Document:

Domtar Corporation 2004 Replacement Long-Term Incentive Plan

 Exhibit 10.30 
 DOMTAR CORPORATION 
 2004 REPLACEMENT LONG-TERM 
 INCENTIVE PLAN 
 FOR FORMER
EMPLOYEES OF WEYERHAUSER COMPANY 

 DOMTAR CORPORATION 
 2004 LONG-TERM INCENTIVE REPLACEMENT PLAN FOR FORMER EMPLOYEES OF 
 WEYERHAEUSER COMPANY

  

					
	SECTION 1.	 	PURPOSE AND ESTABLISHMENT	  	1
			
	 1.1
	 	PURPOSE	  	1
			
	SECTION 2.	 	DEFINITIONS	  	1
			
	SECTION 3.	 	ADMINISTRATION	  	6
			
	 3.1
	 	ADMINISTRATION OF THE PLAN	  	6
	 3.2
	 	ADMINISTRATION AND INTERPRETATION BY COMMITTEE	  	7
			
	SECTION 4.	 	SHARES SUBJECT TO THE PLAN	  	7
			
	 4.1
	 	AUTHORIZED NUMBER OF SHARES	  	7
	 4.2
	 	SHARE USAGE	  	8
			
	SECTION 5.	 	ELIGIBILITY	  	8
			
	SECTION 6.	 	AWARDS	  	8
			
	 6.1
	 	FORM AND GRANT OF AWARDS	  	8
	 6.2
	 	EVIDENCE OF AWARDS	  	9
	 6.3
	 	DEFERRALS	  	9
			
	SECTION 7.	 	OPTIONS	  	9
			
	 7.1
	 	GRANT OF OPTIONS	  	9
	 7.2
	 	OPTION EXERCISE PRICE	  	9
	 7.3
	 	TERMS OF OPTIONS	  	9
	 7.4
	 	EXERCISE OF OPTIONS	  	9
	 7.5
	 	PAYMENT OF EXERCISE PRICE	  	10
	 7.6
	 	POST-TERMINATION EXERCISE	  	10
	 7.7
	 	INCENTIVE STOCK OPTIONS	  	12
			
	SECTION 8.	 	STOCK APPRECIATION RIGHTS	  	12
			
	 8.1
	 	GRANT OF STOCK APPRECIATION RIGHTS	  	12
	 8.2
	 	PAYMENT OF SAR AMOUNT	  	12
			
	SECTION 9.	 	RESTRICTED STOCK AND STOCK UNITS	  	13
			
	 9.1
	 	GRANT OF RESTRICTED STOCK AND STOCK UNITS	  	13
	 9.2
	 	ISSUANCE OF SHARES	  	13
	 9.3
	 	DIVIDENDS AND DISTRIBUTIONS	  	13
			
	SECTION 10.	 	PERFORMANCE SHARES AND PERFORMANCE UNITS	  	13
			
	 10.1
	 	GRANT OF PERFORMANCE SHARES	  	13
	 10.2
	 	GRANT OF PERFORMANCE UNITS	  	14
			
	SECTION 11.	 	PERFORMANCE CRITERIA	  	14
			
	 11.1
	 	AWARDS SUBJECT TO PERFORMANCE GOALS	  	14
	 11.2
	 	USE AND CALCULATION OF PERFORMANCE CRITERIA	  	14
			
	SECTION 12.	 	OTHER STOCK OR CASH BASED AWARDS	  	15
			
	SECTION 13.	 	WITHHOLDING	  	15

  

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	SECTION 14.	 	ASSIGNABILITY	  	15
			
	SECTION 15.	 	AMENDMENT AND TERMINATION	  	16
			
	 15.1
	 	AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN	  	16
	 15.2
	 	TERM OF THE PLAN	  	16
	 15.3
	 	CONSENT OF PARTICIPANT	  	16
			
	SECTION 16.	 	GENERAL	  	16
			
	 16.1
	 	NO INDIVIDUAL RIGHTS	  	16
	 16.2
	 	ISSUANCE OF SHARES	  	17
	 16.3
	 	NO RIGHTS AS A SHAREHOLDER	  	17
	 16.4
	 	COMPLIANCE WITH LAWS AND REGULATIONS	  	17
	 16.5
	 	PARTICIPANTS IN OTHER COUNTRIES	  	18
	 16.6
	 	NO TRUST OR FUND	  	18
	 16.7
	 	SUCCESSORS	  	18
	 16.8
	 	SEVERABILITY	  	18
	 16.9
	 	CHOICE OF LAW	  	18
	 16.10
	 	TREATMENT OF AWARDS FOLLOWING A CHANGE IN CONTROL	  	18
			
