EXHIBIT 10.2.

 

 

 

 

 

 

ABITIBIBOWATER INC.

 

EXECUTIVE DEFERRED SHARE UNIT PLAN

 

 

 

 

 

 

 

 

 

 

 

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AbitibiBowater Inc.

Executive Deferred
Share Unit Plan

 

 

Table of contents

 

 

SECTION 1.

General Provisions

1

 

 

1.1.

Purpose

1

 

 

1.2.

Definitions

1

 

 

1.3.

Effective Date

2

 

 

1.4.

Administration

2

 

 

1.5.

Governing Law

2

 

SECTION 2.

Election under the Plan

2

 

 

2.1

Payment and Deferral of Annual Remuneration

2

 

 

2.2.

Adjustments and Reorganizations

3

 

 

2.3.

Termination of Service

4

SECTION 3.

General

5

 

3.1.

Transferability of Awards

5

 

 

3.2.

No Right to Service

5

 

 

3.3.

Unfunded Plan

5

 

 

3.4.

Successors and Assigns

5

 

 

3.5.

Section 409A

5

 

 

3.6.

Plan Amendment

6

 

 

3.7.

Plan Termination

6

 

 

 

 

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SECTION 1.

General Provisions

 

1.1.

Purpose

 

The purpose of the AbitibiBowater Inc. Executive Deferred Share Unit Plan is to
promote a greater alignment of interests between eligible officers and
executives of the Corporation and the shareholders of the Corporation.

 

1.2

Definitions

As used in the Plan, the following terms have the following meanings:

 

(a)

“Board” means the Board of Directors of the Corporation;

 

(b)

“Committee” means the Human Resources Compensation Committee of the Board, or
such other persons designated by the Board;

 

(c)

“Common Share” means a common share of AbitibiBowater Inc.;

 

(d)

“Corporation” means AbitibiBowater Inc.;

 

(e)

“Deferred Share Unit” means a right granted by the Corporation to an Eligible
Executive to receive on a deferred payment basis the cash equivalent of a Common
Share on the terms contained herein;

 

 

(f)

“Eligible Executive” means any officer or executive of the Corporation or any
subsidiary of the Corporation determined to be an Eligible Executive pursuant to
Section 1.4;

 

 

(g)

“Executive’s Incentive Remuneration” means all bonus amounts (if any) payable to
an Eligible Executive by the Corporation or a subsidiary of the Corporation in
respect of the services provided to the Corporation or subsidiary by the
Eligible Executive in any calendar year;

 

(h)

“Fair Market Value” means the average of the high and low prices per Common
Share at which Common Shares are traded on the principal stock exchange on which
the Common Shares are traded on the applicable day or, if such stock exchange is
not open on such day, or if there are no prices per Common Share quoted on such
day, on the immediately preceding day on which such stock exchange is open or
there is a quoted price, as the case may be. If the Common Shares are not listed
on a stock exchange, the Fair Market Value shall be the value established by the
Committee based on the price per Common Share on any other public exchange on
which the shares are listed, or if the Common Shares are not listed on any
public exchange, by the Committee acting in good faith;

 

(i)

“Filing Date” has the meaning ascribed to that term in Section 2.3(a);

 

(j)

“Final Payment” has the meaning ascribed to that term in Section 2.3(a);

 

(k)

“Plan” means this AbitibiBowater Inc. Executive Deferred Share Unit Plan; and

 

 

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(l)

“Section 409A” means Section 409A of the U.S. Internal Revenue Code of 1986, as
amended, and the Treasury Regulations promulgated thereunder as in effect from
time to time.

 

1.3.

Effective Date

The Plan shall be effective as of March [26], 2008.

 

1.4.

Administration

The Committee shall, in its sole and absolute discretion: (i) determine from
time to time which officers or executives of the Corporation or any subsidiary
of the Corporation shall be Eligible Executives for the purposes of the Plan;
(ii) interpret and administer the Plan; (iii) establish, amend and rescind any
rules and regulations relating to the Plan; and (iv) make any other
determinations that the Committee deems necessary or desirable for the
administration of the Plan. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan in the manner and to the
extent the Committee deems, in its sole and absolute discretion, necessary or
desirable. Any decision of the Committee with respect to the administration and
interpretation of the Plan shall be conclusive and binding on the Eligible
Executive.

