EX-10.1






EXHIBIT 10.1




ABITIBIBOWATER INC.




OUTSIDE DIRECTOR DEFERRED COMPENSATION PLAN


Effective as of January 1, 2009





 









 








	 	 	 	 	 
	1. Purpose
	 	 	1	 
	 
	 	 	 	 
	2. Definitions
	 	 	1	 
	 
	 	 	 	 
	3. Eligibility
	 	 	3	 
	 
	 	 	 	 
	4. Administration
	 	 	3	 
	 
	 	 	 	 
	5. Deferral Election
	 	 	3	 
	 
	 	 	 	 
	6. Accounts
	 	 	4	 
	 
	 	 	 	 
	7. Distributions
	 	 	5	 
	 
	 	 	 	 
	8. Designation of Beneficiary
	 	 	5	 
	 
	 	 	 	 
	9. Voting Rights
	 	 	5	 
	 
	 	 	 	 
	10. Transferability
	 	 	5	 
	 
	 	 	 	 
	11. Covenants of Director
	 	 	6	 
	 
	 	 	 	 
	12. Remedies of the Company
	 	 	6	 
	 
	 	 	 	 
	13. Limitation of Rights of the Director
	 	 	6	 
	 
	 	 	 	 
	14. Payments To Incompetents
	 	 	6	 
	 
	 	 	 	 
	15. Construction
	 	 	6	 
	 
	 	 	 	 
	16. Amendment or Termination
	 	 	7	 
	 
	 	 	 	 
	17. Funding
	 	 	7	 
	 
	 	 	 	 
	18. Governing Law
	 	 	7	 









 









 








AbitibiBowater Inc. Outside Director Deferred Compensation Plan





	1.	 	Purpose. The AbitibiBowater Inc. Outside Director Deferred Compensation Plan (the
“Plan”) is intended to enhance the Company’s ability to attract and retain talented
individuals to serve as members of the Board of Directors and to promote a greater alignment
of interests between non-employee members of the Board and the shareholders of the Company.
All non-employee directors are eligible to participate in the Plan and enjoy the benefits of
the Plan as set forth below upon the Effective Date or, for non-employee directors elected or
appointed to the Board after the Effective Date, on the date of election or appointment.
	 
	 	 	In conjunction with the termination of Prior Plans (as defined herein) effective as of
December 31, 2008, any outstanding balance credited on behalf of a current Director under
one or more Prior Plans shall be transferred to the Plan and credited hereunder as an
opening Account balance on the Effective Date. Unless otherwise stated, all Prior Plan
amounts transferred to the Plan are subject to the terms set forth herein.






	2.	 	Definitions. The following words and phrases, when used in this Plan with an initial
capital letter, unless the context clearly indicates otherwise, shall have the following
meanings, or the meanings as set forth elsewhere in this Plan. Wherever applicable the
masculine pronoun shall include the feminine pronoun and the singular shall include the
plural.






	 	(a)	 	“Account” means a bookkeeping account established for the benefit of a Director
under Section 6 used solely to measure and determine the amounts credited under the
Plan on his behalf. A Director’s Account may include sub-accounts consisting of a Cash
Account and a Deferred Share Unit Account.
	 
	 	(b)	 	“Administrator” means the Corporate Secretary of the Company.
	 
	 	(c)	 	“Affiliate” means any entity directly or indirectly controlled by, controlling,
or under common control with the Company.
	 
	 	(d)	 	“Beneficiary” means the person or persons (including, without limitation, any
trustee) last designated by a Director to receive the balance of his Account in the
event of the Director’s death. If there is no effective designated Beneficiary on file
or surviving Beneficiary, the Participant’s estate shall be the Director’s Beneficiary.
	 
	 	(e)	 	“Board” means the Board of Directors of the Company.
	 
	 	(f)	 	“Canadian Director” means a Director who is a Canadian resident for purposes of
the Income Tax Act (Canada) (the “Canadian Tax Act”).
	 
	 	(g)	 	“Cash Account” means the sub-account used to record (i) deferrals made
hereunder that are designated by the Director for allocation to the Cash Account and
(ii) earnings on such amounts.