	SECTION 17.	 	EFFECTIVE DATE	  	19

  

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 DOMTAR CORPORATION 
 2004 REPLACEMENT LONG-TERM INCENTIVE PLAN 
 FOR FORMER EMPLOYEES OF WEYERHAEUSER COMPANY

 SECTION 1. PURPOSE AND ESTABLISHMENT 
 1.1 Purpose 
 The purpose of this Domtar Corporation 2004 Replacement Long-Term Incentive Plan for Former Employees of Weyerhaeuser Company
(the “Plan”) is to promote the interests of Domtar Corporation (the “Company”) and its shareholders by attracting, retaining and motivating employees, officers and directors key to the growth and success of the Company by
providing them the opportunity to acquire a proprietary interest in the Company and to link their interests and efforts to the long term interests of the Company’s shareholders through the surrender of awards granted under the Weyerhaeuser
Company 2004 Long-Term Incentive Plan (the “Prior Plan”) in exchange for awards granted under this Plan in accordance with the Transaction Agreement (as hereinafter defined). 
 SECTION 2. DEFINITIONS 
 As used in the Plan, the following definitions apply to the terms
indicated below: 
 2.1 “Award” means any Option, Stock Appreciation Right, Restricted Stock, Stock Unit, Performance Share, Performance
Unit, dividend equivalent, cash-based award or other incentive payable in cash or in shares of Common Stock as may be designated by the Committee from time to time. 
 2.2 “Beneficial Owner” has the meaning ascribed to such term in Rule 13d-3 promulgated under the Exchange Act. 
 2.3 “Board” means the Board of Directors of the Company. 
 2.4 “Change in Control” or “CIC” of
the Company shall be deemed to have occurred as of the first day that any one or more of the following conditions shall have been satisfied: 
 (a) Any Person, but excluding the Company and any subsidiary of the Company and any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary of the Company (collectively, “Excluded
Persons”), directly or indirectly, becomes the Beneficial Owner of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities with respect to the election of directors of
the Company and such ownership continues for at least a period of 30 days (with the end of such period being deemed the effective date of the CIC); or 

 (b) During any 24-consecutive month period, the individuals who, at the beginning of such period,
constitute the Board (the “Incumbent Directors”) cease for any reason other than death to constitute at least a majority of the Board, provided, however, that except as set forth in the following sentence, an individual who becomes a
member of the Board subsequent to the beginning of the 24-month period shall be deemed to have satisfied such 24-month requirement (and be an Incumbent Director) if such director was elected by, or on the recommendation of or with the approval of,
at least two-thirds of the directors who then qualified as Incumbent Directors either actually (because they were directors at the beginning of such period) or by prior operation of the provisions of this Section 2.4(b). Notwithstanding the
proviso set forth in the preceding sentence, if any such individual initially assumes office as a result of or in connection with either an actual or threatened solicitation with respect to the election of directors (as such terms are used in Rule
14a 12(c) of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board, then such individual shall not be considered an Incumbent Director.
For purposes of this Section 2.4(b), if at any time individuals who initially assumed office as a result of or in connection with an arrangement or understanding between the Company and any Person (an “Entity Designee”) constitute at
least one-half of the Board, none of such Entity Designees shall be considered Incumbent Directors from that time forward; or 
 (c) There is
consummated: 
 (i) a plan of complete liquidation of the Company; or 
 (ii) a sale or disposition of all or substantially all the Company’s assets in one or a series of related transactions; or 
 (iii) a merger, consolidation, or reorganization of the Company or the acquisition of outstanding Common Stock and as a result of or in connection with
such transaction (A) 35% or more of the outstanding Common Stock or the voting securities of the Company outstanding immediately prior thereto or the outstanding shares of common stock or the combined voting power of the outstanding voting
securities of the surviving entity are owned, directly or indirectly, by any other corporation or Person other than (x) an Excluded Person or (y) a Person who is, or if such Person beneficially owned 5% or more of the outstanding Common
Stock would be, eligible to report such Person’s beneficial ownership on Schedule 13G pursuant to the rules under Section 13(d) of the Exchange Act or (z) a Person that has entered into an agreement with the Company pursuant to which
such Person has agreed not to acquire additional voting securities of the Company (other than pursuant to the terms of such agreement), solicit proxies with respect to the Company’s voting securities or otherwise participate in any contest
relating to the election of directors of the Company, or take other actions that could result in a Change in Control of the Company; provided that this exclusion shall apply only so long as such agreement shall remain in effect, or (B) the
voting securities of the Company 