 

1.5.

Governing Law

The Plan shall be governed by and construed in accordance with the laws of the
Province of Québec and the federal laws of Canada applicable therein.

 

SECTION 2.

Election under the Plan

 

 

2.1.

Payment and Deferral of Remuneration

Subject to such rules, approvals and conditions as the Committee may impose, an
Eligible Executive may elect to receive the Executive’s Incentive Remuneration,
in whole or in part, in the form of Deferred Share Units or cash.

 

(a)

Method of Electing. To elect a form or forms of payment of an Executive’s
Incentive Remuneration, the Eligible Executive shall complete and deliver to the
Secretary of the Corporation a written election by no later than December 31
(June 30 for U.S. Eligible Executives) of the calendar year preceding the
calendar year in which the Executive’s Incentive Remuneration becomes payable.
The Eligible Executive’s written election shall designate the percentage of the
Executive’s Incentive Remuneration for the applicable calendar year that is to
be deferred into Deferred Share Units and the percentage to be paid in cash. In
the absence of a designation to the contrary, the Eligible Executive’s election
for the latest calendar year with respect to the percentage of the Executive’s
Incentive Remuneration that is to be deferred into Deferred Share Units and the
percentage that is to be paid in cash shall continue to apply to all subsequent
Executive’s Incentive Remuneration payments until the Eligible Executive submits
another written election in accordance with this Section. An Eligible Executive
shall only file one election in respect of the Executive’s Incentive
Remuneration

 

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payable in any calendar year and the election shall be irrevocable for that
year. If no election is made, and no prior election remains effective, the
Eligible Executive shall be deemed to have elected to be paid all the
Executive’s Incentive Remuneration for the applicable calendar year in cash.

 

(b)

Payment of Executive’s Incentive Remuneration. The portion of the Executive’s
Incentive Remuneration shall be paid in cash or credited as Deferred Share
Units, as elected by the Eligible Executive, on the date on which bonus awards
are payable under the applicable incentive arrangement.

 

(c)

Deferred Share Units. Deferred Share Units elected by an Eligible Executive
pursuant to the Plan shall be credited to an account maintained for the Eligible
Executive by the Corporation. The number of Deferred Share Units (including
fractional Deferred Share Units) to be credited on each of the dates prescribed
by Section 2.1(b) shall be determined by dividing the amount of the Executive’s
Incentive Remuneration to be deferred into Deferred Share Units on such date by
the Fair Market Value per Common Share on such date.

 

(d)

Dividends. When dividends are paid on Common Shares, an Eligible Executive shall
be credited with dividend equivalents in respect of Deferred Share Units
credited to the Eligible Executive’s account as of the record date for payment
of dividends. Such dividend equivalents shall be converted into additional
Deferred Share Units (including fractional Deferred Share Units) based on the
Fair Market Value per Common Share on the date credited.

 

2.2.

Adjustments and Reorganizations

In the event of (x) a corporate transaction involving the Company (including,
without limitation, any dividend or other distribution (whether in the form of
cash, Common Shares, other securities or other property), stock split,
extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, sale of assets or subsidiaries, combination
or exchange of shares, issuance of warrants or other rights to acquire Common
Shares or other securities of the Company), (y) other similar corporate
transaction or event that affects the Common Shares, or (z)  unusual or
nonrecurring events affecting the Company, any affiliate, or the financial
statements of the Company or any affiliate, or changes in applicable rules,
rulings, regulations or other requirements of any governmental body or
securities exchange or inter-dealer quotation system, accounting principles or
law, then the Committee shall make an equitable or proportionate adjustment to
prevent undue dilution or enlargement of the intended benefits or potential
benefits of the Deferred Share Units consistent with the purposes of the Plan,
including without limitation cancelling any one or more outstanding Deferred
Share Units and causing to be paid to the holders thereof, in cash, Common
Shares, other securities or other property, or any combination thereof, the
value of such Deferred Share Units, if any, as determined by the Committee
(which if applicable may be based upon the price per Common Share received or to
be received by other shareholders of the Company in such event).

