# EDGAR Filing Document

**Accession Number:** 0001381531
**File Stem:** 0001193125-26-131800
**Filing Date:** 2026-3
**Character Count:** 672313
**Document Hash:** 5fd282be49553db64f248240aa5500b5
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-26-131800.hdr.sgml**: 20260330

**ACCESSION NUMBER**: 0001193125-26-131800

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 154

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260330

**DATE AS OF CHANGE**: 20260330

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Domtar CORP
- **CENTRAL INDEX KEY:** 0001381531
- **STANDARD INDUSTRIAL CLASSIFICATION:** PAPER MILLS [2621]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 205901152
- **STATE OF INCORPORATION:** SC
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-33164
- **FILM NUMBER:** 26813259

**BUSINESS ADDRESS:**
- **STREET 1:** 234 KINGSLEY PARK DRIVE
- **CITY:** FORT MILL
- **STATE:** SC
- **ZIP:** 29715
- **BUSINESS PHONE:** (803) 802-7500

**MAIL ADDRESS:**
- **STREET 1:** 234 KINGSLEY PARK DRIVE
- **CITY:** FORT MILL
- **STATE:** SC
- **ZIP:** 29715

?xml version='1.0' encoding='ASCII'? 10-K

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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

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**FORM** 10-K

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☒ **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** 

**For the fiscal year ended** December 31**,** 2025

**or**

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO** 

**Commission File Number:** 001-33164

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Domtar Corporation

**(Exact name of registrant as specified in its charter)**

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| | |
|:---|:---|
| Delaware<br>**(State or other jurisdiction of incorporation or organization)** | 20-5901152<br>**(I.R.S. Employer Identification No.)** |
| 395 de Maisonneuve Blvd. West<br>Montreal**,** Quebec**,** Canada H3A 1L6<br>**(**514**)** 848-5555 | <br>234 Kingsley Park Drive<br>Fort Mill**,** SC 29715<br> **(**803**)** 802-7500 |

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**(Address of principal executive offices, zip code, telephone number)**

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Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☒ No ☐

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ \*

\*The Registrant is a voluntary filer and not subject to the filing requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934. Although not subject to these filing requirements, the Registrant has filed all reports that would have been required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months had the Registrant been subject to such requirements.

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒  | Small reporting company | ☐ |
| Emerging growth company | ☐ |  |  |

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the shares of common stock on The New York Stock Exchange on June 30, 2025, was nil.

There are no publicly traded common shares of Domtar Corporation.

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**DOMTAR CORPORATION**

**ANNUAL REPORT ON FORM 10-K**

**FOR THE YEAR ENDED DECEMBER 31, 2025**

**TABLE OF CONTENTS**

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| | | |
|:---|:---|:---|
|  |  | **<u>PAGE</u>** |
| **PART I** | **PART I** | **PART I** |
| **ITEM 1** | [**<u>BUSINESS</u>**](#item_1_business) | 3 |
| **ITEM 1A** | [**<u>RISK FACTORS</u>**](#item_1a_risk_factors) | 11 |
| **ITEM 1B** | [**<u>UNRESOLVED STAFF COMMENTS</u>**](#item_1b_unresolved_staff_comments) | 22 |
| **ITEM 1C** | [**<u>CYBERSECURITY</u>**](#item1c_cybersecurity) | 22 |
| **ITEM 2** | [**<u>PROPERTIES</u>**](#item_2_properties) | 23 |
| **ITEM 3** | [**<u>LEGAL PROCEEDINGS</u>**](#item_3_legal_proceedings) | 23 |
| **ITEM 4** | [**<u>MINE SAFETY DISCLOSURES</u>**](#item_4_mine_safety_disclosures) | 23 |
| **PART II** | **PART II** | **PART II** |
| **ITEM 5** | [**<u>MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES</u>**](#item_5_market_for_registrants_common_equ) | 24 |
| **ITEM 6** | [**<u>RESERVED</u>**](#item_6) | 24 |
| **ITEM 7** | [**<u>MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</u>**](#item_7_managements_discussion_analysis_f) | 25 |
| **ITEM 7A** | [**<u>QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK</u>**](#item_7a_quantitative_qualitative_disclos) | 44 |
| **ITEM 8** | [**<u>FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA</u>**](#item_8_financial_statements_supplementar) | 46 |
|  | [<u>Management's Reports to Shareholders of Domtar Corporation</u>](#managements_reports_to_shareholders_domt) | 46 |
|  | [<u>Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm</u>](#report_public_accountant)<br>[<u>(PCAOB ID:</u> 271<u>)</u>](#report_public_accountant) | 47 |
|  | [<u>Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss)</u>](#consolidated_statements_earnings_compreh) | 49 |
|  | [<u>Consolidated Balance Sheets</u>](#consolidated_balance_sheets) | 50 |
|  | [<u>Consolidated Statement of Shareholders' Equity</u>](#shareholders_equity) | 51 |
|  | [<u>Consolidated Statements of Cash Flows</u>](#cash_flows) | 52 |
|  | [<u>Notes to Consolidated Financial Statements</u>](#notes_to_consolidated_financial_statemen) | 53 |
| **ITEM 9** | [**<u>CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE</u>**](#item_9_changes_in_disagreements_with_acc) | 126 |
| **ITEM 9A** | [**<u>CONTROLS AND PROCEDURES</u>**](#item_9a_controls_procedures) | 126 |
| **ITEM 9B** | [**<u>OTHER INFORMATION</u>**](#item_9b_or_information) | 126 |
| **ITEM 9C** | [**<u>DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS</u>**](#disclosure_regarding_foreign_jurisd) | 126 |
| **PART III** | **PART III** | **PART III** |
| **ITEM 10** | [**<u>DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE</u>**](#item_10_directors_executive_ficers_corpo) | 126 |
| **ITEM 11** | [**<u>EXECUTIVE COMPENSATION</u>**](#item_11_executive_compensation) | 127 |
| **ITEM 12** | [**<u>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS</u>**](#item_12_security_ownership_certain_benef) | 143 |
| **ITEM 13** | [**<u>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE</u>**](#item_13_certain_relationships_related_tr) | 143 |
| **ITEM 14** | [**<u>PRINCIPAL ACCOUNTANT FEES AND SERVICES</u>**](#item_14_principle_accountant_fees_servic) | 143 |
| **PART IV** | **PART IV** | **PART IV** |
| **ITEM 15** | [**<u>EXHIBITS AND FINANCIAL STATEMENT SCHEDULES</u>**](#item_15_exhibits_financial_statement_sch) | 144 |
|  | [<u>Schedule II – Valuation and Qualifying Accounts</u>](#schedule_ii_valuation_qualifying_account) | 146 |
| **ITEM 16** | [**<u>FORM 10-K SUMMARY</u>**](#item_16_10k_summary) | 147 |
|  | [**<u>SIGNATURES</u>**](#signaturepoa) | 148 |

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**<u>PART</u> <u>I</u>**

**<u>ITEM 1. B</u><u>USINESS</u>**

*Throughout this Annual Report on Form 10-K, unless otherwise specified, "Domtar Corporation," "the Company," "Domtar," "we," "us" and "our" refer to Domtar Corporation, its subsidiaries, as well as its investments.*

**GENERAL**

We design, manufacture, market and distribute a wide variety of fiber-based products including paper, market pulp, wood products and tissue, which are marketed in over 90 countries. We are the largest integrated manufacturer and marketer of uncoated freesheet paper and uncoated mechanical papers in North America as well as a leading global producer of newsprint, fluff, recycled and softwood pulp. We own or operate manufacturing facilities, including pulp and paper mills, tissue facilities and sawmills in the U.S. and Canada. Our paper and tissue manufacturing operations are supported by converting and forms manufacturing operations.

**AVAILABILITY OF INFORMATION**

In this Annual Report on Form 10-K, we incorporate by reference certain information contained in other documents filed with or furnished to the U.S. Securities and Exchange Commission ("SEC") and we refer you to such information. We file annual, quarterly and current reports and other information with the SEC available on the SEC's website at www.sec.gov free of charge as soon as reasonably practicable after we have filed or furnished the above-referenced reports.

**REPORTABLE SEGMENTS**

We manage and report our operating results through three reportable segments, also referred to as Business Units: Paper and Packaging, Pulp and Tissue and Wood Products. For additional information, refer to Item 8, Financial Statements and Supplementary Data, under Note 21 "Segment Disclosures," and Item 7, Management's Discussion and Analysis of Financial Conditions and Results of Operations.

**OUR BUSINESS OVERVIEW**

**Paper and Packaging**: We have six integrated pulp and paper mills, with an annual paper production capacity of approximately 2.2 million tons of uncoated freesheet paper, serving a variety of customers, including merchants, retail outlets, stationers, printers, publishers, converters and end-users. We also have one mechanical paper mill with an annual paper production capacity of 265,000 tons of coated papers, directory and specialty papers. Our paper manufacturing operations are supported by converting and forms manufacturing operations. We produce a wide variety of paper, including office papers, printing and publishing papers, digital & production inkjet papers, technical and specialty papers and converting papers. We have one mill that manufactures packaging materials made from 100% recycled content with a production capacity of approximately 600,000 tons annually of high-quality recycled linerboard and corrugating medium, providing us with a strategic footprint in a growing market. In addition, we produce fluff pulp at our pulp mills at Ashdown and Plymouth and softwood pulp at our Skookumchuck pulp mill. We can sell approximately 1.4 million metric tons of market pulp per year depending on market conditions.

**Pulp and Tissue:** We produce softwood pulp at our pulp mill in Saint-Félicien, and recycled pulp at our Menominee pulp mill. We can sell approximately 0.4 million metric tons of market pulp per year depending on market conditions. We produce newsprint and specialty papers at five mills strategically located to serve major markets with a total capacity of 1.0 million tons. Our specialty papers comprise uncoated mechanical papers, including supercalendered paper and white paper. We produce tissue products at three facilities, with a total capacity of 128,000 tons. We have a total of 11 tissue converting lines. We manufacture a range of tissue products for the retail and away-from-home markets, including recycled and virgin paper products, covering premium, value and economy grades.

**Wood Products:** We own or operate 13 sawmills in Canada and two sawmills in the southern U.S., with a total mechanical capacity of approximately 2,616 million board feet. Our Canadian sawmills produce dimension spruce-pine-fir lumber and provide wood chips to our pulp and paper mills in Canada and third parties. Our U.S. sawmills produce dimension lumber and decking from southern yellow pine and provide wood chips and other wood residue to one of our pulp and paper mills in the U.S. as well as third-party pulp and paper mills and other end users for use as fuel to produce electricity and steam based on renewable sources. We also operate two remanufactured wood products facilities that manufacture bed frame components, finger joints and furring strips, two engineered wood products facilities that produce I-joists for the construction industry, and one wood pellet facility.

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**OUR OPERATIONS**

**Paper, Pulp and Tissue**

The table below lists our operating paper, pulp and tissue manufacturing facilities, the number of machines we operate and their annual production capacity:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Fiberline Pulp Capacity** | **Fiberline Pulp Capacity** | **Saleable Paper** | **Saleable Paper** | **Tissue** | **Tissue** |
|  | **# lines** | **('000 ADMT)** <sup>(1)</sup> | **# machines** | **('000 ST)** <sup>(1, 2)</sup> | **# machines** | **('000 ST)** <sup>(1)</sup> |
| **PAPER AND PACKAGING** |  |  |  |  |  |  |
| **Paper** |  |  |  |  |  |  |
| Windsor, Quebec | 1 | 447 | 2 | 642 |  |  |
| Hawesville, Kentucky | 1 | 412 | 2 | 596 |  |  |
| Marlboro, South Carolina | 1 | 320 | 1 | 274 |  |  |
| Johnsonburg, Pennsylvania | 1 | 228 | 2 | 344 |  |  |
| Nekoosa, Wisconsin | 1 | 155 | 3 | 168 |  |  |
| Rothschild, Wisconsin | 1 | 65 | 1 | 131 |  |  |
| Port Alberni, British Columbia |  |  | 2 | 265 |  |  |
| Kingsport, Tennessee |  |  | 1 | 600 |  |  |
| *Total* | 6 | 1627 | 14 | 3020 |  |  |
| **Pulp** |  |  |  |  |  |  |
| Ashdown, Arkansas | 3 | 725 |  |  |  |  |
| Plymouth, North Carolina | 2 | 390 |  |  |  |  |
| Skookumchuck, British Columbia | 1 | 290 |  |  |  |  |
| *Total* | 6 | 1405 |  |  |  |  |
| ***TOTAL Paper and Packaging*** | **12** | **3032** | **14** | **3020** | **—** | **—** |
| **Trade Pulp** <sup>(3)</sup> |  | **1453** |  |  |  |  |
| **PULP AND TISSUE** |  |  |  |  |  |  |
| **Paper** |  |  |  |  |  |  |
| Clermont, Quebec |  |  | 1 | 244 |  |  |
| Gatineau, Quebec |  |  | 1 | 214 |  |  |
| Alma, Quebec |  |  | 1 | 233 |  |  |
| Dolbeau, Quebec |  |  | 1 | 159 |  |  |
| Kénogami, Quebec |  |  | 1 | 148 |  |  |
| *Total* |  |  | 5 | 998 |  |  |
| **Pulp** <sup>(4)</sup> |  |  |  |  |  |  |
| Saint-Félicien, Quebec | 1 | 357 |  |  |  |  |
| Menominee, Michigan | 1 | 171 |  |  |  |  |
| *Total* | 2 | 528 |  |  |  |  |
| **Tissue** |  |  |  |  |  |  |
| Calhoun. Tennessee |  |  |  |  | 1 | 66 |
| Hialeah, Florida |  |  |  |  | 2 | 34 |
| Sanford, Florida |  |  |  |  | 1 | 28 |
| *Total* |  |  |  |  | 4 | 128 |
| ***TOTAL Pulp and Tissue*** | **2** | **528** | **5** | **998** | **4** | **128** |
| **Trade Pulp** <sup>(3)</sup> |  | **357** |  |  |  |  |

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(1) ADMT refers to an air-dry metric ton and ST refers to short ton. (2) Paper capacity is based on an operating schedule of 360 days and the production at the winder. (3) Estimated third-party shipments dependent upon market conditions. (4) On March 24, 2026, we announced the indefinite idling of our Coosa Pines pulp mill for an expected period greater than one year. This closure is reflected in the table above.

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**Wood** 

The following table lists the total mechanical capacity, reflecting the impact of any downtime taken, of our sawmills by region. We do not have access to enough fiber to operate all of the sawmills at their total mechanical capacity. Total capacity is based on an operating schedule of approximately 355 days.

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| | |
|:---|:---|
| (in million board feet) | **Total Capacity** |
| **Canada** |  |
| &nbsp;&nbsp;Quebec <sup>(1)</sup> | 1680 |
| &nbsp;&nbsp;Ontario | 592 |
| **U.S.** | 344 |
|  | 2616 |

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(1) Includes Sociéte en Commandite Scierie Opitciwan, located in Obedjiwan, an equity method investment in which we have a 45% interest. The amounts in the above table include the sawmill's total capacity.

The table below lists the remanufactured wood, engineered wood, and wood pellet products facilities we owned or operated during the year ended December 31, 2025, and their respective 2025 capacity. Total capacity is based on an operating schedule of approximately 355 days.

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| | |
|:---|:---|
|  | **Total Capacity** |
| Remanufactured Wood Products Facilities (Quebec) - in million board feet | 82 |
| Engineered Wood Products Facilities (Quebec) - in million linear feet | 120 |
| Wood Pellet Products Facility (Ontario) - in thousands of metric tons | 45 |

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**Other products** 

We sell power produced from renewable sources and wood-related products and by-products to customers located in U.S. and Canada. Sales of these other products are considered a recovery of the cost of manufacturing our primary products.

**OUR PRODUCT OFFERING**

***Paper***

Our paper sales channels are aligned to bring a competitive and complete product offering to our varied customers. Our sales, customer service, marketing and production teams work closely together to provide high-quality products, exceptional service and expert support to merchants, converters, end-users, stationers, printers and retailers. We sell our products indirectly through distribution networks and directly to end-users and others who influence paper purchasing decisions in order to enhance brand recognition and increase demand for our products. In addition, our sales, marketing and product management teams work closely with technology teams and mill-based product development personnel and undertake product development and innovation initiatives with customers in order to better serve their business needs and to support future growth opportunities.

We sell business papers to office supply retailers, dealers, wholesalers, merchants, office equipment manufacturers and retail outlets. We distribute uncoated commercial printing, transactional printing and publishing papers to end-users and commercial printers, mainly through paper merchants, as well as selling directly to converters. We sell our specialty and packaging papers mainly to converters, who apply a further production process such as coating, laminating, folding or waxing to our papers before selling them to a variety of specialized end-users. Our publishing papers portfolio comprises uncoated and coated mechanical papers, as well as uncoated freesheet papers. Our publishing papers are used in books, retail inserts, direct mail, coupons, magazines, catalogs, bags and other commercial printing applications. We sell newsprint to newspaper publishers worldwide and to commercial printers in North America for uses such as inserts and flyers. Our packaging paper comprises high-quality recycled linerboard and corrugating medium that we sell to independent corrugated box converters for use in a wide range of packaging applications.

***Market Pulp***

Our pulp products comprise softwood, fluff and recycled bleached kraft. Our pulp grades are sold to customers and are used in a variety of end-products, such as diapers and personal hygiene products, bathroom and facial tissue, specialty and packaging papers, printing and writing grades, building products and electrical insulating papers. We sell market pulp to customers in North America mainly through a North American sales force, while sales to most overseas customers are made directly or through commission agents. We maintain pulp supplies at strategically located warehouses, which allow us to respond to customer orders on short notice.

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***Wood products*** 

Our Canadian sawmills produce dimension spruce-pine-fir lumber and provide wood chips to our pulp and paper mills in Canada and third parties. Our sawmills also supply wood residue to our pulp and paper mills for use as fuel to produce electricity and steam. Our U.S. sawmills produce dimension lumber and decking from southern yellow pine and provide wood chips and other wood residue to one of our mills in the U.S. as well as third party pulp and paper mills and other end-users. We also operate two remanufactured wood products facilities that manufacture bed frame components, finger joints, and furring strips, two engineered wood products facilities that produce I-joists for the construction industry, and one wood pellet facility, all of which are located in Quebec and Ontario.

***Tissue*** 

We manufacture a range of tissue products for the retail and away-from-home markets, including recycled and virgin paper products, covering premium, value and economy grades that are ideally suited to serve U.S. customers. We also sell parent rolls not converted into tissue products.

Based on market interest, we offer a number of our products, including pulp and paper, wood and tissue, with specific designations from one or more globally recognized forest management and chain of custody standard-setting organizations, as well as product specifications to meet customers' requirements.

**OUR CUSTOMERS**

Our ten largest customers represented approximately 28% of our sales in 2025. In 2025, no single customer represented 10% or more of our sales. The majority of our customers purchase products through individual purchase orders. In 2025, approximately 71% of our sales were in the United States, 10% were in Canada, were 11% in Asia and 8% were in other countries.

**OUR RAW MATERIALS** 

The manufacture of our products requires fiber, chemicals and energy. We discuss these three major raw materials used in our manufacturing operations below.

***Fiber*** 

Our sources of wood include purchases from local producers, including sawmills that supply residual wood chips, wood harvested from government-owned land on which we hold timber supply guarantees or harvesting rights, and wood harvesting from property we own or lease. The fiber used by our operations in the U.S. is mainly wood fiber (softwood and hardwood) as well as old corrugated containers ("OCC"). The fiber used at our operations in Canada is both hardwood and softwood and includes a significant amount of residual sawmill chips from our owned sawmills. Access to fiber harvested on public lands in Ontario and Quebec is subject to licensing and review by the relevant governmental authorities.

We depend heavily on harvesting rights and timber supply guarantees over government-owned land in Ontario and Quebec, respectively. The volume of harvest permitted under these licenses is subject to limits, which are generally referred to as the annual allowable cut ("AAC"). Approximately 25% of the total allowable harvesting rights in Quebec are allocated through an open auction system. The prices generated by the auction system are used to set pricing for the remainder of the AAC. The timber requirements for our U.S. sawmills are met mostly by purchasing timber from timberland owners.

***Chemicals***

We use various chemical compounds in our manufacturing operations that we purchase, primarily on a centralized basis, through contracts varying between one and ten years in duration to ensure product availability. Most of the contracts have pricing that fluctuates based on prevailing market conditions. For pulp manufacturing, we use numerous chemicals including caustic soda, sodium chlorate, sulfuric acid, hydrogen peroxide and lime. For paper manufacturing, we also use several chemical products including starch, precipitated calcium carbonate, clay, optical brighteners, dyes and aluminum sulfate.

***Energy*** 

Our operations produce and consume substantial amounts of energy. Our primary energy sources include biomass, natural gas and electricity. A significant portion of the total energy required to manufacture our products comes from renewable fuels such as bark and spent pulping liquor, substantially all of which are generated as by-products from our manufacturing processes. The remainder of the energy comes mainly from natural gas, electricity and from smaller amounts of other fossil fuels as well as purchased steam procured under supply contracts. Under most of these contracts, suppliers are committed to provide quantities within predetermined ranges that meet our needs for a particular type of fuel at a specific facility. Most of these contracts have pricing that fluctuates based on prevailing market conditions. Biomass and fossil fuels are consumed primarily to produce power and steam that are used in the manufacturing process and, to a lesser extent, to provide direct heat used in the chemical recovery process.

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We have energy cogeneration at a number of our integrated pulp and paper mills. These units generate energy from primarily renewable biomass. For some facilities, the right to generate hydroelectricity stems from our ownership of the riverbed on which these facilities are located. Smaller hydro assets are also present at two locations: Nekoosa and Rothschild.

All these generating assets produce electricity for consumption by our manufacturing operations, with the balance of our requirements supplied from local utilities. Electricity is primarily used to drive motors, pumps and other equipment, as well as to provide lighting.

**OUR COMPETITION** 

The markets in which our products are sold are highly competitive. Our products compete against similar products from many large and small companies, including well-known global competitors. We also compete, in some instances, with companies in other industries and against substituted wood-fiber products. We are well positioned in the industry segments and markets in which we operate, often holding a leadership or significant market share position. For our paper products, we compete primarily on the basis of product quality, breadth of offering, service solutions and competitively priced paper products, which include an extensive offering of high-quality Forest Stewardship Council ("FSC")-certified paper products. Price, quality, service, fiber sources and freight costs are considered the main competitive determinants for our pulp products. Because there are few distinctions between lumber from different producers, competition is primarily based on price for our wood products. As with other global commodities, the competitive position of our products is significantly affected by fluctuations in foreign currency exchange rates.

**OUR HUMAN CAPITAL** 

We have approximately 12,100 employees; 46% are employed in the United States and 54% in Canada. 56% of our employees are covered by collective bargaining agreements.

**Health and Safety** 

The physical health of our employees is of vital importance to the Company. That is why we work relentlessly to eliminate the potential for life-altering hazards and minimize risk of injury as part of a proactive, preventive safety culture, while also investing in well-being programs to help our employees establish and maintain healthy lifestyles.

**Attraction and Retention** 

We are committed to fostering a workplace that attracts and retains talent. Through ongoing employee development, comprehensive compensation and benefits, and a focus on health, safety, and community engagement, we aim to directly influence positive work behavior and on-the-job performance. In hiring and promoting employees, we strive to select the individuals who are the most qualified for the relevant positions. We believe that a diverse workplace is in the best interest of Domtar, and, respecting applicable constraints, we seek to maintain an inclusive workplace. We have a strict non-discrimination and anti-harassment policy. However, we view inclusion as more than just a set of policies and practices. It is part of who we are, how we operate, and essential to our long-term sustainability. We strive to create and sustain an inclusive workplace where people can bring their authentic selves to work and feel valued and included.

**Compensation and Pay Equity**

Our compensation program is designed to attract and reward talented individuals who possess the skills necessary to support our business objectives, assist in the achievement of our strategic goals and create long-term value. We believe people should be paid fairly for what they do and how they do it, regardless of their gender, race, or other personal characteristics. To deliver on that commitment, we benchmark and set pay ranges based on market data and consider factors such as an employee's role, experience and performance. We also regularly review our compensation practices, in respect of both of our overall workforce and individual employees, to ensure our employees' pay is fair and equitable.

**Learning and Development**

Hiring, developing and retaining employees is important to our operations and we are focused on creating experiences and programs that foster growth, performance and retention. We continually invest in our employees' career growth and provide a wide range of development opportunities, including face-to-face, virtual, social and on-site learning, mentoring, coaching, and external development.

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**Community Involvement**

We make donations to charitable organizations in the communities where we live and work and believe that this commitment helps in our efforts to attract and retain employees. We also offer employees the opportunity to volunteer in their communities through our Domtar EarthChoice Ambassadors program. We focus our philanthropic efforts on three areas that align with our business: literacy, sustainability, and health and wellness.

**OUR APPROACH TO SUSTAINABILITY** 

Domtar aims to deliver value to our customers, employees and communities by viewing our business decisions within the larger context of sustainability. We take a long-term view on managing natural resources for the future. We strive to carefully manage waste and encourage recycling. We aim to maintain the highest standards of ethical conduct, for caring about the health and safety of each other, and for maintaining the environmental quality in the communities where we live and work. We value the partnerships we have formed with non-governmental organizations and believe they make us a better Company. We focus on agility to respond to new opportunities, and we are committed to turning innovation into value creation. By embracing sustainability as our operating philosophy, we seek to internalize the fact that the choices we have and the impact of the decisions we make on our stakeholders are all interconnected. We believe that our business and the people and communities who depend on us are better served as we weave this focus on sustainability into the things we do.

Domtar strives to execute this commitment to sustainability at every level and every location across the Company. The overall responsibility for our performance in this area resides with our executive team, and we rely on our employees to support the delivery of our key objectives and implement related plans. The committees involved in this effort are cross-functional groups of senior managers and subject-matter experts from manufacturing, sales, environment, human resources, finance and legal, among other departments. Tasked with developing and driving our sustainability strategy and performance based on high priority issues, these committees are focused on improving the net impact of our operations, and maintaining a constructive dialogue with our customers, partners and key stakeholders to ensure alignment and support on our goals. Committee responsibilities also include setting annual targets and providing project oversight on the company's long-term objectives. Our sustainability goals, challenges and progress are reported annually on the Company's website and other published reports. References to published reports and website are for informational purposes only, and neither the published reports nor the other information on our website is incorporated by reference into this Annual Report on Form 10-K.

**OUR ENVIRONMENTAL COMPLIANCE** 

Our business is subject to a wide range of general and industry-specific laws and regulations in the U.S. and Canada, relating to the protection of the environment, including those governing wood harvesting, air emissions, climate change, wastewater discharges, storage, management and disposal of hazardous substances and wastes, contaminated sites, landfill operation and closure obligations and health and safety matters. Compliance with these laws and regulations is a significant factor in the operation of our business. We may encounter situations in which our operations fail to maintain full compliance with applicable environmental requirements, possibly leading to civil or criminal fines, penalties or enforcement actions, including those that could result in governmental or judicial orders that stop or interrupt our operations or require us to take corrective measures at substantial costs, such as the installation of additional pollution control equipment or other remedial actions.

Compliance with environmental laws and regulations involves capital expenditures as well as additional operating costs. Additional information regarding environmental matters is included in Item 8, Financial Statements and Supplementary Data, under Note 19 "Commitments and Contingencies" and in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, under the heading Critical Accounting Estimates and Policies, under the caption "Environmental Matters and Asset Retirement Obligations."

**OUR INTELLECTUAL PROPERTY**

Many of our brand name products are protected by registered trademarks. Our key trademarks include Cougar®, Lynx® Opaque Ultra, Husky® Opaque Offset, EarthChoice®, Ariva®, Resolute®, Resolute Forest Products® and Resolute Tissue®. These brand names and trademarks are important to our business. Our numerous trademarks have been registered in the U.S. and/or in other countries where our products are sold. The current registrations of these trademarks are effective for various periods of time. These trademarks may be renewed periodically, provided that we, as the registered owner, and/or licensee comply with all applicable renewal requirements, including the continued use of the trademarks in connection with the same or similar goods.

We own U.S. and foreign patents and have several pending patent applications. Our management regards these patents and patent applications as important, but does not consider any single patent or group of patents to be materially important to our business as a whole.

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**OUR EXECUTIVE OFFICERS** 

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**Name** | &nbsp;&nbsp;**Age** | &nbsp;&nbsp;**Position and Business Experience** |
| &nbsp;&nbsp;*Steve Henry* | &nbsp;&nbsp;53 | &nbsp;&nbsp;President of the Paper and Packaging Business Unit. Mr. Henry was appointed as President of the Paper and Packaging Business Unit in July 2023. In addition to his role as President of Paper & Packaging, Mr. Henry was also appointed to serve on our Management Board in September 2024. Prior to his current appointment, Mr. Henry served as Domtar's Executive Vice President and Chief Operating Officer and a member of the former Management Committee leading Domtar's pulp, paper and packaging operations and commercial functions. He previously also served as Domtar's Senior Vice President Packaging, Vice President of Strategy and Business Analysis and held various positions at Domtar's Hawesville, KY pulp and paper mill, including mill general manager. Prior to joining Domtar in 2011, he held a variety of mill and corporate positions at Georgia-Pacific, Weyerhaeuser and International Paper.  |
| &nbsp;&nbsp;*Joe Ragan* | &nbsp;&nbsp;64 | &nbsp;&nbsp;Executive Vice President and Chief Financial Officer of the Company. Mr. Ragan was previously President and Chief Investment Officer of Paper Excellence Group and was appointed to his current role in April 2023. He brings more than 30 years of financial experience to Domtar, having previously served as CFO at several multi-billion-dollar corporations prior to joining Paper Excellence Group in 2020. He has extensive global financial leadership experience, having led all areas of finance including global reporting, treasury, investor relations, international tax, financial analysis/planning, mergers and acquisitions, and internal/external audit in previous positions. He was named CFO of the year in 2007 by the Washington (D.C. metro area) Business Journal, then again in 2008 by SmartCEO magazine. |
| &nbsp;&nbsp;*Luc Thériault* | &nbsp;&nbsp;54 | &nbsp;&nbsp;President of the Wood Products Business Unit. Mr. Thériault re-joined the Company in August 2024 in this role. He was previously employed by Resolute Forest Products from 2002 to 2020, culminating in his role as Senior Vice President of Wood Products. During his tenure, his leadership and vision were key in shaping our business strategy, enhancing health and safety programs, strengthening sales and customer relationships, and optimizing harvesting and manufacturing processes. Mr. Thériault is a Chartered Professional Accountant. From 2021 until his return to the Company, he served as a Special Advisor to the Owners and Chief Financial Officer for a privately held vegetable producer in Canada. |
| &nbsp;&nbsp;*Richard Tremblay* | &nbsp;&nbsp;62 | &nbsp;&nbsp;President of the Pulp and Tissue Business Unit. Mr. Tremblay was previously the Senior Vice President, Pulp, Paper and Tissue Operations of one of our predecessor companies until February 2, 2024, when he was promoted to his current role. He previously served as Senior Vice President, Pulp and Paper, from June 2015 to February 2018, and as Senior Vice President, Pulp and Paper Operations, from February 2014 to May 2015. He served as interim Senior Vice President, Pulp and Paper Operations, from November 2013 to January 2014, and as Vice President, Pulp and Paper Operations, from June 2011 to October 2013. Prior to joining Resolute Forest Products in June 2011, he served as General Manager of several mills at Smurfit Stone Container Corporation between 2002 and 2011. |

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Effective March 1, 2026, we transitioned from a Management Board model to a more focused Executive Committee structure to improve strategic alignment and operational accountability. This governance change does not impact our business model, operating segments, or product offerings.

**FORWARD-LOOKING STATEMENTS**

The information included in this Annual Report on Form 10-K contains forward-looking statements relating to trends in, or representing management's beliefs about, Domtar Corporation's future growth, results of operations, performance, liquidity and business prospects and opportunities. These forward-looking statements are generally denoted by the use of words such as "anticipate", "believe", "expect", "intend", "aim", "target", "plan", "continue", "estimate", "project", "may", "will", "should" and similar expressions.

These statements reflect management's current beliefs and are based on information currently available to management. Our future financial condition and results of operations, as well as any forward-looking statements in this report, are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to known and unknown risks and uncertainties and other factors, many of which are beyond our control and are amplified by current and potential trade and tariff actions affecting the countries where we operate, that could cause actual results to differ materially from historical results.

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Accordingly, no assurances can be given that any of the events anticipated by forward-looking statements will occur, or if any do occur, as to what effect they will have on our results of operations or financial condition. These factors include, but are not limited to those discussed in Item 1A "Risk Factors," and:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•continued decline in usage of paper products in our core market;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our ability to implement our business diversification initiatives, including repurposing of assets and strategic acquisitions or divestitures, facility closures and integration of acquired businesses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•future revenues and profitability;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•demand for linerboard;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•product selling prices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•cyclicality of sales and prices in the lumber market and market pulp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•raw material prices, including wood fiber, chemicals and energy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the tariffs announced by the United States government, the retaliatory tariffs and other actions in response announced by other countries, the implementation of new tariffs or future increases in existing tariffs, their impact on the landed sales prices of the products that we manufacture and export and on the cost of the inputs that we import from other countries, and their impact on our overall sales and profitability;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•other economic or geopolitical developments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•impact of inflation on our costs and uncertainty of our ability to pass through increased costs to our customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•conditions in the global capital and credit markets, and the general economy, particularly in the U.S. and Canada;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•significant indebtedness and resulting financial leverage;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•performance of our manufacturing operations, including unexpected maintenance requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the level of competition from domestic and foreign producers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•cyberattacks or other security breaches;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the effect of, or change in, forestry, land use, environmental and other governmental regulations and accounting regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the effect of weather and the risk of loss from fires, floods, windstorms, hurricanes and other natural disasters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•transportation costs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the loss of current customers or the inability to obtain new customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•legal proceedings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in asset valuations, including impairment of long-lived assets, inventory, accounts receivable or other assets, including deferred assets, or other reasons;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in currency exchange rates, particularly the relative value of the Canadian dollar to the U.S. dollar;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•performance of pension fund investments and related derivatives, if any;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a material disruption in our supply chain, manufacturing, distribution operations or customer demand such as public health crises that impact trade or the general economy, including viruses, diseases or illnesses; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the other factors described under "Risk Factors", in item 1A in this Annual Report on Form 10-K.

You are cautioned not to unduly rely on such forward-looking statements, which speak only as of the date made, when evaluating the information presented in this Annual Report on Form 10-K. Unless specifically required by law, Domtar Corporation disclaims any obligation to update or revise these forward-looking statements to reflect new events or circumstances.

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**<u>ITEM 1A. RI</u><u>SK FACTORS</u>**

You should read the following risk factors carefully in connection with evaluating the Company's business and the forward-looking information contained in this Annual Report on Form 10-K. Any of the following risks could materially and adversely affect our business, financial condition, operating results and the actual outcome of matters described in this Annual Report on Form 10-K. While the Company believes it has identified and discussed below the key risk factors affecting our business, there may be additional risks and uncertainties that the Company does not currently know of or believe to be significant, which may adversely affect our business, financial condition or operating results in the future.

**Risks Related to our Business**

***Fluctuations and volatility in the prices of and the demand for the Company's products due to factors such as economic cyclicality and changes in consumer preferences or trends could have a material adverse effect on its business, results of operations and financial position.***

Historically, economic and market shifts, fluctuations in capacity, tariffs or other trade barriers and changes in foreign currency exchange rates have created cyclical changes in prices, demand and margins for the Company's products. The length and magnitude of industry cycles have varied over time, both by market and by product, but generally reflect changes in macroeconomic conditions and levels of capacity. Any decline or stagnation in macroeconomic conditions could lead to lower sales volumes and reduced margins for the Company's products. During periods of weak or weakening global economic conditions, the Company would expect any increase in unemployment or lower gross domestic product growth rates to adversely affect demand for its products as its customers delay or reduce their expenditures. For example, during an economic downturn, the Company's paper products could face more intense pressure from electronic substitution, end consumers may reduce printed newspaper and magazine subscriptions as a direct result of their financial circumstances, contributing to lower demand for the Company's products by its customers. In addition, demand for the Company's market pulp products is generally associated with the production rates of paper producers, as well as consumption trends for products such as tissue, toweling and absorbent products. An economic downturn in the U.S. or Canada could also negatively affect the U.S. or Canadian housing industry and the repair and remodeling segment, which are significant drivers of demand for the Company's lumber and other wood-based products.

Most of the Company's products are commodities that are widely available from other producers. Because commodity products have few distinguishing qualities from producer to producer, competition for these products is based primarily on price, which is determined by supply relative to demand.

In addition, consumer preferences and trends are constantly changing based on, among other factors, cost, convenience and health concerns and perceptions and an increased awareness of Environmental, Social and Governance ("ESG") considerations. These consumer preferences and trends may affect the prices of the Company's products. The Company results may be adversely affected if the Company fails to anticipate trends that would enable it to offer products that respond to changing customer preferences and technological and regulatory developments.

As a result, prices for all of the Company's products are driven by many factors outside of its control and may be volatile. The price for any one or more of these products may fall below its cash production costs, requiring the Company to incur losses on product sales or curtail production at one or more of its manufacturing facilities, or both. If the prices or demand for its products decline, this could adversely affect the Company's business, results of operations and financial position.

***The Company's paper products are vulnerable to long-term declines in demand due to competing technologies or materials.***

The Company's paper business competes with electronic transmission and document storage alternatives, as well as with paper grades it does not produce. As a result of such competition, the Company is experiencing ongoing decreasing demand for most of its existing paper products. As the use of these alternatives grows, demand for paper products is likely to decline further. Declines in demand for the Company's paper products may adversely affect its business, results of operations and financial position.

***Failure to successfully implement the Company's business diversification and integration initiatives could have a material adverse effect on its business, results of operations and financial position.***

The Company is pursuing strategic initiatives that management considers important to its long-term success. The intent of these initiatives is to help grow and diversify the business and counteract the secular decline in the North American paper business. These initiatives may involve organic growth, conversion of assets, other strategic transactions and projects to complement, expand or optimize its business. The success of these initiatives will depend on, among other things, the Company's ability to identify potential strategic initiatives, understand the key trends and principal drivers affecting those businesses and to execute the initiatives in a cost-effective manner. There are significant risks involved with the execution of such initiatives, including significant business, economic and competitive uncertainties, many of which are outside the Company's control. In connection with any acquisition, conversion, strategic transaction or project, the Company may not successfully integrate an acquired business, assets, technologies, processes, controls, policies, and operations with ours or realize some or all of the anticipated benefits and synergies of the acquisition, conversion, strategic transaction or project. In connection with such transactions, the Company may face challenges associated with

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entering a new market, production location, product category or meeting customers' demands. The Company may also face issues with the separation of processes and loss of synergies following the divestiture of businesses or idling or closure of facilities.

Strategic acquisitions may expose the Company to additional risks. The Company may have to compete for acquisition targets and any acquisition it makes, may fail to accomplish its strategic objectives or may not perform as expected. In addition, the costs of integrating an acquired business may exceed its estimates and may require significant time and attention from senior management. Accordingly, the Company cannot predict whether it will succeed in implementing these strategic initiatives. If it fails to successfully diversify its business, or if the diversification strategy does not produce the expected outcomes, it may have a material adverse effect on the Company's competitive position, financial condition and operating results.

Asset conversion, like its conversion of one of its mills to a containerboard production facility, can be capital intensive and can involve the shutdown of a facility for an extended period, followed by an extended ramp-up and customer certification process. In addition, the success of a conversion depends upon demand over time for the new product relative to the previously produced products, as well as costs and other factors, and there can be no assurance that a particular conversion will be as successful as expected.

***The Company may have difficulty obtaining wood fiber at favorable prices, or at all.***

Wood fiber is the principal raw material used by the Company's businesses. The primary source for wood fiber is wood chips and logs for its pulp and paper mills and timber for its wood products business.

Wood fiber is a commodity, and prices historically have been impacted by a variety of factors. Environmental litigation and regulatory developments, activist campaigns and litigation advanced by Indigenous groups or other stakeholders, alternative use for energy production and reduction in harvesting related to the reduced demand, have caused, and may cause in the future, significant reductions in the amount of timber available for commercial harvest in the U.S. and Canada or that meet standards required for third-party certifications. In addition, future domestic or foreign legislation and litigation concerning the use of timberlands, the protection of habitats and endangered or other species, including the woodland caribou, the promotion of forest health and biodiversity and the response to and prevention of catastrophic wildfires could also affect timber supplies. Availability of harvested timber may be further limited by adverse weather, fire, insect infestation, disease, ice storms, windstorms, flooding, climate change effects and other natural and man-made causes, thereby reducing supply and increasing prices. Wood fiber pricing is subject to regional market influences, and the Company's cost of wood fiber may increase in particular regions due to market shifts in those regions. Any sustained increase in wood fiber prices would increase the Company's operating costs, and the Company may be unable to increase prices for its products in response to increased wood fiber costs due to additional factors affecting the demand or supply of these products.

The Company currently meets its wood fiber requirements by purchasing wood fiber from third parties and by harvesting timber pursuant to its forest licenses and forest management agreements. If the Company's harvesting rights, under its forest licenses or forest management agreements are reduced, or any third-party supplier of wood fiber, timber or market pulp is unable to sell wood fiber to the Company at a reasonable market price (or at all) for any of the reasons described above, the Company's financial condition or results of operations could be materially and adversely affected.

***Inflation or a sustained increase in the cost of the Company's purchased energy and/or other raw materials and services would lead to higher manufacturing costs, thereby reducing its margins.***

The Company's operations consume substantial amounts of energy such as biomass, natural gas, electricity and wood residue. The main raw materials the Company uses in its manufacturing process are wood fiber and chemicals. The prices for raw materials and energy are volatile, affected by inflation, tariffs or other trade barriers and may change rapidly, which impacts the Company's manufacturing costs, directly affects its results of operations and may contribute to earnings volatility. While the Company purchases substantial portions of its energy under supply contracts, most of these contracts are based on market pricing. The Company also relies on service providers and contractors in its operations, the costs of which have also increased due to workforce shortages and inflation.

For the commodity products of the Company, the relationship between supply and demand, rather than changes in the cost of raw materials or purchased energy, will determine the Company's ability to increase prices. Consequently, the Company may be unable to pass on increases in its operating costs to its customers. Any sustained increase in raw material or energy prices, including due to factors like changing import duties and tariffs, without a corresponding increase in product pricing would reduce the Company's operating margins and may have a material adverse effect on its business and results of operations.

***The Company could experience disruptions in operations and/or increased labor costs due to labor disputes or occupational health and safety issues.***

A majority of the Company's employees are represented by unions through collective bargaining agreements generally negotiated on a facility-by-facility basis. In the future, the Company may not be able to negotiate acceptable new collective bargaining agreements, which could result in strikes or work stoppages or other labor disputes by affected workers. Renewal of collective bargaining agreements could also result in higher wages or benefits paid to union members. In addition, labor organizing activities could occur at any of the Company's facilities. Therefore, the Company could experience a disruption of its operations or higher ongoing labor costs, which could have a material adverse effect on its business and results of operations.

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Occupational health and safety issues could also cause disruptions in operations or otherwise affect labor-related costs, including workforce availability and logistics constraints related to pandemic measures and the resulting economic conditions.

***A material disruption in the Company's supply chain, manufacturing or distribution operations could prevent us from meeting customer demand, reduce its sales and/or negatively impact its results of operations.***

The Company's ability to manufacture, distribute and sell products is critical to its operations. Any event that disrupts or limits transportation, delivery services or the operations of the Company's suppliers, including workforce shortages and economic conditions resulting from pandemic conditions, could materially and adversely affect the Company's business, including increasing its inventory levels. The Company's supply chain, manufacturing or distribution operations are subject to inherent risks such as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•unscheduled maintenance outages;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•mechanical and/or power failures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•explosions, fires or accidental release of toxic materials;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•malfunction of a boiler or other equipment, structural failures at any of its dams or hydroelectric facilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the effect of a drought or reduced rainfall on its water supply;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•labor shortage or disputes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in domestic and international laws and regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•new or increased tariffs and/or trade barriers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•disruptions in its supply chain and in the transportation infrastructure, including roads, bridges, railroad tracks and tunnels;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•adverse weather events like fires, floods, earthquakes, hurricanes, winter storms and extreme cold or other catastrophes (including adverse weather conditions that may be intensified by climate change);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•cyberattack or other security breaches;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•failure of its Information Technology ("IT") systems, including any failure of its current systems and/or as a result of transitioning to additional or replacement IT systems;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•public health crises that impact trade or the general economy, including viruses, diseases or illnesses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•terrorism or threats of terrorism, acts of war or other violent acts; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•other operational problems, including those resulting from the risks described in this section.

Events such as those listed above can cause personal injury and loss of life, disrupt the Company's supply chain and impair its ability to manufacture or sell its products and have resulted in operating losses in the past. Any interruption or facility damage could prevent the Company from meeting customer demand for its products as well as require additional resources and/or require unplanned expenditures. If one or more of these machines or facilities were to incur significant downtime, a material adverse effect on the Company's business, results of operations and financial condition may result. In addition, some of the above hazards can result in, among other things: reputational damage; the imposition of civil or criminal penalties; workers' compensation claims; and other claims against the Company with respect to workplace exposure, exposure of contractors and others located on or off the Company's premises.

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***The Company is subject to physical, financial, regulatory, transition and litigation risks associated with global, regional, and local weather conditions and climate change.***

The Company's operations and the operations of its suppliers are subject to climate variations, which impact the productivity of forests, the frequency and severity of wildfires, the availability of water, the distribution and abundance of species, and the spread of disease or insect epidemics, which in turn may adversely or positively affect timber production and fiber availability. Over the past several years, changing weather patterns and climatic conditions due to natural and man-made causes have added to the unpredictability and frequency of natural disasters such as hurricanes, earthquakes, hailstorms, wildfires, drought, flooding, snow, ice storms, the spread of disease, and insect infestations. Any of these natural disasters or other conditions could also affect woodlands or cause variations in the cost of raw materials, such as virgin fiber. Changes in precipitation could make wildfires more frequent or more severe and could adversely affect timber harvesting. The effects of global, regional and local weather conditions, and climate change, including the costs of complying with evolving climate change regulations and any related litigation, could also adversely impact its business and results of operations.

Implementation of climate-change mitigation programs could increase the Company's costs in the short term, including as a result of potential GHG emissions reporting obligations in the U.S. and more detailed mandatory reporting in both Ontario and Quebec, all of which may require additional resources for monitoring, tracking, calibrating and reporting information, as well as training and verification. Carbon price mechanisms, such as the cap-and-trade system in Quebec, have an impact on the operational costs of covered facilities, as well as the cost of fuel from distributors operating under the programs. The price of carbon in Canada could continue to increase, and a price on carbon could be introduced in the U.S. International reporting protocols or could change their standards for reporting GHG emissions, including changing the distinction that is currently made between CO2 emissions from biomass combustion at stationary sources and CO2 generated from fossil fuels. Regulatory bodies could also change their position on the carbon-neutrality of biomass energy, which would significantly alter its carbon footprint. Adopting and incorporating new technologies to help with the transition toward a low-carbon economy are also transitional risks that could represent significant costs to the Company or may expose us to unforeseen risks.

***There is increased focus on sustainability reporting and the importance of ESG scores from customers and other stakeholders, which may impact the Company's business.***

Sustainability/ESG reporting frameworks are numerous and evolving rapidly. Sustainability governance, performance and disclosures are reviewed and monitored by customers, stakeholders and ESG scoring service providers using different methodologies, which may impact how stakeholders perceive, justifiably or not, the Company as a debtor, customer, supplier or business partner. In the event that the Company is unable to achieve its stated sustainability targets, goals and commitments or if its sustainability statements were challenged as erroneous, inaccurate or incomplete, whether justified or not, the Company could sustain damage to its reputation and be exposed to litigation and liability. Evolving standards and regulations related to climate change, sustainability and ESG reporting may also result in additional compliance costs, impose strain on its human capital resources, and expose the Company to a new type of credit risk.

***The Company could be required to curtail production, shut down machines or facilities, restructure operations or dispose of facilities or business.***

The Company is continuously seeking the most cost-effective means and structure to serve its customers and to respond to changes in its markets and declining demand for some of its products and to address productivity issues. Accordingly, from time to time, the Company may curtail production, indefinitely or permanently shut-down machines or facilities, sell non-core assets and otherwise restructure operations to improve competitiveness and profitability. Additionally, new or increased tariffs and/or trade barriers and our response to these tariffs and barriers could limit our ability to offer and deliver our products on a cost-effective basis. As a result, restructuring and divestiture costs have been, and are expected to be, a recurring component of the Company's operating expenses, and may vary significantly from year to year depending on the scope of such activities. Divestitures and restructuring may also result in significant financial charges for the impairment of assets, including intangible assets. Furthermore, such activities may divert the attention of management, disrupt its ordinary operations, and/or result in a reduction in the volume of products produced and sold. There is no guarantee that any such activities will achieve their goals, and if the Company cannot successfully manage the associated risks, its financial condition and results of operations could be adversely affected.

***If the Company is unable to offer products certified to globally recognized forestry management and chain of custody standards or meet customers' product specifications, the Company's ability to compete may be adversely affected.***

Based on market interest and customer requirements, the Company offers a number of its products, including pulp and paper, wood products and tissue, with specific designations in respect of one or more globally recognized forest management and chain of custody certification standards. The Company's ability to conform to new or existing guidelines for certification depends on a number of factors, many of which are beyond its control, such as: changes to the standards or the interpretation or the application of the standards; the collaboration of Company suppliers in timely sharing product information; the adequacy of government-implemented conservation measures; and the existence of territorial disputes between Indigenous Peoples and governments. If the Company is unable to offer

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such certified products, for which demand is growing, or to meet commitments to supply certified products or meet the product specifications of its customers, the marketability of the Company's products and its ability to compete with other producers could be adversely affected.

***Negative publicity, even if unjustified, could have a negative impact on the Company's brands and the marketability of its products.***

While the Company believes that it has established a reputation for transparent communications, sound social and corporate governance, responsible forestry practices, and overall sustainability leadership, negative publicity, whether or not justified, relating to its operations and its business or to its industry, could tarnish the Company's reputation or reduce the value of its brands and market demand for its products. In addition, the actions of activists, including legislative initiatives or other campaigns affecting boreal-sourced forest products, whether justified or not, could impede or delay the Company's ability to access raw materials or obtain third-party certifications with respect to forest management and chain of custody standards that the Company seeks in order to supply certified products to its customers. Activist campaigns could affect the Company's revenues and require the Company to incur significant expenses and dedicate substantial resources to defend itself, rebuild its reputation, and restore the value of its brands.

***The Company is transitioning from certain legacy system applications; during the transition, such legacy systems may be more vulnerable to attack or failure and implementation of the transition may cause disruptions to the Company's business IT systems.***

The Company is transitioning from certain legacy system applications with an integrated business management software platform. Prior to the completion of this upgrading process, the Company may not have supplier or third-party support for legacy systems in the event of failure or required updates, and such legacy systems may be more vulnerable to breakdown, malicious intrusion, and random attack. The Company may also experience difficulties maintaining or replacing the hardware infrastructure required to operate these legacy systems. Such legacy systems, if not properly functioning prior to their replacement, could adversely affect the Company's business.

During the process of replacing legacy systems, the Company could experience disruptions to its business IT systems and normal operating processes because of the projects' complexity. The potential adverse consequences could include delays, loss of information, decreased management reporting capabilities, damage to the Company's ability to process transactions, harm to its control environment, diminished employee productivity, business interruptions, and unanticipated increases in costs. Further, the Company's ability to achieve anticipated operational benefits from new IT platforms is not assured.

**Legal and Regulatory Risks**

***The Company could incur substantial costs as a result of compliance with, violations of or liabilities under applicable environmental laws and regulations. It could also incur costs as a result of asbestos-related personal injury litigation.***

The Company is subject to a wide range of general and industry-specific laws and regulations in the U.S. and Canada, relating to pollution and the protection of the environment and natural resources as well as several requirements stipulated in its facilities' permits, including those governing air emissions, greenhouse gases, water usage, wastewater discharges, harvesting, silvicultural activities, storage, management and disposal of hazardous substances and wastes, the investigation and cleanup of contaminated sites, landfill and wastewater treatment system operation and closure obligations, forest management and operations, endangered species and their habitat, health and safety matters, carbon pricing and climate change. In particular, the pulp and paper industry in the U.S. is subject to the United States Environmental Protection Agency's ("EPA") Cluster Rules.

The Company has incurred, and expects that it will continue to incur, significant capital, operating and other expenditures complying with applicable environmental laws and regulations as a result of remedial obligations. The Company could also incur substantial costs, such as civil, administrative or criminal fines, sanctions and enforcement actions (including orders limiting its operations or requiring corrective measures, installation of pollution control equipment or other remedial actions), cleanup and closure costs, and third-party claims for property damage and personal injury as a result of violations of, or liabilities under, environmental laws and regulations. The Company's ongoing efforts to identify potential environmental concerns that may be associated with its past and present properties may lead to future environmental investigations. Those efforts may result in the determination of additional environmental costs and liabilities that cannot be reasonably estimated at this time.

As the owner and operator of real estate, the Company may be liable under environmental laws for cleanup, closure and other damages resulting from the presence and release of hazardous substances, including asbestos, on or from its properties or operations, including properties that it no longer owns. The amount and timing of environmental expenditures is difficult to predict, and, in some cases, the Company's liability may be imposed without regard to contribution or to whether it knew of, or caused, the claimed release of hazardous substances and may exceed forecasted amounts or the value of the property itself. The discovery of additional contamination or the imposition of additional cleanup obligations at the Company's or third-party sites may result in significant additional costs. Any material liability the Company incurs could adversely impact its business and financial condition.

In addition, the Company may also be liable under health and safety laws for exposures of employees, contractors and other persons to substances and waste on or from its current or former properties or injuries, including asbestos-related claims arising out of exposure to asbestos on or from such properties or operations and may incur substantial costs as a result of any defense, settlement, or adverse

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judgment in ensuing litigation. The Company may not have access to adequate insurance proceeds to cover costs associated with asbestos-related personal injury litigation.

Enactment of new environmental laws or regulations or changes in existing laws or regulations, or interpretation thereof, might require significant expenditures. For additional information, refer to Item 8, Financial Statements and Supplementary Data, under Note 19 "Commitments and Contingencies". The Company may be unable to generate funds or other sources of liquidity and capital to cover its overall environmental liabilities or expenditures.

***The Company is subject to a wide variety of laws, regulations and other government requirements that may change in significant ways, and the cost of compliance or failure to comply, could have a material adverse effect on its business, results of operations and financial condition.***

In addition to environmental laws, the Company's business and operations are subject to a broad range of regulation under a wide variety of U.S. federal and state and Canadian laws, regulations and other government requirements, including, those relating to antitrust and competition laws, financial reporting and disclosure obligations, custom, tariffs and trade, timber and water rights, occupational health and safety laws, data privacy, pension, benefit plans, labor and employment laws, the manufacture and sale of consumer products, including product safety and liability, and the rights of Indigenous Peoples, among others. Many of these laws and regulations are complex and subject to evolving and differing interpretation. Compliance with these laws and regulations, including changes to them or their interpretations or enforcement, or introduction of new laws and regulations, including without limitation, higher tariffs or new barriers to entry, has required in the past, and could require in the future, substantial expenditures by the Company and adversely affect its results of operations. In addition, noncompliance with laws and regulations could significantly damage and require the Company to spend substantial amounts of money to rebuild its reputation which may have a material adverse effect on the Company's results of operations and financial condition.

The Company's ability to comply with such laws and regulations often depends, at least in part, on compliance by independent third parties, such as contractors and agents it retains to provide services. For example, its compliance with customs requirements for international shipments depends in part on compliance by its customs brokers, sureties, transportation companies, and external advisors, in addition to its own employees and consultants, and the Company could be liable for noncompliance by any of them, even if inadvertent. Failure to comply with laws and regulations can also be the result of unintended consequences, such as unforeseen consequences of information technology modifications, upgrades, or replacements. Although the Company strives to comply with all applicable laws and regulations, no company can assure that it will successfully prevent, detect, and/or remediate all potential instances of non-compliance. Any failure on our part to do so could be material, require substantial expenditures, and adversely affect its results of operations and financial condition.

For additional information, refer to Item 8, Financial Statements and Supplementary Data, under Note 19 "Commitments and Contingencies."

***Products the Company produces in one country and exports to another may become subject to additional duties, tariff or other international trade remedies or restrictions.***

The Company produces products in the U.S. and Canada and sells products worldwide. Under trade and investment treaties and domestic trade laws, custom duties (also called tariffs) can be imposed by national governments where imports are "dumped" or "subsidized" and such imports cause material injury, or an imminent threat of injury, to a domestic industry. International trade laws also generally provide that national governments can adopt countervailing measures, including countervailing duties, regarding imported products that are subsidized through foreign government programs under certain circumstances. A trade remedy investigation or proceeding may involve allegations of either dumping, subsidization, or both, which are generally initiated at the request of local producers. Where injurious dumping is found, the trade remedy is typically an anti-dumping duty order. Where injurious subsidization is found, the trade remedy is typically a countervailing duty order. In principle, a tariff equal to the amount of dumping or subsidization, as applicable, should be imposed on the importer of the product. Tariffs can be legally challenged before local or international review bodies, but national governments will generally continue levying deposits on estimated customs duties during the pendency of such review proceedings, which can span over many years. Legal rules applicable to tariffs could also be modulated should certain national governments amend their legislation or withdraw from international treaties on tariffs, or in the event such international treaties are renegotiated or terminated. Changes in the import and export policies, including trade restrictions, new or increased tariffs or quotas, embargoes, sanctions and countersanctions, safeguards or customs restrictions by the U.S. and/or other foreign governments, could require the Company to change the way it conducts business and adversely affect its results of operations, financial condition and reputation, as well as our relationships with customers, suppliers and employees in the short- or long-term. Likewise, changes in laws and policies governing manufacturing, development and investment in the territories or countries where we currently conduct business could adversely affect our business.

In 2025, the United States imposed tariffs on specific goods imported from numerous countries and suggested the potential for additional widespread tariffs in the near term. On April 2, 2025, the U.S. administration issued an executive order imposing tariffs beginning at 10% on all imports into the U.S. from all countries, but with much higher rates for many. While Canada was not exempt, goods compliant with the United States-Mexico-Canada Agreement ("USMCA") are not subject to these additional tariffs. Multiples

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nations have countered with retaliatory tariffs and other actions in response. Subsequently, the United States and other nations have adjusted their initial announcement and deferred or limited implementation in certain instances. It is unclear what additional changes in tariffs will be implemented.

These actions are expected to result in retaliatory measures on U.S. goods. If maintained, such tariffs and the potential escalation of trade disputes could pose a significant risk to our business and would affect our revenue and cost of goods sold. The extent and duration of the tariffs and the resulting impact on general economic conditions and on the Company's business are uncertain and depend on various factors, such as negotiations between the U.S. and affected countries, the responses of other countries or regions, exemptions or exclusions that may be granted, availability and cost of alternative sources of supply, and demand for our products in affected markets. Further, actions the Company take to adapt to new tariffs or trade restrictions may cause the Company to modify its operations or forgo business opportunities.

In addition, national governments could also impose non-tariff measures to restrict the import of some or all of the Company's imported products, such as quotas, tariff-rate quotas, import bans, licensing regimes, price bands or targeted domestic taxes. While such non-tariff measures could be legally challenged under existing trade treaties, non-tariff measures adopted by countries where the Company sells its products could materially affect its cash flow, and the competitive position of its operations relating to the affected products.

***The Company is subject to countervailing and anti-dumping duty orders on the vast majority of its U.S. imports of softwood lumber products produced at its Canadian sawmills, which could materially affect its results of operations and cash flows.***

Most of the Company's imports to the U.S. of softwood lumber products produced in Canada are subject to orders requiring the Company to pay cash deposits to U.S. Customs for estimated countervailing and anti-dumping duties. These cash deposit requirements are the result of petitions filed, shortly after the 2006 Softwood Lumber Agreement expired in October 2015, by U.S. softwood lumber products producers and forest landowners with U.S. Department of Commerce ("Commerce") and the U.S. International Trade Commission.

All countervailing and anti-dumping duty orders issued by Commerce in the present softwood lumber dispute have been appealed before a binational review panel established under the North American Free Trade Agreement and its successor the USMCA, or before the U.S. Court of International Trade. Deposits paid to U.S. Customs in each period of review of the present dispute will not be converted into actual duties unless and until appeals have been exhausted for the corresponding period of review.

The Company has been required to pay cash deposits for estimated countervailing duties and anti-dumping duties on most of its U.S. imports of softwood lumber products produced at its Canadian sawmills since April 28, 2017, and June 30, 2017, respectively. Subsequently, Commerce maintained cash deposits at varying rates as a result of annual administrative reviews; following the initial investigation, six administrative reviews were initiated and further administrative reviews could be initiated for years to come. As of December 31, 2025, the rates for estimated countervailing and anti-dumping duties applicable to the Company's U.S. imports of softwood lumber products were 14.63% and 20.53%, respectively and cumulatively. These rates will apply until Commerce sets new duty rates in subsequent administrative reviews, or until new rates are set on appeal through a remand determination by the binational review or by a U.S. court. On February 21, 2025, Commerce published a notice initiating the seventh administrative reviews of the countervailing duty and anti-dumping orders on softwood lumber from Canada. In decisions issued April 9 and 21, 2025, the Company was selected as a respondent in such seventh administrative reviews.

