your contributions, the Company’s
contributions and your investment income);

   -  Your age when you start receiving your retirement income; and

   -  The authorized retirement income vehicle chosen, which could be a life
annuity, a life income fund (LIF) or a locked-in retirement income fund (LRIF).
LIFs and LRIFs are similar to investment accounts from which you make
withdrawals each year, subject to minimums and maximums established by law.
 
   
 
 
If you choose to purchase an annuity with your account balance, the interest
rates prevailing on the market at the time you buy the annuity will affect the
amount of retirement income that the annuity will provide for you.
 
   
 
  DC SERP
 
   
 
  After you leave the Company, your vested DC SERP is paid in cash, less
applicable taxes. It is paid out in two equal payments after you leave the
company (after six months and 12 months respectively).
 
   
DEATH BENEFITS
  DC Plan
 
   
 
 
v   If you die before transferring your DC account out of the Plan, your spouse
or beneficiary will receive your account balance.
 
   
 
 
v   If you die after transferring your DC account out of the Plan, your spouse
or beneficiary will receive the amounts payable under the terms of the locked-in
retirement savings vehicle or authorized retirement income vehicle that you
chose.
 
   
 
  DC SERP
 
   
 
 
v   If you die before leaving the Company, your spouse or beneficiary will
receive a lump-sum payment equal to 100% of your DC SERP account in cash, less
applicable taxes.
 
   
 
 
v   If you die after leaving the Company, but before having received the amount
to which you were entitled when you left the Company, your spouse or beneficiary
will receive any remaining payment that you would have been entitled to receive
had you not died. This amount is paid in cash, less applicable taxes.

 

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ELIGIBILITY
You participate in the retirement program as of January 1, 2009, if you are
employed in a position corresponding to salary grade 29 (Level 29) or above, you
are listed on the Canadian payroll,, and are not accruing benefits in the
defined benefit SERP sponsored by the Company. Any executive who is hired into
or appointed to a position corresponding to salary grade 29 or above after
January 1, 2009, will automatically become a participant in the retirement
program.
You will cease to be eligible for any contributions as of the date you are no
longer actively employed in a position corresponding to salary grade 29 or
above. If you move to a position corresponding to salary grade 28 or below, you
will be covered under the plan for non-unionized employees in Canada.
CONTRIBUTIONS
Contributions are allocated to two plans under the retirement program:

v   the DC Plan (for total employee and Company contributions up to Canadian
Income Tax Act limits); and   v   the DC SERP (for Company contributions in
excess of Canadian Income Tax Act limits).

Your contributions to the retirement program are equal to 5% of your eligible
earnings, up to the US Compensation Limit. The US Compensation Limit is set by
the US Internal Revenue Service and is equal to $245,000 for the year 2009; it
is expected to rise annually in future years. These contributions are allocated
to the DC Plan. Your contributions are made by payroll deductions and are
deposited in your DC Plan according to the timeframes required by law.
The contributions are shown in the following table:

                  THE COMPANY CONTRIBUTIONS   YOU CONTRIBUTE   CONTRIBUTES
BASIC
  5% of your eligible earnings*   10.5% of your eligible earnings
 
       
ADDITIONAL
       
v   For executives at salary grade 33 and above and direct reports to the CEO
  None   10% of your eligible earnings
 
       
v   For the CEO
  None   12% of your eligible earnings

 

*   Up to the US Compensation Limit

Company contributions are first deposited in the DC Plan, up to Canadian Income
Tax Act limits. Any amount that exceeds Canadian Income Tax Act limits is then
allocated to the DC SERP in a personal notional account set up by the Company.

 

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Eligible earnings
Your eligible earnings include your base salary as well as your paid bonus under
the annual incentive plan. Your paid bonus excludes any special bonuses unless
authorized by the Company.
Tax limits
The sum of your contributions and the Company’s contributions to the DC Plan is
subject to the limit prescribed under the Canadian Income Tax Act. In 2009,
contributions to the DC Plan are limited to $22,000. This amount is expected to
rise annually after 2009.
Contributions: Example 1
Let’s say that Richard is a Grade 31 executive and receives $300,000 in eligible
earnings (base salary and eligible bonuses) in 2009. This is how his retirement
program contributions would be allocated for that year:

                                      HOW THE CONTRIBUTIONS ARE       TOTAL    
ALLOCATED       CONTRIBUTIONS     DC PLAN     DC SERP  
Richard’s contributions
                         
5% x $245,000 (earnings, up to US Compensation Limit)
 =  $ 12,250     $ 12,250     $ 0  
Company contributions
                         
10.5% x $300,000
 =  $ 31,500     $ 9,750     $ 21,750  
TOTAL CONTRIBUTIONS
 =  $ 43,750     $ 22,000 *   $ 21,750  

 

*   Canadian Income Tax Act limit (this amount is expected to rise annually
after 2009).

