exv10w6






Exhibit 10.6




GUARANTY AND UNDERTAKING AGREEMENT




Dated as of June 16, 2009




among




THE GUARANTORS PARTY HERETO,




each a debtor and debtor-in-possession Chapter 11 of the Bankruptcy Code,




and




ABITIBI-CONSOLIDATED INC.,




a company operating pursuant to a proceeding under the Canadian CCAA,




in favor of




CITIBANK, N.A.,




as Agent for the Banks





 









 








TABLE OF CONTENTS




	 	 	 	 	 
	ARTICLE 1

	 
	 	 	 	 
	Definitions

	 
	 	 	 	 
	SECTION 1.01. Definitions
	 	 	1	 
	SECTION 1.02. Terms Generally
	 	 	18	 
	 
	 	 	 	 
	ARTICLE 2

	 
	 	 	 	 
	Guarantees

	 
	 	 	 	 
	SECTION 2.01. The Guarantees
	 	 	18	 
	SECTION 2.02. Guarantee Unconditional
	 	 	18	 
	SECTION 2.03. Discharge Only Upon Payment In Full; Reinstatement In Certain Circumstances

	 	 	19	 
	SECTION 2.04. Waiver By Guarantors
	 	 	19	 
	SECTION 2.05. Subrogation
	 	 	20	 
	SECTION 2.06. Stay Of Acceleration
	 	 	20	 
	SECTION 2.07. Payments
	 	 	20	 
	 
	 	 	 	 
	ARTICLE 3

	 
	 	 	 	 
	Representations And Warranties Of The Obligors

	 
	 	 	 	 
	SECTION 3.01. Existence, Qualification And Power; Compliance With Laws
	 	 	20	 
	SECTION 3.02. Authorization; No Contravention
	 	 	21	 
	SECTION 3.03. Governmental Authorization; Other Consents
	 	 	21	 
	SECTION 3.04. Binding Effect
	 	 	21	 
	SECTION 3.05. Historical Financial Statements
	 	 	22	 
	SECTION 3.06. Projections.
	 	 	22	 
	SECTION 3.07. Material Litigation
	 	 	22	 
	SECTION 3.08. Ownership Of Property; Liens
	 	 	22	 
	SECTION 3.09. Environmental Matters
	 	 	23	 
	SECTION 3.10. Taxes
	 	 	24	 
	SECTION 3.11. ERISA and Pension Plan Compliance
	 	 	24	 
	SECTION 3.12. Subsidiaries; Equity Interests
	 	 	25	 
	SECTION 3.13. Margin Regulations; Investment Company Act
	 	 	26	 
	SECTION 3.14. Disclosure
	 	 	26	 
	SECTION 3.15. Labor Matters
	 	 	26	 
	SECTION 3.16. The US Interim Order, the US Final Order and the Canadian Amended Order
	 	 	27	 






 









 






	 	 	 	 	 
	SECTION 3.17. Material Contracts
	 	 	27	 
	SECTION 3.18. PATRIOT Act
	 	 	27	 
	SECTION 3.19. Priority
	 	 	27	 
	 
	 	 	 	 
	ARTICLE 4

	 
	 	 	 	 
	Affirmative Covenants

	 
	 	 	 	 
	SECTION 4.01. Financial Statements
	 	 	28	 
	SECTION 4.02. Other Information
	 	 	29	 
	SECTION 4.03. Notices
	 	 	30	 
	SECTION 4.04. 13-Week Projections
	 	 	31	 
	SECTION 4.05. Payment of Taxes and Claims; Compliance with Obligations
	 	 	32	 
	SECTION
4.06. Preservation of Existence, Etc.
	 	 	32	 
	SECTION 4.07. Maintenance of Properties
	 	 	32	 
	SECTION 4.08. Maintenance of Insurance
	 	 	32	 
	SECTION 4.09. Maintenance of Insurance Policy
	 	 	33	 
	SECTION 4.10. Compliance With Laws
	 	 	33	 
	SECTION 4.11. Books and Records; Inspections
	 	 	33	 
	SECTION 4.12. ERISA and Pension Plans
	 	 	33	 
	SECTION 4.13. Further Assurances.
	 	 	34	 
	SECTION 4.14. Credit Ratings
	 	 	34	 
	 
	 	 	 	 
	ARTICLE 5

	 
	 	 	 	 
	Negative Covenants

	 
	 	 	 	 
	SECTION 5.01. Liens
	 	 	35	 
	SECTION 5.02. Investments
	 	 	37	 
	SECTION 5.03. Indebtedness
	 	 	38	 
	SECTION 5.04. Fundamental Changes; Disposition Of Assets; Acquisitions
	 	 	40	 
	SECTION 5.05. Disposal of Subsidiary Equity Interests
	 	 	41	 
	SECTION 5.06. Conduct of Business
	 	 	41	 
	SECTION 5.07. Transactions with Affiliates
	 	 	41	 
	SECTION 5.08. Restricted Junior Payments
	 	 	42	 
	SECTION 5.09. Actions Voiding Coverage Under the Insurance Policy
	 	 	42	 
	SECTION 5.10. Accounting Changes
	 	 	42	 
	SECTION 5.11. Chapter 11 Claims
	 	 	43	 
	SECTION 5.12. Carve-out
	 	 	43	 
	SECTION 5.13. Amendments or Waivers of Organizational Documents and Certain Related
Agreements
	 	 	43	 
	SECTION 5.14. Minimum Cumulative Consolidated EBITDAR
	 	 	43	 
	SECTION 5.15. Minimum Liquidity
	 	 	44	 
	SECTION 5.16. Combined Capital Expenditures
	 	 	44	 






 









 






	 	 	 	 	 
	ARTICLE 6

	Events Of Default

	 
	 	 	 	 
	ARTICLE 7

	 
	 	 	 	 
	Miscellaneous

	 
	 	 	 	 
	SECTION 7.01. Notices
	 	 	47	 
	SECTION
7.02. Survival of Agreements, Representations and Warranties, Etc.
	 	 	49	 
	SECTION 7.03. No Waiver
	 	 	49	 
	SECTION 7.04. Amendments and Waivers
	 	 	49	 
	SECTION 7.05. Successors and Assigns
	 	 	49	 
	SECTION
7.06. Damages Waiver
	 	 	49	 
	SECTION
7.07. Severability
	 	 	49	 
	SECTION
7.08. Governing Law; Jurisdiction; Etc.
	 	 	49	 
	SECTION
7.09. WAIVER OF JURY TRIAL
	 	 	50	 
	SECTION
7.10. Counterparts; Integration
	 	 	50	 
	SECTION
7.11. Judgment Currency
	 	 	50	 
	SECTION
7.12. Assignment of Guaranteed Obligations
	 	 	51	 
	SECTION
7.13. Execution By ACI
	 	 	51	 
	SECTION
7.14. Interpretation (Québec)
	 	 	51	 
	SECTION
7.15. Language
	 	 	52	 
	SECTION
7.16. Effectiveness
	 	 	52	 






	 	 	 
	Exhibit A

	 	Form of Intercompany Subordination Agreement
	 
	Schedule 3.07

	 	Adverse Proceedings
	Schedule 3.09

	 	Environmental Matters
	Schedule 3.11

	 	ERISA and Pension Plan Matters
	Schedule 3.12

	 	Subsidiaries
	Schedule 4.01

	 	Website Address






 









 





     GUARANTY AND UNDERTAKING AGREEMENT dated as of June 16, 2009 (this “Agreement”), by and among
THE GUARANTORS PARTY HERETO, each a debtor and debtor-in-possession under chapter 11 of the
Bankruptcy Code (the “Guarantors”), ABITIBI-CONSOLIDATED INC., a Canadian corporation and a company
operating pursuant to a proceeding under the CCAA (“ACI” and together with the Guarantors, the
“Obligors”), and CITIBANK, N.A., as agent for the Banks (the “Agent”).



INTRODUCTORY STATEMENT




     WHEREAS, ACI and each of the Guarantors is an Affiliate of Abitibi-Consolidated U.S. Funding
Corp., a Delaware corporation (the “Seller”); and



     WHEREAS, the Seller has entered into that certain Second Amended and Restated Receivables
Purchase Agreement dated as of June 16, 2009 (the “ARRPA”) among the Seller, Abitibi Consolidated
Sales Corporation, a Delaware corporation, as Servicer (“ACSC”), ACI, as Subservicer, the Agent and
the banks party thereto (the “Banks”).



     WHEREAS, in consideration of the financial and other support that the Seller has provided, and
such financial and other support as the Seller may in the future provide, to each Guarantor and to
ACI, each Guarantor and ACI is willing to enter into this Agreement;



     NOW, THEREFORE, in consideration of the premises and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Obligors agree as follows:



ARTICLE 1




Definitions




     SECTION 1.01. Definitions.



     (a) Terms Defined Herein. As used in this Agreement, the following terms shall have the
meanings specified below:



     “13-Week Projection” shall mean a cash flow forecast setting forth the projected combined cash
receipts and cash disbursements of the Abitibi Entities (other than Augusta Newsprint) and the
Seller on a weekly basis for the following 13 calendar weeks, in substantially the form previously
delivered to the Agent. As used herein, “13-Week Projection” shall refer to the most recent
13-Week Projection delivered by the Obligors in accordance with Section 4.04.



     “ABH” shall mean AbitibiBowater Inc., a Delaware corporation.



1









 





     “Abitibi DIP Term Facility” shall mean any debtor in possession term loan facility provided to
ACI or Donohue; provided that neither the Seller nor any Guarantor shall be liable in respect of
any portion thereof.



     “Abitibi Entity” shall mean each of ACI, Donohue and their respective Subsidiaries, other than
the Seller.



     “Abitibi Petitioner” shall have the meaning specified in the Canadian Initial Order.



     “ACI” shall have the meaning specified in the Preamble hereto.



     “ACSC” shall have the meaning specified in the Introductory Statement hereto.



     “Adverse Proceeding” shall mean any action, claim (including any environmental claims), suit,
charge, order, direction, proceeding, hearing (in each case, whether administrative, judicial or
otherwise), governmental investigation or arbitration (whether or not purportedly on behalf of any
Abitibi Entity) at law or in equity, or before or by any Governmental Authority, domestic or
foreign, whether pending or, to the knowledge of ACI or Donohue, threatened against or affecting
any Abitibi Entity or any property of any Abitibi Entity.



     “Affiliate” shall mean, with respect to any specified Person, any other Person that directly
or indirectly through one or more intermediaries, controls, or is controlled by, or is under common
control with, such specified Person. The term “control” shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or otherwise; provided
that, for purposes of Section 5.07, “control” shall also include the possession, directly or
indirectly, of the power to vote 10% or more of the securities having ordinary voting power for the
election of directors (or persons performing similar functions) of a Person, whether through the
ownership of voting securities, by contract or otherwise; “controlling” and “controlled” have
meanings correlative of the foregoing.



     “Agent” shall have the meaning specified in the Preamble hereto.



     “Applicable Date” shall have the meaning specified in Section 5.14.



     “ARRPA” shall have the meaning specified in the Introductory Statement hereto.



     “Asset Sale” shall mean a sale, lease or sub-lease (as lessor or sublessor), sale and
leaseback, assignment, conveyance, exclusive license (as licensor or sublicensor), transfer or
other disposition to, or any exchange of property with, any Person (other than the Seller or any
Guarantor), in one transaction or a series of transactions, of all or any part of any Abitibi
Entity’s businesses, assets or properties of any kind, whether real, personal, or mixed and whether
tangible or intangible, whether now owned or hereafter acquired, leased or licensed, including the
Equity Interests of any of ACI’s or Donohue’s Subsidiaries, other than inventory (or other assets)
sold, leased or licensed in the ordinary course of business. Notwithstanding the foregoing, none of
the following shall be deemed to be an Asset Sale:



2









 





     (1) any single transaction or series of related transactions that involves assets having a
fair market value of less than $5,000,000;



     (2) dispositions of leasehold improvements or leased assets in connection with the termination
of an operating lease;



     (3) transfers of assets between or among the Abitibi Entities;



     (4) sales or other dispositions of Cash Equivalents or obligations in settlement of Hedge
Agreements;



     (5) sales, transfers or other dispositions of the assets of Bridgewater or any of its
Subsidiaries in satisfaction of all or any portion of their respective obligations;



     (6) the creation of a Lien to the extent that the creation thereof is permitted under Section
5.01;



     (7) sales or other dispositions of assets constituting collateral under the Abitibi DIP Term
Facility pursuant to the exercise of remedies under the documents governing the Abitibi DIP Term
Facility;



     (8) dispositions of accounts receivable and other payment obligations in connection with the
compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or
similar proceedings, and transfers of accounts receivable, other payment obligations and related
assets in connection with credit insurance; and



     (9) sales or other dispositions of assets of any Subsidiary that is not a wholly-owned
Subsidiary.



     “Augusta Newsprint” shall mean Augusta Newsprint Company, a Georgia corporation.



     “Authorized Officer” shall mean, as applied to any Person, any individual holding the position
of chairman of the board (if an officer), chief executive officer, president or one of its vice
presidents (or the equivalent thereof), and such Person’s chief financial officer or treasurer.



     “Authorized Officer Certification” shall mean, with respect to the financial statements for
which such certification is required, the certification of the chief financial officer, treasurer
or assistant treasurer of ACI and the chief financial officer, treasurer or assistant treasurer of
Donohue that (i) such financial statements fairly present, in all material respects, the financial
condition of the Abitibi Entities, as at the dates indicated and the results of their operations
and their cash flows for the periods indicated, except, in the case of unaudited financial
statements, for the absence of footnotes and for normal year-end audit adjustments and (ii) no
Default or Event of Default has occurred and is continuing (provided, that each Authorized Officer
Certification delivered pursuant to Section 4.01(b) or 4.01(c) shall also include the computation
of Cumulative Consolidated EBITDAR for the applicable Fiscal Quarter or Fiscal Year).



     “Bankruptcy Code” shall mean the U.S. Bankruptcy Code (11 U.S.C. §§ 101 et seq.).



3









 





     “Bankruptcy Courts” shall mean, collectively, the Bankruptcy Court and the Canadian Court.



     “Banks” shall have the meaning specified in the Introductory Statement hereto.



     “Bowater Entities” shall mean, collectively, (a) ABH, (b) Bowater Incorporated and its
Subsidiaries and (c) Bowater Newsprint South LLC and its Subsidiaries.



     “Bridgewater” shall mean Bridgewater Paper Company Limited, a U.K. company limited by shares.



     “Canada Pension Plan” shall mean the public pension plan created pursuant to the Canada
Pension Plan, R.S. 1985, c. C-8.



     “Canadian Case” shall mean the case commenced on April 17, 2009 by ACI and certain of its
Subsidiaries pursuant to the CCAA in the Canadian Court.



     “Canadian GAAP” shall mean generally accepted accounting principles in Canada as in effect
from time to time.



     “Canadian Initial Order” means the Second Amended Initial Order made by the Canadian Court in
the Canadian Case on May 6, 2009 as amended on or prior to the date hereof.



     “Canadian Person” shall mean any Person that is organized under the laws of Canada or any
province or territory thereof.



     “Capital Expenditures” shall mean expenditures of a Person that are or should be included in
“purchase of property and equipment” or similar items reflected in the statement of cash flows of
such Person.



     “Capital Lease” shall mean, as applied to any Person, any lease of any property (whether real,
personal or mixed) by that Person as lessee that, in conformity with GAAP, is or should be
accounted for as a capital lease on the balance sheet of that Person.



     “Carve-Out” shall mean (a) all allowed professional fees and disbursements incurred by the
professionals retained, pursuant to sections 327, 328 or 1103(a) of the Bankruptcy Code, by the
Obligors and any statutory committee appointed in the US Cases and any disbursements of any member
of such committee in an aggregate amount not to exceed (i) $7,500,000 in the aggregate in respect
of professional fees and disbursements incurred following the occurrence and during the pendency of
an Event of Default or an event of default under any such other post-petition facility of any of
the Obligors (each a “Carve-Out Event”) plus (ii) professional fees and disbursements incurred
prior to the occurrence of a Carve-Out Event to the extent subsequently allowed plus (iii)
professional fees and disbursements incurred from and after the date on which the Carve-Out Event
is no longer continuing to the extent subsequently allowed and (b) quarterly fees required to be
paid pursuant to 28 U.S.C. § 1930(a)(6) and any fees payable to the Clerk of the Bankruptcy Court;
provided, however, that no portion of the Carve-Out shall be used to pay professional fees and
disbursements incurred in connection with (i) asserting any claims or causes of action against the
Agent, the Banks, the Syndication Agent or



4









 







the Seller or any of their respective successors and assigns and/or challenging or raising any
defense to the Guaranteed Obligations, the Superpriority Guaranty Claims or the Superpriority
Receivables Claims, (ii) asserting or prosecuting any action for preferences, fraudulent
conveyances, or other avoidance power claims against the Agent, the Banks, the Syndication Agent or
the Seller or any of their respective successors and assigns, (iii) objecting to or contesting the
true sale nature of the sale and/or contribution of the Transferred Receivables or (iv) objecting
to or contesting in any manner, or raising any defenses to, the validity, perfection, priority,
extent or enforceability of the Guaranteed Obligations under or in connection with the Transaction
Documents, provided further, however, that the Carve-Out may include professional fees and
disbursements for investigation of such claims, causes of action or defenses in an aggregate amount
not to exceed $50,000.



     “Cases” shall mean, collectively, the US Cases and the Canadian Case.



     “Cash Equivalents” shall mean, as at any date of determination, any of the following to the
extent readily monetized: (i) readily marketable securities (a) issued or directly and
unconditionally guaranteed as to interest and principal by the government of the United States of
America or the government of Canada or (b) issued by any agency or instrumentality of the
government of the United States of America or the government of Canada, the obligations of which
are backed by the full faith and credit of such government, in each case maturing within one year
after the date of acquisition thereof; (ii) readily marketable direct obligations issued by any
state of the United States of America or any province of Canada, or any political subdivision of
any such state or province or any public instrumentality thereof, in each case maturing within one
year after such date and having a rating of at least A-1 from S&P or P-1 from Moody’s; (iii)
insured demand deposits, time deposits or certificates of deposit maturing within one year after
the date of acquisition thereof (in the case of time deposits or certificates of deposit) of (1)
any commercial bank that (A) is a member of the Federal Reserve System, (B) issues (or the parent
of which issues) commercial paper rated as described in clause (v), (C) is organized under the laws
of the United States of America or any state thereof and (D) has combined capital and surplus of at
least $500,000,000 or (2) any bank listed on Schedule I of the Bank Act (Canada) that has Tier 1
capital (as defined in OSFI Guideline A-1 on Capital Adequacy Requirements) of not less than
$500,000,000; (iv) repurchase obligations, having a term of not more than ten days, with respect to
underlying securities of the types described in clauses (i) entered into with any commercial bank
satisfying the requirements of clause (iii); (v) commercial paper issued by a Person organized
under the laws of any state of the United States of America or Canada maturing no later than the
Business Day prior to the first Settlement Date (Yield and Fees) following the date of purchase and
having a rating of at least A-1 from S&P and at least P-1 from Moody’s; and (vi) shares of any no
load money market mutual fund (A) having a rating from each rating agency rating such fund in its
highest investment category and (B) having substantially all of its assets invested continuously in
the types of investments referred to in clauses (i), (ii) and (iii) above (including such funds for
which the Agent or any of its Affiliates is investment manager or advisor).