On October 14, 2025, the United States government implemented an additional 10% ad valorem tariff on imports of softwood lumber products from Canada under Section 232 of the Trade Expansion Act of 1962. This tariff is in addition to the existing countervailing and anti-dumping duties, which currently total approximately 35.16%, resulting in a combined duty rate of approximately 45.16% on affected exports. These tariffs materially increase the cost of exporting softwood lumber to the U.S. The increased duties may adversely affect our pricing competitiveness and reduce demand for our wood products.

The Company cannot provide any assurance regarding the estimated or final duty rates that may be determined by Commerce in its future administrative reviews. During any period in which the Company's U.S. imports of softwood lumber products from its Canadian sawmills are subject to countervailing or anti-dumping cash deposit requirements or duty requirements, its cash flows and the competitive position of those products and its related Canadian operations could be adversely affected to a material degree.

***The Company is and may become a party to a number of legal proceedings, claims, governmental inquiries, investigations, and other disputes, and adverse judgments could have a material adverse effect on its financial condition.***

The Company may become involved in various legal proceedings, claims, governmental inquiries, investigations, and other disputes in the normal course of business. These could include, for example, matters related to contracts, transactions, commercial and trade disputes, taxes, environmental and climate change issues, activist's claims for damages, employment and workers' compensation claims, grievances, human rights complaints, pension and benefit plans and obligations, health and safety, product safety and liability, asbestos exposure, intellectual property, financial reporting and disclosure obligations, corporate governance, Indigenous peoples' claims, antitrust, governmental regulations, and other matters. Although the outcome of these matters is subject to many variables and cannot be predicted with any degree of certainty, the Company regularly assesses the status of the matters and establishes provisions (including legal costs expected to be incurred) when it believes an adverse outcome is probable, and the amount can be reasonably

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estimated. Legal proceedings that the Company believes could have a material adverse effect if not resolved in its favor, or that the Company believes to be significant, are discussed in Item 8, Financial Statements and Supplementary Data, under Note 19 "Commitments and Contingencies." However, the Company's periodic reports do not disclose or discuss all matters of which it is aware. If the Company assessment of the probable outcome or immateriality of any matter proves incorrect, the Company may face an unaccrued loss, and its results of operations and financial condition could be adversely impacted.

Some matters that the Company may be involved in from time-to-time involve from claims brought by us against various parties, including customers, suppliers, governments or governmental agencies, activists and others. Even if such a matter may not involve a claim for damages or other penalty or remedial action against us, such a matter could nevertheless adversely affect its relationships with those its claim against and third parties.

**Financial Risks**

***The Company has significant levels of debt and may incur substantially more debt. This could increase risks associated with its leverage.*** 

Net indebtedness, consisting of bank indebtedness, long-term debt and debt due to related party, net of cash and cash equivalents and restricted cash, was $2,781 million as of December 31, 2025, compared to $2,541 million as of December 31, 2024. The Company's net indebtedness level is mainly due to the Resolute Forest Products acquisition. The Company may incur substantial additional indebtedness in the future. Although the Company's debt agreements contain restrictions on the incurrence of additional secured and unsecured indebtedness, these restrictions are subject to a number of qualifications and exceptions, and additional indebtedness incurred in compliance with these restrictions could be substantial. Refer to Item 8, Financial Statements and Supplementary Data, under Note 17 "Long-Term Debt", for more details.

***The Company's operations require substantial capital, and it may not have adequate capital resources to provide for all of its capital requirements, or at all.***

The Company's businesses are capital intensive and require ongoing capital expenditures in order to maintain its equipment, increase its operating efficiency, comply with environmental laws and innovate to remain competitive.

If the Company's available cash resources and cash generated from operations are not sufficient to fund its operating needs, make pension contributions, and finance its working capital, capital expenditures, and duty cash deposits, the Company would have to obtain additional funds from borrowings or other available sources or reduce or delay its capital expenditures. The Company may not be able to obtain additional funds at favorable terms, or at all.

In addition, the Company's debt service obligations will reduce its available cash flows. If the Company cannot maintain or upgrade its equipment as it requires or allocate funds to ensure environmental compliance, it could be required to curtail or cease some of its manufacturing operations, or it may become unable to manufacture products that compete effectively in one or more of its product lines.

***The Company's ability to generate the significant amount of cash needed to pay interest and principal on the Company's secured and unsecured long-term indebtedness and service its other debt and financial obligations and its ability to refinance all or a portion of its indebtedness or obtain additional financing depends on many factors beyond the Company's control.***

Net indebtedness, consisting of bank indebtedness, long-term debt and due to related party, net of cash and cash equivalents and restricted cash, was $2,781 million as of December 31, 2025. A substantial majority of this amount, approximately $1.9 billion, matures in 2028. The Company's ability to make payments on and refinance its debt, including the Company's secured and unsecured long-term notes, its First Lien Term Loan Facility, its Farm Credit Term Loan and its Bank Term Loan and amounts borrowed under its ABL Revolving Credit Facility, if any, and other financial obligations and to fund its operations will depend on its ability to generate substantial operating cash flows. The Company's cash flow generation will depend on its future performance, which will be subject to prevailing economic conditions and to financial, business and other factors, many of which are beyond its control.

The Company's business may not generate sufficient cash flow from operations and future borrowings may not be available to the Company under its ABL Revolving Credit Facility or otherwise in amounts sufficient to enable the Company to service its indebtedness, including the Company's secured and unsecured long-term notes, its First Lien Term Loan Facility, its Farm Credit Term Loan and its Bank Term Loan and borrowings, if any, under its ABL Revolving Credit Facility or to fund its other liquidity needs. If the Company cannot service its debt, the Company will have to take actions such as reducing or delaying capital investments, selling assets, restructuring or refinancing its debt or seek additional equity capital. Any of these remedies may not be executed on commercially reasonable terms, or at all, and may impede the implementation of its business strategy. Furthermore, the secured and unsecured long-term notes, the First Lien Term Loan Facility, Farm Credit Term Loan, Bank Term Loan and the ABL Revolving Credit Facility may restrict the Company from adopting any of these alternatives. Because of these and other factors that may be beyond its control, the Company may be unable to service its indebtedness.

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***An increase in interest rates could have a material adverse effect on the Company's business.***

Borrowings under the Company's ABL Revolving Credit Facility and under its First Lien Term Loan, Farm Credit Term Loan and Bank Term Loan bear interest at rates that are calculated based on SOFR or a base rate plus, in each case, an applicable margin. As a result, the Company is exposed to risks associated with an increase in interest rates, including if the U.S. Federal Reserve raises its benchmark interest rate. The Company may utilize derivative financial instruments, such as interest rate swaps, to manage its interest rate risk. There can be no assurance, however, that increases in interest rates will not adversely affect the Company's business, results of operations and financial position, by causing an increase in interest expense. Significantly higher interest rates may also, among other things, reduce the availability and increase the cost of obtaining new debt and refinancing existing indebtedness.

***The Company has liabilities with respect to its pension plans and the actual cost of its pension plan obligations could exceed current provisions.*** 

Since pension fund obligations are primarily long-term in nature, losses in pension fund investments, if any, would result in increased contributions by the Company, over a period of time ranging from 5 to 15 years, depending upon the applicable legislation for funding pension deficits. Losses, if any, would also impact the Company's results over a longer period of time and immediately increase liabilities and reduce equity.

The Company's future funding obligations for its defined benefit pension plans depend upon changes to the level of benefits provided by the plans, the future performance of assets set aside in trusts for these plans, the level of interest rates used to determine minimum funding levels, actuarial data and experience, and any changes in applicable laws and regulations. The Company also has significant liabilities related to unfunded plans which are subject to their underlying actuarial assumptions.

It is also possible that regulators, including Canadian provincial pension regulators, could attempt to compel additional funding of certain of the Company's pension plans, including its Canadian registered pension plans, in respect of plan members associated with sites it formerly operated. On June 12, 2012, one of our subsidiaries filed a motion for directives with the Quebec Superior Court, the court with jurisdiction in the creditor protection proceedings under the Companies' Creditors Arrangement Act (Canada) (or, the "CCAA Creditor Protection Proceedings"), seeking an order to prevent pension regulators in each of Quebec, New Brunswick, and Newfoundland and Labrador from declaring partial wind-ups of pension plans relating to employees of former operations in New Brunswick, and Newfoundland and Labrador, or a declaration that any claim for accelerated reimbursements of deficits arising from a partial wind-up is barred under the CCAA Creditor Protection Proceedings. A partial wind-up would likely shorten the period in which any deficit, which could reach up to $109 million ($C150 million), within those plans, would have to be funded if the Company does not obtain the relief sought. Refer to Item 8, Financial Statements and Supplementary Data, under Note 19 "Commitments and Contingencies", for more details. At this time, the Company cannot estimate the additional contributions, if any, that may be required in future years, but they could be material.

***The Company may be subject to losses that might not be covered in whole or in part by its insurance coverage.***

The Company maintains property, business interruption, general liability, casualty, cybersecurity and other types of insurance, including environmental liability, that the Company believes are in accordance with customary industry practices, but the Company is not fully insured against all potential hazards inherent in its business, including losses resulting from human error, natural disasters, war risks, or terrorist acts. As is typical in the industry, the Company also does not maintain insurance for any loss to its access to standing timber from natural disasters, regulatory changes, or other causes. Changes in insurance market conditions, including the impact of climate change on the insurance industry, have caused, and may in the future cause, premiums and deductibles for certain insurance policies to increase substantially and in some instances, for certain insurance to become unavailable or available only for reduced amounts of coverage. If the Company was to incur a significant liability for which it was not fully insured, or at all, the Company might not be able to finance the amount of the uninsured liability on terms acceptable to the Company or at all, and might be obligated to divert a significant portion, or all, of its cash flow from normal business operations.

***We could be required to record additional valuation allowances against our recognized deferred income tax assets and we could be limited in our use of certain tax attributes.***

The Company recorded significant deferred income tax assets relating to our Canadian operations in our Consolidated Balance Sheet as of December 31, 2025. If, in the future, the Company determines that it is likely that we will be able to recognize these deferred income tax assets as a result of sustained cumulative losses in our Canadian operations, the Company could be required to record additional valuation allowances for the portion of the deferred income tax assets that is less likely to be realized. Such valuation allowances, if taken, would be recorded as a charge to income tax expense and would adversely impact its results of operations.

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**Market Risks**

***The Company faces intense competition in its markets, and the failure to compete effectively could have a material adverse effect on its business and results of operations.***

The Company competes with domestic and global producers and, for many of its product lines with global producers that may have greater financial resources and lower production costs than the Company. The principal basis for competition is selling price. Because the markets for the Company's products are highly competitive, actions by competitors can affect the Company's ability to compete and the volatility of prices at which its products are sold. For example, favorable market price conditions of wood, pulp or paper products could attract investment from competitors, including the reopening of plants in markets where the Company competes, which in turn could have an adverse impact on the Company's sales, results of operations and financial condition.

The Company's ability to maintain satisfactory margins depends largely on its ability to control its costs. The Company's industries also are particularly sensitive to other factors including innovation, design, quality and service, with varying emphasis on these factors depending on the product line. The Company cannot provide assurance that it will compete effectively and maintain current levels of sales and profitability, and any failure to do so could have a material adverse effect on its business, results of operations and financial condition.

***Conditions in the global geopolitical and economic environment, including protectionist trade policies such as tariffs, and/or other events, may adversely affect the Company's business, results of operations and financial condition.***

A significant or prolonged downturn in the general economic environment may affect the Company's sales and profitability. The Company has exposure to counterparties with which it routinely executes transactions. Such counterparties include commercial banks, insurance companies and other financial institutions, some of which may be exposed to bankruptcy or liquidity risks. A bankruptcy or illiquidity event by one of its significant counterparties may materially and adversely affect the Company's access to capital, future business and results of operations. In addition, the Company's customers and suppliers may be adversely affected by severe economic conditions. This could result in reduced demand for its products or its inability to obtain necessary supplies at reasonable costs, or at all.

The Company may be negatively impacted by geopolitical issues or crises in individual countries or regions, including sovereign risk related to a default by or deterioration in the credit worthiness of local governments, change in the terms of, or countries that are parties to, bilateral and multi-lateral trade agreements and arrangements, limitation on the ability of potential customers to import products or obtain foreign currency for payment of imported products and political and economic instability, including new or increased tariffs and/or trade barriers, pandemics, significant civil unrest, acts of war or terrorist activities, or unstable or unpredictable governments in countries in which the Company operates or trades.

***The Company is affected by changes in currency exchange rates.***

The Company has manufacturing operations in the U.S. and Canada and sells products globally. As a result, it is exposed to movements in foreign currency exchange rates. The Company sells its products mainly in transactions denominated in U.S. dollars, but it also sells in other currencies, including the Canadian dollar, the euro, and the pound sterling. Certain assets and liabilities, including a substantial portion of the Company's net pension and other postretirement benefit obligations and its deferred income tax assets, are denominated mainly in Canadian dollars and are thus exposed to foreign currency movements. The Company's earnings are affected by increases or decreases in the value of the Canadian dollar relative to the U.S. dollar. Additionally, there has been, and may continue to be, unpredictable volatility in currency exchange rates. The Company's risk management policy allows the hedging of a significant portion of its cash flow exposure against fluctuations in the value of the Canadian dollar relative to other currencies, but there can be no assurance that the Company will be fully protected against substantial foreign currency fluctuations. Currency exchange rates could adversely affect the Company's business, results of operations and financial condition.

***The Company is subject to the potential loss of important customers or a significant change in customer relationships or in customer demand for its products, as well as accounts receivable credit risk exposure, which could materially adversely affect the Company's business, results of operations and financial condition.***

The Company's ten largest customers represented approximately 28% of its sales in 2025. Losing important customers, decreases in demand for products from an important customer or increases in accounts receivable credit risk exposure due to financial difficulties of its customers, could materially adversely affect the Company's business, financial condition or results of operations.

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**General Risks**

***Large-scale disruption of social and commercial activity and financial markets, such as has occurred in the past due to pandemic conditions, could have a material adverse effect on the Company's business operations, results of operations, cash flows and financial condition.*** 

Major external events, including pandemic conditions that result in large-sale disruption of social and commercial activity, such as business closures and social restrictions, could adversely impact our volumes, costs and operational execution. If such conditions were to be severe, resulting in a broad-based economic downturn, it may have a material adverse impact on our business operations, results of operations, cash flows and financial condition and hinder our ability to grow our business and otherwise execute our business strategy.

***The Company's financial results could be affected by changes in U.S. and foreign tax laws or in the mix of its U.S. and foreign earnings, as well as adjustments to its estimates of uncertain tax positions or results from audits by U.S. or foreign tax authorities.***

The Company is subject to U.S. and foreign tax laws and regulations. Tax laws, regulations, and administrative practices in various jurisdictions may be subject to significant change, with or without notice, due to economic, political and other conditions, and significant judgment is required in evaluating and estimating its provision and accruals for these taxes. International tax norms governing each country's jurisdiction to tax cross-border international trade have evolved partly due to the Base Erosion and Profit Shifting project led by the Organization for Economic Cooperation and Development and supported by the G20. Changes in these laws and regulations, or any change in the position of tax authorities regarding their application, administration or interpretation could adversely affect the Company's financial results. In addition, countries continue to enact changes to tax laws affecting multinational corporations, including the U.S. Tax Cuts and Jobs Acts ("U.S. Tax Reform") enacted in 2017, the "One Big Beautiful Bill Act," enacted in July 2025, and Organization for Economic Co-operation and Development's inclusive Framework on Base Erosion and Profit Shifting - Pillar Two, including applicable safe harbor provisions that further changes global taxation and could materially impact our financial results.

The Company's effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates or changes in the valuation of deferred tax assets and liabilities. The Company is also subject to the examination of its tax returns and other matters by tax authorities and governmental bodies. The Company regularly assesses the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of its provision for taxes. Taxing authorities may disagree with the positions the Company has taken regarding the tax treatment or characterization of its transactions. If any tax authorities were successful in challenging the tax treatment or characterization of any of the Company's transactions, it could also adversely affect its financial results.

***The Company's intellectual property rights are valuable, and any inability to protect them could reduce the value of its products and its brands.***

The Company relies on patent, trademark and other intellectual property laws of the U.S. and other countries to protect its intellectual property rights. However, the Company may be unable to prevent third parties from using its intellectual property without its authorization, which may reduce any competitive advantage it has developed. If the Company had to litigate to protect these rights, such proceedings could be costly, and it may not prevail. The Company cannot guarantee that any U.S. or foreign patents, issued or pending, will provide it with any competitive advantage or will not be challenged by third parties. Additionally, the Company has obtained and applied for U.S. and foreign trademark registrations and will continue to evaluate the registration of additional service marks and trademarks, as appropriate. The Company cannot guarantee that any of its pending patent or trademark applications will be approved by the applicable governmental authorities and, even if the applications are approved, third parties may seek to oppose or otherwise challenge these registrations. The failure to secure any pending patent or trademark protections may limit the Company's ability to protect the intellectual property rights that the relevant applications are intended to cover.

***Difficulties in the Company's employees' relations or difficulties identifying, attracting, and retaining employees, could lead to operational disruptions or increased costs.***

The success of the Company is substantially dependent, in part, on maintaining good relations with its employees and minimizing employee turnover and on the efforts and abilities of its key personnel, including its executive management team, to develop and implement its business strategies and manage its operations. Work stoppages, excessive employee turnover, or difficulty in attracting and retaining employees, particularly for work in remote locations and certain positions with specialized skill sets, could lead to operational disruptions or increased costs. The failure to retain key personnel or to develop successors with appropriate skills and experience for key positions in the Company could adversely affect the development and achievement of critical organizational strategies, goals and objectives. In addition, as experienced workers retire, the Company could encounter loss of institutional knowledge and specialized skills sets, which could lead to operational disruptions or increased costs. There can be no assurance that the Company will be able to retain or develop the key personnel it needs, and any failure to do so may adversely affect its business, results of operations and financial condition.

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***The Company's operations could be adversely affected by disruptions to its IT systems.***

The Company's IT systems, some of which are dependent on services provided by third parties, serve an important role in the efficient operation of its business. The protection of customers, employees and company data is critical to the Company's business. This role includes ordering and managing materials from suppliers, managing its inventory, converting materials to finished products, facilitating order entry and fulfillment and processing of transactions, summarizing and reporting its financial results, facilitating internal and external communications, administering human resources functions, retaining certain personal information and providing other processes necessary to manage its business. The failure of the Company's IT systems, including any failure of the Company's current systems and/or as a result of transitioning to additional or replacement IT systems, as the case may be, to perform as the Company anticipates could disrupt the Company's business and could result in, among other things, transactions errors, processing inefficiencies, disruption of production and/or deliveries, loss of data and the loss of sales and customers, which could have a material adverse effect on the Company's business, results of operations and financial position, and the effectiveness of its internal control over financial reporting could be negatively impacted. Additionally, the regulatory environment surrounding information security data privacy and data protection is evolving and becoming increasingly restrictive.

The Company is exposed to the risk of cybersecurity incidents in the normal course of business. Cyber incidents may be deliberate attacks attempting for the theft of intellectual property or other sensitive information or may be the result of unintentional events. Like most companies, the Company's information technology systems may be vulnerable to interruption due to a variety of events beyond the Company's control, including, but not limited to, natural disasters, terrorist attacks, power and/or telecommunications failures, computer viruses, hackers and other security issues. The Company has technology security initiatives and disaster recovery plans in place to mitigate the Company's risk to these vulnerabilities, including protection of confidential or personal information, but these measures may not be adequate or implemented properly to ensure that the Company's operations are not disrupted. Cybersecurity and privacy related incidents and vulnerabilities may remain undetected for an extended period of time. The Company's IT systems have been, and will likely continue to be, subject to computer viruses or other malicious codes, unauthorized access attempts, phishing and other cyber-incidents, none of which, to the Company's knowledge, have had a material impact on its business information systems or operations. The Company cannot guarantee that its security efforts will prevent breaches or breakdowns to its IT systems or those of its third-party providers. Potential consequences of a material cyber incident, which could result in confidential or personal information being accessed, obtained, damaged or used by unauthorized or improper persons, include damage to the Company's reputation, litigation, inefficiencies or production downtimes and increased cyber security protection and remediation costs. Such consequences could have a negative impact on the Company's ability to meet customers' orders, resulting in a delay or decrease to its revenue and a reduction to its operating margins. Recent developments in cybersecurity and privacy legislation in different jurisdictions are imposing additional obligations on the Company and could expand its potential liability in the event of a cybersecurity or privacy incident.

**<u>ITEM 1B. UNRESOLV</u><u>ED STAFF COMMENTS</u>**

None.

**<u>ITE</u><u>M 1C. CYBERSECURITY</u>**

***Risk Management and Strategy***

We are committed to our goal of protecting sensitive business-related and personal information, as well as our information systems. We are subject to numerous and evolving cybersecurity risks that could adversely and materially affect our business, results of operations and financial condition.

We have implemented a cybersecurity risk management program based on the National Institute of Standards and Technology (NIST) Cybersecurity Framework to assess, identify and manage cybersecurity risks that may result in material adverse effects on the confidentiality, integrity and availability of our business and information systems.

Our program includes regular risk assessments, penetration testing performed by our internal team and independent third parties, patch management, and vulnerability scanning to identify potential threats and vulnerabilities. We have also implemented a robust security awareness program that includes regular phishing tests and requires employees to undergo annual security awareness training. Our cybersecurity strategy is focused on establishing the zero-trust security model to protect our information assets' confidentiality, integrity, and availability. We also have an incident response process and various incident response plans that are designed to provide timely and effective actions in the event of a cybersecurity incident. Our incident response plan includes procedures for determining the root cause and impacts of the incident, containment actions to mitigate the impacts, and notifying affected parties.

With respect to third-party service providers, we perform information security assessments and due diligence reviews prior to entering into any contractual agreement.

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Despite our efforts, we recognize that no system is completely secure, and our main material cybersecurity risks are related to ransomware attacks, phishing attacks, insider threats, and third-party attacks. We monitor our systems against these risks and adjust our cybersecurity strategy accordingly. The Company's IT systems have been, and likely will continue to be, subject to computer viruses or other malicious codes, unauthorized access attempts, phishing, and other cyber-incidents, none of which, to our knowledge, has had a material impact on our business information systems or operations. While we cannot guarantee that our security efforts will prevent breaches or breakdowns to our IT systems or those of our third-party providers, we have a robust disaster recovery process that is tested annually. For more information about cybersecurity risks, see the Risk Factors discussion in Item 1A of this Form 10-K.

***Governance***

Our senior management team reviews cybersecurity protocols and risks as part of their oversight and execution of the Company's business operations and strategy. The Company's senior management, with the support of relevant committees, oversees risk management to ensure that the processes designed, implemented and maintained by our executives are functioning as intended and adapted when necessary to respond to changes in our Company's strategy as well as emerging risks. We have established oversight mechanisms intended to provide effective cybersecurity governance, risk management and timely incident response.

**<u>ITEM 2. PR</u><u>OPERTIES</u>**

Our corporate co-headquarters are located in Fort Mill, South Carolina and Montreal, Quebec. Our co-headquarters are owned or leased and house certain executive offices, business units, and our administrative, finance, legal, IT and human resources functions.

**Production facilities** 

We own substantially all of our production facilities. As of December 31, 2025, we operated manufacturing and processing facilities in the U.S. and Canada. Our paper manufacturing operations are supported by converting and forms manufacturing operations (including a network of plants located offsite from our paper making operations) as well as sales offices, regional replenishment centers and warehouse facilities located in the U.S. and Canada. For more information on our production facilities, refer to Item 1, Business, under the "Our Operation" section.

We lease substantially all of our sales offices, regional replenishment centers and warehouse facilities. We believe our properties are in good operating condition and are suitable and adequate for the operations for which they are used. We own substantially all of the equipment used in our facilities.

Approximately 59% of our paper production capacity is in the U.S. and 41% is in Canada. Approximately 69% of our pulp production capacity is in the U.S. and 31% is in Canada. All our tissue production capacity is in the U.S. Approximatly 87% of our sawmills mechanical capacity is in Canada and 13% in the U.S.

**Forestlands** 

We have access to fiber from 39 million acres of public forestlands in Canada that are licensed and regulated by the provincial and federal governments. Subject to our ability to maintain the subject licenses, we believe that these forestlands will provide a continuous supply of wood sufficient to meet the Company's foreseeable future needs.

**<u>ITEM 3. LEGAL</u> <u>PROCEEDINGS</u>**

In the normal course of operations, the Company becomes involved in various legal actions mostly related to contract disputes, patent infringements, environmental and product warranty claims, and labor issues. The Company periodically reviews the status of these legal proceedings, assesses the likelihood of any adverse judgments or outcomes, and analyzes the probability of losses. Although the final outcome of any legal proceeding is subject to a number of variables and cannot be predicted with any degree of certainty, management believes that the ultimate outcomes of current legal proceedings will not have a material adverse effect on the Company's long-term results of operations, cash flow or financial condition. An unanticipated adverse outcome in one or more significant legal proceedings could have a material adverse effect on the Company's results of operations and financial condition in a given quarter or year, however.

For a discussion of commitments, legal proceedings and related contingencies, refer to Item 8, Financial Statements and Supplementary Data under, Note 19 "Commitments and Contingencies".

**<u>ITEM 4. MINE SAF</u><u>ETY DISCLOSURES</u>**

Not applicable.

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**PART II**

**<u>ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STO</u><u>CKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES</u>**

As of December 31, 2025, there were no publicly traded common shares of Domtar Corporation.

**<u>ITEM 6. RES</u><u>ERVED</u>**

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**<u>ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF</u> <u>FINANCIAL CONDITION AND RESULTS OF OPERATIONS</u>**

This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in Item 8, Financial Statements and Supplementary Data. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in any forward-looking statements. Factors that might cause a difference include, but are not limited to, those discussed below under "Outlook", in Item 1, Business, under "Forward-looking statements", as well as in Item 1A, Risk Factors, in this report. Except where otherwise indicated, all financial information reflected herein is determined on the basis of accounting principles generally accepted in the United States.

The information contained on our website, www.domtar.com, is not incorporated by reference into this Form 10-K and should in no way be construed as a part of this or any other report that we file with or furnish to the SEC.

In accordance with industry practice, in this report, the term "ton" or the symbol "ST" refers to a short ton, an imperial unit of measurement equal to 0.9072 metric tons. The term "metric ton" or the symbol "ADMT" refers to an air-dry metric ton, and the term "MBF" refer to million board feet. In this report, unless otherwise indicated, all dollar amounts are expressed in U.S. dollars, and the term "dollars" and the symbol "$" refer to U.S. dollars.

For a discussion of the year ended December 31, 2024, compared to the year ended December 31, 2023, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024 (filed with the SEC on February 27, 2025).

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

**Recent Events and Items Affecting Comparability of Financial Results**

<u>Tariffs</u>

In 2025, the United States imposed tariffs on specific goods imported from numerous countries and suggested the potential for additional widespread tariffs in the near term. On April 2, 2025, the U.S. administration issued an executive order imposing tariffs beginning at 10% on all imports into the U.S. from all countries, but which much higher rates for many. While Canada was not exempt, goods compliant with the USMCA are not subject to these additional tariffs. Multiples nations have countered with retaliatory tariffs and other actions in response. Subsequently, the United States and other nations have adjusted their initial announcements and deferred or limited implementation in certain instances. The tariff environment continues to be dynamic, with changes occurring on an ongoing basis, and it is likely that additional developments will occur over the next several months, particularly as the U.S. negotiates with trade partners.

Refer to Part 1, Item 1A Risks Factors "*Products the Company produces in one country and exports to another may become subject to additional duties, tariff or other international trade remedies or restrictions"* for discussion of some of the risks associated with tariffs.

<u>Acquisitions and Divestitures</u>

*Transfer of power generation assets*

On September 8, 2025, we transferred certain power generation assets to Paper Excellence Canada Holdings Corporation, an affiliated company, for consideration of $62 million, through the issuance of interest-bearing notes, in the principal amounts of $47 million and $15 million (the "Agreement").

*Sale of Espanola, Ontario mill*

On October 17, 2025, we completed the sale of our Espanola facility.

*Sale of Forest Products Mauricie, Quebec sawmill*

On July 1, 2025, we completed the sale of the Forest Products Mauricie ("FPM") sawmill, for a purchase price of $15 million, resulting in a gain of $9 million.

*Acquisition of New Receiptco Opco LLC ("Iconex Paper")*

On November 1, 2024, we acquired Iconex Paper for a purchase price of $208 million in cash. Iconex Paper converts thermal paper parent rolls into point-of-sale (POS) receipt rolls, serving customers in industries such as food service, retail, pharmacy, and financial services from its four North American locations in Arizona, Kansas, Tennessee, and Virginia. The Nogales, Mexico converting facility

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was closed in 2025. For the year ended December 31, 2024, we recognized $3 million of transaction related costs associated with this acquisition. These costs are included in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) in the line item entitled Transaction Costs.

*Sale of El Dorado, Arkansas sawmill* 

On August 1, 2024, we sold our sawmill located in El Dorado, Arkansas, to Anthony Forest Products Company, LLC, an affiliate of Canfor Corporation, for a purchase price of $73 million in cash, subject to customary adjustments. For the year 2024, we recorded a gain on disposal of assets of $5 million.

<u>Closure and Restructuring and Impairment of Long-Lived Assets</u>

*Idling of Coosa Pines, Alabama mill*

On March 24, 2026, we announced that we will indefinitely idle operations at our Coosa Pines, Alabama, facility in May 2026. This idling will reduce our annual market pulp production capacity by approximately 270,000 air-dried metric tons and will result in a workforce reduction of approximately 285 employees.

Costs in connection with the closure of the Coosa Pines fluff pulp mill are expected to be incurred largely in the first quarter of 2026. The closure is expected to result in an aggregate pre-tax earnings charge of approximately $45 million, of which an estimated $23 million are non-cash charges related to the write-off of the carrying amount of the equipment, related spare parts and inventory, an estimated $7 million are cash charges related to severance, employee benefits and termination costs and an estimated $15 million charge for other closure and cleanup costs.

*Impairment of long-lived assets*

In the fourth quarter, we initiated a process to pursue the sale of a portfolio of non-core pulp and paper assets. Based on this review, we identified indicators of impairment at those operations for the year ended December 31, 2025.

In connection with the indefinite closure and temporary production curtailment announcements in response to weaker lumber demand conditions, increased countervailing and anti-dumping duties, the introduction of a 10% U.S. tariff in the fourth quarter on Canadian-origin softwood lumber products exported to the U.S., and ongoing economic uncertainty, we determined there were indicators of impairment at certain of our Wood Products lumber operations for the year ended December 31, 2025.

A discounted cash flow model was used to estimate the fair value of the Wood Products impaired asset groups. The fair values of Paper and Packaging as well as the Pulp and Tissue impaired asset groups were derived from indicative non-binding offers from potential buyers.

As a result of these assessments, we recorded impairment charges of $185 million in the Paper and Packaging segment, $136 million in the Wood Products segment, $30 million in the Pulp and Tissue segment, and $3 million as corporate charges for the year ended December 31, 2025. These charges were recorded under Impairment of long-lived assets on the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss).

*Power generation assets impairment costs*

On September 8, 2025, we transferred certain power generation assets to Paper Excellence Canada Holdings Corporation, an affiliated company. As a result, in 2025, we recorded $7 million of write-off of off-market contracts and $1 million of write-off of property, plant and equipment, under Impairment of long-lived assets on the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss).

*Cost reduction measures*

On August 20, 2025, as a result of a strategic review of our operations, we announced the indefinite idling of the Grenada, Mississippi, newsprint mill and the closure of our Addison, Illinois, and Nogales, Mexico, converting facilities. The Nogales facility ceased operations in August, while the Grenada mill and the Addison facility ceased operations in September.

In 2025, we recorded $1 million of write-off of property, plant and equipment, under Impairment of long-lived assets on the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss). Additionally, we recorded $18 million of write-off of inventory, $8 million of severance and termination costs and $3 million of other costs, under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

*Catalyst* 

On January 25, 2024, we announced the indefinite curtailment of the Crofton mill paper operations. On December 2, 2025, we announced the permanent closure of operations at the Crofton pulp mill. While the pulp production is being discontinued, we continue

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to manage the site in compliance with all applicable environmental and other laws and we are exploring a variety of possibilities for the future of the site.

As a results, for the year 2025, we recorded $10 million of accelerated depreciation, under Depreciation and amortization on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss) (2024 – $8 million of accelerated depreciation under Impairment of long-lived assets on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss)).

For the year 2025, we also recorded $17 million of severance and termination costs, $19 million of write-off of inventory, and $3 million of other costs, under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss) (2024 – $4 million of severance and termination costs and $2 million of write-off of inventory).

*Espanola*

In 2023, the mill was idled after years of ongoing operating losses and high costs associated with maintaining and operating the facility. The paper machines were shut down in early 2024.

On October 17, 2025, we completed the sale of our Espanola facility. As a result, for the year ended December 31, 2025, we recorded $12 million of write-off of property, plant and equipment, under Impairment of long-lived assets on the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss).

For the year 2025, we also recorded reversals of $1 million of environmental closure costs and $1 million of other costs, under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

For the year 2024, we recorded $2 million of inventory obsolescence, $1 million of severance and termination costs, and $2 million of other costs, under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

*Ashdown*

On February 21, 2024, we announced that we would indefinitely curtail paper operations at our Ashdown facility. The paper machine and associated sheeter were indefinitely idled in July 2024. The curtailment did not result in a workforce reduction.

For the year 2024, we recorded $30 million of accelerated depreciation, under Depreciation and amortization on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss). Additionally, we recorded $4 million of write-off of inventory and $1 million of severance and termination costs, under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

*Other Costs*

During 2025, other costs related to previous and ongoing closures and restructuring included $3 million of severance and termination costs and $11 million of other costs (2024 - $2 million of severance and termination costs and $12 million of other costs).

**OVERVIEW** 

We design, manufacture, market and distribute a wide variety of fiber-based products including paper, market pulp, wood products and tissue, which are marketed in over 90 countries. We are the largest integrated manufacturer and marketer of uncoated freesheet paper and uncoated mechanical papers in North America as well as a leading global producer of newsprint, fluff, recycled and softwood pulp. We own or operate manufacturing facilities, including pulp and paper mills, tissue facilities and sawmills in the U.S. and Canada. Our paper and tissue manufacturing operations are supported by converting and forms manufacturing operations.

*Organizational structure*

Our organizational structure comprises Business Units and a Corporate function. We manage and report our operating results through three reportable segments: Paper and Packaging, Pulp and Tissue, and Wood Products.

**Paper and Packaging**: Design, manufacture, market and distribute a wide variety of fiber-based products including communication papers, specialty and packaging papers as well as fluff and softwood pulp. We are the largest integrated manufacturer and marketer of uncoated freesheet paper in North America. We are also an important supplier of specialty and packaging papers.

**Pulp and Tissue:** Design, manufacture, market and distribute a wide variety of fiber-based products including market pulp, tissue, and paper. We are the largest producer of uncoated mechanical papers in North America, a leading global producer of newsprint, and a fluff, recycled and softwood pulp producer in North America.

**Wood Products:** A large North American producer of lumber and other wood products for the residential construction and home renovation markets, as well as for specialized structural and industrial applications.

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Our segment measure of profit (operating income (loss)) is used by management to evaluate performance and make operational decisions. Management believes that this measure allows for a better understanding of cost trends, operating efficiencies, prices and volume. Business segment operating income (loss) is defined as earnings (loss) before income taxes and equity losses, interest expense, and non-service components of net periodic benefit cost. Corporate expenses are allocated to our reporting segments with the exception of certain discretionary charges and credits, which we present under "Corporate and Other" and do not allocate to the segments.

**2025 HIGHLIGHTS** 

For the year ended December 31, 2025, we reported operating loss of $395 million, compared to operating income of $218 million for the year ended December 31, 2024. The decline in operating performance primarily reflects the challenging global market conditions that persisted throughout 2025 across all three of our Business units. Market demand was weaker than anticipated for most of the year due to continued economic uncertainty, including softer consumer sentiment, the impact of tariffs, and a slowdown in housing starts, all of which contributed to reduced volumes and margin pressure.

The decrease of $613 million from an operating income to an operating loss, is in part driven by an impairment of long-lived assets of $375 million recorded in 2025. In addition, in 2025, we recognized $80 million of closure and restructuring costs mostly related to the idling of our Crofton pulp mill as well as other cost reduction measures, compared to $30 million of closure and restructuring costs in 2024 mostly related to paper machine closures in 2024. When we compare 2025 to 2024, we had higher input costs, lower volume of pulp and paper, higher maintenance costs, higher freight costs, lower production as well as higher U.S. duties and tariffs for our wood products, partially offset by higher average selling prices for the majority of our products, favorable impact of a lower Canadian dollar on our Canadian dollar denominated expenses, the inclusion of our Iconex business acquired in the fourth quarter of 2024 as well as lower selling, general and administrative costs.

These and other factors that affected the comparison of financial results are discussed in the consolidated results of operations and segment review.

**Economic conditions and uncertainties** 

The markets in which our businesses operate are highly competitive and include well-established domestic and foreign manufacturers. Most of our products are commodities that are widely available from other producers as well. Because commodity products have few distinguishing qualities from producer to producer, competition for these products is based primarily on price, which is determined by supply relative to demand. For our pulp and paper products, we also compete on the basis of product quality, breadth of offering and service solutions. Further, as a paper company, we compete against electronic transmission and document storage alternatives. As a result of such competition, we are experiencing ongoing decreasing demand for most of our existing paper products. The pulp market is highly fragmented as well, with many manufacturers competing worldwide. Competition in the pulp market is primarily based on product quality and price.

A portion of the products that we manufacture are exported to other countries, and a portion of the inputs that we use in manufacturing are imported from other countries. Starting in the first quarter of 2025, the U.S. government announced new tariffs on imports from numerous countries, and multiple nations countered with retaliatory tariffs and other actions in response. Subsequently, the U.S. and other nations have adjusted their initial announcements and deferred or limited implementation in certain instances. The tariff environment has been dynamic over the last several months, with changes occurring on an ongoing basis, and developments are likely over the next several months, particularly as the U.S. negotiates with trade partners.

Implementation of new tariffs or increases in existing tariffs likely will have an adverse impact on our business. As noted above, we operate in a highly competitive environment, and tariffs that either increase our landed sales prices or our manufacturing costs make our products less competitive relative to those that are not subject to these impacts. Our main export markets from the United States are: China, Canada and Mexico and from Canada, our main export market is the United States. We continue to actively evaluate the potential impacts of the announced tariffs on our business as well as our ability to mitigate impacts as they arise. The tariff environment is volatile and unpredictable, however, and such impacts may be significant in the future.

**OUTLOOK** 

For 2026, we expect demand for paper to remain stable relative to 2025 levels, with modest improvements anticipated in pulp demand. We also expect some recovery in our pulp and paper pricing. We will continue to actively manage our inventory levels and align our production with our customer demand. In our Wood Products business, soft demand in the U.S., combined with the implementation of additional 10% tariff on lumber exports to the U.S., has created challenging market conditions and contributed to a significant reduction in the North American lumber capacity. Despite near-term pressure, we remain confident on the medium and long-term housing fundamentals and the housing shortage in both the U.S. and Canada. Overall, we anticipate costs, including freight, labor and raw materials, to marginally increase year over year. We will continue to monitor the recent Middle-East conflict (March 2026), which is driving increases in energy prices, supply and shipping disruptions, inflationary pressures, and broader supply chain uncertainty. Our near-term focus continues to be on controlling costs and generating cash flow.

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This outlook reflects assumptions subject to change depending on broader macroeconomic developments.

**CONSOLIDATED RESULTS OF OPERATIONS AND SEGMENT REVIEW**

This section presents a discussion and analysis of our 12 months ended December 31, 2025, and 2024, sales, operating income (loss) and other information relevant to the understanding of our results.

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| | | |
|:---|:---|:---|
|  | **Year ended<br>December 31, 2025** | Year ended<br>December 31, 2024 |
| *(In millions of dollars, unless otherwise noted)* |  |  |
| **Sales** | $**6943** | $**7154** |
| **Operating Expenses** |  |  |
| Cost of sales, excluding depreciation and amortization | **6197** | 6267 |
| Depreciation and amortization | **339** | 336 |
| Selling, general and administrative | **354** | 365 |
| Impairment of long-lived assets | **375** |  |
| Closure and restructuring costs | **80** | 30 |
| Transaction costs | **—** | 3 |
| Other operating income, net | **(7)** | (65) |
|  | $**7338** | $6936 |
| **Operating (loss) income** | $**(395)** | $218 |
| Interest expense, net | **237** | 237 |
| Non-service components of net periodic benefit cost | **(16)** | (20) |
| **(Loss) earnings before income taxes** | $**(616)** | $**1** |
| Income tax expence | **188** | 18 |
| **Net (loss) earnings** | $**(804)** | $**(17)** |
| **Sales, per segment** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Paper and Packaging | $**4679** | $4727 |
| &nbsp;&nbsp;&nbsp;&nbsp;Pulp and Tissue | **1378** | 1510 |
| &nbsp;&nbsp;&nbsp;&nbsp;Wood Products | **960** | 1006 |
| **Total for reportable segment** | $**7017** | $**7243** |
| &nbsp;&nbsp;Intersegment sales | **(74)** | (89) |
| **Consolidated sales** | $**6943** | $**7154** |
| **Operating (loss) income, per segment** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Paper and Packaging | $**(1)** | $331 |
| &nbsp;&nbsp;&nbsp;&nbsp;Pulp and Tissue | **(92)** | 53 |
| &nbsp;&nbsp;&nbsp;&nbsp;Wood Products | **(183)** | (113) |
| **Total for reportable segment** | $**(276)** | $**271** |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate and Other | **(119)** | (53) |
| **Consolidated operating (loss) income** | $**(395)** | $**218** |

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| | | |
|:---|:---|:---|
|  | **At December 31,** | At December 31, |
|  | **2025** | 2024 |
| Total assets | $**6658** | $7316 |
| Total long-term debt, including current portion and due to related party | $**2832** | $2630 |

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In the following discussion, unless otherwise noted, references to increases or decreases in income and expense items, prices, contribution to net earnings (loss), and shipment volumes are based on the 12-month periods ended December 31, 2025 and 2024. The

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12-month periods are also referred to as 2025, and 2024. References to notes refer to footnotes to the consolidated financial statements and notes thereto included in Item 8, Financial Statements and Supplementary Data.

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| | | | |
|:---|:---|:---|:---|
|  | **Year ended <br>December 31, 2025** | Year ended <br>December 31, 2024 | Variance 2025 vs. 2024 |
| FINANCIAL HIGHLIGHTS |  |  |  |
| *(In millions of dollars, unless otherwise noted)* |  |  |  |
| Sales | $**6943** | $7154 | $(211) |
| Operating (loss) income | **(395)** | 218 | (613) |
| Net (loss) earnings | **(804)** | (17) | (787) |

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**2025 vs. 2024**

**Analysis of Sales** 

Sales in 2025 decreased by $211 million, or 3% when compared to sales in 2024. This decrease in sales is mostly due to a decrease in our sales volume for most of our products. This decline was largely attributable to weakened consumer demand resulting from ongoing macroeconomic challenges. These decreases were partially offset by an increase in our net average selling prices for the majority of our products. In addition, our paper sales volume was impacted by our paper machine closure at our Ashdown facilities in 2024. In addition, our 2025 sales includes the sales of Iconex, acquired in the fourth quarter of 2024.

**Analysis of change in Operating (Loss) Income** 

Operating loss in 2025 of $395 million was lower by $613 million when compared to operating income in 2024. This decrease is mainly driven by $375 of impairment of long-lived assets as well as higher closure and restructuring costs related to our cost-reduction measures and the closure of our Crofton pulp mill in December 2025. When we compare 2025 to 2024, we had higher input costs, lower volume for most of our products, higher maintenance costs, higher freight costs, lower production as well as higher U.S. duties and tariffs for our wood products, partially offset by higher average selling prices for the majority of our products, favorable impact of a lower Canadian dollar on our Canadian dollar denominated expenses, the inclusion of our Iconex business acquired in the fourth quarter of 2024 as well as lower selling, general and administrative costs. Our paper volume was impacted by our paper machine closure at our Ashdown facility in early July 2024.

Refer to Item 8, Financial Statements and Supplementary Data, under Note 14 "Closure and Restructuring, Impairment of Long-Lived Asset and Asset Conversion Costs" for additional information.

**OTHER FACTORS**

**Corporate and Other**

For the year 2025, our Corporate and Other incurred a loss of $119 million, an increase of $66 million compared to $53 million in 2024. This increase in loss was mostly due to higher foreign exchange loss on working capital items of $33 million, higher closure and restructuring costs of $22 million, $17 million of impairment on long-lived assets, lower gains on assets disposal of $32 million when compared to 2024, partially offset by litigation settlement loss of $21 million in 2024 and lower other costs of $8 million, lower selling, general and administrative costs of $6 million as well as lower transaction costs of $3 million.

**Interest Expense, net** 

We incurred $237 million of net interest expense in 2025, flat compared to net interest expense of $237 million in 2024. Interest expense decreased mainly due to lower floating rates for SOFR, offset by higher debt levels in 2025 compared to 2024. In 2025, we had capitalized interest of $2 million, compared to $6 million in 2024. See section "Capital Resources" below for more information on our debt structure.

**Non-Service Components of Net Periodic Benefit Cost**

For the year 2025, our non-service components of net periodic benefit cost were a benefit of $16 million, a decrease of $4 million when compared to 2024. Refer to Item 8, Financial Statements and Supplementary Data, under Note 5 "Pension Plans and Other Post-Retirement Benefit Plans" for additional information.

**Income Taxes** 

We recorded an income tax expense of $188 million in 2025 compared to an income tax expense of $18 million in 2024, which yielded an effective tax rate of -30.5% and 1,800% for 2025 and 2024, respectively. Our 2025 effective tax rate was unfavorably impacted by

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our decision to record a full allowance against our net U.S. deferred income tax assets and the net deferred tax assets of certain Canadian subsidiaries, as discussed further below. The effective tax rate was also negatively affected by the recognition of a capital gain arising from the repatriation of foreign earnings from a wholly owned subsidiary, which did not result in any cash taxes payable, as well as by nondeductible items. These impacts were partially offset by research and experimentation tax credits, foreign exchange effects resulting from the strengthening of the Canadian dollar, and a reduction in the deferred tax liability on foreign earnings.

At each reporting period, we assess whether it is more likely than not that the deferred income tax assets will be realized, based on the review of all available positive and negative evidence, including future reversals of existing taxable temporary differences, estimates of future taxable income, past operating results, and prudent and feasible tax planning strategies. Our assessment assigns the most weight to historical income or losses. A cumulative three-year loss position is considered significant negative evidence in assessing the realizability of deferred income tax assets that is difficult to overcome. The carrying value of deferred income tax assets reflects the expected ability to generate sufficient future taxable income in certain tax jurisdictions to utilize these deferred income tax assets.

Following the assessment of our ability to realize the deferred income tax assets related to our U.S. operations, we concluded that existing negative evidence outweighed the positive evidence, especially since our U.S. operations had a cumulative loss for the three years ending December 31, 2025. Since the weight assigned to positive and negative evidence must align with how objectively verifiable that evidence is, the cumulative losses from our U.S. operations significantly constrains our ability to rely on more subjective positive indicators. As a result, we determined that it is not more likely than not that we will realize the remaining net deferred tax asset in the U.S. and recorded a corresponding increase in the related valuation allowance. As of December 31, 2025, the total valuation allowance related to net U.S. deferred income tax assets was $686 million, resulting in no recognized deferred tax assets for our U.S. operations.

Following an evaluation of our ability to realize deferred income tax assets related to our Canadian operations, we determined that positive evidence, including sustained historical earnings, outweighed any negative evidence for certain Canadian subsidiaries. Accordingly, no valuation allowance was required for the majority of our net Canadian deferred income tax assets. However, certain Canadian subsidiaries were in a cumulative three-year loss position as of December 31, 2025, which limited our ability to rely on more subjective positive indicators or evidence. As a result, a valuation allowance was recorded for the net deferred tax assets of such subsidiaries. As of December 31, 2025, the total valuation allowance related to net Canadian deferred income tax assets was $72 million.

The non-cash charge to increase the valuation allowance has no impact on consolidated operating income or cash flows and does not restrict our ability to utilize tax loss carryforwards or other deferred tax assets in future periods. If, in a subsequent period, sufficient objective positive evidence becomes available to support the realizability of some or all of our deferred tax assets for which an allowance has been recorded, the amount will be reduced as appropriate, with the corresponding adjustment recognized as a reduction of the income tax provision.

Our 2024 effective tax rate was unfavorably impacted by foreign exchange items from the weakening of the Canadian dollar and by recording a valuation allowance on certain elements of deferred income tax assets, mainly deferred interest expense. This was partially offset by additional tax credits, mainly from research activities and state investment, as well as adjustments relating to filed tax returns.

*Pillar Two - Global Anti-Base Erosion Model Rules ("GloBE Rules")*

In October 2021, the Organization for Economic Co-operation and Development ("OECD") announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting which agreed to a two-pillar framework to address tax challenges arising from digitalization of the economy and profit shifting. In December 2021, the OECD published the GloBE Rules designed to ensure that multinational enterprises are subject to tax at an effective minimum tax rate of 15% in each jurisdiction where they operate. Although the U.S. has not enacted legislation to adopt GloBE Rules, the foreign countries wherein we have significant operations have already adopted or are in the process of adopting such legislation. We have performed an assessment of potential exposure and concluded GloBE Rules did not impact our financial results for the year ended December 31, 2025. We will continue to evaluate their impact on future periods.

**Commentary – Segment Review** 

Our segment measure of profit (operating income (loss)) is used by management to evaluate performance and make operational decisions. Management believes that this measure allows for a better understanding of cost trends, operating efficiencies, prices and volume. Business segment operating income (loss) is defined as earnings (loss) before income taxes and equity losses, interest expense, and non-service components of net periodic benefit cost. Corporate expenses are allocated to the related reporting segment with the exception of certain discretionary charges and credits, which we present under "Corporate and Other."

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**PAPER AND PACKAGING**

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| | | | |
|:---|:---|:---|:---|
| *(In millions of dollars, unless otherwise noted)* | **Year ended <br>December 31, 2025** | Year ended <br>December 31, 2024 | *Variance 2025 vs. 2024* |
| Sales |  |  |  |
| &nbsp;&nbsp;Paper | $**3348** | $3437 | $(89) |
| &nbsp;&nbsp;Pulp | $**1331** | $1290 | $41 |
| Total sales | $**4679** | $4727 | $(48) |
| Operating (loss) income | $**(1)** | $331 | $(332) |
| <u>Shipments</u> |  |  |  |
| Paper - manufactured (in thousands of ST) | **2401** | 2606 | (205) |
| &nbsp;&nbsp;Communication papers | **1447** | 1629 | (182) |
| &nbsp;&nbsp;Specialty and Packaging papers | **954** | 977 | (23) |
| Pulp (in thousands of ADMT) | **1546** | 1498 | 48 |

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*Sales*

Paper and Packaging segment sales in 2025 decreased by $48 million, or 1% when compared to sales in 2024. This decrease in sales is mostly due to a decrease in our Communication paper sales volumes. Our paper volume was impacted by lower demand, resulting from ongoing macroeconomic challenges and our paper machine closure at our Ashdown facility in July 2024. This decrease was partially offset by an increase in our net average selling prices for our paper and pulp products as well as an increase in our pulp volume. In addition, our 2025 sales include the sales of Iconex, acquired in the fourth quarter of 2024.

*Operating (loss) income*

Operating loss in our Paper and Packaging segment amounted to $1 million in 2025, a decrease in income of $332 million, when compared to operating income of $331 million in 2024. Our results were negatively impacted by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher impairment of long-lived assets charges ($185 million) when compared to 2024 in part due to the curtailment of our Crofton pulp mill operations in 2025, partially offset by lower depreciation charge of $5 million when compared to 2024

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher operating expenses ($133 million) when compared to 2024 mostly due to higher maintenance costs in part due to the timing of some major maintenance, lower production, higher freight costs as well as lower by-products sales and other operating expenses

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher input costs ($73 million) mostly due to higher costs of energy, chemicals and fiber

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower volume and mix ($26 million)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher closure and restructuring costs ($28 million) mostly related to the closing of our Crofton pulp mill in December 2025

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher other expense ($8 million)

These decreases were partially offset by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher net average selling prices for paper and pulp ($95 million)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Positive impact of a lower Canadian dollar on our Canadian dollar denominated expenses ($21 million)

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**PULP AND TISSUE**

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| | | | |
|:---|:---|:---|:---|
| *(In millions of dollars, unless otherwise noted)* | **Year ended <br>December 31, 2025** | Year ended <br>December 31, 2024 | *Variance 2025 vs. 2024* |
| Sales |  |  |  |
| &nbsp;&nbsp;Paper | $**670** | $740 | $(70) |
| &nbsp;&nbsp;Pulp | $**470** | $543 | $(73) |
| &nbsp;&nbsp;Tissue | $**238** | $227 | $11 |
| Total sales | $**1378** | $1510 | $(132) |
| Operating (loss) income | $**(92)** | $53 | $(145) |
| <u>Shipments</u> |  |  |  |
| Paper - manufactured (in thousands of ST) | **1027** | 1102 | (75) |
| Pulp (in thousands of ADMT) | **538** | 644 | (106) |
| Tissue (in thousands of ST) <sup>(1)</sup> | **105** | 97 | 8 |

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<sup>(1)</sup> *Tissue converted products, which are measured in cases, are converted to short tons.*

*Sales*

Pulp and Tissue segment sales in 2025 decreased by $132 million, or 9% when compared to sales in 2024. This decrease in sales is mostly due to a decrease in our pulp and paper sales volume mostly due to lower demand resulting from ongoing macroeconomic challenges, as well as a decrease in our net average selling prices for paper, partially offset by an increase in our net average selling prices for pulp.

*Operating (loss) income* 

Operating loss in our Pulp and Tissue segment amounted to $92 million in 2025, an increase in loss of $145 million when compared to operating income of $53 million in 2024. Our results were negatively impacted by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher operating expenses ($59 million) mostly due to higher maintenance costs in part due to the timing of some major maintenance, lower production as well as higher freight cost

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher impairment of long-lived assets ($38 million) when compared to 2024, as well as higher depreciation charges ($10 million)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher input costs ($32 million) mostly related to higher costs of energy, fiber and chemicals

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower net average selling prices for paper ($20 million)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower volume and mix for pulp and paper ($16 million)

These increases in loss were partially offset by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher net average selling prices for pulp and tissue ($16 million)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Positive impact of a lower Canadian dollar on our Canadian dollar denominated expenses ($14 million)

**WOOD PRODUCTS**

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| | | | |
|:---|:---|:---|:---|
| *(In millions of dollars, unless otherwise noted)* | **Year ended <br>December 31, 2025** | Year ended <br>December 31, 2024 | *Variance 2025 vs. 2024* |
| Sales | $**960** | $1006 | $(46) |
| Operating loss | $**(183)** | $(113) | $(70) |
| <u>Shipments</u> |  |  |  |
| Wood products (in millions board feet) <sup>(1)</sup> | **1916** | 2130 | (214) |

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<sup>(1)</sup> *Includes wood pellets measured by mass, converted to board feet using a density-based conversion ratio, as well as engineered wood products measured by linear feet, converted to board feet.*

*Sales*

Wood Products segment sales in 2025 decreased by $46 million, or 5%, when compared to sales in 2024. This decrease in sales is mostly due to a decrease in our volume mostly due to lower demand resulting from a slowdown in residential construction and renovation activity, partially offset by higher net average selling prices.

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*Operating loss* 

Operating loss in our Wood Products segment amounted to $183 million in 2025, an increase in loss of $70 million when compared to operating loss of $113 million in 2024. Our results were negatively impacted by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher impairment of long-lived assets ($136 million) when compared to 2024

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher cash deposits for duties and higher U.S. tariffs ($34 million)

These increases in loss were offset by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher net average selling prices for wood products ($53 million)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Positive impact of a lower Canadian dollar on our Canadian dollar denominated expenses ($21 million)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower input costs ($18 million) mostly related to lower costs of fiber

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Favorable inventory valuation variance ($6 million)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher volume ($1 million)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower operating expenses ($1 million)

**LIQUIDITY AND CAPITAL RESOURCES**

Our principal cash requirements are for ongoing operating costs, pension contributions, working capital and capital expenditures, as well as principal and interest payments on our debt and income tax payments. We expect to fund our liquidity needs primarily with internally generated funds from our operations and, to the extent necessary, through borrowings under various lending arrangements, including our ABL Revolving Credit facility, of which $390 million was undrawn and available as of December 31, 2025, and asset sales. Under adverse market conditions, there can be no assurance that these agreements would be available or sufficient. See "Capital Resources" below.

We expect that we will need to refinance all or a portion of our indebtedness on or before maturity. If we cannot timely refinance our indebtedness, we may have to take actions such as raising additional equity capital and reducing, delaying or foregoing capital expenditures, strategic acquisitions, investments and alliances. It is uncertain whether any such actions, if necessary, could be implemented on commercially reasonable terms or at all. In addition, if our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity challenges and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital, and/or restructure our indebtedness. We may not be able to effect such alternative measures on commercially reasonable terms or at all, and, even if successful, those alternative actions may not allow us fully to meet our debt service obligations.

For the year 2025, we used $25 million of cash flows in operations, had capital expenditures of $248 million, and had debt repayments of $73 million. This compares to $79 million cash provided from operations, capital expenditures of $280 million and debt repayments of $67 million for the year 2024.

We are focused on generating additional liquidity, including from external sources. Accordingly, we have undertaken a number of actions that seek to enhance our access to liquidity in the business. We continue to conduct a comprehensive review of the assets in our portfolio to identify those that are not complementary to the business and therefore may merit divestiture to provide cash inflow and reduce operating costs; we are continuing a complete review of support function costs with the aim of reducing costs and right sizing the organization in anticipation of asset sales; we may also potentially idle certain underperforming mills and plans to reduce working capital. In addition, in 2025, we have: taken steps to adjust production capacity and reduce costs by taking market downtime in various locations to adjust to customer demand for paper, pulp and wood lumber products; closure of the Crofton pulp mill, idled indefinitely the Grenada, Mississippi newsprint mill in response to lower customer demand for newsprint; closure of the Nogales, Mexico converting facility and the closure of the Addison, Illinois converting facility; curtailment of operations at the Glenwood, Arkansas, sawmill and at the Maniwaki, Quebec sawmill in response to weaker lumber demand conditions; and reduced capital expenditure programs for 2025 and 2026 to better focus on core functions such as the maintenance of assets, safety of our employees and compliance with applicable laws and regulations.

Our consolidated financial statements have been prepared on the basis that we are expected to be able to realize our assets and discharge our liabilities in the normal course of business as they become due for at least twelve months from the issuance date of these consolidated financial statements. Significant judgment was applied in performing a liquidity assessment to evaluate whether we has sufficient liquidity for the next 12 months using a cash flow model. Based on current assumptions, including those related to expected operating margin and other non-discretionary cash inflows and outflows, we expect to have sufficient liquidity to meet our obligations over the next 12 months. In addition to these assumptions, our liquidity position is supported by our available cash balances, access to existing credit facilities, and anticipated cash flows from operations.

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Our ability to make payments on the requirements mentioned above will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Our credit facility and debt indentures impose various restrictions and covenants on us that could limit our ability to respond to market conditions, to provide for unanticipated capital investments or to take advantage of business opportunities. Refer to the discussion in Part 1, item 1A Risks Factors of this Form 10-K.

A portion of our cash is held outside the U.S. by foreign subsidiaries. The earnings of the foreign subsidiaries reflect full provision for local income taxes. We remain indefinitely reinvested in the outside basis differences of our foreign subsidiaries.

**Operating Activities** 

Our operating cash flow requirements are primarily for salaries and benefits, the purchase of raw materials, including fiber and energy, and other expenses such as income tax and property taxes.

Cash flows used for operating activities totaled $25 million in 2025, a $104 million difference compared to cash flows provided from operating activities of $79 million in 2024. This increase in cash flows used for operating activities is primarily due to an increase in net loss partially offset by a decrease in working capital requirements. In addition, we had income tax payments, net of refunds, of $7 million during 2025, compared to income tax refunds, net of payments, of $18 million in 2024. We paid $99 million of employer pension and other post-retirement contributions in excess of pension and other post-retirement expense in 2025 compared to $104 million of employer pension and other post-retirement contributions in excess of pension and other post-retirement expense in 2024.

**Investing Activities** 

Cash flows used for investing activities in 2025 amounted to $223 million, a $129 million difference compared to cash flow used for investing activities of $352 million in 2024.

The use of cash for investing activities in 2025 was mostly attributable to additions to property, plant and equipment of $248 million and was partially offset by the proceeds from the sale of businesses, net of cash disposed, of $15 million and proceeds from the disposals of property, plant and equipment of $11 million.

The use of cash for investing activities in 2024 was attributable to additions to property, plant and equipment of $280 million, as well as an acquisition of business, net of cash acquired, for a total of $208 million, partially offset by proceeds from the sales of businesses of $97 million and proceeds from the disposals of property, plant and equipment of $40 million.

Our annual capital expenditures for 2026 are expected to total between $260 million and $290 million.

**Financing Activities**

Cash flows provided from financing activities totaled $191 million in 2025 compared to cash flows provided from financing activities of $233 million in 2024.

The cash flows provided from financing activities in 2025 were attributable to borrowing under our ABL Revolving Credit Facility ($115 million), issuance of long-term debt ($150 million), and higher bank indebtedness ($2 million), partially offset by repayment of long-term debt as required for quarterly amortization of our term loans ($73 million).