  

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outstanding immediately prior thereto do not immediately after such transaction continue to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than sixty percent (60%) of the combined voting power of the voting securities of the Company (or such surviving entity) outstanding immediately after such merger, consolidation, or
reorganization. 
 2.5 “Change in Control Price” means, with respect to a share of Common Stock, the higher of (i) the highest reported
sales price, regular way, of such share of Common Stock in any transaction reported on the New York Stock Exchange Composite Tape or other national exchange on which such shares are listed during the 60-day period prior to and including the date of
the Change in Control or (ii) if the Change in Control is the result of a tender or exchange offer or a merger, reorganization or consolidation or sale or other disposition of all or substantially all of the assets of the Company, the highest
price per such share of Common Stock paid in such transaction; provided, however, that in the case of Incentive Stock Options and Stock Appreciation Rights relating to Incentive Stock Options, the Change in Control Price shall be the Fair Market
Value of such share of Common Stock on the date such Incentive Stock Option or Stock Appreciation Right is exercised or deemed exercised pursuant to Section 16.10(b). To the extent the consideration paid in any such transaction described above
consists all or in part of securities or other non-cash consideration, the value of such securities or other non-cash consideration shall be determined in the sole discretion of the Board. 
 2.6 “Code” means the Internal Revenue Code of 1986, as amended from time to time. 
 2.7 “Committee” has the meaning set forth in Section 3.1. 
 2.8 “Common Stock” means
the common stock, par value $0.01 per share, of the Company. 
 2.9 “Company” means Domtar Corporation, a Delaware corporation. 

2.10 “Covered Employee” means a “covered employee” as that term is defined in Section 162(m) of the Code or any successor provision.

 2.11 “Disability” means “Disability” as defined by the Committee or the Company’s vice president of human resources for
purposes of the Plan or an Award, or in the instrument evidencing the Award, or in a written employment or services agreement. 
 2.12 “Effective
Date” has the meaning set forth in Section 17. 
 2.13 “Exchange Act” means the Securities Exchange Act of 1934, as amended
from time to time. 
  

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 2.14 “Fair Market Value” means the average of the high and low per share trading prices (or the average
of the opening and closing prices, or the closing price, if so determined by the Committee) for the Common Stock as reported on the consolidated transaction reporting system for New York Stock Exchange issues during regular session trading or such
other source the Committee deems reliable for a single trading day or an average of trading days not to exceed 30 days from the Grant Date or other date on which the Fair Market Value is determined, at the Committee’s discretion. 
 2.15 “Grant Date” means the Grant Date of the Prior Plan Award surrendered in exchange for the Award. 
 2.16 “Incentive Stock Option” means an Option granted with the intention that it qualify as an “incentive stock option” as that term is
defined in Section 422 of the Code or any successor provision. 
 2.17 “Layoff” means “Layoff” as defined by the
Committee or the Company’s vice president of human resources for purposes of the Plan or an Award or in the instrument evidencing the Award or in a written employment or services agreement. 
 2.18 “Non-qualified Stock Option” means an Option other than an Incentive Stock Option. 
 2.19 “Non-recurring Items” means non-recurring items deemed not reflective of the Company’s core operating performance, including, but not limited to, exogenous events, acquisitions,
divestitures, changes in accounting principles or “extraordinary items” determined under generally accepted accounting principles. 
 2.20
“Option” means a right to purchase Common Stock granted under Section 7. 
 2.21 “Participant” means any eligible person
as set forth in Section 5 to whom an Award is granted. 
 2.22 “Performance Criteria” has the meaning set forth in Section 11.1.