 









 






	 	(h)	 	“Committee” means Human Resources and Compensation Committee of the Board or such
members of the Board as are selected by the Board from time to time to administer
the Plan.
	 
	 	(i)	 	“Company” means AbitibiBowater Inc.
	 
	 	(j)	 	“Crediting Date” is, unless otherwise determined by the Committee, the last
business day of the calendar quarter.
	 
	 	(k)	 	“Deferred Share Unit Account” or “DSU Account” means the sub-account used
to record (i) deferrals made hereunder which are designated by the Director for
allocation to the DSU Account and (ii) any credits on and adjustments of such amounts
pursuant to Section 6.
	 
	 	(l)	 	“Director” means any individual qualified to serve as a member of the Board who
is elected or appointed and who is not an employee or a full-time officer of the
Company or any Affiliate.
	 
	 	(m)	 	“Effective Date” means January 1, 2009.
	 
	 	(n)	 	“Fair Market Value” means the average of the high and low trading prices of a
share of Stock as reported for the New York Stock Exchange Composite Transactions
during the previous five business days ending, and including, the Valuation Date,
rounded to the nearest number within two decimal places.
	 
	 	(o)	 	“Prior Plans” means the Deferred Compensation Plan for Outside Directors of
Bowater Incorporated, the Bowater Incorporated Outside Directors’ Stock-Based Deferred
Fee Plan, the Bowater Incorporated 2004 Non-Employee Director Stock Unit Plan and the
Abitibi-Consolidated Inc. Stock Plan for Non-Employee Directors.
	 
	 	(p)	 	“Separation from Service” means a separation from service with the Company and
other entities affiliated with the Company, as determined in accordance with Section
409A of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) and guidance
issued thereunder. For purposes of the foregoing, whether an entity is affiliated with
the Company shall be determined pursuant to the controlled group rules of Code Section
414, as modified by Code Section 409A.
	 
	 	(q)	 	“Share Unit” means the right to receive payment in cash in an amount equal to
the Fair Market Value of one share of Stock, determined as of the Valuation Date with
respect to that Share Unit.
	 
	 	(r)	 	“Stock” means the common stock of the Company, par value $1.00.
	 
	 	(s)	 	“US Director” means a Director who is considered a US resident for tax
purposes.
	 
	 	(t)	 	“Valuation Date” means the date of the Director’s Separation from Service.




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	3.	 	Eligibility. Participation in the Plan shall be extended to all Directors.
	 
	4.	 	Administration. The Committee shall administer the Plan, provided that the Committee
may delegate responsibility for administration to such person or persons as it deems
appropriate from time to time. Subject to the express provisions of the Plan, the Committee
shall have the authority to do all things that it may deem necessary or desirable in
connection with the administration of the Plan, including without limitation (a) to establish,
modify and revoke rules relating to the Plan; (b) to interpret and construe the terms of the
Plan, any rules under the Plan and the terms and conditions of any award or benefit under the
Plan; (c) to approve the form and content of any documentation relating to awards or benefits
under the Plan or Plan administration; and (d) consistent with the express provisions of the
Plan, to approve, establish and amend the terms governing a benefit under the Plan. All
determinations, interpretations and decisions made by the Committee under or with respect to
the Plan shall be final, conclusive and binding on the Company, and Directors and any
beneficiary of a benefit. No member of the Committee shall be liable for any action taken in
good faith with respect to the Plan. Notwithstanding the foregoing, the Administrator shall
have the authority to approve the form and content of any election or beneficiary forms for
the efficient administration of the Plan.
	 
	5.	 	Deferral Election. A Director may elect to defer all or a portion of his cash
compensation including, without limitation, his annual retainer and/or other fees for service
as a Director (for example, for serving as chair), if he completes and delivers to the
Administrator a written deferral election (i) designating the portion of such compensation to
be deferred under the Plan in 10% increments and (ii) specifying whether the deferrals are to
be allocated to the Cash Account or the DSU Account (or both Accounts in 10% increments).
Notwithstanding the foregoing, a Canadian Director cannot allocate a deferral to a Cash
Account; any deferral by a Canadian Director will be allocated to a DSU Account. To be
considered timely, a Director must deliver the written deferral election as follows.