The cash flows provided from financing activities in 2024 were attributable to borrowings under our ABL Revolving Credit Facility ($145 million), issuance of capital ($100 million), and issuance of long-term debt ($61 million) partially offset by repayment of long-term debt as required for quarterly amortization of our term loans ($67 million) and lower bank indebtedness ($6 million).

**Capital Resources** 

Net indebtedness, consisting of bank indebtedness, long-term debt and due to related party, net of cash and cash equivalents and restricted cash, was $2,781 million as of December 31, 2025, compared to $2,541 million as of December 31, 2024. A substantial majority of this amount, approximately $1.9 billion, matures in 2028.

*ABL Revolving Credit Facility* 

On February 26, 2025, we amended our ABL Revolving Credit Facility that matures on March 1, 2028. Pursuant to the Third ABL Amendment, the maximum availability under the ABL Revolving Credit Facility was increased from $1.0 billion to $1.14 billion, which includes a Tranche 1 Loan ("ABL Tranche I Loan") of $1.020 billion and First In, Last Out ("FILO") tranche of $120 million (the "ABL FILO Loan"). Our ABL Revolving Credit Facility provides for revolving loans and letters of credit in an aggregate amended amount of up to $1.14 billion, subject to borrowing base capacity. The facility was fully available as of December 31, 2025.

Borrowings under the ABL Tranche 1 Loan bears interest at a floating rate per annum of, at our option, SOFR (adjusted by 0.10%) plus an applicable margin of 1.50% to 2.00% or a base rate plus 0.50% to 1.00%, in each case, depending on excess availability. Borrowing under the ABL FILO Loan bears interest at a floating rate per annum of, at our option, SOFR (adjusted by 0.10%) plus an applicable margin of 2.75% or a base rate plus 1.75%. Utilization of the ABL Revolving Credit Facility is limited by borrowing base

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calculations based on the sum of specified percentages of eligible accounts receivable, plus specified percentages of eligible inventory, plus specified percentages of qualified cash, minus the amount of any applicable reserves. The ABL Revolving Credit Facility is subject to an unused line fee of 0.25% to 0.375%, depending upon utilization.

Our ABL Revolving Credit Facility, when specified excess availability is less than the greater of $99.75 million and 10% of the lesser of the borrowing base and maximum borrowing capacity, requires the maintenance of a fixed charge coverage ratio of 1.00 to 1.00 at the end of each fiscal quarter for the trailing 12-month period. This covenant did not apply as of December 31, 2025.

On December 31, 2025, we had borrowings of $595 million and $155 million of letters of credit outstanding under this facility, leaving unused commitments available to us of $390 million.

*Bank Term Loan*

On January 28, 2025, we entered into a Term Loan Credit Agreement (the "Bank Term Loan") for $150 million which was used to repay borrowings under the ABL Revolving Credit Facility. The Bank Term Loan will mature on November 30, 2028. The Bank Term Loan bears interest at a floating rate per annum, of SOFR plus 5.00%. Borrowings under the Bank Term Loan will be amortized in equal quarterly installments in an amount equivalent to 5.00% per annum of the principal amount. The Bank Term Loan ranks pari passu with the Farm Credit Term Loan, the First Lien Term Loan Credit Agreement, the Senior Secured Notes and the Industrial Revenue Bond. The Bank Term Loan contains customary negative covenants, including, but not limited to, restrictions on our ability and that of our restricted subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make investments, pay dividends or make other restricted payments, sell or otherwise transfer assets or enter into transactions with affiliates. At December 31, 2025, there were $144 million of borrowings outstanding under the Bank Term Loan.

*Industrial Revenue Bond ("IRB Bonds")*

On December 5, 2024, we issued IRB Bonds with a principal amount of $60 million through the Industrial Development Board of the City of Kingsport, Tennessee to finance an environmental project at our Kingsport linerboard mill. The proceeds of the financing are held in trust to pay for the costs of the project. The funds held in trust are included in Other assets on the Consolidated Balance Sheets. The rate on the bonds is 5.25% until November 15, 2029. The IRB Bond provisions include a mandatory remarketing event scheduled for November 15, 2029, where the bonds will be offered for remarketing at the prevailing market rate. We are obligated to repurchase any bonds not successfully remarketed. The interest on these bonds is exempt from federal income tax for holders. The bonds rank pari passu with the First Lien Term Loan Credit Agreement, the Senior Secured Notes, the Farm Credit Term Loan and the Bank Term Loan. While the bonds remain outstanding, we are obligated to follow the covenants contained in the Senior Note indenture or a replacement security.

*Farm Credit Term Loan*

On March 1, 2023, we entered into a Term Loan Credit Agreement (the "Farm Credit Term Loan") for $949 million, consisting of two tranches: (a) $666 million of Farm Credit Term Loan A (as defined in the Farm Credit Term Loan) used to refinance renewable energy investments and facilitate an acquisition and (b) $283 million of Farm Credit Term Loan B (as defined in the Farm Credit Term Loan) used to repay $283 million of borrowings under the Term Loan Facility.

Our Farm Credit Term Loan matures (i) with respect to the Farm Credit Term Loan A, on March 1, 2030, and (ii) with respect to the Farm Credit Term Loan B, on November 30, 2028. Our Farm Credit Term Loan bear interest at a floating rate per annum of, at Domtar's option, (i) with respect to the Farm Credit Term Loan A, SOFR (adjusted by 0.10%) plus 6% or a base rate plus 5%, and (ii) with respect to the Farm Credit Term Loan B, SOFR (adjusted by 0.10%) plus 5.75% or a base rate plus 4.75%. The SOFR rate is subject to an interest rate floor of 0.75% and the base rate is subject to an interest rate floor of 1.75%. Borrowings under our Farm Credit Term Loan amortize in equal quarterly installments in an amount equivalent to 5% per annum of the principal amount. The Farm Credit Term Loan ranks pari passu with the First Lien Term Loan Credit Agreement and the Senior Secured Notes.

We are required to offer to prepay the loans under the Farm Credit Term Loan, the Term Loan Facility and the Senior Secured Notes with 100% of the net cash proceeds of certain asset sales subject to reinvestment rights. We are required to prepay the Farm Credit Term Loan and Term Loan Facility with 100% of the net cash proceeds of certain debt issuances and 50% of excess cash flow, subject to certain exceptions.

During the year 2025, we repaid $33 million of Farm Credit Term Loan A, and $14 million of Farm Credit Term Loan B, as required for quarterly amortization. At December 31, 2025, there were $574 million of borrowings under the Farm Credit Term Loan A and $241 million of borrowings under the Farm Credit Term Loan B.

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*First Lien Term Loan Facility*

Borrowings under our First Lien Term Loan Facility amortize in equal quarterly installments in an amount equal to 5% per annum. The interest rate margin applicable to borrowings under our First Lien Term Loan Facility is, at our option, either (1) SOFR adjusted by 0.114% plus 5.50%, or (2) the base rate plus 4.50%. The Term Loan Facility is subject to a SOFR floor of 0.75%.

During the year 2025, we repaid $19 million as required for quarterly amortization. At December 31, 2025, there were $307 million of borrowings outstanding under the Term Loan Facility.

*Senior Secured Notes*

Pearl Merger Sub Inc., a wholly-owned subsidiary of Pearl Excellence Holdco L.P., a Delaware limited partnership, was the initial issuer of the $775 million aggregate principal amount of 6.75% Senior Secured Notes due 2028 (the "Notes"). This Note issue was part of financing related to the acquisition of Domtar by Pearl Excellence Holdco L.P. Upon the completion of the acquisition, the initial issuer was merged with and into Domtar with Domtar surviving the Merger and becoming the obligor of the Notes. As of December 31, 2025, we had $642 million of Notes outstanding.

The Notes mature on October 1, 2028, and interest on the Notes is payable in cash semi-annually in arrears on April 1 and October 1 of each year.

*Secured Debt Attributes*

We are required to offer to prepay the loans under the Farm Credit Term Loan, the First Lien Term Loan Facility, the Bank Term Loan, the Senior Secured Notes and IRB Bonds with 100% of the net cash proceeds of certain asset sales subject to reinvestment rights.

We are required to prepay the Farm Credit Term Loan, First Lien Term Loan Facility and Bank Term Loan with 100% of the net cash proceeds of certain debt issuances and 50% of excess cash flow, subject to certain exceptions.

Our ABL Revolving Credit Facility, Farm Credit Term Loan, the First Lien Term Loan Facility and the Senior Secured Notes contain customary negative covenants, including, but not limited to, restrictions on our ability and that of our restricted subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make investments, pay dividends or make other restricted payments, sell or otherwise transfer assets or enter into transactions with affiliates.

Our ABL Revolving Credit Facility, Farm Credit Term Loan, the First Lien Term Loan Facility and the Senior Secured Notes provide that, upon the occurrence of certain events of default, our obligations thereunder may be accelerated. Such events of default include payment defaults to the lenders thereunder, material inaccuracies of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, voluntary and involuntary bankruptcy, insolvency, corporate arrangement, winding-up, liquidation or similar proceedings, material money judgments, change of control and other customary events of default.

Our obligations under our ABL Revolving Credit Facility are guaranteed by our immediate parent (a company that has no assets other than Domtar shares) and our wholly-owned material U.S. subsidiaries and wholly-owned material Canadian subsidiaries. Our ABL Revolving Credit Facility has a first-priority lien on the current assets of such U.S. subsidiaries and all the assets of Canadian subsidiaries, and a second-priority lien on the fixed assets of our wholly-owned material U.S. subsidiaries (in all cases, excluding principal properties and shares of subsidiaries), in each case, subject to permitted liens.

Our obligations under our Farm Credit Term Loan, the First Lien Term Loan Facility and the Senior Secured Notes are guaranteed by our immediate parent (a company with no assets other than Domtar shares) and all of the Issuer's direct and indirect wholly-owned material U.S. subsidiaries. Our Farm Credit Term Loan, the First Lien Term Loan Facility, the Senior Secured Notes, the Bank Term Loan and the IRB Bonds have a first priority lien on the fixed assets of our wholly-owned material U.S. subsidiaries, representing 58% of the Consolidated Fixed Assets, and a second-priority lien on the current asset collateral in the U.S. (second in priority to the liens securing our ABL Revolving Credit Facility discussed above), in each case, subject to other permitted liens.

*Unsecured Notes* 

As of December 31, 2025, we had outstanding $116 million of the 6.25% Notes due 2042 and $150 million of the 6.75% Notes due 2044.

**GUARANTEES**

**Indemnifications**

In the normal course of business, we offer indemnifications relating to the sale of our businesses and real estate. In general, these indemnifications may relate to claims from past business operations, compliance with laws, the failure to abide by covenants and the breach of representations and warranties included in sales agreements. Typically, such representations and warranties relate to taxation, environmental, product and employee matters, in some instance the terms of these indemnification agreements are for an unlimited period of time. At December 31, 2025, we were unable to estimate the potential maximum liabilities for these types of indemnification

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guarantees as the amounts are contingent upon the outcome of future events, the nature and likelihood of which cannot be reasonably estimated at this time. Accordingly, no provision has been recorded. These indemnifications have not yielded significant expenses in the past.

**Pension Plans**

We have indemnified and held harmless the trustees of our pension funds, and the respective officers, directors, employees and agents of such trustees, from any and all costs and expenses arising out of the performance of their obligations under the relevant trust agreements, including in respect of their reliance on authorized instructions from us or for failing to act in the absence of authorized instructions. These indemnifications survive the termination of such agreements. At December 31, 2025, we have not recorded a liability associated with these indemnifications, as we do not expect to make any payments pertaining to these indemnifications.

**CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS** 

In the normal course of business, we enter into certain contractual obligations and commercial commitments. For more information on our contractual obligation and commercial commitments, refer to Item 8, Financial Statements and Supplementary Data under Note 11 "Leases", Note 17 "Long-Term Debt" and Note 19 "Commitments and Contingencies".

In addition, we expect to contribute a minimum total amount of $87 million to the pension plans in 2026 and a minimum total amount of $15 million in 2026 to the other post-retirement benefits plans.

For 2026 and the foreseeable future, we expect cash flows from operations and from our various sources of financing to be sufficient to meet our contractual obligations and commercial commitments. Refer to section "Liquidity and Capital Resources" above for more information on our liquidity.

**RECENT ACCOUNTING PRONOUNCEMENTS**

Refer to Item 8, Financial Statements and Supplementary Data under Note 2 "Recent Accounting Pronouncements".

**CRITICAL ACCOUNTING ESTIMATES AND POLICIES** 

Our principal accounting policies are described in Item 8, Financial Statements and Supplementary Data, under Note 1 "Summary of Significant Accounting Policies". Notes referenced in this section are included in Item 8, Financial Statements and Supplementary Data.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates, assumptions and choices amongst acceptable accounting methods that affect our reported results of operations and financial position. Critical accounting estimates pertain to matters that contain a significant level of management estimates about future events, encompass the most complex and subjective judgments and are subject to a fair degree of measurement uncertainty. On an ongoing basis, management reviews its estimates, including those related to liquidity assessment, environmental matters and asset retirement obligations, business combinations, impairment and useful lives of long-lived assets, usefull life, closure and restructuring costs, pension and other post-retirement benefit plans, income taxes, countervailing duty and anti-dumping duty cash deposits on softwood lumber and contingencies related to legal claims. These critical accounting estimates and policies have been reviewed with the Audit Committee. We believe these accounting policies, and others as set forth in Note 1 "Summary of Significant Accounting Policies", should be reviewed as they are essential to understanding our results of operations, cash flows and financial condition. Actual results could differ from those estimates.

**Liquidity Assessment**

We have prepared the consolidated financial statements on the basis that we are expected to be able to realize our assets and discharge our liabilities in the normal course of business as they become due for at least twelve months from the issuance date of these consolidated financial statements. Significant judgment was applied in performing a liquidity assessment to evaluate whether we has sufficient liquidity for the next 12 months using a cash flow model. Based on current assumptions, including those related to expected operating margin and other non-discretionary cash inflows and outflows, we expect to have sufficient liquidity to meet our obligations over the next 12 months. In addition to these assumptions, our liquidity position is supported by our available cash balances, access to existing credit facilities, and anticipated cash flows from operations.

**Environmental Matters and Asset Retirement Obligations**

We maintain provisions for estimated environmental costs when remedial efforts are probable and can be reasonably estimated. Environmental provisions relate mainly to effluent treatment, air emissions, silvicultural activities and site remediation (together

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referred to as "environmental matters"). The environmental cost estimates reflect assumptions and judgments as to probable nature, magnitude and timing of required investigation, remediation and monitoring activities, as well as contribution by other responsible parties. Additional information regarding environmental matters is available in Note 19 "Commitments and Contingencies".

While we believe that we have determined the costs for environmental matters likely to be incurred, based on known information, our ongoing efforts to identify potential environmental concerns that may be associated with the properties may lead to future environmental investigations. These efforts may result in the determination of additional environmental costs and liabilities, which cannot be reasonably estimated at this time. In addition, environmental laws and regulations and interpretation by regulatory authorities could change which could result in significant changes to our estimates. For further details on "Climate change and air quality regulation" and other environmental matters refer to Note 19 "Commitments and Contingencies".

Asset retirement obligations are mainly associated with landfill operation and closure, dredging of settling ponds and bark pile management. We recognize asset retirement obligations, at fair value, in the period in which we incur a legal obligation associated with the retirement of an asset. The fair value is based on the expected cash flow approach, in which multiple cash flow scenarios that reflect a range of possible outcomes are considered. Probabilities are applied to each of the cash flow scenarios to arrive at an expected cash flow. The estimated cash flows are then discounted using a credit adjusted risk-free interest rate in combination with business-specific and other relevant risks to discount the cash flow. The rates used in 2025 was 6.75%.

Cash flow estimates incorporate assumptions that marketplace participants would use in their estimates of fair value, whenever that information is available without undue cost and effort. If unavailable, assumptions are based on internal experts, third-party engineers' studies and historical experience in remediation work.

As of December 31, 2025, we had a total provision of $113 million for environmental matters and asset retirement obligations (2024 – $113 million). Certain of these amounts have been discounted due to more certainty of the timing of expenditures using the credit adjusted risk-free interest rate for the corresponding period until the settlement date. The rates used vary, based on the prevailing rate at the moment of recognition of the liability and on its settlement period. Additional costs, not known or identified, could be incurred for remediation efforts. Based on policies and procedures in place to monitor environmental exposure, management believes that such additional remediation costs would not have a material adverse effect on our result of operations, cash flows or financial condition.

**Business Combinations**

We account for business combinations using the acquisition method of accounting, which requires us to recognize the assets acquired and the liabilities assumed at their acquisition date fair value and the recognition of acquisition-related costs in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss).

The estimated fair value assigned to identifiable intangible assets acquired are determined primarily by using an income approach using a discounted cash flow methodology, which is based on assumptions and estimates made by management.

The fair value of property, plant and equipment was primarily determined based on management's estimate of depreciated replacement cost as further adjusted based on estimated cash flow forecasts. The significant assumptions underlying the fair value are based on company specific information and projections, which are not observable in the market and, therefore, are considered Level 3 measurements. These significant assumptions are forward-looking and could be affected by future changes in economic and market conditions.

The estimated fair value of finished goods was calculated as the estimated selling price, adjusted for costs of the selling effort and a reasonable profit allowance relating to the selling effort. The estimated fair value of work in process inventory was primarily calculated as the estimated selling price, adjusted for estimated costs to complete the manufacturing, estimated costs of the selling effort, as well as a reasonable profit margin on the remaining manufacturing and selling effort. The estimated fair value of raw materials and operating and maintenance supplies was determined to approximate the historical carrying value. These significant assumptions are based on company specific information and projections, which are not observable in the market and, therefore, are considered Level 3 measurements. These significant assumptions are forward-looking and could be affected by future changes in economic and market conditions.

We generally use third-party qualified consultants to assist management in determining the fair value of assets acquired and liabilities assumed. This includes, when necessary, assistance with the determination of economic useful lives and valuation of property, plant and equipment and identifiable intangibles as well as assisting management in assessing off-market contracts.

The purchase price allocation process also entails us to refine these estimates over a measurement period not to exceed one year to reflect new information obtained surrounding facts and circumstances existing at acquisition date.

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The excess of the purchase price over the fair value of the identified assets acquired and liabilities assumed is recorded as goodwill. The excess of the fair value of the identified assets acquired and liabilities assumed over the purchase price is recorded as a gain on acquisition recognized in the Statement of Earnings (Loss) and Comprehensive Income (Loss).

**Impairment of Property Plant and Equipment, Operating lease right-of-use assets and Definite-Lived Intangible Assets** 

Property, plant and equipment, operating lease right-of-use assets and definite-lived intangible assets are reviewed for impairment upon the occurrence of events or changes in circumstances indicating that, at the lowest level of determinable cash flows, the carrying value of the assets may not be recoverable. Step I of the impairment test assesses if the carrying value of the assets exceeds their estimated undiscounted future cash flows in order to assess if the property, plant and equipment, operating lease right-of-use assets and definite-lived intangible assets are impaired. In the event the estimated undiscounted future cash flows are lower than the net book value of the assets, a Step II impairment test must be carried out to determine the impairment charge. In Step II, the assets are written down to their estimated fair values. Given that there is generally no readily available quoted value for our property, plant and equipment, operating lease right-of-use assets and definite-lived intangible assets, we determine fair value of our assets based on the present value of estimated future cash flows expected from their use and eventual disposition, and by using the liquidation or salvage value in the case of idled assets. The fair value estimate in Step II is based on the undiscounted cash flows used in Step I.

Estimates of undiscounted future cash flows used to test the recoverability of the property, plant and equipment, operating lease right-of use assets and definite-lived intangible assets includes key assumptions related to selling prices, volume, fiber cost, inflation-adjusted cost projections, forecasted exchange rates (when applicable) and estimated useful life. Changes in our assumptions and estimates may affect our forecasts and may lead to an outcome where impairment charges would be required. In addition, actual results may vary from our forecasts, and such variations may be material and unfavorable, thereby triggering the need for future impairment tests where our conclusions may differ in reflection of prevailing market conditions.

For further details on "Impairment of long-lived assets" refer to Note 14 "Closure and Restructuring, Impairment of Long-Lived Assets and Asset Conversion Costs".

**Useful Lives**

On a regular basis, we review the estimated useful lives of our property, plant and equipment and our definite-lived intangible assets. Assessing the reasonableness of the estimated useful lives of property, plant and equipment and definite-lived intangible assets requires judgment and is based on currently available information. Changes in circumstances such as technological advances, changes to our business strategy, changes to our capital strategy or changes in regulation can result in useful lives differing from our estimates. Revisions to the estimated useful lives of property, plant and equipment and definite-lived intangible assets constitute a change in accounting estimate and are dealt with prospectively by amending depreciation and amortization rates.

A change in the remaining estimated useful life of a group of assets, or their estimated net salvage value, will affect the depreciation or amortization rate used to depreciate or amortize the group of assets and thus affect depreciation or amortization expense as reported in our results of operations.

**Closure and Restructuring Costs**

Closure and restructuring costs are recognized as liabilities in the period when they are incurred and are measured at their fair value. For such recognition to occur, management, with the appropriate level of authority, must have approved and committed to a firm plan and appropriate communication to those affected must have occurred. These provisions may require an estimation of costs such as severance and termination benefits, pension and related curtailments, environmental remediation and may also include expenses related to demolition and outplacement. Actions taken may also require an evaluation of any remaining assets to determine required impairments, if any, and a review of estimated remaining useful lives which may lead to accelerated depreciation expense.

Estimates of cash flows and fair value relating to closures and restructuring require judgment. Closure and restructuring liabilities are based on management's best estimates of future events. Although we do not anticipate significant changes, actual costs may differ from these estimates due to subsequent business developments. As such, additional costs and further impairment charges may be required in future periods.

Additional information can be found under Note 14 "Closure and Restructuring, Impairment of Long-Lived Assets and Asset Conversion Costs".

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**Pension Plans and Other Post-Retirement Benefit Plans**

We have several defined contribution pension plans. The pension expense under these plans is equal to our contribution.

We sponsor both contributory and non-contributory U.S. and non-U.S. defined benefit pension plans. We also sponsor a number of other post-retirement benefit plans for eligible U.S. and non-U.S. employees; the plans are unfunded and include life insurance programs and medical and dental benefits. In addition, we provide supplemental unfunded defined benefit pension plans and supplemental unfunded defined contribution pension plans to certain employees.

We account for pensions and other post-retirement benefits in accordance with Compensation-Retirement Benefits Topic of the Financial Accounting Standards Board, which requires employers to recognize the overfunded or underfunded status of defined benefit pension plans as an asset or liability in its Consolidated Balance Sheets. Pension and other post-retirement benefit charges require assumptions in order to estimate the projected and accumulated benefit obligations. These assumptions require considerable management judgment and include:

-Expected long-term rate of return on plan assets – used to estimate the growth and expected return on assets

-Discount rate – used to determine interest costs and the net present value of our obligations

-Rate of compensation increase – used to calculate the impact of future increases on our obligations

-Health care cost trends – used to calculate the impact of future health care costs on our obligations

-Employee related factors, such as mortality rates, turnover, retirement age and disabilities – used to determine the extent of our obligations

Changes in these assumptions result in actuarial gains or losses, which are amortized over the expected average remaining service life of the active employee group covered by the plans, only to the extent that the unrecognized net actuarial gains and losses are in excess of 10% of the greater of the projected benefit obligation and the market value of assets, over the average remaining service period of approximately 11 years of the active employee group covered by the pension plans, and 16 years of the active employee group covered by the other post-retirement benefits plans.

An expected rate of return on plan assets of 5.5% was considered appropriate by management for the determination of pension expense for 2025. Effective January 1, 2026, we will use 5.5% as the expected return on plan assets, which reflects the current view of long-term investment returns. The overall expected long-term rate of return on plan assets is based on management's best estimate of the long-term returns of the major asset classes (cash and cash equivalents, equities, bonds and various alternative investment asset classes) weighted by the target allocation of assets at the measurement date, net of expenses. This rate includes an equity risk premium over government bond returns for equity investments and a value-added premium for the contribution to returns from active management. The sources used to determine management's best estimate of long-term returns are numerous and include country specific bond yields, which may be derived from the market using local bond indices or by analysis of the local bond market, and country-specific inflation and investment market expectations derived from market data and analysts' or governments' expectations, as applicable.

We set our discount rate assumption annually to reflect the rates available on high-quality, fixed income debt instruments, with a duration that is expected to match the timing and amount of expected benefit payments. High-quality debt instruments are corporate bonds with a rating of AA or better. The discount rates as of December 31, 2025 for pension plans were estimated at 4.9% for the projected benefit obligation and 4.9% for the net periodic benefit cost for 2025 and for post-retirement benefit plans were estimated at 4.8% for the projected benefit obligation and 4.7% for the net periodic benefit cost for 2025.

We used a full yield curve approach to estimate the current service and interest cost components of net periodic benefit cost for Canadian pension plans and U.S. funded pension plans. The estimate of these components is made by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. We used this approach to provide a more precise measurement of current service and interest cost components by improving the correlation between projected benefit cash flows to the corresponding spot yield curve rates.

The rate of compensation increase is another significant assumption in the actuarial model for pension plan (set at 2.1% for the projected benefit obligation and 2.1% for the net periodic benefit cost) and for post-retirement benefit plans (set at 2.1% for the projected benefit obligation and 2.0% for the net periodic benefit cost) and is determined based upon our long-term plans for such increases.

For employee related factors, mortality rate tables tailored to our industry were used and the other factors reflect our historical experience and management's best estimate regarding future expectations.

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For measurement purposes in 2025, a 4.4%, reducing to 3.7% in 2040 weighted average annual rate of increase in the per capita cost of covered health care benefits was assumed for Canadian plans and a 7.4%, reducing to 4.0% in 2050 weighted average annual rate of increase in the per capita cost of covered health care benefits was assumed for U.S. plans.

The following table provides a sensitivity analysis of the key weighted average economic assumptions used in measuring the projected pension benefit obligation, the accrued other post-retirement benefit obligation and related net periodic benefit cost for 2025. The sensitivity analysis should be used with caution as it is hypothetical and changes in each key assumption may not be linear. The sensitivities in each key variable have been calculated independently of each other.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pension** | **Pension** | **Other Post-Retirement Benefit** | **Other Post-Retirement Benefit** |
| **PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS** | Projected Benefit Obligation | Net Periodic Benefit Cost | Projected Benefit Obligation | Net Periodic Benefit Cost |
| *(In millions of dollars)* |  |  |  |  |
| **Expected rate of return on assets** |  |  |  |  |
| Impact of: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;0.25% increase | N/A | (8) | N/A | N/A |
| &nbsp;&nbsp;&nbsp;&nbsp;0.25% decrease | N/A | 8 | N/A | N/A |
| **Discount rate** |  |  |  |  |
| Impact of: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;0.25% increase | (71) |  | (3) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;0.25% decrease | 74 |  | 3 |  |

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Our pension plan funding policy is to contribute annually the amount required to provide for benefits earned in the year and to fund solvency deficiencies, funding shortfalls and past service obligations over periods not exceeding those permitted by the applicable regulatory authorities. Past service obligations primarily arise from improvements to plan benefits. The other post-retirement benefit plans are not funded, and contributions are made annually to cover benefit payments.

We expect to contribute a minimum total amount of $87 million in 2026 compared to $80 million in 2025 to the pension plans. We expect to contribute a minimum total amount of $15 million in 2026 compared to $16 million in 2025 to the other post-retirement benefit plans.

Benefit obligations and fair values of plan assets as of December 31, 2025, for our pension and post-retirement plans were as follows:

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| |
|:---|
| Projected benefit obligation at end of year**))** |
| Fair value of assets at end of year |
| Funded status |

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For additional details on our pension plans and other post-retirement benefit plans, refer to Note 5 "Pension Plans and Other Post-Retirement Benefit Plans".

**Income Taxes** 

We use the asset and liability method of accounting for income taxes, with deferred tax assets and liabilities classified as noncurrent items on the Consolidated Balance Sheets. Under this method, deferred tax assets and liabilities are determined according to differences between the carrying amounts and tax bases of the assets and liabilities. The change in the net deferred tax asset or liability is included in earnings. Deferred tax assets and liabilities are measured using enacted tax rates and laws expected to apply in the years in which assets and liabilities are expected to be recovered or settled. For these years, a projection of taxable income and an assumption of the ultimate recovery or settlement period for temporary differences are required. The projection of future taxable income is based on management's best estimate and may vary from actual taxable income.

At each reporting period, we assess the need to establish a valuation allowance for deferred tax assets and, if it is deemed more likely than not that our deferred tax assets will not be realized based on these taxable income projections, a valuation allowance is recorded. In general, "realization" refers to the incremental benefit achieved through the reduction in future taxes payable or an increase in future taxes refundable from the deferred tax assets. Evaluating the need for an amount of a valuation allowance for deferred tax assets often requires significant judgment. As part of our assessment, we consider all available positive and negative evidence, and placing greater weight on objectively verifiable evidence, particularly historical earnings or losses.

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Following the assessment of our ability to realize the deferred income tax assets related to our U.S. operations, we concluded that existing negative evidence outweighed the positive evidence, especially since our U.S. operations had a cumulative loss for the three years ending December 31, 2025. As a result, we determined that it is not more likely than not that we will recognize the remaining net deferred tax asset in the U.S. and recorded a corresponding increase in the related valuation allowance. As of December 31, 2025, the total valuation allowance related to net U.S. deferred income tax assets was $686 million, resulting in no recognized deferred tax assets for our U.S. operations.

Based on an assessment of the realizability of deferred income tax assets related to our Canadian operations, we determined that positive evidence, including sustained historical earnings, outweighed negative evidence for certain Canadian subsidiaries, and no valuation allowance was required for the majority of our net Canadian deferred income tax assets. A valuation allowance was recorded for certain Canadian subsidiaries in a cumulative three-year loss position as of December 31, 2025. The total valuation allowance related to net Canadian deferred income tax assets was $72 million as of December 31, 2025.

Our deferred tax assets are mainly composed of temporary differences related to various accruals, accounting provisions, accounting provisions, net operating loss and other deduction limitation carryforwards, pension and post-retirement benefits, countervailing and anti-dumping duties, intangibles, and available tax credits. Our deferred tax liabilities are mainly composed of temporary differences pertaining to property, plant and equipment. Estimating the ultimate settlement period requires judgment. The reversal of timing differences is expected at enacted tax rates, which could change due to changes in income tax laws or the introduction of tax changes through the presentation of annual budgets by different governments. As a result, a change in the timing and the income tax rate at which the components will reverse could materially affect deferred tax expense in our future results of operations.

In addition, U.S. and foreign tax rules and regulations are subject to interpretation and require judgment that may be challenged by taxation authorities. To the best of our knowledge, we have adequately provided for our future tax consequences based upon current facts and circumstances and current tax law. In accordance with Income Taxes Topic of FASB ASC 740, we evaluate new tax positions that result in a tax benefit to us and determine the amount of tax benefits that can be recognized. The remaining unrecognized tax benefits are evaluated on a quarterly basis to determine if changes in recognition or classification are necessary. Future recognition of unrecognized tax benefits would impact the effective tax rate in the period the benefits are recognized. As of December 31, 2025, we had gross unrecognized tax benefits of $61 million (2024 – $60 million). These amounts represent the gross amount of exposure in individual jurisdictions and do not reflect any additional benefits expected to be realized if such positions were sustained, such as federal deduction that could be realized if an unrecognized state deduction was not sustained. In addition, countries continue to enact changes to tax laws affecting multinational corporations, including the U.S. Tax Reform of 2017, the One Big Beautiful Bill Act enacted in July 2025, and the Organization for Economic Co-operation and Development's inclusive Framework on Base Erosion and Profit Shifting – Pillar Two, including applicable safe-harbor provisions. The effects of enacted provisions are reflected in our analysis to the extent objectively determinable, while ongoing implementation and interpretation could materially affect our financial results.

We operate in multiple jurisdictions with complex tax policy and regulatory environments. U.S. and foreign tax rules and regulations are subject to interpretation and require judgment that may be challenged by taxation authorities. Tax audits by their nature are often complex and can require several years to resolve. We have a number of audits in progress in various jurisdictions. Although the resolution of these tax positions is uncertain, based on currently available information, we believe that we have adequately provided for our future tax consequences based upon current facts and circumstances and current tax law, and we believe that the ultimate outcomes should not have a material adverse effect on our financial position, results of operations or cash flows. For further details refer to Note 8 "Income Taxes."

**Countervailing duty and Anti-dumping duty cash deposits on softwood lumber**

As of December 31, 2025, a total of $731 million of countervailing and anti-dumping duty cash deposits on estimated softwood lumber duties were paid. Of this amount, $563 million of deposits were paid at the Resolute acquisition date and were included in the purchase price allocation. These deposits are measured since the Acquisition date, using a model based on the assumption that a settlement would be reached and that a certain percentage of the deposits would be recovered after a certain period of time. These deposits are remeasured with the model every reporting date and the accretion is recorded under Other operating (income) loss, net on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

**Contingencies related to legal claims**

As discussed in Item 1A Risk Factors, under the risk "The Company is subject to a wide variety of laws, regulations and other government requirements that may change in significant ways, and the cost of compliance or failure to comply, could have a material adverse effect on its business, financial results or condition" and in Note 19 "Commitments and Contingencies", we are subject to various legal proceedings and claims that arise in the ordinary course of business. We record a liability when it is probable that a loss has been incurred, and the amount is reasonably estimable. The most likely cost to be incurred is accrued based on an evaluation of the then available facts with respect to each matter. When no amount within a range of estimates is more likely, the minimum is

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accrued. Significant judgment is required in both the probability determination and as to whether an exposure can be reasonably estimated. For further details on "Contingencies" and legal claims refer to Note 19 "Commitments and Contingencies".

**<u>ITEM 7A. QUANTITATIVE AND QUALITAT</u><u>IVE DISCLOSURE ABOUT MARKET RISK</u>**

Our operating income can be impacted by the following sensitivities:

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| | |
|:---|:---|
| **SENSITIVITY ANALYSIS** |  |
| *(In millions of dollars, unless otherwise noted)* |  |
| **Each $10/unit change in the selling price of the following <br> products**<sup>1</sup>**:** |  |
| Papers | 34 |
| Pulp - net position | 21 |
| Wood | 20 |
| Tissue | 1 |
| **Foreign exchange** |  |
| (US $0.01 change in relative value to the Canadian dollar before hedging) | 35 |
| **Energy** <sup>2</sup> |  |
| Natural gas: $0.25/MMBtu change in price before hedging | 9 |

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1. Based on estimated 2026 capacity (ST or ADMT).

2. Based on estimated 2026 consumption levels. The allocation between energy sources may vary during the year in order to take advantage of market conditions.

*Note that we may, from time to time, hedge part of our foreign exchange and energy positions, which may therefore impact the above sensitivities.*

In the normal course of business, we are exposed to certain financial risks. We do not use derivative instruments for speculative purposes; although all derivative instruments purchased to minimize risk may not qualify for hedge accounting.

**CREDIT RISK** 

We are exposed to credit risk on accounts receivable from our customers. In order to reduce this risk, we review new customers' credit history before granting credit and conduct regular reviews of existing customers' credit performance. As of December 31, 2025, no single customer represented more than 10% of our receivables (December 31, 2024–no single customer represented more than 10% of our receivables).

We are exposed to credit risk in the event of non-performance by counterparties to our financial instruments. We attempt to minimize this exposure by entering into contracts with counterparties that are believed to be of high credit quality. Collateral or other security to support financial instruments subject to credit risk is usually not obtained. The credit standing of counterparties is regularly monitored.

**INTEREST RATE RISK**

We are subject to market risk from exposure to changes in interest rates based on our cash and cash equivalents, bank indebtedness, revolving credit facility, term loan and long-term debt. We had outstanding variable interest rate borrowings of $595 million under the ABL Revolving Credit Facility and $1,266 million (par value) under three term loan facilities as of December 31, 2025. A hypothetical change of 100 basis points would result in a maximum potential change to interest expense of $19 million annually. While we cannot predict the impact interest rate movements will have on our existing debt, management evaluates our financial position on an ongoing basis. From time to time, we may enter into interest rate swaps to reduce the impact of changes in interest rates on our floating rate debt. We had no interest rate swaps in effect during the years ended December 31, 2025, and 2024.

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**COST RISK**

**Cash flow hedges**

We are exposed to price volatility for raw materials and energy used in our manufacturing process. We manage our exposure to cost risk primarily through the use of supplier contracts. We purchase natural gas at the prevailing market price at the time of delivery. To reduce the impact on cash flow and earnings due to pricing volatility, we may utilize derivatives to fix the price of forecasted natural gas purchases. The changes in the fair value on qualifying instruments are included in Accumulated other comprehensive income (loss) to the extent effective, and reclassified into Cost of sales in the period during which the hedged transaction affects earnings. Current contracts are used to hedge a portion of forecasted purchases of natural gas over the next month.

As of December 31, 2025, we hedged 1% of our forecasted purchases of natural gas under derivative contracts for 2026. The natural gas derivative contracts were effective as of December 31, 2025.

**FOREIGN CURRENCY RISK**

**Cash flow hedges**

We have manufacturing operations in the U.S. and Canada. As a result, we are exposed to movements in foreign currency exchange rates in Canada. Moreover, certain assets and liabilities are denominated in Canadian dollars and are exposed to foreign currency movements. Accordingly, our earnings are affected by increases or decreases in the value of the Canadian dollar. We may use derivative financial instruments (currency options and foreign exchange forward contracts) to mitigate our exposure to fluctuations in foreign currency exchange rates.

Current contracts are used to hedge forecasted purchases in Canadian dollars by our Canadian operations over the next 11 months. Such derivatives are designated as cash flow hedges. The changes in the fair value on qualifying instruments are included in Accumulated other comprehensive income (loss) to the extent effective, and reclassified into Sales or Cost of sales in the period during which the hedged transaction affects earnings.

As of December 31, 2025, we hedged 35% of our forecasted net Canadian dollars cash exposures under contracts for 2026. The foreign exchange derivative contracts were effective as of December 31, 2025.

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PART II

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Management's Reports to Shareholders of Domtar Corporation

Management's Report on Financial Statements and Practices

The accompanying Consolidated Financial Statements of Domtar Corporation and its subsidiaries (the "Company") were prepared by management. The statements were prepared in accordance with accounting principles generally accepted in the United States of America and include amounts that are based on management's best judgments and estimates. Management is responsible for the completeness, accuracy and objectivity of the financial statements. The other financial information included in the annual report is consistent with that in the financial statements.

Management has established and maintains a system of internal accounting and other controls for the Company and its subsidiaries. This system and its established accounting procedures and related controls are designed to provide reasonable assurance that assets are safeguarded, that the books and records properly reflect all transactions, that policies and procedures are implemented by qualified personnel, and that published financial statements are properly prepared and fairly presented. The Company's system of internal control is supported by written policies and procedures, contains self-monitoring mechanisms, and is audited by the internal audit function. Appropriate actions are taken by management to correct deficiencies as they are identified.

Management's Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Management has evaluated the effectiveness of internal control over financial reporting, using the criteria established in 2013 *Internal Control – Integrated Framework,* issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on the assessment, management has concluded that the Company maintained effective internal control over financial reporting as of December 31, 2025, based on criteria in *Internal Control – Integrated Framework* issued in 2013 by the COSO.

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**Report of Independent Registered Public Accounting Firm**

To the Board of Directors and Shareholder of Domtar Corporation

***Opinion on the Financial Statements***

We have audited the accompanying consolidated balance sheets of Domtar Corporation and its subsidiaries (the Company) as of December 31, 2025 and 2024, and the related consolidated statements of earnings (loss) and comprehensive income (loss), of shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2025 appearing under Item 15(a)(2) (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America.

***Basis for Opinion***

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

***Critical Audit Matters***

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

------

***Liquidity assessment*** 

As described in Note 17 to the consolidated financial statements, the Company's consolidated financial statements have been prepared on the basis, that the Company is expected to be able to realize its assets and discharge its liabilities in the normal course of business as they become due for at least twelve months from the issuance date of these consolidated financial statements. For the year ended December 31, 2025, the Company incurred a net loss of $804 million and net cash used in operating activities was $25 million. As of December 31, 2025, the accumulated deficit amounted to $929 million. Management applied significant judgment in performing a liquidity assessment to evaluate whether the Company has sufficient liquidity using a cash flow model. The assumptions used in management's estimate of future cash flows included in the model consisted of expected operating margin, and other non-discretionary cash inflows and outflows. Based on current assumptions and available resources, management expects that the Company will be able to realize its assets and discharge its liabilities in the normal course of business as they become due for at least twelve months from the issuance date of these consolidated financial statements.

The principal considerations for our determination that performing procedures relating to the liquidity assessment is a critical audit matter are the significant judgments made by management as to whether they have sufficient liquidity. This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures relating to management's liquidity assessment and estimate of future cash flows and assumptions related to expected operating margin, and other non-discretionary cash inflows and outflows.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others, (i) testing management's process as to whether the Company has sufficient liquidity to be able to realize its assets and discharge its liabilities in the normal course of business as they become due for a period of no less than 12 months from the date of the issuance of the consolidated financial statements; (ii) evaluating the appropriateness of the cash flow model; (iii) testing the completeness and accuracy of the underlying data used in management's estimation of future cash flows; and (iv) evaluating the reasonableness of management's assumptions related to the estimation of future cash flows. Evaluating management's assumptions related to expected operating margin and other non-discretionary cash inflows and outflows, involved evaluating whether the assumptions used were reasonable considering the current and past performance of the Company; management's historical forecasting accuracy; and whether these assumptions were consistent with evidence obtained in other areas of the audit.

/s/ PricewaterhouseCoopers LLP

Montréal, Canada

March 30, 2026

We have served as the Company's auditor since 2023.

------

**DOMTAR CORPORATION**

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS)

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

---

| | |
|:---|:---|
|  | Year ended December 31, |
|  | 2023 |
|  | $ |
| **Sales** |  |
| **Operating expenses** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of sales, excluding depreciation and amortization |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of long-lived assets (NOTE 14) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Closure and restructuring costs (NOTE 14) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Asset conversion costs (NOTE 14) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transaction costs (NOTE 3) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other operating income, net (NOTE 6)**)** |  |
| **Operating (loss) income from continuing operations)** |  |
| Interest expense, net (NOTE 7) |  |
| Non-service components of net periodic benefit cost (NOTE 5)**)** |  |
| **(Loss) earnings before income taxes)** |  |
| Income tax expense (benefit) (NOTE 8) |  |
| **(Loss) earnings from continuing operations)** |  |
| Earnings from discontinued operations, net of taxes (NOTE 4) |  |
| **Net (loss) earnings)** |  |
| **Other comprehensive income (loss):** |  |
| Net derivative gains (losses) on cash flow hedges: |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net gains (losses) arising during the year, net<br> of tax of $(8) (2024 – $16; 2023 – $(1)) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: Reclassification adjustment for losses included in <br> net (loss) earnings, net of tax of $(4) (2024 – $(5); <br> 2023 –$(5)) |  |
| Foreign currency translation adjustments) |  |
| Change in unrecognized gains (losses) and prior service cost<br> related to pension and post-retirement benefit plans, <br> net of tax of $(10) (2024 – $(20); 2023 – $25) |  |
| **Other comprehensive income (loss)** |  |
| **Comprehensive (loss) income** |  |

---

The accompanying notes are an integral part of the consolidated financial statements.

------

**DOMTAR CORPORATION**

CONSOLIDATED BALANCE SHEETS

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

---

| | | |
|:---|:---|:---|
|  | **At** | **At** |
|  | **December 31,** | December 31, |
|  | **2025** | 2024 |
|  | **$** | $ |
| **Assets** |  |  |
| **Current assets** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents, including restricted cash of $4 and $14 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Receivables, less allowances of $5 and $5 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Receivables from related party (NOTE 22) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventories (NOTE 9) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Income and other taxes receivable |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Other current assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total current assets** |  |  |
| **Property, plant and equipment, net (NOTE 10)** |  |  |
| **Operating lease right-of-use assets (NOTE 11)** |  |  |
| **Notes receivable from related party (NOTE 22)** |  |  |
| **Goodwill and other intangible assets, net (NOTE 12)** |  |  |
| **Deferred income tax assets (NOTE 8)** |  |  |
| **Other assets (NOTE 13)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total assets** |  |  |
| **Liabilities and shareholders' equity** |  |  |
| **Current liabilities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Bank indebtedness |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Trade and other payables (NOTE 15) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Income and other taxes payable |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities due within one year (NOTE 11) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Due to related party (NOTE 22) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term debt due within one year (NOTE 17) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total current liabilities** |  |  |
| **Long-term debt (NOTE 17)** |  |  |
| **Operating lease liabilities (NOTE 11)** |  |  |
| **Deferred income taxes and other (NOTE 8)** |  |  |
| **Pension and other post-retirement benefit obligations (NOTE 5)** |  |  |
| **Other liabilities and deferred credits (NOTE 18)** |  |  |
| Commitments and contingencies **(NOTE 19)** |  |  |
| **Shareholders' equity** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stock $0.01 par value; 100 shares issued and outstanding |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Deficit**)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive income (loss) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total shareholders' equity** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total liabilities and shareholders' equity** |  |  |

---

The accompanying notes are an integral part of the consolidated financial statements.

------

**DOMTAR CORPORATION**

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

---

| | | | |
|:---|:---|:---|:---|
|  | **Additional<br>paid-in<br>capital** | **Accumulated<br>other<br>comprehensive<br>income (loss)** | **Total<br>shareholders'<br>equity** |
|  | $ | $ | $ |
| Balance at December 31, 2022) |  |  |  |
| Capital contribution |  |  |  |
| Net earnings |  |  |  |
| Net derivative gains on cash flow hedges: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net gains arising during the year, net of tax of $(1) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: Reclassification adjustment for losses included in <br> net earnings, net of tax of $(5) |  |  |  |
| Foreign currency translation adjustments |  |  |  |
| Change in unrecognized losses and prior service cost related to <br> pension and post-retirement benefit plans, net of tax of $25) |  |  |  |
| Transaction with Skookumchuck Pulp Inc.'s stockholders (NOTE 3) |  |  |  |
| Deemed dividend) |  |  |  |
| Balance at December 31, 2023) |  |  |  |
| Capital contribution |  |  |  |
| Net loss) |  |  |  |
| Net derivative losses on cash flow hedges: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net losses arising during the year, net of tax of $16) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: Reclassification adjustment for losses included in <br> net loss, net of tax of $(5) |  |  |  |
| Foreign currency translation adjustments) |  |  |  |
| Change in unrecognized gains and prior service cost related to <br> pension and post-retirement benefit plans, net of tax of $(20) |  |  |  |
| Balance at December 31, 2024) |  |  |  |
| **Net loss))** |  |  |  |
| **Net derivative gains on cash flow hedges:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Net gains arising during the year, net of tax of $(8)** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Less: Reclassification adjustment for losses included in <br> net loss, net of tax of $(4)** |  |  |  |
| **Foreign currency translation adjustments** |  |  |  |
| **Change in unrecognized gains and prior service cost related to <br> pension and post-retirement benefit plans, net of tax of $(10)** |  |  |  |
| **Balance at December 31, 2025** |  |  |  |

---

The accompanying notes are an integral part of the consolidated financial statements.

------

**DOMTAR CORPORATION**

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN MILLIONS OF DOLLARS)

---

| | | |
|:---|:---|:---|
|  | **Year ended December 31, 2025** | Year ended December 31, 2023 |
|  | **$** | $ |
| **Operating activities** |  |  |
| Net (loss) earnings**)** |  |  |
| Adjustments to reconcile net (loss) earnings to cash flows <br> (used for) provided from operating activities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes and tax uncertainties (NOTE 8) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of long-lived assets (NOTE 14) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of inventory (NOTE 14) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net gains on disposals of assets**)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on acquisition of business (NOTE 3) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other) |  |  |
| Changes in assets and liabilities, excluding the effects of acquisitions<br> and sale of businesses |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Receivables, including related party) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories**)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade and other payables, including related party**)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income and other taxes) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Difference between employer pension and other post-retirement<br> contributions and pension and other post-retirement expense**)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets and other liabilities) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash flows (used for) provided from operating activities**)** |  |  |
| **Investing activities** |  |  |
| Additions to property, plant and equipment**)** |  |  |
| Proceeds from disposals of property, plant and equipment |  |  |
| Proceeds from sale of businesses, net of cash disposed (NOTE 3 & 4) |  |  |
| Acquisition of businesses, net of cash acquired (NOTE 3) |  |  |
| Other**)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash flows used for investing activities**)** |  |  |
| **Financing activities** |  |  |
| Capital contribution |  |  |
| Net change in bank indebtedness) |  |  |
| Change in revolving credit facility |  |  |
| Issuance to related party |  |  |
| Issuance of long-term debt, net of debt issue costs |  |  |
| Repayments to related party) |  |  |
| Repayments of long-term debt**)** |  |  |
| Other**)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash flows provided from financing activities |  |  |
| **Net decrease in cash, cash equivalents and restricted cash)** |  |  |
| Impact of foreign exchange on cash) |  |  |
| Cash, cash equivalents and restricted cash at beginning of year |  |  |
| **Cash, cash equivalents and restricted cash at end of year** |  |  |
| **Supplemental cash flow information** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net cash payments (refunds) for: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes |  |  |
| The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows. | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows. | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows. |
| Cash and cash equivalents |  |  |
| Restricted cash included in Cash and cash equivalents |  |  |
| Restricted cash included in Other assets |  |  |
| **Total cash, cash equivalents, and restricted cash shown in the <br> Consolidated Statement of Cash Flows** |  |  |

---

The accompanying notes are an integral part of the consolidated financial statements.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

---

| | | |
|:---|:---|:---|
| NOTE 1 | [<u>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</u>](#note_1) | 54 |
| NOTE 2 | [<u>RECENT ACCOUNTING PRONOUNCEMENTS</u>](#note_2) | 62 |
| NOTE 3 | [<u>ACQUISITION AND SALE OF BUSINESSES</u>](#acquisition_of_business) | 63 |
| NOTE 4 | [<u>DISCONTINUED OPERATIONS</u>](#note_discop) | 69 |
| NOTE 5 | [<u>PENSION PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS</u>](#note_7) | 71 |
| NOTE 6 | [<u>OTHER OPERATING INCOME, NET</u>](#other_operating_loss) | 82 |
| NOTE 7 | [<u>INTEREST EXPENSE, NET</u>](#note_9) | 83 |
| NOTE 8 | [<u>INCOME TAXES</u>](#note_10) | 84 |
| NOTE 9 | [<u>INVENTORIES</u>](#note_11_investories) | 90 |
| NOTE 10 | [<u>PROPERTY, PLANT AND EQUIPMENT</u>](#note_13_property) | 91 |
| NOTE 11 | [<u>LEASES</u>](#note_leases) | 92 |
| NOTE 12 | [<u>GOODWILL AND OTHER INTANGIBLE ASSETS</u>](#note_14) | 94 |
| NOTE 13 | [<u>OTHER ASSETS</u>](#other_assets) | 95 |
| NOTE 14 | [<u>CLOSURE AND RESTRUCTURING, IMPAIRMENT OF LONG-LIVED ASSETS AND ASSET CONVERSION COSTS</u>](#note_16) | <br>96 |
| NOTE 15 | [<u>TRADE AND OTHER PAYABLES</u>](#note_17) | 99 |
| NOTE 16 | [<u>CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT</u>](#note_18) | 100 |
| NOTE 17 | [<u>LONG-TERM DEBT</u>](#note_19) | 102 |
| NOTE 18 | [<u>OTHER LIABILITIES AND DEFERRED CREDITS</u>](#other_liab) | 107 |
| NOTE 19 | [<u>COMMITMENTS AND CONTINGENCIES</u>](#note_22) | 108 |
| NOTE 20 | [<u>DERIVATIVES AND HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENT</u>](#note_23) | 117 |
| NOTE 21 | [<u>SEGMENT DISCLOSURES</u>](#note_24) | 121 |
| NOTE 22 | [<u>RELATED PARTY TRANSACTIONS</u>](#related_party) | 125 |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 1.**

------

**SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

NATURE OF OPERATIONS

Domtar designs, manufactures, markets and distributes a wide variety of fiber-based products including paper, market pulp, wood products and tissue, which are marketed in approximately 90 countries. Domtar is the largest integrated manufacturer and marketer of uncoated freesheet paper and uncoated mechanical papers in North America as well as a leading global producer of newsprint, fluff, recycled and softwood pulp producer in North America. Domtar owns or operates manufacturing facilities, including pulp and paper mills as well as tissue facilities and sawmills, as well as power generation assets in the U.S. and Canada. Domtar's paper and tissue manufacturing operations are supported by converting and forms manufacturing operations.

BASIS OF PRESENTATION

The Company's consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the year, the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements. On an ongoing basis, management reviews the estimates and assumptions, including but not limited to those related to environmental matters and asset retirement obligations, impairment and useful lives of long-lived assets, impairment of intangibles, closure and restructuring costs, pension and other post-retirement benefit plans, income taxes, business combinations, contingencies and countervailing duty and anti-dumping duty cash deposits on softwood lumber, based on currently available information. Actual results could differ from those estimates.

Certain reclassifications have been made to the prior years' presentation to conform to the current year presentation.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Domtar and its controlled subsidiaries. Intercompany transactions have been eliminated on consolidation. The equity method of accounting is used for investments in affiliates over which the Company has significant influence but does not have effective control.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

BUSINESS COMBINATIONS

The Company accounts for business combinations in accordance with ASC 805 "Business Combinations" which requires, among other things, the acquiring entity in a business combination to recognize the fair value of the assets acquired and liabilities assumed; the recognition of acquisition-related costs in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss); the recognition of restructuring costs in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) for which the acquirer becomes obligated after the acquisition date; and contingent purchase consideration to be recognized at fair value on the acquisition date with subsequent adjustments recognized in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss).

Estimates of fair value require a complex series of judgments about future events and uncertainties. The estimates and assumptions used to determine the estimated fair value assigned to each class of assets and liabilities, as well as asset lives, have a material impact to the Company's consolidated financial statements, and are based upon assumptions believed to be reasonable but that are inherently uncertain. The Company generally uses third-party qualified consultants to assist management in determining the fair value of assets acquired and liabilities assumed. This includes, when necessary, assistance with the determination of lives and valuation of property and identifiable intangibles and assisting management in assessing off-market contracts and obligations associated with legal and environmental claims. The purchase price allocation process also entails the Company to refine these estimates over a measurement period not to exceed one year to reflect new information obtained surrounding facts and circumstances existing at acquisition date.

The excess of the purchase price over the fair value of the identified assets acquired and liabilities assumed is recorded as goodwill.

The Company accounts for transaction between entities under common control in accordance with ASC 805-50, Business Combination – Related Issues, which requires that acquiree's related assets and liabilities be transferred at their historical carrying amounts on the acquisition date with the difference between the carrying amount of the net asset transferred and the purchase consideration recognized as a deemed dividend or capital contribution by the acquiror. The guidance also requires retrospective combination of entities as if the combination had been in effect since the inception of common control.

TRANSLATION OF FOREIGN CURRENCIES

The Company determines its international subsidiaries' functional currency by reviewing the currencies in which their respective operating activities occur. The Company translates assets and liabilities of its non-U.S. dollar functional currency subsidiaries (primarily Canadian dollar) into U.S. dollars using the rate in effect at the balance sheet date and revenues and expenses are translated at the average exchange rates during the year. Foreign currency translation gains and losses are included in Shareholders' equity as a component of Accumulated other comprehensive income (loss) in the accompanying Consolidated Balance Sheets.

Monetary assets and liabilities denominated in a currency that is different from a reporting entity's functional currency must first be remeasured from the applicable currency to the legal entity's functional currency. The effect of this remeasurement process is recognized in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) and is partially offset by the Company's hedging program (refer to Note 20 "Derivatives and Hedging Activities and Fair Value Measurement").

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

REVENUE RECOGNITION

The Company's revenue is generated from the sale of finished goods to customers. Revenue is recognized at a single point in time when the performance obligation is satisfied which occurs when the control over the goods is transferred to customers. For shipping and handling activities performed after customers obtain control of the goods, the Company elected to account for these activities as fulfillment activities rather than assessing such activities as separate performance obligations. Accordingly, the sale of goods to customers represents a single performance obligation to which the entire transaction price is allocated.

The point in time when the control of goods is transferred to customers is largely dependent on delivery terms. Revenue is recorded at the time of shipment for delivery terms designated Free On Board ("F.O.B.") shipping point. For sales transactions designated F.O.B. destination, revenue is recorded when the product is delivered to the customer's delivery site.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for goods transferred to customers. Revenue is recognized net of variable consideration in the form of rebates, discounts and other commercial incentives extended to customers. Variable consideration is recognized using the most likely amounts which are based on an analysis of historical experience and current period expectations. The Company includes estimated amounts of variable consideration in revenue to the extent that it is probable that there will not be a significant reversal of recognized revenue when the uncertainty related to that variable consideration is resolved.

For all the Company's contracts, customer payments are due in less than one year. Accordingly, the Company does not adjust the amount of revenue recognized for the effects of a significant financing component.

Sales taxes, and other similar taxes, collected from customers are excluded from revenue.

SHIPPING AND HANDLING COSTS

The Company classifies shipping and handling costs as a component of Cost of sales in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss).

CLOSURE AND RESTRUCTURING COSTS

Closure and restructuring costs are recognized as liabilities in the period when they are incurred and are measured at their fair value. For such recognition to occur, management, with the appropriate level of authority, must have approved and committed to a firm plan and appropriate communication to those affected must have occurred. These provisions may require an estimation of costs such as severance and termination benefits, pension and related curtailments, environmental remediation and may also include expenses related to demolition and outplacement. Actions taken may also require an evaluation of any remaining assets to determine required impairments, if any, and a review of estimated remaining useful lives which may lead to accelerated depreciation expense.

Estimates of cash flows and fair value relating to closures and restructurings require judgment. Closure and restructuring liabilities are based on management's best estimates of future events. Although the Company does not anticipate significant changes, the actual costs may differ from these estimates due to subsequent developments such as the results of environmental studies, the ability to find a buyer for assets set to be dismantled and demolished and other business developments. As such, additional costs and further working capital adjustments may be required in future periods.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

INCOME TAXES

Domtar uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined according to differences between the carrying amounts and tax bases of the assets and liabilities. The Company records its worldwide tax provision based on the respective tax rules and regulations for the jurisdictions in which it operates. The change in the net deferred tax asset or liability is included in Income tax expense (benefit) or in Other comprehensive income (loss) in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss). Deferred tax assets and liabilities are measured using enacted tax rates and laws expected to apply in the years in which the assets and liabilities are expected to be recovered or settled. Uncertain tax positions are recorded based upon the Company's evaluation of whether it is "more likely than not" (a probability level of more than 50%) that, based upon its technical merits, the tax position will be sustained upon examination by the taxing authorities. The Company establishes a valuation allowance for deferred tax assets when it is more likely than not that they will not be realized. In general, "realization" refers to the incremental benefit achieved through the reduction in future taxes payable or an increase in future taxes refundable from the deferred tax assets. Deferred tax assets and liabilities are classified as non-current items on the Consolidated Balance Sheets.

The Company recognizes interest and penalties related to income tax matters as a component of Income tax expense (benefit) in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss).

If and when incurred, the Company accounts for any taxes associated with Global Intangible Low-Taxed Income ("GILTI") as a period cost.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash and short-term investments with maturities of less than three months from the date of purchase and are presented at cost which approximates fair value. Cash and cash equivalents that are legally restricted as to withdrawal or usage are classified in Cash and cash equivalents or Other assets, as applicable, on the Consolidated Balance Sheets.

RECEIVABLES AND ALLOWANCES FOR EXPECTED CREDIT LOSSES

Receivables are recorded at cost, net of an allowance for expected credit losses. The Company establishes allowances for expected credit losses on receivables and the adequacy of these allowances is assessed regularly through consideration of factors including, but not limited to, customer credit ratings, bankruptcy filings, published or estimated credit default rates, age of the receivable, expected loss rates and collateral exposures. The Company assigns internal credit ratings for all customers and determines the creditworthiness of each customer based upon publicly available information and information obtained directly from its customers. A receivable is written off when there is no reasonable expectation of recovering the contractual cash flows.

INVENTORIES

Inventories are stated at the lower of cost or net realizable value. Cost includes labor, materials and production overhead. The last-in, first-out ("LIFO") method is used to account for certain domestic raw materials, in process and finished goods inventories. The balance of domestic raw material, in process and finished goods inventories, all materials and supplies inventories as well as all foreign inventories are recorded at either the first-in, first-out ("FIFO") or average cost methods.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at acquisition cost less accumulated depreciation and impairment. Costs for repair and maintenance activities are expensed as incurred under the direct expense method of accounting. Interest costs are capitalized for significant capital projects. For timberlands, the amortization is calculated using the unit of production method. For all other assets, depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Buildings and improvements are depreciated over periods of 10 to 40 years and machinery and equipment over periods of 3 to 20 years. No depreciation is recorded on assets under construction.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are reviewed for impairment upon the occurrence of events or changes in circumstances indicating that the carrying value of the assets may not be recoverable, by comparing the net book value of the asset group to their estimated undiscounted future cash flows expected from their use and eventual disposition. Impaired assets are recorded at estimated fair value, determined principally by using the present value of estimated future cash flows expected from their use and eventual disposition.