     “Change of Control” shall mean, at any time, (a) any Person or “group” (within the meaning of
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934) (i) shall have acquired beneficial
ownership of 35% or more on a fully diluted basis of the voting and/or economic interest in the
Equity Interests of ABH or (ii) shall have obtained the power (whether



5









 







or not exercised) to elect a majority of the members of the board of directors (or similar
governing body) of ABH; (b) ABH shall cease to beneficially own and control directly 100% on a
fully diluted basis of the economic and voting interest in the Equity Interests of ACI; provided
that for purposes of this clause (b), the exchangeable shares issued by AbitibiBowater Canada Inc.
(f/k/a Bowater Canada, Inc.) outstanding on April 1, 2008 shall be deemed to have been exchanged
for Equity Interests of ABH; (c) ACI shall cease to beneficially own and control directly 100% on a
fully diluted basis of the economic and voting interest in the Equity Interests of
Abitibi-Consolidated Company of Canada; (d) ABH (or any wholly owned Subsidiary of ABH that is
organized under the laws of any state of the United States but is not Bowater Incorporated or any
Subsidiary thereof) shall cease to collectively and beneficially own and control directly 100% on a
fully diluted basis of the economic and voting interest in the Equity Interests of Donohue; (e)
Donohue shall cease to beneficially own and control, directly or indirectly, 100% on a fully
diluted basis of the economic and voting interest in the Equity Interests of each of its
Subsidiaries that is a Guarantor; or (f) the majority of the seats (other than vacant seats) on the
board of directors (or similar governing body) of ABH cease to be occupied by Persons who either
(i) were members of the board of directors of ABH on the Effective Date or (ii) were nominated for
election by the board of directors of ABH, a majority of whom were directors on the Effective Date
or whose election or nomination for election was previously approved by a majority of such
directors.



     “Chapter 11 Cases” shall mean the proceedings under chapter 11 of the Bankruptcy Code
commenced by the Guarantors on the Petition Date.



     “Chapter 15 Case” shall mean the case filed on April 19, 2009 by ACI and certain of its
Subsidiaries in the Bankruptcy Court under chapter 15 of the Bankruptcy Code.



     “Combined Capital Expenditures” shall mean an amount equal to the sum, without duplication, of
(a) Consolidated Capital Expenditures of ACI and its Subsidiaries plus (b) Consolidated Capital
Expenditures of Donohue and its Subsidiaries.



     “Commodity Agreement” shall mean any commodity exchange contract, commodity swap agreement,
futures contract, option contract, synthetic cap or other similar agreement or arrangement, each of
which is for the purpose of hedging the commodity risk associated with the Abitibi Entities’
operations and not for speculative purposes.



     “Consolidated Capital Expenditures” shall mean, for any period, the aggregate of all
expenditures of a Person and its Subsidiaries during such period determined on a consolidated basis
that, in accordance with GAAP, are or should be included in “purchase of property and equipment” or
similar items reflected in the consolidated statement of cash flows of such Person and its
Subsidiaries.



     “Consolidated EBITDAR” shall mean, with respect to the Abitibi Entities for any period, the
sum, without duplication, of:




     (a) Consolidated Net Income for such period (after giving effect to the proviso to the
definition of “Consolidated Non-Cash Charges”), plus



6









 






     (b) to the extent such Consolidated Net Income for such period has been reduced
thereby,




     (i) all income taxes paid or accrued during such period,




     (ii) Consolidated Interest Expense for such period,




     (iii) Consolidated Non-Cash Charges for such period,




     (iv) the amount of any minority interest expense consisting of Subsidiary
income attributable to minority equity interests of third parties in any non-wholly
owned Subsidiary,




     (v) (A) any costs, fees, expenses or disbursements of attorneys, consultants or
advisors to the Abitibi Entities, in each case, incurred in connection with the
ongoing administration of the Cases and the negotiation, execution and documentation
of the Transaction Documents, together with any such costs, fees, expenses or
disbursements paid to the attorneys, consultants and advisors of the agents and
lenders in connection therewith and (B) any upfront, arrangement or other fees paid
by the Obligors in connection with the Facility, in each case for such period, minus




     (c) to the extent such Consolidated Net Income for such period has been increased
thereby, Consolidated Non-Cash Gains for such period.



     “Consolidated Interest Expense” shall mean, with respect to the Abitibi Entities and for any
period, the sum, without duplication, of (a) the interest expense (including (i) imputed interest
expense in respect of Capital Leases and (ii) “yield” expense and fee expense incurred as a result
of the transactions pursuant to the ARRPA) of the Abitibi Entities for such period, determined on a
combined basis and otherwise in accordance with GAAP and (b) any interest accrued during such
period, in respect of Indebtedness of any Abitibi Entity, that is required under GAAP to be
capitalized rather than included in consolidated (or combined) interest expense for such period.



     “Consolidated Net Income” shall mean, with respect to the Abitibi Entities, for any period,
net income (or loss) determined on a combined basis in accordance with GAAP for such period;
provided that there shall be excluded therefrom (but only to the extent included in the calculation
of the foregoing):




     (a) gains or losses from disposals, asset impairments or reversal of impairments or
abandonments or reserves relating thereto;




     (b) gains or losses on foreign currency translation in connection with the
remeasurement of balance sheet assets and liabilities;




     (c) items classified as extraordinary gains or losses; and



7









 






     (d) the net income or loss of any Person that is not a Subsidiary of ACI or Donohue,
except to the extent of cash dividends or distributions paid to ACI, Donohue or to a
Subsidiary.



     “Consolidated Non-Cash Charges” shall mean, with respect to the Abitibi Entities, for any
period, the aggregate depreciation, amortization and other non-recurring non-cash expenses reducing
Consolidated Net Income for such period (provided that if any such other non-recurring non-cash
expense represents a reserve or similar provision for cash expenditures in a future period, such
cash expenditures shall be deducted from Consolidated Net Income in the determination of
Consolidated EBITDAR for the period in which such cash expenditures are made).



     “Consolidated Non-Cash Gains” shall mean, with respect to the Abitibi Entities, for any
period, the aggregate non-recurring non-cash items increasing Consolidated Net Income for such
period (excluding (i) the accrual of revenue consistent with past practice and (ii) the reversal in
such period of an accrual of, or cash reserve for, cash expenses in a prior period, to the extent
such accrual or reserve did not increase Consolidated EBITDAR in a prior period).



     “Contractual Obligation” shall mean, as applied to any Person, any obligation of such Person
under any Security issued by that Person or any indenture, mortgage, deed of trust, lease,
contract, undertaking, agreement or other instrument to which that Person is a party or by which it
or any of its properties is bound or to which it or any of its properties is subject.



     “Currency Agreement” shall mean any foreign exchange contract, currency swap agreement,
futures contract, option contract, synthetic cap or other similar agreement or arrangement, each of
which is for the purpose of hedging the foreign currency risk associated with the Abitibi Entities’
operations and not for speculative purposes.



     “Default” shall mean a condition or event that constitutes an Event of Default or which, after
notice or lapse of time or both, would become, unless cured or waived, an Event of Default.



     “Disqualified Equity Interests” shall mean any Equity Interest which, by its terms (or by the
terms of any security or other Equity Interests into which it is convertible or for which it is
exchangeable) or upon the happening of any event or condition, (a) matures or is mandatorily
redeemable (other than solely for Equity Interests which are not otherwise Disqualified Equity
Interests), pursuant to a sinking fund obligation or otherwise, (b) is redeemable at the option of
the holder thereof (other than solely for Equity Interests which are not otherwise Disqualified
Equity Interests), in whole or in part, (c) provides for the scheduled payments or dividends in
cash or (d) is or becomes convertible into or exchangeable for Indebtedness or any other Equity
Interests that would constitute Disqualified Equity Interests, except, in the case of clauses (a)
and (b), if as a result of a change of control or asset sale, so long as any rights of the holders
thereof upon the occurrence of such a change of control or asset sale event are subject to the
prior payment in full of all Guaranteed Obligations.



     “Donohue” shall mean Donohue Corp., a Delaware corporation.



     “Effective Date” shall mean June 16, 2009.



8









 





     “Employee Benefit Plan” shall mean (a) in respect of any Abitibi Entity that is a US Person,
any “employee benefit plan” as defined in Section 3(3) of ERISA which is or was sponsored,
maintained or contributed to by, or required to be contributed by any Abitibi Entity or any of
their respective ERISA Affiliates in the preceding six calendar years, and (b) in respect of any
Abitibi Entity that is a Canadian Person, any employee benefit plan of any nature or kind that is
not a Pension Plan and is maintained by or contributed to, or required to be maintained by or
contributed to, by any Abitibi Entity that is a Canadian Person.



     “Environmental Claim” shall mean any written notice of investigation, notice of violation,
claim, action, suit, charge, proceeding, demand, abatement order or other order or directive
(conditional or otherwise), by any Governmental Authority or any other Person, arising (a) pursuant
to or in connection with any Environmental Law or any actual or alleged violation of any
Environmental Law; (b) in connection with any Hazardous Material or any actual or alleged Hazardous
Materials Activity; or (c) in connection with any actual or alleged damage, injury, threat or harm
to worker health and safety, natural resources or the environment.



     “Environmental Laws” shall mean any and all foreign or domestic, federal (U.S. or Canadian),
state, provincial or municipal or any subdivision of any of them laws (including the common law),
statutes, ordinances, orders, rules, regulations, judgments, Governmental Authorizations, and any
other Laws or any other requirements of Governmental Authorities relating to: (a) environmental
matters, including those relating to any Hazardous Materials Activity and endangered or threatened
species; (b) the use, manufacture, possession, storage, holding, presence, existence, location,
Release, threatened Release, discharge, placement, generation, transportation, processing,
construction, treatment, abatement, removal, remediation, management, control, containment,
disposal, disposition or handling of any Hazardous Materials, and any corrective action or response
action with respect to any of the foregoing; (c) any actual or alleged damage, injury, threat or
harm to worker health and safety, natural resources or the environment or the preservation or
reclamation of natural resources or the environment; (d) forestation; or (e) occupational safety
and health, industrial hygiene, land use or the protection of human, plant or animal health or
welfare; in each case, in any manner applicable to any Abitibi Entity or any Property.



     “Equity Interests” shall mean any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all equivalent
ownership interests in a Person (other than a corporation), including partnership interests and
membership interests, and any and all warrants, rights or options to purchase or other arrangements
or rights to acquire any of the foregoing.



     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time
to time, and any successor thereto.



     “ERISA Affiliate” shall mean, as applied to any Person, (a) any corporation which is a member
of a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue
Code of which that Person is a member; (b) any trade or business (whether or not incorporated)
which is a member of a group of trades or businesses under common control within the meaning of
Section 414(c) of the Internal Revenue Code of which that Person is a member; and (c) any member of
an affiliated service group within the meaning of Section



9









 




414(m) or (o) of the Internal Revenue Code of which that Person, any corporation described in
clause (a) above or any trade or business described in clause (b) above is a member. Any former
ERISA Affiliate of any Abitibi Entity shall continue to be considered an ERISA Affiliate of such
Abitibi Entity within the meaning of this definition with respect to the period such entity was an
ERISA Affiliate of such Abitibi Entity and with respect to liabilities arising after such period
for which such Abitibi Entity could be liable under the Internal Revenue Code or ERISA.




     “ERISA Event” shall mean, with respect to any Abitibi Entity that is a US Person, (a) a
“reportable event” within the meaning of Section 4043 of ERISA and the regulations issued
thereunder with respect to any Pension Plan (excluding those for which the provision for 30-day
notice to the PBGC has been waived by regulation); (b) the failure to meet the minimum funding
standard of Section 412 or Section 430, as applicable, of the Internal Revenue Code with respect to
any Pension Plan (whether or not waived in accordance with Section 412(c) of the Internal Revenue
Code) or the failure to make by its due date a required installment under Section 430(j) of the
Internal Revenue Code with respect to any Pension Plan or the failure to make any required
contribution to a Multiemployer Plan; (c) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress
termination described in Section 4041(c) of ERISA; (d) the withdrawal by any Abitibi Entity or any
of their respective ERISA Affiliates from any Pension Plan with two or more contributing sponsors
or the termination of any such Pension Plan resulting in either case in liability to any Abitibi
Entity or any of their respective Affiliates pursuant to Section 4063 or 4064 of ERISA; (e) the
institution by the PBGC of proceedings to terminate any Pension Plan under Section 4042(a)(1)-(3)
of ERISA; (f) the imposition of liability on any Abitibi Entity or any of their respective ERISA
Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section
4212(c) of ERISA; (g) the withdrawal of any Abitibi Entity or any of their respective ERISA
Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of
ERISA) from any Multiemployer Plan if there is any potential liability therefor, or the receipt by
any Abitibi Entity or any of their respective ERISA Affiliates of notice from any Multiemployer
Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that
it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (h) the occurrence
of an act or omission which could give rise to the imposition on any Abitibi Entity or any of their
respective ERISA Affiliates of fines, penalties, taxes or related charges under Chapter 43 of the
Internal Revenue Code or under Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in
respect of any Employee Benefit Plan; (i) the assertion of a material claim (other than routine
claims for benefits) against any Employee Benefit Plan other than a Multiemployer Plan or the
assets thereof, or against any Abitibi Entity or any of their respective ERISA Affiliates in
connection with any Employee Benefit Plan; (j) receipt from the Internal Revenue Service of notice
of the failure of any Pension Plan (or any other Employee Benefit Plan intended to be qualified
under Section 401(a) of the Internal Revenue Code) to qualify under Section 401(a) of the Internal
Revenue Code, or the failure of any trust forming part of any Pension Plan to qualify for exemption
from taxation under Section 501(a) of the Internal Revenue Code; or (k) the imposition of a lien
pursuant to Section 430(k) of the Internal Revenue Code or ERISA or a violation of Section 436 of
the Internal Revenue Code.



     “Event of Default” shall have the meaning set forth in Article 6.



10









 





     “Facility” shall mean the accounts receivable purchase facility made available to the Seller
pursuant to the Transaction Documents.



     “Fiscal Quarter” shall mean a fiscal quarter of any Fiscal Year.



     “Fiscal Year” shall mean the fiscal year of the Abitibi Entities ending on December 31 of each
calendar year.



     “GAAP” shall mean, for any period prior to January 1, 2009, Canadian GAAP and, for any period
commencing on or after January 1, 2009, US GAAP.



     “Governmental Authority” shall mean any nation or government, any state or other political
subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative
tribunal, central bank or other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government.



     “Governmental Authorization” shall mean any permit, license, approval, authorization, plan,
directive, consent order or consent decree or other like instrument of or from or required by any
Governmental Authority.



     “Guarantee” by any Person (the “guarantor”) shall mean any obligation, contingent or
otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any
Indebtedness of any other Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or
pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other
obligation or to purchase (or advance or supply funds for the purchase of) any security for the
payment thereof, (b) to purchase or lease property, securities or services for the purpose of
assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or liquidity of the
primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or
(d) as an account party in respect of any letter of credit or letter of guaranty issued to support
such Indebtedness or other obligation; provided that the term “Guarantee” shall not include
endorsements for collection or deposit in the ordinary course of business.



     “Guaranteed Obligations” shall mean all payment obligations of the Seller under the
Transaction Documents, including without limitation, payment of the Termination Amount and all
Indemnified Amounts.



     “Guarantors” shall have the meaning specified in the Preamble hereto.



     “Hazardous Materials” shall mean any chemical, material, substance or waste, exposure to which
is prohibited, limited or regulated by any Governmental Authority or which may or could pose a
hazard or cause an adverse effect to the health and safety of the owners, occupants or any Persons
or property in the vicinity of any Property or to the indoor or outdoor environment, including
asbestos, petroleum (or any breakdown constituents), dioxin, pentachlorophenol and polychlorinated
biphenyls.



11









 





     “Hazardous Materials Activity” shall mean any past, current, proposed or threatened activity,
event or occurrence involving any Hazardous Materials, including the use, manufacture, possession,
storage, holding, presence, existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment, abatement, removal, remediation,
disposal, disposition or handling of any Hazardous Materials, and any corrective action or response
action with respect to any of the foregoing.



     “Hedge Agreement” shall mean an Interest Rate Agreement, a Commodity Agreement or a Currency
Agreement.



     “Historical Financial Statements” shall mean (x) the consolidated financial statements of ACI
and its Subsidiaries for Fiscal Year 2007 and Fiscal Year 2006 and (y) the combined financial
statements of the Abitibi Entities for Fiscal Year 2008, in each case certified by an Authorized
Officer that they fairly present, in all material respects, the financial condition of ACI and its
Subsidiaries or the Abitibi Entities, as the case may be, as at the dates indicated and the results
of their operations and their cash flows for the periods indicated.