	 	(a)	 	For Directors in office on the Effective Date, deferral election must be
completed and filed with the Administrator by December 31, 2008 to be effective to
defer compensation earned on and after the Effective Date under the Plan.
	 
	 	(b)	 	With respect to any calendar year, the deferral election must be made before
the commencement of that calendar year. Notwithstanding the foregoing, if an
individual first becomes elected or appointed as a Director during the calendar year,
the deferral election must be completed and filed with the Administrator within 30 days
after the Director is first elected or appointed.






An election made in accordance with the foregoing shall be effective for the calendar year
for which it was made but shall only be effective with regard to compensation earned on and
after January 1 of the year to which the election relates or after the expiration of the
30-day election period for newly-elected or appointed Directors, as the case may be. Once
an election is made, it is irrevocable for the calendar year (or portion thereof for
newly-elected or appointed Directors) for which it was made and will continue in effect for
subsequent calendar years until revoked or changed by the Director. An election may be
revoked or changed only with respect to a calendar year subsequent to the date of the
revocation or change. If no election to defer is made, the Director shall be deemed to have
elected to be paid compensation for his duties as a Director entirely in cash. A Director’s
written election shall constitute the Director’s acceptance of the benefits and terms of the
Plan.



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	6.	 	Accounts.






	 	(a)	 	Establishment of Accounts. As of the Effective Date or, if later, the date on
which an individual becomes a Director and elects to defer compensation to the Plan,
the Administrator or its delegate shall establish an Account for each Director to
reflect the deferrals of amounts made for the Director’s benefit, together with any
income adjustments thereto. The Accounts shall not be used to segregate assets for
payment of any amounts deferred or allocated under the Plan, and shall not constitute
or be treated as a trust fund of any kind. Unless the Committee determines otherwise,
the Plan shall maintain and credit the following sub-Accounts: (i) Cash Account and
(ii) DSU Account. The Director shall, at all times, have a nonforfeitable right to all
amounts credited to his Account.
	 
	 	(b)	 	Crediting of Accounts.






	 	(i)	 	In General. An amount will be credited to a Director’s
Cash Account and/or DSU Account pursuant to the Director’s deferral election on
each Crediting Date.






	 	(A)	 	The amount allocated to the Cash Account shall
be the amount of compensation earned for that quarter and specified for
allocation to the Cash Account.
	 
	 	(B)	 	The amount allocated to the DSU Account shall
be a number of Deferred Share Units (including fractional Deferred
Share Units) determined by dividing (i) the amount of compensation
earned for that quarter and specified for allocation to the DSU Account
by (ii) 95% of the Fair Market Value of the Stock as of the Crediting
Date.






	 	(ii)	 	Prior Plans. Each Director with a Prior Plan account
balance and/or a deferred stock unit award granted in 2007 under the Bowater
Incorporated 2006 Stock Option and Restricted Stock Plan shall have such
balance and/or award as of December 31, 2008 transferred to the Plan and
credited to his Account as an opening balance on the Effective Date. If such
Prior Plan account balance was cash-based, such balance shall be credited to a
Director’s Cash Account. If such Prior Plan and/or award was share or share
unit-based, such shares or share units shall be converted into Deferred Share
Units at a ratio of one-to-one and credited to a Director’s DSU Account.
Unless otherwise stated herein, all Prior Plan amounts credited to Accounts
hereunder shall be subject to the terms of this Plan. For reference, no
Canadian Director had a Prior Plan account balance in cash. Therefore, all
Prior Plan account balances for Canadian Directors were transferred to the DSU
account.






	 	(c)	 	Earnings and Adjustments.






	 	(i)	 	Cash Account. As of the last day of each quarter, the
Cash Account of each Director shall be credited with interest, on the average
balance of the Cash Account during such quarter, at a rate equal to the Lipper
Money Market Fund Index or in the absence of such index, by a comparable index
designated by the Committee, for such quarter.