LEASES

The Company engages in short and long-term leases for building, machinery, equipment and office equipment. At inception of an arrangement, the Company determines whether the arrangement contains a lease. A lease conveys the right to control the use of identified property, plant, or equipment (asset) for a period of time in exchange for consideration. Control over the use of the identified asset means that the Company has both the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset.

For each lease arrangement that has an original lease term of more than 12 months, a right-of-use asset and a lease liability are recorded in the Consolidated Balance Sheets. The right-of-use asset represents the Company's right to use an underlying asset for the lease term while the lease liability represents the obligation to make lease payments arising from the lease. The right-of-use asset and the lease liability are initially recorded at the same amount at the lease commencement date based on the present value of the remaining lease payments discounted using the Company's incremental borrowing rate. The operating lease right-of-use asset also includes purchase price adjustments relating to favorable and unfavorable terms of leases acquired as part of business combinations. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Impairment of right-of-use assets is determined and calculated in the same manner as disclosed under Impairment of property, plant and equipment.

Leases that have variable payments that are not based on an index or rate are not included in the right-of-use asset and lease liability and are recorded as expenses in the period incurred. Such leases include variable payments for machinery and equipment primarily related to usage, repairs and maintenance, and leases within supply agreements primarily related to usage.

The terms of a lease arrangement determine how a lease is classified (operating or finance), the resulting recognition pattern in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) and the classification in the Consolidated Balance Sheets.

Finance lease expense is represented by the interest on the lease liability determined using the effective interest method and the amortization of the finance lease right-of-use asset calculated using the straight-line method over the estimated useful life of the identified asset. Finance lease related balances are included in the Consolidated Balance Sheets in Property, plant and equipment, net, Long-term debt due within one year and Long-term debt.

Operating lease expense is recorded on a straight-line basis over the lease term by adding interest expense determined using the effective interest method to the amortization of the right-of-use asset. Operating lease related balances are included in the Consolidated Balance Sheets in Operating lease right-of-use assets, Operating lease liabilities due within one year and Operating lease liabilities.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

GOODWILL AND DEFINITE-LIVED INTANGIBLE ASSETS

Goodwill is not amortized. Annual evaluation for possible goodwill impairment is performed as of the beginning of the fourth quarter of each year, with additional interim evaluation performed when management believes that it is more likely than not, that events or circumstances have occurred that would result in the impairment of a reporting unit's goodwill.

The Company has the option to evaluate goodwill for impairment by first performing a qualitative assessment of events and circumstances to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amounts, then the quantitative goodwill impairment test is not required to be performed. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if the Company does not elect the option to perform an initial qualitative assessment, the Company is required to perform the quantitative goodwill impairment test.

For reporting units whose carrying amount is in excess of their estimated fair value, the reporting unit will record an impairment charge by the amount that the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

Significant judgment is required to estimate the fair value of a reporting unit. The Company uses an income approach to determine the fair value of a reporting unit. Under the income approach, the Company estimates the fair value of a reporting unit based on the present value of estimated future cash flows. Key estimates supporting the cash flow projections include, but are not limited to, management's assessment of industry and market conditions as well as its estimates of revenue growth rates and profit margins, economic indicators, tax rates, capital expenditures and discount rates. Assumptions used in the impairment evaluations are consistent with internal projections and operating plans. Analysis of the sensitivities of the fair value estimate to changes in assumptions are also performed. Unanticipated market and macroeconomic events and circumstances may occur and could affect the accuracy and validity of management assumptions and estimates.

Definite-lived intangible assets are stated at acquisition cost less accumulated amortization and are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Definite-lived intangible assets include water rights, trade names and customer relationships which are amortized using the straight-line method over their respective estimated useful lives. Impairment for definite-lived intangible assets is determined and calculated in the same manner as disclosed under Impairment of long-lived assets in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss).

Amortization is based on the following useful lives:

---

| | |
|:---|:---|
| Water rights | 30 years |
| Trade names | 15 years |
| Customer relationships | 8 years |

---

DEBT ISSUANCE COSTS

Debt issuance costs associated with long-term debt are presented in the Consolidated Balance Sheets as a deduction from the carrying value of long-term debt. Debt issuance costs associated with revolving credit arrangements are presented in Other assets in the Consolidated Balance Sheets. Debt issuance costs are amortized using the effective rate method over the term of the related debt and included in Interest expense, net in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss).

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

ENVIRONMENTAL COSTS AND ASSET RETIREMENT OBLIGATIONS

Environmental expenditures for effluent treatment, air emission, silvicultural activities and site remediation (together referred to as environmental matters) are expensed or capitalized depending on their future economic benefit. In the normal course of business, Domtar incurs certain operating costs for environmental matters that are expensed as incurred. Expenditures for property, plant and equipment that prevent future environmental impacts are capitalized and amortized on a straight-line basis over 10 to 40 years. Provisions for environmental matters are recorded when remediation efforts are probable and can be reasonably estimated. Provisions for environmental matters are generally not discounted, due to uncertainty with respect to timing of expenditures.

Asset retirement obligations are mainly associated with landfill operation and closure, dredging of settling ponds and bark pile management and are recognized, at fair value, in the period in which Domtar incurs a legal obligation associated with the retirement of an asset. Conditional asset retirement obligations are recognized, at fair value, when the fair value of the liability can be reasonably estimated on a probability-weighted discounted cash flow estimate. The associated costs are capitalized as part of the carrying value of the related asset and depreciated over its remaining useful life. The liability is accreted using the credit adjusted risk-free interest rate used to discount the cash flow.

DERIVATIVE INSTRUMENTS

Derivative instruments may be utilized by Domtar as part of the overall strategy to manage exposure to fluctuations in foreign currency, interest rate and commodity price on certain purchases. As a matter of policy, derivatives are not used for trading or speculative purposes. All derivatives are recorded at fair value either as assets or liabilities. When derivative instruments have been designated within a hedge relationship and are highly effective in offsetting the identified risk characteristics of specific financial assets and liabilities or group of financial assets and liabilities, hedge accounting is applied. In a fair value hedge, changes in fair value of derivatives are recognized in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss). The change in fair value of the hedged item attributable to the hedged risk is also recorded in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) by way of a corresponding adjustment of the carrying amount of the hedged item recognized in the Consolidated Balance Sheets. In a cash flow hedge, changes in fair value of derivative instruments are recorded in Other comprehensive income (loss). These amounts are reclassified in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) in the periods in which results are affected by the cash flows of the hedged item within the same line item.

PENSION PLANS

Domtar's plans include funded and unfunded defined benefit and defined contribution pension plans. Domtar recognizes the overfunded or underfunded status of defined benefit and underfunded defined contribution pension plans as an asset or liability in the Consolidated Balance Sheets. The net periodic benefit cost includes the following:

- The cost of pension benefits provided in exchange for employees' services rendered during the period,

- The interest cost of pension obligations,

- The expected long-term return on pension fund assets based on a market value of pension fund assets,

- Gains or losses on settlements and curtailments,

- The straight-line amortization of past service costs and plan amendments over the average remaining service period of approximately 11 years of the active employee group covered by the plans, and

- The amortization of cumulative net actuarial gains and losses in excess of 10% of the greater of the projected benefit obligation and the market value of assets over the average remaining service period of approximately 11 years of the active employee group covered by the plans.

The defined benefit plan obligations are determined in accordance with the projected unit credit actuarial cost method.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

OTHER POST-RETIREMENT BENEFIT PLANS

The Company recognizes the unfunded status of other post-retirement benefit plans as a liability in the Consolidated Balance Sheets. These benefits, which are funded by Domtar as they become due, include life insurance programs, medical and dental benefits and short-term and long-term disability programs. The Company amortizes the cumulative net actuarial gains and losses in excess of 10% of the greater of the projected benefit obligation and the market value of assets over the average remaining service period of approximately 16 years of the active employee group covered by the plans.

GUARANTEES

A guarantee is a contract or an indemnification agreement that contingently requires Domtar to make payments to the other party of the contract or agreement, based on changes in an underlying item that is related to an asset, a liability or an equity security of the other party or on a third party's failure to perform under an obligating agreement. It could also be an indirect guarantee of the indebtedness of another party, even though the payment to the other party may not be based on changes in an underlying item that is related to an asset, a liability or an equity security of the other party. Guarantees, when applicable, are accounted for at fair value.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 2.**

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**RECENT ACCOUNTING PRONOUNCEMENTS**

**ACCOUNTING CHANGES IMPLEMENTED**

INCOME TAX DISCLOSURES

On December 14, 2023, the FASB issued ASU 2023-09, "*Improvements to Income Tax Disclosures*" which requires significant additional disclosures about income taxes, primarily focused on the disclosure of income taxes paid and the rate reconciliation table.

The Company has adopted the guidance for the year ended December 31, 2025, and applied the new disclosure requirements prospectively to the current annual period. Prior period disclosures have not been significantly adjusted to reflect the new disclosure requirements. See Note 8 "Income Taxes" for further details.

**FUTURE ACCOUNTING CHANGES**

EXPENSE DISAGGREGATION DISCLOSURE

On November 4, 2024, the FASB issued ASU 2024-03, "*Disaggregation of Income Statement Expenses*" which requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. The new guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The new guidance may be applied either prospectively or retrospectively. Early adoption is permitted.

The Company is currently evaluating the impact the new guidance will have on its disclosures.

GOVERNMENT GRANTS

On December 4, 2025, the FASB issued ASU 2025-10, "*Accounting for Government Grants Received by Business Entities*", to establish guidance on the recognition, measurement, and presentation of government grants received by business entities. The new guidance leverages the principles in the accounting framework for government assistance in IFRS, specifically IAS 20, "Accounting for Government Grants and Disclosure of Government Assistance". The new guidance will be effective for calendar year-end public business entities in the 2029 annual period (including interim periods within), with early adoption permitted.

The new guidance is not expected to significantly change the Company's current accounting for incentives from federal, state, provincial, and local governments.

INTERIM REPORTING

On December 8, 2025, the FASB issued ASU No. 2025-11 "*Interim Reporting (Topic 270): Narrow-Scope Improvements*". The new guidance clarifies the applicability of Topic 270 and the form and content of interim financial statements. In addition, it requires entities to disclose material events occurring since the last annual reporting period. The new guidance will be effective for interim periods beginning January 1, 2028, and can be applied on a prospective or retrospective basis.

The Company is evaluating the disclosure impact; however, the new guidance will not have an impact on the Company's consolidated financial position, results of operations or cash flows.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 3.**

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**ACQUISITION AND SALE OF BUSINESSES**

*Transfer of power generation assets*

On September 8, 2025, Domtar transferred certain power generation assets to Paper Excellence Canada Holdings Corporation ("PECHC"), an affiliated company, through the creation and sale of a special purpose entity, for consideration of $62 million tendered by PECHC through the issuance of interest-bearing notes, in the principal amounts of $47 million and $15 million (the "Agreement"). The notes issued by PECHC bear interest at 10% and are payable to Domtar no later than September 8, 2027. The notes are secured by a movable hypothec on the equity interests acquired by PECHC under the Agreement (see Note 14 "Closure and Restructuring and Impairment of Long-Lived Assets and Asset Conversion Costs" for more details).

*Sale of Espanola, Ontario mill*

On April 9, 2025, the Company signed an agreement for the sale of its Espanola facility. On October 17, 2025, the Company completed the sale (see Note 14 "Closure and Restructuring and Impairment of Long-Lived Assets and Asset Conversion Costs" for more details).

*Sale of Forest Products Mauricie, Quebec sawmill*

On April 2, 2025, Domtar reached an agreement for the sale of the Forest Products Mauricie ("FPM") sawmill, subject to the fulfillment of closing conditions. On July 1, 2025, the Company completed the sale for a purchase price of $15 million, resulting in a gain of $9 million.

*Acquisition of New Receiptco Opco LLC ("Iconex Paper")*

On November 1, 2024, Domtar completed the acquisition of 100% of the equity interests in Iconex Paper, as well as certain related assets, from affiliates of Atlas Holdings for a purchase price of $208 million in cash. Of the purchase price, $100 million was funded through a contribution to equity by Domtar's parent company.

Iconex Paper converts thermal paper parent rolls into point-of-sale (POS) receipt rolls, serving customers in industries such as food service, retail, pharmacy, and financial services from its four North American locations in Arizona, Kansas, Tennessee, and Virginia. Its Nogales, Mexico converting facility was closed during 2025.

Domtar was determined to be the accounting acquirer in the acquisition which was accounted for using the acquisition method of accounting. Under the acquisition method of accounting, the purchase consideration allocated to Iconex Paper's assets and liabilities is based upon their fair values at the acquisition date.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 3. ACQUISITION AND SALE OF BUSINESSES (CONTINUED)**

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date. Purchase adjustments were made related to events or circumstances existing at the acquisition date. The goodwill is deductible for income tax purposes.

---

| | |
|:---|:---|
| **Fair value of net assets acquired at the date of acquisition** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Receivables | $42 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventories | 34 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;Property, plant and equipment | 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease right-of-use assets | 15 |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangible assets - customer relationships | 110 |
| &nbsp;&nbsp;&nbsp;&nbsp;Goodwill | 35 |
| **Total assets** | 259 |
| **Less: Assumed Liabilities** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Trade and other payables | 23 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other current liabilities | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities (including short-term portion) | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax liabilities | 2 |
| **Total liabilities** | 51 |
| **Fair value of net assets acquired at the date of acquisition** | 208 |

---

The fair value of the customer relationship intangible assets was estimated using the multi-period excess earnings method. Management applied significant judgment related to this fair value method, which included the determination of an expected EBITDA margin assumption for the forecast period, contributory asset charges, customer attrition rate, sales volume and market-participant discount rate assumptions. These significant assumptions are based on company specific information and projections, which are not observable in the market (except for the discount rate assumption) and, therefore, are considered Level 2 and Level 3 measurements. These significant assumptions are forward-looking and could be affected by future changes in economic and market conditions.

For the year ended December 31, 2024, the Company recognized $3 million of transaction related costs associated to this acquisition. These costs were included in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) in the line item entitled Transaction costs.

The amounts of Sales and Net earnings of Iconex Paper included in the Company's Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) for the period from November 1, 2024 to December 31, 2024 are $45 million and $6 million, respectively.

The following represents the unaudited pro forma sales and net earnings of the Company as if the acquisition of Iconex Paper had occurred on January 1, 2023:

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| | | |
|:---|:---|:---|
|  | **Year ended <br>December 31,** | Year ended <br>December 31, |
|  | **2024** | 2023 |
|  | **$** | $ |
| Sales | **7323** | 7158 |
| Net earnings | **6** | 298 |

---

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**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 3. ACQUISITION AND SALE OF BUSINESSES (CONTINUED)**

These amounts have been calculated after applying the Company's accounting policies and adjusting the results of Iconex Paper to reflect the reduction in interest expense and the additional depreciation and operating costs that would have been charged assuming the fair value adjustments to inventory, property, plant and equipment, customer relationships and favorable facility leasing contracts had been applied on January 1, 2023, together with the related tax effects. In addition, these amounts include the additional interest expense incurred by the Company in relation to the financing of the acquisition. The Company did not have any material, nonrecurring pro forma adjustments directly attributable to the acquisition included in the unaudited pro forma sales and net earnings.

S*ale of El Dorado, Arkansas sawmill*

On April 30, 2024, Domtar Corporation through its wholly-owned subsidiary, Resolute El Dorado Inc., entered into an asset purchase agreement with Anthony Forest Products Company, LLC, an affiliate of Canfor Corporation (the "Purchaser") to sell the Company's sawmill located in El Dorado, Arkansas, to the Purchaser for a purchase price of $73 million in cash, subject to customary adjustments. This transaction closed on August 1, 2024. For the year ended December 31, 2024, the Company recorded a gain on disposal of assets of $5 million.

*Acquisition of Catalyst Paper Corporation – transaction between entities under common control*

On October 27, 2023, Domtar completed the acquisition of all the outstanding common and preferred shares of Catalyst Paper Corporation ("Catalyst"), which included one pulp and paper mill and one paper mill, both located in British Columbia, for a purchase consideration of $1 dollar. Paper Excellence group of companies owned both Domtar and Catalyst.

The acquisition of Catalyst from Paper Excellence was accounted for as a transaction between entities under common control in accordance with *ASC 805-50, Business Combination – Related Issues*, which required that Catalyst's related assets and liabilities be transferred at their historical carrying amounts on the acquisition date. Domtar recognized a capital contribution of $727 million, which corresponded to the excess of the carrying value of the net assets transferred on the acquisition date over the purchase consideration. Further, *ASC 805-50* required retrospective combination of entities as if the combination had been in effect since the inception of common control. Accordingly, the financial information for Domtar and Catalyst was combined from the inception of common control, which was November 30, 2021, and the accompanying financial statements and related notes of Domtar were retrospectively adjusted to include the historical results of Catalyst from that date. On January 1, 2024, Domtar and Catalyst were amalgamated.

For the year ended December 31, 2023, the Company recognized $2 million of transaction related costs associated to this acquisition. These costs were included in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) in the line item entitled Transaction costs.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 3. ACQUISITION AND SALE OF BUSINESSES (CONTINUED)**

*Acquisition of Skookumchuck Pulp Inc. – transaction between entities under common control*

On June 29, 2023, Domtar completed the acquisition of all the outstanding common and preferred shares of Skookumchuck Pulp Inc. ("SPI"), a pulp mill in British Columbia, for a purchase consideration of $185 million. Paper Excellence group of companies owned both Domtar and SPI. The acquisition consideration transferred to Paper Excellence consisted of: a $50 million non-interest bearing promissory note repaid on July 15, 2023; a $35 million promissory note bearing interest at 8.50% per annum, due after June 30, 2031; and non-voting, redeemable Series B preferred shares totaling $100 million bearing interest at 9.75% per annum and redeemable by Paper Excellence after June 30, 2031. Prior to the acquisition of Catalyst by Domtar, the $35 million promissory note and the non-voting, redeemable Series B were contributed to Catalyst by Paper Excellence and are no longer payable by Domtar following the amalgamation of Catalyst and Domtar on January 1, 2024.

The acquisition of SPI from Paper Excellence was accounted for as a transaction between entities under common control in accordance with *ASC 805-50, Business Combination – Related Issues*, which required that SPI's related assets and liabilities be transferred at their historical carrying amounts on the acquisition date. Domtar recognized a deemed dividend of $55 million, which corresponded to the excess of the purchase consideration of $185 million over the carrying value of the net assets transferred of $130 million on the acquisition date. Further, *ASC 805-50* required retrospective combination of entities as if the combination had been in effect since the inception of common control. Accordingly, the financial information for Domtar and SPI was combined from the inception of common control, which was November 30, 2021, and the accompanying financial statements and related notes of Domtar were retrospectively adjusted to include the historical results of SPI from that date.

For the year ended December 31, 2023, the Company recognized $1 million of transaction related costs associated to this acquisition. These costs were included in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) in the line item entitled Transaction costs.

*Acquisition of Resolute Forest Products Inc. by Paper Excellence through Domtar Corporation*

On March 1, 2023, Paper Excellence completed the acquisition of all the outstanding common shares of Resolute through Domtar by means of a merger of Terra Acquisition Sub Inc. (a Domtar wholly-owned subsidiary) with and into Resolute, with Resolute continuing as the surviving corporation and as a subsidiary of Domtar. Under the Acquisition agreement, Domtar acquired all outstanding shares of Resolute common stock for $20.50 per share and one contingent value right tied to any refunds on duty deposits made on or prior to June 30, 2022, of up to $500 million. Any proceeds attributable to the contingent value right will be distributed proportionally to contingent value right holders, and the value will ultimately be determined by the terms and timing of the resolution of the softwood lumber dispute between Canada and the United States.

The acquisition date fair value of the consideration transferred is $1.696 billion, less cash acquired of $480 million and including the contingent value right on softwood lumber duty deposit refunds estimated to be $118 million and included in Other liabilities and deferred credits in the Consolidated Balance Sheets.

Domtar was determined to be the accounting acquirer in the Acquisition which was accounted for using the acquisition method of accounting. Under the acquisition method of accounting, the purchase consideration allocated to Resolute's assets and liabilities is based upon their fair values at the acquisition date.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 3. ACQUISITION AND SALE OF BUSINESSES (CONTINUED)**

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date.

---

| | |
|:---|:---|
| **Fair value of net assets acquired at the date of acquisition** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Receivables | $309 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventories | 508 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses | 30 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other current assets | 12 |
| &nbsp;&nbsp;&nbsp;&nbsp;Property, plant and equipment | 952 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease right-of-use assets | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax assets <sup>(1)</sup> | 737 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other assets <sup>(2)</sup> | 264 |
| &nbsp;&nbsp;&nbsp;&nbsp;Assets held for sale | 255 |
| **Total assets** | 3105 |
| **Less: Assumed Liabilities** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Trade and other payables | 538 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities (including short-term portion) | 40 |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term debt (including short-term portion) | 312 |
| &nbsp;&nbsp;&nbsp;&nbsp;Pension and other post-retirement benefit obligations | 643 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | 90 |
| &nbsp;&nbsp;&nbsp;&nbsp;Liabilities held for sale | 41 |
| **Total liabilities** | 1664 |
| **Fair value of net assets acquired at the date of acquisition** | 1441 |
| **Gain on acquisition** <sup>(3)</sup> | (225) |
| **Consideration transferred, less cash acquired** | 1216 |

---

<sup>(1)</sup> The Company recognized previously unrecognized deferred tax assets related to operating losses carried forward in the United States and research and development pools and credits in Canada. In addition, deferred tax assets related to timing difference mainly related to pension and other post-retirement benefits, asset retirement obligations and environmental liabilities. Management determines the recoverability of the net deferred tax assets based on a review of all available negative and positive evidence, including historical earnings, projected future results, future reversals of deferred tax liabilities, impact of the tax regulations and available tax planning opportunities.

<sup>(2)</sup> The Company identified $74 million of off-market contracts, of which $21 million are being amortized over a weighted-average useful life of 11 years. Other assets also include $132 million of duty deposits and $25 million of equity method investments.

<sup>(3)</sup> The purchase price allocation reflects a gain of $225 million recorded under Other operating (income) loss, net in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss). The gain resulted from the recognition and measurement of items, principally related to deferred income tax assets, in accordance with exemptions to the fair value model as provided for by US GAAP under the accounting for business combination.

The contingent consideration arrangement requires the Company to pay any refunds related to the countervailing and anti-dumping duty deposits made on or prior to June 30, 2022, of up to $500 million to contingent value right holders. The fair value of the contingent consideration arrangement at the acquisition date was $118 million. The Company estimated the fair value of the contingent consideration based on the last price of Resolute's common shares on the New York Stock Exchange on February 28, 2023, which is considered a Level 2 measurement.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 3. ACQUISITION AND SALE OF BUSINESSES (CONTINUED)**

The fair value of property, plant and equipment was primarily determined based on management's estimate of depreciated replacement cost as further adjusted based on estimated cash flow forecasts. Management applied significant judgment in estimating the fair value of property plant and equipment acquired, which involved the use of assumptions with respect to estimated replacement and reproduction costs, estimated useful lives, and physical, functional and economic obsolescence for the estimated depreciated replacement cost and projections of product pricing, sales volumes, product costs, projected capital spending and discount rates at the time of acquisition for the discounted cash flow model.

The fair value of finished goods was calculated as the estimated selling price, adjusted for costs of the selling effort and a reasonable profit allowance relating to the selling effort. The fair value of work in process inventory and raw materials in wood products was primarily calculated as the estimated selling price, adjusted for estimated costs to complete the manufacturing, estimated costs of the selling effort, as well as a reasonable profit margin on the remaining manufacturing and selling effort. The fair value of raw materials, except for raw materials in wood products, was determined to approximate the historical carrying value. The fair value of operating and maintenance supplies was calculated using a method based on historical usage and consumption.

The fair value of other working capital items was determined to approximate their historical carrying values.

For the year ended December 31, 2023, the Company recognized $57 million of transaction related costs associated to the Acquisition, which also included advisor and legal fees, as well as the accelerated vesting of certain long-term incentive awards of Resolute. These costs were included in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) in the line item entitled Transaction costs.

The amounts of Sales and Net loss of Resolute included in the Company's Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) for the period from March 1, 2023 to December 31, 2023 are $2,062 million and $78 million, respectively.

The following represents the unaudited pro forma sales and net earnings if the acquisition of Resolute had occurred on January 1, 2022:

---

| | |
|:---|:---|
|  | Year ended <br>December 31, |
|  | 2023 |
|  | $ |
| &nbsp;&nbsp;&nbsp;&nbsp;**Sales** | 7404 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Net earnings** | 138 |

---

These amounts have been calculated after applying the Company's accounting policies and adjusting the results of Resolute to reflect the reduction in interest expense and the additional depreciation and operating costs that would have been charged assuming the fair value adjustments to property, plant and equipment and off-market energy contracts had been applied on January 1, 2022, together with the related tax effects. In addition, these amounts include the additional interest expense incurred by the Company in relation to the financing of the Acquisition.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 4.**

------

**DISCONTINUED OPERATIONS**

*Mandated sale of Thunder Bay and Dryden, Ontario mills*

On March 1, 2023, Paper Excellence completed the acquisition of all the outstanding common shares of Resolute through Domtar by means of a merger of Terra Acquisition Sub Inc. (a Domtar wholly-owned subsidiary) with and into Resolute, with Resolute continuing as the surviving corporation and as a subsidiary of Domtar. The Acquisition was subject to regulatory approvals in various jurisdictions, including review by the Canadian Competition Bureau, which outlined certain stipulations in a consent agreement before providing their final approval.

The consent agreement filed by the Canadian Commissioner of Competition (the "Commissioner") with the Competition Tribunal fulfilled the final condition to the closing of the Acquisition. According to the consent agreement, following the closing of the Acquisition, Resolute's pulp and paper mill in Thunder Bay, Ontario and Domtar's pulp mill in Dryden, Ontario were to be sold in order to resolve the Commissioner's concerns that the Acquisition would likely lessen competition substantially in the supply of northern bleached softwood kraft pulp in Eastern and Central Canada and in the purchase of wood fiber from private lands in Northwestern Ontario.

The two mills were sold to two independent purchasers that were approved by the Commissioner.

On August 1, 2023, the Company completed the sale of the Thunder Bay pulp and paper mill (the "Thunder Bay disposal group") for a purchase price of $231 million. In connection with the sale, the Company entered into Transition Services Agreements with the acquirer pursuant to which the Company agreed to provide various back-office and information technology support until the business is fully separated from the Company.

The results of operations of the Thunder Bay disposal group were classified as discontinued operations as the mill was part of Resolute's acquired assets. These results were summarized in Earnings from discontinued operations, net of taxes on the Company's Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) for the period of March 1, 2023 to July 31, 2023. The Consolidated Statements of Cash Flows were not reclassified to reflect discontinued operations.

On August 1, 2023, the Company also completed the sale of the Dryden, Ontario mill (the "Dryden disposal group") for a purchase price of $186 million. In connection with the sale, the Company entered into Transition Services Agreements with the acquirer pursuant to which the Company agreed to provide various back-office and information technology support until the business is fully separated from Domtar.

The results of operations of the Dryden disposal group were not classified as discontinued operations as the mill was part of the pre-existing assets of Domtar. For the year ended December 31, 2023, the Company recognized $8 million of transaction related costs associated with this sale. These costs were included in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) in the line item entitled Transaction costs.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 4. DISCONTINUED OPERATIONS (CONTINUED)**

Major components of earnings from discontinued operations:

---

| | |
|:---|:---|
|  | Year ended<br>December 31, |
|  | 2023 |
|  | $ |
| **Sales** | 123 |
| **Operating expenses** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of sales, excluding depreciation and amortization | 105 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other operating loss, net | 1 |
|  | 106 |
| **Earnings from discontinued operations <br> before income taxes** | 17 |
| Income tax expense | 4 |
| **Net earnings from discontinued operations** | 13 |

---

Cash Flows from Discontinued Operations:

---

| | |
|:---|:---|
|  | Year ended<br>December 31, |
|  | $ |
| **Cash flows from operating activities** |  |
| **Cash flows used for investing activities**) |  |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 5.**

------

**PENSION PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS**

DEFINED CONTRIBUTION PLANS

The Company has several defined contribution plans and multi-employer plans. The pension expense under these plans is equal to the Company's contribution. For the year ended December 31, 2025, the related pension expense was $63 million (2024 – $60 million; 2023 – $58 million).

DEFINED BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS

The Company's employees participate in various employee benefit plans.

The Company sponsors both contributory and non-contributory U.S. and Canadian defined benefit pension plans for its unionized and non-unionized employees. The majority of defined benefit pension plans are grandfathered. Employees who are not eligible to participate in a defined benefit pension plan participate in a defined contribution pension plan instead. The Company also sponsors a number of other post-retirement benefit plans for eligible U.S. and Canadian employees; the plans are unfunded and include life insurance programs and medical and dental benefits. The Company also provides supplemental unfunded defined benefit pension plans and supplemental unfunded defined contribution pension plans.

Related pension and other post-retirement plan expenses and the corresponding obligations are actuarially determined using management's most probable assumptions.

The Company's pension plan funding policy is to contribute annually the amount required to provide for benefits earned in the year and to fund solvency deficiencies, funding shortfalls and past service obligations over periods not exceeding those permitted by the applicable regulatory authorities. Past service obligations primarily arise from improvements to plan benefits. The other post-retirement benefit plans are not funded, and contributions are made annually to cover benefit payments.

The Company expects to contribute a minimum total amount of $87 million in 2026 compared to $80 million in 2025 (2024 – $85 million; 2023 – $56 million) to the pension plans. The Company expects to contribute a minimum total amount of $15 million in 2026 compared to $16 million in 2025 (2024 – $14 million; 2023 – $14 million) to the other post-retirement benefit plans.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 5. PENSION PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS (CONTINUED)**

CHANGE IN PROJECTED BENEFIT OBLIGATION

The following table represents the change in the projected benefit obligation as of December 31, 2025 and December 31, 2024, the measurement date for each year:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | December 31, 2024 | December 31, 2024 |
|  | **Pension** | **Other post-retirement** | Pension | Other post-retirement |
|  | **plans** | **benefit plans** | plans | benefit plans |
|  | **$** | **$** | $ | $ |
| Projected benefit obligation at beginning of year |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Service cost for the year |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Plan participants' contributions |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Actuarial gain**)** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Plan amendments |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Benefits paid**))** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Direct benefit payments**))** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net transfer in (including effect of any business combination/divestiture) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Curtailment**)** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Settlement <sup>(1)</sup>**)** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Effect of foreign currency exchange rate change) |  |  |  |  |
| Projected benefit obligation at end of year |  |  |  |  |

---

For both 2025 and 2024, net actuarial gains decreased the projected benefit obligation due to the increase in discount rates.

The accumulated benefit obligation of the pension plans at December 31, 2025 and 2024 was $3,671 million and $3,976 million, respectively.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 5. PENSION PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS (CONTINUED)**

CHANGE IN FAIR VALUE OF ASSETS

The following table represents the change in the fair value of assets, as of December 31, 2025 and December 31, 2024, reflecting the actual return on plan assets, the contributions and the benefits paid for each year:

---

| | | |
|:---|:---|:---|
|  | **December 31, 2025** | December 31, 2024 |
|  | **Pension plans** | Pension plans |
|  | **$** | $ |
| Fair value of assets at beginning of year |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Actual return on plan assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Employer contributions |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Plan participants' contributions |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Benefits paid**)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Settlement <sup>(1)</sup>**)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Effect of foreign currency exchange rate change) |  |  |
| Fair value of assets at end of year |  |  |

---

<sup>(1)</sup> Settlement accounting was triggered throughout 2025, as the Company entered into an agreement with an insurance company to purchase a group annuity buy-out contract and transfer approximately $57 million of its U.S. defined benefit plans' projected benefit obligation. The transaction closed in October 2025 and was funded with pension plan assets. Additionally, the Company entered into agreements with existing insurers to convert $250 million (CDN $316 million) of existing buy-in annuity contracts to buy-out annuity contracts to complete the full transfer of these obligations.

These annuity buy-out transactions transferred responsibility for pension benefits for approximately 2,302 retirees and their beneficiaries. Additionally, settlement accounting was triggered throughout 2025, as lump sums paid exceeded the sum of service cost and interest cost. Settlement accounting rules required a remeasurement of the plans as of March 31, 2025 for Canada and December 31, 2025 for the U.S. and the Company recognized a non-cash pension settlement gain of $2 million before tax in 2025.

INVESTMENT POLICIES AND STRATEGIES OF THE PLAN ASSETS

The assets of the pension plans are held by a number of independent trustees and are accounted for separately in the Company's pension funds. The investment strategy for the assets in the pension plans is to maintain a diversified portfolio of assets, invested in a prudent manner to maintain the security of funds while maximizing returns within the guidelines provided in the investment policy. Diversification of the pension plans' holdings is maintained in order to reduce the pension plans' annual return variability, reduce market and credit exposure to any single asset and to any single component of the capital markets, reduce exposure to unexpected inflation, enhance the long-term risk-adjusted return potential of the pension plans and reduce funding risk.

Over the long-term, the performance of the pension plans is primarily determined by the long-term asset mix decisions. To manage the long-term risk of not having sufficient funds to match the obligations of the pension plans, the Company conducts asset/liability studies. These studies lead to the recommendation and adoption of a long-term asset mix target that sets the expected rate of return and reduces the risk of adverse consequences to the plans from increases in liabilities and decreases in assets. In identifying the asset mix target that would best meet the investment objectives, consideration is given to various factors, including (a) each plan's characteristics, (b) the duration of each plan's liabilities, (c) the solvency and going concern financial position of each plan and their sensitivity to changes in interest rates and inflation, and (d) the long-term return and risk expectations for key asset classes.

The investments of each plan can be done directly through cash investments in equities, bonds or alternative investment asset classes or indirectly through derivatives, pooled funds or private placements. The use of derivatives must be in accordance with an approved mandate and cannot be used for speculative purposes.

The Company's pension funds are not permitted to directly own any of the Company's debt instruments.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 5. PENSION PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS (CONTINUED)**

The following table shows the allocation of the plan assets, based on the fair value of the assets held and the target allocation for 2025:

---

| | | | |
|:---|:---|:---|:---|
|  |  | **Percentage of** | Percentage of |
|  |  | **plan assets at** | plan assets at |
|  |  | **December 31,** | December 31, |
|  | Target allocation | **2025** | 2024 |
| **Fixed income** |  |  |  |
| Cash and cash equivalents | 2% | **3%** | 3% |
| Bonds | 40% | **40%** | 44% |
| Insurance contracts | 13% | **12%** | 7% |
| **Equity** |  |  |  |
| Canadian equity | 4% | **4%** | 4% |
| U.S. equity | 11% | **12%** | 13% |
| International equity | 12% | **11%** | 13% |
| **Alternate Investments** |  |  |  |
| Real estate | 6% | **6%** | 6% |
| Multi-asset credit | 6% | **6%** | 5% |
| Infrastructure | 6% | **6%** | 5% |
| Total <sup>(1)</sup> |  | **100%** | 100% |

---

<sup>(1)</sup> Approximately 79% of the pension plans' assets relate to Canadian plans, 21% relate to U.S. plans.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 5. PENSION PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS (CONTINUED)**

RECONCILIATION OF FUNDED STATUS TO AMOUNTS RECOGNIZED IN THE CONSOLIDATED BALANCE SHEETS

The following table presents the difference between the fair value of assets and the actuarially determined projected benefit obligation. This difference is also referred to as either the deficit or surplus, as the case may be, or the funded status of the plans. The table further reconciles the amount of the surplus or deficit (funded status) to the net amount recognized in the Consolidated Balance Sheets.

---

| |
|:---|
| Projected benefit obligation at end of year**))** |
| Fair value of assets at end of year |
| Funded status |

---

---

| |
|:---|
| Trade and other payables**))** |
| Pension and other post-retirement benefit obligations <sup>(1)</sup>**))** |
| Other assets |
| Net amount recognized in the Consolidated<br> Balance Sheets |

---

<sup>(1)</sup> At December 31, 2025, the amount on the line Pension and other post-retirement benefit obligations on the Consolidated Balance Sheets also includes $27 million (2024 – $30 million) of multiemployer pension plan withdrawal liabilities.

The following table presents the pre-tax amounts included in Other comprehensive income (loss):

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended <br>December 31,** | Year ended <br>December 31, | Year ended <br>December 31, |
|  | **2025** | 2024 | 2024 |
|  |  |  | Other post- |
|  | **Pension** | Pension | retirement |
|  | **plans** | plans | benefit plans |
|  | **$** | $ | $ |
| Prior service (cost) credit**))** |  |  |  |
| Amortization of prior year service cost |  |  |  |
| Net gain (loss) |  |  |  |
| Amortization of net actuarial gain**))** |  |  |  |
| Net amount recognized in other comprehensive <br> income (loss) (pre-tax) |  |  |  |

---

At December 31, 2025, the projected benefit obligation and the fair value of plan assets with a projected benefit obligation in excess of fair value of plan assets were $2,601 million and $2,162 million, respectively (2024 – $2,705 million and $2,179 million, respectively).

Components of net periodic benefit cost for pension plans and other post-retirement benefit plans:

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 5. PENSION PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS (CONTINUED)**

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended <br>December 31,** | Year ended <br>December 31, | Year ended <br>December 31, |
| Components of net periodic benefit cost for pension plans | **2025** | 2024 | 2023 |
|  | **$** | $ | $ |
| &nbsp;&nbsp;&nbsp;&nbsp;Service cost for the year |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Expected return on plan assets |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Curtailment loss |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Special termination benefits<sup>(1)</sup> |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Settlement gain |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of prior year service cost |  |  |  |
| Net periodic benefit cost |  |  |  |

---

---

| | | | |
|:---|:---|:---|:---|
| Components of net periodic benefit cost for other post-retirement | **Year ended <br>December 31,** | Year ended <br>December 31, | Year ended <br>December 31, |
| &nbsp;&nbsp;&nbsp;&nbsp;benefit plans | **2025** | 2024 | 2023 |
|  | **$** | $ | $ |
| &nbsp;&nbsp;&nbsp;&nbsp;Service cost for the year |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of net actuarial gain |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Special termination benefits<sup>(1)</sup> |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Curtailment gain<sup>(1)</sup> |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of prior year service cost |  |  |  |
| Net periodic benefit cost |  |  |  |

---

<sup>(1)</sup> For the year ended December 31, 2023, special termination benefits recognized of $13 million in the pension plans and $2 million in other post-retirement plans, as well as a curtailment gain of $1 million in other post-retirement plans, related to the idling of the Espanola, Ontario mill are presented in Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

WEIGHTED-AVERAGE ASSUMPTIONS

The Company used the following assumptions to measure the projected benefit obligation and the net periodic benefit cost. These assumptions are long-term, which is consistent with the nature of employee future benefits.

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31,** | December 31, | December 31, |
| Pension plans | **2025** | 2024 | 2023 |
| Projected benefit obligation |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Discount rate | **4.9%** | 4.8% | 4.7% |
| &nbsp;&nbsp;&nbsp;&nbsp;Rate of compensation increase | **2.1%** | 2.1% | 2.1% |
| Net periodic benefit cost |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Discount rate | **4.9%** | 4.9% | 5.4% |
| &nbsp;&nbsp;&nbsp;&nbsp;Rate of compensation increase | **2.1%** | 2.1% | 2.6% |
| &nbsp;&nbsp;&nbsp;&nbsp;Expected long-term rate of return on plan assets | **5.5%** | 6.0% | 6.3% |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 5. PENSION PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS (CONTINUED)**

A weighted-average interest-crediting rate of 4.6% was assumed for 2025, for the Company's cash balance pension plan.

The Company used a full yield curve approach to estimate the current service and interest cost components of net periodic benefit cost for Canadian pension plans and U.S. funded pension plans. The estimate of these components is made by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows.

For the unfunded pension plan and other post-retirement benefits, given materiality, the current service and interest cost components were estimated using a single weighted-average discount rate derived from the yield curve for each unfunded pension plan or based on each post-retirement plans' projected cash flows.

Effective January 1, 2026, the Company will use 5.5% (2025 – 5.5%; 2024 – 6.0%) as the expected return on plan assets, which reflects the current view of long-term investment returns. The overall expected long-term rate of return on plan assets is based on management's best estimate of the long-term returns of the major asset classes (cash and cash equivalents, equities, bonds and various alternative investment asset classes) weighted by the target allocation of assets at the measurement date, net of expenses. This rate includes an equity risk premium over government bond returns for equity investments and a value-added premium for the contribution to returns from active management. The sources used to determine management's best estimate of long-term returns are numerous and include country specific bond yields, which may be derived from the market using local bond indices or by analysis of the local bond market, and country-specific inflation and investment market expectations derived from market data and analysts' or governments' expectations, as applicable.

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31,** | December 31, | December 31, |
| Other post-retirement benefit plans | **2025** | 2024 | 2023 |
| Projected benefit obligation |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Discount rate | **4.8%** | 4.7% | 4.7% |
| &nbsp;&nbsp;&nbsp;&nbsp;Rate of compensation increase | **2.1%** | 2.2% | 2.0% |
| Net periodic benefit cost |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Discount rate | **4.7%** | 4.7% | 5.2% |
| &nbsp;&nbsp;&nbsp;&nbsp;Rate of compensation increase | **2.0%** | 2.3% | 3.2% |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 5. PENSION PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS (CONTINUED)**

For measurement purposes in 2025, a 4.4%, reducing to 3.7% in 2040 weighted average annual rate of increase in the per capita cost of covered health care benefits was assumed for Canadian plans and a 7.4%, reducing to 4.0% in 2050 weighted average annual rate of increase in the per capita cost of covered health care benefits was assumed for U.S. plans.

FAIR VALUE MEASUREMENT

Fair Value Measurements and Disclosures Topic of FASB ASC 820 establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is available and significant to the fair value measurement.

---

| | |
|:---|:---|
| Level 1 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Quoted prices in active markets for identical assets or liabilities. |
| Level 2 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
| Level 3 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inputs that are generally unobservable and typically reflect management's estimates of assumptions that market participants would use in pricing the assets or liabilities. |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 5. PENSION PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS (CONTINUED)**

The following table presents the fair value of the plan assets at December 31, 2025, by asset category:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Fair Value Measurements at** | **Fair Value Measurements at** | **Fair Value Measurements at** | **Fair Value Measurements at** |
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
|  |  | **Quoted Prices** |  |  |
|  |  | **in Active** | **Significant** | **Significant** |
|  |  | **Markets for** | **Observable** | **Unobservable** |
|  |  | **Identical Assets** | **Inputs** | **Inputs** |
| Asset Category | **Total** | **(Level 1)** | **(Level 2)** | **(Level 3)** |
|  | **$** | **$** | **$** | **$** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Investments measured at fair value** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and short-term investments | **66** | **66** | **—** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;Equity securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Canadian equities | **137** | **137** | **—** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. equities | **317** | **317** | **—** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; International equities | **307** | **307** | **—** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity funds | **2** | **2** | **—** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;Debt securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate and government securities | **561** | **—** | **561** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset backed securities | **22** | **—** | **22** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bond funds | **151** | **151** | **—** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;Derivative instruments | **3** | **—** | **3** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;Insurance contracts | **436** | **—** | **—** | **436** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total investments measured at fair value** | **2002** | **980** | **586** | **436** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Investments measured at net asset value** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commingled cash and fixed income funds | **731** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commingled equity funds | **182** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Private debt and alternative credit funds | **204** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Real estate funds | **210** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Infrastructure funds | **212** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total investments measured at net asset value** | **1539** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total** | **3541** |  |  |  |

---

Debt securities include corporate bonds and term loans of U.S. and Canadian companies from diversified industries, bonds and Treasuries issued by the U.S. government and the Canadian federal and provincial governments, asset-backed securities and commingled fixed income funds invested in these same types of securities. The fair value of the debt securities is determined based on quoted market prices (Level 1) and market-corroborated inputs such as matrix prices, yield curves and indices (Level 2) and other unobservable inputs such as models and assumptions (Level 3).

Equity securities include large-cap, mid-cap and small-cap publicly traded companies mainly located in the U.S., Canada and other developed and emerging countries. The fair value of the equity securities is determined based on quoted market prices (Level 1).

Derivative financial instruments are valued using quoted market prices when available (Level 1) and based on valuation techniques using market data when quoted market prices are not available (Level 2).

Certain insurance contracts include group contracts that have been purchased to cover a portion of the plan members. The fair value of annuity buy-in contracts changes based on fluctuations in the obligation associated with the covered plan members (Level 3).

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 5. PENSION PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS (CONTINUED)**

Investments measured at fair value using the net asset value ("NAV") practical expedient are excluded from the fair value hierarchy and valued at the NAV as provided by the fund administrator. The debt and equity investment funds, with a combined value of approximately $913 million, are invested in collective investment trusts and commingled vehicles and may be redeemed daily or weekly with limited redemption notice required. Other investments, approximately $626 million, include private debt and alternative credit funds, real estate funds, and infrastructure funds, with generally quarterly redemptions and some are subject to lock-up periods.

The following table presents the fair value of the plan assets at December 31, 2024, by asset category:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Fair Value Measurements at | Fair Value Measurements at | Fair Value Measurements at | Fair Value Measurements at |
|  | December 31, 2024 | December 31, 2024 | December 31, 2024 | December 31, 2024 |
|  |  | Quoted Prices<br>in Active<br>Markets for<br>Identical Assets | Significant<br>Observable Inputs | Significant<br>Unobservable Inputs |
| Asset Category | Total | (Level 1) | (Level 2) | (Level 3) |
|  | $ | $ | $ | $ |
| &nbsp;&nbsp;&nbsp;&nbsp;**Investments measured at fair value** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and short-term investments |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Equity securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Canadian equities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. equities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; International equities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Debt securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate and government securities |  |  | 655 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset backed securities |  |  | 14 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bond fund |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Derivative instruments |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Insurance contracts |  |  |  | 273 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total investments measured at fair value** |  |  | 669 | 273 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Investments measured at net asset value** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commingled cash and fixed income funds |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commingled equity funds |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Private debt and alternative credit funds |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Real estate funds |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Infrastructure funds |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total investments measured at net asset value** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total** |  |  |  |  |

---

Debt securities include corporate bonds and term loans of U.S. and Canadian companies from diversified industries, bonds and Treasuries issued by the U.S. government and the Canadian federal and provincial governments, asset-backed securities and commingled fixed income funds invested in these same types of securities. The fair value of the debt securities is determined based on quoted market prices (Level 1) and market-corroborated inputs such as matrix prices, yield curves and indices (Level 2) and other unobservable inputs such as models and assumptions (Level 3).

Equity securities include large-cap, mid-cap and small-cap publicly traded companies mainly located in the U.S., Canada and other developed and emerging countries. The fair value of the equity securities is determined based on quoted market prices (Level 1).

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 5. PENSION PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS (CONTINUED)**

Derivative financial instruments are valued using quoted market prices when available (Level 1) and based on valuation techniques using market data when quoted market prices are not available (Level 2).

Certain insurance contracts include group contracts that have been purchased to cover a portion of the plan members. The fair value of annuity buy-in contracts changes based on fluctuations in the obligation associated with the covered plan members (Level 3).

Investments measured at fair value using the net asset value ("NAV") practical expedient are excluded from the fair value hierarchy and valued at the NAV as provided by the fund administrator. The debt and equity investment funds, with a combined value of approximately $1,050 million, are invested in collective investment trusts and commingled vehicles and may be redeemed daily or weekly with limited redemption notice required. Other investments, approximately $575 million, include private debt and alternative credit, real estate, and infrastructure funds, with quarterly redemptions and some are subject to lock-up periods.

The following table presents changes during the period for Level 3 fair value measurements of plan assets:

---

| | |
|:---|:---|
|  | Fair Value Measurements Using Significant |
|  | Unobservable Inputs (Level 3) |
|  | $ |
| Balance at December 31, 2023 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Settlements) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Return on plan assets |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Effect of foreign currency exchange rate change) |  |
| Balance at December 31, 2024 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Settlements**)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Return on plan assets |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Effect of foreign currency exchange rate change |  |
| Balance at December 31, 2025 |  |

---

ESTIMATED FUTURE BENEFIT PAYMENTS FROM THE PLANS

Estimated future benefit payments from the plans for the next 10 years at December 31, 2025 are as follows:

---

| | | |
|:---|:---|:---|
| **.** | Pension plans | Other post-retirement<br>benefit plans |
|  | $ | $ |
| 2026 | 345 | 15 |
| 2027 | 305 | 15 |
| 2028 | 299 | 14 |
| 2029 | 292 | 14 |
| 2030 | 284 | 13 |
| 2031 – 2035 | 1294 | 63 |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 6.**

------

**OTHER OPERATING INCOME, NET**

Other operating (income) loss, net is an aggregate of both recurring and nonrecurring income or loss items and, as a result, can fluctuate from year to year. The Company's other operating income, net includes the following:

---

| |
|:---|
| Gain on acquisition (NOTE 3) |
| Litigation settlements <sup>(1)</sup>**)** |
| Foreign exchange loss (gain) |
| Net gain on sale of assets**)** |
| Other**)** |

---

<sup>(1)</sup> For the year ended December 31, 2025, the Company recognized litigation settlements gain of $4 million relating to past asset divestitures (2024 – loss of $21 million). For the year ended December 31, 2023, the Company recognized, amongst others, a litigation settlement gain of $63 million.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 7.**

------

**INTEREST EXPENSE, NET**

The following table presents the components of interest expense, net:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended <br>December 31,** | Year ended <br>December 31, | Year ended <br>December 31, |
|  | **2025** | 2024 | 2023 |
|  | **$** | $ | $ |
| Interest on long-term debt <sup>(1)</sup> | **227** | 227 | 226 |
| Interest on withdrawal liabilities for multiemployer plans | **2** | 2 | 2 |
| Amortization of debt issuance costs and other | **8** | 8 | 6 |
|  | **237** | 237 | 234 |

---

<sup>(1)</sup> The Company capitalized $2 million of interest expense for the year ended December 31, 2025 (2024 – $6 million; 2023 – $8 million).

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 8.**

------

**INCOME TAXES**

The Company's earnings before income taxes by taxing jurisdiction were:

---

| | | |
|:---|:---|:---|
|  | Year ended <br>December 31, | Year ended <br>December 31, |
|  | 2024 | 2023 |
|  | $ | $ |
| U.S. (loss) earnings**)** |  |  |
| Foreign (loss) earnings**)** |  |  |
| (Loss) earnings before income taxes |  |  |

---

Provision for income taxes includes the following:

---

| | | |
|:---|:---|:---|
|  | **Year ended <br>December 31,** | Year ended <br>December 31, |
|  | **2025** | 2024 |
|  | **$** | $ |
| Current: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Federal) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;State and local |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign |  |  |
| Deferred: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Federal) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;State and local) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign**)** |  |  |
| Income tax expense (benefit) |  |  |

---

The Company's income taxes paid (net of refunds) by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 were:

---

| | | |
|:---|:---|:---|
|  | **Year ended <br>December 31,** | Year ended <br>December 31, |
|  | **2025** | 2023 |
|  | **$** | $ |
| &nbsp;&nbsp;&nbsp;&nbsp;Federal) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;State and local**)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign - Canada) |  |  |
| Income tax paid (net of refunds) |  |  |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 8. INCOME TAXES (CONTINUED)**

The table below provides the updated requirements of ASU 2023-09 for 2025. See Note 2 "Recent Accounting Pronouncements" for additional details on the adoption of ASU 2023-09.

The Company's provision for income taxes differs from the amounts computed by applying the statutory income tax rate of 21% to earnings before income taxes due to the following:

---

| | | |
|:---|:---|:---|
|  | **Year ended <br>December 31, 2025** | **Year ended <br>December 31, 2025** |
|  | **$** | % |
| U.S. federal statutory income tax**)** |  | **21.0** |
| State and local income taxes, net of federal income tax effect (a) |  | **(4.1)** |
| Reconciling Items: |  |  |
| Foreign tax effects - Canada |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Statutory tax rate difference between Canada and U.S.**)** |  | **1.8** |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange**)** |  | **2.6** |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred tax on foreign earnings**)** |  | **1.0** |
| &nbsp;&nbsp;&nbsp;&nbsp;Valuation allowance |  | **(10.6)** |
| &nbsp;&nbsp;&nbsp;&nbsp;Other**)** |  | **0.2** |
| Effect of cross-border tax laws |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax on repatriation distribution |  | **(2.8)** |
| &nbsp;&nbsp;&nbsp;&nbsp;Global intangible low-taxed income (GILTI)**)** |  | **0.3** |
| Tax credits - Research and experimentation**)** |  | **2.9** |
| Changes in valuation allowance |  | **(41.4)** |
| Nontaxable or nondeductible items |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accretion on Contingent Value Rights |  | **(0.8)** |
| &nbsp;&nbsp;&nbsp;&nbsp;Other |  | **(0.2)** |
| Changes in unrecognized tax benefits |  | **(0.2)** |
| Other adjustments |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Expiration of tax attributes |  | **(0.8)** |
| &nbsp;&nbsp;&nbsp;&nbsp;Other**)** |  | **0.6** |
| Income tax expense |  | **-30.5%** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(a) State taxes in Georgia, Mississippi, South Carolina, Tennessee and Wisconsin make up greater than 50 percent of the tax effect in this category.*

In 2025, the effective tax rate was unfavorably impacted by the Company's decision to record a full valuation allowance against its net U.S. deferred income tax assets and the net deferred tax assets of certain Canadian subsidiaries, as discussed further below. The effective tax rate was also negatively affected by the recognition of a capital gain arising from the repatriation of foreign earnings from a wholly owned subsidiary, which did not result in any cash taxes payable, as well as by nondeductible items. These impacts were partially offset by research and experimentation tax credits, foreign exchange effects resulting from the strengthening of the Canadian dollar, and a reduction in the deferred tax liability on foreign earnings.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 8. INCOME TAXES (CONTINUED)**

The Company's provision for income taxes for the years ended December 31, 2024 and 2023, before the adoption of ASU 2023-09, differs from the amounts computed by applying the statutory income tax rate of 21% to earnings before income taxes due to the following:

---

| | |
|:---|:---|
|  | Year ended <br>December 31, |
|  | 2024 |
|  | $ |
| U.S. federal statutory income tax |  |
| Reconciling Items: |  |
| State and local income taxes, net of federal<br> income tax benefit) |  |
| Foreign income tax rate differential) |  |
| Tax credits and special deductions) |  |
| Deferred tax revaluation due to acquisitions |  |
| Uncertain tax positions) |  |
| Valuation allowance on deferred tax assets) |  |
| Nondeductible expenses |  |
| GILTI) |  |
| Litigation settlement) |  |
| Foreign exchange) |  |
| Business acquisition gain) |  |
| Outside basis difference in partnership investment) |  |
| Other) |  |
| Income tax expense (benefit) |  |

---

In 2024, the effective tax rate was unfavorably impacted by foreign exchange items from the weakening of the Canadian dollar and by recording a valuation allowance on certain elements of deferred income tax assets, mainly deferred interest expense. This was partially offset by additional tax credits, mainly from research activities and state investment, as well as adjustments relating to filed tax returns.

In 2023, the effective tax rate was favorably impacted by the reversal of the valuation allowance on SPI's and Catalyst's loss carryforwards due to management's assessment that future income would be sufficient to utilize the losses prior to expiration after the acquisition by Domtar Inc. It was also favorably impacted by a non-taxable business acquisition gain, research and experimentation tax credits and state investment credits, and foreign exchange items. This was partly offset by a U.S. tax liability from GILTI related to the Company's operations in Canada, the inclusion of a full valuation allowance on deferred interest expenses, and transaction costs with minimal tax benefit.

Deferred tax assets and liabilities are based on tax rates that are expected to be in effect in future periods when deferred items are expected to reverse. Changes in tax rates or tax laws affect the expected future benefit or expense. The effect of such changes, if any, would be disclosed in the effective income tax rate reconciliation.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 8. INCOME TAXES (CONTINUED)**

DEFERRED TAX ASSETS AND LIABILITIES

The tax effects of significant temporary differences representing deferred tax assets and liabilities at December 31, 2025 and December 31, 2024 are comprised of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | December 31, |
|  | **2025** | 2024 |
|  | **$** | $ |
| Accounting provisions |  |  |
| Net operating loss carryforwards and other deductions |  |  |
| Inventory |  |  |
| Intangible assets |  |  |
| Tax credits |  |  |
| Debt |  |  |
| Pension and other employee future benefit plans |  |  |
| Countervailing duty and anti-dumping duty |  |  |
| Investment in subsidiaries |  |  |
| Operating lease liability |  |  |
| Other |  |  |
| Gross deferred tax assets |  |  |
| Valuation allowance**)** |  |  |
| **Net deferred tax assets** |  |  |
| Property, plant and equipment**)** |  |  |
| Investment in subsidiaries**)** |  |  |
| Operating lease asset**)** |  |  |
| Deferred tax on foreign earnings**)** |  |  |
| Other**)** |  |  |
| **Total deferred tax liabilities)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Net deferred tax assets** |  |  |
| Included in: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes and other**)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total** |  |  |

---

At December 31, 2025, the Company had $2.3 billion net operating loss and deduction limitation carryforwards, $1.1 billion of which expires between 2029 and 2037, and a capital loss carryforward of $186 million which expires in 2026. The Company also had foreign net operating losses of $1.0 billion, expiring between 2029 and 2045, and research and development expenditures of $353 million that can be carried forward indefinitely.

At each reporting period, the Company assesses whether it is more likely than not that the deferred income tax assets will be realized, based on the review of all available positive and negative evidence, including future reversals of existing taxable temporary differences, estimates of future taxable income, past operating results, and prudent and feasible tax planning strategies. The assessment assigns the most weight to historical income or losses. A cumulative three-year loss position is considered significant negative evidence in assessing the realizability of deferred income tax assets that is difficult to overcome. The carrying value of deferred income tax assets reflects the expected ability to generate sufficient future taxable income in certain tax jurisdictions to utilize these deferred income tax assets.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 8. INCOME TAXES (CONTINUED)**

Following the assessment of the Company's ability to realize the deferred income tax assets related to its U.S. operations, the Company concluded that existing negative evidence outweighed the positive evidence, especially since its U.S. operations had a cumulative loss for the three years ended December 31, 2025. Since the weight assigned to positive and negative evidence must align with how objectively verifiable that evidence is, the cumulative losses from its U.S. operations significantly constrain the Company's ability to rely on more subjective positive indicators. As a result, Management determined that it is less than likely the Company will recognize the remaining net deferred tax asset in the U.S. and recorded a corresponding increase in the related valuation allowance. As of December 31, 2025, the Company's total valuation allowance related to net U.S. deferred income tax assets was $686 million, resulting in no recognized deferred tax assets for the U.S. operations.

Following an evaluation of the Company's ability to realize deferred income tax assets related to its Canadian operations, it was determined that positive evidence, including sustained historical earnings, outweighed any negative evidence for certain Canadian subsidiaries. Accordingly, no valuation allowance was required for the majority of the Company's net Canadian deferred income tax assets. However, certain Canadian subsidiaries were in a cumulative three-year loss position as of December 31, 2025, which limited the ability to rely on more subjective positive indicators or evidence. As a result, a valuation allowance was recorded for the net deferred tax assets of such subsidiaries. As of December 31, 2025, the Company's total valuation allowance related to net Canadian deferred income tax assets was $72 million.

The non-cash charge to increase the valuation allowance has no impact on consolidated operating income or cash flows and does not restrict the Company's ability to utilize tax loss carryforwards or other deferred tax assets in future periods. If, in a subsequent period, sufficient objective positive evidence becomes available to support the realizability of some or all of the deferred tax assets for which an allowance has been recorded, the amount will be reduced as appropriate, with the corresponding adjustment recognized as a reduction of the income tax provision.

As of December 31, 2025, the Company has recorded a cumulative deferred tax liability of $12 million (2024 – $18 million) for foreign withholding tax and various state income taxes associated with the future repatriation of its unremitted foreign earnings. The Company did not provide for deferred taxes on the outside basis differences in its investments in its foreign subsidiaries that are unrelated to earnings as it estimates that this deferred tax liability covers all tax liabilities with foreign investments to date. The Company is indefinitely reinvested in the outside basis differences of its remaining foreign subsidiaries.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 8. INCOME TAXES (CONTINUED)**

ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES

At December 31, 2025, the Company had gross unrecognized tax benefits of approximately $61 million ($60 million and $54 million for 2024 and 2023, respectively). If recognized in 2025, $17 million of these tax benefits would impact the effective tax rate. These amounts represent the gross amount of exposure in individual jurisdictions and do not reflect any additional benefits expected to be realized if such positions were sustained, such as federal deduction that could be realized if an unrecognized state deduction was not sustained.

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31,** | December 31, | December 31, |
|  | **2025** | 2024 | 2023 |
|  | **$** | $ | $ |
| Balance at beginning of year |  |  |  |
| Acquisition of businesses |  |  |  |
| Additions for tax positions related to current year |  |  |  |
| Additions for tax positions of prior years |  |  |  |
| Reductions for tax position of prior years) |  |  |  |
| Expirations of statutes of limitations**)** |  |  |  |
| Interest |  |  |  |
| Foreign exchange) |  |  |  |
| Balance at end of year <sup>(1)</sup> |  |  |  |

---

<sup>(1)</sup> As of December 31, 2025, $50 million of these unrecognized tax benefits are reducing Deferred income tax assets in the Consolidated Balance Sheets (2024 – $31 million) and are included in the Deferred tax assets and liabilities table above. The remaining balance of $11 million is included in Deferred income taxes and other in the Consolidated Balance sheets (2024 – $29 million).