     “Indebtedness” shall mean, as applied to any Person, without duplication, (a) all indebtedness
for borrowed money; (b) that portion of obligations with respect to Capital Leases that is properly
classified as a liability on a balance sheet in conformity with GAAP; (c) notes payable and drafts
accepted representing extensions of credit whether or not representing obligations for borrowed
money; (d) any obligation owed for all or any part of the deferred purchase price of property or
services, including any earn-out obligations (excluding any such obligations incurred under ERISA),
which purchase price is (i) due more than six months from the date of incurrence of the obligation
in respect thereof or (ii) evidenced by a note or similar written instrument; (e) all indebtedness
secured by any Lien (other than Liens permitted under Section 5.01(u)) on any property or asset
owned or held by that Person regardless of whether the indebtedness secured thereby shall have been
assumed by that Person or is nonrecourse to the credit of that Person, provided that the amount of
any such Indebtedness that is nonrecourse to the credit of that Person shall be determined to be
the lesser of (i) the amount of such Indebtedness and (ii) the value of the property or assets
subject to such Lien; (f) the undrawn amount of any letter of credit or banker’s acceptance issued
or accepted, as the case may be, for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or otherwise; (g) Disqualified Equity Interests; (h)
the direct or indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another; (i) any obligation of such Person the primary purpose or
intent of which is to provide assurance to an obligee that the obligation of the obligor thereof
will be paid or discharged, or any agreement relating thereto will be complied with, or the holders
thereof will be protected (in whole or in part) against loss in respect thereof; (j) any liability
of such Person for an obligation of another through any agreement (contingent or otherwise) (A) to
purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide
funds for the payment or discharge of such obligation (whether in the form of loans, advances,
stock purchases, capital contributions or otherwise) or (B) to maintain the solvency or any balance
sheet item, level of income or financial condition of another if, in the case of any agreement
described under subclauses (A) or (B) of this clause (j), the primary purpose or intent thereof is
as described in clause (i) above; and (k) all obligations of such Person in respect of any exchange
traded or over



12









 







the counter derivative transaction, including any Hedge Agreement, in each case, whether
entered into for hedging or speculative purposes.



     “Interest Rate Agreement” shall mean any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedging agreement or other similar
agreement or arrangement, each of which is for the purpose of hedging the interest rate exposure
associated with the Abitibi Entities’ operations and not for speculative purposes.



     “Internal Revenue Code” shall mean the U.S. Internal Revenue Code of 1986, as amended to the
date hereof and from time to time hereafter, and any successor statute.



     “Investment” means, as to any Person, any direct or indirect acquisition or investment by such
Person, whether by means of (a) the purchase or other acquisition of Securities of another Person,
(b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or equity participation or interest in, another Person,
including any partnership or joint venture interest in such other Person and any arrangement
pursuant to which the investor Guarantees Indebtedness of such other Person, or (c) the purchase or
other acquisition (in one transaction or a series of transactions) of assets of another Person that
constitute a business unit. For purposes of covenant compliance, the amount of any Investment
shall be the amount actually invested, without adjustment for subsequent increases or decreases in
the value of such Investment.



     “Laws” shall mean, as to any Person, collectively, all applicable international, foreign,
federal (U.S. or Canadian), state, provincial and local statutes, treaties, rules, guidelines,
regulations, ordinances, codes and administrative or judicial precedents or authorities, including
the interpretation or administration thereof by any Governmental Authority charged with the
enforcement, interpretation or administration thereof, and all applicable administrative orders,
directed duties, requests, licenses, authorizations and permits of, and agreements with, any
Governmental Authority, in each case binding on such Person or to which such Person or any of its
property or assets is subject.



     “Lien” shall mean any lien, mortgage, hypothec, pledge, assignment, security interest, charge
or encumbrance of any kind (including any agreement to give any of the foregoing, any conditional
sale or other title retention agreement, and any lease or license in the nature thereof) and any
option, trust or other preferential arrangement having the practical effect of any of the
foregoing.



     “Liquidity” shall mean, on any date of determination, the sum of (a) the Dollar Equivalent of
the combined amount of Unrestricted Cash of the Abitibi Entities on such date (excluding, however,
any such Unrestricted Cash of the Abitibi Entities that are not Canadian Persons or US Persons)
plus (b) the Securitization Availability on such date plus (c) the principal amount
of loans available to be borrowed under the Abitibi DIP Term Facility on such date.



     “Material Adverse Effect” shall mean (A) a material adverse effect on (i) the financial
condition, business, operations, assets, liabilities or prospects of the Abitibi Entities taken as
a whole, (ii) the ability of ACI or any Guarantor to perform any of its obligations under any of
the Transaction Documents to which it is a party or (iii) the legality, validity or enforceability
of the



13









 







Transaction Documents (including, without limitation, the validity, enforceability or priority
of the ownership or security interests granted thereunder) or (B) a material impairment of the
rights or remedies of the Agent or the Banks under any of the Transaction Documents; provided that
a Material Adverse Effect shall not be deemed to exist as a result of the Bankruptcy Case and the
Canadian Case or the effect thereof or the circumstances and events leading up thereto.



     “Moody’s” shall mean Moody’s Investors Service, Inc. and any successor thereto.



     “Multiemployer Plan” shall mean any Employee Benefit Plan which is a “multiemployer plan” as
defined in Section 3(37) of ERISA.



     “Narrative Report” shall mean, with respect to the financial statements for which such
narrative report is required, a narrative report describing the operations of the Abitibi Entities
in the form prepared for presentation to senior management thereof for the applicable Fiscal Year.



     “Non-Public Information” shall mean information which has not been disseminated in a manner
making it available to investors generally, within the meaning of Regulation FD.



     “Obligors” shall have the meaning specified in the Preamble hereto.



     “Organizational Documents” shall mean (a) with respect to any corporation or company, its
certificate, articles or memorandum of incorporation, organization, association or amalgamation,
its letters patent or other constating documents, in each case, as amended, and its by-laws, if
any, as amended, (b) with respect to any limited partnership, its certificate or declaration of
limited partnership, as amended, and its partnership agreement, as amended, (c) with respect to any
general partnership, its partnership agreement, as amended and (d) with respect to any limited
liability company, its articles of organization, as amended, and its operating or incorporation
agreement, as amended. In the event any term or condition of this Agreement or any other
Transaction Document requires any Organizational Document to be certified by a secretary of state
or similar governmental official, the reference to any such “Organizational Document” shall only be
to a document of a type customarily certified by such governmental official.



     “PATRIOT Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001).



     “PBGC” shall mean the Pension Benefit Guaranty Corporation or any successor thereto.



     “PCTFA” the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada).



     “Pension Plan” shall mean, (a) in respect of any Abitibi Entity that is a US Person, any
Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Title IV of ERISA and
is subject to Section 412 of the Internal Revenue Code or Section 302 of ERISA, and (b) in respect
of any Abitibi Entity that is a Canadian Person, each pension, supplementary pension, retirement
savings or other retirement income plan or arrangement of any kind, registered or



14









 







non-registered, established, maintained or contributed to by such Abitibi Entity in respect of
its employees or former employees, but does not include the Canada Pension Plan or the Québec
Pension Plan.



     “Person” shall mean any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other entity.



     “Pre-Petition Payment” shall mean a payment by an Abitibi Entity that is a party to any of the
Cases (by way of adequate protection or otherwise) of principal or interest on, or otherwise on
account of, any Indebtedness of any Abitibi Entity that is a party to any of the Cases existing on
the Petition Date.



     “Projections” shall have the meaning specified in Section 3.06(a).



     “Property” shall mean any real property (including all buildings, fixtures or other
improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by any
Abitibi Entity or any of their respective predecessors or Affiliates.



     “Québec Pension Plan” shall mean the public pension plan created pursuant to An Act respecting
the Québec Pension Plan, R.S.Q. C.R-9.



     “RCRA” shall mean the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et. seq.).



     “Release” shall mean any release, spill, emission, leaking, pumping, pouring, injection,
escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous
Material into the indoor or outdoor environment (including the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous Material) or the movement
of any Hazardous Material through the air, soil, surface water or groundwater.



     “Reorganization Plan” shall mean a plan of reorganization in any of the US Cases or a plan of
compromise or arrangement in the Canadian Case.



     “Restricted Junior Payment” shall mean (a) any dividend or other distribution, direct or
indirect, on account of any shares of any class of stock of ACI or Donohue now or hereafter
outstanding, except a dividend payable solely in shares of that class of stock to the holders of
that class; (b) any redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of stock of ACI or Donohue
now or hereafter outstanding; (c) any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any class of stock of ACI or
Donohue (or any direct or indirect parent thereof) now or hereafter outstanding; and (d) any
payment or prepayment of principal of, premium, if any, or interest on, or redemption, purchase,
retirement, defeasance (including in-substance or legal defeasance), sinking fund or similar
payment with respect to, (i) any pre-petition Indebtedness or (ii) any Indebtedness that is
subordinated to (or that is required to be subordinated to) the Guaranteed Obligations.



15









 





     “S&P” shall mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies,
Inc. and any successor thereto.



     “Securities” shall mean any stock, shares, partnership interests, voting trust certificates,
certificates of interest or participation in any profit-sharing agreement or arrangement, options,
warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any instruments commonly known as
“securities” or any certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire,
any of the foregoing.



     “Securitization Availability” shall mean, on any date of determination, (a) the lesser of (i)
Collateral Availability and (ii) the Purchase Limit, minus (b) the aggregate outstanding Capital of
Receivable Interests.



     “Subsidiary” shall mean with respect to any Person, (a) a corporation a majority of the voting
Equity Interests of which are at the time, directly or indirectly, owned by such Person; or (b) any
other Person (other than a corporation), including, a partnership, limited liability company,
business trust or joint venture, in which such Person, at the time thereof, directly or indirectly,
has at least a majority ownership interest entitled to vote in the election of directors, managers
or trustees thereof (or other Person performing similar functions). Unless otherwise qualified,
all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary
or Subsidiaries of ACI or Donohue.



     “Superpriority Claim” shall mean a claim against any Guarantor or any of their Subsidiaries in
any of the US Cases which is an administrative expense claim having priority over any or all
administrative expenses of the kind specified in Sections 503(b) or 507(b) of the Bankruptcy Code.



     “Tax” shall mean any present or future tax, levy, impost, duty, assessment, charge, fee,
deduction or withholding of any nature and whatever called (including any GST or PST), including
any interest, additions to tax or penalties thereto, by whomsoever, on whomsoever and wherever
imposed, levied, collected, withheld or assessed; provided that, “Tax on the overall net income” of
a Person shall be construed as a reference to a tax imposed by the jurisdiction in which that
Person is organized or in which that Person’s applicable principal office is located or in which
that Person is deemed to be doing business on all or part of the net income, profits or gains
(whether worldwide, or only insofar as such income, profits or gains are considered to arise in or
to relate to a particular jurisdiction, or otherwise) of that Person.



     “Transferred Receivables” shall have the meaning specified in the Originator Purchase
Agreement.



     “UCC” shall mean the personal property security laws as from time to time in effect in any
applicable United States jurisdiction which govern the validity, perfection (or opposability),
effect of perfection or of non-perfection or priority of security interests.



16









 





     “Unrestricted Cash” shall mean cash and Cash Equivalents that would not appear in the combined
financial statements of the Abitibi Entities, prepared on a combined basis and otherwise in
accordance with GAAP, as a line item on the balance sheet as “restricted cash” or similar caption.



     “US Cases” shall mean, collectively, the Chapter 11 Cases and the Chapter 15 Case.



     “US GAAP” shall mean generally accepted accounting principles in the United States of America
as in effect from time to time.



     “US Person” shall mean any Person that is organized under the laws of the United States or any
state thereof.



     “US Subsidiary” shall mean each Subsidiary that is a US Person.



     (b) Terms Defined in the ARRPA. As used in this Agreement, the following terms shall have the
meanings set forth in the ARRPA:


Adequate Protection Claims

Bankruptcy Code

Bankruptcy Court

Business Day

CAD

Canadian Amended Order

Canadian Court

Canadian Dollar Equivalent

Capital

CCAA

Collateral

Collateral Availability

Collections

Dollars

Dollar Equivalent

Eligible Assignee

GST

Indemnified Amounts

Indemnified Party

Insurance Policy

Insurance Policy Event

Majority Banks

Originator

Originator Purchase Agreement

Originator Receivable

Petition Date

PPSA

PST

Purchase Limit




17









 







Receivable

Receivable Interest

Related Security

Securitization Provisions

Settlement Date (Yield and Fees)

Superpriority Guaranty Claims

Superpriority Receivables Claims

Syndication Agent

Termination Amount

Transaction Documents

US Final Order

US Interim Order

Yield




     SECTION 1.02. Terms Generally. Except where the context requires otherwise, the definitions
in Section 1.01 shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding masculine, feminine
and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed
by the phrase “without limitation”. Unless otherwise stated, references to Sections, Articles,
Schedules and Exhibits made herein are to Sections, Articles, Schedules or Exhibits, as the case
may be, of this Agreement. “Writing”, “written” and comparable terms refer to printing, typing and
other means of reproducing words in a visible form. References to any agreement or contract are to
such agreement or contract as amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof. References to any Person include the successors and permitted
assigns of such Person. References “from” or “through” any date mean, unless otherwise specified,
“from and including” or “through and including”, respectively. Unless otherwise stated, references
herein to any Dollar amount shall include a reference to the Canadian Dollar Equivalent thereof.



ARTICLE 2




Guarantees




     SECTION 2.01. The Guarantees. Each Guarantor hereby unconditionally guarantees the full and
punctual payment (whether at stated maturity, upon acceleration or otherwise) of the Guaranteed
Obligations. Upon failure by the Seller to pay punctually any amounts in respect of the Guaranteed
Obligations, the Guarantors shall forthwith on demand pay the amount not so paid at the place and
in the manner specified in the ARRPA.



     SECTION 2.02. Guarantee Unconditional. The obligations of each Guarantor hereunder shall be
unconditional and absolute and, without limiting the generality of the foregoing, shall not be
released, discharged or otherwise affected by:



     (a) any extension, renewal, settlement, compromise, waiver or release in respect of any
obligation of the Seller under any Transaction Document, by operation of law or otherwise;



18









 





     (b) any modification or amendment of or supplement to any Transaction Document;



     (c) any release, impairment, non-perfection or invalidity of any direct or indirect security
for any obligation of the Seller, any Guarantor or any other Person under any Transaction Document;



     (d) any change in the corporate existence, structure or ownership of the Seller, any Guarantor
or any other Person or any of their respective subsidiaries, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Seller, any Guarantor or any other Person
or any of their assets or any resulting release or discharge of any obligation of the Seller, any
Guarantor or any other Person under any Transaction Document;



     (e) the existence of any claim, set off or other right that such Guarantor may have at any
time against the Seller, any Guarantor, any Bank or any other Person, whether in connection with
the Transaction Documents or any unrelated transactions; provided that nothing herein shall prevent
the assertion of any such claim by separate suit or compulsory counterclaim;



     (f) any invalidity or unenforceability relating to or against the Seller, any Guarantor or any
other Person for any reason of any Transaction Document, or any provision of applicable law or
regulation purporting to prohibit the payment of the Guaranteed Obligations by the Seller, any
Guarantor or any other Person; or



     (g) any other act or omission to act or delay of any kind by the Seller, any Guarantor, any
other party to any Transaction Document, any Bank or any other Person, or any other circumstance
whatsoever that might, but for the provisions of this clause (g), constitute a legal or equitable
discharge of or defense to any obligation of any Guarantor hereunder.



     SECTION 2.03. Discharge Only Upon Payment In Full; Reinstatement In Certain Circumstances.



     (a) Each Guarantor’s obligations hereunder shall remain in full force and effect until all
Guaranteed Obligations shall have been paid in full. If at any time any payment of any Guaranteed
Obligation is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy
or reorganization of the Seller or otherwise, the Guarantors’ obligations hereunder with respect to
such payment shall be reinstated as though such payment had been due but not made at such time.



     (b) Each Guarantor agrees that (i) its obligations under this Agreement shall not be
discharged by the entry of an order confirming a Reorganization Plan (and each of the Guarantors,
pursuant to Section 1141(d)(4) of the Bankruptcy Code, hereby waives any such discharge) and (ii)
the Superpriority Guaranty Claims granted to the Agent and the Banks pursuant to the US Interim
Order (or the US Final Order, as applicable) shall not be affected in any manner by the entry of an
order confirming a Reorganization Plan in any of the Cases.



     SECTION 2.04. Waiver By Guarantors. Each Guarantor irrevocably waives acceptance hereof,
diligence, presentment, demand, protest and any notice not provided for herein, as well as



19









 







any requirement that at any time any action be taken by any Person or entity against the
Guarantor, the Seller, any Guarantor or any other Person or entity.



     SECTION 2.05. Subrogation. A Guarantor that makes a payment with respect to a Guaranteed
Obligation or by reason of contribution against any other guarantor of such Guaranteed Obligation
hereunder shall be subrogated to the rights of the payee against the Seller with respect to such
payment; provided that no Guarantor shall enforce any payment by way of subrogation against the
Seller so long as any Guaranteed Obligation remains unpaid.



     SECTION 2.06. Stay Of Acceleration. If acceleration of the time for payment of any
Guaranteed Obligation is stayed upon the insolvency, bankruptcy or reorganization of the Seller,
all such Guaranteed Obligations otherwise subject to acceleration under the terms of the
Transaction Documents shall nonetheless be payable by the Guarantors hereunder forthwith on demand
by the Banks.



     SECTION 2.07. Payments. All payments made by any Guarantor pursuant to this Article 2 shall
be made to the Agent for the ratable benefit of the Banks.



ARTICLE 3




Representations And Warranties Of The Obligors




     Each Obligor represents and warrants, to the Agent and the Banks that:



     SECTION 3.01. Existence, Qualification And Power; Compliance With Laws. Each Abitibi Entity
(a) is a Person duly organized or formed, validly existing and in good standing, in each case where
such concept exists, under the Laws of the jurisdiction of its incorporation or organization,
except, in the case of an Abitibi Entity that is not the Seller or an Obligor, to the extent
failure to be duly organized or formed and in good standing would not be reasonably expected to
have a Material Adverse Effect, (b) subject to the entry by the Bankruptcy Court of (x) the US
Interim Order at any time prior to the entry of the US Final Order and (y) the US Final Order
thereafter, and subject to the entry by the Canadian Court of the Canadian Amended Order, and in
each such case, subject to the terms thereof, has all requisite constitutional, corporate or other
similar power and authority to (i) own or lease its material assets and carry on its business
substantially as currently conducted and (ii) execute, deliver and perform its obligations under
the Transaction Documents to which it is a party, except, in the case of clause (b)(i), to the
extent that failure to have any requisite power or authority would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, (c) subject to the entry by
the Bankruptcy Court of (x) the US Interim Order at any time prior to the entry of the US Final
Order and (y) the US Final Order thereafter, and subject to the entry by the Canadian Court of the
Canadian Amended Order, and in each such case, subject to the terms thereof, is duly qualified and
in good standing, in each case where such concept exists, under the Laws of each jurisdiction where
its ownership, lease or operation of properties or the conduct of its business requires such
qualification; except to the extent that failure to be duly qualified and in good standing would
not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect,
(d) is in compliance with all Laws, orders, writs and injunctions except



20









 







to the extent failure to comply therewith is permitted by the Bankruptcy Code or the CCAA or
the Canadian Amended Order and except to the extent failure to comply therewith would not,
individually or in the aggregate, reasonably be expected to cause a Material Adverse Effect and (e)
subject to the entry by the Bankruptcy Court of (x) the US Interim Order at any time prior to the
entry of the US Final Order and (y) the US Final Order thereafter, and subject to the entry by the
Canadian Court of the Canadian Amended Order, has all requisite governmental licenses,
authorizations, consents and approvals to operate its business as currently conducted except to the
extent that failure to have any requisite governmental license, authorization, consent and approval
would not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.