 2.23 “Performance Share” has the meaning set forth in Section 10.1. 
 2.24 “Performance Unit” has the meaning set forth in Section 10.2. 
 2.25 “Person”
means any individual, corporation, partnership, association, limited liability company, joint stock company, trust, unincorporated organization or government or political subdivision thereof, and as used in Section 13(d) and 14(d) of the
Exchange Act, including a “group” as defined in Section 13(d). 
 2.26 “Plan” means the Domtar Corporation 2004 Replacement
Long-Term Incentive Compensation Plan for Former Employees of Weyerhaeuser Company. 
  

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 2.27 “Prior Plan” has the meaning set forth in Section 1.1. 
 2.28 “Prior Plan Award” means an award granted to a Participant under the Prior Plan that has been surrendered by the Participant in exchange for an
Award granted under this Plan pursuant to the terms of the Transaction Agreement. 
 2.29 “Related Company” means any entity that is
directly or indirectly controlled by the Company. 
 2.30 “Restricted Stock” means an Award of shares of Common Stock granted under
Section 9, the rights of ownership of which may be subject to restrictions prescribed by the Committee. 
 2.31 “Retirement” means
“Retirement” as defined by the Committee or the Company’s vice president of human resources for purposes of the Plan or an Award or in the instrument evidencing the Award or in a written employment or services agreement.

 2.32 “Securities Act” means the Securities Act of 1933, as amended from time to time. 
 2.33 “Stock Appreciation Right” has the meaning set forth in Section 8.1. 
 2.34 “Stock Unit” means an Award granted under Section 9 denominated in units of Common Stock. 
 2.35 “Substitute Awards” means Awards granted or shares of Common Stock issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future
awards, by a company acquired by the Company or with which the Company combines. 
 2.36 “Substituted Spinco Options” shall have the meaning
set forth in the Transaction Agreement. 
 2.37 “Substituted Spinco RSUs” shall have the meaning set forth in the Transaction Agreement.

 2.38 “Substituted Spinco SARs” shall have the meaning set forth in the Transaction Agreement. 
 2.39 “Termination of Service,” unless otherwise defined by the Committee or the Company’s vice president of human resources or in the instrument
evidencing the Award or in a written employment or services agreement, means a termination of employment or service relationship with the Company or a Related Company for any reason, whether voluntary or involuntary, including by reason of death,
Disability, Retirement, or Layoff. Any question as to whether and when there has been a Termination of Service for the purposes of an Award and the cause of such Termination of Service shall be determined 

  

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by the Company’s vice president of human resources or by the Committee with respect to officers subject to the reporting requirements of
Section 16(a) of the Securities Act, and such determination shall be final. Transfer of a Participant’s employment or service relationship between wholly owned subsidiaries of the Company, or between the Company and any wholly owned
subsidiaries of the Company, shall not be considered a Termination of Service for purposes of an Award. Unless the Committee determines otherwise, a Termination of Service shall be deemed to occur if the Participant’s employment or service
relationship is with an entity that has ceased to be a Related Company. 
 2.40 “Transaction Agreement” means the Amended and Restated
Transaction Agreement, dated as of January 25, 2007, among Weyerhaeuser Company, the Company, Domtar Paper Company, LLC, Domtar Delaware Holdings Inc., Domtar Pacific Papers Inc., Domtar Pacific Papers ULC, Domtar (Canada) Paper Inc. and Domtar
Inc., as the same may be amended from time to time. 
 2.41 “Weyerhaueser” means Weyerhaeuser Company, a Washington corporation. 

2.42 “Weyerhaueser Equity Award” shall have the meaning set forth in the Transaction Agreement. 
 SECTION 3. ADMINISTRATION 
 3.1 Administration of
the Plan 
 The Plan shall be administered by the Human Resources Committee of the Board. Notwithstanding the foregoing, the Board or the Human Resources
Committee may delegate responsibility for administering the Plan with respect to designated classes of eligible persons to different committees consisting of one or more members of the Board, subject to such limitations as the Board or the Human
Resources Committee deems appropriate, except with respect to benefits to non-employee directors and to officers subject to Section 16 of the Exchange Act or officers who are or may be Covered Employees. Members of any committee shall serve for
such term as the Board may determine, subject to removal by the Board at any time. To the extent consistent with applicable law, the Board or the Human Resources Committee may authorize one or more officers of the Company to grant Awards to
designated classes of eligible persons, within limits specifically prescribed by the Board or the Committee; provided, however, that no such officer shall have or obtain authority to grant Awards to himself or herself or to any person subject to
Section 16 of the Exchange Act. All references in the Plan to the “Committee” shall be, as applicable, to the Human Resources Committee, or any other committee or any officer to whom the Board or the Human Resources Committee has
delegated authority to administer the Plan. 
  