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	 	(ii)	 	Deferred Share Unit Account.






	 	(A)	 	Dividends. With respect to dividend record
dates occurring during the period in which Deferred Share Units are
credited to a Director’s DSU Account, the Director’s DSU Account will
be increased to reflect dividends payable with respect to Stock. The
DSU Account will be increased by the number of Deferred Share Units
equal to the number of shares of Stock that could be purchased with the
dividends payable with respect to such Deferred Share Units as of the
record date for that dividend and based on the Fair Market Value of the
Stock at the time such dividends are paid.
	 
	 	(B)	 	Adjustments. In the event of any stock
dividend, stock split, combination or exchange of shares, merger,
consolidation, spinoff or other distribution (other than normal cash
dividends) of Company assets to shareholders or any other change
affecting the Stock, the Committee may make such adjustments to the
amount payable with respect to the Deferred Share Units that the
Committee, in its sole discretion, may deem appropriate to reflect such
change.






	 	(d)	 	Reallocation of Accounts. Transfers shall not be permitted between Accounts.






	7.	 	Distributions. A Director’s Account shall be distributed in cash upon the Director’s
Separation from Service or death, whichever is earlier. Payment shall be made no later than
the last day of the calendar year in which the payment event occurs, or if later, the
15th day of the third month following such event. The latest payment date set
forth in the preceding sentence has been specified for purposes of complying with the
provisions of Section 409A of the Internal Revenue Code. Notwithstanding the foregoing, if a
Director made an election under the Bowater Incorporated 2006 Stock Option and Restricted
Stock Plan to receive payment of deferred stock units awarded in 2007 in the form of
installment payments, such election will continue to be honored under the Plan.






	8.	 	Designation of Beneficiary. Each Director shall designate on forms provided by the
Administrator, signed by the Participant and delivered to the Administrator, the Beneficiary
or Beneficiaries to receive the balance credited to the Director’s Account in the event of his
death. A Director may, from time to time, change the designated Beneficiary or Beneficiaries,
without the consent of such Beneficiary or Beneficiaries, by delivering to the Administrator a
new written and signed designation of Beneficiary. The Director’s spouse, if any, shall not
be required to consent in writing to any non-spouse designation. The Director may designate
primary or contingent Beneficiaries. The written designation last delivered and signed by the
Director shall be effective and supersede all prior designations on file with the
Administrator.






	9.	 	Voting Rights. A Director shall not be a shareholder of record with respect to
Deferred Share Units and shall have no voting rights with respect to the Deferred Share Units.






	10.	 	Transferability. Rights under the Plan may not be sold, assigned, pledged, alienated
or otherwise transferred or encumbered except by will or the laws of descent and distribution.




5









 












	11.	 	Covenants of Director. As a condition of participation in this Plan, each
participating Director agrees to devote his best efforts and undivided loyalty to the Company
and devote such time to his tasks as a Director as shall be required to discharge his
obligations to the best of his abilities.






	12.	 	Remedies of the Company. Upon the occurrence of any one or more of the following
circumstances:






	 	(a)	 	if the Director is at any time removed from incumbency as a Director for
reasons deriving from his gross negligence or misconduct detrimental to the business
interests of the Company, or for criminal conduct of any type (regardless of the effect
thereof on the business interest of the Company); or
	 
	 	(b)	 	if the Director at any time materially fails to comply with the requirements of
Section 11;






then, and in any such event, the Company’s obligation to pay or provide benefits hereunder
to such Director shall automatically cease and terminate, and neither the Director nor any
other person claiming any benefit pursuant to the Director’s participation in this Plan
shall have any rights, claims or causes of action hereunder against the Board, the Company
or any person acting on their behalf. The Company’s sole remedy for breach by the Director
of the provisions of Section 11 shall be to cease paying or providing benefits pursuant to
the provisions of Section 7 or receive from the Director repayment of any amounts paid.
Such remedy shall not preclude the Company from recovering from a Director damages inflicted
on the Company or its Affiliates by conduct of a Director which renders the Director liable
to the Company independently of the fact that such conduct constitutes a breach of the
Director’s covenants in Section 11.