     SECTION 3.02. Authorization; No Contravention. Subject to the entry by the Bankruptcy Court
of (x) the US Interim Order at any time prior to the entry of the US Final Order and (y) the US
Final Order thereafter, and subject to the entry by the Canadian Court of the Canadian Amended
Order, and in each such case, subject to the terms thereof, the execution, delivery and performance
by each Obligor of each Transaction Document to which such Person is a party, and the consummation
of the transactions contemplated thereby, are within such Person’s corporate or other powers, have
been duly authorized by all necessary corporate or other organizational action, and do not and will
not (a) contravene the terms of any of such Person’s Organizational Documents; (b) conflict with or
result in any breach or contravention of, or the creation of any Lien on any of the properties or
assets of any Abitibi Entity (other than Liens created under the Transaction Documents), or require
any payment to be made under (i) any Contractual Obligation to which such Person is a party or
affecting such Person or the properties of such Person or any of its Subsidiaries or (ii) any
order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such
Person or its property is subject; or (iii) any Law; except with respect to any conflict, breach or
contravention or payment (but not creation of Liens) referred to in this clause (b), to the extent
that such conflict, breach, contravention or payment could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.



     SECTION 3.03. Governmental Authorization; Other Consents. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any Governmental Authority (except
as required under the Bankruptcy Code and the CCAA and applicable state, federal (U.S. or Canadian)
and provincial bankruptcy rules) or any other Person is necessary for or required of an Obligor as
a condition to the execution, delivery or performance by such Obligor, or enforcement against such
Obligor, of any Transaction Document other than the filings necessary to perfect the interest of
the Seller, the Agent (for the benefit of the Banks) in the Receivables Interests.



     SECTION 3.04. Binding Effect. Subject to the entry by the Bankruptcy Court of (x) the US
Interim Order at any time prior to the entry of the US Final Order and (y) the US Final Order
thereafter, and subject to the entry by the Canadian Court of the Canadian Amended Order, and in
each such case, subject to the terms thereof, this Agreement and each other Transaction Document
has been duly executed and delivered by each Obligor that is a party thereto. Subject to the entry
by the Bankruptcy Court of (x) the US Interim Order at any time prior to the entry of the US Final
Order and (y) the US Final Order thereafter, and subject to the entry by the Canadian Court of the
Canadian Amended Order, and in each such case, subject to the terms



21









 







thereof, this Agreement and each other Transaction Document constitutes a legal, valid and
binding obligation of each Obligor that is a party thereto, enforceable against such Obligor in
accordance with its terms.



     SECTION 3.05. Historical Financial Statements. The Historical Financial Statements were
prepared in conformity with GAAP (except, with respect to the financial statements for Fiscal Year
2008, to the extent that the combination of the financial statements of ACI and Donohue is not in
accordance with GAAP) and fairly present, in all material respects, the financial position, on a
consolidated or combined basis, as applicable, of the Persons described in such financial
statements as at the respective dates thereof and the results of operations and cash flows, on a
combined basis, of the Persons described therein for each of the periods then ended, subject, in
the case of any such unaudited financial statements, to changes resulting from normal year-end
audit adjustments. Except as otherwise publicly disclosed by ABH and its Affiliates prior to the
Effective Date, as of the Effective Date no Abitibi Entity has any contingent liability or
liability for taxes, long-term lease or unusual forward or long-term commitment that is not
reflected in the Historical Financial Statements or the notes thereto and which in any such case is
material in relation to the business, operations, properties, assets or condition (financial or
otherwise) of the Abitibi Entities taken as a whole.



     SECTION 3.06. Projections. (a) On and as of the Effective Date, the projections of the
Abitibi Entities (taken as a whole) for the period of Fiscal Year 2009 through and including Fiscal
Year 2010 (the “Projections”) are based on good faith estimates and assumptions made by the
management of the Abitibi Entities; provided that the Projections are not to be viewed as facts and
that actual results during the period or periods covered by the Projections may differ from such
Projections and that the differences may be material; provided further that, as of the Effective
Date, management of the Abitibi Entities believed that the Projections were reasonable and
attainable.



     (b) The Obligors have disclosed any material assumptions with respect to the 13-Week
Projection and affirm that the 13-Week Projection was prepared in good faith upon assumptions
believed to be reasonable at the time of preparation.



     SECTION 3.07. Material Litigation. Other than the Cases, any proceedings that have been
stayed as a result of the Cases and as disclosed on Schedules 3.07 and 3.11, there are no Adverse
Proceedings, individually or in the aggregate, that could reasonably be expected to have a Material
Adverse Effect. No Abitibi Entity (a) is in violation of any applicable laws (including
Environmental Laws) that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, or (b) is subject to or in default with respect to any unstayed final
judgments, writs, injunctions, decrees, rules or regulations of any court or any federal (U.S. or
Canadian), state, provincial, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.



     SECTION 3.08. Ownership Of Property; Liens. Each Abitibi Entity has (a) good, sufficient
and legal title to (in the case of fee interests in real property), (b) valid leasehold interests
in (in the case of leasehold interests in real or personal property), (c) valid licensed rights in
(in the case of licensed interests in real or intellectual property) and (d) good title to (in



22









 







the case of all other personal property) all of their respective material properties and
assets reflected in the most recent Historical Financial Statements referred to in Section 3.05 and
in the most recent financial statements delivered pursuant to Section 4.01, in each case except (i)
for assets disposed of since the date of such financial statements in the ordinary course of
business or as otherwise permitted under Section 5.04 and (ii) in the case of Abibiti Entities
other than the Seller or an Obligor, to the extent that the failure to have such title, interests
or rights could not reasonably be expected to have a Material Adverse Effect. Except as permitted
by this Agreement, all such properties and assets are free and clear of Liens.



     SECTION 3.09. Environmental Matters. In each case, except as set forth on Schedule 3.09:



     (a) No Abitibi Entity nor any of its respective facilities or operations are subject to any
outstanding written order, consent decree or settlement agreement with any Person relating to any
Environmental Law, any Environmental Claim, or any Hazardous Materials Activity that, individually
or in the aggregate, could reasonably be expected to have a Material Adverse Effect. No Abitibi
Entity has received any letter or request for information under Section 104 of the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9604 et seq.) or any
comparable federal (U.S. or Canada), state, foreign or provincial law with respect to any
environmental condition that could reasonably be expected to have a Material Adverse Effect. There
are and, to the knowledge of ACI and Donohue, have been no conditions, occurrences, or Hazardous
Materials Activities which could reasonably be expected to form the basis of an Environmental Claim
against any Abitibi Entity that, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect. Each Abitibi Entity is in compliance with all applicable
Environmental Laws, which compliance includes obtaining, maintaining and complying with any
Governmental Authorizations required under all applicable Environmental Laws necessary to operate
its business, except for any non-compliance that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. No Abitibi Entity has been issued or been
required to obtain a Governmental Authorization for the treatment, storage or disposal of hazardous
waste for any of its facilities pursuant to the RCRA, or any comparable federal, state, foreign or
provincial Environmental Law, nor are any such facilities regulated as “interim status” facilities
required to undergo corrective action pursuant to RCRA or any comparable federal, state, provincial
or foreign law, the failure of which to obtain or comply with could reasonably be expected to have
a Material Adverse Effect. Compliance with all current or reasonably foreseeable future
requirements pursuant to or under Environmental Laws could not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect. No event or condition has occurred or
is occurring with respect to any Abitibi Entity relating to any Environmental Law, any Release of
Hazardous Materials or any Hazardous Materials Activity or which is reasonably likely to give rise
to any liability or responsibility pursuant to any Environmental Law, in either case which
individually or in the aggregate has had, or could reasonably be expected to have, a Material
Adverse Effect.



     (b) Each Obligor hereby acknowledges and agrees that neither the Agent nor any Bank: (i) is
now, or has ever (A) owned, occupied or been in charge, management or control of any Property, or
(B) been in charge, management or control of any Obligor’s affairs or operations, or (ii) has or
has ever had the capacity or the authority through the provisions of the Transaction Documents or
otherwise to direct or influence any (A) Obligor’s conduct with respect to the



23









 







ownership, operation or management of any Property, (B) undertaking, work or task performed by
any employee, agent or contractor of any Obligor or the manner in which such undertaking, work or
task may be carried out or performed, or (C) compliance with Environmental Laws.



     SECTION 3.10. Taxes. In each case except to the extent failure to do so is permitted by
Chapter 11 of the Bankruptcy Code or the CCAA or the Canadian Amended Order or to the extent the
failure to file or pay could not reasonably be expected to have a Material Adverse Effect, all
federal (U.S. and Canadian), provincial and other Tax returns and reports of the Abitibi Entities
(including all GST and PST returns) required to be filed by any of them have been timely filed, and
all federal (U.S. and Canadian), provincial and other (including all GST and PST returns) Taxes
shown on such Tax returns and reports to be due and payable and all assessments, fees and other
governmental charges upon the Abitibi Entities and upon their respective properties, assets,
income, businesses and franchises which are due and payable have been paid when due and payable.
Except as could not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, ACI and Donohue know of no proposed Tax assessment against any Abitibi Entity which
is not being actively contested by such Abitibi Entity in good faith and by appropriate
proceedings; provided that such reserves or other appropriate provisions, if any, as shall be
required in conformity with GAAP shall have been made or provided therefor.



     SECTION 3.11. ERISA and Pension Plan Compliance. (a) Except as set forth on Schedule 3.11:
(i) each Abitibi Entity and each of their respective ERISA Affiliates is in compliance with all
applicable provisions and requirements of ERISA and the Internal Revenue Code and the regulations
and published interpretations thereunder with respect to each Employee Benefit Plan, and have
performed all its obligations under each Employee Benefit Plan, except where the failure to so
comply or perform could not reasonably be expected to have a Material Adverse Effect; (ii) no
material liability to the PBGC (other than required premium payments or contributions in the
ordinary course of business), the Internal Revenue Service, any Employee Benefit Plan or any trust
established under Title IV of ERISA has been or is expected to be incurred by any Abitibi Entity;
(iii) no ERISA Event has occurred or is reasonably expected to occur that could reasonably be
expected to have a Material Adverse Effect; (iv) except to the extent required under Section 4980B
of the Internal Revenue Code or similar state laws or as required under any collective bargaining
agreement, no Abitibi Entity has any liability with respect to an Employee Benefit Plan that
provides health or welfare benefits (through the purchase of insurance or otherwise) for any
retired or former employee of any Abitibi Entity or any of their respective ERISA Affiliates,
except for any such liability that could not reasonably be expected to have a Material Adverse
Effect; (v) except as could not reasonably be expected to have a Material Adverse Effect, the
present value of the aggregate benefit liabilities under each Pension Plan sponsored, maintained or
contributed to by any Abitibi Entity or any of their ERISA Affiliates (determined as of the end of
the most recent plan year on the basis of the actuarial assumptions specified for funding purposes
in the most recent actuarial valuation for such Pension Plan), did not exceed the aggregate current
value of the assets of such Pension Plan as of such date; (vi) as of the most recent valuation date
for each Multiemployer Plan for which the actuarial report is available, the potential liability of
the Abitibi Entities and their respective ERISA Affiliates for a complete withdrawal from such
Multiemployer Plan (within the meaning of Section 4203 of ERISA), when aggregated with such
potential liability for a complete



24









 







withdrawal from all Multiemployer Plans, based on information available pursuant to Section
4221(e) of ERISA is zero; and (vii) each Abitibi Entity and each of their ERISA Affiliates have
complied with the requirements of Section 515 of ERISA with respect to each Multiemployer Plan and
are not in material “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments
to a Multiemployer Plan.



     (b) Except as set forth on Schedule 3.11: (i) in respect of each Abitibi Entity that is a
Canadian Person, the Pension Plans that are required to be registered are duly registered under all
applicable Laws which require registration (including the Income Tax Act (Canada)), have been
administered in accordance with the Income Tax Act (Canada) and such other applicable Laws (other
than the payment of the special amortization payments since the Petition Date and the transfer of
commuted values out of the plans) and no event has occurred which is reasonably likely to cause the
loss of such registered status, except to the extent that the failure to be registered could not
reasonably be expected to have a Material Adverse Effect, (ii) all obligations of each Canadian
Obligor (including fiduciary, contribution, funding, investment and administration obligations)
required to be performed in connection with the Employee Benefit Plans, the Pension Plans and any
funding agreements therefor under the terms thereof and applicable statutory and regulatory
requirements (other than the payment of the special amortization payments since the Petition Date
and the transfer of commuted values out of the plans), have been performed in a timely fashion in
accordance with the terms thereof, except to the extent that the failure to so perform could not
reasonably be expected to have a Material Adverse Effect, (iii) no promises of benefit improvements
under the Pension Plans or the Employee Benefit Plans (other than improvements required to be
implemented pursuant to court orders under the Canadian Case) have been made except where such
improvement could not reasonably be expected to have a Material Adverse Effect, (iv) all employer
and employee payments, contributions, and premiums (other than the payment of the special
amortization payments since the commencement of the Canadian Case) required to be remitted or paid
to or in respect of the Pension Plans and the Employee Benefit Plans have been paid or remitted in
accordance with their respective terms and applicable statutory and regulatory requirements, except
to the extent that the failure to so pay or remit could not reasonably be expected to have a
Material Adverse Effect, (v) there have been no improper withdrawals or applications of the assets
of the Pension Plans or the Employee Benefit Plans that could reasonably be expected to have a
Material Adverse Effect, (vi) there are no outstanding disputes concerning the assets or
liabilities of the Pension Plans or the Employee Benefit Plans that could reasonably be expected to
have a Material Adverse Effect and (vii) each Pension Plan is funded to the extent required by Law,
except (x) in respect of the payment of the special amortization payments thereto since the
Petition Date and (y) to the extent that the failure to be so funded could not reasonably be
expected to have a Material Adverse Effect.



     SECTION 3.12. Subsidiaries; Equity Interests. Donohue has no Subsidiaries other than those
disclosed in Schedule 3.12, and all of the outstanding Equity Interests owned by Donohue (or any
Subsidiary of Donohue) in such Subsidiaries have been validly issued and are fully paid and all
Equity Interests owned by Donohue (or any Subsidiary of Donohue) in such Subsidiaries are owned
free and clear of all Liens except Liens permitted under Section 5.01. Schedule 3.12 sets forth
the name, jurisdiction and ownership interest of Donohue and each of its Subsidiaries.



25









 





     SECTION 3.13. Margin Regulations; Investment Company Act. (a) No Abitibi Entity is engaged
nor will it engage, principally or as one of its important activities, in the business of
purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or
extending credit for the purpose of purchasing or carrying margin stock.



     (b) No Abitibi Entity is or is required to be registered as an “investment company” under the
Investment Company Act of 1940.



     SECTION 3.14. Disclosure. No representation or warranty of any Obligor contained in any
Transaction Document or in any other documents, certificates or written statements furnished to the
Agent or any Bank by or on behalf of any Abitibi Entity for use in connection with the transactions
contemplated hereby, together with all other representations, warranties, documents, certificates
and statements so furnished taken as a whole, contains any untrue statement of a material fact or
omits to state a material fact (known to ACI and Donohue in the case of any document not furnished
by any of them) necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made. Any projections and pro
forma financial information contained in such materials are based upon good faith estimates and
assumptions believed by the Obligors to be reasonable at the time made, it being recognized by the
Banks that such projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ from the projected
results. There are no facts known (or which should upon the reasonable exercise of diligence be
known) to ACI and Donohue (other than matters of a general economic nature) that, individually or
in the aggregate, could reasonably be expected to result in a Material Adverse Effect and that have
not been disclosed herein or in such other documents, certificates and statements furnished to the
Banks for use in connection with the transactions contemplated hereby.



     SECTION 3.15. Labor Matters. Except for matters that have been stayed as a result of the
Cases, (a) no Abitibi Entity is engaged in any unfair labor practice that could reasonably be
expected to have a Material Adverse Effect, (b) there is no unfair labor practice complaint or
other labor proceeding (including certification) pending against any Abitibi Entity, or to the
knowledge of ACI and Donohue, threatened against any of them before the National Labor Relations
Board or a labor board of any other jurisdiction, and no grievance or arbitration proceeding
arising out of or under any applicable collective bargaining agreement is pending against any
Abitibi Entity or, to the best knowledge of ACI and Donohue, threatened against any of them and
there is no Abitibi Entity in violation of any applicable collective agreement, in each case which,
individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect,
(c) there is no strike or work stoppage in existence or, to the knowledge of ACI and Donohue,
threatened involving any Abitibi Entity which, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect, (d) to the knowledge of ACI and Donohue, no
application for recognition, petition for certification or representation petition or union
organizing activities are taking place with respect to the employees of any Abitibi Entity which
either individually or in the aggregate could reasonably be expected to have a Material Adverse
Effect and (e) all payments due from ACI for employee health and welfare insurance have been paid
or accrued as a liability on the books of ACI and ACI has withheld and remitted all employee
withholdings to be withheld or remitted by it and has made all employer contributions to be made by
it (other than the payment of the special amortization payments



26









 







since the Petition Date), in each case pursuant to applicable Law, including on account of the
Canada Pension Plan and Québec Pension Plan maintained by the Government of Canada and the Province
of Québec, respectively, employment insurance, employee income taxes, and any other required
payroll deduction, except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.



     SECTION 3.16. The US Interim Order, the US Final Order and the Canadian Amended Order. At
the time that any of the Guaranteed Obligations become due and payable, the Banks shall, subject to
the provisions of Article 6 and the applicable provisions of (i) the US Interim Order (at any time
prior to the entry of the US Final Order), (ii) the US Final Order (thereafter) and (iii) the
Canadian Amended Order, be entitled to immediate payment of such Guaranteed Obligations, and to
enforce the remedies provided for hereunder, without further application to or order by the
Bankruptcy Courts.