Contributions: Example 2
Let’s say that John is a Grade 29 executive and receives $200,000 in eligible
earnings (base salary and eligible bonuses) in 2009. This is how his retirement
program contributions would be allocated for that year:

                                      HOW THE CONTRIBUTIONS ARE     TOTAL    
ALLOCATED     CONTRIBUTIONS     DC PLAN     DC SERP  
John’s contributions
                         
5% x $200,000
 =  $ 10,000     $ 10,000     $ 0  
Company contributions
                         
10.5% x $200,000
 =  $ 21,000     $ 12,000     $ 9,000  
TOTAL CONTRIBUTIONS
 =  $ 31,000     $ 22,000 *   $ 9,000  

 

*   Canadian Income Tax Act limit (this amount is expected to rise annually
after 2009).

 

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Withdrawal of contributions
No amount can be withdrawn from your DC account or received from the DC SERP as
long as you are employed by the Company.
VESTING
DC Plan
You are immediately 100% vested in your DC Plan account. In other words, your DC
Plan account balance belongs to you entirely as of your first day of membership
in the plan.
DC SERP
If you leave the Company voluntarily, the amount you receive from the DC SERP
will depend on your age when you leave. The vesting schedule for the DC SERP is
as follows:

            VESTED %   ATTAINED AGE  
50
%   Prior to 55
70
%   55
80
%   56
90
%   57
100
%   58

If you terminate employment after age 55 but before age 58, the specific vesting
percentage will be interpolated and rounded to the closest month of age.
Accelerated vesting
Immediate vesting upon termination without cause
If you are involuntarily terminated for any reason other than “with cause,” you
will immediately become 100% vested in your DC SERP balance. For purposes of the
DC SERP, “cause” means the definition, if any, in your employment agreement or
other individual agreement you may have with the Company. If you do not have an
agreement, “cause” will be determined by the Company in its sole discretion.
If your employment is terminated with cause by the Company, you will lose your
DC SERP balance.
Immediate vesting upon death
If your employment terminates due to death, you will be fully vested in your DC
SERP balance.

 

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HOW YOUR MONEY GROWS
DC Plan
The DC Plan offers a variety of investment funds through Sun Life Financial, the
DC plan service provider. A range of funds has been pre-selected in terms of
their risk-return balance. However, you choose how to allocate your and the
Company’s contributions among these funds.
You make your own decisions on how to invest your contributions and those of the
Company. There are several factors to consider when determining which
investments are right for you. Some of these factors are your age, investment
horizon, retirement goals, level of risk tolerance, investment knowledge,
personal situation, net worth and liquidity requirements.
The gains and losses generated by your investment choices are reflected on your
account balance. They have a direct impact on the amount that you will have at
your disposal when you retire. Therefore, it is important to determine your
investment strategy carefully and review it from time to time to meet your
changing needs over the years.
To plan your retirement, it is important to familiarize yourself with these
investment funds and choose those that are consistent with your goals. Please
refer to the information kit from Sun Life Financial for more detailed
information on the investment funds and the tools available to you. To make
informed decisions, you may also want to seek independent financial advice.
Investment gains (or losses) are not taxable while the funds remain in the plan.
Investment decision responsibility
The Company assumes no responsibility for the investment decisions made by plan
members, or the resulting investment return (positive or negative). However, the
pension committees (see Plan Administration for more details) will monitor the
investment funds offered under the DC Plan to assess their general performance
and their risk-return ratio.
Making changes to your investment allocations
You can change your investment instructions at any time for future
contributions. You can transfer amounts between funds anytime at no cost to you,
subject to a market value adjustment in the case of guaranteed funds, where
applicable.
Please note that to prevent short-term trading, Sun Life Financial may charge a
2% fee to plan members who initiate an inter-fund transfer into a fund followed
by a subsequent inter-fund transfer out of the same fund within 30 calendar
days.