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 3.2 Administration and Interpretation by Committee 
 Except for the terms and conditions explicitly set forth in the Plan, the Committee shall have full power and exclusive authority, subject to such orders or resolutions not inconsistent with the provisions of the Plan
as may from time to time be adopted by the Board, to (a) select the eligible persons as set forth in Section 5 to whom Awards may from time to time be granted under the Plan; (b) determine the type or types of Award to be granted to
each Participant under the Plan; (c) determine the number of shares of Common Stock to be covered by each Award granted under the Plan; (d) determine the terms and conditions of any Award granted under the Plan; (e) approve the forms
of agreements for use under the Plan; (f) determine whether, to what extent and under what circumstances Awards may be settled in cash, shares of Common Stock or other property or canceled or suspended; (g) determine whether, to what
extent and under what circumstances cash, shares of Common Stock, other property and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the Participant; (h) interpret and administer the
Plan and any instrument or agreement entered into under the Plan; (i) establish such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (j) delegate ministerial duties to
such of the Company’s officers as it so determines; and (k) make any other determination and take any other action that the Committee deems necessary or desirable for administration of the Plan. Decisions of the Committee shall be final,
conclusive and binding on all persons, including the Company, any Participant, any shareholder and any eligible person. A majority of the members of the Committee may determine its actions and fix the time and place of its meetings. 
 SECTION 4. SHARES SUBJECT TO THE PLAN 
 4.1
Authorized Number of Shares 
 (a) Subject to adjustment from time to time as provided in this Section 4.1, the maximum number of
shares of Common Stock available for issuance under the Plan shall be 1,780,341. 
 (b) In the event, at any time or from time to time, a
stock dividend, stock split, reverse stock split, spin-off, combination or exchange of shares, recapitalization, merger, consolidation, distribution to shareholders other than a normal cash dividend or other change in the Company’s corporate or
capital structure results in (i) the outstanding shares of Common Stock, or any securities exchanged therefore or received in their place, being exchanged for a different number or kind of securities of the Company or of any other company or
(ii) new, different or additional securities of the Company or of any other company being received by the holders of shares of Common Stock, then the Committee shall make proportional adjustments in (A) the maximum number and kind of
securities available for issuance under the Plan; (B) the maximum number and kind of securities issuable as Incentive Stock Options as set forth in Section 4.2; and (C) the number and kind of securities that are subject to any
outstanding Award and the per share price of such securities, without any change in the aggregate price to be paid therefor. 
  

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 (c) The determination by the Committee as to the terms of any of the foregoing adjustments shall be
conclusive and binding. 
 (d) Notwithstanding the foregoing, the issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or for labor or services rendered, either upon direct sale or upon the exercise of rights or warrants to subscribe therefore, or upon conversion of shares or obligations of the
Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, outstanding Awards. 
 4.2 Share Usage 
 (a) Shares of Common Stock covered by an Award shall not be counted as used unless and until they are
actually issued and delivered to a Participant. If any Award based on shares is settled for cash, or lapses, expires, terminates or is canceled prior to the issuance of shares thereunder, the shares subject to such Awards shall revert to the Company
and shall no longer be available for issuance under the Plan. The number of shares available for issuance under the Plan shall not be reduced to reflect any dividends or dividend equivalents that are reinvested into additional shares or credited as
additional Restricted Stock, Stock Units, Performance Shares or Performance Units. All shares issued under the Plan shall be authorized and unissued shares or Shares held in the Company’s treasury. 
 (b) The Committee shall have the authority to grant Awards only as replacements for awards under the Prior Plan that have been exchanged for equivalent
awards of Domtar Corporation pursuant to the Transaction Agreement. 
 (c) Notwithstanding the foregoing, the maximum number of shares that
may be issued upon the exercise of Incentive Stock Options shall be 0, subject to adjustment as provided in Section 4.1(d); and provided, further that any such shares shall be counted in accordance with the requirements of Section 162(m)
of the Code. 
 SECTION 5. ELIGIBILITY 
 An Award may be granted to any employee or officer of the Company who held a Prior Plan Award who has elected to surrender all of his or her Weyerhaeuser Equity Awards in exchange for an Award granted by the Company under the Plan.