 

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2.3.   Termination of Service

 

(a)

Termination of Service.

(i) Non-U.S. Executives. An Eligible Executive who is not subject to U.S. tax (a
“Non-U.S. Eligible Executive”) and who has retired from all positions with the
Corporation and any subsidiary of the Corporation as officer, executive and
director, or who, except as a result of death, has otherwise ceased to hold any
such positions with the Corporation and any such subsidiaries, may redeem the
Deferred Share Units credited to the Non-U.S. Eligible Executive’s account by
filing with the Secretary of the Corporation a notice of redemption of the
Deferred Share Units in the prescribed form on or before December 15 of the
first calendar year commencing after the date the Non-U.S. Eligible Executive
retires from or otherwise ceases to hold such positions. If the Non-U.S.
Eligible Executive fails to file a notice of redemption o f the Deferred Share
Units on or before such December 15, the Non-U.S. Eligible Executive shall be
deemed to have filed with the Secretary of the Corporation a notice of
redemption on such December 15. The date on which a notice of redemption is
filed or deemed to be filed with the Secretary of the Corporation is the “Filing
Date”. The notice of redemption filed by the Non-U.S. Eligible Executive shall
specify that the Non-U.S. Eligible Executive will receive a lump sum cash
payment (net of any applicable withholdings) (the “Final Payment”) equal to the
number of Deferred Share Units credited to the Non-U.S. Eligible Executive’s
account as of the Filing Date multiplied by the Fair Market Value per Common
Share on the Filing Date. Within 7 days following the Filing Date, the
Corporation shall make the Final Payment to the Non-U.S. Eligible Executive.

(ii) U.S. Executives. The Final Payment due to an Eligible Executive who is
subject to U.S. tax (a “U.S. Eligible Executive”) will be made the earlier of
(i) “separation from service” within the meaning of Section 409A of the Code, or
(ii) within 90 days of the U.S. Eligible Executive’s death. The Final Payment
will be equal to the number of Deferred Share Units credited to the U.S.
Eligible Executive’s account multiplied by the Fair Market Value per Common
Share as of the date his or her employment terminates.

 

(b)

Death of Non-U.S. Eligible Executive. In the event of the death of a Non-U.S.
Eligible Executive, the Corporation shall, within 90 days of the Non-U.S.
Eligible Executive’s death, make a lump sum cash payment to or for the benefit
of the legal representative or beneficiary of the Non-U.S. Eligible Executive.
The lump sum cash payment shall equal the number of Deferred Share Units
credited to the Non-U.S. Eligible Executive’s Account on the date of payment
multiplied by the Fair Market Value per Common Share on the day immediately
preceding the date of payment.

 

(c)

Death of Non-U.S. Eligible Executive after Retirement. If a Non-U.S. Eligible
Executive dies after ceasing to hold all positions as officer, executive and
director of the Corporation or any of its subsidiaries but before filing a
notice of redemption with the Secretary of the Corporation, Sections 2.3(a)(i)
and (b) shall

 

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apply with such modifications as the circumstances require provided that, in no
event shall payment be made later than December 31 of the first calendar year
commencing after the Non-U.S. Eligible Executive ceases to hold the
aforementioned positions.

 

(d)

Appointment of Beneficiary. If permitted by applicable law, the Eligible
Executive may appoint a beneficiary of his rights under the Plan. “Beneficiary”
for the purpose of the Plan means a person who is a relation or dependent of the
Eligible Executive.

 

SECTION 3.

General

 

 

3.1.

Transferability of Awards

Except as provided in Section 2.3(d), rights in respect of Deferred Share Units
shall not be transferable or assignable other than by will or the laws of
descent and distribution.

 

3.2.

No Right to Service

Neither participation in the Plan nor any action under the Plan shall be
construed to give any Eligible Executive a right to be retained as an employee,
officer or otherwise in the service of the Corporation.

 

3.3.

Unfunded Plan

Unless otherwise determined by the Committee, the Plan shall be unfunded. To the
extent any individual holds any rights by virtue of an election under the Plan,
such rights (unless otherwise determined by the Committee) shall be no greater
than the rights of an unsecured general creditor of the Corporation.