 

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Information on your DC account
You can access your DC account balance through Sun Life Financial’s automated
telephone system, Customer Care Service Centre, or through its Plan Member
Services web site. By entering your personal Access ID, you can obtain the
following information:

  v   your account balance;     v   interest rates and fund performance
information;     v   accumulated contributions in your account;     v  
information on investment options.

In addition, Sun Life Financial will send you a statement of account specifying
the transactions entered since the last statement, your investments and your
account balance.
You can access the Sun Life Financial web site and customer care centre at:

  v   www.sunlife.ca/member (to access your accounts, you will need a personal
Access ID and Password);     v   1-866-733-8612.

Administration and investment fees
The funds offered under the DC Plan are managed by professional institutional
investment managers. As with any other investment fund, you pay investment
management fees based on the type of fund you select. Investment fees are
charged for the work investment managers do on your behalf. However, these fees
are generally lower than those you may incur when investing on an individual
basis.
In addition, Sun Life Financial charges a small fund-operating expense based on
the overall assets held in each fund.
The Company will pay a portion of the applicable administration fees. Details on
administrative and investment management fees can be found on Sun Life
Financial’s web site.
DC SERP
The plan administrator (see Plan Administration) will establish a notional
account to reflect your DC SERP balance. The accounts are established solely for
the purpose of tracking contributions and adjustments for income or losses. The
accounts will not be used to segregate actual assets. Unlike your DC Plan
account, your account under the DC SERP does not entitle you to ownership of any
actual assets until funds are ultimately distributed to you.
Company contributions will be credited to your account. Your account balance
from the previous year, if any, will be credited with interest each year at a
rate equal to the average rate of return on the balanced funds offered in the DC
Plan during the year. Interest on contributions will be allocated to your
account on an annual basis.
Each year, you will receive a statement of your notional account reflecting all
contributions and investment returns (positive or negative) accrued during the
prior year.

 

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TERMINATION OR RETIREMENT
DC Plan
Termination
If your employment terminates, you are entitled to your full DC account balance,
which includes your contributions, the Company’s contributions and your
investment income.
When you leave the Company, your contributions, those made by the Company and
your investment income can be transferred to a locked-in retirement savings
vehicle on a tax-sheltered basis. You can also keep your account in the Company
plan. You will, however, need to transfer it to an authorized retirement income
vehicle when you want to receive a retirement income.
You will not be able to make withdrawals from your DC account (your account is
locked in), except for special situations prescribed by pension legislation (see
Other information — Reimbursements for special cases). The locked-in retirement
account (LIRA) is the most common locked-in retirement savings vehicle.
Retirement
To receive a retirement income, you must transfer your account balance to an
authorized retirement income vehicle. The most common vehicles are a lifetime
annuity purchased from an insurance company of your choice and a life income
fund (LIF) established with a financial institution of your choice.
The amount of your retirement income will depend on the following factors:

  v   The total amount of your contributions and the Company’s contributions;  
  v   Your investment return (positive or negative). The higher your investment
return, the higher your capital will be to provide for a retirement income;    
v   Your age when you start receiving your retirement income.

If you opt for an annuity, the following factors also apply:

  v   The annuity purchase price, including interest rates in effect when you
purchase the annuity. The higher the interest rates, the higher your annuity
will be;     v   The form of annuity payment. If you have a spouse when you buy
an annuity, you are required by law to purchase a 60% joint and survivor
annuity. Under this form of payment, 60% of your annuity continues to your
spouse for life upon your death. If your spouse waives the survivor annuity in
writing, you may opt for another form of payment, such as a lifetime annuity
with a 10-year or 15-year guarantee.

 

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Authorized retirement income vehicles
According to current laws, you have the following retirement income options:

  v   A life income fund (LIF) with a financial institution;     v   A locked-in
retirement income fund (LRIF) with a financial institution (in Newfoundland and
Labrador only); and     v   A life annuity purchased from an insurance company.