     SECTION 3.17. Material Contracts. Each Abitibi Entity is in material compliance with each
contract entered into by it after the Petition Date the breach or loss of which could reasonably be
expected to have a Material Adverse Effect.



     SECTION 3.18. PATRIOT Act. To the extent applicable, each Abitibi Entity is in compliance,
in all material respects, with (a) the Trading with the Enemy Act, as amended, and each of the
foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) and any other enabling legislation or executive order relating thereto, (b)
the PATRIOT Act, (c) the PCTFA and (d) each of (i) Part II.1 of the Criminal Code (Canada), (ii)
the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism
(Canada), (iii) the United Nations Al-Qaida and Taliban Regulations (Canada) and (iv) any other
Canadian Laws (including those administered by Foreign Affairs and International Trade Canada and
the Department of Public Safety Canada (collectively, the “Departments”)) which (x) prohibit
Canadians from engaging in transactions with, or providing services to, Persons on the lists
created under various federal statutes and regulations, or (y) block Persons, foreign countries and
territories subject to Canadian sanctions administered by, inter alia, the Departments.



     SECTION 3.19. Priority. (a) Each Guarantor hereby covenants, represents and warrants that,
upon entry of (i) the US Interim Order at any time prior to the entry of the US Final Order and
(ii) the US Final Order thereafter, the obligations of such Guarantor hereunder shall at all times
constitute an allowed superpriority claim pursuant to section 364(c)(1) of the Bankruptcy Code with
priority above all other administrative expenses of the kind specified in sections 503(b) and
507(b) of the Bankruptcy Code (other than the Adequate Protection Claims), subject in all respects
to the Carve-Out and (b) ACSC hereby covenants, represents and warrants that, upon entry of (i) the
US Interim Order at any time prior to the entry of the US Final Order and (ii) the US Final Order
thereafter, the obligations of ACSC under the ARRPA and the Originator Purchase Agreement shall at
all times constitute an allowed superpriority claim pursuant to section 364(c)(1) of the Bankruptcy
Code with priority above all other administrative expenses of the kind specified in sections 503(b)
and 507(b) of the Bankruptcy Code, subject in all respects to the Carve-Out.



27









 





     (b) Except for the Carve-Out (and solely with respect to the Superpriority Guaranty Claims,
except for the Adequate Protection Claims against each Guarantor), the Superpriority Guaranty
Claims and the Superpriority Receivables Claims of the Agent and the Banks against each Guarantor
shall at all times be senior to the rights of any chapter 11 trustee and, subject to section 726 of
the Bankruptcy Code, any chapter 7 trustee, or any other creditor (including, without limitation,
post-petition counterparties and other post-petition creditors) in the US Cases or any subsequent
proceedings under the Bankruptcy Code, including, without limitation, any chapter 7 cases if any of
the US Cases are converted to cases under chapter 7 of the Bankruptcy Code as against each
Guarantor.



ARTICLE 4




Affirmative Covenants




     Until the date on which no Capital of or Yield on any Receivable Interest shall be
outstanding, all other amounts owed by the Seller under the ARRPA to the Banks or the Agent shall
have been paid in full and the Banks shall have no further obligation to purchase Receivable
Interests pursuant to the ARRPA, the Obligors shall, and shall cause each of their Subsidiaries
(other than the Seller) to:



     SECTION 4.01. Financial Statements. (a) Deliver to the Agent for prompt further
distribution to each Bank, as soon as available, and in any event within 30 days after the end of
each month ending after the Effective Date (other than the third month of each Fiscal Quarter),
commencing with the month in which the Effective Date occurs, the combined balance sheet of the
Abitibi Entities as at the end of such month and the related combined statements of income and cash
flows of the Abitibi Entities for such month and for the period from the beginning of the then
current Fiscal Year to the end of such month, setting forth, in the case of any financial
statements for a period commencing on or after January 1, 2010, in comparative form the
corresponding figures for the corresponding periods of the previous Fiscal Year, to the extent
prepared on a monthly basis, all in reasonable detail, together with an Authorized Officer
Certification;



     (b) Deliver to the Agent for prompt further distribution to each Bank, as soon as available,
and in any event within 50 days after the end of each Fiscal Quarter of each Fiscal Year (other
than the last Fiscal Quarter of each Fiscal Year), commencing with the Fiscal Quarter ending June
30, 2009, the combined balance sheets of the Abitibi Entities as at the end of such Fiscal Quarter
and the related combined statements of income and cash flows of the Abitibi Entities for such
Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of
such Fiscal Quarter, setting forth in the case of any financial statements for a period commencing
on or after January 1, 2010, in comparative form the corresponding figures for the corresponding
periods of the previous Fiscal Year, all in reasonable detail, together with an Authorized Officer
Certification;



     (c) Deliver to the Agent for prompt further distribution to each Bank, as soon as available,
and in any event within 105 days after the end of each Fiscal Year, commencing with Fiscal Year
2009, (i) the combined balance sheets of the Abitibi Entities as at the end of such



28









 







Fiscal Year and the related combined statements of income, stockholders’ equity and cash flows
of the Abitibi Entities for such Fiscal Year, setting forth in the case of any financial statements
for a period commencing on or after January 1, 2010, in comparative form the corresponding figures
for the previous Fiscal Year, in reasonable detail, together with an Authorized Officer
Certification and a Narrative Report with respect thereto; and (ii) with respect to such combined
financial statements a report thereon of PricewaterhouseCoopers LLP or other independent certified
public (or, in the case of ACI, chartered) accountants of recognized national standing selected by
ACI and Donohue, and reasonably satisfactory to the Agent (which report shall be unqualified (other
than with respect to the Cases), and shall state that such combined financial statements fairly
present, in all material respects, the combined financial position of the Abitibi Entities as at
the dates indicated and the results of their operations and their cash flows for the periods
indicated on a combined basis and otherwise in conformity with GAAP applied on a basis consistent
with prior years (except as otherwise disclosed in such financial statements);



     (d) [Reserved];



     (e) Documents required to be delivered pursuant to this Section 4.01 may be delivered
electronically and if so delivered, shall be deemed to have been delivered on the date on which the
Obligors (or any direct or indirect parent of the Obligors) post such documents, or provides a link
thereto on the website on the Internet at the website address listed on Schedule 4.01; provided
that: (i) upon written request by the Agent or any Bank, the Obligors shall deliver paper copies of
such information to the Agent or such Bank (as applicable) and (ii) the Obligors shall notify
(which may be by facsimile or electronic mail) the Agent of the posting of any such documents.



     (f) The Obligors and each Bank acknowledge that certain of the Banks may be “public-side”
Banks (Banks that do not wish to receive material Non-Public Information with respect to ABH, the
Obligors, their respective Subsidiaries or their Securities) and, if documents or notices required
to be delivered pursuant to this Section 4.01 or otherwise are being distributed through Intralinks
(the “Platform”), any document or notice that ACI or Donohue has indicated contains Non-Public
Information shall not be posted on that portion of the Platform designated for such public-side
Banks. ACI and Donohue agree to clearly designate all information provided to the Agent by or on
behalf of the Obligors which is suitable to be made available to public-side Banks. If the Obligors
have not indicated whether a document or notice delivered pursuant to this Section 4.01 contains
material Non-Public Information, Agent shall post such document or notice solely on that portion of
the Platform designated for Banks who wish to receive material Non-Public Information with respect
to ABH, the Obligors, their respective Subsidiaries and their Securities.



     SECTION 4.02. Other Information. (a) Deliver to the Agent for prompt further distribution to
each Bank:




     (i) promptly upon their becoming available, copies of (A) all financial statements,
reports, notices and proxy statements sent or made available generally by the ABH, ACI or
Donohue to their security holders acting in such capacity or by any Subsidiary of any of the
foregoing to its security holders other than any other Abitibi Entity or ABH, (B) all
regular and periodic reports and all registration statements and



29









 







prospectuses, if any, filed by any Abitibi Entity with any securities exchange or with
the U.S. Securities and Exchange Commission, the Ontario Securities Commission, the Québec
Autorité des marchés financiers or any other governmental or private regulatory authority,
(C) all press releases and other statements made available generally by any Abitibi Entity
to the public concerning material developments in the business of any Abitibi Entity, and
(D) such other information and data with respect to any Abitibi Entity as from time to time
may be reasonably requested by Agent or any Bank;




     (ii) promptly, such additional information regarding the business, legal, financial or
corporate affairs of the Abitibi Entities, or compliance with the terms of the Transaction
Documents, as the Agent or any Bank through the Agent may from time to time reasonably
request;




     (iii) (A) as soon as practicable in advance of filing with the Bankruptcy Court or the
Canadian Court or delivering to the official creditors’ committee appointed in the US Cases
(the “Creditors’ Committee”) or to the United States Trustee for the District of Delaware
(the “US Trustee”), as the case may be, all other proposed orders and pleadings related to
the Facility (which must be in form and substance reasonably satisfactory to the Banks), any
Reorganization Plan and/or any disclosure statement related thereto and (B) substantially
simultaneously with the filing with the Bankruptcy Court or the Canadian Court or delivering
to the Creditors’ Committee or to the US Trustee, as the case may be, all other notices,
filings, motions, pleadings or other information concerning the financial condition of the
Obligors or other Indebtedness of the Obligors that may be filed with the Bankruptcy Court
or the Canadian Court or delivered to the Creditors’ Committee or to the US Trustee; and




     (iv) simultaneously with delivery to the lenders under the Abitibi DIP Term Facility,
each notice, report or other information required to be delivered pursuant to the terms of
the Abitibi DIP Term Facility (other than routine administrative notices and correspondence
unrelated to any failure of any Abitibi Entity to perform thereunder) to the extent not
otherwise required to be delivered hereunder.



     (b) On a quarterly basis, at regularly scheduled times reasonably acceptable to the Agent (but
in any event on at least five (5) Business Days’ notice to the Agent), the Obligors shall hold an
update call with an Authorized Officer of each of ACI and Donohue and such other members of senior
management of the Obligors as the Obligors deems appropriate and the Banks and their respective
representatives, advisors and independent contractors to discuss the state of the Abitibi Entities’
business, including but not limited to recent performance, current business and market conditions
and material performance changes.



     SECTION 4.03. Notices. Deliver to the Agent for prompt further distribution to each Bank:



     (a) promptly upon any officer of ACI or Donohue obtaining actual knowledge (i) of any
condition or event that constitutes a Default or an Event of Default or that notice has been given
to ACI or Donohue with respect thereto; (ii) that any Person has given any notice to any Abitibi
Entity or the Seller or taken any other action with respect to any default or event of



30









 







default under the Abitibi DIP Term Facility; or (iii) of the occurrence of any event or change
that has caused, or of the existence of, either in any case or in the aggregate, a Material Adverse
Effect, a certificate of an Authorized Officer specifying the nature and period of existence of
such condition, event or change, or specifying the notice given and action taken by any such Person
and the nature of such claimed Event of Default, Default, default, event or condition, and what
action ACI or Donohue has taken, is taking and proposes to take with respect thereto;



     (b) promptly upon any officer of ACI or Donohue obtaining actual knowledge of (i) any Adverse
Proceeding not previously disclosed in writing to the Banks, or (ii) any development in any Adverse
Proceeding that, in the case of either clause (i) or (ii), if adversely determined could be
reasonably expected to have a Material Adverse Effect, or seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a result of, the transactions
contemplated hereby, written notice thereof together with such other unprivileged information as
may be reasonably available to ACI or Donohue to enable the Banks and their counsel to evaluate
such matters;



     (c) promptly upon the occurrence thereof, written notice describing in reasonable detail (i)
any Release required to be reported to any federal (U.S. or Canadian), state, provincial or local
governmental or regulatory agency under any applicable Environmental Laws reasonably likely to lead
to liability or expenses in excess of $1,000,000, (ii) any remedial action taken by any Person in
response to (A) any Hazardous Materials Activities, the existence of which has a reasonable
possibility of resulting in one or more Environmental Claims or any liability under any
Environmental Laws which could reasonably be expected to have a Material Adverse Effect, or (B) any
Environmental Claims which could reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect, and (ii) ACI’s or Donohue’s discovery of any occurrence or
condition on any real property adjoining or in the vicinity of any Property that could cause such
Property or any part thereof to be subject to any material restrictions on the ownership,
occupancy, transferability or use thereof under any Environmental Laws which could reasonably be
expected to have a Material Adverse Effect; and



     (d) as soon as practicable following the sending or receipt thereof by any Abitibi Entity, a
copy of any and all written communications with respect to (i) any Environmental Claims which could
reasonably be expected to result, individually or in the aggregate, in liability or expenses in
excess of $1,000,000, (ii) any Release required to be reported to any Governmental Authority which
would be reasonably be expected to result, individually or in the aggregate, in liability or
expenses in excess of $1,000,000 and (iii) any request for information from any Governmental
Authority that suggests such Governmental Authority is investigating whether any Abitibi Entity may
be potentially responsible for any Hazardous Materials Activity which could reasonably be expected
to result in, individually or in the aggregate, liability or expenses in excess of $1,000,000.



     SECTION 4.04. 13-Week Projections. Deliver to the Agent for prompt further distribution to
each Bank, on the fifth Business Day following the last Business Day of each calendar week (with
each calendar week deemed to end on Friday), (i) an updated 13-Week Projection and (ii) a statement
setting forth the combined cash flow of the Abitibi Entities (other than Augusta Newsprint) and the
Seller for such calendar week.



31









 





     SECTION 4.05. Payment of Taxes and Claims; Compliance with Obligations. (a) In accordance
with the Bankruptcy Code and the CCAA and the Canadian Amended Order and subject to any required
approval of the Bankruptcy Courts, pay all federal (U.S. and Canadian) and other material
post-petition Taxes imposed upon it or any of its properties or assets or in respect of any of its
income, businesses or franchises (including any GST and PST) before any penalty or fine accrues
thereon, and all federal (U.S. and Canadian) and other material claims (including claims for labor,
services, materials and supplies) for sums that have become due and payable and that by law have or
may become a Lien upon any of its properties or assets, prior to the time when any penalty or fine
(or, in the case of such federal (U.S. and Canadian) and other material claims, any material
penalty or fine) shall be incurred with respect thereto; provided that no such federal (U.S. and
Canadian) or other material Tax or claim need be paid if it is being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted, so long as (i) adequate
reserve or other appropriate provision, as shall be required in conformity with GAAP shall have
been made therefor, and (ii) in the case of a federal (U.S. and Canadian) or other material Tax or
claim which has or may become a Lien against any of the Collateral, such contest proceedings
conclusively operate to stay the sale of any portion of the Collateral to satisfy such federal
(U.S. and Canadian) or other material Tax or claim.



     (b) Subject to the effect of the Cases, the Bankruptcy Code and the CCAA and all orders of the
Bankruptcy Courts entered with the consent of (or non-objection by) the Banks, comply in all
material respects with all Contractual Obligations entered into on or after the Petition Date,
except to the extent that any failure to so comply could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.



     SECTION 4.06. Preservation of Existence, Etc. Except as otherwise permitted under Section
5.04, at all times preserve and keep in full force and effect (i) its existence and (ii) all rights
and franchises, licenses and permits material to its business, except in the case of clause (ii)
where the failure to do so could not reasonably be expected to result in a Material Adverse Effect;
provided that no such Person shall be required to preserve any such existence, right or franchise,
licenses and permits if such Person’s board of directors (or similar governing body) shall
determine that the preservation thereof is no longer desirable in the conduct of the business of
such Person, and that the loss thereof is not disadvantageous in any material respect to such
Person or to the interests of the Banks under the Transaction Documents;



     SECTION 4.07. Maintenance of Properties. Maintain or cause to be maintained, in all
material respects, in good repair, working order and condition, ordinary wear and tear excepted,
all material properties used or useful in the business of the Abitibi Entities and from time to
time will make or cause to be made all appropriate repairs, renewals and replacements thereof;
provided, however, that nothing contained herein shall be construed (a) to restrict or prohibit the
closure of any property or facility or (b) to require the maintenance of any closed property or
facility.



     SECTION 4.08. Maintenance of Insurance. Maintain with reputable insurance companies,
insurance with respect to its assets, properties and business against loss or damage to the extent
available on commercially reasonable terms of the kinds customarily insured against by Persons of
similar size engaged in the same or similar industry, of such types and in such amounts (after
giving effect to any self-insurance (including captive industry insurance)




32











 




reasonable and customary for similarly situated Persons of similar size engaged in the same or
similar businesses as the Abitibi Entities) as are customarily carried under similar circumstances
by such other Persons.




     SECTION 4.09. Maintenance of Insurance Policy. Cause the Insurance Policy to be maintained
in full force and effect.



     SECTION 4.10. Compliance With Laws. Except as otherwise excused by the Bankruptcy Code or
the CCAA, comply with, and cause all other Persons, if any, on or occupying any facilities to
comply with, the requirements of all applicable Laws (including all Environmental Laws), rules,
regulations and orders of any Governmental Authority, noncompliance with which could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.



     SECTION 4.11. Books and Records; Inspections. (a) Keep proper books of record and accounts
in which full, true and correct entries in conformity in all material respects with GAAP shall be
made of all dealings and transactions in relation to its and their business and activities and (b)
permit any authorized representatives designated by any Bank to visit and inspect any of its or
their properties, to inspect, copy and take extracts from its and their financial and accounting
records, and to discuss its and their affairs, finances and accounts with its and their respective
officers and independent public (or in the case of ACI, chartered) accountants, all upon reasonable
notice and at such reasonable times during normal business hours and as often as may reasonably be
requested.



     SECTION 4.12. ERISA and Pension Plans. (a) Promptly upon becoming aware of the occurrence of
or forthcoming occurrence of any ERISA Event, deliver to the Agent for prompt further distribution
to each Bank a written notice specifying the nature thereof, what action any Abitibi Entities or
any of their respective ERISA Affiliates has taken, is taking or proposes to take with respect
thereto and, when known, any action taken or threatened by the Internal Revenue Service, the United
States Department of Labor or the PBGC with respect thereto; (b) with reasonable promptness, upon
request by Agent, deliver to the Agent for prompt further distribution to each Bank copies of (i)
each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by any
Abitibi Entity or any of their respective ERISA Affiliates with the Internal Revenue Service with
respect to each Pension Plan; (ii) all notices received by any Abitibi Entity or any of their
respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and (iii)
copies of such other documents or governmental reports or filings relating to any Employee Benefit
Plan as Agent shall reasonably request; and (c) in respect of ACI, deliver to the Agent for prompt
further distribution to each Bank (i) copies of each annual and other return, report or valuation
with respect to each registered Pension Plan as filed with any applicable Governmental Authority;
(ii) promptly after receipt thereof, a copy of any direction, order, notice, ruling or opinion that
ACI may receive from any applicable Governmental Authority with respect to any registered Pension
Plan; and (iii) notification within 30 days of any increases having a cost to ACI in excess of
$1,000,000 per annum in the aggregate, in the benefits of any existing Pension Plan or Employee
Benefit Plan, or the establishment of any new Pension Plan or Employee Benefit Plan, or the
commencement of contributions to any such plan to which ACI was not previously contributing.