The Company recorded $1 million of accrued interest associated with unrecognized tax benefits for the period ending December 31, 2025 ($1 million for 2024 and less than $1 million for 2023). The Company recognizes accrued interest and penalties, if any, related to unrecognized tax benefits as a component of tax expense.

The main jurisdictions where the Company and its subsidiaries file tax returns for 2025 are the U.S. and Canada. The Company and its subsidiaries also file returns in other countries in Europe and Asia as well as various U.S. states and Canadian provinces. At December 31, 2025, the Company's subsidiaries are subject to foreign federal income tax examinations for 2020 and subsequent tax years. Years prior to 2022 are closed from a U.S. federal cash tax liability standpoint. The Company does not anticipate that adjustments stemming from these audits would result in a significant change to the results of its operations and financial condition.

PILLAR TWO - GLOBAL ANTI-BASE EROSION MODEL RULES ("GloBE Rules")

In October 2021, the Organization for Economic Co-operation and Development ("OECD") announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting which agreed to a two-pillar framework to address tax challenges arising from digitalization of the economy and profit shifting. In December 2021, the OECD published the GloBE Rules designed to ensure that multinational enterprises are subject to tax at an effective minimum tax rate of 15% in each jurisdiction where they operate. Although the U.S. has not enacted legislation to adopt GloBE Rules, the foreign countries where the Company has significant operations have already adopted or are in the process of adopting such legislation. The Company has performed an assessment of potential exposure and concluded GloBE Rules did not impact financial results for the year ended December 31, 2025. The Company continues to evaluate their impact on future periods.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 9.**

------

**INVENTORIES**

The following table presents the components of inventories:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | December 31, |
|  | **2025** | 2024 |
|  | **$** | $ |
| Work in process and finished goods | **763** | 682 |
| Raw materials | **371** | 344 |
| Operating and maintenance supplies | **365** | 368 |
|  | **1499** | 1394 |

---

Certain domestic raw materials, in process and finished goods inventories are valued based on the LIFO method. LIFO inventories were $363 million and $305 million at December 31, 2025 and 2024, respectively. If inventories valued under the LIFO basis had been valued using the FIFO method, inventories would have been $29 million higher than reported at December 31, 2025 and $14 million higher at December 31, 2024.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 10.**

------

**PROPERTY, PLANT AND EQUIPMENT**

The following table presents the components of property, plant and equipment:

---

| | | | |
|:---|:---|:---|:---|
|  | Range of useful lives | **December 31,** | December 31, |
|  | (in years) | **2025** | 2024 |
|  |  | **$** | $ |
| Machinery and equipment | 3 – 20 |  |  |
| Buildings and improvements | 10 – 40 |  |  |
| Timberlands | <sup>(1)</sup> |  |  |
| Assets under construction |  |  |  |
| Less: Accumulated depreciation |  |  |  |

---

<sup>(1)</sup> Amortization is calculated using the unit of production method.

Depreciation expense related to property, plant and equipment for the year ended December 31, 2025 was $324 million (2024 – $333 million; 2023 – $281 million).

*Impairment of long-lived assets*

For the year ended December 31, 2025, the Company recorded impairment charges of $349 million as a reduction to the carrying value of property, plant and equipment (2024 – nil; 2023 – $31 million) (see Note 14 "Closure and Restructuring, Impairment of Long-Lived Assets and Asset Conversion Costs" for more details).

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 11.**

------

**LEASES**

In the normal course of business, the Company enters into operating and finance leases mainly for warehousing facilities, corporate offices, motor vehicles, mobile equipment, office equipment and manufacturing equipment.

While the Company's lease payments are generally fixed over the lease term, some leases may include price escalation terms that are fixed at the lease commencement date.

The Company has remaining lease terms ranging from less than 1 year to 20 years, some of which may include options to extend the leases for up to 20 years, and some of which may include options to terminate the leases within 1 year.

The components of lease expense were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended <br>December 31,** | Year ended <br>December 31, | Year ended <br>December 31, |
|  | **2025** | 2024 | 2023 |
|  | **$** | $ | $ |
| Operating lease expense | **32** | 34 | 36 |
| Variable lease expense <sup>(1)</sup> | **11** | 10 | 17 |
| Finance lease expense: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of right-of-use assets | **2** | 1 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest on lease liabilities | **—** |  |  |
| Total finance lease expense | **2** | 1 | 1 |

---

<sup>(1)</sup> Variable lease expense is determined by the consumption of the underlying asset.

Supplemental cash flow information related to leases was as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended <br>December 31,** | Year ended <br>December 31, | Year ended <br>December 31, |
|  | **2025** | 2024 | 2023 |
|  | **$** | $ | $ |
| Cash paid for amounts included in the measurement of lease <br> liabilities: |  |  |  |
| Operating cash flows from operating leases | **35** | 36 | 35 |
| Operating cash flows from finance leases | **1** |  |  |
| Financing cash flows from finance leases | **2** | 1 | 1 |
| Right-of-use assets obtained in exchange for lease liabilities: |  |  |  |
| Operating leases | **13** | 31 | 35 |
| Finance leases | **3** | 2 | 1 |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 11. LEASES (CONTINUED)**

Supplemental balance sheet information related to leases was as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | December 31, |
|  | **2025** | 2024 |
|  | **$** | $ |
| Operating leases |  |  |
| Operating lease right-of-use assets | **71** | 113 |
| Lease liabilities due within one year | **25** | 28 |
| Long-term operating lease liabilities | **64** | 86 |
|  | **89** | 114 |
| Finance leases |  |  |
| Property, plant and equipment | **12** | 9 |
| Accumulated depreciation | **(3)** | (2) |
|  | **9** | 7 |
| Long-term debt due within one year | **2** | 1 |
| Long-term debt | **5** | 4 |
|  | **7** | 5 |
| Weighted-average remaining lease term |  |  |
| Operating leases | 5.5 **years** | 5.6 years |
| Finance leases | 3.7 **years** | 3.8 years |
| Weighted-average discount rate |  |  |
| Operating leases | **6.4%** | 6.2% |
| Finance leases | **7.4%** | 8.2% |

---

Maturities of lease liabilities at December 31, 2025 were as follows:

---

| | |
|:---|:---|
|  | **Operating leases** |
|  | **$** |
| 2026 | 29 |
| 2027 | 24 |
| 2028 | 16 |
| 2029 | 12 |
| 2030 | 7 |
| Thereafter | 21 |
| Total lease payments | 109 |
| Less: Imputed interest | 20 |
| Total lease liabilities | 89 |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 12.**

------

**GOODWILL AND OTHER INTANGIBLE ASSETS**

The carrying value of goodwill is as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | December 31, |
|  | **2025** | 2024 |
|  | **$** | $ |
| Balance at beginning of year | **33** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisition of Iconex Paper (Note 3) | **—** | 33 |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase price accounting adjustment | **2** |  |
| Balance at end of year | **35** | 33 |

---

The goodwill at December 31, 2025 and 2024 is entirely related to the Paper and packaging reporting segment.

The following table presents the components of intangible assets:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Estimated useful lives | **December 31,** | **December 31,** | **December 31,** | December 31, | December 31, | December 31, |
|  | (in years) | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
|  |  | **Gross carrying** | **Accumulated** |  | Gross carrying | Accumulated |  |
|  |  | **amount** | **amortization** | **Net** | amount | amortization | Net |
| Definite-lived intangible assets <br> subject to amortization |  | **$** | **$** | **$** | $ | $ | $ |
| Water rights | 30 | **9** |  | **8** | 9 |  | 8 |
| Trade names | 15 | **15** |  | **11** | 15 |  | 12 |
| Customer relationships | 8 | **110** |  | **94** | 110 |  | 108 |
| Total |  | **134** |  | **113** | 134 |  | 128 |

---

Amortization expense related to intangible assets for the year ended December 31, 2025 was $15 million (2024 – $3 million; 2023 – $1 million).

Amortization expense for the next five years related to intangible assets is expected to be as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **2026** | **2027** | **2028** | **2029** | **2030** |
|  | $ | $ | $ | $ | $ |
| Amortization expense related to intangible assets | 15 | 15 | 15 | 15 | 15 |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 13.**

------

**OTHER ASSETS**

The following table presents the components of other assets:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | December 31, |
|  | **2025** | 2024 |
|  | **$** | $ |
| Pension asset - defined benefit pension plans | **285** | 250 |
| Countervailing duty and anti-dumping duty cash deposits on softwood lumber | **242** | 195 |
| Off-market contracts | **62** | 71 |
| Restricted cash | **41** | 59 |
| Other | **44** | 43 |
|  | **674** | 618 |

---

At December 31, 2025 and 2024, restricted cash included in Other assets in the Consolidated Balance Sheets represents amounts held in trust to pay for the costs of an environmental project at the Kingsport linerboard mill. The restriction will lapse when the related long-term debt is paid off.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 14.**

------

**CLOSURE AND RESTRUCTURING, IMPAIRMENT OF LONG-LIVED ASSETS AND ASSET CONVERSION COSTS**

*Idling of Coosa Pines, Alabama mill*

On March 24, 2026, the Company announced that it will indefinitely idle operations at its Coosa Pines, Alabama, facility in May 2026. This idling will reduce the Company's annual market pulp production capacity by approximately 270,000 air-dried metric tons and will result in a workforce reduction of approximately 285 employees.

Costs in connection with the closure of the Coosa Pines fluff pulp mill are expected to be incurred largely in the first quarter of 2026. The closure is expected to result in an aggregate pre-tax earnings charge of approximately $45 million, of which an estimated $23 million are non-cash charges related to the write-off of the carrying amount of the equipment, related spare parts and inventory, an estimated $7 million are cash charges related to severance, employee benefits and termination costs and an estimated $15 million charge for other closure and cleanup costs.

*Impairment of long-lived assets*

In the fourth quarter, the Company initiated a process to pursue the sale of a portfolio of non-core pulp and paper assets. Based on this review, the Company identified indicators of impairment at those operations for the year ended December 31, 2025.

In connection with the indefinite closure and temporary production curtailment announcements in response to weaker lumber demand conditions, increased countervailing and anti-dumping duties and the introduction of a 10% U.S. tariff in the fourth quarter on Canadian-origin softwood lumber products exported to the U.S as well as the ongoing economic uncertainty, the Company determined there were indicators of impairment at certain of its Wood Products lumber operations for the year ended December 31, 2025.

A discounted cash flow model was used to estimate the fair value of the Wood Products impaired asset groups. This discounted cash flow model was projected based on experience as well as management's assessment of future trends in the lumber industry, based on external and internal sources of data. Assumptions include sales volumes, commodity prices, production costs, the discount rate, applicable foreign exchange rates, duties, tariffs, operating rates of the assets, and the future capital required to maintain the assets for their current operating conditions. Estimated future cash flows were discounted at a rate of 15%.

The fair values of Paper and Packaging as well as the Pulp and Tissue impaired asset groups were derived from indicative non-binding offers from potential buyers.

As a result of these assessments, the Company recorded impairment charges of $185 million in the Paper and Packaging segment, $136 million in the Wood Products segment, $30 million in the Pulp and Tissue segment, and $3 million as corporate charges for the year ended December 31, 2025. The impairment charges were recognized as a reduction to the carrying value of property, plant and equipment of $335 million, operating lease right-of-use assets of $17 million and other assets of $2 million. These charges were recorded under Impairment of long-lived assets on the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss).

*Power generation assets impairment costs*

On September 8, 2025, the Company transferred certain power generation assets to PECHC, an affiliated company, through the creation and transfer of a special purpose entity. As a result, these power generation assets were evaluated for impairment and during the year ended December 31, 2025, the Company recorded $7 million of write-off of off-market contracts and $1 million of write-off of property, plant and equipment, under Impairment of long-lived assets on the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss).

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 14. CLOSURE AND RESTRUCTURING, IMPAIRMENT OF LONG-LIVED ASSETS AND ASSET CONVERSION COSTS (CONTINUED)**

*Cost reduction measures*

On August 20, 2025, as a result of a strategic review of its operations, the Company announced the indefinite idling of the Grenada, Mississippi, newsprint mill and the closure of the Addison, Illinois, and Nogales, Mexico, converting facilities. The Nogales facility ceased operations in August, while the Grenada mill and the Addison facility ceased operations in September.

For the year ended December 31, 2025, the Company recorded $1 million of write-off of property, plant and equipment, under Impairment of long-lived assets on the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss). Additionally, the Company recorded $18 million of write-off of inventory, $8 million of severance and termination costs and $3 million of other costs, under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

*Catalyst restructuring and impairment costs, British Columbia mills*

On August 16, 2023, it was announced that operations at the Tiskwat mill at Powell River would be curtailed permanently. On January 25, 2024, the Company announced the indefinite curtailment of the Crofton mill paper operations. On December 2, 2025, the Company announced the permanent closure of operations at the Crofton mill. While pulp production is being discontinued, the Company continues to manage the site in compliance with all applicable environmental and other laws and is exploring a variety of possibilities for the future of the site.

As a result, for the year ended December 31, 2025, the Company recorded $10 million of accelerated depreciation, under Depreciation and amortization on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss) (2024 – $8 million of accelerated depreciation; 2023 – $25 million of write-off of property, plant and equipment under Impairment of long-lived assets on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss)).

For the year ended December 31, 2025, the Company also recorded $17 million of severance and termination costs, $19 million of write-off of inventory, and $3 million of other costs, under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss) (2024 – $4 million of severance and termination costs and $2 million of write-off of inventory; 2023 – $8 million of severance and termination costs and $8 million of environmental closure costs).

*Idling and sale of Espanola, Ontario mill*

On September 6, 2023, the Company announced the indefinite idling of the Espanola mill's pulp and paper operations for an expected period greater than one year. The mill has been idled after years of ongoing operating losses and high costs associated with maintaining and operating the facility. The pulp mill was shut down in early October 2023, and the paper machines were shut down in early 2024.

On April 9, 2025, the Company signed a purchase agreement for the sale of its Espanola facility. On October 17, 2025, the Company completed the sale. As a result, for the year ended December 31, 2025, the Company recorded $12 million of write-off of property, plant and equipment, under Impairment of long-lived assets on the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss).

For the year ended December 31, 2025, the Company also recorded reversals of $1 million of environmental closure costs and $1 million of other costs, under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

For the year ended December 31, 2024, the Company recorded $2 million of inventory obsolescence, $1 million of severance and termination costs, and $2 million of other costs, under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

For the year ended December 31, 2023, the Company recorded $6 million of write-off of property, plant and equipment and $3 million of write-off of investment under Impairment of long-lived assets, on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss). Additionally, the Company recorded $23 million of inventory obsolescence, $12 million of severance and termination costs, $14 million of pension and other post-retirement costs and $9 million of other costs, under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 14. CLOSURE AND RESTRUCTURING, IMPAIRMENT OF LONG-LIVED ASSETS AND ASSET CONVERSION COSTS (CONTINUED)**

*Ashdown curtailment, Arkansas mill*

On February 21, 2024, the Company announced that it will indefinitely curtail paper operations at its Ashdown, Arkansas, facility. The Ashdown mill's paper machine and associated sheeter were indefinitely idled in July 2024. The curtailment did not result in a workforce reduction.

For the year ended December 31, 2024, the Company recorded $30 million of accelerated depreciation, under Depreciation and amortization on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss). Additionally, the Company recorded $4 million of write-off of inventory and $1 million of severance and termination costs, under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

*Conversion of Kingsport, Tennessee mill*

The Company entered the linerboard market upon the completion of the conversion of the Kingsport paper machine in June 2023. For the year ended December 31, 2023, the Company recorded $63 million under Asset conversion costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

*Other Costs*

During 2025 other costs related to previous and ongoing closures and restructuring included $3 million of severance and termination costs and $11 million of other costs (2024 – $2 million of severance and termination costs and $12 million of other costs; 2023 – $1 million of severance and termination costs and $11 million of other costs).

The following table provides the activity in the closure and restructuring and transaction costs liability:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | December 31, |
|  | **2025** | 2024 |
|  | **$** | $ |
| Balance at beginning of year |  |  |
| Additions and other changes |  |  |
| Payments**)** |  |  |
| Balance at end of year <sup>(1)</sup> |  |  |

---

<sup>(1)</sup> At December 31, 2025, $26 million is shown in Trade and other payables.

The $26 million provision is comprised of severance and termination costs of $23 million, and other costs of $3 million.

Closure and restructuring costs are based on management's best estimates at December 31, 2025. Actual costs may differ from these estimates due to subsequent developments such as the results of environmental studies, the ability to find a buyer for assets set to be dismantled and demolished and other business developments. As such, additional costs and further impairment charges may be required in future periods.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 15.**

------

**TRADE AND OTHER PAYABLES**

The following table presents the components of trade and other payables:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | December 31, |
|  | **2025** | 2024 |
|  | **$** | $ |
| Trade payables | **554** | 575 |
| Payroll-related accruals | **114** | 153 |
| Other accruals | **187** | 209 |
|  | **855** | 937 |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 16.**

------

**CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT**

The following table presents the changes in Accumulated other comprehensive income (loss) by component<sup>(1)</sup>for the periods ended December 31, 2024 and December 31, 2025.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Net derivative<br>gains (losses) on <br>cash flow hedges** | **Pension items**<sup>(2)</sup> | **Post-retirement<br>benefit items**<sup>(2)</sup> | **Total** |
|  | **$** | **$** | **$** | **$** |
| Balance at December 31, 2023)**)** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Natural gas swap contracts) |  | N/A | N/A |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Currency options) |  | N/A | N/A |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange forward contracts) |  | N/A | N/A |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net gain | N/A |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign currency items | N/A | N/A | N/A)**)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive (loss) income before <br> reclassifications**)** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amounts reclassified from Accumulated other<br> comprehensive income (loss) |  |  |  |  |
| Net current period other comprehensive<br> (loss) income**)** |  |  |  |  |
| Balance at December 31, 2024)**)** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Currency options |  | N/A | N/A |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange forward contracts |  | N/A | N/A |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net gain | N/A) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign currency items | N/A | N/A | N/A |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive income before <br> reclassifications) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amounts reclassified from Accumulated other<br> comprehensive income (loss) |  |  |  |  |
| Net current period other comprehensive income |  |  |  |  |
| **Balance at December 31, 2025** |  |  |  |  |

---

<sup>(1)</sup> All amounts are after tax. Amounts in parentheses indicate losses.

<sup>(2)</sup> The projected benefit obligation is actuarially determined on an annual basis as of December 31.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 16. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT (CONTINUED)**

The following table presents reclassifications out of Accumulated other comprehensive income (loss):

---

| | | | |
|:---|:---|:---|:---|
| **Details about Accumulated other comprehensive income<br> (loss) components** | **Amounts reclassified from <br>Accumulated other comprehensive income (loss)** | **Amounts reclassified from <br>Accumulated other comprehensive income (loss)** | **Amounts reclassified from <br>Accumulated other comprehensive income (loss)** |
|  | **Year ended<br>December 31,<br>2025** | Year ended<br>December 31,<br>2024 | Year ended<br>December 31,<br>2023 |
|  | **$** | $ | $ |
| Net derivative losses on cash flow hedge |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Natural gas swap contracts <sup>(1)</sup> |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Currency options and forwards <sup>(1)</sup> |  |  |  |
| &nbsp;&nbsp;Total before tax |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax benefit |  |  |  |
| &nbsp;&nbsp;Net of tax |  |  |  |
| Amortization of defined benefit pension items |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of net actuarial gain <sup>(2)</sup> |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of prior year service cost <sup>(2)</sup> |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Curtailment loss <sup>(2)</sup> |  |  |  |
| &nbsp;&nbsp;Total before tax |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax benefit |  |  |  |
| &nbsp;&nbsp;Net of tax |  |  |  |
| Amortization of other post-retirement benefit items |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of net actuarial gain <sup>(2)</sup> |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of prior year service credit <sup>(2)</sup> |  |  |  |
| &nbsp;&nbsp;Total before tax |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax benefit |  |  |  |
| &nbsp;&nbsp;Net of tax |  |  |  |

---

<sup>(1)</sup> These amounts are included in Cost of sales in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss).

<sup>(2)</sup> These amounts are included in the computation of net periodic benefit cost (see Note 5 "Pension Plans and Other Post-Retirement Benefit Plans" for more details).

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 17.**

------

**LONG-TERM DEBT**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **Par** |  | **December 31,** | December 31, |
|  | **Maturity** | **Amount** | **Currency** | **2025** | 2024 |
|  |  | $ | $— | **$** | $ |
| Unsecured notes |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.25% Notes | 2042 |  | USD | **119** | 120 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.75% Notes | 2044 |  | USD | **155** | 155 |
| Senior secured notes |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.75% Notes | 2028 |  | USD | **642** | 642 |
| ABL Revolving Credit Facility | 2028 |  | USD | **595** | 480 |
| Bank Term Loan | 2028 |  | USD | **144** |  |
| First Lien Term Loan | 2028 |  | USD | **306** | 323 |
| Farm Credit Term Loan A | 2030 |  | USD | **570** | 603 |
| Farm Credit Term Loan B | 2028 |  | USD | **241** | 255 |
| IRB Bonds | 2029 |  | USD | **60** | 60 |
| Other |  |  | USD | **6** | 5 |
| Finance lease obligations | 2025-2030 |  |  | **7** | 5 |
|  |  |  |  | **2845** | 2648 |
| Less: Unamortized debt issuance costs |  |  |  | **21** | 25 |
| Less: Due within one year |  |  |  | **75** | 66 |
|  |  |  |  | **2749** | 2557 |

---

Principal long-term debt repayments, including finance lease obligations, in each of the next five years will amount to:

---

| | | |
|:---|:---|:---|
|  | **Long-term <br>debt** | **Finance <br>leases** |
|  | $ | $ |
| 2026 | 73 | 2 |
| 2027 | 72 | 2 |
| 2028 | 1882 | 1 |
| 2029 | 92 | 1 |
| 2030 | 445 | 1 |
| Thereafter | 271 |  |
|  | 2835 | 7 |
| Less: Amounts representing interest |  |  |
| Total payments | 2835 | 7 |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 17. LONG-TERM DEBT (CONTINUED)**

ABL REVOLVING CREDIT FACILITY

On March 1, 2023, the Company amended its ABL Revolving Credit Facility that matures on March 1, 2028 (extended from November 30, 2026). The Company's ABL Revolving Credit Facility provides for revolving loans and letters of credit of up to $1.0 billion (up from $400 million), subject to borrowing base capacity. On February 26, 2025, the Company entered into an amendment (the "Third ABL Amendment") to its ABL Revolving Credit Facility that matures on March 1, 2028. Pursuant to the Third ABL Amendment, the maximum availability under the ABL Revolving Credit Facility was increased from $1.0 billion to $1.14 billion, which includes a First In, Last Out ("FILO") tranche of $120 million (the "ABL FILO Loan"). Availability is subject to the borrowing base as calculated monthly. Borrowings under the ABL FILO Loan bear interest at a floating rate per annum of, at the Company's option, SOFR (adjusted by 0.10%) plus an applicable margin of 2.75% or base rate plus 1.75%.

Borrowings under the ABL Revolving Credit Facility is limited by borrowing base calculations based on the sum of specified percentages of eligible accounts receivable, plus specified percentages of eligible inventory, plus specified percentages of qualified cash, minus the amount of any applicable reserves. Borrowings bear interest at a floating rate, which can be either an adjusted Eurodollar rate plus an applicable margin or, at the Company's option, a base rate plus an applicable margin.

The Company's obligations under the ABL Revolving Credit Facility are guaranteed by its immediate parent (a company with no assets other than Domtar shares) and its wholly-owned material U.S. subsidiaries and wholly-owned material Canadian subsidiaries. The ABL Revolving Credit Facility has a first-priority lien on the current assets of such U.S. subsidiaries and all the assets of Canadian subsidiaries and a second-priority lien on the fixed assets of its wholly-owned material U.S. subsidiaries (excluding principal properties and shares of subsidiaries), in each case, subject to permitted liens.

Borrowings under the ABL Revolving Credit Facility bear interest at SOFR, Canadian bankers' acceptance or prime rate, as applicable, plus a margin linked to the Company's utilization of the credit. In addition, the Company pays facility fees quarterly at rates linked to its utilization of the credit.

The ABL Revolving Credit Facility contains customary covenants, including, but not limited to, restrictions on the Company's ability and that of its subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make acquisitions, loans, advances or investments, pay dividends, sell or otherwise transfer assets, optionally prepay or modify terms of any junior indebtedness, enter into transactions with affiliates or change its line of business.

The ABL Revolving Credit Facility, when specified excess availability is less than the greater of $99.75 million and 10% of the lesser of the borrowing base and maximum borrowing capacity, requires the maintenance of a fixed charge coverage ratio of 1.00 to 1.00 at the end of each fiscal quarter for the trailing 12-month period. This covenant did not apply as at December 31, 2025.

On December 31, 2025, the Company had borrowings of $595 million and $155 million of letters of credit outstanding under this facility, leaving unused commitments of $390 million available (2024 – $480 million and $158 million, respectively).

BANK TERM LOAN

On January 28, 2025, the Company entered into a Term Loan Credit Agreement (the "Bank Term Loan") for $150 million which was used to repay borrowings under the ABL Revolving Credit Facility. The Bank Term Loan will mature on November 30, 2028. The Bank Term Loan bears interest at a floating rate per annum, of SOFR plus 5.00%. Borrowings under the Company's Bank Term Loan will amortize in equal quarterly installments in an amount equivalent to 5.00% per annum of the principal amount. The Bank Term Loan ranks pari passu with the Farm Credit Term Loan, the First Lien Term Loan Credit Agreement, the Senior Secured Notes and the Industrial Revenue Bond. The Bank Term Loan contains customary negative covenants, including, but not limited to, restrictions on the Company's ability and that of its restricted subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make investments, pay dividends or make other restricted payments, sell or otherwise transfer assets or enter into transactions with affiliates. At December 31, 2025, there were $144 million of borrowings outstanding under the Bank Term Loan.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 17. LONG-TERM DEBT (CONTINUED)**

INDUSTRIAL REVENUE BOND ("IRB Bonds")

On December 5, 2024, the Company issued IRB Bonds with a principal amount of $60 million through the Industrial Development Board of the City of Kingsport, Tennessee to finance an environmental project at the Kingsport linerboard mill. The proceeds of the financing are held in trust to pay for the costs of the project. The funds held in trust are included in Other assets on the Consolidated Balance Sheets. The rate on the bonds is 5.25% until November 15, 2029. The IRB Bond provisions include a mandatory remarketing event scheduled for November 15, 2029 where the bonds will be offered for remarketing at the prevailing market rate. The Company is obligated to repurchase any bonds not successfully remarketed. The interest on these bonds is exempt from federal income tax for holders. The bonds rank pari passu with the First Lien Term Loan Credit Agreement, the Senior Secured Notes, the Farm Credit Term Loan and the Bank Term Loan. While the bonds remain outstanding, the Company is obligated to follow the covenants contained in the Senior Note indenture or a replacement security.

FARM CREDIT TERM LOAN

On March 1, 2023, the Company entered into a Term Loan Credit Agreement (the "Farm Credit Term Loan") for $949 million, consisting of two tranches: (a) $666 million of Farm Credit Term Loan A used to refinance renewable energy investments and facilitate the Acquisition and (b) $283 million of Farm Credit Term Loan B used to repay $283 million of borrowings under the First Lien Term Loan Facility.

Farm Credit Term Loan A will mature on March 1, 2030 and Farm Credit Term Loan B will mature on November 30, 2028. The Farm Credit Term Loan bears interest at a floating rate per annum, at Domtar's option, (i) at SOFR (adjusted by 0.10%) plus 6.00% or a base rate plus 5.00%, with respect to Farm Credit Term Loan A and (ii) at SOFR (adjusted by 0.10%) plus 5.75% or a base rate plus 4.75%, with respect to Farm Credit Term Loan B. The SOFR rate is subject to an interest rate floor of 0.75% and the base rate is subject to an interest rate floor of 1.75%. Borrowings under the Company's Farm Credit Term Loan will amortize in equal quarterly installments in an amount equivalent to 5.00% per annum of the principal amount. The Farm Credit Term Loan ranks pari passu with the First Lien Term Loan Credit Agreement and the Senior Secured Notes.

The Farm Credit Term Loan contains customary negative covenants, including, but not limited to, restrictions on the Company's ability and that of its restricted subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make investments, pay dividends or make other restricted payments, sell or otherwise transfer assets or enter into transactions with affiliates.

During the year ended December 31, 2025, the Company repaid $33 million of Farm Credit Term Loan A, and $14 million of Farm Credit Term Loan B, as required for quarterly amortization (2024 – $33 million and $14 million, respectively). At December 31, 2025, there was $574 million of borrowings under Farm Credit Term Loan A and $241 million of borrowings under Farm Credit Term Loan B (2024 – $608 million and $255 million, respectively).

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 17. LONG-TERM DEBT (CONTINUED)**

FIRST LIEN TERM LOAN FACILITY

On November 30, 2021, the Company entered into the Term Loan Facility maturing November 30, 2028.

Borrowings under the Term Loan Facility amortize in equal quarterly installments in an amount equal to 1% per annum of the principal amount in 2022 and 5% per annum thereafter.

The Term Loan Facility bears interest at a floating rate per annum, at Domtar's option, (i) at SOFR (adjusted by 0.114%) plus 5.5% or a base rate plus 4.5%. The Term Loan Facility is subject to a SOFR floor of 0.75%.

The Term Loan Facility contains customary negative covenants consistent with those applicable to the Notes, including, but not limited to, restrictions on the Company's ability and that of its restricted subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, pay dividends or make other restricted payments, sell or otherwise transfer assets or enter into transactions with affiliates.

During the year ended December 31, 2025, the Company repaid $19 million as required for quarterly amortization (2024 –

$19 million). The Company also repaid $283 million on March 1, 2023 pursuant to the Acquisition and related to the issue of Farm Credit Term Loan B for $283 million. At December 31, 2025 there was $307 million of borrowings outstanding under the Term Loan Facility (2024 – $325 million).

SENIOR SECURED NOTES

Pearl Merger Sub Inc., a newly formed, wholly-owned subsidiary of Pearl Excellence Holdco L. P., a Delaware limited partnership, was the initial issuer of the $775 million aggregate principal amount of 6.75% Senior Secured Notes due 2028 (the "Notes"). This note issue was part of financing related to the acquisition of Domtar by Pearl Excellence Holdco L.P. Upon the completion of the acquisition, the initial issuer was merged with and into Domtar with Domtar surviving the Merger and becoming the obligor of the Notes.

The Notes will mature on October 1, 2028 and interest on the Notes will be payable in cash semi-annually in arrears on April 1 and October 1 of each year, commencing on April 1, 2022.

The Senior Secured Notes contain customary negative covenants consistent with those applicable to the Notes, including, but not limited to, restrictions on the Company's ability and that of its restricted subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, pay dividends or make other restricted payments, sell or otherwise transfer assets or enter into transactions with affiliates.

At December 31, 2025 and 2024, there was $642 million of Notes outstanding.

COMMON ATTRIBUTES OF THE TERM LOAN FACILITIES, THE NOTES AND IRB BOND

The Company's obligations in respect to the Farm Credit Term Loan, the Term Loan Facility, Bank Term Loan, the Notes and IRB Bond are guaranteed by its immediate parent and all of the Issuer's direct and indirect wholly-owned material U.S. subsidiaries. The obligations have a first-priority lien on the fixed assets of its wholly-owned material U.S. subsidiaries' fixed assets and a second-priority lien on the current asset collateral (second in priority to the liens securing the ABL Revolving Credit Facility discussed above), in each case, subject to other permitted liens. The Farm Credit Term Loan, the Term Loan Facility, Bank Term Loan, the Notes and IRB Bond are ranked pari passu, subject to intercreditor agreements.

The Company is required to prepay the Farm Credit Term Loan, the Term Loan Facility, Bank Term Loan, the Notes and IRB Bond with 100% of the net cash proceeds of certain asset sales subject to certain reinvestment rights. The Company is required to prepay the Farm Credit Term Loan and the Term Loan Facility and Bank Term Loan with 100% of the net cash proceeds of certain debt issuances and 50% of excess cash flow in each case, subject to certain exceptions.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 17. LONG-TERM DEBT (CONTINUED)**

REDEMPTION OF RESOLUTE NOTES

Resolute had $300 million of notes outstanding upon the Acquisition taking place. On February 14, 2023, Resolute delivered notice of redemption to holders of the 4.875% senior notes due 2026. The redemption notice provided for the full redemption of $300 million principal amount of the notes on March 1, 2023 at a redemption price equal to 102.438% of the principal amount of the notes redeemed, plus accrued and unpaid interest. The redemption of the notes was subject to the consummation of the Acquisition. Following the redemption on March 1, 2023, no Resolute notes remain outstanding.

INDEBTEDNESS AND LIQUIDITY

The Company expects that it will need to refinance all or a portion of its indebtedness on or before maturity. If it cannot timely refinance its indebtedness, the Company may have to take actions such as raising additional equity capital and reducing, delaying or foregoing capital expenditures, strategic acquisitions, investments and alliances. It is uncertain whether any such actions, if necessary, could be implemented on commercially reasonable terms or at all. In addition, if the Company's cash flows and capital resources are insufficient to fund its debt service obligations, it could face substantial liquidity challenges and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure its indebtedness. The Company may not be able to effect such alternative measures on commercially reasonable terms or at all, and, even if successful, those alternative actions may not allow the Company fully to meet its debt service obligations.

The Company is focused on generating additional liquidity, including from external sources. Accordingly, it has undertaken a number of actions that seek to enhance access to liquidity in the business. The Company is conducting a comprehensive review of the assets in its portfolio to identify assets that are not complementary to the business and therefore may merit divestiture to provide cash inflow and reduce operating costs; it is continuing a review of support function costs with the aim of reducing costs and right sizing the organization in anticipation of asset sales; the Company may also potentially idle certain underperforming mills and plans to reduce working capital. Additionally, in 2025, the Company took steps to adjust production capacity and reduce costs by taking market downtime in various locations to adjust to customer demand for paper, pulp and wood lumber products; idled indefinitely the Grenada, Mississippi newsprint mill in response to lower customer demand for newsprint; announced the closure of the Nogales, Mexico converting facility and the closure of the Addison, Illinois converting facility; announced the curtailment of operations at the Glenwood, Arkansas sawmill and the Maniwaki, Quebec sawmill in response to weaker lumber demand conditions; announced the permanent closure of the Crofton, British Columbia pulp mill; and reduced capital expenditure programs for 2025 and 2026 to better focus on core functions such as the maintenance of assets, the safety of employees and compliance with applicable laws and regulations.

The Company's consolidated financial statements have been prepared on the basis that the Company is expected to be able to realize its assets and discharge its liabilities in the normal course of business as they become due for at least twelve months from the issuance date of these consolidated financial statements. Significant judgement was applied in performing a liquidity assessment to evaluate whether the Company has sufficient liquidity for the next 12 months using a cash flow model. Based on current assumptions, including those related to expected operating margin and other non-discretionary cash inflows and outflows, the Company expects to have sufficient liquidity to meet its obligations over the next 12 months. In addition to these assumptions, the Company's liquidity position is supported by its available cash balances, access to existing credit facilities, and anticipated cash flows from operations.

The Company's ability to meet its debt service requirements and liquidity needs will depend on its ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors, many of which are beyond its control.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 18.**

**_________________**

**OTHER LIABILITIES AND DEFERRED CREDITS**

The following table presents the components of other liabilities and deferred credits**:**

---

| | | |
|:---|:---|:---|
|  | **December 31,** | December 31, |
|  | **2025** | 2024 |
|  | **$** | $ |
| Provision for environmental and asset retirement obligations | **103** | 107 |
| Contingent consideration for contingent value right | **178** | 154 |
| Other | **51** | 54 |
|  | **332** | 315 |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 19.**

------

**COMMITMENTS AND CONTINGENCIES**

ENVIRONMENTAL MATTERS

The Company is subject to environmental laws and regulations enacted by federal, provincial, state and local authorities. The Company may also incur substantial costs in relation to enforcement actions (including orders requiring corrective measures, installation of pollution control equipment or other remedial actions) as a result of violations of, or liabilities under, environmental laws and regulations applicable to its past and present properties. The Company's ongoing efforts to identify potential environmental concerns that may be associated with such properties may result in additional environmental costs and liabilities which cannot be reasonably estimated at this time.

The Company has environmental liabilities of $55 million recorded as of December 31, 2025 (2024 – $57 million) primarily related to environmental remediation related to closed sites. The amount of these liabilities represents management's estimate of the ultimate settlement based on an assessment of relevant factors and assumptions and could be affected by changes in facts or assumptions not currently known to management for which the outcome cannot be reasonably estimated at this time.

The Company also has asset retirement obligations of $58 million recorded as of December 31, 2025 (2024 – $56 million), primarily consisting of liabilities associated with landfills, sludge basins and the dismantling of retired assets.

These liabilities are included in Trade and other payables and Other liabilities and deferred credits in the Consolidated Balance Sheets.

Additionally, the Company has asset retirement obligations with indeterminate settlement dates. The fair value of these liabilities cannot be estimated due to the lack of sufficient information to estimate the settlement dates of the obligation. The Company will recognize liability in the period in which sufficient information becomes available. These asset retirement obligations relate mainly to disposal of potentially hazardous materials that may be required if the Company undergoes major maintenance, renovation or demolition, and to closure of retention ponds that may be required if it ceases its operations.

For the year ended December 31, 2025, the Company's operating expenses for environmental matters amounted to $123 million (2024 – $128 million; 2023 – $101 million).

The Company made capital expenditures for environmental matters of $32 million during the year ended December 31, 2025 (2024 – $11 million; 2023 – $18 million).

The following table reflects changes in the reserve for environmental remediation and asset retirement obligations:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | December 31, |
|  | **2025** | 2024 |
|  | **$** | $ |
| Balance at beginning of year |  |  |
| Additions and other changes |  |  |
| Reversal of provision**)** |  |  |
| Environmental spending**))** |  |  |
| Effect of foreign currency exchange rate change**)** |  |  |
| Balance at end of year <sup>(1)</sup> |  |  |

---

<sup>(1)</sup> At December 31, 2025, $10 million is shown in Trade and other payables and $103 million is shown in Other liabilities and deferred credits in the Consolidated Balance Sheets.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 19. COMMITMENTS AND CONTINGENCIES (CONTINUED)**

At December 31, 2025, anticipated undiscounted payments in each of the next five years are as follows:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2026** | **2027** | **2028** | **2029** | **2030** | **Thereafter** | **Total** |
|  | $ | $ | $ | $ | $ | $ | $ |
| Environmental provision and asset<br> retirement obligations | 10 | 15 | 3 | 3 | 2 | 153 | 186 |

---

The U.S. Environmental Protection Agency (the "EPA") and/or various state agencies have notified the Company that it may be a potentially responsible party under the Comprehensive Environmental Response Compensation and Liability Act, commonly known as "Superfund", and similar state laws with respect to other hazardous waste sites as to which no proceedings have been instituted against the Company. The Company continues to take remedial action under its Care and Control Program at its former wood preserving sites, and at a number of operating sites, due to possible soil, sediment or groundwater contamination.

CONTINGENCIES

In the normal course of operations, the Company becomes involved in various legal actions mostly related to contract disputes, patent infringements, environmental and product warranty claims, and labor issues. While the final outcome with respect to actions outstanding or pending at December 31, 2025, cannot be predicted with certainty, it is management's opinion that their resolution will not have a material adverse effect on the Company's financial position, results of operations or cash flows.

OTHER COMMERCIAL COMMITMENTS

The Company has commitments to purchase property, plant and equipment, roundwood, wood chips, gas and certain chemicals. Purchase orders in the normal course of business are excluded from the table below. Any amounts for which the Company is liable under purchase orders are reflected in the Consolidated Balance Sheets as Trade and other payables. Minimum future payments under these other commercial commitments, determined at December 31, 2025, were as follows:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2026** | **2027** | **2028** | **2029** | **2030** | **Thereafter** | **Total** |
|  | $ | $ | $ | $ | $ | $ | $ |
| Other commercial commitments | 213 | 29 | 11 | 2 | 1 | 14 | 270 |

---

INDEMNIFICATIONS

In the normal course of business, the Company offers indemnifications relating to the sale of its businesses and real estate. In general, these indemnifications may relate to claims from past business operations, compliance with laws, the failure to abide by covenants and the breach of representations and warranties included in the sales agreements. Typically, such representations and warranties relate to taxation, environmental, product and employee matters. The terms of these indemnification agreements are generally for an unlimited period of time. At December 31, 2025, the Company is unable to estimate the potential maximum liabilities for these types of indemnification guarantees as the amounts are contingent upon the outcome of future events, the nature and likelihood of which cannot be reasonably estimated at this time. Accordingly, no provision has been recorded. These indemnifications have not yielded a significant expense in the past.

*Pension Plans*

The Company has indemnified and held harmless the trustees of its pension funds, and the respective officers, directors, employees and agents of such trustees, from any and all costs and expenses arising out of the performance of their obligations under the relevant trust agreements, including in respect of their reliance on authorized instructions from the Company or for failing to act in the absence of authorized instructions. These indemnifications survive the termination of such agreements. At December 31, 2025, the Company has not recorded a liability associated with these indemnifications, as it does not expect to make any payments pertaining to these indemnifications.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 19. COMMITMENTS AND CONTINGENCIES (CONTINUED)**

CLIMATE CHANGE AND AIR QUALITY REGULATIONS

Various national and local laws and regulations relating to climate change have been established or are emerging in jurisdictions where the Company currently has, or may have in the future, manufacturing facilities or investments.

In 2019, the EPA repealed the Clean Power Plan and replaced it with the "Affordable Clean Energy" ("ACE") rule. The ACE rule was legally challenged in the U.S. Court of Appeals for the D.C. Circuit. The Court vacated the ACE rule and the repeal of the Clean Power Plan, but the court stayed its mandate as to the Clean Power Plan repeal to avoid reinstating that rule. However, on June 30, 2022, the Supreme Court reversed the D.C. Circuit's decision, holding that the Clean Power Plan was an "extraordinary" case of an agency claiming transformative power over a "major question" of policy without a clear statement from Congress. The decision does not completely bar the EPA from regulating greenhouse gas emissions from the power sector but prohibits the EPA from imposing standards based on "generation shifting" away from coal-fired power plants to natural gas plants and renewable resources.

On May 23, 2023, the EPA proposed a new climate change rule for existing power plants and repealed the ACE rule. The new rule requires, by 2030, all existing coal-fired power plants operating beyond 2039 to choose between carbon capture and sequestration by 2032, natural gas-co-firing by 2030, or retirement before 2032. The new rule also applies to all new gas combustion turbines which are categorized by operating level. Units that operate greater than 40% of their operating capacity in a year require carbon capture and sequestration. Units that operate less have an emission limit or the requirement to use lower emitting fuels. These new climate rules have been challenged in the D.C. Circuit and oral argument was held on December 6, 2024. However, the current Trump administration has indicated an intent to reconsider the rule and filed a motion with the court to hold the litigation in abeyance during the reconsideration, which the court granted on February 19, 2025. The Company does not expect to be disproportionately affected compared with other pulp and paper producers located in the states where the Company operates.

The EPA finalized amendments revising certain aspects of its Industrial Boiler Maximum Achievable Control Technology Standard ("MACT"), or Boiler MACT in 2022. The revised rule responded to two court decisions that remanded certain issues for further review by the EPA, and it includes revisions to 34 different emission limitations that could apply to some of the Company's facilities. Although the EPA has indicated that a small number of facilities may need to reduce emissions further compared to the current limits, the EPA does not expect additional costs to be significant. On September 3, 2024, EPA's rule amendments were partially set aside by the D.C. Circuit because they failed to properly distinguish between "new" and "existing" sources. As a result, EPA is expected to revise its Boiler MACT rules again in the near future. The Company does not expect its facilities to be disproportionately affected compared to other U.S. pulp and paper producers.

The province of Quebec has a greenhouse gas ("GHG") cap-and-trade system with reduction targets. Ontario has its GHG Emission Performance Standards regulation and the province of British Columbia has the B.C. Output-Based Pricing System. The Company does not expect its facilities to be disproportionately affected by these measures compared to the other pulp and paper producers located in these provinces.

The Government of Canada has established a federal carbon pricing system that took effect in 2019. The Federal program is a backstop and takes effect if a province does not have a carbon pricing program or if a provincial program is not rigorous enough to meet federal requirements.

LEGAL MATTERS

The Company becomes involved in various legal proceedings, claims and governmental inquiries, investigations, and other disputes in the normal course of business, including matters related to contracts, torts, commercial and trade disputes, taxes, environmental issues, activist damages, employment and workers' compensation claims, grievances, human rights complaints, pension and benefit plans and obligations, health and safety, product safety and liability, asbestos exposure, financial reporting and disclosure obligations, corporate governance, Indigenous peoples' claims, antitrust, governmental regulations, and other matters. Although the final outcome is subject to many variables and cannot be predicted with any degree of certainty, the Company regularly assesses the status of the matters and establishes provisions (including legal costs expected to be incurred) when it believes an adverse outcome is probable, and the amount can be reasonably estimated. Any recovery from litigation or settlement of claims that is a gain contingency is recognized if, and when, realized or realizable. Except as described below and for claims that cannot be assessed due to their preliminary nature, the Company believes that the ultimate disposition of these matters outstanding or pending as of December 31, 2025, will not have a material adverse effect on the Company's Consolidated Financial Statements.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 19. COMMITMENTS AND CONTINGENCIES (CONTINUED)**

ASBESTOS-RELATED LAWSUITS

The Company is involved in a number of asbestos-related lawsuits filed primarily in U.S. state courts, including certain cases involving multiple defendants. These lawsuits principally allege direct or indirect personal injury or death resulting from exposure to asbestos-containing premises. While the Company disputes the plaintiffs' allegations and intends to vigorously defend these claims, the ultimate resolution of these matters cannot be determined at this time. These lawsuits frequently involve claims for unspecified compensatory and punitive damages, and the Company is unable to reasonably estimate a range of possible losses, which may not be covered in whole or in part by its insurance coverage. However, unfavorable rulings, judgments or settlement terms could materially impact the Consolidated Financial Statements. Hearings for certain of these matters are scheduled to occur in the next twelve months.

COUNTERVAILING DUTY AND ANTI-DUMPING INVESTIGATIONS ON SOFTWOOD LUMBER

On November 25, 2016, countervailing duty and anti-dumping petitions were filed with the U.S. Department of Commerce ("Commerce") and the U.S. International Trade Commission ("ITC") by certain U.S. softwood lumber products producers and forest landowners, requesting that the U.S. government impose countervailing and anti-dumping duties on Canadian-origin softwood lumber products exported to the U.S. One of the Company's subsidiaries was identified in the petitions as being a Canadian exporting producer of softwood lumber products to the U.S. and was selected as a mandatory respondent to be investigated by Commerce in the countervailing and anti-dumping duty investigations, in the first administrative review of the countervailing and anti-dumping duty orders, in the second and third administrative reviews of the countervailing duty order, and in the seventh administrative review of the countervailing and anti-dumping duty orders. With respect to other administrative reviews of the countervailing and anti-dumping duty orders for which the Company was not selected as a respondent by Commerce, the Company's subject imports were assigned the rate applicable to non-selected importers.

The cash deposit rates on account of countervailing and anti-dumping duties paid for the Company's subject imports of Canadian-origin softwood lumber products into the United States are as follows:

---

| | |
|:---|:---|
| **Effective dates for deposits on account of countervailing duties** | **Cash deposit rates** |
| **Initial Investigation** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;April 28 2017 – November 7, 2017 (Preliminary Determination) | 12.82% |
| &nbsp;&nbsp;&nbsp;&nbsp;November 8, 2017 – November 30, 2020 (Final Determination) | 14.70% |
| **First Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;December 1, 2020 – December 1, 2021 | 19.10% |
| **Second Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;December 2, 2021 – August 8, 2022 | 18.07% |
| **Third Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;August 9, 2022 – July 31, 2023 | 10.10% |
| **Fourth Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;August 1, 2023 – August 18, 2024 | 1.79% |
| **Fifth Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;August 19, 2024 – August 11, 2025 | 6.74% |
| **Sixth Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;August 12, 2025 – Present | 14.63% |

---

Commerce issued its final determination in the sixth countervailing administrative review on August 12, 2025.

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**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 19. COMMITMENTS AND CONTINGENCIES (CONTINUED)**

---

| | |
|:---|:---|
| **Effective dates for deposits on account of anti-dumping duties** | **Cash deposit rates** |
| **Initial Investigation** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;June 30, 2017 – November 7, 2017 (Preliminary Determination) | 4.59% |
| &nbsp;&nbsp;&nbsp;&nbsp;November 8, 2017 – November 29, 2020 (Final Determination) | 3.20% |
| **First Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;November 30, 2020 – December 1, 2021 | 1.15% |
| **Second Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;December 2, 2021 – August 8, 2022 | 11.59% |
| **Third Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;August 9, 2022 – July 31, 2023 | 4.76% |
| **Fourth Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;August 1, 2023 – September 6, 2023 | 6.20% |
| &nbsp;&nbsp;&nbsp;&nbsp;September 7, 2023 – August 18, 2024 | 6.26% |
| **Fifth Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;August 19, 2024 – July 28, 2025 | 7.66% |
| **Sixth Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;July 29, 2025 – September 10, 2025 | 20.56% |
| &nbsp;&nbsp;&nbsp;&nbsp;September 11, 2025 – Present | 20.53% |

---

Commerce issued its final determination in the sixth anti-dumping administrative review on July 29, 2025, and a correction on September 11, 2025.

*Ongoing Administrative Reviews*

Following Commerce's completion of the Canadian softwood lumber investigation and the first, second, third, fourth, fifth and sixth administrative reviews, the seventh administrative review remains pending. On February 21, 2025, Commerce published a notice initiating the seventh administrative review of the countervailing duty and anti-dumping orders on softwood lumber from Canada. In decisions issued April 9 and 21, 2025, the Company was selected as a respondent in the seventh administrative review of the anti-dumping and countervailing investigations, respectively.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 19. COMMITMENTS AND CONTINGENCIES (CONTINUED)**

*Ongoing Appellate Reviews*

On December 14, 2017 and January 4, 2018, the Company filed complaints supporting appellate reviews of the final results of Commerce's countervailing and anti-dumping investigations on softwood lumber from Canada, respectively, before a binational panel formed pursuant to the North American Free Trade Agreement or United States-Mexico-Canada Agreement, as the case may be ("Panel"). The Panel issued its decision in the anti-dumping appellate review on October 5, 2023, finding that Commerce's methodology was inconsistent with applicable legal principles and ordering a remand to Commerce. Commerce's decision was issued on April 30, 2024. The hearing for the countervailing appellate review took place from September 27 to 29, 2023. On May 6, 2024, the Panel issued its decision on the countervailing appellate review and remanded to Commerce on certain issues. Commerce's decision was issued on December 17, 2024. On January 6, 2021 and January 19, 2021, the Company filed its complaints supporting appellate Panel reviews of the final results in the countervailing and anti-dumping first administrative reviews. On July 21, 2025, the Panel issued its decision in the first administrative review of the anti-dumping order and remanded Commerce on its methodology further to two recent decisions of the U.S. Court of Assents for the Federal Circuit. On September 17, 2025, the Panel granted the motion for voluntary dismissal jointly filed by all appellate parties, concluding the appellate Panel review in the anti-dumping first administrative review. The Company filed similar complaints with respect to the second administrative reviews on January 12, 2022, and with respect to the third administrative reviews on September 16, 2022. On September 10, 2025, the Panel granted the motion for voluntary dismissal jointly filed by all appellate parties, concluding the appellate Panel review in the anti-dumping second administrative review. On October 12, 2023, the Company joined the complaint filed by Canadian parties supporting an appellate Panel review of the final results in the countervailing fourth administration review, and also filed a summons before the U.S. Court of International Trade ("CIT") to initiate an appellate review of the final results in the anti-dumping fourth administrative review. On October 18, 2024, the Company joined the complaint filed by Canadian parties supporting appellate Panel reviews of the final results in the countervailing and anti-dumping fifth administrative reviews. On September 29, 2025, the Company joined the complaint filed by Canadian parties supporting appellate Panel reviews of the final results in the countervailing and anti-dumping sixth administrative reviews. All appellate reviews described above remain pending, except for the anti-dumping first and second administrative reviews.

*Sunset Reviews*

In parallel, on December 1, 2022, Commerce and the ITC published notices that automatically initiated five-year "sunset" reviews to determine whether revocation, for the future, of the anti-dumping and countervailing duty orders on softwood lumber products from Canada would likely lead to continuation or recurrence of dumping or subsidies (Commerce) and of material injury (ITC). Commerce released final results in the sunset reviews of the countervailing and anti-dumping orders on March 27 and April 3, 2023, respectively, finding that revocation of the orders would be likely to lead to continuation or recurrence of countervailable subsidies and of dumping. On May 8, 2023, the Company filed with the CIT a complaint supporting an appellate review of Commerce's final results in the sunset review of the anti-dumping order. On November 30, 2023, the ITC voted that revocation of the orders would be likely to lead to a continuation or recurrence of material injury to the U.S. industry within a reasonably foreseeable time.

*World Trade Organization Appeal*

In addition, on August 24, 2020, the World Trade Organization's (the "WTO") dispute panel issued a report (the "Panel Report") in the case brought by the government of Canada in "United States — Countervailing Measures on Softwood Lumber from Canada" ("DS533"), concluding, among other things, that Commerce acted inconsistently with the Agreement on Subsidies and Countervailing Measures on most of the matters. On September 28, 2020, the U.S. notified the WTO's Dispute Settlement Body of its decision to appeal the Panel Report. The appeal remains pending.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 19. COMMITMENTS AND CONTINGENCIES (CONTINUED)**

*Financial assurance*

The Company is required by U.S. Customs to provide surety bonds to secure the payment of its cash deposits. As of December 31, 2025, the Company had $133 million of surety bonds outstanding in favor of U.S. Customs, of which $62 million were secured by letters of credit.

As of December 31, 2025, a total of $731 million of cash deposits ($517 million of countervailing and $214 million of anti-dumping duties) on estimated softwood lumber duties were paid. Of this amount, $563 million of deposits ($443 million of countervailing and $120 million of antidumping duties) were paid at acquisition date and were included in the purchase price allocation (refer to Note 3 "Acquisition and Sale of Businesses"). These deposits are measured, since the acquisition, using a model based on the assumptions that a settlement would be reached and that a certain percentage of the deposits would be recovered after a certain period of time. Deposits are remeasured with that model every reporting date and the variation is recorded under Other operating income, net on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

The following table reconciles the Company's cash deposits paid during the period to the amount recorded on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss):

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the year ended December 31, 2025** | **For the year ended December 31, 2025** | **For the year ended December 31, 2025** | **For the year ended December 31, 2024** | **For the year ended December 31, 2024** | **For the year ended December 31, 2024** |
|  | Countervailing duty | Anti-dumping duty | **Total** | Countervailing duty | Anti-dumping duty | **Total** |
|  | $ | $ | **$** | $ | $ | **$** |
| Cash deposits paid <sup>(1)</sup> |  |  |  |  |  |  |
| Cash deposits paid recognized as receivable)**))** |  |  |  |  |  |  |

---

<sup>(1)</sup> Deposits paid since the acquisition are recorded as contingent assets with a portion recoverable, using a recovery model and undiscounted figures based on management estimates.

The following table outlines the changes in duties receivable:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | Countervailing duty | Anti-dumping duty | **Total** | Countervailing duty | Anti-dumping duty | **Total** |
|  | $ | $ | **$** | $ | $ | **$** |
| Beginning of period | 146 | 49 | **195** | 123 | 36 | **159** |
| Cash deposits paid recognized as recoverable | 9 | 11 | **20** | 4 | 8 | **12** |
| Accretion | 21 | 6 | **27** | 19 | 5 | **24** |
| Balance at end of year <sup>(1)</sup> | 176 | 66 | **242** | 146 | 49 | **195** |

---

<sup>(1)</sup> The balance of $242 million is shown in Other assets in the Consolidated Balance Sheets.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 19. COMMITMENTS AND CONTINGENCIES (CONTINUED)**

PARTIAL WIND-UPS OF PENSION PLANS

On June 12, 2012, the Company filed a motion for directives with the Quebec Superior Court, the court with jurisdiction in the creditor protection proceedings under the Companies' Creditors Arrangement Act (Canada) (the "CCAA Creditor Protection Proceedings"), seeking an order to prevent pension regulators in each of Quebec, New Brunswick, and Newfoundland and Labrador from declaring partial wind-ups of pension plans relating to employees of former operations in New Brunswick, and Newfoundland and Labrador, or a declaration that any claim for accelerated reimbursements of deficits arising from a partial wind-up is a barred claim under the CCAA Creditor Protection Proceedings. The Company's position is that any such declaration, if issued, would be inconsistent with the Quebec Superior Court's sanction order confirming the CCAA debtors' CCAA Plan of Reorganization and Compromise, as amended, and the terms of the Company's emergence from the CCAA Creditor Protection Proceedings. A partial wind-up would likely shorten the period in which any deficit within those plans, which could reach up to $109 million (C$150 million), would have to be funded if the Company does not obtain the relief sought. The hearing in this matter was held in March 2024. On August 27, 2024, the Quebec Superior Court rendered its judgment, declaring that (i) claims for additional contributions to the New Brunswick, and Newfoundland and Labrador pension plans resulting from partial wind-ups of these pension plans are extinguished and have been released and discharged by the sanction order confirming the CCAA debtors' CCAA Plan of Reorganization and Compromise, as amended; and (ii) claims for additional contributions to the New Brunswick, and Newfoundland and Labrador pension plans resulting from partial wind-ups of the pension plans on the basis of facts that took place prior to April 17, 2009 are inconsistent with the sanction order confirming the CCAA debtors' CCAA Plan of Reorganization and Compromise, as amended. On September 17, 2024, the Superintendent of Pensions for New Brunswick and the Superintendent of Pensions of Newfoundland and Labrador filed a motion seeking leave to appeal, which was denied. On January 7, 2025, the Superintendent of Pensions for New Brunswick and the Superintendent of Pensions of Newfoundland and Labrador filed an application for leave to appeal to the Supreme Court of Canada, which was rejected by the Supreme Court of Canada on September 23, 2025.

On August 5, 2025, the Superintendent of Pensions for New Brunswick and the Superintendent of Pensions of Newfoundland and Labrador each sent to the Company demand letters requesting evidence from the Company that the pension plans relating to employees of former operations in New Brunswick and Newfoundland and Labrador have been funded in accordance with New Brunswick and Newfoundland and Labrador laws during the period starting on December 9, 2010 and ending July 1, 2020 and July 1, 2023 respectively, and seeking grounds to confirm a partial termination of the pension plans for funding below the levels required under New Brunswick and Newfoundland and Labrador laws.

SUPERFUND SITE

On May 17, 2023, the EPA issued a General Notice of Liability and Demand for Reimbursement of Response Costs Expended at the Barite Hill/Nevada Goldfields Superfund Site (the "Notice of Liability") to the Company. The Notice of Liability states that the EPA believes that the Company may be liable under Sections 106 and 107(a) of the Comprehensive, Environmental Response, Compensation, and Liability Act ("CERCLA") for costs the EPA has incurred at the Barite Hill/Nevada Goldfields Superfund Site (the "Site"). The approximate total response costs identified by the EPA in the Notice of Liability through January 19, 2023 was approximately $21 million. The Company believes that the EPA may also seek to hold it responsible for future remediation costs at the Site. The Company is currently assessing its defenses to liability at the Site.

The Company recognized a provision of $15 million, with respect to the EPA's cause of action for past costs described in the Notice of Liability, as an environmental liability in Other liabilities in the purchase price allocation of Resolute. See Note 3 "Acquisition and Sale of Businesses" for more information.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 19. COMMITMENTS AND CONTINGENCIES (CONTINUED)**

MENOMINEE FIRE

Prior to the acquisition, on October 6, 2022, a fire in a third-party owned warehouse that the Company leases adjacent to its Menominee recycled pulp mill damaged and, in some cases, destroyed, the warehouse, as well as certain of the Company's property, plant and equipment and inventories, which resulted in the temporary idling of the mill. The mill was restarted during the first quarter of 2023, operating at a limited capacity. The fire incident resulted in third-party damages in addition to damages to the Company's Menominee mill. At this time, six claims have been filed in Michigan State Court against the Company, of which four have been settled including the complaint by the owner of the warehouse alleging damages in an amount in excess of $45 million. The separate complaint filed by a co-tenant in the warehouse and its insurer alleging damages in an amount in excess of $132 million is still pending. The Company currently does not believe it is probable that it will incur any material uninsured loss related to third party claims, nor could any possible loss contingency be reasonably estimable at the present time.

On December 6, 2024, Michigan EGLE sent a "Compliance Communication" to the Company regarding the alleged release of hazardous substances caused by the October 6, 2022 fire and fire suppression activities. EGLE alleges that the Company is liable under Part 201 for the facility and seeks reimbursement of EGLE's response activity costs. The Company disputes EGLE's allegations.

On March 5, 2025, the Company also received a letter from USEPA Region 5 seeking recovery of "Response Costs" for the period up to November 30, 2024. On October 2, 2025, the parties signed a statute-of-limitations tolling agreement.

On March 6, 2025, the Company received a claim letter from the U.S. Coast Guard National Pollution Funds Center, indicating that they received a claim from the City of Marinette identifying the Company as the party responsible for the October 6, 2022 warehouse fire. On March 17, 2025, the U.S. Coast Guard National Pollution Funds Center denied the City of Marinette's initial claim related to the fire incident.