If you are under age 71 and you do not wish to start receiving your retirement
income immediately, you can transfer your account balance to a locked-in
retirement account (LIRA).
These retirement income vehicles are described in more detail in the Appendix.
Note that this decision only needs to be made at retirement.
DC SERP
After you leave the Company, your vested DC SERP account (see Vesting) is paid
in cash, less applicable taxes. It is paid out in two equal payments after you
leave the Company (after six months and 12 months respectively). If you die
before payment is completed, any remaining payment will be made to your spouse
or beneficiary in a lump sum, less applicable taxes.
Right of offset
The Company will have the right to offset any amounts payable to you under the
DC SERP by any amount necessary to reimburse the Company for liabilities or
obligations you have to the Company, including any amounts misappropriated by
you.

 

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DEATH BENEFITS
DC Plan
Death BEFORE retirement
If you die before retirement, your spouse or beneficiary will receive your DC
account balance. Payment of the death benefit varies by province and depends on
whether the payment is made to your spouse or another beneficiary.
Death benefit payable to your spouse
          In Newfoundland and Labrador, your spouse has the following options:

  v   If you die before age 55: tax-free transfer to an RRSP or cash payment,
less applicable income taxes;     v   If you die at age 55 or after: transfer to
a locked-in retirement savings vehicle.

In New Brunswick, Nova Scotia, Ontario and Quebec, your spouse may transfer the
value of your account to an RRSP (on a tax-free basis) or receive a cash
payment, less applicable income taxes.
Death benefit payable to another beneficiary
          The account balance is paid in cash, less applicable income taxes.
Death DURING retirement
If you die during retirement, your spouse, at the time you retire, or your
beneficiary, will receive the sums payable under the authorized retirement
income vehicle you chose. If such vehicle is an annuity, death benefits will be
paid according to the form of payment provided by the annuity contract.
DC SERP
Death BEFORE termination of employment
If you die before leaving the Company, your spouse or beneficiary will receive
100% of your DC SERP account in cash, less applicable taxes.
Death AFTER termination of employment
If you die after leaving the Company, but before having received the amount to
which you were entitled when you left the Company, your spouse or beneficiary
will receive any remaining payment that you would have been entitled to receive
had you not died. This amount is paid in cash, less applicable taxes.
Your DC SERP beneficiary is the same person designated as your DC Plan
beneficiary.

 

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OTHER KEY EVENTS
Disability
If you become disabled after December 31, 2008, and are entitled to benefits
under the Company’s short-term disability plan, you and the Company will
continue to contribute to the DC Plan and DC SERP during this period.
Contributions will be based on your eligible earnings before the start of your
disability leave.
If you become disabled after December 31, 2008, and are entitled to benefits
under the Company’s long-term disability plan, the Company will continue to make
contributions to your plans, as well as the contributions you were making the
day before the start of your disability leave. Contributions will be based on
your eligible earnings before the start of your disability leave.
Maternity, paternity or parental leave (including adoption)
You may continue to contribute to the DC Plan during a maternity, paternity or
parental leave based on your earnings before the start of your leave. If you
contribute to the plans during your leave, the Company will also contribute.
Marriage breakdown
DC Plan
In the event of marriage breakdown, your DC account balance may be split between
you and your spouse, depending on the legislation in your province. We recommend
you seek legal advice in such situations.
DC SERP
The notional account accrued in the DC SERP is not split between spouses. At
retirement, the notional account is paid as if no split of the DC plan has
occurred.

 

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NON-COMPETE / CONFIDENTIALITY PROVISIONS
DC SERP
You will lose your right to receive any money from the DC SERP if it is found
that you have not respected the terms of the non-compete provisions (for two
years following termination of employment) or confidentiality provisions (no
limit) stipulated under the DC SERP plan text. The Company also reserves the
right to seek reimbursement (with interest) of any amount paid under the DC SERP
if it is found that you have not respected the above conditions.
Non-compete provision
During your employment with the Company or during a period of two years
following your termination of employment or retirement, you must not, directly
or indirectly, without the consent of the Company:

v   Engage in or become interested as a principal, agent, officer, employee,
manager, advisor, financial backer, shareholder (except as a passive investor in
a public corporation) or in any other capacity whatsoever in a North American
business that may be fairly regarded as being in competition with the business
of the Company;   v   Assist financially or in any manner whatsoever any person,
firm, association or corporation, whether as principal, agent, officer,
employee, manager, advisor, financial backer, shareholder (except as a passive
investor in a public corporation) or in any capacity whatsoever to enter into,
develop, carry on or maintain a North American business that may fairly be
regarded as being in competition with the business of the Company.