33









 





     SECTION 4.13. Further Assurances.



     (a) Execute any and all further documents, agreements and instruments, and take all further
action that may be required under applicable Laws, or that the Banks or the Agent may reasonably
request, in order to effectuate the transactions contemplated by the Transaction Documents.



     (b) Cause any subsequently acquired or formed wholly-owned US Subsidiary of Donohue
(including, for the avoidance of doubt, Augusta Newsprint and any other Person any of the Equity
Interests of which are presently owned by Donohue or any of its US Subsidiaries that becomes a
wholly-owned US Subsidiary of Donohue after the Effective Date) to become a Guarantor and an
Obligor by executing and delivering a joinder to this Agreement, in form and substance reasonably
acceptable to the Administrative Agent, within ten Business Days after such acquisition or
formation; provided, that the foregoing requirement shall be inapplicable to Augusta Newsprint if
(x) the transaction pursuant to which Augusta Newsprint becomes a wholly-owned US Subsidiary of
Donohue (or in the case of any series of transactions pursuant to which Augusta Newsprint becomes a
wholly-owned US Subsidiary of Donohue, each such transaction), including, to the extent of any
recourse to any Guarantor or to any asset of any Guarantor, any financing required to effect such
transaction or transactions (collectively, the “Augusta Financing”) is approved by the Bankruptcy
Court, (y) the Augusta Financing (including any Guarantee thereof) is permitted under Section 5.03
and (z) the terms of the Augusta Financing (A) do not provide for recourse against any Abitibi
Entity or against the assets of any Abitibi Entity other than (1) Augusta Newsprint and its assets
and (2) solely to the extent that it has guaranteed the Augusta Financing, ACSC and the Equity
Interests of Augusta Newsprint held by ACSC and (B) prohibit Augusta Newsprint from becoming a
Guarantor.



     (c) Promptly upon request by the Agent or the Banks, correct any material defect or error that
may be discovered in any Transaction Document or in the execution, acknowledgment, filing or
recordation thereof.



     SECTION 4.14. Credit Ratings. Use commercially reasonable efforts to (a) obtain credit
ratings in respect of the Facility from S&P and at least one other nationally recognized
statistical rating organization within thirty (30) days after the Effective Date and (b) maintain
in effect credit ratings in respect of the Facility from such ratings organizations thereafter;
provided that nothing in this Section 4.14 shall obligate any Abitibi Entity to maintain any
particular credit rating in respect of the Facility.



ARTICLE 5




Negative Covenants




     Until the date on which no Capital of or Yield on any Receivable Interest shall be
outstanding, all other amounts owed by the Seller under the ARRPA to the Banks or the Agent shall
have been paid in full and the Banks shall have no further obligation to purchase Receivable
Interests pursuant to the ARRPA, the Obligors shall not (and shall not apply to either



34









 




of the Bankruptcy Courts for authority to), and shall cause each of their Subsidiaries (other
than the Seller) not to:




     SECTION 5.01. Liens. Directly or indirectly, create, incur, assume or permit to exist any
Lien on or with respect to any property, asset or undertaking of any kind (including any document
or instrument in respect of goods or accounts receivable) of any Abitibi Entity, whether now owned
or hereafter acquired or licensed, or any income or profits or royalties therefrom, or file or
permit the filing of, or permit to remain in effect for more than ten Business Days, any financing
statement or other similar notice of any Lien with respect to any such property, asset, income,
profits or royalties under the UCC of any state or the PPSA of any province or under any similar
recording or notice statute or under any applicable intellectual property laws, rules or
procedures, except:



     (a) Liens (other than Liens permitted under Section 5.01(n)) existing on the Petition Date;



     (b) Liens created pursuant to orders of the Bankruptcy Courts entered on or prior to the
Effective Date, including in respect of adequate protection;



     (c) Liens created pursuant to the Transaction Documents, the US Interim Order, the Canadian
Initial Order, the Canadian Amended Order and the US Final Order;



     (d) Liens for Taxes if obligations with respect to such Taxes either (i) accrued prior to the
Petition Date or (ii) are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted and, in the case of clause (ii), so long as such reserves or
other appropriate provisions, if any, as shall be required by GAAP shall have been made for any
such contested amounts;



     (e) Liens of landlords, banks (and rights of set-off), of carriers, warehousemen, mechanics,
repairmen, workmen and materialmen, and other similar Liens (other than any such Lien imposed
pursuant to Section 430(k) of the Internal Revenue Code or ERISA or a violation of Section 436 of
the Internal Revenue Code), in each case incurred in the ordinary course of business (i) prior to
the Petition Date, (ii) for amounts not more than 30 days overdue or (iii) for amounts that are
more than 30 days overdue and that are being contested in good faith by appropriate proceedings, so
long as such reserves or other appropriate provisions, if any, as shall be required by GAAP shall
have been made for any such contested amounts;



     (f) Liens incurred in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government
contracts, permits, licenses, trade contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed money or other
Indebtedness);



     (g) easements, rights-of-way, restrictions, encroachments, and other minor defects or
irregularities in title, in each case which do not and will not interfere in any material respect
with the ordinary conduct of the business of any Abitibi Entity;



35









 





     (h) any interest or title of a lessor or sublessor under any lease of real estate permitted
hereunder;



     (i) purported Liens evidenced by the filing of precautionary UCC or financing statements or
Liens evidenced by the filing of PPSA financing statements, in either case relating solely to
operating leases of personal property entered into in the ordinary course of business;



     (j) Liens in favor of customs and revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of goods;



     (k) any zoning or similar law or right reserved to or vested in any governmental office or
agency to control or regulate the use of any real property;



     (l) non-exclusive outbound licenses of patents, copyrights, trademarks and other intellectual
property rights granted by any Abitibi Entity in the ordinary course of business and not
interfering in any respect with the ordinary conduct of or materially detracting from the value of
the business of such Abitibi Entity;



     (m) ground leases of underutilized or vacant properties of any Abitibi Entity to third parties
with which any Abitibi Entity has a production, co-production, operating or other arrangement or to
third-party providers of energy, transportation services or raw materials in the ordinary course of
business, in each case which do not and will not interfere in any material respect with the
ordinary conduct of the business of any Abitibi Entity;



     (n) Liens on an aggregate amount of $160,000,000 of cash collateral securing Indebtedness
permitted under Section 5.03(j) or 5.03(k);



     (o) Liens granted by any Abitibi Entity in favor of the Seller or any Guarantor;



     (p) Liens on any insurance policy (other than the Insurance Policy) securing Indebtedness
incurred to purchase such insurance policy to the extent permitted under Section 5.03(l);



     (q) Liens securing judgments that do not constitute an Event of Default hereunder; provided
that enforcement of any such Liens is stayed and claims secured by such Liens are being actively
contested in good faith and by appropriate proceedings;



     (r) Liens on assets of any Abitibi Petitioner securing Indebtedness permitted under Section
5.03(c) or clause (i) of Section 5.03(n);



     (s) Liens on the assets and Equity Interests of Augusta Newsprint securing Indebtedness
permitted under Section 5.03(o);



     (t) Liens on specific items of inventory or other goods of a Person and the proceeds thereof
(other than proceeds constituting Collateral) securing such Person’s obligations in respect of
bankers’ acceptances issued or created for the account of such Person to facilitate the purchase,
shipment or storage of such inventory or other goods;



36









 





     (u) Statutory Liens arising pursuant to the Ontario Pension Benefits Act;



     (v) Liens on the assets of Bridgewater and its Subsidiaries; and



     (w) Liens securing Indebtedness permitted under Sections 5.03(f) and 5.03(g); provided that
any such Lien shall encumber only the asset acquired with the proceeds of such Indebtedness.



     It is acknowledged and agreed that any reference in this Agreement to a Lien that is permitted
hereunder (or words to similar effect) is not intended to subordinate or postpone, and shall not be
interpreted as subordinating or postponing, or as any agreement to subordinate or postpone, any
Lien in favor of the Seller, the Agent or any Bank created or to be created pursuant to any of the
Transaction Documents to any such permitted Lien).



     SECTION 5.02. Investments. Make or hold any Investments, except:



     (a) Investments existing on the Petition Date;



     (b) Investments in cash or Cash Equivalents;



     (c) equity Investments owned as of the Effective Date in any Subsidiary and Investments made
after the Effective Date in the Seller or any Guarantor; provided, that in the case of Investments
in the form of intercompany advances or loans made to a Guarantor, the applicable Indebtedness is
permitted under Section 5.03(e);



     (d) Investments in the form of intercompany advances or loans made to any Abitibi Petitioner
to the extent the applicable Indebtedness is permitted under Section 5.03(e);



     (e) Investments (i) in any Securities received in satisfaction or partial satisfaction thereof
from financially troubled account debtors and (ii) deposits, prepayments and other credits to
suppliers made in the ordinary course of business consistent with the past practices of the Abitibi
Entities;



     (f) Investments consisting of Hedge Agreements entered into in the ordinary course of business
consistent with past practice;



     (g) Investments in the form of non-cash consideration received (i) from any Asset Sale
permitted hereunder (other than to the extent such Asset Sale involves the sale or disposition of
cash or Cash Equivalents) or (ii) from any sale or other disposition not constituting an Asset Sale
(other than a sale or disposition of cash or Cash Equivalents);



     (h) Investments in the form of loans and advances to, and Guarantees of the obligations of,
employees of any of the Abitibi Entities or employees of ABH incurred in the ordinary course of
business, in an aggregate amount not to exceed (x) $5,000,000 to the extent directly attributable
to the relocation of the corporate headquarters of ABH and (y) in addition to the Investments
permitted pursuant to the preceding clause (x), $2,000,000, in each case at any one time
outstanding;



37









 





     (i) Investments consisting of Guarantees of Indebtedness otherwise permitted under Section
5.03;



     (j) Investments in the form of payment of intercompany expenses to the extent permitted under
clause (vi) of Section 5.07;



     (k) the acquisition or redemption of Equity Interests of Augusta Newsprint not owned on the
Effective Date by ABH or any of its Subsidiaries; provided, that Augusta Newsprint shall have
become a Guarantor to the extent required under Section 4.13(b); and



     (l) other Investments in an aggregate amount not to exceed $30,000,000 at any time
outstanding; provided, that the aggregate amount of Investments made by Guarantors in reliance on
this Section 5.02(l) shall not exceed $10,000,000 at any time outstanding.



     SECTION 5.03. Indebtedness. Directly or indirectly create, incur, assume, guarantee or
otherwise become or remain directly or indirectly liable with respect to any Indebtedness, except:



     (a) Indebtedness (other than Indebtedness permitted under Section 5.03(k)) outstanding on the
Petition Date;



     (b) Indebtedness of any Obligor created under the Transaction Documents;



     (c) Indebtedness of ACI in respect of the Abitibi DIP Term Facility in an aggregate principal
amount not to exceed $250,000,000 at any time outstanding;



     (d) Indebtedness of Bridgewater Paper Company Limited and its Subsidiaries in respect of
hedging obligations entered into in the ordinary course of business and not for speculative
purposes;



     (e) Indebtedness of any Abitibi Entity owing to any other Abitibi Entity; provided that (x)
any such Indebtedness of a Guarantor that is owed to another Guarantor shall have administrative
priority status in the US Case (or, with respect to any such Indebtedness of an Abitibi Entity that
has become a Guarantor after the Effective Date, in a proceeding under Chapter 11 of the Bankruptcy
Code commenced by such Abitibi Entity after the Effective Date) of the applicable Guarantor
pursuant to Section 507(a)(2) of the Bankruptcy Code and (y) any such Indebtedness of ACI that is
owed to a Guarantor shall be secured by a charge on the assets of ACI pursuant to paragraph 63 of
the Canadian Initial Order with the priority set forth in paragraph 89 thereof;



     (f) Indebtedness in respect of Capital Leases in an aggregate amount not to exceed $15,000,000
at any time outstanding;



     (g) purchase money Indebtedness of the Abitibi Entities; provided that, any such Indebtedness
shall be secured only by the asset acquired, constructed, developed or improved in connection with
the incurrence of such Indebtedness;



38









 





     (h) Indebtedness in respect of workers’ compensation claims, unemployment or other insurance
or self-insurance obligations, and similar obligations, in each case incurred in the ordinary
course of business;



     (i) Indebtedness in respect of netting services, overdraft protections and otherwise in
connection with deposit accounts;



     (j) Indebtedness under Hedge Agreements entered into in the ordinary course of business
consistent with past practice;



     (k) letters of credit issued in the ordinary course of business having an aggregate face
amount not to exceed, as of any date of incurrence of such Indebtedness, $135,000,000;



     (l) Indebtedness solely in respect of premium financing or similar deferred obligations with
respect to insurance policies purchased in the ordinary course of business;



     (m) Guarantees in the ordinary course of business of the obligations of suppliers, customers,
franchisees and licensees of any Abitibi Entity;



     (n) Indebtedness in respect of any Guarantee made by (i) any Abitibi Petitioner of
Indebtedness permitted under Section 5.03(c) and (ii) any Abitibi Entity of Indebtedness (other
than Indebtedness permitted under Section 5.03(c)) of any other Abitibi Entity otherwise permitted
hereunder; provided, that any such Indebtedness in respect of a Guarantee made by a Guarantor shall
be subordinated to the Guaranteed Obligations of such Guarantor pursuant to an Intercompany
Subordination Agreement substantially in the form of Exhibit A unless an order of the Bankruptcy
Court provides that such Indebtedness shall have administrative priority status in the US Case of
such Guarantor pursuant to Section 507(a)(2) of the Bankruptcy Code;



     (o) (i) Indebtedness of Augusta Newsprint incurred after the Petition Date to finance the
acquisition or redemption of Equity Interests of Augusta Newsprint not owned on the Effective Date
by ABH or any of its Subsidiaries, in an aggregate principal amount not to exceed $100,000,000 at
any time outstanding (“Redemption Indebtedness”) and (ii) Indebtedness in respect of Guarantees
made by ACSC of Redemption Indebtedness; provided, that the aggregate amount of Redemption
Indebtedness so guaranteed by ACSC shall not exceed the product of (x) the percentage of Augusta
Newsprint’s outstanding Equity Interests held by ACSC and (y) the aggregate principal amount of
Redemption Indebtedness then outstanding;



     (p) Indebtedness of any Abitibi Entity (other than the Seller) arising from agreements of such
Abitibi Entity providing for indemnification, adjustment of purchase price or similar obligations,
in each case, entered into in connection with the sale or other disposition of any business, assets
or Equity Interest of any such Abitibi Entity permitted under this Agreement, other than Guarantees
of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or
Equity Interest; provided that the maximum aggregate liability in respect of all such Indebtedness
shall at no time exceed the net proceeds, whether or not cash, actually received by the Abitibi
Entities in connection with such disposition; and



39









 





     (q) other unsecured Indebtedness of the Abitibi Entities in an aggregate principal amount not
to exceed $25,000,000 at any time outstanding.



     SECTION 5.04. Fundamental Changes; Disposition Of Assets; Acquisitions. Enter into any
transaction of merger, amalgamation, reorganization or consolidation, or liquidate, wind-up or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease or license,
exchange, transfer or otherwise dispose of, in one transaction or a series of transactions, all or
any part of its business, assets or property of any kind whatsoever, whether real, personal or
mixed and whether tangible or intangible, whether now owned or hereafter acquired, leased or
licensed, or acquire by purchase or otherwise (other than purchases or other acquisitions of
inventory, materials and equipment and Capital Expenditures in the ordinary course of business) the
business, property or fixed assets of, or stock or other evidence of beneficial ownership of, any
Person or any division or line of business or other business unit of any Person, except:



     (a) (i) any Abitibi Entity may be merged or amalgamated with or merged into any Guarantor;
provided that (x) in the case of any such merger or amalgamation involving a Guarantor, the
continuing or surviving Person shall be a Guarantor and (y) in the case of any such merger or
amalgamation involving ACI, the continuing or surviving Person (1) shall have assumed all of ACI’s
obligations under the Transaction Documents pursuant to documentation reasonably satisfactory to
the Agent and (2) shall have delivered to the Agent proper financing statements, financing change
statements and/or financing statement amendments under the UCC and PPSA of all jurisdictions that
the Agent deems reasonably necessary or desirable in order to continue the perfection of the
ownership and security interests contemplated by the Transaction Documents and (3) shall have
delivered to the Agent such legal opinions with respect to the foregoing matters as the Agent shall
have reasonably requested, and (ii) any Abitibi Entity may be liquidated, wound up or dissolved, or
all or any part of its business, property or assets may be conveyed, sold, leased, transferred or
otherwise disposed of, in one transaction or a series of transactions, to any Guarantor;



     (b) (i) any Abitibi Entity that is not a Guarantor may be merged or amalgamated with or merged
into any other Abitibi Entity that is not a Guarantor; provided that in the case of any such merger
or amalgamation involving ACI, the continuing or surviving Person shall have satisfied the
requirements set forth in subclauses (y)(1), (y)(2) and (y)(3) of Section 5.04(a)) and (ii) any
Abitibi Entity (other than ACI) that is not a Guarantor may be liquidated, wound up or dissolved,
or all or any part of its business, property or assets may be conveyed, sold, leased, transferred
or otherwise disposed of, in one transaction or a series of transactions, to any Abitibi Entity
that is not a Guarantor;



     (c) sales or other dispositions of assets that do not constitute Asset Sales;



     (d) disposals of obsolete, worn out or surplus equipment in the ordinary course of business or
as approved by the Bankruptcy Court, in the case of the Guarantors, or the Canadian Court, in the
case of the other Abitibi Entities;



     (e) sales of accounts receivable, payment intangibles, collections thereon and related assets
and Related Security by ACI and ACSC to the Seller, and sales of such accounts receivables, payment
intangibles, collections thereon and related assets and Related Security by



40









 




the Seller, in each case pursuant to the Originator Purchase Agreement and the ARRPA; provided
that, except as contemplated by the Originator Purchase Agreement, no such sales shall take the
form of capital contributions or other Investments;




     (f) Investments made in accordance with Section 5.02;



     (g) any liquidation, winding-up or dissolution of Augusta Newsprint or of Bridgewater or any
of its Subsidiaries or of all or any part of their respective business, assets or property;



     (h) the disposition of (i) all or substantially all of the Equity Interests or assets of
Lufkin, Manicouagan Power Company and ACH Limited Partnership, (ii) any timberland assets and (iii)
any assets associated with a mill or other facility that has been permanently closed;



     (i) other Asset Sales (other than Equity Interests of ACI, the Seller or any Guarantor) in an
aggregate amount not to exceed $100,000,000, so long as no Default or Event of Default shall have
occurred and be continuing at the time of such Asset Sale or shall be caused thereby.