The Company maintains insurance coverage, subject to customary deductibles and limits. Anticipated insurance recoveries related to losses and incremental costs incurred, in excess of the deductible, are recognized when receipt is probable. The anticipated insurance recoveries related to the fire, in excess of the net book value of the damaged operating assets and related to business interruption, will not be recognized until all contingencies related to the claim have been resolved.

Prior to the acquisition, total costs of $32 million, net of deductible, were determined probable to be recovered, of which $18 million were received. The balance of $14 million was recorded under Receivables on the Consolidated Balance Sheet at the acquisition date.

Subsequent to the acquisition, additional costs of $32 million were determined probable to be recovered and insurance recoveries of $46 million were received.

For the year ended December 31, 2025, the Company recognized direct costs of $13 million (2024 – $8 million; 2023 – $25 million) which were determined probable to be recovered and recognized an equivalent amount of recovery in reduction of Cost of sales. The Company also recognized a gain on disposition of property, plant and equipment of $3 million (2024 – $5 million; 2023 – $3 million) for the year ended December 31, 2025, under Other operating income, net on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss). For the year ended December 31, 2025, $16 million was received from the insurer (2024 – $27 million; 2023 – $30 million).

The Company expects to continue to record additional costs and recoveries until the assessment is completed and insurance claims are fully settled. The timing and the amounts of additional insurance recoveries, including for business interruption, are not known at this time.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 20.**

------

**DERIVATIVES AND HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENT**

HEDGING PROGRAMS

The Company is exposed to market risk, such as changes in currency exchange rates, commodity prices and interest rates. To the extent the Company decides to manage the volatility related to these exposures, the Company may enter into various financial derivatives that are accounted for under the derivatives and hedging guidance. These transactions are governed by the Company's hedging policies which provide direction on acceptable hedging activities, including instrument type and acceptable counterparty exposure.

Upon inception, the Company formally documents the relationship between hedging instruments and hedged items. At inception and quarterly thereafter, the Company formally assesses whether the financial instruments used in hedging transactions are effective at offsetting changes in either the cash flow or the fair value of the underlying exposures. The Company does not hold derivative financial instruments for trading purposes.

CREDIT RISK

The Company is exposed to credit risk on accounts receivable from its customers. In order to reduce this risk, the Company reviews new customers' credit history before granting credit and conducts regular reviews of existing customers' credit performance. As of December 31, 2025 and December 31, 2024, no single customer represented more than 10% of the Company's receivables.

The Company is exposed to credit risk in the event of non-performance by counterparties to its financial instruments. The Company attempts to minimize this exposure by entering into contracts with counterparties that are believed to be of high credit quality. Collateral or other security to support financial instruments subject to credit risk is usually not obtained. The credit standing of counterparties is regularly monitored.

INTEREST RATE RISK

The Company is exposed to interest rate risk arising from fluctuations in interest rates on its cash and cash equivalents, bank indebtedness, revolving credit facility, term loan and long-term debt. The Company's objective in managing exposure to interest rate changes is to minimize the impact of interest rate changes on earnings and cash flows and to lower its overall borrowing costs. The Company may manage this interest rate exposure through the use of derivative instruments such as interest rate swap contracts, whereby it agrees to exchange the difference between fixed and variable interest amounts calculated by reference to an agreed upon notional principal amount.

COST RISK

Cash flow hedges:

The Company is exposed to price volatility for raw materials and energy used in its manufacturing process. The Company manages its exposure to cost risk primarily through the use of supplier contracts. The Company purchases natural gas at the prevailing market price at the time of delivery. To reduce the impact on cash flow and earnings due to pricing volatility, the Company may utilize derivatives to fix the price of forecasted natural gas purchases. The changes in the fair value on qualifying instruments are included in Accumulated other comprehensive income (loss) to the extent effective, and reclassified into Cost of sales in the period during which the hedged transaction affects earnings. Current contracts are used to hedge a portion of forecasted purchases of natural gas over the next 1 month.

As of December 31, 2025, the Company hedged 1% of its forecasted purchases of natural gas under derivative contracts for 2026. The natural gas derivative contracts were effective as of December 31, 2025.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 20. DERIVATIVES AND HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENT (CONTINUED)**

FOREIGN CURRENCY RISK

Cash flow hedges:

The Company has manufacturing operations in the United States and Canada. As a result, it is exposed to movements in foreign currency exchange rates in Canada. Moreover, certain assets and liabilities are denominated in Canadian dollars and are exposed to foreign currency movements. Accordingly, the Company's earnings are affected by increases or decreases in the value of the Canadian dollar. The Company may use derivative financial instruments (currency options and foreign exchange forward contracts) to mitigate its exposure to fluctuations in foreign currency exchange rates.

Current contracts are used to hedge forecasted purchases in Canadian dollars by the Company's Canadian operations over the next 11 months. Such derivatives are designated as cash flow hedges. The changes in the fair value on qualifying instruments are included in Accumulated other comprehensive income (loss) to the extent effective, and reclassified into Sales or Cost of sales in the period during which the hedged transaction affects earnings.

As of December 31, 2025, the Company hedged 35% of its forecasted net Canadian dollars cash exposures under contracts for 2026. The foreign exchange derivative contracts were effective as of December 31, 2025.

FAIR VALUE MEASUREMENT

The accounting standards for fair value measurements and disclosures establish a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is available and significant to the fair value measurement.

---

| | |
|:---|:---|
| Level 1 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Quoted prices in active markets for identical assets or liabilities. |
| Level 2 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
| Level 3 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inputs that are generally unobservable and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability. |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 20. DERIVATIVES AND HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENT (CONTINUED)**

The following tables present information about the Company's financial assets and financial liabilities measured at fair value on a recurring basis (except Long-term debt, see (b) and (c) below) at December 31, 2025 and December 31, 2024, in accordance with the accounting standards for fair value measurements and disclosures and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  | **Quoted prices in** | **Significant** | **Significant** |  |  |
|  |  | **active markets for** | **observable** | **unobservable** |  |  |
|  | **December 31,** | **identical assets** | **inputs** | **inputs** |  |  |
| **Fair Value of financial instruments at:** | **2025** | **(Level 1)** | **(Level 2)** | **(Level 3)** |  | **Balance sheet classification** |
|  | **$** | $ | $ | $ | $— |  |
| Derivatives designated as <br> hedging instruments: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Asset derivatives** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Currency derivatives | **15** |  | 15 |  | (a) | Prepaid expenses |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total Assets** | **15** |  | 15 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Liabilities derivatives** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Currency derivatives | **2** |  | 2 |  | (a) | Trade and other payables |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities** | **2** |  | 2 |  |  |  |
| **Other Instruments:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term debt due within <br> one year | **75** |  | 75 |  | (b) | Long-term debt due within <br> one year |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term debt | **2348** |  | 2348 |  | (c) | Long-term debt |
| &nbsp;&nbsp;&nbsp;&nbsp;Contingent consideration <br> for contingent value right | **178** |  |  |  | (d) | Other liabilities and deferred <br> credits |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 20. DERIVATIVES AND HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENT (CONTINUED)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  | **Quoted prices in** | **Significant** | **Significant** |  |  |
|  |  | **active markets for** | **observable** | **unobservable** |  |  |
|  | **December 31,** | **identical assets** | **inputs** | **inputs** |  |  |
| **Fair Value of financial instruments at:** | **2024** | **(Level 1)** | **(Level 2)** | **(Level 3)** |  | **Balance sheet classification** |
|  | **$** | $ | $ | $ | $— |  |
| Derivatives designated as <br> hedging instruments: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Asset derivatives** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Natural gas swap contracts | **3** |  | 3 |  | (a) | Prepaid expenses |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total Assets** | 3 |  | 3 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Liabilities derivatives** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Currency derivatives | **39** |  | 39 |  | (a) | Trade and other payables |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities** | **39** |  | 39 |  |  |  |
| **Other Instruments:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term debt due within <br> one year | **66** |  | 66 |  | (b) | Long-term debt due within <br> one year |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term debt | **2422** |  | 2422 |  | (c) | Long-term debt |
| &nbsp;&nbsp;&nbsp;&nbsp;Contingent consideration <br> for contingent value right | **154** |  |  |  | (d) | Other liabilities and deferred <br> credits |

---

<sup>(a)</sup>Fair value of the Company's derivatives are classified under Level 2 (inputs that are observable; directly or indirectly) as it is measured as follows:

- For currency derivatives: Foreign currency forward and option contracts are valued using standard valuation models. Interest rates, forward market rates and volatility are used as inputs for such valuation techniques.

- For natural gas contracts: Fair value is measured using the discounted difference between contractual rates and quoted market future rates.

<sup>(b)</sup>Fair value of the Company's long-term debt is measured by comparison to market prices of its debt. The Company's long-term debt is not carried at fair value on the Consolidated Balance Sheets at December 31, 2025 and December 31, 2024. The carrying value of the Company's long-term debt due within one year is $75 million and $66 million at December 31, 2025 and December 31, 2024, respectively.

<sup>(c)</sup>The carrying value of the Company's long-term debt is $2,749 million and $2,557 million at December 31, 2025 and December 31, 2024, respectively.

<sup>(d)</sup>The Company estimates the fair value of the contingent consideration by using a model based on the assumptions that a settlement would be reached and that a certain percentage of the deposits would be recovered after a certain period, which requires management's estimates.

Due to their short-term maturity, the carrying amounts of cash and cash equivalents, including restricted cash, receivables, receivables from related party, bank indebtedness, trade and other payables and payables to related party approximate their fair values.

Notes receivable from related party are carried at amortized cost, and bear interest at rates that approximate current market rates for similar financial instruments. Their carrying amounts approximate their fair value because there have been no significant changes in market rates or credit risk.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 21.**

------

**SEGMENT DISCLOSURES**

The Company reports segment information consistent with the way its Chief Operating Decision Maker ("CODM") evaluates the operating results and performance of the Company. The Company analyzes the results of its business through the following reportable segments, which also represent its three operating segments based on the Company's organizational structure:

• **Paper and Packaging** – consists of the design, manufacturing, marketing and distribution of a wide variety of fiber-based products including communication, specialty and packaging papers as well as fluff and softwood pulp.

• **Pulp and Tissue** – consists of the design, manufacturing, marketing and distribution of a wide variety of fiber-based products including market pulp, tissue and paper.

• **Wood products** – consists of the production of lumber and other wood products for the residential construction and home renovation markets, as well as for specialized structural and industrial applications.

The accounting policies of the reportable segments are the same as those described in Note 1.

The Company's CODM, the owner and sole shareholder of Domtar, reviews segment operating income, as well as revenue, in the budgeting and forecasting process and considers actual versus budget variances in assessing the performance of the segment and the allocation of resources. The CODM also uses segment operating income as an input to the overall compensation measures for segment management under our incentive compensation plans. The Company believes it is appropriate to disclose this measure to help analyze segment performance and trends. Expense information is provided to and reviewed by the CODM on a consolidated basis to evaluate cost efficiency and company level performance. Segment operating income excludes certain corporate expenses that are not related to segment activities and are presented on the Corporate and other line. The Company excludes these items from segment operating income in order to provide better transparency of its segment operating results. Additionally, no segment assets are reported as they are not identifiable by segment.

The Company attributes sales to customers in different geographical areas on the basis of the location of the customer.

Long-lived assets consist of property, plant and equipment, operating lease right-of-use assets, goodwill and intangible assets used in the generation of sales in the different geographical areas.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 21. SEGMENT DISCLOSURES (CONTINUED)**

An analysis and reconciliation of the Company's business segment information to the respective information in the financial statements is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended <br>December 31,** | Year ended <br>December 31, | Year ended <br>December 31, |
| SEGMENT DATA | **2025** | 2024 | 2023 |
|  | **$** | $ | $ |
| Sales by segment |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Paper and packaging |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Pulp and tissue |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Wood products |  |  |  |
| Total for reportable segments |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Intersegment sales |  |  |  |
| Consolidated sales |  |  |  |
| Sales by product group |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Communication papers |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Specialty and packaging papers |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Market pulp |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Linerboard |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Newsprint |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Tissue |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Wood |  |  |  |
| Consolidated sales |  |  |  |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 21. SEGMENT DISCLOSURES (CONTINUED)**

---

| | |
|:---|:---|
|  | Year ended <br>December 31, |
|  | 2023 |
|  | $ |
| Other costs by segment |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Paper and packaging |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Pulp and tissue |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Wood products |  |
| Total for reportable segments |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate and other) |  |
| Consolidated other costs |  |
| Operating (loss) income from continuing operations |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Paper and packaging**)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Pulp and tissue**)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Wood products**)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate and other**)** |  |
| Consolidated operating (loss) income from continuing operations**)** |  |
| Interest expense, net |  |
| Non-service components of net periodic benefit cost**)** |  |
| (Loss) earnings before income taxes**)** |  |
| Income tax expense (benefit) |  |
| (Loss) earnings from continuing operations**)** |  |
| Earnings from discontinued operations, net of taxes |  |
| Net (loss) earnings |  |

---

Other costs by segment consist primarily of: input costs (including fiber, energy and chemicals), manufacturing costs (including hourly and salaried wages and fringe and plant overhead, such as utilities and taxes), freight & duty costs, maintenance related costs, spending-related costs (including depreciation and amortization of manufacturing assets, asset retirements, intangible assets and operating leases), and administrative, information technology, and selling costs (including primarily wages and fringe for salaried personnel and purchased services).

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOTE 21. SEGMENT DISCLOSURES (CONTINUED)**

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended <br>December 31,** | Year ended <br>December 31, | Year ended <br>December 31, |
|  | **2025** | 2024 | 2023 |
|  | **$** | $ | $ |
| Additions to property, plant and equipment |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Paper and packaging |  |  | 217 |
| &nbsp;&nbsp;&nbsp;&nbsp;Pulp and tissue |  |  | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;Wood products |  |  | 66 |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate and other |  |  | 13 |
| Consolidated additions to property, plant and equipment |  |  | 331 |
| &nbsp;&nbsp;&nbsp;&nbsp;Add (Deduct): Change in payables on capital projects**)** |  |  | 11 |
| Consolidated additions to property, plant and equipment <br> per Consolidated Statements of Cash Flows |  |  | 342 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended <br>December 31,** | Year ended <br>December 31, | Year ended <br>December 31, |
|  | **2025** | 2024 | 2023 |
|  | **$** | $ | $ |
| Geographic information |  |  |  |
| Sales |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;United States | **4901** | 5153 | 4983 |
| &nbsp;&nbsp;&nbsp;&nbsp;Canada | **729** | 756 | 775 |
| &nbsp;&nbsp;&nbsp;&nbsp;Asia | **740** | 723 | 686 |
| &nbsp;&nbsp;&nbsp;&nbsp;Europe | **345** | 316 | 349 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other foreign countries | **228** | 206 | 143 |
|  | **6943** | 7154 | 6936 |

---

---

| | | |
|:---|:---|:---|
|  | **December 31,** | December 31, |
|  | **2025** | 2024 |
|  | **$** | $ |
| Long-lived assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;United States | **1991** | 2178 |
| &nbsp;&nbsp;&nbsp;&nbsp;Canada | **1305** | 1631 |
|  | **3296** | 3809 |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**DECEMBER 31, 2025**

**(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)**

**NOT** **E 22.**

------

**RELATED PARTY TRANSACTIONS**

For the year ended December 31, 2025, the Company purchased $12 million (2024 and 2023 – nil) of electricity from an affiliated company and provided services of $8 million (2024 and 2023 – nil) to the same affiliated company. These costs are included, on a net basis, in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) under Cost of sales.

For the year ended December 31, 2025, the Company recognized $19 million of administrative expenses paid to an affiliated company (2024 – $22 million; 2023 – $28 million). These costs are included in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) under Selling, general and administrative expense.

For the year ended December 31, 2024, the Company purchased $7 million of wood fiber from Paper Excellence affiliates.

The Company has other receivables with affiliated companies of $33 million and $35 million at December 31, 2025 and December 31, 2024, respectively.

The Company has other payables with affiliated companies of $8 million and $7 million at December 31, 2025 and December 31, 2024, respectively.

The Company has notes receivable issued by PECHC, an affiliated company, of $64 million and nil at December 31, 2025 and December 31, 2024, respectively. The subject interest-bearing notes were issued as consideration for the transfer of certain power generation assets to PECHC through the creation and sale of a special purpose entity (see Note 3 "Acquisition and Sale of Businesses" for more details). Concurrently, the Company entered into agreements to provide services to, and make purchases from, the subject entity, on arm's length terms.

------

**<u>ITEM 9. CH</u><u>ANGES IN AND DISAGREEMENTS WITH ACCO</u>** **<u>UNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE</u>**

The Company has nothing to report under this item.

**<u>ITEM 9A. CONTROL</u><u>S AND PROCEDURES</u>**

*Evaluation of Disclosure Controls and Procedures*

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports under the Securities and Exchange Act of 1934, as amended ("Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of December 31, 2025, an evaluation was performed by members of management, at the direction and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as at December 31, 2025, our disclosure controls and procedures were effective.

*Management's Report on Internal Control over Financial Reporting*

Refer to Item 8, Financial Statements and Supplementary Data, for Management's Report on Internal Control Over Financial Reporting.

*Change in Internal Control over Financial Reporting*

There were no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting during the fourth quarter ended December 31, 2025.

**<u>ITEM 9B. OTHE</u><u>R INFORMATION</u>** 

The Company has nothing to report under this item.

**<u>ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS</u>**

Not applicable

**<u>PART</u> <u>III</u>**

**<u>ITEM 10. DIRECTORS, EXECUTIVE OF</u><u>FICERS AND CORPORATE GOVERNANCE</u>**

Information regarding our executive officers is presented in Item 1, Business, under the caption "Our Executive Officers".

Set forth in the table below is the list of our directors, together with certain biographical information, including their ages as of March 1, 2026.

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;Name | &nbsp;&nbsp;Age | &nbsp;&nbsp;Principal Occupation |
| &nbsp;&nbsp;Tom Shih | &nbsp;&nbsp;55 | &nbsp;&nbsp;Chief, Legal Affairs, Paper Excellence Canada Holdings Corporation |
| &nbsp;&nbsp;Hardi Wardhana | &nbsp;&nbsp;54 | &nbsp;&nbsp;Director, Global Head of M&A, Paper Excellence |

---

*Tom Shih* has been a director of the Company since November 30, 2021. Mr. Shih previously served as General Counsel for the Paper Excellence Group ("Group") and headed the legal department of the organization since 2011. In this capacity, he provided guidance to shareholder, executives and managers at all levels on all legal, corporate/commercial, regulatory, government affairs, compliance and strategic management matters relating to the Group and its various subsidiaries and affiliates. Currently he serves as Chief, Legal Affairs for Paper Excellence Canada Holdings Corporation. Mr. Shih holds several advanced degrees from the University of California, Los Angeles, including Juris Doctor (J.D.), Doctor of Environmental Science & Engineering (D.Env.), Master of Public Health (M.P.H.), and a Bachelor of Science in Biology. He is a licensed attorney with expertise in international, corporate, contracts, regulatory and environmental laws and regulations. Prior to his legal practice, Mr. Shih worked for over 5 years as an Environmental Scientist at the California Environmental Protection Agency, Water Resources Control Board.

------

*Hardi Wardhana* has been a director of the Company since November 30, 2021. Mr. Wardhana has been with the Paper Excellence Group since inception in 2006. He is currently a Director of Paper Excellence B.V., and the Global Head of M&A. Mr. Wardhana has been involved in all the M&A transactions within the Paper Excellence Group, overseeing a total of about US$8 billion in transaction value across Canada, France, Germany, Brazil and U.S. Mr. Wardhana previously worked at McKinsey & Co as a management consultant. He earned a Bachelor of Science in Mechanical Engineering from Columbia University, a Master of Science in Engineering-Economic Systems from Stanford University and a master's in finance from the London Business School.

**Code of Conduct and Ethics**

The Company has adopted a Code of Business Conduct and Ethics that is applicable to its directors and all employees, including the principal executive officer, the principal financial officer and the principal accounting officer, and which is available on the Corporation's website at *www.domtar.com*. Directors and employees are required to complete annually a mandatory online training program that includes a certification attesting to their adherence to the Code.

**<u>ITEM 11. EXECUT</u><u>IVE COMPENSATION</u>** 

**Key Compensation Decisions in 2025**

For the 2025 Annual Bonus Plan, no bonus was paid to participants. The performance metrics were weighted 70% on company EBITDA performance, 10% on Health & Safety and 20% on Productivity. The maximum payout opportunity was set at 150% of target to limit payout costs. The minimum was set at 50%. The targeted Adjusted EBITDA reflected the approved budgeted amount, and the threshold was calculated at 85% of the targeted Adjusted EBITDA and maximum calculated at 125%.

The 2025 Domtar Corporation Amended and Restated Long-Term Incentive Plan (LTIP) was comprised of non-equity awards, consisting of 50% Restricted Units that are service-based, which vest and settle in cash at the end of three years (in March of 2028), and 50% Performance Units, with payout opportunities ranging from 0% to 200% of target, which vest and settle in cash at the end of three years (in March 2028). The Performance Units have three tranches equally weighted at 25% with annual goals (for each of 2025, 2026, and 2027) and a fourth tranche based on the average of the actual 3-year results, also weighted at 25%. The maximum payout under the LTIP plan is 150%: (Max of 100% on Restricted Units x 50% weighting = 50%) + (Max of 200% on Performance Units x 50% weighting = 100%). Performance targets are determined each year at budget time. For the 2025 performance-based KPI, which included Year 1 of the 2025 Grant and Year 2 of the 2024 Grant, metrics included Leverage Ratio at year-end and Free Cash Flow, each weighted at 50%. A threshold for the Leverage Ratio was introduced, as opposed to the 2024 "all or nothing" methodology.

A Non-Qualified Deferred Compensation Plan was implemented for U.S. executives in 2024 to provide enhanced retirement savings opportunities for eligible executives beyond amounts allowed by the IRS to a 401(k) plan. The plan allows voluntary deferrals up to 50% of pretax base salary and up to 100% of annual bonus compensation, thereby lowering taxable compensation and delaying income tax payment to a later year. Participant deferrals, however, are subject to FICA tax when deferred, and are always 100% vested. None of the Named Executive Officers participated in the plan in 2025.

**Named Executive Officers**

Steve Henry continued to serve as President of the Paper & Packaging business unit and Principal Executive Officer ("PEO") of Domtar with the responsibility to sign SEC disclosures such as the Form 10-K and the certifications for the Forms 10-K and 10-Qs. In September 2024, Mr. Henry was appointed as a member of the Management Board.

Joseph Ragan continued to serve as EVP & Chief Financial Officer.

Richard Tremblay continued to serve as President of the Pulp & Tissue business unit.

Luc Thériault continued to serve as President of the Wood Products business unit.

For 2025, our Named Executive Officers ("NEOs") are:

---

| | |
|:---|:---|
| &nbsp;&nbsp;**Steve Henry** | &nbsp;&nbsp;Principal Executive Officer (PEO) / President, Paper & Packaging Business Unit |
| &nbsp;&nbsp;**Joe Ragan** | &nbsp;&nbsp;Executive Vice President & Chief Financial Officer (CFO) |
| &nbsp;&nbsp;**Richard Tremblay** | &nbsp;&nbsp;President, Pulp & Tissue Business Unit |
| &nbsp;&nbsp;**Luc Thériault** | &nbsp;&nbsp;President, Wood Products Business Unit |

---

**2025 Compensation Results**

Annual bonus awards as a percentage of target earned by our NEOs based on business results for 2025 were: 0% for Paper & Packaging; 0% for Pulp & Tissue; 0% for Wood Products; and 0% for the North America Corporate Center.

------

The status of the LTIP performance results are summarized below:

**<u>Domtar – LTIP Performance Units ("PUs"):</u>** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•2024 PUs – Second year awards banked at 0% (Year 2 results are 0% multiplied by one-fourth of the measurement period or 25%) for the Leverage Ratio and Free Cash Flow during FY2025. Both Performance Units (as adjusted for performance results) and Restricted Units will vest on December 31, 2026, and will be settled by March 15, 2027.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•2025 PUs – First year awards banked at 0% (Year 1 results are 0% multiplied by one-fourth of the measurement period or 25%) for the Leverage Ratio and Free Cash Flow during FY2025. Both Performance Units (as adjusted for performance results) and Restricted Units will vest on December 31, 2027, and will be settled by March 15, 2028.

**<u>Domtar – Legacy LTIP Performance Units ("PUs"):</u>** 

All previous outstanding equity awards have been paid out in their entirety.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•2023 PUs – Third year awards banked at 0% (Year 3 results are 0% multiplied by one-third of the measurement period or 33.33%) for Adjusted Cash Flow from Operating Activities and Kingsport Productivity Ramp performance during 2025. This completes the performance period for the 2023 LTIP PU award, resulting in a total payout of 57.81%. Both Performance Units and Restricted Units vested on December 31, 2025, and will be settled by March 15, 2026.

**<u>Resolute – Legacy LTIP Performance Share Units ("PSUs"):</u>** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•2023 PSUs - Granted on January 1, 2023, 2023 PSUs continue to vest over the 38-month vesting period from the grant date through February 28, 2026, and will settle at $20.50/unit, at the target level of performance (100%) for the PSUs. The Restricted Units vest ratably at 25% each December 1, with the third tranche vested and paid out as of December 1, 2025. The final and fourth tranche for the Restricted Units will vest on December 1, 2026.

Each PSU (whether vested or unvested and including any corresponding dividend equivalents) will provide a Contingent Value Right ("CVR"), in accordance with the merger agreement.

**Additional Information on Executive Compensation Program** 

**Compensation Decisions for 2025 – Principal Executive Officer ("PEO") Details** 

The table below shows target total direct compensation for Domtar's PEO.

Steve Henry: Domtar PEO/President, Paper & Packaging Business Unit – Target Total Direct Compensation:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | **Change** | **Change** |
| **Steve Henry** | **2024** | **2025** | **Dollars** | **&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Percent**  |
| Base Salary | $636000 | $667800 | $31800 | 5.0% |
| Annual Incentive Plan |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Target % of Base Salary | 80% | 80% |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Target Dollars | $508800 | $534240 | $25440 | 5.0% |
| Target Total Cash | $1144800 | $1202040 | $57240 | 5.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Actual Payout % of Target | 78.93% | 0% |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Actual Payout Dollars | $401596 | $0 | $(401596) | -100% |
| Actual Total Cash | $1037596 | $667800 | $(369796) | -35.6% |
| Long-Term Incentive (LTI) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Target % of Base Salary | 120% | 120% |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Target Dollars  | $763200 | $801360 | $38160 | 5.0% |
| Target Total Direct Compensation | $1908000 | $2003400 | $95400 | 5.0% |

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**Direct Compensation Mix – at Target** 

The 2025 target pay mix for our PEO and other NEOs is shown below and reflects pay changes made for 2025.

![img152551504_0.gif](img152551504_0.gif)

**Executive Compensation Decision-Making Process** 

**Process and Participants** 

The table below lists the primary roles of the key participants related to our executive compensation decision-making process:

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;**Process and Participants** | &nbsp;&nbsp;**Description of Role** |
| &nbsp;&nbsp;&nbsp;**Management Board** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Management Board provides strategic oversight, ensures corporate governance, and guides decision-making to achieve our mission of producing industry-leading forest products with a commitment to our employees, customers, and communities and a dedication to sustainability.  |
| &nbsp;&nbsp;&nbsp;**Human Resources Committee** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Established on November 1, 2024, the Human Resources Committee is tasked with overseeing the organization's human resources management strategies, policies, and practices. It ensures alignment with the organization's goals and compliance with relevant laws and regulations. |

---

**Benchmarking** 

**Use of Market Data** 

We use compensation market data as a reference for understanding the competitive pay positioning of each pay element and total compensation. Judgment is exercised about compensation decisions, which are reviewed for each executive officer in relation to a range of market data (*e.g*., 25<sup>th</sup>percentile, median, 75<sup>th</sup> percentile, etc.) and considered, along with internal and other external factors, in making executive pay decisions.

Our approach to executive pay benchmarking for most of our senior executives uses a mix of general and manufacturing industry data from WTW for companies that are similar in size to Domtar.

**Details of Executive Compensation Program** 

**Components of Executive Compensation** 

The principal components of our ongoing compensation program for our NEOs, and their primary purposes, are detailed below:

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| | |
|:---|:---|
| **Component** | **Purpose** |
| Base salaries | Deliver a competitive level of fixed cash pay intended to reflect the primary duties of the role |
| Annual cash bonuses | Offer an opportunity to earn additional pay based on achieving predetermined performance goals pursuant to Annual Bonus Plan  |
| Long-term incentives | Align executives' interests to stay focused on maximizing the Company's value over the long term through cash-based incentive vehicles  |
| Retirement and other health/welfare <br>benefits | Provide assistance with executive retirement needs, and security in case of possible illness, disability, or loss of life |

---

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| | |
|:---|:---|
| **Component** | **Purpose** |
| Perquisites | Provide limited business-related benefits  |
| Severance and Change- <br>in-Control provisions | Provide protection against termination of employment for reasons beyond the executives' control |

---

The following paragraphs describe our approach to each component in greater detail.

**Base Salaries** 

The Management Board considers whether to grant merit increases and/or market-based adjustments to our executives. Such increases are not always made annually, but rather are made periodically after considering several factors, including:

• competitive market pay levels derived from our benchmarking analyses;

• the executive's performance throughout the year, and whether his or her duties changed during the year; and

• the overall economic climate, and the Corporation's performance.

Base salaries in 2025 for our NEOs (in USD) were as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;**Name** | &nbsp;&nbsp;**Position** | &nbsp;&nbsp;**2024** | &nbsp;&nbsp;**2025** | &nbsp;&nbsp;**% Change** |
| &nbsp;&nbsp;Steve Henry | &nbsp;&nbsp;PEO / President, Paper & Packaging | &nbsp;&nbsp;$636000 | &nbsp;&nbsp;$667800 | &nbsp;&nbsp;5.0% |
| &nbsp;&nbsp;Joseph Ragan | &nbsp;&nbsp;CFO | &nbsp;&nbsp;$865862 | &nbsp;&nbsp;$865862 | &nbsp;&nbsp;0% |
| &nbsp;&nbsp;Richard Tremblay | &nbsp;&nbsp;President, Pulp & Tissue | &nbsp;&nbsp;$490000 | &nbsp;&nbsp;$507150 | &nbsp;&nbsp;3.5% |
| &nbsp;&nbsp;Luc Thériault | &nbsp;&nbsp;President, Wood Products | &nbsp;&nbsp;$450000 | &nbsp;&nbsp;$465750 | &nbsp;&nbsp;3.5% |

---

**Performance-Based Annual Bonuses** 

Annual cash bonuses focus our executive officers on achieving specific annual financial and operating results. These short-term incentives play a key role in ensuring that our total cash compensation opportunity remains competitive.

**Target awards.** Each NEO has a target bonus award for the plan year, expressed as a percentage of the actual base salary paid to the NEO during that year. For 2025, short-term incentive targets were as follows:

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;**Name** | &nbsp;&nbsp;**Position** | &nbsp;&nbsp;**Target as Percent of Salary** |
| &nbsp;&nbsp;&nbsp;Steve Henry | PEO / President, Paper & Packaging | 80% |
| &nbsp;&nbsp;&nbsp;Joseph Ragan | CFO | 45% |
| &nbsp;&nbsp;&nbsp;Richard Tremblay | President, Pulp & Tissue | 100% |
| &nbsp;&nbsp;&nbsp; Luc Thériault | President, Wood Products | 80% |

---

**<u>Annual Bonus Plan ("ABP"):</u>**

Based on performance, actual awards earned can vary as a percentage of target from below threshold of 0% (if performance is below threshold for all measures) to a maximum of 150%. The targeted Adjusted EBITDA reflects the approved budgeted amount, the Threshold is calculated at 85% of the target Adjusted EBITDA and the maximum is calculated at 125% of the target Adjusted EBITDA. Achieving results at the threshold performance for any measure will result in a payout equal to 50% of the target award allocated to that measure. Between performance levels, award payouts will be interpolated on a straight-line basis. The ABP also has an Individual Performance factor ("IPF") that is subject to employees' meeting their individual objectives. The IPF can vary between 0% to 150%. The maximum bonus payout, meaning the total of the KPI and an IPF, that can be earned, is capped at 185% of the bonus budget at target.

**Performance measures.** The ABP measures results for Key Performance Indicators ("KPIs") that we view as critical to positioning our business for the future.

The performance measures applicable for our 2025 program are described below.

**<u>Fixed Measures</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•**EBITDA.** We view EBITDA as a leading indicator of our ability to successfully manage our business. This measure is defined as earnings before interest, taxes, depreciation and amortization, and excludes certain one-time or nonrecurring items as further described in our ABP.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•**Health and Safety.** Providing a safe working environment for our employees is critical to our business and directly correlated with efficient operations and manufacturing excellence. This measure focuses on the degree to which we reduce the number of occurrences that must be reported to the Occupational Safety and Health Agency ("OSHA").

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•**Productivity.** Increasing our productivity levels is an indicator of the efficiency with which we deploy our assets. This item measures productivity at our pulp, paper, packaging mills and our wood products business relative to the prior year's performance.

**Performance goals and results achieved.** The following charts present each KPI, its weighting, the performance goals established at the beginning of 2025, results achieved for each measure, and the related payout earned as a percentage of the target award. The Management Board, in exercising its judgment regarding the appropriate level of threshold, target and maximum goals for the 2025 performance measures, considered a number of factors that included the following (without any specific weighting):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Historical results for the performance measure;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Internally forecasted results for the performance measure as determined through our annual budgeting process; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Expected degree of difficulty and likelihood of achieving the minimum, target and maximum goals.

ABP goals are reviewed on an annual basis. Financial metrics, such as EBITDA, are established in accordance with our annual budget, based on business expectations for the coming year.

Each NEO's performance is considered against key strategic initiatives, operational efficiency, and leadership goals established at the beginning of 2025.

The Company did not achieve the applicable threshold performance metrics for the 2025 performance period; accordingly, no performance-based bonuses were earned or paid for such period.

**Long-Term Cash Incentives** 

We grant long-term cash incentive awards to align with maximizing long-term cash generation, long-term stability and delivering new growth opportunities, while operating the Company in a sustainable and responsible manner.

The purpose of the Long-Term Incentive Plan is to promote the interests of the Company and its Subsidiaries by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Attracting and retaining executive personnel and other key employees for future services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Motivating executive personnel and other key employees by means of performance-related incentives designed to achieve long-range performance goals; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Enabling such individuals to participate in the long-term growth and financial success of the Company.

The 2025 LTIP awards consist of two types of vehicles, namely, Performance Units and Restricted Units. LTIP awards vest at the end of a three-year period, and payment is generally conditional on continued employment until the vesting date. Each unit to be paid is worth $1 in the participant's local currency.

**Overall Target awards.** Target long-term values for 2025 awards to our NEOs are shown in the following chart:

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| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;**Name** |  | &nbsp;&nbsp;&nbsp;**Target Award as a % of Base Salary** | &nbsp;&nbsp;&nbsp;**Target Award as a % of Base Salary** |  |
| &nbsp;&nbsp;&nbsp;**Name** | &nbsp;&nbsp;&nbsp;**Position** | &nbsp;&nbsp;&nbsp;**2024** | &nbsp;&nbsp;&nbsp;**2025** | &nbsp;&nbsp;&nbsp;**% Change**  |
| &nbsp;&nbsp;&nbsp;Steve Henry | PEO / President, Paper & Packaging | 120% | 120% | 0% |
| &nbsp;&nbsp;&nbsp;Joseph Ragan | CFO | 15% | 45% | 30% |
| &nbsp;&nbsp;&nbsp;Richard Tremblay | President, Pulp & Tissue  | 125% | 125% | 0% |
| &nbsp;&nbsp;&nbsp;Luc Thériault | President, Wood Products | 120% | 120% | 0% |

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**<u>Long-Term Incentives ("LTIP"):</u>**

**Award Mix.** The LTIP for 2025 continued to use a portfolio approach, as shown below.

**Performance Units: 50% Restricted Units: 50%**

![img152551504_1.gif](img152551504_1.gif)

Approximately 234 of our managers participated in our cash LTIP program for 2025. The grants awarded to our managers generally comprised of RUs and PUs weighted 50% and 50%, respectively.

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Additional information regarding the terms of our PU and RU awards is provided in the narrative accompanying the Grants of Plan-Based Awards Table.

**Performance Measure Determinations.** The performance measures for the Year 1 (2025) of our PUs are Leverage Ratio, weighted at 50% and Free Cash Flow, also weighted at 50%. The 2025 PU performance will be evaluated at the end of each individual year in the 3-year period as well as at the end of the 3-year period based on the average performance over that period. Each performance period may have separate goals, determined each year by the Plan Administrator. PUs can be earned based on the achievement against those goals. All earned PUs are banked for payout in the first quarter of 2028.

**PU Performance Periods.** No PU awards are earned when performance is below what is deemed to be performance threshold. Payout opportunity ranges from 0% to 200% of target based on performance level achieved. PUs earned for the performance periods vest in full at the end of the entire three-year period. Linear interpolation applied to determine awards earned for results between performance levels of Threshold and Target, and between Target and Maximum.

**2025 PU Performance Measures**

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| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;**2023 LTIP Grant – Year 3** | | &nbsp;&nbsp;&nbsp;**2025 Domtar Results** | &nbsp;&nbsp;&nbsp;**Payout as % of Target** |
| &nbsp;&nbsp;&nbsp;**2023 LTIP Grant – Year 3** | &nbsp;&nbsp;&nbsp;**Weight**<br>&nbsp;&nbsp;&nbsp;**100%** | &nbsp;&nbsp;&nbsp;**2025 Domtar Results** | &nbsp;&nbsp;&nbsp;**Payout as % of Target** |
| &nbsp;&nbsp;&nbsp;Adjusted Cash Flow from Operating activities | &nbsp;&nbsp;&nbsp;80% | &nbsp;&nbsp;&nbsp;Between Threshold | &nbsp;&nbsp;&nbsp;0.00% |
| &nbsp;&nbsp;&nbsp;Packaging EBITDA | &nbsp;&nbsp;&nbsp;20% | &nbsp;&nbsp;&nbsp;Below Threshold | &nbsp;&nbsp;&nbsp;0.00% |

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For the 2023 LTIP PU Awards, Year 1 resulted in a banked percentage of 33.54% (100.62% x 33.33%) and Year 2 resulted in a banked percentage of 24.27% (72.82% x 33.33%) of the overall 2023 LTIP PU Awards. Year 3 resulted in a banked percentage of 0% (0% x 33.33%). This results in a total payout of 57.81% for the legacy Domtar only 2023 LTIP PU Awards, which will vest and pay out in March 2026.

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| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;**2024 LTIP Grant – Year 2**<br>**2025 LTIP Grant – Year 1** | | &nbsp;&nbsp;&nbsp;**2025 Domtar Results** | &nbsp;&nbsp;&nbsp;**Payout as % of Target** |
| &nbsp;&nbsp;&nbsp;**2024 LTIP Grant – Year 2**<br>**2025 LTIP Grant – Year 1** | &nbsp;&nbsp;&nbsp;**Weight**<br>&nbsp;&nbsp;&nbsp;**100%** | &nbsp;&nbsp;&nbsp;**2025 Domtar Results** | &nbsp;&nbsp;&nbsp;**Payout as % of Target** |
| &nbsp;&nbsp;&nbsp;Leverage Ratio  | &nbsp;&nbsp;&nbsp;50% | &nbsp;&nbsp;&nbsp;Below Threshold | &nbsp;&nbsp;&nbsp;0.00% |
| &nbsp;&nbsp;&nbsp;Free Cash Flow | &nbsp;&nbsp;&nbsp;50% | &nbsp;&nbsp;&nbsp;Below Threshold | &nbsp;&nbsp;&nbsp;0.00% |

---

For the 2024 LTIP PU Awards, Year 1 resulted in a banked percentage of 0% (0% x 25%) and Year 2 resulted in a banked percentage of 0% (0% x 25%) of the overall 2024 LTIP PU Awards.

For the 2025 LTIP PU Awards, Year 1 resulted in a banked percentage of 0% (0% x 25%) of the overall 2025 LTIP PU Awards.

**Employee Benefits and Perquisites** 

As part of a competitive total compensation program, we also offer our executives the ability to participate in customary employee benefit programs as outlined in the table below.

**<u>Domtar – Employee Benefits and Perquisites:</u>**

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| | | |
|:---|:---|:---|
| **Types of benefits** | **Underlying rationale for offering these <br>benefits** | **Description of benefits provided** |
| **Retirement Benefits** | Attract and retain the highest caliber executive talent by: <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•ensuring our overall compensation is competitive, and <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•providing our executives with a baseline level of financial security. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax-qualified plans: <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Defined Contribution Pension Plan for Non-Unionized Employees of Resolute Forest Products (Canadian tax-qualified pension plan that covers certain Canadian salaried employees of Domtar). <br>- Mr. Thériault participate in this plan. <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Domtar U.S. Salaried 401(k) plan (U.S. tax-qualified defined contribution plan available to all U.S. salaried employees of Domtar). <br>- Messrs. Ragan, Tremblay and Henry participate in this plan.  |

---

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| | | |
|:---|:---|:---|
| **Types of benefits** | **Underlying rationale for offering these <br>benefits** | **Description of benefits provided** |
|  |  | Defined Contributions Supplemental Executive Retirement Plan ("DC SERP") for Designated Executives of Domtar Corporation and its Affiliates ("DC SERP"): <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Provided to certain officers and key employees. <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The DC SERP is designed to provide retirement benefits for earnings above fiscal limits on registered and tax-qualified retirement plans in Canada and the U.S. |
|  |  | Nonqualified Deferred Compensation Plan<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Provided to certain officers and key employees.<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Permits elective deferrals of eligible compensation above amounts otherwise permitted under tax-qualified plans.<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•None of the NEOs currently have elected to participate |
| **Health and Welfare Benefits** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Offer a competitive package <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Provide benefits that will enable our executives to more fully focus on the demands of running our business. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Medical & dental benefits <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Life, accidental death and dismemberment coverage <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Long-term disability insurance coverage <br>Benefits applicable to our NEOs vary based on whether they are based in the U.S. or in Canada. |
| **Executive Perquisites** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Provide flexibility to our executives <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Increase travel efficiencies to ensure more productive use of his time and a greater focus on Domtar-related activities. | For a description of the perquisites provided, see the footnote disclosure to the All Other Compensation column in the Summary Compensation Table that appears later in this statement. <br>We do not provide tax gross***-***ups on any perquisites other than taxable relocation expenses. |

---

**<u>Employee Benefits and Executive Perquisites</u>**

For Messrs. Tremblay and Thériault: Designed to give the executive officers flexibility in selecting the perquisites that are suitable to their needs for a given year, provide additional medical coverage and, if applicable, limit the executive's tax liability to the liability in the executive's home country. The named executive officers are responsible for any tax consequences related to their use and receipt of the perquisites. A fixed annual allowance is offered to cover expenses for fiscal and financial advice, and such other perquisites as chosen by the executive. If an executive is not covered by the Company's frequent business traveler's policy, then the annual allowance may also be used for tax preparation fees. A fixed allowance balances the market practice of providing a certain level of perquisites with controlling costs to ensure the perquisites are not excessive.

If any of the named executive officers are subject to taxation in both Canada and the U.S. as a result of their business travel, he is provided a payment under the Company's tax equalization policy generally equal to the difference between his respective home tax liability and actual taxes paid, as well as a gross-up on that difference.

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**Employment Agreements and Other Post-Termination Protections** 

The material terms of the employment contracts described below and benefits provided under the named severance plans are described and quantified in the section entitled "Employment Agreements and Potential Payments upon Termination or a Change in Control" later in this statement.

On January 8, 2020, Mr. Ragan entered into an employment agreement with Paper Excellence. Pursuant to this agreement, if the Company terminates his employment for reasons other than "for Cause", Mr. Ragan will receive a severance payment equal to 6 months of base pay plus one month of base pay for each completed year of service with the Company at the time of separation; provided, however, that the maximum severance pay benefit payable shall not exceed 12 month's base pay. To be eligible for severance pay, Mr. Ragan must execute, and not thereafter revoke, a release of claims he might otherwise have against the Company or any of its affiliates in a form acceptable to the Company. In addition, Mr. Ragan may resign for "Good Reason" and his resignation and termination of employment will be treated for purposes of his entitlement to severance pay as though he had been terminated by the Company other than for Cause. In November 2024, Mr. Ragan was granted a special Long-Term Incentive award in the amount of $500,000 payable in March 2027 contingent upon achievement of specific quarterly KPIs.

On February 5, 2024, Mr. Tremblay entered into an employment agreement with Paper Excellence for his position of President, Pulp & Tissue, including a second retention bonus agreement. Following the Merger effective date of March 1, 2023, he entered into the first retention bonus agreement as a reward for his contribution to the Company's success and to provide an incentive for him to remain with the Company (or its successor). Under the first retention bonus agreement, Mr. Tremblay may receive a retention bonus, equal to 50% of his base salary for each of the next two years. The first-year retention bonus vested on the first anniversary of the Merger effective date or March 1, 2024, and the second-year retention bonus will vest on the second anniversary of the Merger effective date or March 1, 2025, provided that he is employed by the Company on such dates. Under the second retention bonus agreement, Mr. Tremblay may receive USD $200,000 in March 2026, provided that he is employed by the Company on such date. Also as of the Merger effective date, he will retain all rights and remain subject to all obligations under the 2022 letter agreement between him and Resolute amending certain changes to the terms and conditions of his entitlements under Resolute's Severance Policy – Chief Executive Officer and Direct Reports ("CEO/DR Severance Policy"). This CEO/DR Severance Policy became effective once the transactions contemplated by the Merger Agreement were completed and following the closing in accordance with the terms of the Merger Agreement, as it relates to a change in control.

Mr. Henry entered into a retention agreement in 2023; however, this was not executed in the same year. Thus, in 2024, his retention bonus agreement will consist of a USD $250,000 payment for each of the next four years. The retention bonus will vest on July 1 of each year from 2025 to 2028, provided that he is employed by the Company as of respective such date. Should Mr. Henry leave the Paper Excellence Group before the fourth anniversary, he will forfeit the Company match and be obligated to repay any retention payments. Mr. Henry is also eligible to participate in Domtar's Severance Program for Management Committee Members, which is a severance program intended to assure that members are treated fairly in the event their employment is terminated.

As of his hire date, Mr. Thériault became eligible to receive a retention bonus over three years. The bonus consists of USD $300,000 per year payable in each of August 2025, August 2026, and August 2027 provided that he remains actively employed with the Company for the applicable year and through to the payment date. Mr. Thériault is entitled to a severance of 12 months of base salary, plus an additional 3 months of base salary for each full year of continuous service as a member of the Management Committee, up to a maximum of 24 months of base salary. He is ineligible for the severance allowance if terminated for Cause as outlined in his employment agreement.

**Related Policies and Considerations** 

**<u>Domtar – Related Policies and Considerations</u>**

**Forfeiture of Awards for Misconduct ("Clawback")** 

If a participant in the Domtar Corporation Amended and Restated Long-Term Incentive Plan knowingly or grossly negligently engages in financial reporting misconduct, then all awards in the 12 months prior to the date the misleading financial statements were issued, as well as any awards that vested based on the misleading financial statements, will be disgorged to the Corporation. In addition, the Corporation may cancel or reduce, or require a participant to forfeit and disgorge to the Corporation or reimburse the Corporation for, any awards granted or vested, and bonus granted or paid, and any gains earned or accrued, due to the vesting or settlement of awards, to the extent permitted or required by, or pursuant to any Corporation policy implemented as required by, applicable law or regulation rules as may from time to time be in effect.

**Timing of Long-Term Incentive Grants** 

The Corporation's practice is to make all annual long-term award grants once per year.

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**<u>Resolute – Related Policies and Considerations</u>** 

**Recoupment Policy** 

The Company has maintained a recoupment policy since 2013, which applies to the named executive officers and all other current and former Section 16 officers of the Company. In general, excess incentive and/or equity compensation is subject to recoupment if the Company is required to restate its financial statements due to material noncompliance with a financial reporting requirement, whether or not as a result of misconduct by one or more officers covered by the policy. The Company's recoupment policy applies a look back to recoup such compensation received during the three-year period before the date on which the Company is required to prepare a restatement. The Company also has discretion to recoup incentive and/or equity compensation paid to an officer who engages in misconduct in the performance of his or her duties, regardless of whether the misconduct involves a restatement of its financial statements. The Company has the discretion to make all determinations under the policy

**Risk Assessment of Compensation Programs, Policies and Practices** 

The Company has conducted a risk assessment of its 2025 compensation programs, policies and practices for all employees, including the Named Executive Officers, to determine whether they create a reasonable likelihood of a material adverse effect on the Company. Based on this assessment, which also considered the control environment and approval processes in place, the Company concluded that its compensation programs, policies and practices do not encourage excessive or unnecessary risk-taking and are not reasonably likely to have a material adverse effect on the Company. The Company's findings were reported to, and discussed by, the Human Resources Committee.

**Board of Directors Report** 

We have reviewed and discussed the foregoing Part III, Item 10 and Item 11 with management as required by Item 402(b) of Regulation S-K. We approve of the inclusion of Part III, Item 10 and Item 11in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2025.

Report submitted as of March 30, 2026 by:

**THE BOARD OF DIRECTORS OF DOMTAR CORPORATION:** 

Tom Shih

Hardi Wardhana

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**EXECUTIVE COMPENSATION** 

**Summary Compensation Table and Narrative Disclosure** 

The table and footnotes below describe the total compensation paid or awarded to or earned by the Corporation's Named Executive Officers ("NEOs").

**Summary Compensation Table**

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;Name and Principal<br>Position | &nbsp;&nbsp;&nbsp;Year<sup>(1)</sup> | &nbsp;&nbsp;&nbsp;Salary<sup>(2)</sup> | &nbsp;&nbsp;&nbsp;Bonus<sup>(3)</sup> | &nbsp;&nbsp;&nbsp;Stock<br>Awards<sup>(4)</sup> | &nbsp;&nbsp;&nbsp;Non-Equity<br>Incentive<br>Plan<br>Compen-<br>sation<sup>(5)</sup> | &nbsp;&nbsp;&nbsp;Change in<br>Pension Value<br>and<br>Non-qualified<br>Deferred<br>Compensation<br>Earnings<sup>(6)</sup> | &nbsp;&nbsp;&nbsp;All<br>Other<br>Compen-<br>sation<sup>(7)</sup> | &nbsp;&nbsp;&nbsp;Total |
|  |  | &nbsp;&nbsp;&nbsp;($) | &nbsp;&nbsp;&nbsp;($) | &nbsp;&nbsp;&nbsp;($) | &nbsp;&nbsp;&nbsp;($) | &nbsp;&nbsp;&nbsp;($) | &nbsp;&nbsp;&nbsp;($) | &nbsp;&nbsp;&nbsp;($) |
| &nbsp;&nbsp;&nbsp;**Steve Henry**<br>PEO / President, Paper & Packaging | &nbsp;&nbsp;&nbsp;2025 | &nbsp;&nbsp;&nbsp;667800 | &nbsp;&nbsp;&nbsp;250000 | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;381600 | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;134795 | &nbsp;&nbsp;&nbsp;1434195 |
| &nbsp;&nbsp;&nbsp;**Steve Henry**<br>PEO / President, Paper & Packaging | &nbsp;&nbsp;&nbsp;2024 | &nbsp;&nbsp;&nbsp;620077 | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;851862 | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;113999 | &nbsp;&nbsp;&nbsp;1585938 |
| &nbsp;&nbsp;&nbsp;**Steve Henry**<br>PEO / President, Paper & Packaging | &nbsp;&nbsp;&nbsp;2023 | &nbsp;&nbsp;&nbsp;548077 | &nbsp;&nbsp;&nbsp;300000 | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;581770 | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;117904 | &nbsp;&nbsp;&nbsp;1547751 |
| &nbsp;&nbsp;&nbsp;**Joseph Ragan**<br>CFO | &nbsp;&nbsp;&nbsp;2025 | &nbsp;&nbsp;&nbsp;865863 | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;64940 | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;127693 | &nbsp;&nbsp;&nbsp;1058496 |
| &nbsp;&nbsp;&nbsp;**Joseph Ragan**<br>CFO | &nbsp;&nbsp;&nbsp;2024 | &nbsp;&nbsp;&nbsp;727429 | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;253529 | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;127709 | &nbsp;&nbsp;&nbsp;1108667 |
| &nbsp;&nbsp;&nbsp;**Joseph Ragan**<br>CFO | &nbsp;&nbsp;&nbsp;2023 | &nbsp;&nbsp;&nbsp;940040 | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;78324 | &nbsp;&nbsp;&nbsp;1018364 |
| &nbsp;&nbsp;&nbsp;**Richard Tremblay**<br>President, Pulp and Tissue | &nbsp;&nbsp;&nbsp;2025 | &nbsp;&nbsp;&nbsp;507150 | &nbsp;&nbsp;&nbsp;245000 | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;306250 | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;87720 | &nbsp;&nbsp;&nbsp;1146120 |
| &nbsp;&nbsp;&nbsp;**Richard Tremblay**<br>President, Pulp and Tissue | &nbsp;&nbsp;&nbsp;2024 | &nbsp;&nbsp;&nbsp;482411 | &nbsp;&nbsp;&nbsp;244766 | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;416857 | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;80159 | &nbsp;&nbsp;&nbsp;1224193 |
| &nbsp;&nbsp;&nbsp;**Richard Tremblay**<br>President, Pulp and Tissue | &nbsp;&nbsp;&nbsp;2023 | &nbsp;&nbsp;&nbsp;402197 | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;492676 | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;367296 | &nbsp;&nbsp;&nbsp;1262169 |
| &nbsp;&nbsp;&nbsp;**Luc Thériault**<br>President, Wood Products | &nbsp;&nbsp;&nbsp;2025 | &nbsp;&nbsp;&nbsp;465750 | &nbsp;&nbsp;&nbsp;638849 | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;270000 | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;74346 | &nbsp;&nbsp;&nbsp;1448945 |
| &nbsp;&nbsp;&nbsp;**Luc Thériault**<br>President, Wood Products | &nbsp;&nbsp;&nbsp;2024 | &nbsp;&nbsp;&nbsp;188788 | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;68780 | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;18123 | &nbsp;&nbsp;&nbsp;275691 |
| &nbsp;&nbsp;&nbsp;**Luc Thériault**<br>President, Wood Products | &nbsp;&nbsp;&nbsp;2023 | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;N/A | &nbsp;&nbsp;&nbsp;N/A |

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(1) Executives that were not NEOs in 2023 will not reflect compensation information in the respective years in the Summary Compensation Table.

(2) This column reflects actual base salaries paid in 2025. For Mr. Theriault, his 2024 base salary represents his partial year with Domtar.

(3) This column reflects retention bonuses earned and paid in the year indicated.

(4) As per the Merger agreement RSUs and PSUs had a grant share price of $21.43/unit.

(5) This column represents:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)There was no actual cash bonuses earned under Domtar's Annual Incentive Plan based on the 2025 performance level achieved. See "Performance-Based Annual Bonuses" for a discussion of the target performance levels.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)The actual cash value of the RUs awarded in 2025 and the value of the PUs awarded in 2025 achieved in Year 1 that are considered 'banked', are payable under the Long-Term Incentive Plan terms after completion of the 3-Year vesting schedule, in March 2028. For RUs, the amount to be paid is as follows: Mr. Henry is $381,600, Mr. Ragan is $64,940, Mr. Tremblay is $306,250 and Mr. Thériault is $270,000. For PUs, the 2025 Year 1 banked amount is 0%.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)The value of the PUs awarded in 2024 achieved in Year 2 of the 3-Year performance measurement period that are considered 'banked', are payable under the Long-Term Incentive Plan terms after completion of the 3-Year vesting schedule, in March 2027. For 2024 Year 2 the banked amount is 0%.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)For Mr. Henry: The value of the PUs awarded in 2023 achieved in Year 3 of the 3-Year performance measurement period that are considered 'banked', are payable under the Long-Term Incentive Plan terms after completion of the 3-Year vesting schedule, in March 2026. For 2023 Year 3 the banked amount is 0%.

(6) This column represents the actuarial increase in the applicable year in the pension value of the defined benefit retirement plans in which each eligible NEO participates. Mssrs. Henry, Ragan, Tremblay, and Thériault do not participate in a defined benefit retirement plan. As a result, N/A is reflected for them.

(7) Amounts shown in the "All Other Compensation" column include the following (for 2025 only):

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;Name | Annual Allowance<sup>(a)</sup> | &nbsp;&nbsp;&nbsp;&nbsp;Corporation<br>Contributions<br>to Defined<br>Contribution<br>Plans<sup>(b)</sup> | &nbsp;&nbsp;&nbsp;&nbsp;Corporation<br>Paid<br>Medical<br>Exams<sup>(c)</sup> | &nbsp;&nbsp;&nbsp;&nbsp;Personal Use of<br>Corporate<br>Transportation<sup>(d)</sup><br>| &nbsp;&nbsp;&nbsp;&nbsp;Corporation<br>Paid<br>Insurance<br>Premiums<sup>(e)</sup> | &nbsp;&nbsp;&nbsp;&nbsp;Total |
|  | ($) | &nbsp;&nbsp;&nbsp;&nbsp;($) | &nbsp;&nbsp;&nbsp;&nbsp;($) | &nbsp;&nbsp;&nbsp;&nbsp;($) | &nbsp;&nbsp;&nbsp;&nbsp;($) | &nbsp;&nbsp;&nbsp;&nbsp;($) |
| &nbsp;&nbsp;&nbsp;&nbsp;Steve Henry | - | &nbsp;&nbsp;&nbsp;&nbsp;116086 | &nbsp;&nbsp;&nbsp;&nbsp;4800 | &nbsp;&nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;&nbsp;13909 | &nbsp;&nbsp;&nbsp;&nbsp;134795 |
| &nbsp;&nbsp;&nbsp;&nbsp;Joseph Ragan | - | &nbsp;&nbsp;&nbsp;&nbsp;95582 | &nbsp;&nbsp;&nbsp;&nbsp;6000 | &nbsp;&nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;&nbsp;26111 | &nbsp;&nbsp;&nbsp;&nbsp;127693 |
| &nbsp;&nbsp;&nbsp;&nbsp;Richard Tremblay | 12000 | &nbsp;&nbsp;&nbsp;&nbsp;57780 | &nbsp;&nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;&nbsp;17940 | &nbsp;&nbsp;&nbsp;&nbsp;87720 |
| &nbsp;&nbsp;&nbsp;&nbsp;Luc Thériault | 12000 | &nbsp;&nbsp;&nbsp;&nbsp;53057 | &nbsp;&nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;&nbsp;905 | &nbsp;&nbsp;&nbsp;&nbsp;8384 | &nbsp;&nbsp;&nbsp;&nbsp;74346 |

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For purposes of this table, amounts paid in Canadian dollars were converted to U.S. dollars at the average prevailing spot exchange rate (0.7154).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)For Mr. Tremblay, an annual lump sum allowance is provided to cover personal transportation, fiscal/financial advice, etc.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)US: Company contributions were made to the Domtar U.S. Salaried 401(k) plan for Messrs. Henry ($35,000), Ragan ($35,000) and Tremblay ($35,000), and to the DC SERP for Designated Executives of Domtar Corporation and its Affiliates for Messrs. Henry ($81,086), Ragan ($70,573) and Tremblay ($30,681). Canada: Company contributions were made to the Defined Contribution Pension Plan for Non-Unionized Employees of Resolute Forest Products for Mr. Thériault ($12,093) and to the DC SERP for Designated Executives of Domtar Corporation and its Affiliates for Mr. Thériault ($40,964).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Mr,Thériault was not eligible for the Canadian Medical program, Medysis, which was discontinued as at March 31, 2024.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)For Mr. Thériault, the amounts represent the cost of Company-paid parking.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)Represents the cost of Company-paid health, welfare, disability, life, and accidental death and dismemberment insurance.

**Grants of Plan-Based Awards Table**

During 2025, the NEOs received the following types of plan-based awards: –

*Annual Bonus Plan* – Domtar's ABP is a cash-based incentive plan based on achieving pre-established annual targets.

For each plan year, a specified percentage of each bonus award is based upon the performance objectives for that plan year. Each performance objective has an associated threshold level that must be achieved for any of the bonus award associated with such objective to be paid. The maximum bonus award that could be paid under the plan framework is determined by the Plan Administrator, subject to any individual or aggregate maximum bonus amount limits established by the Plan Administrator or Management Board. There is no payment under the ABP for performance that does not meet the threshold level. The actual amount paid under the ABP for 2025 is set forth in the "Non-Equity Incentive Plan Compensation" column of the Summary Compensation Table.

*Long-Term Incentive Plan* – The following non-equity awards were granted to current NEOs in 2025 as units under the Domtar Corporation Amended and Restated Long-Term Incentive Plan ("LTIP"):

*RUs* – RUs or serviced-based awards were granted to the NEOs on January 1, 2025, under Domtar's LTIP.