Confidentiality provision
During your employment with the Company or at any time thereafter, you must not
disclose any information of a confidential or proprietary nature concerning the
Company, its subsidiaries and affiliates and their respective operations,
assets, finances, business and affairs, or use such information for personal
advantage. However, nothing in this provision prevents you from disclosing
information that is publicly available or that is required to be disclosed under
appropriate statutes, rules or law or legal process. In the event of doubt
regarding the confidentiality of any information, you must verify the
confidential nature of the information with the Company.
PLAN ADMINISTRATION
DC Plan
The Company sponsors two defined contribution plans: the Defined Contribution
Pension Plan for Non-Unionized Employees of Abitibi-Consolidated Inc. and the DC
Retirement Plan (2003) for Non-Unionized Employees of Bowater. Each of these
plans is administered by a pension committee.

 

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Each pension committee is made up of a number of individuals who have the right
to vote, and are nominated as follows:

  v   Up to 5 individuals are designated by the Company;     v   1 individual is
designated by active members at the annual meeting (or, failing such
designation, by the Company);     v   1 individual is designated by non-active
members at the annual meeting (or, failing such designation, by the Company);
and     v   1 independent individual, who is neither a plan member nor Company
representative, is designated by the Company.

The group formed by the active members and the group formed by the non-active
members may also each designate an additional non-voting pension committee
member at the annual meeting.
The committees delegate the administrative duties of the plans to experts.
The following employers participate in the DC Plan:

  v   For the Defined Contribution Pension Plan for Non-Unionized Employees of
Abitibi-Consolidated Inc.:

  –   Abitibi Consolidated Inc.; and     –   Abitibi-Consolidated Company of
Canada.

  v   For the DC Retirement Plan (2003) for Non-Unionized Employees of Bowater:

  –   Bowater Canadian Forest Products Inc.;     –   Bowater Maritimes Inc.; and
    –   Bowater Mersey Paper Company Ltd.

DC SERP
Except with respect to certain portions of claims administration and amendment
authority, the Company has appointed the Senior Vice President – Human Resources
to serve as the plan administrator until the Company decides that another
individual or committee should serve as plan administrator. The plan
administrator oversees the administration of the DC SERP and has complete
authority to determine the rights and benefits and all claims, demands and
actions arising out of the provisions of the DC SERP document.
Among other duties and responsibilities, the plan administrator, in its
discretion, interprets and construes the DC SERP document’s terms, identifies
the class of eligible individuals, and decides any matters brought under the DC
SERP. The plan administrator’s interpretation of the DC SERP document’s terms
and its decisions under the DC SERP are final, conclusive and binding on all
participants and any beneficiary or other person claiming under or through any
participant, in the absence of clear and convincing evidence that the plan
administrator acted arbitrarily or capriciously. Benefits under the DC SERP will
be paid only if the plan administrator decides that the individual is entitled
to them. When making a determination or calculation, the plan administrator will
rely on information furnished by you, your beneficiary and the Company.

 

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The plan administrator may establish rules and procedures to administer the DC
SERP. In addition, the plan administrator may appoint such officers or agents,
and may delegate such powers and duties and shall follow such claims and appeal
procedures with respect to the DC SERP as it may establish. The plan
administrator or individuals acting on its behalf shall receive reimbursement
for any reasonable business expense incurred in the performance of his or her
duties.
If the plan administrator is a participant in the DC SERP, the plan
administrator will not vote or act on any matter relating solely to himself or
herself.
Consulting the text of the retirement program
The official text of the retirement program for your participating employer may
be examined at the following address: Pension and Benefits Department, 1155
Metcalfe Street, Suite 800, Montreal, Quebec, H3B 5H2. If you are not located in
the Montreal area, a copy of the plan text may be obtained, at no charge, upon
written request to the same address.