     SECTION 5.05. Disposal of Subsidiary Equity Interests. Except for any sale of all of its
interests in the Equity Interests of any of its Subsidiaries in compliance with the provisions of
Section 5.04, directly or indirectly sell, assign, pledge or otherwise encumber or dispose of any
Equity Interests of any of its Subsidiaries, except to qualify directors if required by applicable
law.



     SECTION 5.06. Conduct of Business. Except as required by the Bankruptcy Code or the Canadian
Court, engage in any business other than the businesses engaged in by such Obligor or such
Subsidiary on the Effective Date.



     SECTION 5.07. Transactions with Affiliates. Enter into any transaction of any kind with any
Affiliate other than (i) transactions entered into in the ordinary course of business and on terms
that are no less favorable to the relevant Abitibi Entity than those terms that might reasonably
have been obtained in a comparable transaction at such time on an arm’s length basis by the
relevant Abitibi Entity and an unrelated Person, (ii) transactions between or among Guarantors,
(iii) compensation, retirement, expense reimbursement, insurance and indemnification arrangements
with directors, officers, employees or consultants in the ordinary course of business consistent
with the 13-Week Projection; (iv) allocation of customer orders between the Abitibi Entities and
the Bowater Entities determined in the ordinary course of business in a manner consistent with past
practice; (v) payments in the ordinary course of business to the Bowater Entities of amounts
received by Abitibi Entities and representing payments on accounts receivable of the Bowater
Entities consistent with past practice and permitted by orders of the Bankruptcy Court and/or the
Canadian Court, as applicable; (vi) allocation of selling, general and administrative expenses
between Abitibi Entities and Bowater Entities in the ordinary course of business in a manner
consistent with past practice; (vii) joint purchasing agreements between or among the Abitibi
Entities and the Bowater Entities whereby the parties thereto agree to jointly purchase goods or
services from third parties; provided that such joint purchasing agreements are on terms no less
favorable than would be obtainable in a comparable arm’s length transaction with a Person that is
not an Affiliate and (viii) transactions contemplated by the ARRPA and the Originator Purchase
Agreement.



41









 





     SECTION 5.08. Restricted Junior Payments. Make any Restricted Junior Payment, except (a)
payments made pursuant to “first day” orders in the US Cases, the Canadian Initial Order, the
Canadian Amended Order or other orders entered by the Bankruptcy Courts or action approved by the
monitor pursuant to the Canadian Amended Order with notice to the Agent and (y) payments in respect
of Adequate Protection Claims to the extent authorized by the Bankruptcy Court; provided that
payments of regularly scheduled interest shall be permitted (i) with respect to post-petition
Indebtedness and (ii) with respect to pre-petition Indebtedness to the extent authorized by an
order of the Bankruptcy Courts; provided further, that Indebtedness secured by a Lien permitted
under Section 5.01 on an asset that is disposed of pursuant to a transaction permitted under
Section 5.04 may be prepaid with the proceeds of such disposition. Notwithstanding the foregoing,
the following, to the extent not covered by an existing order of the US and Canadian Courts, shall
be permitted:



     (1) any payment solely to reimburse ABH or its Affiliates for actual out-of-pocket expenses,
not including fees paid directly or indirectly to ABH or its Affiliates, for the provision of
services by unaffiliated third parties to the Abitibi Entities;



     (2) payments to, or on behalf of, ABH solely to permit ABH to pay its reasonable accounting,
legal and administrative expenses when due, in an aggregate amount in any Fiscal Year not to exceed
50% of the amount of such expenses incurred by ABH during such Fiscal Year; provided, that the
amount of such payments permitted to be made during any Fiscal Year shall be increased by the
amount of such expenses allocated by ABH to Bowater Incorporated, Bowater Newsprint South LLC or
any of their Subsidiaries for such Fiscal Year (such amount to be equal to 50% of the amount of
such expenses incurred by ABH during such Fiscal Year), but only to the extent such Persons have
failed to pay such amount; provided further, that the aggregate amount of such payments made in
reliance on the preceding proviso after the Effective Date shall not exceed the sum of (x)
$15,000,000 plus (y) the excess (if any) of (i) the aggregate amount of payments permitted
to be made pursuant to this clause (2) in all previous Fiscal Years over (ii) the aggregate
amount of payments actually made pursuant to this clause (2) in all previous Fiscal Years (in each
case without giving effect to the provisos thereto); and



     (3) for so long as any Abitibi Entity is a member of a group filing a consolidated or combined
tax return with ABH (each an “Applicable Abitibi Entity”), payments to ABH in respect of the
portion of ABH’s consolidated tax liability that is attributable to the Applicable Abitibi Entities
(“Tax Payments”); provided that the Tax Payments shall not exceed the taxes (including any
penalties and interest) that would have been payable by the Abitibi Entities as a stand-alone
group, taking into account any carryovers and carrybacks of tax attributes (such as net operating
losses) of the Abitibi Entities from other taxable years.



     SECTION 5.09. Actions Voiding Coverage Under the Insurance Policy. Take any action or
knowingly fail to take any action where such action or failure to act voids, or could reasonably be
expected to void, coverage under the Insurance Policy.



     SECTION 5.10. Accounting Changes. Make any change in its Fiscal Year without the prior
written consent of the Agent.



42









 





     SECTION 5.11. Chapter 11 Claims. In the Chapter 11 Cases, incur, create, assume, suffer to
exist or permit any other Superpriority Claim which is senior to or pari passu with the
Superpriority Guaranty Claims or the Superpriority Receivables Claims, except for the Carve-Out
and, in the case of the Superpriority Guaranty Claims, the Adequate Protection Claims.



     SECTION 5.12. Carve-out. Permit any portion of the Carve-Out or any proceeds of any purchase
or reinvestment made pursuant to the ARRPA to be used for the payment of professional fees and
disbursements incurred in connection with (a) asserting any claims or causes of action against the
Agent or the Banks and/or challenging or raising any defense to the Guaranteed Obligations or any
other obligations of ACI, ACSC or the Seller under the Transaction Documents, (b) asserting or
prosecuting any action for preferences, fraudulent conveyances, or other avoidance power claims
against the Agent or the Banks or (c) objecting to or contesting the true sale nature of the sale
and/or contribution of the Transferred Receivables, or permit more than $50,000 of the Carve-Out,
or any proceeds received by any Abitibi Entity from the purchase by the Banks of Receivable
Interests, or the reinvestment with the Seller of any Collections, in each case pursuant to the
ARRPA, to be used to pay professional fees and disbursements for investigation of such claims,
causes of action or defenses by any committee or any representative of the estate.



     SECTION 5.13. Amendments or Waivers of Organizational Documents and Certain Related
Agreements. Agree to any amendment, restatement, supplement or other modification to, or waiver of,
any of its Organizational Documents after the Effective Date if such amendment, restatement,
supplement or other modification or waiver would be adverse to the interests of the Banks in any
material respect; provided, however, that any amendment, restatement, supplement or other
modification to, or waiver of, any of the Organizational Documents of Augusta Newsprint or of
Bridgewater or any of its Subsidiaries shall be deemed to be not adverse to the interests of the
Banks in any material respect.



     SECTION 5.14. Minimum Cumulative Consolidated EBITDAR. Permit Cumulative Consolidated EBITDAR
(determined on the basis of the Authorized Officer Certification most recently delivered pursuant
to Section 4.01(b) or 4.01(c)) for any period set forth in the table below (in each case considered
as a single accounting period) to be less than the corresponding amount set forth for such period:



	 	 	 	 	 
	 	 	Minimum
	 	 	Cumulative
	 	 	Consolidated
	Period	 	EBITDAR
	Fiscal Quarter Ending June 30, 2009
	 	$	45,000,000	 
	Period of Two Consecutive Fiscal Quarters Ending September 30, 2009
	 	$	90,000,000	 
	Period of Three Consecutive Fiscal Quarters Ending December 31, 2009
	 	$	135,000,000	 
	Period of Four Consecutive Fiscal Quarters Ending March 31, 2010
	 	$	180,000,000	 
	Period of Four Consecutive Fiscal Quarters Ending June 30, 2010
	 	$	180,000,000	 
	Period of Four Consecutive Fiscal Quarters Ending September 30, 2010
	 	$	180,000,000	 






43









 






     ; provided that failure to comply with the foregoing shall not constitute an Event of Default
on any date (the “Applicable Date”) if (x) (i) the daily average Liquidity for the most recent four
calendar week period (with each calendar week being deemed to end on Friday) ending prior to the
Applicable Date is at least $100,000,000 and (ii) Liquidity on the Applicable Date is at least
$75,000,000 or (y) the Applicable Date is prior to August 20, 2009.



     SECTION 5.15. Minimum Liquidity. (a) Permit Liquidity to be less than $25,000,000 at any
time on or after the Effective Date or (b) permit daily average Liquidity for any four consecutive
calendar week period (with each calendar week being deemed to end on Friday) commencing with the
four consecutive calendar week period ending on the first Friday following the Effective Date to be
less than $50,000,000.



     SECTION 5.16. Combined Capital Expenditures. Permit Combined Capital Expenditures for any
period set forth in the table below to be greater than the corresponding amount for such period set
forth in such table:



	 	 	 	 	 
	 	 	Maximum
	 	 	Combined
	 	 	Capital
	Period	 	Expenditures
	Fiscal Year 2009
	 	$	90,000,000	 
	Fiscal Year 2010
	 	$	90,000,000	 






ARTICLE 6

Events Of Default




     If any of the following events (each an “Event of Default”) shall occur:



     (a) Failure to Make Payments When Due. Any Guarantor shall fail to pay when and as required
to be paid herein, any amount of the Guaranteed Obligations, or any Obligor shall fail to pay when
due any other amount payable under this Agreement and such failure shall continue unremedied for a
period of three Business Days;



     (b) Breach of Certain Covenants. Any Obligor shall fail to perform or observe any term,
covenant or agreement contained in Sections 4.01(a), 4.01(b), 4.01(c), 4.03(a), 4.06 or 4.09 or
Article 5;



     (c) Other Defaults. Any Obligor shall fail to perform or observe any other covenant or
agreement (not specified in clauses (a) or (b) above) contained in this Agreement and such failure
shall not have been remedied or waived within ten days (or, in the case of Section 4.04, within two
Business Days) after an officer of ACI, Donohue or such Obligor becoming aware of such failure;



44









 





     (d) Breach of Representations, Etc. Any representation, warranty, certification or statement
of fact made or deemed made by or on behalf of any other Obligor herein (or any certification by a
Authorized Officer expressly contemplated by this Agreement) shall be incorrect or misleading in
any material respect when made or deemed made;



     (e) [Reserved];



     (f) [Reserved];



     (g) [Reserved];



     (h) Employee Benefit Plans. One or more ERISA Events shall occur which, individually or in
the aggregate, could reasonably be expected to result in liability of any Abitibi Entity or any of
their respective ERISA Affiliates in excess of $25,000,000 during the term hereof; (ii) any fact or
circumstance shall exist that reasonably could be expected to result in the imposition of a Lien or
security interest pursuant to Section 430(k) of the Internal Revenue Code or ERISA or a violation
of Section 436 of the Internal Revenue Code, or (iii) in respect of any Abitibi Entity that is a
Canadian Person, any event (other than the failure to make the payment of the special amortization
payments since the Petition Date) shall occur which would entitle a Person (without the consent of
any Abitibi Entity) to wind-up or terminate a Pension Plan in full or in part, or the institution
of any steps by any Person to withdraw from, terminate participation in, wind-up or order the
termination or wind-up of, in full or in part, any Pension Plan, or any Abitibi Entity that is a
Canadian Person shall receive material correspondence from a Governmental Authority relating to a
potential or actual, partial or full, termination or wind-up of any Pension Plan, or an event
(other than the failure to make the payment of the special amortization payments since the Petition
Date) shall occur respecting any Pension Plan which would result in the revocation of the
registration of such Pension Plan or which could otherwise reasonably be expected to adversely
affect the tax status of any such Pension Plan, or any Abitibi Entity that is a Canadian Person
shall fail to make a required contribution to or payment under any Pension Plan when due (other
than the failure to make the payment of the special amortization payments since the Petition Date);



     (i) [Reserved];



     (j) Relief From Automatic Stay. The Bankruptcy Court or the Canadian Court shall enter an
order or orders granting relief from the automatic stay applicable under Section 362 of the
Bankruptcy Code or the stay arising under the Canadian Amended Order, as applicable, to the holder
or holders of any security interest to permit foreclosure (or the granting of a deed in lieu of
foreclosure or the like) on any assets of any of the Abitibi Entities which have a value in excess
of $10,000,000 in the aggregate;



     (k) [Reserved];



     (l) Pre-Petition Payments. Any Abitibi Entity that is a party to any of the Cases shall make
any Pre-Petition Payment other than Pre-Petition Payments authorized by the Bankruptcy Court in
accordance with “first day” orders entered in the US Cases or as authorized by the Canadian Initial
Order, the Canadian Amended Order, the US Interim Order or other orders of



45









 




the Bankruptcy Court or the Canadian Court entered with the consent of (or non-objection by)
the Agent (acting at the direction of the Majority Banks);




     (m) [Reserved];



     (n) Supportive Actions. Any Abitibi Entity or ABH shall take any action in support of any
matter set forth in paragraph (j) or (l) above or any other Person shall do so and such application
is not contested in good faith by the Obligors and the relief requested is granted in an order that
is not stayed pending appeal;



     (o) Collateral Matters. A final non-appealable order of the Bankruptcy Court or the Canadian
Court shall be entered that provides for the recovery from any portion of the Collateral of any
costs or expenses of preserving or disposing of such Collateral under section 506(c) of the
Bankruptcy Code; or any Abitibi Entity, ABH or the Seller shall bring a motion in any of the Cases
seeking, or otherwise consent to, authority from the Bankruptcy Court or the Canadian Court (i) to
recover from any portions of the Collateral any costs or expenses of preserving or disposing of
such Collateral under section 506(c) of the Bankruptcy Code or (ii) to effect any other action or
actions adverse to the Agent or Banks or their rights and remedies hereunder or their interest in
the Collateral, except to the extent such action (or actions) is an integral part of a transaction
expressly permitted under this Agreement;



     (p) Material Impairment of Rights. Any Abitibi Entity, ABH or the Seller shall seek to, or
shall support (whether by way of motion or other pleadings filed with the Bankruptcy Court or the
Canadian Court or any other writing executed by any Abitibi Entity, ABH or the Seller or by oral
argument) any other Person’s motion to, (1) disallow in whole or in part any of the obligations
arising under this Agreement or any other Transaction Document, (2) challenge the validity and
enforceability of the claims granted or confirmed herein or in the US Interim Order (prior to the
entry of the US Final Order), the US Final Order (thereafter) or the Securitization Provisions of
the Canadian Amended Order, in each case as applicable, in favor of the Agent and the Banks or (3)
challenge the validity or the true sale/contribution nature of the transfers of the Originator
Receivables from the Originators to the Seller;



     (q) Change of Control. A Change of Control shall occur; or



     (r) Event of Termination. An “Event of Termination” (as defined in the ARRPA) shall occur and
be continuing;



     then, and during the continuation of any such event, the Agent may, or at the written
direction of the Majority Banks shall, by written or telecopied notice to ACI and Donohue (with a
copy to counsel for the Official Creditors’ Committee appointed in the Cases, the United States
Trustee for the District of Delaware and the monitor in the Canadian Case), take any or all of the
following actions, at the same or different times, in each case without further order of or
application to the Bankruptcy Court or the Canadian Court (provided, that with respect to clause
(ii) below, the Agent shall provide ACI and Donohue (with a copy to counsel for the Official
Creditors’ Committee in the Cases, the United States Trustee for the District of Delaware and the
monitor in the Canadian Case) with five (5) Business Days’ written notice prior to taking the
action contemplated thereby; in any hearing after the giving of the aforementioned notice, the



46









 





only issue that may be raised by any party in opposition thereto being whether, in fact, an
Event of Default has occurred and is continuing): (i) declare the Guaranteed Obligations and all
other monetary obligations of the Obligors hereunder to be forthwith due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein to the contrary notwithstanding, (ii) set off amounts in any
accounts maintained with the Agent and apply such amounts to the obligations of the Obligors
hereunder and in the other Transaction Documents and (iii) exercise any and all remedies under the
Transaction Documents and under applicable law available to the Agent and the Banks.




ARTICLE 7




Miscellaneous




     SECTION 7.01. Notices. All notices and other communications hereunder shall, unless
otherwise stated herein, be given in writing or by any telecommunication device capable of creating
a written record, to the applicable party at its address set forth below or at such other address
as shall be designated by such party in a notice to the other parties hereto given as provided
herein.



     (a) If to any Guarantor, in all cases (other than in respect of service of process in
accordance with Section 7.08(d)) to:


Abitibi-Consolidated Inc.

1155 Metcalfe Street, Suite 800

Montreal QC H3B 542

Canada

Attention: Treasury Department

Facsimile No.: 514-394-2267




       With a copy to:


Abitibi-Consolidated Inc.

1155 Metcalfe Street, Suite 800

Montreal QC H3B 542

Canada

Attention: Stephanie Leclaire, Chief Legal Officer

Facsimile No.: 514-394-3644




     (b) If to any Guarantor (in respect of service of process in accordance with Section 7.08(d))
to:


Abitibi Consolidated Sales Corporation

55 E. Camperdown Way

Greenville, SC 29601

Attention: Treasury

Facsimile No.: 514-394-2267




47









 








       With a copy to:


Abitibi-Consolidated Inc.