*PUs* – PUs or performance-based awards were granted to the NEOs on January 1, 2025, under Domtar's LTIP.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp; <br>Name | &nbsp;&nbsp;&nbsp; <br>Grant Type |  | &nbsp;&nbsp;&nbsp; <br>Grant Date | &nbsp;&nbsp;&nbsp; <br>Estimated Possible Payouts<br> Under Non-Equity Incentive Plan Awards<sup>(1)</sup> | &nbsp;&nbsp;&nbsp; <br>Estimated Possible Payouts<br> Under Non-Equity Incentive Plan Awards<sup>(1)</sup> | &nbsp;&nbsp;&nbsp; <br>Estimated Possible Payouts<br> Under Non-Equity Incentive Plan Awards<sup>(1)</sup> |
| &nbsp;&nbsp;&nbsp; <br>Name | &nbsp;&nbsp;&nbsp; <br>Grant Type | &nbsp;&nbsp;&nbsp; 

# of Units Awarded | &nbsp;&nbsp;&nbsp; <br>Grant Date | &nbsp;&nbsp;&nbsp; <br>Threshold | &nbsp;&nbsp;&nbsp; <br>Target | &nbsp;&nbsp;&nbsp; <br>Max |
|  |  |  |  | &nbsp;&nbsp;&nbsp;$ | &nbsp;&nbsp;&nbsp;$ | &nbsp;&nbsp;&nbsp;$ |
| &nbsp;&nbsp;&nbsp;Steve Henry | &nbsp;&nbsp;&nbsp;ABP | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;267120 | &nbsp;&nbsp;&nbsp;534240 | &nbsp;&nbsp;&nbsp;801360 |
|  | &nbsp;&nbsp;&nbsp;RUs | &nbsp;&nbsp;&nbsp;381600 | &nbsp;&nbsp;&nbsp;1/1/25 | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;381600 | &nbsp;&nbsp;&nbsp;- |
|  | &nbsp;&nbsp;&nbsp;PUs | &nbsp;&nbsp;&nbsp;381600 | &nbsp;&nbsp;&nbsp;1/1/25 | &nbsp;&nbsp;&nbsp;190800 | &nbsp;&nbsp;&nbsp;381600 | &nbsp;&nbsp;&nbsp;763200 |
| &nbsp;&nbsp;&nbsp;Joseph Ragan | &nbsp;&nbsp;&nbsp;ABP | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;194819 | &nbsp;&nbsp;&nbsp;389638 | &nbsp;&nbsp;&nbsp;584457 |
|  | &nbsp;&nbsp;&nbsp;RUs | &nbsp;&nbsp;&nbsp;64940 | &nbsp;&nbsp;&nbsp;1/1/25 | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;64940 | &nbsp;&nbsp;&nbsp;- |
|  | &nbsp;&nbsp;&nbsp;PUs | &nbsp;&nbsp;&nbsp;64940 | &nbsp;&nbsp;&nbsp;1/1/25 | &nbsp;&nbsp;&nbsp;32470 | &nbsp;&nbsp;&nbsp;64940 | &nbsp;&nbsp;&nbsp;129880 |
| &nbsp;&nbsp;&nbsp;Richard Tremblay | &nbsp;&nbsp;&nbsp;ABP | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;253575 | &nbsp;&nbsp;&nbsp;507150 | &nbsp;&nbsp;&nbsp;760725 |
|  | &nbsp;&nbsp;&nbsp;RSUs | &nbsp;&nbsp;&nbsp;306250 | &nbsp;&nbsp;&nbsp;1/1/25 | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;306250 | &nbsp;&nbsp;&nbsp;- |
|  | &nbsp;&nbsp;&nbsp;PSUs | &nbsp;&nbsp;&nbsp;306250 | &nbsp;&nbsp;&nbsp;1/1/25 | &nbsp;&nbsp;&nbsp;153125 | &nbsp;&nbsp;&nbsp;306250 | &nbsp;&nbsp;&nbsp;612500 |
| &nbsp;&nbsp;&nbsp;Luc Thériault | &nbsp;&nbsp;&nbsp;ABP | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;186300 | &nbsp;&nbsp;&nbsp;372600 | &nbsp;&nbsp;&nbsp;558900 |
|  | &nbsp;&nbsp;&nbsp;RSUs | &nbsp;&nbsp;&nbsp;270000 | &nbsp;&nbsp;&nbsp;1/1/25 | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;270000 | &nbsp;&nbsp;&nbsp;- |
|  | &nbsp;&nbsp;&nbsp;PSUs | &nbsp;&nbsp;&nbsp;270000 | &nbsp;&nbsp;&nbsp;1/1/25 | &nbsp;&nbsp;&nbsp;135000 | &nbsp;&nbsp;&nbsp;270000 | &nbsp;&nbsp;&nbsp;540000 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)These columns consist of non-equity incentive awards under Domtar's ABP and Domtar's LTIP for 2025. As Domtar is a private company it does not have any common stock associated with it and therefore the subsequent columns have been removed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.For the AIP and PUs, the "Threshold" column represents the minimum amount payable when threshold performance is met. The "Target" column represents the amount payable if the specified performance targets are reached. The "Maximum" column represents the maximum payment possible under the plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.RUs are service-based and do not have specified performance targets.

**Outstanding Equity Awards at Fiscal Year-End Table** 

The following table sets forth information concerning outstanding equity awards for each NEO at the end of fiscal year 2025. Amounts in the table are based on the respective information as outlined below. Due to the acquisition by Paper Excellence in 2021, all outstanding equity awards granted through Domtar at that time were settled and paid in cash on December 13, 2021. LTIP awards granted from Domtar since 2022 are considered non-equity awards as there is no common stock.

<u>Resolute – Mr. Tremblay</u> 

Pursuant to the Merger agreement with Paper Excellence, the RSUs and PSUs awards granted in 2023 will settle at $20.50/unit, using target level of performance for the PSUs, in accordance with the award. The RSUs have a 47-month vesting period with 25%

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vesting on December 1 of each calendar year. All the equity awards contain customary provisions for vesting upon certain terminations and events. For more details, reference the section earlier named "Resolute - Long-Term Equity Incentive".

Number of Shares or Units of Stock That Have Not Vested (#) – This column represents RSUs that will vest if service requirements are fulfilled and PSUs, using target level performance, that are considered vested as of December 31, 2025.

Value of Shares or Units of Stock That Have Not Vested ($) – This column represents the value of RSUs that will vest if service requirements are fulfilled and PSUs, using target level performance, that are considered vested as of December 31, 2025.

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp; <br>Name | &nbsp;&nbsp;&nbsp;Option Awards <sup>(1)</sup> | &nbsp;&nbsp;&nbsp;Option Awards <sup>(1)</sup> | &nbsp;&nbsp;&nbsp;Option Awards <sup>(1)</sup> | &nbsp;&nbsp;&nbsp;Option Awards <sup>(1)</sup> | &nbsp;&nbsp;&nbsp;Stock Awards | &nbsp;&nbsp;&nbsp;Stock Awards | &nbsp;&nbsp;&nbsp;Stock Awards | &nbsp;&nbsp;&nbsp;Stock Awards |
| &nbsp;&nbsp;&nbsp; <br>Name | &nbsp;&nbsp;&nbsp;Number of<br>Securities<br>Underlying<br>Unexercised<br>Options<br>Exercisable | &nbsp;&nbsp;&nbsp;Number of<br>Securities<br>Underlying<br>Unexercised<br>Options<br>Unexercisable | &nbsp;&nbsp;&nbsp;Option<br>Exercise<br>Price | &nbsp;&nbsp;&nbsp;Option<br>Expiration<br>Date | &nbsp;&nbsp;&nbsp;Number of<br>Shares or<br>Units That Have<br>Not Vested <sup>(2)</sup> | &nbsp;&nbsp;&nbsp;Market<br>Value of<br>Shares<br>or Units of Stock That Have<br>Not Vested | &nbsp;&nbsp;&nbsp;Equity<br>Incentive Plan<br>Awards:<br>Number of Unearned<br>Shares, Units or<br>Other Rights That Have Not Vested | &nbsp;&nbsp;&nbsp;Equity<br>Incentive Plan Awards:<br>Market or Payout<br>Value of Unearned<br>Shares, Units or<br>Other Rights That Have<br>Not Vested |
|  | &nbsp;&nbsp;&nbsp;(#) | &nbsp;&nbsp;&nbsp;(#) | &nbsp;&nbsp;&nbsp;($) |  | &nbsp;&nbsp;&nbsp;(#) | &nbsp;&nbsp;&nbsp;($) | &nbsp;&nbsp;&nbsp;(#) | &nbsp;&nbsp;&nbsp;($) |
| &nbsp;&nbsp;&nbsp;Richard Tremblay | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;14369 | &nbsp;&nbsp;&nbsp;294565 | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;- |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)There were no outstanding Option Awards for Resolute participants.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)Includes earned, but unvested RSUs granted on 1/1/23 that vest on 12/1/26, subject to continued employment, and represents 25% of the total award. Includes earned but unvested PSUs granted on 1/1/23 that will vest on 2/28/26 at target performance, subject to continued employment.

**Option Exercises and Stock Vested Table**

<u>Resolute - Mr. Tremblay</u>

Effective as of immediately prior to March 1, 2023, all then-outstanding Company RSUs and PSUs (whether vested or unvested and including any corresponding dividend equivalents), were automatically canceled and each such Company RSU and PSU was converted into the right to receive from the Surviving Corporation (i) an amount of cash, without interest and subject to any applicable Tax withholding, equal to the product of (A) the total number of shares of Company Common Stock then underlying such Company RSU and PSU multiplied by (B) $20.50 and (ii) one Contingent Value Right for each share of Company Common Stock subject to such Company RSU and PSU.

The 2023 RSUs which were granted on January 1, 2023, have a 47-month vesting period with 25% vesting on December 1 of each calendar year.

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp; <br>Name | &nbsp;&nbsp;&nbsp;Acceleration Equity and Option Awards | &nbsp;&nbsp;&nbsp;Acceleration Equity and Option Awards | &nbsp;&nbsp;&nbsp;Acceleration Equity and Option Awards | &nbsp;&nbsp;&nbsp;Acceleration Equity and Option Awards | &nbsp;&nbsp;&nbsp;2023 Annual Equity Award | &nbsp;&nbsp;&nbsp;2023 Annual Equity Award | &nbsp;&nbsp;&nbsp;2023 Annual Equity Award | &nbsp;&nbsp;&nbsp;Aggregate | &nbsp;&nbsp;&nbsp;Aggregate |
| &nbsp;&nbsp;&nbsp; <br>Name | &nbsp;&nbsp;&nbsp;Number of shares acquired on vesting <sup>(1)</sup> | &nbsp;&nbsp;&nbsp;Value realized on vesting <sup>(2)</sup> | &nbsp;&nbsp;&nbsp;Options realized value <sup>(3)</sup> | &nbsp;&nbsp;&nbsp;CVR <sup>(4)</sup> | &nbsp;&nbsp;&nbsp;Number of shares acquired on vesting <sup>(5)</sup> | &nbsp;&nbsp;&nbsp;Value realized on vesting <sup>(6)</sup> | &nbsp;&nbsp;&nbsp;CVR <sup>(4)</sup> | &nbsp;&nbsp;&nbsp;Number of shares acquired on vesting in 2025 | &nbsp;&nbsp;&nbsp;Value realized on vesting in 2025 |
|  | &nbsp;&nbsp;&nbsp;(#) | &nbsp;&nbsp;&nbsp;(#) | &nbsp;&nbsp;&nbsp;($) |  | &nbsp;&nbsp;&nbsp;(#) | &nbsp;&nbsp;&nbsp;($) |  | &nbsp;&nbsp;&nbsp;(#) | &nbsp;&nbsp;&nbsp;($) |
| &nbsp;&nbsp;&nbsp;Richard Tremblay | &nbsp;&nbsp;&nbsp;244037 | &nbsp;&nbsp;&nbsp;5002759 | &nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;244037 | &nbsp;&nbsp;&nbsp;8621 | &nbsp;&nbsp;&nbsp;176731 | &nbsp;&nbsp;&nbsp;8621 | &nbsp;&nbsp;&nbsp;252658 | &nbsp;&nbsp;&nbsp;5179489 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Includes all RSU and PSUs granted prior to 1/1/23 that were accelerated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)Includes all RSU and PSUs granted prior to 1/1/23 were accelerated at the price of $20.50/unit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)All options granted prior to 1/1/23 that were accelerated at the price of $20.50/unit

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)Each holder of a Contingent Value Right shall have the right to receive the payments set forth in the merger agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5)75% of the 2023 RSUs were vested and settled on 12/1/2023, 12/1/2024 and 12/1/2025.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6)75% of the 2023 RSUs were vested and settled on 12/1/2023, 12/1/2024, and 12/1/2025 at the settlement price of $20.50/unit.

***Nonqualified Deferred Compensation*** 

The following table and narrative provide information on the nonqualified deferred compensation plans in which our NEOs participate. The table shows the 2025 account activity for each NEO and includes each executive's contributions, Company contributions, earnings, distributions and the aggregate balance of his total deferral account as of December 31, 2025. The aggregate balance includes the total personal contributions made (and not withdrawn) by each executive and the contributions made by the Corporation and predecessor companies over the career of each executive.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Name | Plan Name | Executive<br>Contributions in<br>Last FY<sup>(1)</sup> | Registrant<br>Contributions in<br>Last FY<sup>(12)</sup> | Aggregate<br>Earnings in<br>Last FY | Aggregate<br> Withdrawals/ <br>Distributions | Aggregate<br>Balance at<br>Last FYE<sup>(2)</sup> |
|  |  | ($) | ($) | ($) | ($) | ($) |
| Steve Henry | DC SERP | - | $81086 | $80853 | - | $573044 |
| Joseph Ragan | DC SERP | - | $60582 | - | - | $60582 |
| Richard Tremblay | DC SERP | - | $22780 | - | - | $22780 |
| Luc Theriault<sup>(3)</sup> | DC SERP | - | $40964 | - | - | $40964 |

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(1) The amounts with respect to the DC SERP are included in the "All Other Compensation" column of the "Summary Compensation Table".

(2) The following amount was reported in the Corporation's Summary Compensation Table for the prior years: Mr. Henry, $57,158 of the amounts with respect to the DC SERP. Messrs. Ragan, Tremblay and Thériault did not participate in the DC SERP prior to January 1, 2025, and therefore had no amounts for the prior years.

(3) DC SERP amounts are converted in U.S. dollars at the average prevailing spot exchange rate during 2025 (0.7154).

For 2025, Canadian executives' accounts are credited with an amount equal to 10% of earnings, less the value of the benefit provided by the employer contributions under the Defined Contribution Pension Plan for Non-Unionized Employees of Resolute Forest Products (the "Canadian Pension Plan"), calculated based on the assumption that the executive has elected to contribute to the defined contribution option at the maximum allowable rate. A Canadian executive will continue to accrue benefits if he is considered "disabled" under the Canadian Pension Plan. Benefits under the DC SERP will only be paid upon a disabled participant's actual termination of employment. A Canadian executive who retires after age 55 also has the option to receive his benefits over a 10-year period.

The Corporation has a securing arrangement through a letter of credit for benefits payable from the DC SERP for eligible Canadian executives who are not U.S. taxpayers. The letter of credit will be used to pay eligible benefits in the event of failure of the employer to make payments.

For 2025, the U.S. executives' accounts are credited with an amount equal to 10% of earnings for Messrs. Ragan and Tremblay and 11% of earnings for Mr. Henry, less the employer contribution to the Domtar U.S. Salaried 401(k) Plan, calculated based on the assumption that the executive has elected to contribute to the Domtar U.S. Salaried 401(k) Plan at the maximum allowable rate.

For purposes of the DC SERP, "earnings" includes base salary and annual cash bonuses.

**Resolute Pension Benefits (Messrs. Tremblay, Ragan and Thériault)**

Mr. Henry does not participate in the Resolute pension benefit plan, therefore this section is not applicable for him.

***Retirement Plans and DC Make-Up Program for Messrs. Ragan, Tremblay and Thériault***

For 2025, the named executive officers earned retirement benefits only under a tax-qualified retirement plan, subject to either Canadian or U.S. law. The tax-qualified retirement plans are offered to all eligible employees (not just named executive officers).

From 2012 up to December 31, 2024, Resolute did not offer any supplemental retirement plan that allowed named executive officers to accumulate, on a tax-deferred basis, additional retirement income. Instead, the Company paid named executive officers a cash payment equal to the Company contributions prescribed under the applicable tax-qualified plan formulas that exceed statutory limits. In addition, Canadian named executive officers received a cash payment equal to the employer contribution they would have received on their annual incentive awards as if the broad-based plan had provided an employer contribution on these awards. The DC Make-Up Program did not allow named executive officers to accumulate earnings on a deferred basis. The named executive officers paid taxes on the cash payment and no gross-up or other earnings were provided on these payments. Effective December 31, 2024, the participation of Messrs. Ragan, Tremblay and Thériault ceased in the DC Make-Up Program as they joined the DC SERP on January 1, 2025.

**Employment Agreements and Potential Payments upon Termination or a Change in Control**

**Severance Benefits** 

**Mr. Ragan.** On January 8, 2020, Mr. Ragan entered into an employment agreement with Paper Excellence. Under this agreement if the Company terminates his employment for reasons other than "for Cause" or he resigns for "Good Reason" (as defined in the agreement), Mr. Ragan will receive a severance payment equal to 6 months of base pay plus one month of base pay for each completed year of service with the Company at the time of separation with a maximum severance pay benefit of 12 months of base pay. To be eligible for the severance pay, Mr. Ragan must execute, and not, thereafter revoke, a release of claims he might otherwise have against the Company or any of its affiliates in a form acceptable to the Company.

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**Mr. Henry**. Under the Domtar Severance Program applicable to members of its Management Committee, our NEOs would be entitled to up to 24 months' salary payable in a lump sum upon a termination of employment by the Corporation for reasons other than cause, with benefit levels that vary based on service. Severance is equal to one year's base salary regardless of service as a member of the Management Committee, with three additional months' salary paid for each full year of service on the Management Committee, up to a maximum of 24 months base salary. Mr. Henry would be entitled to 18 months' salary. The executives would also be entitled to continued health benefits for the severance period, except if the executive's benefits are subject to taxation in the United States, in which case the health insurance policies maintained by the Corporation will remain in effect until the earlier to occur of the last day of the severance period and the 18-month anniversary of the date the executive's separation from service. The executives will also be entitled to outplacement services.

In the event one of the covered executives' employment is involuntarily terminated without cause or the executive voluntarily terminates his employment for Good Reason within three months prior to or 24 months following a change in control of the Corporation, each of NEOs would be entitled to cash severance equal to 24 months' salary plus two times his target bonus as of the date of termination or, if greater, the date of the change in control.

Under our severance program, a covered executive who has been involuntarily terminated by the Corporation for business reasons, whether or not in connection with a Change in Control, or who in the three months prior to or 24 months following a Change in Control has terminated his or her employment for Good Reason or has been terminated by the Corporation without Cause will be eligible for a prorated bonus under the ABP for the year in which the termination of employment occurred. Payment will be based on the pre-established goals under the ABP for the applicable plan year accrued on the books and records of the Corporation as at the end of the fiscal quarter ended immediately prior to such termination (or such greater amount as is payable under the ABP) and the covered executive's performance.

**Mr. Thériault**. On July 26, 2024, Mr. Thériault entered into an employment agreement entitling him to a severance allowance of 12 months of base salary, plus an additional 3 months of base salary for each full year of continuous service as a member of the Management Committee, up to a maximum of 24 months of base salary. He is not eligible for the severance allowance if terminated for Cause.

**Domtar Change in Control Protections.** The Corporation does not have change in control agreements with its employees (although as described above, enhanced benefits may be available under our severance program). Under the Domtar Corporation Amended and Restated Long-Term Incentive Plan, unless otherwise determined by the Board or as otherwise provided in an Award Agreement, all outstanding Awards shall become vested upon a change in control.

All outstanding service-based awards held by a Participant shall become vested and the restricted period on all such outstanding service awards shall lapse and for each outstanding performance-based award held by a Participant shall be deemed to be earned and become vested based on the plan terms regarding performance cycles completed, in progress or not yet commenced. All other performance awards that do not vest in accordance with the performance rules shall lapse and be forfeited and canceled upon consummation of the change in control without any payment therefor.

If there is a change in control and a participant's employment is terminated for business reasons within 3 months prior to the occurrence of a change in control shall be considered an active employee and continuing in the Company's employment until the occurrence of such change in control, and to have been terminated immediately thereafter. Any amounts payable in respect of vested Awards shall be settled in cash.

Under Domtar's annual incentive plan, bonuses payable for the year in which the change in control occurs will not be less than the bonus amounts accrued on the books and records of the Corporation as of the date of the change in control.

**Mr. Tremblay**. On March 13, 2023, Mr. Tremblay received a letter confirming that he will retain all rights and remain subject to all obligations under his 2022 letter agreement between him and Resolute amending certain changes to the terms and conditions of his entitlements under Resolute's Severance Policy – Chief Executive Officer and Direct Reports ("CEO/DR Severance Policy"). This CEO/DR Severance Policy became effective upon completion of the transactions contemplated by the Merger Agreement and following the closing in accordance with the terms of the Merger Agreement, as it relates to a change in control. The severance pay and benefits to which Mr. Tremblay would otherwise be entitled under the CEO/DR Severance Policy (and certain terms of the CEO/DR Severance Policy) were modified to include and reflect the following enhancements and clarifications:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The coverage period for an eligible termination increased from 12 to 24 months following the Merger time and includes the 3-month period immediately preceding the Merger effective time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The minimum severance amount increased to 104 weeks of eligible pay.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•He is entitled to receive a prorated Short-Term Incentive Plan payment thereunder for the year of such termination without regard to any otherwise required applicable minimum period of service during the year of termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•If an eligible executive has received less than two annual STIP incentive award payments immediately prior to termination, "Eligible pay" is enhanced to reflect the annual base pay as in effect at the termination of employment date and the greater of (x) the last incentive award paid to the employee, if any, under the applicable incentive plan or program or (y) the individuals

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target incentive award for the year in which such termination occurs, as applicable. If an incentive award paid for less than a full year is included, such award amount will be annualized. In any case, the award amount used to determine Eligible Pay will continue to be subject to a maximum of 125% of the Eligible Executive's target incentive (expressed in dollars) for the year in which the termination occurs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•For U.S. executives, the Company shall pay or reimburse the individual (within the required time period under Section 409A of the Code) for the premiums for 18 months of continuation coverage under COBRA.

**Other Domtar Post-Employment Benefits – Mr. Henry only.** In the event of the death of a U.S. executive, the beneficiary will receive a payment equal to the calculated amount of the life insurance (up to maximum of $1,600,000 including the basic life insurance of up to $50,000) based on the basic annual salary of the executive in the year of his or her death pursuant to the U.S. Executive Life plan and using the following table:

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;Age | &nbsp;&nbsp;Multiplier |
| &nbsp;&nbsp;&nbsp;Under 45 | &nbsp;&nbsp;5 times |
| &nbsp;&nbsp;&nbsp;45 to 49 | &nbsp;&nbsp;4 times |
| &nbsp;&nbsp;&nbsp;50 to 54 | &nbsp;&nbsp;3 times |
| &nbsp;&nbsp;&nbsp;55 or over | &nbsp;&nbsp;2 times |

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The supplemental pension benefits under the DC SERP for Designated Executives of Domtar for Mr. Henry are fully vested. He will receive benefits under the plan in the event of death or if his employment was terminated involuntarily. However, before such date, all benefits in the event of death under the plan are considered vested.

The following table presents potential payments to each NEO as if the officer's employment had been terminated and/or if a change in control had occurred as of December 31, 2025, the last business day of 2025. The actual amounts that would be paid to any NEO can only be determined at the time of an actual termination of employment or change in control and would vary from those listed below. The estimated amounts listed below are in addition to any retirement, welfare and other benefits that are available to our salaried employees generally.

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;Name | &nbsp;&nbsp;&nbsp;Severance<br>Pay<sup>(1)</sup> | Non-Equity With Accelerated Vesting | Equity With Accelerated Vesting | &nbsp;&nbsp;&nbsp;Retirement<br>Plan<br>Benefits:<br>SERP | &nbsp;&nbsp;&nbsp;Death/<br>Disability<br>Benefits | &nbsp;&nbsp;&nbsp;Continued<br>Perquisites<br>and<br>Benefits<sup>(5)</sup>  | &nbsp;&nbsp;&nbsp;Total |
|  | &nbsp;&nbsp;&nbsp;($) | ($)<sup>2</sup> | ($)<sup>(3)</sup> | &nbsp;&nbsp;&nbsp;($) | &nbsp;&nbsp;&nbsp;($) | &nbsp;&nbsp;&nbsp;($) | &nbsp;&nbsp;&nbsp;($) |
| &nbsp;&nbsp;&nbsp;&nbsp;**Steve Henry** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Death | &nbsp;&nbsp;&nbsp;– | 1533909 | – | &nbsp;&nbsp;&nbsp;573045 | &nbsp;&nbsp;&nbsp;1600000 <sup>(4)</sup> | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;3706954 |
| &nbsp;&nbsp;&nbsp;&nbsp;Disability | &nbsp;&nbsp;&nbsp;– | 1241778 | – | &nbsp;&nbsp;&nbsp;573045 | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;1814823 |
| &nbsp;&nbsp;&nbsp;&nbsp;Retirement | &nbsp;&nbsp;&nbsp;– | – | – | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– |
| &nbsp;&nbsp;&nbsp;&nbsp;Involuntary Termination | &nbsp;&nbsp;&nbsp;1335600 | – | – | &nbsp;&nbsp;&nbsp;573045 | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;15129 | &nbsp;&nbsp;&nbsp;1923774 |
| &nbsp;&nbsp;&nbsp;&nbsp;Change-In-Control: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Involuntary Termination or Termination for good Reason within Two Years after a Change-In-Control | &nbsp;&nbsp;&nbsp;2404080 | 1451341 | – | &nbsp;&nbsp;&nbsp;573045 | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;15129 | &nbsp;&nbsp;&nbsp;4443595 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Joseph Ragan** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Death | &nbsp;&nbsp;&nbsp;– | 192718 | – | &nbsp;&nbsp;&nbsp;60582 | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;253300 |
| &nbsp;&nbsp;&nbsp;&nbsp;Disability | &nbsp;&nbsp;&nbsp;– | 157193 | – | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;157193 |
| &nbsp;&nbsp;&nbsp;&nbsp;Retirement | &nbsp;&nbsp;&nbsp;– | – | – | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– |
| &nbsp;&nbsp;&nbsp;&nbsp;Involuntary Termination | &nbsp;&nbsp;&nbsp;793707 | – | – | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;48127 | &nbsp;&nbsp;&nbsp;841834 |
| &nbsp;&nbsp;&nbsp;&nbsp;Change-In-Control: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Involuntary Termination or Termination for good Reason within Two Years after a Change-In-Control | &nbsp;&nbsp;&nbsp;793707 | 193123 | – | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;48127 | &nbsp;&nbsp;&nbsp;1034957 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Richard Tremblay** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Death | &nbsp;&nbsp;&nbsp;– | 833354 | 282162 | &nbsp;&nbsp;&nbsp;22780 | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;1138296 |
| &nbsp;&nbsp;&nbsp;&nbsp;Disability | &nbsp;&nbsp;&nbsp;– | 685957 | 282162 | &nbsp;&nbsp;&nbsp;22780 | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;990899 |
| &nbsp;&nbsp;&nbsp;&nbsp;Retirement | &nbsp;&nbsp;&nbsp;– | 396879 | 294565 | &nbsp;&nbsp;&nbsp;22780 | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;714224 |
| &nbsp;&nbsp;&nbsp;&nbsp;Involuntary Termination | &nbsp;&nbsp;&nbsp;1176191 | – | 233065 | &nbsp;&nbsp;&nbsp;22780 | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;27177 | &nbsp;&nbsp;&nbsp;1459213 |
| &nbsp;&nbsp;&nbsp;&nbsp;Change-In-Control: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Involuntary Termination or Termination for Good Reason within Two Years after a Change-In-Control | &nbsp;&nbsp;&nbsp;1176191 | 850371 | 233065 | &nbsp;&nbsp;&nbsp;22780 | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;27177 | &nbsp;&nbsp;&nbsp;2309584 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Luc Theriault** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Death | &nbsp;&nbsp;&nbsp;– | 360000 | – | &nbsp;&nbsp;&nbsp;41779 | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;401779 |
| &nbsp;&nbsp;&nbsp;&nbsp;Disability | &nbsp;&nbsp;&nbsp;– | 330000 | – | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;330000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Retirement | &nbsp;&nbsp;&nbsp;– | – | – | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– |
| &nbsp;&nbsp;&nbsp;&nbsp;Involuntary Termination | &nbsp;&nbsp;&nbsp;582188 | – | – | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;5945 | &nbsp;&nbsp;&nbsp;588133 |
| &nbsp;&nbsp;&nbsp;&nbsp;Change-In-Control: |  |  |  |  |  |  |  |

---

------

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;Name | &nbsp;&nbsp;&nbsp;Severance<br>Pay<sup>(1)</sup> | Non-Equity With Accelerated Vesting | Equity With Accelerated Vesting | &nbsp;&nbsp;&nbsp;Retirement<br>Plan<br>Benefits:<br>SERP | &nbsp;&nbsp;&nbsp;Death/<br>Disability<br>Benefits | &nbsp;&nbsp;&nbsp;Continued<br>Perquisites<br>and<br>Benefits<sup>(5)</sup>  | &nbsp;&nbsp;&nbsp;Total |
|  | &nbsp;&nbsp;&nbsp;($) | ($)<sup>2</sup> | ($)<sup>(3)</sup> | &nbsp;&nbsp;&nbsp;($) | &nbsp;&nbsp;&nbsp;($) | &nbsp;&nbsp;&nbsp;($) | &nbsp;&nbsp;&nbsp;($) |
| &nbsp;&nbsp;&nbsp;&nbsp;Involuntary Termination or Termination for Good Reason within Two Years after a Change-In-Control | &nbsp;&nbsp;&nbsp;582188 | 450000 | – | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;– | &nbsp;&nbsp;&nbsp;5945 | &nbsp;&nbsp;&nbsp;1038133 |

---

For the purposes of this table, converted to U.S. dollars at spot exchange rate of December 31, 2025 (0.7296).

(1)The amounts shown for:

- Mr. Henry are 1.) for involuntary termination, 24 months of base salary plus 2025 actual bonus payout to be received and 2.) for his CIC value, reflects 2x base salary and 2x target bonus.

- For Mr. Ragan, it reflects 6 months of base pay plus one month of base pay for each completed year of service at the time of separation, not to exceed 12 months base pay. Due to his January 2020 agreement, this assumes an additional 5 months of base salary or 11 months value in total.

- Per the enhanced terms and conditions of their entitlements under the CEO/DR Severance Policy, Mr. Tremblay, are 1.) based on years of service and the minimum and maximum amounts payable under the policy or respectively 2x base salary and 2.) the average of the 2024 and 2025 regular incentive awards paid, using the same multiple as the base salary portion.

- For Mr. Thériault, it reflects 12 months of base pay plus an additional 3 months of base pay for each completed year of service at the time of separation, not to exceed 24 months of base pay. Due to his 2024 agreement, this assumes 3 additional months of base salary.

(2)This reflects the 2024 and 2025 LTIP Grants that are considered non-equity awards. Amounts included for the PU awards has been calculated at "Target" for Death benefits and, for all other instances, based on achievement of the performance goals through 2025 for the 2024 and 2025 metrics, and at "Target" for awards with performance periods that commence after 2025. For Mr. Henry, this also includes his 2023 LTIP Grant that is also considered non-equity awards.

(3)For Mr. Tremblay, this reflects his 2023 LTIP Grant that is still considered an equity award.

(4)Represents the death benefit, which is fully insured.

(5)Amount shown under "Continued Perquisites and Benefits" represents the cost of Company-paid medical and dental for all US-based NEOs and includes the cost of basic life and AD&D in addition to medical and dental for Canada-based NEOs. It also includes outplacement for Messrs. Tremblay and Thériault.

**DISCLOSURE OF THE CEO PAY RATIO** 

As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Regulation S-K (the "Regulation"), we are providing the following information about the relationship between the annual total compensation of our Chief Executive Officer and that of the median employee across both Domtar and Resolute. As Domtar does not have a CEO role due to the organization's restructuring with Paper Excellence, Mr. Henry therefore assumes the additional responsibility of Principal Executive Officer ("PEO") for Domtar to fulfill the requirements to sign SEC disclosures such as the Form 10-K.

To determine its median employee for purposes of the CEO pay ratio, Domtar analyzed the combined employee population from both Domtar and Resolute (excluding the PEO) of approximately 14,000 full-time, part-time and temporary employees across the U.S. and Canada as of December 1, 2023. The median employee was identified using base compensation, which we determined reasonably reflects the annual compensation and is consistently applied to all our employees. The calculation of total compensation of the PEO and the median employee was determined in the same manner as the "Total Compensation" shown for our PEO in the "Summary Compensation Table".

In 2025, Domtar PEO's total compensation was $1,434,195 and the total compensation of the median employee was $109,051. The resulting ratio of total compensation of the CEO to our median employee is 13:1. This ratio is a reasonable estimate calculated in a manner consistent with the Regulation.

The applicable rules provide issuers with a great degree of flexibility in determining the methodology and related assumptions in identifying their median employee and calculating the ratio. As a result, the pay ratio we have disclosed in this statement may not be comparable to pay ratios disclosed by other companies.

------

**<u>ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL O</u><u>WNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS</u>**

As of March 30, 2026, there were 100 shares of common stock of the Company issued and outstanding. All of our issued and outstanding common stock is owned by Pearl Excellence Holdco L.P., the general partner of which is Karta Halten General Partner B.V.,which is indirectly 100% owned by Mr. Jackson Wijaya. Directors and Executive Officers do not own shares of the Company or any of its parent or subsidiaries.

**<u>ITEM 13. CERTAIN RELATIONSHIPS AND RELATE</u><u>D TRANSACTIONS, AND DIRECTOR INDEPENDENCE</u>**

The Company has written Procedures for Review of Related Person Transactions. Under such procedures, each director, director nominee, executive officer and shareholder beneficially owning more than five percent of voting securities of the Company must notify the Senior Vice-President, General Counsel and Corporate Secretary in writing of any related person transaction in which the Company was or is to be a participant, where the amount exceeds $120,000.

**Director Independence**

Domtar Corporation is a privately held corporation, held by Paper Excellence Group. Messrs. Shih and Wardhana are not independent because of their affiliations with Paper Excellence Group.

**<u>ITEM 14. PRINCIPAL ACCOU</u><u>NTANT FEES AND SERVICES</u>**

The Company's fees for services performed by its independent registered public accounting firm during 2025 and 2024 were:

---

| | | |
|:---|:---|:---|
|  | For the year ended December 31, | For the year ended December 31, |
|  | **2025** | 2024 |
| Audit fees <sup>(1)</sup> | $**3281977** | $3414948 |
| Audit-related fees | **140138** | 343188 |
| Tax fees <sup>(2)</sup> | **—** |  |
| All other fees <sup>(3)</sup> | **2415** | 27179 |
| **Total fees** | $**3424530** | $**3785315** |

---

(1) Audit fees were primarily for services rendered in connection with the audit of the financial statements included in the Annual Report of the Corporation on Form 10-K, and reviews of the financial statements included in the Corporation's Quarterly Reports on Form 10-Q.

(2) Tax fees related to tax compliance, tax planning and tax advice*.* 

(3) The 2025 and 2024 fees included amounts for license fees for an accounting and reporting research tool.

The Company has established policies requiring its pre-approval of audit and non-audit services provided by the independent registered public accounting firm. The policies require that the Management Board annually pre-approve specifically described audit and audit-related services. For the annual pre-approval, the Management Board approves categories of audit services and audit-related services, and related fee budgets. For all pre-approvals, the Management Board considers whether such services impair the independence of the Corporation's independent registered public accounting firm. All audit and non-audit fees were approved pursuant to the policy in 2024 and 2025.

------

**<u>PART</u> <u>IV</u>**

**<u>ITEM 15. EXHIBITS AND FIN</u><u>ANCIAL STATEMENT SCHEDULES</u>**

(a)1. Financial Statements – See Item 8, Financial Statements and Supplementary Data.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Schedule II – Valuation and Qualifying Accounts

All other schedules are omitted as the information required is either included elsewhere in the consolidated financial statements in Item 8, Financial Statements and Supplementary Data – or is not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Exhibits:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | **Incorporated by reference to:** | **Incorporated by reference to:** | **Incorporated by reference to:** |
| **Exhibit**<br>**Number** | **Exhibit Description** | **Form** | **Exhibit** | **Filing Date** |
| 2.1 | [<u>Agreement and Plan of Merger, dated as of July 5, 2022, by and among Resolute Forest Products Inc., Domtar Corporation, Terra Acquisition Sub Inc., Karta Halten B.V. and Paper Excellence B.V.</u>](https://www.sec.gov/Archives/edgar/data/1381531/000119312522191244/d369818dex21.htm) | 8-K | 2.1 | 11/07/2022 |
| 2.2 | [<u>Equity Purchase Agreement, dated November 1, 2024, between Atlas Receiptco Holdings LLC and Domtar Paper Company, LLC</u>](https://www.sec.gov/Archives/edgar/data/1381531/000095017024120912/ck0001381531-ex2_1.htm) | 10-Q | 2.1 | 11/04/2024 |
| 2.3 | [<u>Asset Purchase Agreement, dated November 1, 2024, between Iconex (Canada) Ltd. and Domtar Inc.</u>](https://www.sec.gov/Archives/edgar/data/1381531/000095017024120912/ck0001381531-ex2_2.htm) | 10-Q | 2.2 | 11/04/2024 |
| 3.1 | [<u>Certificate of Incorporation</u>](https://www.sec.gov/Archives/edgar/data/1381531/000119312521343066/d217948dex31.htm) | 8-K | 3.1 | 11/30/2021 |
| 3.2 | [<u>By-Laws</u>](https://www.sec.gov/Archives/edgar/data/1381531/000119312521343066/d217948dex32.htm) | 8-K | 3.2 | 11/30/2021 |
| 4.1 | [<u>Indenture, dated as of October 18, 2021, with respect to Domtar Corporation's 6.75% Senior Secured Notes due 2028</u>](https://www.sec.gov/Archives/edgar/data/1381531/000156459022009469/ufs-ex43_65.htm) | 10-K | 4.3 | 03/10/2022 |
| 4.2 | [<u>Supplemental Indenture, dated as of November 30, 2021, with respect to Domtar Corporation's 6.75% Senior Secured Notes due 2028</u>](https://www.sec.gov/Archives/edgar/data/1381531/000156459022009469/ufs-ex44_64.htm) | 10-K | 4.4 | 03/10/2022 |
| 4.3 | [<u>Second Supplemental Indenture, dated as of December 30, 2021, with respect to Domtar Corporation's 6.75% Senior Secured Notes due 2028</u>](https://www.sec.gov/Archives/edgar/data/1381531/000156459022009469/ufs-ex45_63.htm) | 10-K | 4.5 | 03/10/2022 |
| 4.5 | [<u>Supplemental Indenture, dated December 30, 2021, with respect to subsidiary guarantees of Domtar Corporation's 6.75% Senior Secured Notes due 2028</u>](https://www.sec.gov/Archives/edgar/data/1381531/000156459022009469/ufs-ex46_62.htm) | 10-K | 4.6 | 03/10/2022 |
| 10.1\* | [<u>Amended and Restated Severance Program for Management Committee Members</u>](https://www.sec.gov/ix?doc=/Archives/edgar/data/1381531/000156459021009629/ufs-10k_20201231.htm) | 10-K | 10.6 | 03/01/2021 |
| 10.2\* | [<u>Amended and Restated DC SERP for Designated Executives of Domtar</u>](ck0001381531-ex10_2.htm) |  |  |  |
| 10.3\* | [<u>Form of Indemnification Agreement for members of Pension Administration Committee of Domtar Corporation</u>](https://www.sec.gov/Archives/edgar/data/1381531/000095017025028984/ck0001381531-ex10_4.htm) | 10-K | 10.4 | 02/27/2025 |
| 10.4\* | [<u>Domtar Corporation Amended and Restated Annual Bonus Plan</u>](https://www.sec.gov/Archives/edgar/data/1381531/000095017025028984/ck0001381531-ex10_6.htm) | 10-K | 10.6 | 02/27/2025 |
| 10.5\* | [<u>Domtar Corporation Long-Term Incentive Plan</u>](https://www.sec.gov/Archives/edgar/data/1381531/000119312522255468/d301783dex102.htm) | 8-K | 10.2 | 09/30/2022 |
| 10.6\* | [<u>Domtar Corporation Amended and Restated Long-Term Incentive Plan</u>](https://www.sec.gov/Archives/edgar/data/1381531/000095017025028984/ck0001381531-ex10_8.htm) | 10-K | 10.8 | 02/27/2025 |
| 10.7\* | [<u>Domtar Corporation - 2025 Restrictive Unit Award Agreement</u>](ck0001381531-ex10_7.htm) |  |  |  |
| 10.8\* | [<u>Domtar Corporation - 2025 Performance Unit Award Agreement</u>](ck0001381531-ex10_8.htm) |  |  |  |
| 10.9\* | [<u>Resolute Forest Products Inc. 2019 Equity Incentive Plan</u>](https://www.sec.gov/Archives/edgar/data/1393066/000139306619000006/rfp-2019630xex104.htm) | 10-Q | 10.4 | 08/09/2019 |
| 10.10\* | [<u>First Amendment to the Resolute Forest Products Inc. 2019 Equity Incentive Plan</u>](https://www.sec.gov/Archives/edgar/data/1393066/000119312520210783/d57706dex101.htm) | S-8 | 10.1 | 08/05/2020 |
| 10.11\* | [<u>2023 Resolute Forest Products Equity Incentive Plan, Cash Settled Performance<br>Stock Unit Agreement</u>](https://www.sec.gov/Archives/edgar/data/1381531/000095017023017494/ck0001381531-ex10_7.htm) | 10-Q | 10.7 | 05/04/2023 |

---

------

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | **Incorporated by reference to:** | **Incorporated by reference to:** | **Incorporated by reference to:** |
| **Exhibit**<br>**Number** | **Exhibit Description** | **Form** | **Exhibit** | **Filing Date** |
| 10.12\* | [<u>2023 Resolute Forest Products Equity Incentive Plan, Cash Settled Restricted<br>Stock Unit Agreement</u>](https://www.sec.gov/Archives/edgar/data/1381531/000095017023017494/ck0001381531-ex10_8.htm) | 10-Q | 10.8 | 05/04/2023 |
| 10.13\* | [<u>Resolute Forest Products Severance Policy for Chief Executive Officer and Direct Reports</u>](https://www.sec.gov/Archives/edgar/data/1381531/000095017024023697/ck0001381531-ex10_18.htm) | 10-K | 10.18 | 03/01/2024 |
| 10.14\* | [<u>Employment Agreement of Mr. Steve Henry</u>](https://www.sec.gov/Archives/edgar/data/1381531/000095017024023697/ck0001381531-ex10_19.htm) | 10-K | 10.19 | 03/01/2024 |
| 10.15\* | [<u>Employment Agreement of Mr. Joseph Ragan</u>](https://www.sec.gov/Archives/edgar/data/1381531/000095017024023697/ck0001381531-ex10_21.htm) | 10-K | 10.21 | 03/01/2024 |
| 10.16\* | [<u>Employment Agreement of Mr. Richard Tremblay</u>](https://www.sec.gov/Archives/edgar/data/1381531/000095017025028984/ck0001381531-ex10_19.htm) | 10-K | 10.19 | 02/27/2025 |
| 10.17\* | [<u>Employment Agreement of Mr. Luc Theriault</u>](https://www.sec.gov/Archives/edgar/data/1381531/000095017025028984/ck0001381531-ex10_20.htm) | 10-K | 10.20 | 02/27/2025 |
| 10.18 | [<u>ABL Revolving Credit Agreement, dated as of November 30, 2021</u>](https://www.sec.gov/Archives/edgar/data/1381531/000156459022009469/ufs-ex41_61.htm) | 10-K | 4.1 | 03/10/2022 |
| 10.19 | [<u>First Lien Credit Agreement, dated as of November 30, 2021</u>](https://www.sec.gov/Archives/edgar/data/1381531/000156459022009469/ufs-ex42_60.htm) | 10-K | 4.2 | 03/10/2022 |
| 10.20 | [<u>Amendment No.1 to ABL Credit Agreement, dated March 1, 2023</u>](https://www.sec.gov/Archives/edgar/data/1381531/000119312523056293/d449137dex102.htm) | 8-K | 10.2 | 03/01/2023 |
| 10.21 | [<u>Term Loan Credit Agreement, dated as of March 1, 2023</u>](https://www.sec.gov/Archives/edgar/data/1381531/000119312523056293/d449137dex103.htm) | 8-K | 10.3 | 03/01/2023 |
| 10.22 | [<u>Loan Agreement, dated as of December 1, 2024</u>](https://www.sec.gov/Archives/edgar/data/1381531/000095017025028984/ck0001381531-ex10_25.htm) | 10-K | 10.25 | 02/27/2025 |
| 10.23 | [<u>Term Loan Credit Agreement, dated as of January 28, 2025</u>](https://www.sec.gov/Archives/edgar/data/1381531/000095017025028984/ck0001381531-ex10_26.htm) | 10-K | 10.26 | 02/27/2025 |
| 10.24 | [<u>Amendment No.3 to ABL Credit Agreement, dated February 26, 2025</u>](https://www.sec.gov/Archives/edgar/data/1381531/000095017025028984/ck0001381531-ex10_27.htm) | 10-K | 10.27 | 02/27/2025 |
| 21 | [<u>Subsidiaries of Domtar Corporation</u>](ck0001381531-ex21.htm) |  |  |  |
| 24.1 | [<u>Powers of Attorney (included in signature page)</u>](#signaturepoa) |  |  |  |
| 31.1 | [<u>Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</u>](ck0001381531-ex31_1.htm) |  |  |  |
| 31.2 | [<u>Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</u>](ck0001381531-ex31_2.htm) |  |  |  |
| 32.1 | [<u>Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</u>](ck0001381531-ex32_1.htm) |  |  |  |
| 32.2 | [<u>Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</u>](ck0001381531-ex32_2.htm) |  |  |  |
| 101.INS | XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |  |  |  |
| 101.SCH | Inline XBRL Taxonomy Extension Schema With Embedded Linkbases Document |  |  |  |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |  |  |  |

---

<sup>\*</sup>Indicates management contract or compensatory arrangement

------

FINANCIAL STATEMENT SCHEDULE

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS

For the periods ended:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended <br>December 31,** | Year ended <br>December 31, | Year ended <br>December 31, |
|  | **2025** | 2024 | 2023 |
|  | **$** | $ | **$** |
| **Allowances deducted from related asset accounts:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Doubtful accounts - Accounts receivable** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Balance at beginning of period | **5** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deductions from reserve | **—**) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition of businesses | **—** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Balance at end of period** | **5** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Valuation Allowance on Deferred Tax Assets** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Balance at beginning of period | **453** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Charged (reversed) to income | **305**) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additions to (deductions from) reserve | **—**) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition of businesses | **—** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Balance at end of period** | **758** |  |  |

---

------

**<u>ITEM 16. FORM 10-K SUMMARY</u>**

None.

------

**SIGNA** **TURES**

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Fort Mill, South Carolina, United States, on March 30, 2026

---

| | | |
|:---|:---|:---|
|  | **DOMTAR CORPORATION** | **DOMTAR CORPORATION** |
| &nbsp;&nbsp;&nbsp;&nbsp;by |  | /s/ Joseph Ragan |
| **Name:** |  | Joseph Ragan |
| **Title:** |  | Chief Financial Officer (Principal Accounting Officer and Duly Authorized Officer) |

---

We, the undersigned directors and officers of Domtar Corporation, hereby severally constitute Nancy Klembus, and each of them singly, our true and lawful attorneys with full power to them and each of them to sign for us, in our names in the capacities indicated below, any and all amendments to this Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;**Signature** | &nbsp;&nbsp;&nbsp;**Title** | &nbsp;&nbsp;&nbsp;**Date** |
| /s/ Steve Henry | &nbsp;&nbsp;&nbsp;&nbsp;Paper & Packaging CEO and President USA of Domtar (Principal Executive Officer) | March 30, 2026 |
| Steve Henry | &nbsp;&nbsp;&nbsp;&nbsp;Paper & Packaging CEO and President USA of Domtar (Principal Executive Officer) |  |
| /s/ Joseph Ragan | &nbsp;&nbsp;&nbsp;&nbsp;Chief Financial Officer | March 30, 2026 |
| Joseph Ragan | &nbsp;&nbsp;&nbsp;&nbsp;(Principal Accounting Officer and  |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;Duly Authorized Officer) |  |
| /s/ Tom Shih | &nbsp;&nbsp;&nbsp;&nbsp;Director | March 30, 2026 |
| Tom Shih |  |  |
| /s/ Hardi Wardhana | &nbsp;&nbsp;&nbsp;&nbsp;Director | March 30, 2026 |
| Hardi Wardhana |  |  |

---

------

## Exhibit 10.2

Exhibit 10.2

**AMENDED AND RESTATED DC SERP FOR DESIGNATED EXECUTIVES OF DOMTAR CORPORATION & ITS AFFILIATES** 

------

Exhibit 10.2

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. | Introduction | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. | Definitions | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. | Retirement | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. | Non-Vested Termination of Employment | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. | Vested Termination | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. | Death | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. | Disability | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. | Administration | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. | Funding | 12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. | Non-Alienation of Benefits | 14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. | Conflicts or Inconsistencies | 14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. | Amendments | 14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. | General Provisions | 14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APPENDIX A | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APPENDIX A | 17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APPENDIX B | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APPENDIX B | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APPENDIX C | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APPENDIX C | 19 |

---

------

**1. Introduction**

1.1 The present document constitutes the DC SERP for Designated Executives of Domtar Corporation and Its Affiliates, as amended from time to time, hereinafter called the "DC SERP".

1.2 The purpose of the DC SERP is to provide designated executives of the Company and its Affiliates with additional retirement benefits in excess of those that may be payable in accordance with the provisions of the Base Plans, as defined below.

1.3 The DC SERP original effective date is March 7, 2007.

1.4 On September 1, 2012, the DC SERP was amended and restated in order to allow designated employees transferred to Attends Healthcare Products, Inc. to continue participation in the DC SERP.

1.5 On July 30, 2013, the DC SERP was amended and restated in order to clarify the treatment of employees with service both in Canada and the U.S. and to clarify the treatment of employees no longer meeting the Member criteria.

1.6 On December 7, 2014, the DC SERP was amended and restated in order to exclude employees transferred to the DC SERP for Designated Executives of Domtar Personal Care.

1.7 On December 7, 2016, the DC SERP was amended and restated in order to provide funding for Members other than U.S. Taxpayers in the form of a Letter of Credit held in a retirement compensation arrangement, and to adopt claims procedures for U.S. Taxpayers.

1.8 On January 1, 2019, the DC SERP was amended and restated in order to reflect changes in the record-keeping arrangement and in the definition of Notional Return.

1.9 Effective as of January 1, 2025, the DC SERP is amended and restated in order to reflect updates to the ownership structure of Domtar and its Affiliates and the consolidation of the benefit programs of Domtar and certain of its Affiliates, including Resolute and Paper Excellence. The DC SERP is also amended on that date to reflect recent amendments to the provisions of the Canadian income tax legislation applicable to retirement compensation arrangements.

**2. Definitions**

***2.1 Administrator***: means such person or persons designated by the Board as provided in Section 8.

2.2 ***Affiliates*:** any entity included with the Company in a controlled group of corporations or trades or businesses under common control within the meaning of Code §414(b) or §414(c). For all purposes under the DC SERP, in applying Code §1563(a)(1), (2) and (3) for purposes of determining the Company's Affiliates in applying Code §§414(b) and 414(c), the language "at least 80%" shall be applied as it appears in those sections, and in applying Treas. Reg. §1.414(c)-2 for purposes of determining trades or business (whether or not incorporated) that are under common control for purposes of Code §414(c), the language "at least 80%" shall be used as it appears in such regulation; provided, however, for purposes of determining a Separation from

DC SERP for Designated Executives of Domtar Corporation and Its Affiliates

As in effect on March 7, 2007, amended and restated on September 1, 2012, July 30, 2013, December 7, 2014, December 7, 2016, January 1, 2019, and further amended and restated as of January 1, 2025

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Service under Section 2.25, "at least 50%" shall be substituted for "at least 80%" wherever applicable in Code §§414(b) and (c) and in Treas. Reg. §1.414(c)-2.

2.3 ***Annual Contribution Credit***: for a given calendar year, and subject to Section 2.31,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) For a Member employed in Canada: the excess, if any, of ten percent (10%) of the Member's Earnings during the calendar year over:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) For a member of the DC Option under the Base Canadian Pension Plan: Company's or an Affiliate's contribution to the Base Canadian Pension Plan with respect to the period of that calendar year as a Member of the DC SERP, assuming that the Member would have elected to contribute to the Base Canadian Pension Plan such amount that would result in the maximum Company or Affiliate contribution; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) For a member of the DB Option under the Base Canadian Pension Plan: the Pension Adjustment of the Member, reduced by the Member's contribution to the DB Option of the Base Canadian Pension Plan, both with respect to the period of that calendar year as a Member of the DC SERP.

Notwithstanding the above, any such Members employed listed on Confidential Appendix B hereto shall have an Annual Contribution Credit equal to the excess of eleven percent (11%) of the Member's Earnings during the calendar year over the amounts determined under Sections 2.2(a)(i) and (ii) above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) For a Member employed in the United States: the excess, if any, of (i) ten percent (10%) of the Member's Earnings during the calendar year in respect of the period of the calendar year that the individual is a Member of the DC SERP, over (ii) the sum of Company's or an Affiliate's contribution to the Base U.S. Savings Plan and of the credit to the Member for the calendar year under the Base U.S. Pension Plan, if any, in respect of the period of the calendar year that the individual is a Member of the DC SERP. For the purposes of this paragraph, a Member who is a U.S. Taxpayer is assumed to contribute to the Base U.S. Savings Plan such amount that would result in the maximum Company or Affiliate contribution.

Notwithstanding the above, any such Member who is listed on Confidential Appendix B hereto shall have an Annual Contribution Credit equal to the excess of eleven percent (11%) of the Member's Earnings during the calendar year in respect of the period of the calendar year that the individual is a Member of the DC SERP over the amounts determined under Section 2.2(b)(ii) above.

Annual Contribution Credits are credited by the Company to the DC SERP Notional Account at the end of the calendar year for which they have been determined, or upon Separation from Service if earlier. The Annual Contribution Credit for the year shall only be determined with respect to the period of that calendar year throughout which the DC SERP Member meets the eligibility requirements as defined in Section 2.16.

Annual Contribution Credits are invested in Notional Investment Options in accordance with Section 2.15.

DC SERP for Designated Executives of Domtar Corporation and Its Affiliates

As in effect on March 7, 2007, amended and restated on September 1, 2012, July 30, 2013, December 7, 2014, December 7, 2016, January 1, 2019, and further amended and restated as of January 1, 2025

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2.4 ***Base Canadian Pension Plan***: any of the following plans: (a) the Domtar Pension Plan for Non-Negotiated Employees, (b) Régime de retraite à cotisations déterminées des employés non syndiqués de Produits Forestiers Résolu, (c) Catalyst Paper Corporation Retirement Plan for Salaried Employees, (d) Registered Pension Plan for Employees of Paper Excellence Canada Holdings Corporation and Participating Affiliates, (e) Régime complémentaire de retraite des employés non syndiqués de Fibrek, (f) Pension Plan for the Employees of Paper Excellence - Howe Sound Pulp and Paper Corporation, each as may be amended from time to time.

2.5 ***Base Plans***: subject to Section 2.31,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) For a Member employed in Canada: the Base Canadian Pension Plan

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) For a Member employed in the United States: the Base U.S. Pension Plan and the Base U.S. Savings Plan.

2.6 ***Base U.S. Pension Plan***: the Domtar U.S. Pension Plan, as may be amended from time to time.

2.7 ***Base U.S. Savings Plan***: the Domtar U.S. Salaried 401(k) Plan, as may be amended from time to time.

2.8 ***Board***: the Board of Directors of the Corporation or its delegate. Any references in this DC SERP to the "Board" shall be deemed to refer to the Board or its delegate, as applicable.

2.9 ***Code***: the Internal Revenue Code of 1986, as it may be amended from time to time, including applicable regulations for the specified section of the Code. Any reference herein to a section of the Code, including the applicable regulations, shall be considered also to mean and refer to any subsequent amendment or replacement of that section or regulation.

2.10 ***Company or Domtar***: means Domtar Inc., and any successor or successors to all or substantially all of the Company's assets or business.

2.11 ***Corporation***: means Domtar Corporation and any successor or successors to all or substantially all of the Corporation's assets or business.

2.12 ***DC SERP Notional Account***: shall, at any date whatsoever, be the sum of the notional Annual Contribution Credits and of the Notional Returns in the name of the Member under the DC SERP.

2.13 ***Default***: shall have the meaning given to it in the Trust Agreement.

2.14 ***Earnings***: subject to Section 2.31,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) For a Member employed in Canada: Earnings as defined under the Base Canadian Pension Plan in respect of periods in which the executive is a Member of the DC SERP.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) For a Member employed in the United States: Compensation as defined under the Base U.S. Savings Plan in respect of periods in which the executive is a Member of the DC SERP; provided, however, that Earnings for purposes of this Plan shall also include any elective deferrals

DC SERP for Designated Executives of Domtar Corporation and Its Affiliates

As in effect on March 7, 2007, amended and restated on September 1, 2012, July 30, 2013, December 7, 2014, December 7, 2016, January 1, 2019, and further amended and restated as of January 1, 2025

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made by a Member into the Domtar Paper Company LLC Non-Qualified Deferred Compensation Plan, even though such amounts do not qualify as "Compensation" under the Base U.S. Savings Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) For a Member with employment periods in Canada and the United States: with respect to an Annual Contribution Credit to be contributed or deemed contributed based on the Base Canadian Pension Plan, Earnings as defined under the Base Canadian Pension Plan, and with respect to an Annual Contribution Credit to be contributed or deemed contributed based on the Base U.S. Pension Plan or the Base U.S. Savings Plan, Compensation as defined under the Base U.S. Savings Plan.

Notwithstanding the above, Earnings for 2007 for executives who were promoted to salary level 26 or over before March 7, 2007 and who became Members on March 7, 2007 shall be equal to the amount that would have been determined above if the DC SERP had been in effect for the entire calendar year.

2.15 ***Management Board***: a group of executives responsible for providing additional oversight and financial checks and balances for the Corporation as a whole, while leaving day-to-day operational decisions to the business and functional teams.

**2.16 Member:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) For periods before January 1, 2025, any individual previously determined to be a Member of the SERP; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) For periods from and after January 1, 2025, either (i) Senior Director level and above (grade levels 16 or above) of the Company or its Affiliates, or (ii) any other U.S. or Canadian key employee of the Company or its Affiliates as recommended by the Management Board or its designee.

Notwithstanding the above, an executive covered under a grandfathered SERP arrangement is not a Member of the DC SERP. For convenience, a list of such executives covered under a grandfathered SERP arrangement as of March 7, 2007 is included in the Appendix A. Transfer Member will cease to be a Member of the DC SERP as of his Transfer Date.

2.17 ***Notional Investment Options***: unless not administratively feasible, the Company or its Affiliates shall provide the same notional investment options to Members as are provided under the Base Plans.

Beginning January 1, 2019, the Member's DC SERP Notional Account shall be notionally invested by the Record-keeper in the notional investment option selected by the Member for the 2018 plan year. Thereafter, the Member may elect to change how the Member's DC SERP Notional Account is notionally invested by the Record-keeper by making an election as to the proportional allocation between the Notional Investment Options made available by the Company, subject to the terms of the Record-keeping Agreements and any rules prescribed by the Company. Neither the Company nor its Affiliates shall not be responsible for the performance of the Notional Investment Options offered.

DC SERP for Designated Executives of Domtar Corporation and Its Affiliates

As in effect on March 7, 2007, amended and restated on September 1, 2012, July 30, 2013, December 7, 2014, December 7, 2016, January 1, 2019, and further amended and restated as of January 1, 2025

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The Company reserves the right to change the Notional Investment Options offered under the DC SERP at any time, and from time to time, at its sole discretion.

A Member's investment directions shall be made on-line, in writing, by phone or in such other manner as may be acceptable to the Company and the Record-keeper, and within the time frame prescribed by the Company. Such directions will continue to be in force until changed by the Member.

In the absence of direction provided by the Member or if the direction does not fully address the entirety of the Member's DC SERP Notional Account, the balance of the Member's DC SERP Notional Account shall, pending receipt of such direction, be notionally invested in the Notional Investment Option that is the same as the default fund under the applicable Base Plan.

2.18 ***Normal Retirement Date***: with respect to a Member, the first day of the month coinciding with or immediately following the Member's sixty-fifth (65th) birthday.

2.19 ***Notional Return***: for a given calendar year prior to 2019, the Annual Credited Notional Return as defined in the DC SERP prior to the January 1, 2019 restatement.

For a given calendar year beginning on or after January 1, 2019, and subject to Section 2.31, for all Members, Notional Return means, with respect to each DC SERP Notional Account, the notional interest, notional dividends, notional gains or losses allocated to the DC SERP Notional Account during the year based on the Members' notional investment options. Notional Returns will be allocated through the last day of the month preceding the month in which the value of the DC SERP Notional Account is paid.

Notional Returns will be net of all reasonable fees and expenses.

2.20 ***Pension Adjustment***: shall mean the pension adjustment as defined under the Income Tax Act (Canada), for purposes of determining a deemed value to the DB Option of the Base Canadian Pension Plan.

2.21 ***Record-keeper***: means a licensed annuity provider, a trust company or an investment management company, including any combination or successors thereof appointed by the Company to administer the DC SERP Notional Accounts.

2.22 ***Record-keeping Agreements***: means any agreement or agreements now or hereafter executed between the Company and the Record-keeper for purposes of this DC SERP.