 

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OTHER INFORMATION
Beneficiary designation
For the DC Plan, provincial pension laws provide that your spouse is the sole
beneficiary of the benefits payable upon your death. However, your spouse can
waive this right, except in New Brunswick, Newfoundland and Labrador and Nova
Scotia (with respect to pre-retirement death benefits), before the payment of
your death benefits. To do so, your spouse must complete a waiver form and
forward it to your pension committee.
If your spouse waives this right, you can designate any other beneficiary of
your choice. Note that waiving rights to death benefits does not reduce a
spouse’s rights to an eventual split of benefits upon a marriage breakdown.
The spouse can also cancel the waiver before your death (for pre-retirement
death benefits) or before the payment of your retirement benefits
(post-retirement death benefits). In such a case, any beneficiary designation
you may have made would be without effect.
Please refer to the definition of spouse in each province for more information
(see Appendix).
If you do not have a spouse, you can designate the beneficiary of your choice.
If you make no designation, benefits payable upon your death will be paid to
your estate.
Benefits from other Company pension plans
If you have accrued benefits under other pension plans of the Company for prior
service, these benefits will be paid according to the provisions of those plans.
DC SERP funding
The DC SERP is considered “unfunded” for tax purposes and constitutes a promise
by the Company to make payments as provided under the DC SERP. As such, you and
your beneficiaries will have the status of general unsecured creditors of the
Company. Nothing in the DC SERP or this booklet shall be construed to give you
or any other person rights to any specific assets of the Company or of any other
person.
The Company may authorize a trust to hold the assets on behalf of the DC SERP.
Even in such a case, the assets will remain subject to the claims of creditors
of the Company and the DC SERP will retain its status as an unfunded plan for
tax purposes.
Restriction against assignment
DC SERP benefits, payments or proceeds will not be subject to any claim of any
creditor of you or your beneficiary and will not be subject to attachment or
garnishment or other legal process. You may not assign, pledge or encumber your
account or any benefits payable to you under the DC SERP.

 

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Receipt and release
Any distribution made from the DC SERP will be in full satisfaction of all
claims against the Company, the plan administrator and a trustee (if any) under
the DC SERP. The plan administrator may require you to execute a receipt or
release to such effect as a condition to your distribution.
No right of employment
Nothing in the DC SERP gives you any right to be employed or to continue in the
employ of the Company, or to limit the Company’s right to terminate your
employment at any time, or to modify any of your compensation.
Fiscal year
The fiscal year of the retirement program runs from January 1 to December 31.
Reimbursements for special cases
Small amounts
For the DC Plan, if the amount payable upon your termination of employment or
retirement is small, it is not locked in. In that case, you can receive it in
cash, less applicable income taxes, or transfer it to a personal RRSP.
Quebec members who stopped residing in Canada
You can receive the value of your benefits from the DC Plan in cash, less
applicable income taxes, if:

  v   You are considered a Quebec member; and     v   Your employment ended or
you are retired; and     v   You stopped residing in Canada at least two years
before the reimbursement date.

Transfers from other plans
If you have transferred locked-in funds into the DC Plan from another plan,
these funds will continue to grow according to your investment instructions. No
transfers are allowed to the DC SERP.

While the Company intends to continue the retirement program,
it reserves the right to modify or terminate this arrangement at any time.

 

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APPENDIX – DEFINITIONS
Life annuity
A life annuity purchased from an insurance company provides a monthly amount
payable for the rest of your life. Once you have purchased an annuity, you
generally cannot transfer it to another insurer, nor convert it into another
authorized retirement income vehicle.
The amount of your annuity will depend, among other things, on the following
factors:

  v   The funds at your disposal to purchase an annuity;     v   Your age at the
time you purchase the annuity and the date payments begin, because the insurance
company estimates your life expectancy, that is, the number of years during
which the annuity may be paid to you; and     v   The annuity purchase rates
prevailing on the market at the time you buy the annuity.

Your annuity may include various guarantees. The following table presents some
examples. However, note that the provincial laws require that all annuities
purchased with locked-in funds (like your DC Plan) must allow for the payment of
part of the annuity to the spouse upon the retiree’s death. This is what is
called a joint and survivor annuity. A written waiver will be required if you
wish to provide a survivor benefit to someone other than your spouse.

     
LIFE ANNUITY
  The annuity is payable for the rest of your life. No benefits are payable upon
your death.
 
   
GUARANTEED LIFE ANNUITY
  The annuity is payable for the rest of your life. A minimum number of payments
are guaranteed, for example 60 or 120 monthly payments. If you die before the
end of the guarantee period, your spouse, or beneficiary, as provided under the
annuity contract, receives the balance of the payments. No benefits are payable
to your spouse or beneficiary if you die after the guarantee period. Please note
that if you have a spouse and wish to elect a guaranteed life annuity, you must
obtain a waiver from your spouse.
 