1155 Metcalfe Street, Suite 800

Montreal QC H3B 542

Canada

Attention: Stephanie Leclaire, Chief Legal Officer

Facsimile No.: 514-394-3644




     (c) If to ACI, in all cases to:


Abitibi-Consolidated Inc.

1155 Metcalfe Street, Suite 800

Montreal QC H3B 542

Canada

Attention: Treasury Department

Facsimile No.: 514-394-2267




       With a copy to:


Abitibi-Consolidated Inc.

1155 Metcalfe Street, Suite 800

Montreal QC H3B 542

Canada

Attention: Stephanie Leclaire, Chief Legal Officer

Facsimile No.: 514-394-3644




     (d) If to the Agent, in all cases to:


Citibank, N.A.

390 Greenwich Street

1st Floor

New York, New York 10013

Attention: David Jaffe

Facsimile No.: 212-723-8721




     (e) If to any Bank, in accordance with Section 10.02 of the ARRPA.



     All notices and other communications given to any party hereto in accordance with the
provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered
by hand or overnight courier service or sent by telecopy equipment of the sender, or on the date
five Business Days after dispatch by certified or registered mail if mailed, in each case
delivered, sent or mailed (properly addressed) to such party as provided in this Section 7.01 or in
accordance with the latest unrevoked direction from such party given in accordance with this
Section 7.01.



48









 





     SECTION 7.02. Survival of Agreements, Representations and Warranties, Etc. All warranties,
representations and covenants made by any Obligor herein or in any certificate or other instrument
delivered by any Obligor or on its behalf in connection with the Transaction Documents shall be
considered to have been relied upon by the Banks and the other parties hereto and shall survive the
execution and delivery of the Transaction Documents and the purchase of any Receivable Interests by
the Banks pursuant to the ARRPA, regardless of any investigation made by the Banks or such other
parties or on their behalf and notwithstanding that the Agent or any Bank may have notice or
knowledge of any Default or incorrect representation or warranty at the time any such purchase, and
shall continue in full force and effect so long as any amount due or to become due under the
Transaction Documents is outstanding and unpaid and any Purchase Limit remains in effect.



     SECTION 7.03. No Waiver. No failure or delay by the Agent in exercising any right, power or
privilege under this Agreement or the ARRPA shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.



     SECTION 7.04. Amendments and Waivers. Any provision of this Agreement may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed by the Agent (acting
in accordance with Section 10.01 of the ARRPA) and the Obligors.



     SECTION 7.05. Successors and Assigns. This Agreement shall be binding upon the Obligors and
their successors and assigns, for the benefit of the Banks and their successors and assigns, except
that no Obligor may transfer or assign any or all of its rights or obligations hereunder without
the prior written consent of the Agent.



     SECTION 7.06. Damages Waiver. To the extent permitted by applicable law, no Obligor shall
assert, and each hereby waives, any claim against any Indemnified Party, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement or any other
Transaction Document.



     SECTION 7.07. Severability. In case any one or more of the provisions contained in this
Agreement shall be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained therein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of which comes as
close as possible to that of the invalid, illegal or unenforceable provisions.



     SECTION 7.08. Governing Law; Jurisdiction; Etc.. (a) This Agreement shall be construed in
accordance with and governed by the law of the State of New York.



     (b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the Bankruptcy Court and, if the Bankruptcy Court
does not have (or abstains from) jurisdiction, any New York State or Federal court sitting in New
York City in any action or proceeding arising out of or relating to this Agreement or the other
Transaction Documents, or for recognition or enforcement of any judgment, and each party



49









 




hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in any such New York State court or, to the extent
permitted by law, in such Federal court. The parties hereto hereby irrevocably waive, to the
fullest extent they may effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding. The parties hereto agree that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.




     (c) Each party hereto irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection that it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this Agreement or any other
Transaction Document in any court referred to in subsection (b) of this Section. Each party hereto
irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of any such suit, action or proceeding in any such court.



     (d) Each Guarantor consents to the service of any and all process in any such action or
proceeding by the mailing of copies of such process to it in care of ACSC at its address specified
in Section 7.01(b). ACI consents to the service of any and all process in any such action or
proceeding by the mailing of copies of such process to the attention of the ACSC at its address
specified in Section 7.01(c), or in any other manner permitted by applicable law. Nothing in this
Section 7.08 shall affect the right of any Bank or the Agent to serve legal process in any other
manner permitted by law.



     SECTION 7.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE MAXIMUM EXTENT
PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR ANY OTHER
DOCUMENT EXECUTED OR DELIVERED PURSUANT HERETO.



     SECTION 7.10. Counterparts; Integration. This Agreement may be executed in counterparts (and
by different parties hereto on different counterparts), each of which shall constitute an original,
but all of which when taken together shall constitute a single contract. Delivery by telecopier,
PDF or other electronic means of an executed counterpart of a signature page to this Agreement
shall be effective as delivery of an original executed counterpart of this Agreement. This
Agreement, the other Transaction Documents and any separate letter agreements with respect to fees
payable to the Agent constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof.



     SECTION 7.11. Judgment Currency. (a) If for the purposes of obtaining judgment in any court
it is necessary to convert a sum due hereunder in Dollars into another currency, the parties hereto
agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall
be that at which in accordance with normal banking procedures the Agent or its assigns could
purchase Dollars with such other currency at New York, New York on the Business Day preceding that
on which final judgment is given.



50









 





     (b) The obligations of the each Guarantor (each, a “Payor”) in respect of any sum due from
such Payor to the Banks or the Agent (each, a “Recipient”) hereunder shall, notwithstanding any
judgment in a currency other than Dollars, be discharged only to the extent that on the Business
Day following such Recipient’s receipt of any sum adjudged to be so due in such other currency,
such Recipient may, in accordance with normal banking procedures purchase (and remit in New York)
Dollars with such other currency; if the Dollars so purchased and remitted are less than the sum
originally due to such Recipient in Dollars, the relevant Payor agrees, as a separate obligation
and notwithstanding any such judgment, to indemnify the relevant Recipient against such loss, and
if the Dollars so purchased exceed the sum originally due to the relevant Recipient in Dollars, the
relevant Recipient agrees to remit to the relevant Payor such excess.



     SECTION 7.12. Assignment of Guaranteed Obligations. In accordance with the terms of Section
10.03 of the ARRPA, each Bank may from time to time without notice to the undersigned (or any of
them), assign or transfer its Guaranteed Obligations or any interest therein to an Eligible
Assignee. Notwithstanding any such assignment or transfer made in accordance with Section 10.03 of
the ARRPA, such Guaranteed Obligations shall be and remain Guaranteed Obligations for the purposes
of this Agreement, and each and every assignee or transferee of any of the Guaranteed Obligations
or of any interest therein (to the extent such assignment or transfer was effected in accordance
with Section 10.03 of the ARRPA) shall, to the extent of the interest of such assignee or
transferee in the Guaranteed Obligations, be entitled to the benefits of this Guaranty to the same
extent as if such assignee or transferee were a Bank as of the Effective Date.



     SECTION 7.13. Execution By ACI. This Agreement shall be considered to be executed and
delivered by ACI in the United States of America and once an authorized director or officer of ACI
resident in the United States of America has executed the same.



     SECTION 7.14. Interpretation (Québec). For purposes of any assets, liabilities or entities
located in the Province of Québec and for all other purposes pursuant to which the interpretation
or construction of this Agreement may be subject to the laws of the Province of Québec or a court
or tribunal exercising jurisdiction in the Province of Québec, (a) “personal property” shall
include “movable property”, (b) “tangible property” shall include “corporeal property”, (c)
“intangible property” shall include “incorporeal property”, (d) “security interest”, “mortgage” and
“lien” shall include a “hypothec”, (e) all references to filing, perfection, priority, remedies,
registering or recording under the UCC or PPSA shall include publication under the Civil Code of
Québec, (f) all references to “perfection” of or “perfected” liens or security interest shall
include a reference to an “opposable” or “set up” lien or security interest as against third
parties, (g) any “right of offset”, “right of setoff” or similar expression shall include a “right
of compensation”, (h) “goods” shall include “corporeal movable property” other than chattel paper,
documents of title, instruments, money and securities, (i) an “agent” shall include a “mandatary”,
(j) “joint and several” shall include “solidary”; (k) “gross negligence or willful misconduct”
shall be deemed to be “intentional or gross fault”; (l) “priority” shall include “prior claim”; (m)
“state” shall include “province” and (n) “accounts” shall include “claims”.



51









 





     SECTION 7.15. Language. This Agreement and all related documents have been written in the
English language at the express request of the parties. Le présent contrat ainsi que tous les
documents s’y rattachant ont été rédigés en anglais à la demande expresse des parties.



     SECTION 7.16. Effectiveness. This Agreement shall become effective when (x) copies hereof
which, when taken together, bear the signatures of ACI and each of the Guarantors shall have been
received by the Agent and (y) the ARRPA shall have become effective in accordance with its terms.



52









 





     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.



	 	 	 	 	 
	 	OBLIGORS:



   ABITIBI-CONSOLIDATED INC., as
an Obligor

 
	 
	 	   By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	GUARANTORS AND OBLIGORS:



   DONOHUE CORP.,
as a Guarantor and Obligor


	 
	 	   By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	   ABITIBI CONSOLIDATED SALES
CORPORATION,

  as a Guarantor and Obligor


	 
	 	   By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	   ABITIBI-CONSOLIDATED CORP.,

  as a Guarantor and Obligor


	 
	 	   By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	AUGUSTA WOODLANDS, LLC,

as a Guarantor and Obligor

By:  ABITIBI-CONSOLIDATED CORP.,
        
its Sole Member

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	ABITIBI-CONSOLIDATED ALABAMA
CORPORATION,

as a Guarantor and Obligor


	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	ALABAMA RIVER NEWSPRINT COMPANY,

as a Guarantor and Obligor


	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 









 






	 	 	 	 	 



Agreed to and accepted by:




 CITIBANK, N.A., as Agent




	 	 	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




 









 








EXHIBIT A




Form of Intercompany Subordination Agreement





 









 









SCHEDULE 3.07




Adverse Proceedings





     All Adverse Proceedings as have been disclosed in AbitibiBowater Inc.’s Annual Report on Form 10-K
filed on April 30, 2009 and Quarterly Report on Form 10-Q filed on May 15, 2009 (SEC File No.
001-33776), which include the following:




	 	-	 	AbitibiBowater Inc. v. Government of Canada: expropriation of AbitibiBowater’s assets
in the Province of Newfoundland and Labrador.






 









 








SCHEDULE 3.09




Environmental Matters



No known exceptions.





 









 








SCHEDULE 3.11




ERISA and Pension Plan Matters




I. Disclosures related to Canadian Law




Promises of Benefit Improvements:





(1) Promise to amend some pension plans (the “2009 Plans”) effective January 1, 2009 to provide
cost of living increase of pensions in payment to eligible retirees effective January 1, 2009,
January 1, 2011 and January 1, 2013 (for Alma, increases are January 1, 2010, January 1, 2012
and January 1, 2014).




(2) Promise to amend the 2009 Plans effective May 1, 2009, including the following:




	 	•	 	Increase in member contributions to 7.5% of earnings from May 1, 2009 (7.3% at
Thorold)
	 
	 	•	 	Increase in pension formula for all service from 1.70% to 1.75% of final (or best,
as applicable) five-year average earnings for eligible employees retiring from active
service (for Fort Frances, pension is based on greater of minimum formula which is
being increased from 1.70% to 1.75% and formula of 2% with an offset which is being
reduced from .15% to .08% of final average earnings up to final average YMPE; for
Alma, formula is being increased to 1.79% of final average earnings times credited
service, less offset equal to 1/35 of QPP pension)
	 
	 	•	 	Change in early retirement provisions to provide no reduction in the pension and
bridge benefit amounts (subject to minimum reductions imposed by the tax rules) for
eligible employees retiring from active service at age 57 with at least 20 years of
service (For Alma, bridge benefit amount before age 60 also increased from $32 to
$33).






The promise to amend the 2009 Plans referenced in paragraphs (1) and (2) above applies to
unionized members that were covered by the applicable collective agreements.




The cost of living increase referenced in paragraph (1) has been paid since January 1, 2009 to
the members of the 2009 Plans. The promises to amend the 2009 Plans referenced in paragraph (2)
will not be implemented until amendments have been filed with and registered by the relevant
pension regulatory authorities and the Canada Revenue Agency.




(3) Promise to amend other pension plans (the “2010 Plans”) effective January 1, 2010 to provide
cost of living increase of pensions in payment to eligible retirees effective January 1, 2010,
January 1, 2012 and January 1, 2014.




(4) Promise to amend the “2010 Plans effective May 1, 2010, including the following:




	 	•	 	Increase in member contributions to 7.5% of earnings from May 1, 2010




 









 












	 	•	 	Increase in pension formula for all service from 1.70% to 1.75% of final (or best,
as applicable) five-year average earnings for eligible employees retiring from active
service
	 
	 	•	 	Change in early retirement provisions to provide no reduction in the pension and
bridge benefit amounts (subject to minimum reductions imposed by the tax rules) for
eligible employees retiring from active service at age 57 with at least 20 years of
service.





Suspension of Non-Registered Plans Payments:



On April 17, 2009, ACI suspended any and all payments of all benefits under all non-registered
Pension Plans.



Decision Received from the Quebec Pension Regulator:



On May 11, 2009, the Quebec pension regulator (“Régie des rentes du Québec”) ordered in a formal
decision to limit the payments from the plans regulated by the Quebec pension regulator to monthly
pension benefits paid and to be paid from the plans, transfers of additional voluntary
contributions and contributions credited to a member in a defined contribution section of a plan
and the payment of the plans’ administration fees and expenses. The Obligors have decided to apply
this decision to all their Canadian pension plans.




Financial Services Tribunal-Hearing — ACI:



On July 22, 2008, ACI, filed a request for hearing regarding a Notice of Proposal of the Deputy
Superintendent, Pensions (Ontario), dated June 27, 2008, to refuse to consent to transfers of
assets effective January 1, 1998, from the Stone Salaried Plan and the Abitibi Non-Union Plan to
the Stone Non-Union Plan under section 81 of the PBA. The pension plans impacted by the Notice of
Proposal and the hearing before the Tribunal are: the “Pension Plan for Salaried Employees of
Stone-Consolidated Corporation”, Ontario Registration Number 0202424, the “Pension Plan for
Non-Union Employees of Abitibi-Consolidated Inc.”, Ontario Registration Number 0472928 and the
“Pension Plan for Non-Union Employees of Abitibi Consolidated Inc.”, Quebec Registration Number
101793



On May 1, 2009, ACI advised the Tribunal that it was subject to an Order dated April 17, 2009
issued by the Superior Court of Quebec pursuant to the Companies Creditors Arrangement Act, and
requested a stay of the Tribunal’s proceedings. Abitibi-Consolidated Inc. also advised that the
Superintendent did not object to the request for a stay of these proceedings. The Tribunal granted
an adjournment of the matter and directed Abitibi-Consolidated Inc. to provide the Tribunal with an
update by November 2, 2009.




II. Disclosures related to U.S. law



The following ERISA Events have occurred or are reasonably expected to occur, without regard to
whether any of such ERISA Events could reasonably be expected to have a Material Adverse Effect:




4









 









(A) The filing of the US Cases by AbitibiBowater Inc. constituted a reportable event as
defined in PBGC Regulations §4043.35(a)(1) with respect to the AbitibiBowater Inc.
Retirement Plan, the AbitibiBowater Inc. Pension Plan, the Abitibi Consolidated U.S. Pension
Plan for Certain Hourly-Paid Employees, and the Abitibi Consolidated U.S. Retirement Plan.
Notices of such reportable events were filed with the PBGC on May 18, 2009.




(B) It is anticipated that the announced closing of the Alabama River Newsprint paper mill
owned by Abitibi-Consolidated Alabama Corporation will cause the number of active
participants in the Abitibi Consolidated U.S. Retirement Plan to decrease to less than 80%
of the active participants at the beginning of the 2009 plan year, which will constitute a
reportable event as defined in PBGC Regulations §4043.23.




(C) The anticipated closing of the Alabama River Newsprint paper mill may also result in
the imposition of joint and several liability on the Abitibi Entities that are US Persons
pursuant to Section 4062(e) of ERISA.




(D) Corporate restructuring occurring pursuant to the US Cases may result in various other
reportable events, including changes in contributing sponsors or members of the controlled
group within the meaning of PBGC Regulations §4043.29 or transfers of benefit liabilities
within the meaning of PBGC Regulations §4043.32


The following Employee Benefit Plans provide for health and welfare benefits to retired and former
employees of Abitibi Entities or their ERISA Affiliates for which Abitibi Entities may be liable,
without regard to whether such liabilities could reasonably be expected to have a Material Adverse
Effect:





(A) AbitibiBowater Benefit Plan, as restated effective January 1, 2009, incorporating the
retiree medical programs described in Section 1.04 thereof.


Although the most recent actuarial valuation for the AbitibiBowater Inc. Retirement Plan, the
AbitibiBowater Inc. Pension Plan, the Abitibi Consolidated U.S. Pension Plan for Certain
Hourly-Paid Employees, and the Abitibi Consolidated U.S. Retirement Plan, as of January 1, 2009,
have not yet completed, it may be anticipated in light of recent market developments that the
present value of the aggregate benefit liabilities of some or all of such plans may exceed the
aggregate value of the assets of such plan, although the amount of such excess, and whether it
could reasonably be expected to have a Material Adverse Effect, cannot be determined at this time.





5









 








SCHEDULE 3.12




Donohue Subsidiaries




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Ownership
	Subsidiary	 	Jurisdiction	 	(direct or indirect)
	Abitibi-Consolidated Corp.
	 	Delaware	 	 	100	%
	Abitibi-Consolidated U.S. Funding Corp.
	 	Delaware	 	 	100	%
	Abitibi Consolidated Sales Corporation
	 	Delaware	 	 	100	%
	Abitibi-Consolidated Alabama Corporation
	 	Alabama	 	 	100	%
	Alabama River Newsprint Company
	 	Alabama	 	 	100	%
	Augusta Newsprint Company
	 	Georgia	 	 	52.5	%
	Augusta Woodlands, LLC
	 	Delaware	 	 	100	%







 









 








SCHEDULE 4.01




Website Address



The website addresses on which links to documents required to be delivered pursuant to Section 4.01
may be posted are as follows:





	 	-	 	AbitibiBowater, Inc.: www.abitibibowater.com
	 
	 	-	 	SEC EDGAR: www.sec.gov/edgar.shtml