2.23 ***Refundable Tax***: shall have the meaning given to it in the Trust Agreement.

2.24 ***Section 409A***: section 409A of the Code and the rules, regulations and guidance promulgated thereunder.

2.25 ***Separation from Service***: occurs (or a Member Separates from Service) when

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) For a U.S. Taxpayer: the Member ceases to be employed by the Company or its Affiliates as a result of the Member's death, retirement, or other termination of employment.

DC SERP for Designated Executives of Domtar Corporation and Its Affiliates

As in effect on March 7, 2007, amended and restated on September 1, 2012, July 30, 2013, December 7, 2014, December 7, 2016, January 1, 2019, and further amended and restated as of January 1, 2025

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Whether a Separation from Service takes place is based on all the relevant facts and circumstances and determined in accordance with U.S. Treas. Reg. 1.409A-1(h)(1);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) For a Member other than a U.S. Taxpayer: the Member ceases to be employed by the Company or its Affiliates as a result of the Member's death, retirement, or other termination of employment.

2.26 ***Trust Agreement***: the agreement between the Company or its Affiliates and a Trustee, as may be entered into in accordance with Section 9 of the DC SERP.

2.27 ***Trust Fund***: shall have the meaning given to it in the Trust Agreement.

2.28 ***Trustee***: the trustee party to the Trust Agreement.

2.29 ***U.S. Taxpayer***: a Member who

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Is a U.S. citizen; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Is a foreign national/U.S. permanent resident ("green card" holder); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Is a foreign national who meets the "substantial physical presence" test during an applicable calendar year; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Is a "dual status" individual and either:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Who declares that he or she is a U.S. Taxpayer (under a), b), or c) above); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Who the Company or its Affiliates determines is a U.S. Taxpayer (under a), b), or c) above).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Is subject to U.S. federal income tax under the terms of the Canada-United States Tax Convention (1980) and the Protocols in effect thereunder, except to the extent the Member's benefits under the Plan are otherwise excludable from Section 409A (such as by reason of the exception for certain limited deferrals for nonresident aliens under foreign plans); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Whose benefits under this DC SERP are otherwise subject to taxation in the U.S.

Notwithstanding the foreign Member's declaration of U.S. Taxpayer status, and unless proven otherwise, if the Company's payroll, human resources, or other records indicate that the Member is a U.S. Taxpayer, then the Member shall be deemed to be a U.S. Taxpayer for the purposes of the DC SERP.

2.30 For the purposes of the present document, the terms DB Option and DC Option shall have the meaning given to them in the Base Canadian Pension Plan.

2.31 For the purposes of the present document, unless otherwise determined by the Administrator in its sole discretion:

DC SERP for Designated Executives of Domtar Corporation and Its Affiliates

As in effect on March 7, 2007, amended and restated on September 1, 2012, July 30, 2013, December 7, 2014, December 7, 2016, January 1, 2019, and further amended and restated as of January 1, 2025

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If a Member has periods of employment in both Canada and the United States, then, except as expressly provided otherwise, the provisions of the present document with respect to Members employed in Canada shall apply with respect to such periods as the Member is employed in Canada and the provisions of the present document with respect to Members employed in the United States shall apply with respect to such periods as the Member is employed in the United States;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) A Member shall be considered to be employed in the country of the Member's primary payroll location unless the Member and the Company or its applicable Affiliate agree otherwise;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In no event shall a Member be deemed to be employed in two locations simultaneously;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Except as provided in Section (e) below, a Member shall accrue an Annual Contribution Credit in a calendar year determined on the basis of the provisions applicable in respect of employment in the country of the Member's primary payroll location at the commencement of the applicable calendar year; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) In the event that a Member who is not a U.S. Taxpayer as of the commencement of the applicable calendar year and for the three years prior to that year (i) has periods of employment in both Canada and the United States during that year, (ii) accrues benefits in the Base Plans of the two countries during that year, (iii) is entitled to make an initial deferral election in that year under U.S. Treas. Reg. § 1.409A-2(c), and (iv) the actual aggregate Company or Affiliate contributions to the Base Plans of the two countries for the Member with respect to that year are greater than the maximum Company or Affiliate contribution that would have been made had the Member remained in the country of the Member's primary payroll location at the commencement of that year, then that year's Annual Contribution Credit for such Member shall be the excess, if any (such excess, the "**Transition Contribution**"), of (A) the sum of (i) ten (10%) (or eleven percent (11%) for a Member listed on Confidential Appendix B) of the Member's Earnings from employment in Canada during the calendar year and (ii) ten percent (10%) (or eleven percent (11%) for a Member listed on Confidential Appendix B) of the Member's Earnings from employment in the United States during the calendar year, over (B) the sum of (i) for a member of the DC Option under the Base Canadian Pension Plan: the Company's or Affiliate's contribution to the Base Canadian Pension Plan with respect to the period of that calendar year as a Member of the DC SERP while employed in Canada, (ii) for a member of the DB Option under the Base Canadian Pension Plan: the Pension Adjustment of the Member for the year with respect to the Company or its Affiliate, reduced by the Member's contribution to the DB Option of the Base Canadian Pension Plan, both with respect to the period of that calendar year as a Member of the DC SERP while employed in Canada and (iii) the sum of Company's or Affiliate's contribution to the Base U.S. Savings Plan and of the credit to the Member for the calendar year under the Base U.S. Pension Plan, if any, with respect to the period of the calendar year as a Member of the DC SERP while employed in the United States. For the purposes of Section 2.14(c) and with respect to the applicable calendar year referred to in this Section 2.31(e), the Annual Contribution Credit deemed contributed for the year based on the Base Canadian Pension Plan shall equal the Applicable Canadian Percentage of the Transition Contribution and the Annual Contribution Credit deemed contributed for the year based on the Base U.S. Pension Plan and the Base U.S. Savings Plan shall equal the Applicable U.S. Percentage of the Transition

DC SERP for Designated Executives of Domtar Corporation and Its Affiliates

As in effect on March 7, 2007, amended and restated on September 1, 2012, July 30, 2013, December 7, 2014, December 7, 2016, January 1, 2019, and further amended and restated as of January 1, 2025

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Contribution. For purposes of this Section 2.31, the "**Applicable Canadian Percentage**" shall mean the percentage obtained by dividing (i) the Company's or Affiliate's actual contributions to the Base Canadian Pension Plan for the Member in the applicable calendar year by (ii) the Company's or Affiliate's aggregate contributions to the Base Plans of the two countries for the Member in that year, and the "**Applicable U.S. Percentage**" shall mean the percentage obtained by dividing (i) the Company's or Affiliate's actual contributions to the Base U.S. Pension Plan and the Base U.S. Savings Plan for the Member in the applicable calendar year by (ii) the Company's or Affiliate's contributions to the Base Plans of the two countries for the Member in that year.

**3. Retirement**

A Member who Separates from Service on or after age 55, after completing two (2) years of service as a Member shall receive as soon as practicable from the Company or its Affiliate in accordance with the DC SERP, a lump sum payment equal to his DC SERP Notional Account. For a U.S. Taxpayer, such payment shall be made within 90 days following the six (6) month anniversary of the date of Separation from Service if any.

A Member, other than a U.S. Taxpayer, may instead irrevocably elect in writing, prior to the first payment of his benefits, to receive the payment of his DC SERP Notional Account over a period not exceeding 10 years in annual installments. The first payment is due upon his retirement date and is equal to his DC SERP Notional Account divided by the number of payments he has elected. Subsequent payments are made on each anniversary of the retirement of the Member in an amount equal to the remaining DC SERP Notional Account value as at the end of the month that is one month preceding the next anniversary, divided by the number of remaining payments he has elected. For more certainty, this paragraph does not apply to a U.S. Taxpayer.

**4. Non-Vested Termination of Employment**

A Member who Separates from Service, for a reason other than death, before completing two (2) years of service as a Member is not entitled to any benefit under the DC SERP; <u>provided, however, that</u> an employee who becomes a Member as of January 1, 2025 and who participated in the Resolute Forest Products DC Make-Up Program (for Salary Grades 29 and Above) immediately before January 1, 2025 shall be credited with years of service for periods of participation under that plan immediately before January 1, 2025. For the avoidance of doubt, any employee of Paper Excellence who becomes a Member as of January 1, 2025 shall not receive any credit for service with Paper Excellence prior to January 1, 2025.

**5. Vested Termination**

A Member who Separates from Service, for a reason other than death, prior to age 55 after completing two (2) years of service as a Member shall receive as soon as practicable from the Company or its Affiliate in accordance with the DC SERP, a lump sum payment equal to his DC SERP Notional Account. For a U.S. Taxpayer, such payment shall be made within 90 days following the six (6) month anniversary of the date of Separation from Service, if any.

**6. Death**

If a Member Separates from Service by reason of death, his estate shall receive from the Company or its Affiliate, in accordance with the DC SERP, a lump sum payment equal to his DC

DC SERP for Designated Executives of Domtar Corporation and Its Affiliates

As in effect on March 7, 2007, amended and restated on September 1, 2012, July 30, 2013, December 7, 2014, December 7, 2016, January 1, 2019, and further amended and restated as of January 1, 2025

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SERP Notional Account. Any such payment shall be made within 90 days of the date of the Member's death.

**7. Disability**

A Member who is considered disabled under the Base Plans, and who continues, on that basis, to accrue credited service, pension credits, or company contributions under such Base Plans, as the case may be, shall continue to accrue Annual Contribution Credits for the purposes of the DC SERP, on the basis of his salary rate at the time his disability began.

Benefits will only be paid from the DC SERP upon the Member's actual Separation from Service, as described in Sections 3, 4, 5 or 6 above, as applicable.

**8. Administration**

8.1 <u>Administration by Administrator</u>. The Board will designate an Administrator and the DC SERP will be administered by the Administrator, or by any other person or group identified by such Administrator. Effective January 1, 2025, the Board designates the Company's Pension Administration Committee as the Administrator of the DC SERP, which such designation may be rescinded or amended by the Board at any time in its discretion.

8.2 <u>Rules and Regulations of Administrator</u>. The Administrator shall have the authority to make such rules and regulations and to take such action as may be necessary to carry out the provisions of the DC SERP and will, subject to the provisions of the DC SERP, decide any questions arising in the administration, interpretation and application of the DC SERP, which decisions shall be conclusive and binding on all parties. The Administrator may allocate or delegate any part of its authority and duties as it deems expedient.

8.3 <u>Powers of Administrator</u>. In order to effectuate the purposes of the DC SERP, the Administrator shall have the power to construe the DC SERP and to make equitable adjustments for any mistakes or errors made in the administration of the DC SERP, and all such actions or determinations made by the Administrator in good faith shall be final and binding on the Members.

8.4 <u>Duties of Administrator</u>. The Administrator shall, in its sole discretion, as a part of its general duty to supervise and administer the DC SERP:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Determine all facts and maintain records with respect to Member, and by application of the facts so determined and any other facts deemed material, determine the amount, if any, of benefit payable under the DC SERP on behalf of a Member;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Make all determination with respect to, or provide the Record-keeper, if any, with guidance on, the making of payments, the amounts to be paid and the time or times when payments shall be made and benefit amounts payable under the DC SERP;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) Comply (or transfer responsibility for compliance to the Record-keeper, Trustee or other paying agent, if any) with all applicable tax payment and withholding requirements related to the DC SERP;

DC SERP for Designated Executives of Domtar Corporation and Its Affiliates

As in effect on March 7, 2007, amended and restated on September 1, 2012, July 30, 2013, December 7, 2014, December 7, 2016, January 1, 2019, and further amended and restated as of January 1, 2025

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) Engage on behalf of all Members an independent qualified public accountant and an enrolled actuary, as applicable.

The foregoing list of express duties is not intended to be either complete or conclusive, and the Administrator shall, in addition, exercise such other powers and perform such other duties as it may deem necessary, desirable, advisable or proper for the supervision and administration of the DC SERP.

8.5 <u>Information Required by Administrator</u>. Each Member or beneficiary entitled to benefits under the DC SERP must file with the Administrator from time to time such Member's or beneficiary's post office address and each change of post office address. Any communication, statement, or notice addressed to any Member or beneficiary at the last post office address filed with the Administrator will be binding upon such person or entity for all purposes of the DC SERP. Each Member or beneficiary entitled to benefits under the DC SERP also shall furnish the Administrator with such documents, evidence, data, or information as the Administrator considers necessary or desirable for the purposes of administering the DC SERP. The Company's records as to a Member's period of employment, Separation from Service and the reason therefore, leave of absence, reemployment, and compensation will be conclusive on all Members and beneficiaries unless determined to the Administrator's satisfaction to be incorrect.

8.6 <u>Uniform Application of Rules</u>. The Administrator shall administer the DC SERP on a reasonable basis. Any rules, procedures, or regulations established by the Administrator shall be applied uniformly to all persons similarly situated, unless otherwise provided by the DC SERP or if such action would not result in the effective administration of the DC SERP by the Administrator.

8.7 <u>Service of Process</u>. In the absence of any designation to the contrary by the Administrator, the Secretary of the Corporation is designated as the appropriate and exclusive agent for the receipt of service of process directed to the DC SERP in any legal proceeding, including arbitration, involving the DC SERP.

8.8 <u>Determinations</u>. Unless otherwise delegated by the DC SERP to the Board, the Administrator shall make such determinations as may be required from time to time in the administration of the DC SERP. Subject to the foregoing sentence, the Administrator shall have the sole discretion, authority and responsibility to interpret and construe this DC SERP document and to determine all factual and legal questions under the DC SERP, including but not limited to the entitlement of any persons to benefits and the amounts of their benefits. The Trustee, Record-keeper and other interested parties may act and rely upon all information reported to them hereunder and need not inquire into the accuracy thereof nor be charged with any notice to the contrary.

**9. Funding**

This Section 9 does not apply to U.S. Taxpayers.

9.1 The Company shall arrange for the issuance of a new Letter of Credit, or the renewal of an existing Letter of Credit, in accordance with this Section 9, and in accordance with the Trust Agreement, in respect of benefits payable under the DC SERP on behalf of persons who were Members and were actively employed by the Company on the effective date of the Trust Agreement or who become Members thereafter, provided such persons or their survivors who are

DC SERP for Designated Executives of Domtar Corporation and Its Affiliates

As in effect on March 7, 2007, amended and restated on September 1, 2012, July 30, 2013, December 7, 2014, December 7, 2016, January 1, 2019, and further amended and restated as of January 1, 2025

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entitled to benefits under the DC SERP are not U.S. Taxpayers. On the effective date of the Trust Agreement, the DC SERP shall become a retirement compensation arrangement within the meaning of the *Income Tax Act*.

Coverage in respect of benefits under the DC SERP by the Letter of Credit shall cease once all benefits payable under the DC SERP on behalf of a person have been paid. Coverage in respect of benefits under the DC SERP by the Letter of Credit shall also cease with respect to all benefits when a Member becomes a U.S. Taxpayer.

The amount of the Letter of Credit shall be determined in accordance with an actuarial valuation performed in accordance with the Trust Agreement.

Coverage by the Letter of Credit for benefits payable under the DC SERP may be combined with coverage for benefits payable under the DB SERP for Management Committee Members of Domtar and the Supplementary Pension Plan for Designated Managers of Domtar Inc.

If an event of Default occurs, benefits covered by the Letter of Credit shall be settled in a lump sum amount and the 10 annual instalments option provided in Section 3 shall no longer apply. Subject to the terms of the Trust Agreement, the lump sum amount shall correspond to the DC SERP Notional Account if the Member had completed two years of service as a Member at the date of Default, and shall be nil otherwise.

9.2 Where a Letter of Credit is issued or renewed in accordance with this Section 9, the Company shall arrange with the issuer thereof to issue or renew, as the case may be, the Letter of Credit in the name of the Trustee, to be held by the Trustee as part of the Trust Fund.

9.3 To secure the issuance or renewal of a Letter of Credit, the Company shall contribute to the Trust Fund the amount that, after the withholding and payment of the Refundable Tax therefrom to the extent required by law, is required by the issuer of the Letter of Credit for the issuance or renewal of the Letter of Credit, as the case may be.

9.4 On or before the Renewal Date of a particular Letter of Credit held by the Trustee, the Company shall either:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) cause the issuer of the particular Letter of Credit to renew it on the same terms and conditions as applied before the renewal;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) substitute for the particular Letter of Credit another Letter of Credit on the same terms and conditions as the particular Letter of Credit; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) contribute to the Trust Fund the face amount of the Letter of Credit or such other amount required in accordance with the last actuarial valuation report.

9.5 Where the Company does not comply with paragraph 9.4 or where there occurs a Default, the Trustee shall forthwith demand payment under the Letter of Credit.

9.6 In this Section 9,

DC SERP for Designated Executives of Domtar Corporation and Its Affiliates

As in effect on March 7, 2007, amended and restated on September 1, 2012, July 30, 2013, December 7, 2014, December 7, 2016, January 1, 2019, and further amended and restated as of January 1, 2025

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"Letter of Credit" means an irrevocable, standby, unsecured letter of credit obtained from a Schedule 1 Canadian Bank or other lender with a term of one year which names the Trustee as beneficiary permitted to draw down (an amount up to the face amount) on the Letter of Credit on the occurrence of a Default or a failure by the Company to comply with paragraph 9.4;

"Renewal Date", in relation to a Letter of Credit, means the date that is thirty (30) days before the Letter of Credit is to expire.

9.7 For more certainty, in the event that, for whatever reason, the assets of the Trust Fund are insufficient to settle in full the benefits payable under the DC SERP as and when they become due, notwithstanding any other provision of this Section 9, the Company shall remain responsible for the payment of such remaining benefits.

9.8 Nothing herein shall be interpreted as (i) limiting the right of the Company to claim a refund of Refundable Tax as contemplated under the *Income Tax Act*, or (ii) the authority of the Administrator to take such actions (including providing directions to the Trustee) as may be necessary or desirable to allow the Company to obtain such a refund.

**10. Non-Alienation of Benefits**

No benefit payable under the provisions of the DC SERP shall be in any manner capable of anticipation, surrender, commutation, alienation, sale, transfer, assignment, pledge, encumbrance or charge; nor shall any such benefit be in any manner subject to the debts, contracts, liabilities, engagements or torts of the person entitled to such benefit, except as specifically provided in any applicable legislation.

**11. Conflicts or Inconsistencies**

In the event of any conflict or inconsistency between the provisions of the DC SERP and the provisions of the Base Plans, the provisions of the DC SERP shall prevail.

**12. Amendments**

The Board reserves the right to amend or terminate the DC SERP at any time. Subject to Section 13.6, no change or termination shall adversely affect any benefits that have accrued up to the effective date of such change, which effective date shall not precede the date on which the change is communicated to the Member. Notwithstanding the foregoing, any amendment to this DC SERP which is the result of a change to the Base Plans shall take effect as of the same date as applicable in respect of the amendment to the Base Plans.

**13. General Provisions**

**13.1 Currency**

Notwithstanding anything to the contrary herein, all payments under the DC SERP shall be in Canadian currency for Members employed in Canada, and in U.S. currency for Members employed in the United States, in each case as of the last date of employment with the Company or its Affiliates. Any Annual Contribution Credit and any future Notional Returns on such Annual

DC SERP for Designated Executives of Domtar Corporation and Its Affiliates

As in effect on March 7, 2007, amended and restated on September 1, 2012, July 30, 2013, December 7, 2014, December 7, 2016, January 1, 2019, and further amended and restated as of January 1, 2025

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Contribution Credit shall be in the currency of the applicable Base Plan used for the determination of such Annual Contribution Credit.

**13.2 Withholding and reporting**

All payments under the DC SERP are expressed on a pre-tax basis and shall be subject to applicable withholding tax and reporting pursuant to applicable legislation.

**13.3 Interpretation**

The DC SERP shall be interpreted, with respect to a Member, in accordance with the laws of the same jurisdiction as applicable for purposes of the Member's employment agreement with the Company or its Affiliate, which is in force at the relevant time, or in the absence of an employment agreement, with the law of the Province of Québec for a Member employed in Canada, and with the law of the State of South Carolina for a Member employed in the United States.

**13.4 Entire Agreement; Limited Effect of Restatement**

Except to the extent expressly contemplated by the Administrator at the time of adoption of the DC SERP, the DC SERP supersedes and replaces any and all prior plans, agreements, arrangements or understandings between the Company, its Affiliates and the Member regarding any retirement benefits to be provided to the Member in excess of those that may be payable in accordance with the provisions of the Base Plans. Notwithstanding any provision of the DC SERP to the contrary, to the extent permitted by applicable law, this instrument shall not affect the availability, amount, form or method of payment of benefits being paid before the effective date hereof to any Member or former Member (or a beneficiary of either) in the DC SERP who is not an active Member on or after the effective date hereof, said availability, amount, form or method of payment of benefits, if any, to be determined in accordance with the applicable provisions of the DC SERP as in effect prior to the effective date hereof.

**13.5 Severability**

Should any of the provisions of the DC SERP and/or conditions be illegal or not enforceable, it or they shall be considered severable and the DC SERP and the remaining conditions shall remain in full force and effect and be binding upon the parties as though the said provision or provisions had never been included.

**13.6 Enurement**

The DC SERP shall enure to the benefit of and be binding upon the respective successors of the parties hereto, and the heirs, administrators and legal representatives of the Member.

**13.7 Section 409A**

The DC SERP is intended to be administered in compliance with Section 409A and each provision of the DC SERP shall be interpreted consistent with Section 409A. Neither the Company, its Affiliates nor any of their directors, officers or employees shall have any liability to a Member in the event Section 409A applies to any benefit paid or provided pursuant to the DC

DC SERP for Designated Executives of Domtar Corporation and Its Affiliates

As in effect on March 7, 2007, amended and restated on September 1, 2012, July 30, 2013, December 7, 2014, December 7, 2016, January 1, 2019, and further amended and restated as of January 1, 2025

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SERP in a manner that results in adverse tax consequences for the Member or any of his or her beneficiaries or transferees. The Administrator may unilaterally amend, modify or terminate any benefit provided under the DC SERP if it determines, in its sole discretion, that such amendment, modification or termination is necessary or advisable to comply with applicable U.S. law as a result of changes in law or regulation or to avoid the imposition of an additional tax, interest or penalty under Section 409A.

13.8 **Claims Procedure** The Administrator has adopted the claims procedures set forth in Appendix C hereto, in accordance with Department of Labor Regulations Section 2560.503-1.

DC SERP for Designated Executives of Domtar Corporation and Its Affiliates

As in effect on March 7, 2007, amended and restated on September 1, 2012, July 30, 2013, December 7, 2014, December 7, 2016, January 1, 2019, and further amended and restated as of January 1, 2025

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**<u>APPENDIX A</u>**

**Executives covered under a grandfathered SERP arrangement as at March 7, 2007**

Steven Barker <br>Kevin Bélanger <br>Guy Boucher <br>Roger Brear <br>Gerald Gray <br>Timothy Houle<br>Gérard Lacombe <br>James Lenhoff <br>Martin Lorrion<br>Dominic Maiorino<br>Stewart Marcoux <br>Gildas Minville <br>Gilles Pharand<br>Raymond Royer<br>Louis Schiavone <br>Ross Stairs <br>Nicholas Willis

DC SERP for Designated Executives of Domtar Corporation and Its Affiliates

As in effect on March 7, 2007, amended and restated on September 1, 2012, July 30, 2013, December 7, 2014, December 7, 2016, January 1, 2019, and further amended and restated as of January 1, 2025

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**<u>APPENDIX B</u>**

[CONFIDENTIAL]

DC SERP for Designated Executives of Domtar Corporation and Its Affiliates

As in effect on March 7, 2007, amended and restated on September 1, 2012, July 30, 2013, December 7, 2014, December 7, 2016, January 1, 2019, and further amended and restated as of January 1, 2025

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**<u>APPENDIX C</u>**

**<u>Claims Procedures for Domtar DC SERP</u>** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Claims for benefits</u>. These claims procedures shall apply with respect to Members who are U.S. Taxpayers of the Domtar DC SERP for Designated Executives of Domtar Corporation and Its Affiliates (the "DC SERP"), in accordance with Department of Labor Regulations Section 2560.503-1.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Initial claim review</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Nondisability claims</u>. All claims for benefits under the DC SERP, other than claims based on a disability, shall be submitted in writing to the Company's Chief Human Resources Officer (the "CHRO") or the CHRO's designee (references herein to the CHRO shall include both the CHRO and the CHRO's designee, if applicable). The CHRO shall review the claim when filed and advise the claimant as to whether the claim is approved or denied. If the claim is wholly or partially denied, the CHRO shall furnish a written or electronic denial within a reasonable period of time, but not later than 90 days after receipt of the claim by the DC SERP, unless the CHRO determines that special circumstances require an extension of time for processing the claim. If the CHRO determines that an extension of time for processing a claim is required, written notice of the extension shall be furnished to the claimant prior to the expiration of the initial 90-day period, which shall indicate the special circumstances requiring an extension of time and the date by which the DC SERP expects to render a decision. In no event shall such extension exceed a period of 90 days from the end of such initial period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Disability claims</u>. All claims for benefits under the DC SERP that are based on a disability (as referred to in the DC SERP) shall be submitted in writing to the CHRO. The CHRO shall review the claim when filed and advise the claimant as to whether the claim is approved or denied. If the claim is wholly or partially denied, the CHRO shall, within a reasonable period of time, but no later than 45 days after receipt of the claim, notify the claimant in writing of the denial of the claim. This 45-day period may be extended up to 30 days if such an extension is necessary due to matters beyond the control of the DC SERP, and the claimant is notified, prior to the expiration of the initial 45-day period, of the circumstances requiring the extension of time and the date by which the DC SERP expects to render a decision. If, prior to the end of the first 30-day extension period, the CHRO determines that, due to matters beyond the control of the DC SERP, a decision cannot be rendered within that extension period, the period for making the determination may be extended for up to an additional 30 days, provided that the CHRO notifies the claimant, prior to the expiration of the first 30-day extension period, of the circumstances requiring the extension and the date as of which the DC SERP expects to render a decision. In the case of any extension, the notice of extension also shall specifically explain the standards on which entitlement to a benefit is based, the unresolved issues that prevent a decision on the claim, and the additional information needed to resolve those issues, and the claimant shall be afforded at least 45 days within which to provide the specified information. If the extension is due to the claimant's failure to submit information necessary to decide the claim, the period for making the benefit determination shall be tolled from the date on which the notification of the extension is sent to

DC SERP for Designated Executives of Domtar Corporation and Its Affiliates

As in effect on March 7, 2007, amended and restated on September 1, 2012, July 30, 2013, December 7, 2014, December 7, 2016, January 1, 2019, and further amended and restated as of January 1, 2025

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the claimant until the date on which the claimant responds to the request for additional information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(c) Denial of claim</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>All claims</u>. If the CHRO denies the claim for a benefit in whole or in part, the CHRO shall provide the claimant a written or electronic notice of the adverse benefit determination. The notification shall set forth, in a manner calculated to be understood by the claimant, (1) the specific reason or reasons for the adverse benefit determination; (2) reference to the specific DC SERP provisions on which the determination is based; (3) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; (4) a description of the DC SERP's review procedures and the time limits applicable to such procedures, including a statement of the claimant's right to bring a civil action under section 502(a) of the Employee Retirement Income Security Act of 1974 ("**ERISA**") following an adverse benefit determination on review.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(ii) Disability claims only</u>. If an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination, the notice of the adverse benefit determination shall cite to the specific rule, guideline, protocol, or other similar criterion; or include a statement that such a rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination and that a copy of such rule, guideline, protocol, or other criterion will be provided free of charge to the claimant upon request. If the adverse benefit determination was based on a medical necessity or experimental treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment, applying the terms of the DC SERP to the claimant's medical circumstances, shall be provided free of charge, or the claimant may be informed that such explanation shall be provided free of charge upon request.

DC SERP for Designated Executives of Domtar Corporation and Its Affiliates

As in effect on March 7, 2007, amended and restated on September 1, 2012, July 30, 2013, December 7, 2014, December 7, 2016, January 1, 2019, and further amended and restated as of January 1, 2025

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(d) Appeal of adverse benefit determination.</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(i) Nondisability determination</u>. A claimant may appeal the denial of the claim to the Pension Administration Committee (the "PAC") or its designee within 60 days after receipt of the adverse benefit determination (references herein to the PAC shall include both the PAC and its designee, if appliable).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Disability determination</u>. If the claim for a disability benefit is denied in full or in part, the claimant shall have the right to appeal the decision to the PAC within 180 days after receipt of the adverse benefit determination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>All determination appeals</u>. The appeal shall be in writing addressed to the PAC and shall state the reason why the PAC should grant the appeal. The claimant may submit written comments, documents, records, and other information relating to his claim for benefits. Upon request, the claimant shall be provided free of charge and reasonable access to, and copies of, all documents, records and other information relevant to his claim.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(e) Review of appealed claim.</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(i) All claims</u>. The PAC shall conduct a full and fair review of the claim that takes into account all comments, documents, records, and other information submitted by the claimant or his authorized representative relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. The review shall not afford deference to the initial benefit determination and shall be conducted by one or more individuals who are neither those who made the adverse benefit determination that is the subject of the appeal, nor the subordinates of such individuals.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(ii) Disability claims only</u>. If the initial claim was denied in whole or in part due to a medical judgment, the PAC shall consult a healthcare professional who has appropriate training and experience in the field of medicine relating to the claimant's disability and who was neither consulted as part of the initial denial nor is the subordinate of any healthcare professional who was consulted as part of the initial denial. The CHRO shall identify the medical or vocational experts whose advice was obtained with respect to the initial benefit denial, without regard to whether the advice was relied upon in making the decision.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(f) Timing of review on appeal.</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Nondisability claims</u>. The PAC shall notify the claimant of the determination on review within a reasonable period of time, but not later than 60 days after receipt of the appeal unless the PAC determines that special circumstances require an extension of time for processing the claim. If the PAC determines that an extension of time for processing is required, the PAC shall notify the claimant in writing prior to the termination of the initial 60-day period, indicating the special circumstances that require an extension of time and the date the DC SERP expects to render a determination on appeal. In no event shall such extension exceed a period of 60 days from the end of such initial period. If such an extension of time for review is required because of special circumstances, the PAC shall provide the claimant with written notice of the extension, describing the special circumstances and the date as of which the benefit determination will be made, prior to the commencement of the extension. The PAC shall notify the claimant, in

DC SERP for Designated Executives of Domtar Corporation and Its Affiliates

As in effect on March 7, 2007, amended and restated on September 1, 2012, July 30, 2013, December 7, 2014, December 7, 2016, January 1, 2019, and further amended and restated as of January 1, 2025

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accordance with paragraph (vi) below, of the benefit determination as soon as possible, but not later than 5 days after the benefit determination is made.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(ii) Disability claims</u>. The PAC shall notify the claimant of the determination on review within a reasonable period of time, but not later than 45 days after receipt of the request for review, unless the PAC determines that special circumstances require an extension of time for processing the claim. If the PAC determines that an extension of time for processing is required, the PAC shall notify the claimant in writing prior to the termination of the initial 45-day period, indicating the special circumstances that require an extension of time and the date the DC SERP expects to render a determination on appeal. In no event shall such extension exceed a period of 45 days from the end of such initial period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(iii) All claims</u>. If the extension under paragraph (v)(1) or (v)(2) is due to the claimant's failure to submit information necessary to decide the claim, the period for making the benefit determination shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>(g) Denial on appeal.</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>All claims</u>. If the PAC denies the claim on appeal, it shall furnish the claimant a written or electronic adverse benefit determination, stating the reasons for the denial in a manner calculated to be understood by the claimant, and shall make specific references to the pertinent DC SERP provisions on which the benefit determination is based. The notification of the benefit determination also shall include a statement of the claimant's right to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant's claim for benefits and to bring a civil action under section 502(a) of ERISA. The CHRO shall have complete discretion in deciding an initial claim for benefits, and the PAC shall have complete discretion as to whether any such claim shall be allowed or denied on appeal. The PAC's decision upon appeal, or the CHRO's initial decision if no appeal is taken, shall be final, conclusive and binding on all parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Disability claims only</u>. If an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination, notice shall cite to the specific rule, guideline, protocol, or other similar criterion shall be provided free of charge, or the claimant may be informed that such rule, guideline, protocol, or other criterion shall be provided free of charge upon request. If the adverse benefit determination was based on a medical necessity or experimental treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment, applying the terms of the DC SERP to the claimant's medical circumstances, shall be provided free of charge, or the claimant may be informed that such explanation shall be provided free of charge upon request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Relevant documents and records</u>. For purposes of these claim procedures, a document, record or other information is "relevant" if it: (i) was relied on in making the claim decision; (ii) was submitted, considered or generated in making the decision; or (iii) demonstrates compliance with the DC SERP's procedural and administrative safeguards. In the case of a disability claim for benefits, a document, record or other information shall be considered "relevant" to a claimant's claim if such document, record, or other information constitutes a statement of

DC SERP for Designated Executives of Domtar Corporation and Its Affiliates

As in effect on March 7, 2007, amended and restated on September 1, 2012, July 30, 2013, December 7, 2014, December 7, 2016, January 1, 2019, and further amended and restated as of January 1, 2025

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policy or guidance with respect to the DC SERP concerning the denied treatment option or benefit for the claimant's diagnosis, without regard to whether such advice or statement was relied upon in making the benefit determination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Deadline to File Claim</u>. To be considered timely under the DC SERP's claim and review procedure, a claim must be filed with the Administrator within one (1) year after the claimant knew or reasonably should have known of the principal facts upon which the claim is based.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>Exhaustion of Administrative Remedies</u>. The exhaustion of the claim and review procedure is mandatory for resolving every claim and dispute arising under the DC SERP. As to such claims and disputes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) No claimant shall be permitted to commence any legal action to recover DC SERP benefits or to enforce or clarify rights under the Plan under section 502 or section 510 of ERISA or under any other provision of law, whether or not statutory, until the claim and review procedure set forth herein have been exhausted in their entirety; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) In any such legal action all explicit and all implicit determinations by the PAC (including, but not limited to, determinations as to whether the claim, or a request for a review of a denied claim, was timely filed) shall be afforded the maximum deference permitted by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>Deadline to File Legal Action</u>. No legal action to recover Plan benefits or to enforce or clarify rights under the Plan under section 502 or section 510 of ERISA or under any other provision of law, whether or not statutory, may be brought by any claimant on any matter pertaining to the Plan unless the legal action is commenced in the U.S. District Court in the state of South Carolina that is nearest to Fort Mill, South Carolina, which is where this Plan is administered, before the earlier of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Thirty (30) months after the claimant knew or reasonably should have known of the principal facts on which the claim is based, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Six (6) months after the claimant has exhausted the claim and review procedure.

DC SERP for Designated Executives of Domtar Corporation and Its Affiliates

As in effect on March 7, 2007, amended and restated on September 1, 2012, July 30, 2013, December 7, 2014, December 7, 2016, January 1, 2019, and further amended and restated as of January 1, 2025

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## Exhibit 10.7

**Exhibit 10.7**

**RESTRICTED UNIT AGREEMENT** 

**FOR AWARDS GRANTED IN 2025**

RESTRICTED UNIT AGREEMENT (the "<u>Agreement</u>") dated as of the Grant Date set forth in the *2025 Long-Term Incentive Plan Overview* (the "<u>Notice of Grant</u>"), between Domtar Corporation (the "<u>Company</u>"), its Affiliates and the participant whose name appears in the Notice of Grant in each individual packet (the "<u>Participant</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.<u>Grant of Restricted Units.</u> The Company confirms its grant to the Participant, effective as of the Grant Date, of the number of Restricted Units specified in the Notice of Grant delivered by the Company to the Participant. This Agreement is subordinate to, and the terms and conditions of the Restricted Units granted hereunder are subject to, the terms and conditions of the Domtar Corporation Amended and Restated Long-Term Incentive Plan (the "<u>Plan</u>"), which are incorporated by reference herein. If there is any inconsistency between the terms hereof or the terms in the Notice of Grant and the terms of the Plan, the terms of the Plan shall govern. Any capitalized terms used herein without definition shall have the meanings set forth in the Plan. The Restricted Units shall be considered Service Awards under the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.<u>Vesting of Restricted Units</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)<u>Vesting</u>. Except as otherwise provided in this Section 2, the Restricted Units shall become vested, if at all, on the vesting date(s) set forth in the Notice of Grant (each, a "<u>Vesting Date</u>"), subject to the continued employment of the Participant by the Company or one of its Affiliates through such date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)<u>Termination of Employment</u>.<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.<u>Death or Disability</u>. If the Participant's employment is terminated due to death or Disability prior to the Vesting Date, 100% of the Restricted Units shall become fully vested and non-forfeitable and shall be paid as provided in Section 3. The Plan Administrator may, in its discretion, condition any such vesting on the Participant first providing the Company and its Affiliates with a release of claims in such form as the Plan Administrator may require.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.<u>Retirement</u>. If the Participant's employment is terminated due to Retirement by the Participant, the Participant shall be deemed

------

**Exhibit 10.7**

vested in the number of Restricted Units that would have vested had the Participant's Service continued until the Vesting Date, multiplied by a fraction, the numerator of which is the number of days elapsed from the Grant Date through the date of the Participant's Retirement and the denominator of which is the number of days from the Grant Date to the Vesting Date, and any remaining Restricted Units shall be forfeited and canceled as of the date of such Retirement for no consideration, and without any further action required by either the Participant or the Company and its Affiliates. Vested Restricted Units shall be settled as set forth in Section 3. The Plan Administrator may, in its discretion, condition any such vesting on the Participant first providing the Company and its Affiliates with a release of claims in such form as the Plan Administrator may require.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii.<u>Any Other Reason</u>. If the Participant's employment is terminated prior to the Vesting Date for any reason other than those included in Sections 2(b)(i)-(iii), all Restricted Units shall immediately be forfeited and canceled effective as of the date of the Participant's Termination of Service, unless otherwise determined by the Plan Administrator.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)<u>Change in Control</u>. In the event of a Change in Control, then the Restricted Units shall vest as set forth in the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)<u>Plan Administrator Discretion.</u> Notwithstanding anything contained in this Agreement to the contrary, the Plan Administrator, in its sole discretion, may accelerate the vesting with respect to any Restricted Units under this Agreement, at such times and upon such terms and conditions as the Plan Administrator shall determine.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.<u>Settlement of Restricted Units</u>. Subject to Section 5(d), the Company or its Affiliates shall deliver to the Participant in cash, the value of each outstanding Restricted Unit that has vested as provided in Section 2 on or within 30 days after the first to occur of (<u>i</u>) the Vesting Date and, (<u>ii</u>) in the event of a Termination of Service as provided in Sections 2(b)(i) or (ii), (<u>A</u>) such Termination of Service or (<u>B</u>) notwithstanding the preceding clause (A), if the Participant is a United States citizen or resident or the Participant's Restricted Units are otherwise subject to United States federal income tax, January 31 of the year immediately following the year of the Participant's Termination of Service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.<u>Participant's Rights with Respect to the Restricted Units</u>.

------

**Exhibit 10.7**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)<u>Nontransferability of Awards.</u> The Restricted Units granted hereby are not assignable or transferable, in whole or in part, and may not, directly or indirectly, be offered, transferred, sold, pledged, assigned or otherwise encumbered except by will or by the laws of descent and distribution to the estate of the Participant upon the Participant's death; provided that the deceased Participant's beneficiary or representative of the Participant's estate shall acknowledge and agree in writing, in a form reasonably acceptable to the Plan Administrator, to be bound by the provisions of this Agreement and the Plan as if such beneficiary or the estate were the Participant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.<u>Miscellaneous</u>.<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)<u>Binding Effect; Benefits.</u> This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and assigns. Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the parties to this Agreement or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)<u>No Right to Continued Employment.</u> Nothing in the Plan or this Agreement shall interfere with or limit in any way the right of the Company or its Affiliates to terminate the Participant's employment at any time or confer upon the Participant any right to continue in the employ of the Company or its Affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)<u>Interpretation.</u> The Plan Administrator shall have full power and discretion to construe and interpret the Plan (and any rules and regulations issued thereunder) and this Award. Any determination or interpretation by the Plan Administrator under or pursuant to the Plan or this Award shall be final and binding and conclusive on all persons affected hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)<u>Tax Withholding.</u> The Company or the Participant's Employer shall have the right to deduct from all amounts paid to the Participant in cash (whether under the Plan or otherwise) any amount of taxes required by law to be withheld in respect of settlement of the Restricted Units under the Plan as may be necessary in the opinion of the Employer to satisfy tax withholding required under the laws of any country, state, province, city or other jurisdiction, including but not limited to income taxes, capital gains taxes, transfer taxes, and social security contributions that are required by law to be withheld.

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**Exhibit 10.7**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e)<u>Forfeiture for Financial Reporting Misconduct or Detrimental Activity.</u> If the Company is required to prepare an accounting restatement due to material noncompliance by the Company with any financial reporting requirement and if the Participant knowingly or grossly negligently engaged in the misconduct or knowingly or grossly negligently failed to prevent the misconduct as determined by the Plan Administrator, or if the Participant is one of the individuals subject to automatic forfeiture under Section 304 of the *Sarbanes-Oxley Act of 2002*, then the Participant shall forfeit and disgorge to the Company (<u>i</u>) any Restricted Units granted or vested or (<u>ii</u>) any cash received in respect of Restricted Units that vested based on the materially non- complying financial reporting. The Company may also cancel or reduce, or require a Participant to forfeit and disgorge to the Company or reimburse the Company for, any Restricted Units granted or vested and any gains earned or accrued, due to the vesting or settlement of Restricted Units to the extent permitted or required by, or pursuant to any Company policy implemented as required by applicable law. In addition, the Award is subject to reduction, cancellation, forfeiture or recoupment in the event (<u>a</u>) the Participant engages in any Detrimental Activity; (<u>b</u>) of the Participant's serious misconduct or breach of fiduciary duty; or (<u>c</u>) the Participant's violation of the Company's or Affiliate's or a Subsidiary's policies. The determination of whether a Participant's conduct, activities or circumstances are described in the immediately preceding sentence shall be made by the Plan Administrator in its good faith discretion, and pending any such determination, the Plan Administrator shall have the authority to suspend the payment, delivery or settlement of all or any portion of such Participant's outstanding Awards pending an investigation of the matter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f)<u>Applicable Law.</u> This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware regardless of the application of rules of conflict of law that would apply the laws of any other jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g)<u>Limitation on Rights; No Right to Future Grants; Extraordinary Item of Compensation.</u> By entering into this Agreement and accepting the Restricted Units evidenced hereby, the Participant acknowledges: (<u>a</u>) that the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (<u>b</u>) that the Award does not create any contractual or other right to receive future grants of Awards; (<u>c</u>) that participation in the Plan is voluntary; (<u>d</u>) that the value of the Restricted Units is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service Awards, pension or retirement benefits or similar payments;

------

**Exhibit 10.7**

and (e) that the future value of the Units is unknown and cannot be predicted with certainty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h)<u>Employee Data Privacy.</u> By entering into this Agreement and accepting the Restricted Units evidenced hereby, the Participant: (<u>a</u>) authorizes the Company and its Affiliates and the Participant's employer or, if different, any agent of the Company administering the Plan or providing Plan recordkeeping services, to disclose to the Company or any of its Affiliates any information and data the Company or its Affiliates requests in order to facilitate the grant of the Award and the administration of the Plan; (<u>b</u>) waives any data privacy rights the Participant may have with respect to such information; and (<u>c</u>) authorizes the Company, its Affiliates and their agents to store and transmit such information in electronic form.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i)<u>Consent to Electronic Delivery.</u> By entering into this Agreement and accepting the Restricted Units evidenced hereby, Participant hereby consents to the delivery of information (including, without limitation, information required to be delivered to the Participant pursuant to applicable securities laws) regarding the Company, the Plan, this Agreement and the Restricted Units via Company or Affiliate web site or other electronic delivery.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j)<u>Headings and Captions.</u> The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;k)<u>Counterparts.</u> This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.

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## Exhibit 10.8

**Exhibit 10.8**

**PERFORMANCE UNIT AGREEMENT** 

**FOR AWARDS GRANTED IN 2025**

PERFORMANCE UNIT AGREEMENT (the "<u>Agreement</u>") dated as of the Grant Date set forth in the *2025 Long-Term Incentive Plan Overview* (the "<u>Notice of Grant</u>"), between Domtar Corporation (the "<u>Company</u>"), its Affiliates and the participant whose name appears in the Notice of Grant in each individual packet (the "<u>Participant</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.<u>Grant of Performance Units.</u> The Company confirms its grant to the Participant, effective as of the Grant Date, the number of Performance Units specified in the Notice of Grant delivered by the Company to the Participant. This Agreement is subordinate to, and the terms and conditions of the Performance Units granted hereunder are subject to, the terms and conditions of the Domtar Corporation Amended and Restated Long-Term Incentive Plan (the "Plan"), which are incorporated by reference herein. If there is any inconsistency between the terms hereof or the terms in the Notice of Grant and the terms of the Plan, the terms of the Plan shall govern. Any capitalized terms used herein without definition shall have the meanings set forth in the Plan. The Performance Units shall be considered Performance Awards under the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.<u>Vesting of Performance Units</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)<u>Vesting</u>. Except as otherwise provided in this Section 2, the Performance Units shall become vested, if at all, on the vesting date(s) set forth in the Notice of Grant (each, a "<u>Vesting Date</u>"), subject to the continued employment of the Participant by the Company through such date, and to the achievement of the Performance Goals (the "<u>Goals</u>") established by the Plan Administrator pursuant to the Plan for the Performance Units for the <u>Performance Cycle</u> and/or related Performance Measurement Period(s) set forth in the Notice of Grant. As soon as feasible after the end of each Performance Cycle or, as applicable, after the end of the Performance Measurement Period, the Plan Administrator will determine whether the Goals have been satisfied, in whole or in part. Based upon the foregoing determination, the number of Performance Units will vest on the Vesting Date on a percentage basis, as set forth in the Notice of Grant. Performance Units that have not vested by the Vesting Date in accordance with this Section 2 shall be forfeited for no consideration and without any further action required by either the Participant or the Company and its Affiliates

------

**Exhibit 10.8**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)<u>Termination of Employment</u>.<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.<u>Death</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.*During a Performance Cycle.* If the Participant's employment with the Company or any Affiliate terminates due to the Participant's death during the Performance Cycle, the Participant shall become vested in a pro-rata number of Performance Units and entitled to receive a number of Performance Units based on actual Goal achievement for any Performance Measurement Periods completed before the date of death and target Goal achievement for any Performance Measurement Periods not completed before the date of death. Such pro-rata number of the Performance Units shall be equal to (A) the total number of granted Performance Units under Section 1 multiplied by (B) a fraction, the numerator of which shall be number of days elapsed from the commencement of the Performance Cycle through the end of the calendar year that contains the Participant's date of death and the denominator of which shall be the number of days in the Performance Cycle. Such vested Performance Units, if any, shall be paid to the Participant's beneficiary or estate as provided in Section 3, and any Performance Units that do not vest in accordance with the foregoing sentence shall be forfeited and canceled for no consideration as of the date of the Participant's Termination of Service without any further action required by either the Participant or the Company and its Affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.*Following a Performance Cycle, Prior to Settlement.* If the Participant's employment is terminated due to death after the end of any Performance Cycle but prior to the settlement date, the Participant's estate shall be entitled to receive, and such Performance Units shall be deemed vested to the extent of, the number of Performance Units that would have been payable with respect to the Performance Units relating to such Performance Cycle had the Participant's Service continued until the settlement date, subject to achievement of the Goals, and the remainder of such Performance Units shall be forfeited and canceled for no consideration as of the date of the Participant's Termination of Service without any further action required by either the Participant or the Company and its Affiliates.

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**Exhibit 10.8**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.<u>Disability or Retirement</u>. If the Participant's employment is terminated due to Disability or Retirement prior to the Vesting Date, then, on the Vesting Date the Participant shall be deemed vested to the extent of the number of Performance Units that would have vested had the Participant's Service continued until the Vesting Date, subject to achievement of the Goals, multiplied by a fraction, the numerator of which is the number of days elapsed from the commencement of the Performance Cycle through the date of the Participant's termination due to Disability or Retirement, as applicable, and the denominator of which is the number of days in the Performance Cycle, and the remainder of the Performance Units shall be forfeited and canceled for no consideration as of the date of such termination due to Disability or Retirement, as applicable. The Plan Administrator may, in its discretion, condition any such vesting on the Participant first providing the Company and its Affiliates with a release of claims in such form as the Plan Administrator may require.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii.<u>Any Other Reason</u>. If the Participant's employment is terminated prior to the Vesting Date for any reason other than those specified in Section 2(b)(i)-(iii), all Performance Units shall immediately be forfeited and canceled for no consideration effective as of the date of the Participant's Termination of Service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)<u>Change in Control</u>. In the event of a Change in Control, then the Performance Units shall vest as set forth in the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)<u>Plan Administrator Discretion.</u> Notwithstanding anything contained in this Agreement to the contrary, the Plan Administrator, in its sole discretion, may accelerate the vesting with respect to any Performance Units under this Agreement, at such times and upon such terms and conditions as the Plan Administrator shall determine.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.<u>Settlement of Performance Units</u>. Subject to Section 5(d), the Company or its Affiliates shall deliver to the Participant in cash, the value of each outstanding Performance Unit that has vested as provided in Section 2 on the first to occur of (i) as soon as practicable after the date that the Plan Administrator determines that the Goals for the last Performance Cycle(s) have been satisfied, but in no event later than 2½ months after the end of the Performance Cycle and (ii) in the event of a Termination of Service due to death, the earlier of (a) the date the Performance Units would have been paid had the Participant remained in Service through the

------

**Exhibit 10.8**

original payment date and (b) January 31 of the year following the Participant's Termination of Service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.<u>Participant's Rights with Respect to the Performance Units</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)<u>Nontransferability of Awards.</u> The Performance Units granted hereby are not assignable or transferable, in whole or in part, and may not, directly or indirectly, be offered, transferred, sold, pledged, assigned or otherwise encumbered except by will or by the laws of descent and distribution to the estate of the Participant upon the Participant's death; provided that the deceased Participant's beneficiary or representative of the Participant's estate shall acknowledge and agree in writing, in a form reasonably acceptable to the Plan Administrator, to be bound by the provisions of this Agreement and the Plan as if such beneficiary or the estate were the Participant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.<u>Miscellaneous</u>.<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)<u>Binding Effect; Benefits</u>. This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and assigns. Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the parties to this Agreement or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)<u>No Right to Continued Employment</u>. Nothing in the Plan or this Agreement shall interfere with or limit in any way the right of the Company or its Affiliates to terminate the Participant's employment at any time or confer upon the Participant any right to continue in the employ of the Company or its Affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)<u>Interpretation</u>. The Plan Administrator shall have full power and discretion to construe and interpret the Plan (and any rules and regulations issued thereunder) and this Award. Any determination or interpretation by the Plan Administrator under or pursuant to the Plan or this Award shall be final and binding and conclusive on all persons affected hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)<u>Tax Withholding</u>. The Company or the Participant's Employer shall have the right to deduct from all amounts paid to the Participant in cash (whether under the Plan or otherwise) any amount of taxes required by law to be withheld in respect of settlement of the Performance Units under the Plan as may be necessary in the opinion of the Employer to satisfy tax

------

**Exhibit 10.8**

withholding required under the laws of any country, state, province, city or other jurisdiction, including but not limited to income taxes, capital gains taxes, transfer taxes, and social security contributions that are required by law to be withheld.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e)<u>Forfeiture for Financial Reporting Misconduct or Detrimental Activity</u>. If the Company is required to prepare an accounting restatement due to material noncompliance by the Company with any financial reporting requirement, and if the Participant knowingly or grossly negligently engaged in the misconduct or knowingly or grossly negligently failed to prevent the misconduct as determined by the Plan Administrator, or if the Participant is one of the individuals subject to automatic forfeiture under Section 304 of the *Sarbanes-Oxley Act of 2002*, then the Participant shall forfeit and disgorge to the Company (<u>i</u>) any Performance Units granted or vested to the Participant or (<u>ii</u>) any cash received in respect of Performance Units that vested based on the materially non- complying financial reporting. The Company may also cancel or reduce, or require a Participant to forfeit and disgorge to the Company or reimburse the Company for, any Performance Units granted or vested and any gains earned or accrued, due to the vesting or settlement of Performance Units to the extent permitted or required by, or pursuant to any Company policy implemented as required by, applicable law. In addition, the Award is subject to reduction, cancellation, forfeiture or recoupment in the event (<u>a</u>) the Participant engages in any Detrimental Activity; (<u>b</u>) of the Participant's serious misconduct or breach of fiduciary duty; or (<u>c</u>) the Participant's violation of the Company's or Affiliate's or a Subsidiary's policies. The determination of whether a Participant's conduct, activities or circumstances are described in the immediately preceding sentence shall be made by the Plan Administrator in its good faith discretion, and pending any such determination, the Plan Administrator shall have the authority to suspend the payment, delivery or settlement of all or any portion of such Participant's outstanding Awards pending an investigation of the matter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f)<u>Applicable Law</u>. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware regardless of the application of rules of conflict of law that would apply the laws of any other jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g)<u>Limitation on Rights; No Right to Future Grants; Extraordinary Item of Compensation</u>. By entering into this Agreement and accepting the Performance Units evidenced hereby, the Participant acknowledges: (<u>a</u>) that the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (<u>b</u>) that the Award does not create any contractual or other right to receive future grants of Awards; (<u>c</u>) that

------

**Exhibit 10.8**

participation in the Plan is voluntary; (<u>d</u>) that the value of the Performance Units is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service Awards, pension or retirement benefits or similar payments; and (<u>e</u>) that the future value of the Units is unknown and cannot be predicted with certainty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h)<u>Employee Data Privacy</u>. By entering into this Agreement and accepting the Performance Units evidenced hereby, the Participant: (<u>a</u>) authorizes the Company and its Affiliates and the Participant's employer or, if different, any agent of the Company administering the Plan or providing Plan recordkeeping services, to disclose to the Company or any of its Affiliates any information and data the Company requests in order to facilitate the grant of the Award and the administration of the Plan; (<u>b</u>) waives any data privacy rights the Participant may have with respect to such information; and (<u>c</u>) authorizes the Company, its Affiliates and their agents to store and transmit such information in electronic form.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i)<u>Consent to Electronic Delivery</u>. By entering into this Agreement and accepting the Performance Units evidenced hereby, Participant hereby consents to the delivery of information (including, without limitation, information required to be delivered to the Participant pursuant to applicable securities laws) regarding the Company, the Plan, this Agreement and the Performance Units via Company or Affiliate web site or other electronic delivery.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j)<u>Headings and Captions</u>. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;k)<u>Counterparts</u>. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.

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## Ex-21

DOMTAR CORPORATION – SUBSIDIARY COMPANIES

Exhibit 21

As of December 31, 2025

Domtar Corporation

Domtar Industries LLC

Domtar Funding Limited Liability Company

E.B. Eddy Paper, Inc.

Ariva Distribution Inc.

Domtar A.W. LLC

Domtar Wisconsin Dam Corp.

Domtar Europe Sprl

Domtar AI Inc.

EAM Corporation

Palmetto Enterprises LLC

Domtar Paper Company, LLC

Domtar Delaware Holdings, LLC

West Carrollton Paper LLC

New Receiptco Opco LLC

Iconex Holdco Inc.

Iconex Minority Shareholder LLC

Interactive Printing Solutions Mexico I, S.A. (held 0.02% by Iconex Minority Shareholder LLC and 99.98% by Iconex Holdco Inc.)

Domtar Delaware Holdings Inc.

Domtar Luxembourg Investments Sarl

Domtar Inc.

13536637 Canada Inc.

Domtar Pulp and Paper General Partnership (held 0.001% by 13536637 Canada Inc. and 99.999% by DInc)

Domtar Asia Limited

Domtar Hong Kong Limited (held 34% by DInc. and 66% by DPC, LLC)

468327 B.C. Ltd.

0606890 B.C. Ltd.

British Columbia Forest Products Limited

Catalyst Pulp and Paper Sales Inc.

Crofton Pulp and Paper Limited

Echelon Paper Corporation

Elk Falls Pulp and Paper Limited

Export Sales Co. Ltd.

NSC Holdings (Philippines) Inc.

Pacifica Poplars Ltd.

Catalyst Pulp Sales Inc.

Catalyst Paper General Partnership (held 0.01% by 13536637 Canada Inc. and 99.99% by DInc)

Catalyst Paper Holdings Inc.

Catalyst Paper (Snowflake) Inc.

Catalyst Paper (USA) Inc.

Pacifica Papers U.S. Inc.

Pacifica Poplars Inc.

Pacifica Papers Sales Inc.

Domtar Renaissance, LLC

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DOMTAR CORPORATION – SUBSIDIARY COMPANIES

Exhibit 21

As of December 31, 2025

Resolute Forest Products Inc.

Donohue Corp.

Resolute US Lumber Inc.

Resolute El Dorado Inc.

Resolute Navcor LLC

Resolute Cross City LLC

Resolute Cross City Timber Management LLC

Resolute Caddo River LLC

Resolute Cross City Real Estate Holdings LLC

Resolute Glenwood LLC

Fibrek U.S. Inc.

Fibrek Recycling U.S. Inc.

GLPC Residual Management, LLC

AbiBow Recycling LLC

Abitibi Consolidated Sales LLC

Resolute FP Augusta LLC

Resolute Growth US LLC

Resolute FP Florida Inc.

Atlas Tissue Holdings, Inc.

Atlas Paper Mills, LLC

Atlas Paper Management, LLC

Accurate Paper Holdings, LLC

Atlas Southeast Papers, Inc.

Resolute Tissue LLC

Bowater Newsprint South LLC

Resolute FP US Inc. (held 27.01% by BNS LLC and 72.99% by RFP Inc.)

Bowater Nuway Mid-States Inc.

Resolute FP Sub 1 Inc.

Lake Superior Forest Products Inc.

Calhoun Newsprint Company

Calhoun Note Holdings AT LLC

Calhoun Note Holdings TI LLC

Resolute Hagerstown LLC

Resolute Engineered Wood Sales LLC

Bowater South American Holdings Incorporated

Bowater Canadian Limited

AbitibiBowater Canada Inc.

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DOMTAR CORPORATION – SUBSIDIARY COMPANIES

Exhibit 21

As of December 31, 2025

Bowater Canadian Holdings Incorporated (held 24.1% by RFP US Inc., and 75.9% by RFP Inc.)

Resolute FP Canada Inc. (held 100% (non-voting shares) by Bowater Canadian Holdings Incorporated and 100% (voting shares) by AbitibiBowater Canada Inc.)

Resolute Engineered Wood Larouche Inc.

Resolute Engineered Wood St-Prime Limited Partnership (held 99.9999% by RFP Canada Inc. and 0.0001% by REWL Inc.)

9192-8515 Quebec Inc.

Forest Products Mauricie LP (held 99.99% by RFP Canada Inc. and 0.01% 9192-8515 Quebec Inc.)

9340939 Canada Inc.

SFK Pulp Finco Inc.

Fibrek General Partnership (held 99.99% by RFP Canada Inc. and 0.01% SFK Pulp Finco Inc.)

Fibrek International Inc.

15477468 Canada Inc.

Profor Renaissance LP (held 99.99% by RFP Canada Inc. and 0.01% 15477468 Canada Inc.)

Profor Renaissance, LLC

9546-6215 Quebec Inc.

95466215 General Partnership (held 99.9% by RFP Canada Inc. and 0.1% 9546-6215 Quebec Inc.)

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DOMTAR CORPORATION – SUBSIDIARY COMPANIES

Exhibit 21

As of December 31, 2025

**<u>AFFILIATED COMPANIES</u> - (% held)**

Celluforce Inc. (44%)

Northshore Forest Inc. (42%)

Vermilion Forest Management Co. (24.17 class A shares)

Prisma Renewable Composites, Inc. (19.8%)

3436900 Canada Inc. (45%)

Société en Commandite Scierie Opitciwan (45%)

Tradepak Internacional S.A. de C.V. (36.75%)

Boundary Waters Forest Management Corp (8.33%)

Performance BioFilaments Inc. (50%)

Produits Forestiers Canbo Inc. (20%)

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## Exhibit 31.1

**Exhibit 31.1**

CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Steve Henry, certify that:

1. I have reviewed this annual report on Form 10-K of Domtar Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 30, 2026

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| |
|:---|
| /s/ Steve Henry |
| Steve Henry |
| Paper & Packaging CEO and President USA of Domtar |

---

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## Exhibit 31.2

**Exhibit 31.2**

CERTIFICATION BY THE CHIEF FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph Ragan, certify that:

1. I have reviewed this annual report on Form 10-K of Domtar Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 30, 2026

---

| |
|:---|
| /s/ Joseph Ragan |
| Joseph Ragan |
| Chief Financial Officer (Principal Accounting Officer and Duly Authorized Officer) |

---

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## Exhibit 32.1

**Exhibit 32.1**

CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies that to his knowledge, the Company's Annual Report on Form 10-K for the period ended December 31, 2025 (the "Form 10-K") fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 30, 2026

---

| |
|:---|
| /s/ Steve Henry |
| Steve Henry |
| Paper & Packaging CEO and President USA of Domtar |

---

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## Exhibit 32.2

**Exhibit 32.2**

CERTIFICATION BY THE CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies that to his knowledge, the Company's Annual Report on Form 10-K for the period ended December 31, 2025 (the "Form 10-K") fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 30, 2026

---

| |
|:---|
| /s/ Joseph Ragan |
| Joseph Ragan |
| Chief Financial Officer (Principal Accounting Officer and Duly Authorized Officer) |

---

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