   
JOINT AND SURVIVOR ANNUITY
  After your death, your spouse receives a life annuity equal to a percentage of
yours, for example, 60%.

An indexed annuity may be combined with any of these options. This annuity
increases by a specific percentage each year and provides a certain degree of
inflation protection during your retirement.
Other combinations of these options are also possible. Your decision only needs
to be made at retirement.

 

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Life income fund (LIF)
A LIF is an authorized retirement income vehicle from which you make withdrawals
each year, subject to a minimum and a maximum established by law. The purpose of
this legal requirement is to ensure that you will continue to receive a
retirement income for the rest of your life.
You may transfer your LIF to another financial institution, according to the
terms of the LIF.
In the event of your death, the balance of your LIF is payable to your spouse or
beneficiary.
Locked-in retirement account (LIRA)
A LIRA is a locked-in retirement savings vehicle similar to an RRSP but from
which you cannot make withdrawals. You can however transfer your LIRA from one
financial institution to another, in compliance with the terms of the LIRA.
In the event of your death, the balance of your LIRA is payable to your spouse
or beneficiary.
Locked-in retirement income fund (LRIF)
A LRIF is only available in Newfoundland and Labrador. A LRIF is similar to a
LIF but offers more flexibility. Members are not required to convert the LRIF
into a life annuity.
Spouse
The definition of spouse under a registered pension plan, such as the DC Plan,
varies by province. Your spouse is the person who meets the definition at the
time of your retirement (or death, if before retirement). Detailed definitions
are provided below.
New Brunswick
          The person of the opposite sex who:

  v   Is married to you; or     v   Is married to you by a marriage that is
voidable and has not been avoided by a declaration of nullity; or     v   Has
gone with you, in good faith, through a form of marriage that is void and who
has cohabited with you within the preceding year; or     v   Without being
married to you, has cohabited with you in a conjugal relationship continuously
for at least three years, and part of this three year period was within the
preceding year, provided that one of you has been substantially dependent upon
the other for support; or     v   Without being married to you, has cohabited
with you in a relationship of some permanence within the preceding year, if you
jointly are the natural parents of a child.

 

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Newfoundland and Labrador
          The person who:

  v   Is not married to you and:

  –   if you are not married to someone else, has cohabited continuously with
you in a conjugal relationship for a period of at least one year; or     –   if
you are married to someone else, has cohabited continuously with you in a
conjugal relationship for a period of at least three years,

  v   And is cohabiting, or has cohabited with you within the preceding year; or

          If there is no person that qualifies as a spouse under the above
definition, the person who:

  v   Is married to you; or     v   Is married to you by a marriage that is
voidable, which has not been voided by a judgment of nullity; or     v   Has, in
good faith, gone through a form of marriage with you that is void and is
cohabiting or has cohabited with you within the preceding year.

Nova Scotia
          The person who:

  v   Is not living separate and apart from you and:

  –   Is married to you;     –   Is married to you by a marriage that is
voidable and has not been annulled by a declaration of nullity;     –   With
whom you have gone through a form of marriage, in good faith, that is void and
who is cohabiting with you or, if you have ceased to cohabit, has cohabited with
you within the immediately preceding 12-month period;     –   Is your
“registered domestic partner” under the Nova Scotia Vital Statistics Act; or

  v   If there is no person to whom the above definitions apply, the person who
has cohabited with you in a conjugal relationship for at least two years,
provided that neither of you is the spouse of another person as defined in the
points mentioned above.

Ontario
          The person who:

  v   Is married to you and is living with you; or     v   Is not married to you
and has been living with you,

  –   In a conjugal relationship continuously for a period of at least three
years; or     –   In a conjugal relationship of some permanence if you both are
the natural or adoptive parents of a child.

 

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Quebec

  v   The person who is married to you and is not legally separated from bed and
board from you or is in a civil union with you; or     v   If you are neither
married nor in a civil union with anyone, a person of the opposite sex or the
same sex who has been living in a conjugal relationship with you for a period of
at least three years, or for a period of at least one year if:

  –   At least one child is born, or to be born, of your union;     –   You have
jointly adopted at least one child; or     –   One of you has adopted at least
one child of the other.