 

3.4.

Successors and Assigns

The Plan shall be binding on all successors and assigns of the Corporation and
an Eligible Executive, including without limitation, the estate of such Eligible
Executive and the legal representative of such estate, or any receiver or
trustee in bankruptcy or representative of the Corporation’s or Eligible
Executive’s creditors.

 

3.5.

Section 409A

It is intended that the provisions of this Plan comply with Section 409A, and
all provisions of this Plan shall be construed and interpreted in a manner
consistent with the requirements for avoiding taxes or penalties under Section
409A. Except as permitted under Section 409A, any deferred compensation (within
the meaning of Section 409A) payable to or for the benefit of a U.S. Eligible
Executive may not be reduced by, or offset against, any amount owing by the U.S.
Eligible Executive to the Corporation or any of its affiliates. Notwithstanding
anything in this Plan to the contrary, if a U.S. Eligible Executive becomes
entitled to receive payment in respect of any Deferred Share Units as a result
of his or her “separation from service” (within the meaning of Section 409A),
and the U.S Eligible Executive is a “specified employee” (within the meaning of
Section 409A) at the time of his or her separation from service, and the

 

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Committee makes a good faith determination that (i) all or a portion of the
Deferred Share Units constitute “deferred compensation” (within the meaning of
Section 409A) and (ii) any such deferred compensation that would otherwise be
payable during the six-month period following such separation from service is
required to be delayed pursuant to the six-month delay rule set forth in Section
409A in order to avoid taxes or penalties under Section 409A, then payment of
such “deferred compensation” shall not be made to the U.S Eligible Executive
before the date which is six months after the date of his or her separation from
service (and shall be paid in a single lump sum on the first day of the seventh
month following the date of such separation from service) or, if earlier, the
U.S Eligible Executive’s date of death; in such event, the Final Payment will be
equal to the number of Deferred Share Units credited to the U.S. Eligible
Executive’s account multiplied by the Fair Market Value per Common Share as of
the expiration of such six-month period or the date of death. (For illustrative
purposes only, if a U.S Eligible Executive who is a specified employee subject
to the provisions of the previous sentence incurs a separation from service on
January 16 of a calendar year, any payments of deferred compensation that would
be payable to such U.S Eligible Executive during the six-month period from such
January 16 through July 16 shall be accumulated and paid in a single lump sum to
such U.S Eligible Executive on July 17 of such calendar year, or, if earlier,
such U.S Eligible Executive’s date of death.) Each U.S Eligible Executive, any
beneficiary or the U.S Eligible Executive’s estate, as the case may be, is
solely responsible and liable for the satisfaction of all taxes and penalties
that may be imposed on or for the account of such U.S Eligibl e Executive in
connection with this Plan (including any taxes and penalties under Section
409A), and neither the Company nor any affiliate shall have any obligation to
indemnify or otherwise hold such U.S Eligible Executive or beneficiary or the
U.S Eligible Executive’s estate harmless from any or all of such taxes or
penalties. Notwithstanding any provision of the Plan to the contrary, in the
event that the Committee determines that any amounts payable hereunder will be
taxable to a Participant under Section 409A prior to payment to such Participant
of such amount, the Company may (i) adopt such amendments to the Plan and
Deferred Share Units and appropriate policies and procedures, including
amendments and policies with retroactive effect, that the Committee determines
necessary or appropriate to preserve the intended tax treatment of the benefits
provided by the Plan and Deferred Share Units hereunder and/or (ii) take such
other actions as the Committee determines necessary or appropriate to avoid or
limit the imposition of an additional tax under Section 409A.

 

3.6.

Plan Amendment

The Committee may amend the Plan as it deems necessary or appropriate, but no
such amendment shall, without the consent of the Eligible Executive or unless
required by law, adversely affect the rights of an Eligible Executive with
respect to Deferred Share Units to which the Eligible Executive is then entitled
under the Plan.

 

3.7.

Plan Termination

The Committee may terminate the Plan at any time, but no such termination shall,
without the consent of the Eligible Executive or unless required by law,
adversely affect the rights of an Eligible Executive with respect to Deferred
Share Units to which the Eligible Executive is then entitled under the Plan.

 

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