	13.	 	Limitation of Rights of the Director. Inclusion under the Plan shall not give a
Director any right or claim to a benefit, except as specifically defined in this Plan. The
establishment of the Plan shall not be construed as giving any Director a right to be
continued in Service as a Director of the Company.
	 
	14.	 	Payments To Incompetents. In the event that any payment hereunder becomes payable to
a person adjudicated to be incompetent, payment thereof to the guardian or legal
representative of such person shall constitute full and complete compliance herewith and
entitle the Company to discharge with respect thereto.
	 
	15.	 	Construction.






	 	(a)	 	The decision of the Committee on all matters concerning the interpretation and
administration of this Plan shall be final. Each Director agrees, as a condition to
participation herein, to be bound by all actions and interpretations regarding this
Plan by the Committee. Neither the Board, the Committee, any individual Director nor
any persons acting on their behalf shall be subject to any liability to any Director or
other person in the construction and administration of this Plan.




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	 	(b)	 	Notwithstanding any other provision of this Plan, it is intended that all Deferred
Share Units granted under this Plan which are considered to be deferred compensation
subject to Section 409A of the Code shall be provided and paid in a manner, and at
such time, including without limitation payment only in connection with a
permissible payment event contained in Section 409A (e.g., separation from service
from the Company and its affiliates as defined for purposes of Section 409A of the
Code), and in such form, as complies with the applicable requirements of Section
409A of the Code, to avoid the unfavorable tax consequences provided therein for
non-compliance. In addition, it is intended that all Deferred Share Units granted
to Canadian Directors under this Plan shall be provided and paid in a manner, and at
such time, and in such form, as complies with the applicable requirements of
paragraph 6801(d) of the regulations to the Canadian Tax Act, to avoid the
unfavorable tax consequences provided therein for non-compliance. Notwithstanding
the foregoing, none of the Company or its affiliates or the Committee shall be
liable to any person if such person is subject to any additional tax, penalty or
interest as a result of failure to comply with Section 409A of the Code or paragraph
6801(d) of the regulations to the Canadian Tax Act.






	16.	 	Amendment or Termination. The Company reserves the right at any time, and from time
to time, by action of a majority of the Board at a meeting at which all members thereof are
present and voting or the required notice of which contained an accurate summary of the action
proposed for vote, to amend, in whole or in part, any or all of the provisions of this Plan.
The Company reserves the right to terminate the Plan at any time. Notwithstanding the
foregoing, no such amendment or termination shall adversely affect benefits under this Plan
already being paid or having become unconditionally payable pursuant to the terms hereof.
Upon termination of the Plan, the Company reserves the discretion to accelerate distribution
of Directors’ Accounts in accordance with regulations promulgated by the Department of the
Treasury under Code Section 409A.
	 
	17.	 	Funding. The Company’s obligations under this Plan shall be unfunded and the Company
shall not be obligated under any circumstances to fund its obligations under this Plan.
Payment of a Director’s Account balance shall be made from the Company’s general assets. The
rights of a Director to the payment of benefits under the Plan shall be no greater than the
rights of an unsecured creditor of the Company.
	 
	18.	 	Governing Law. This Plan shall be governed by and interpreted in accordance with the
laws of the State of Delaware and, subject to Section 16 above, shall be binding upon the
Company and its successors, including any successor which acquires all or substantially all of
the assets of the Company.





*   *   *




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     IN WITNESS WHEREOF, the Company has caused this document to be executed by its duly authorized
officer and be effective as of January 1, 2009.



	 	 	 
	 

	ABITIBIBOWATER INC.
	 
	 	 
	 

	By:  	/s/ Jacques P. Vachon
	 

	 	 
	 

	Name: Jacques P. Vachon

Title: Senior Vice President, Corporate Affairs and

Chief Legal Officer
	 

	Date Signed: November 11, 2008