 SECTION 6. AWARDS 
 6.1 Form and
Grant of Awards 
 The Committee shall have the authority, to grant only Substituted Spinco Options, Substituted Spinco RSUs and Substituted Spinco SARs
under the Plan, having the terms and provisions set forth in the Transaction Agreement. 
  

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 6.2 Evidence of Awards 
 Awards granted under the Plan shall be evidenced by a written instrument that shall contain such terms, conditions, limitations and restrictions as the Committee shall deem advisable and that are not inconsistent with the Plan and the
Transaction Agreement. 
 6.3 Deferrals 
 The Committee
may permit or require a Participant to defer receipt of the payment of any Award. If any such deferral election is permitted or required, the Committee, in its sole discretion, shall establish rules and procedures for such payment deferrals, which
may include the grant of additional Awards or provisions for the payment or crediting of interest or dividend equivalents, including converting such credits to deferred stock unit equivalents. 
 SECTION 7. OPTIONS 
 7.1 Grant of Options 
 The Committee may grant Options designated as Incentive Stock Options or Non-qualified Stock Options. 
 7.2 Option Exercise Price 
 The exercise price for shares purchased under an Option shall be as determined by the
Committee, as provided in the Transaction Agreement. In no event shall the Committee, without the prior approval of the Company’s shareholders, cancel any outstanding Option for the purpose of reissuing the Option to the Participant at a lower
exercise price or reduce the exercise price of an outstanding Option. 
 7.3 Terms of Options 
 Subject to earlier termination in accordance with the terms of the Plan and the instrument evidencing the Option, the maximum term of an Option shall be as established
for that Option by the Committee or, if not so established, shall be 10 years from the Grant Date. 
 7.4 Exercise of Options 
 (a) The Committee shall establish and set forth in each instrument that evidences an Option the time at which, or the installments in which, the Option
shall vest and become exercisable, any of which provisions may be waived or modified by the Committee at any time. 
 (b) To the extent an
Option has vested and become exercisable, the Option may be exercised in whole or from time to time in part by delivery as directed by the Company to the Company or a brokerage firm designated or approved by the Company of a written stock option
exercise agreement or notice, in a form and in accordance with procedures established by the Committee, setting forth the number of shares with respect to which the Option is being exercised, the restrictions imposed on the shares purchased 

  

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under such exercise agreement, if any, and such representations and agreements as may be required by the Committee, accompanied by payment in full as
described in Section 7.5. An Option may be exercised only for whole shares and may not be exercised for less than a reasonable number of shares at any one time, as determined by the Committee. 
 7.5 Payment of Exercise Price 
 The exercise price for shares
purchased under an Option shall be paid in full as directed by the Company to the Company or a brokerage firm designated or approved by the Company by delivery of consideration equal to the product of the Option exercise price and the number of
shares purchased. Such consideration must be paid before the Company will issue the shares being purchased and must be in a form or a combination of forms acceptable to the Committee for that purchase, which forms may include: (a) check;
(b) wire transfer; (c) tendering by attestation shares of Common Stock already owned by the Participant for at least six months (or any shorter period sufficient to avoid a charge to the Company’s earnings for financial reporting
purposes) that on the day prior to the exercise date have a Fair Market Value equal to the aggregate exercise price of the shares being purchased under the Option; (d) to the extent permitted by applicable law, delivery of a properly executed
exercise notice, together with irrevocable instructions to a brokerage firm designated or approved by the Company to deliver promptly to the Company the aggregate amount of sale or loan proceeds to pay the Option exercise price and any tax
withholding obligations that may arise in connection with the exercise, all in accordance with the regulations of the Federal Reserve Board; or (e) such other consideration as the Committee may permit in its sole discretion, including, where
permitted by law and the Committee, other Awards. Notwithstanding the foregoing, if the Company becomes subject to new accounting rules applicable to equity-based compensation, and is required to or elects to expense the cost of Options pursuant to
FAS 123 (or a successor or other standard), the Committee shall have the sole discretion to substitute, without receiving Participant permission, SARs paid only in stock for outstanding Options; provided, the terms of the substituted stock SARs are
the same as the terms for the Options, the number of shares underlying the number of stock SARs equals the number of shares underlying the Options and the difference between the Fair Market Value of the underlying Shares and the Grant Price of the
SARs is equivalent to the difference between the Fair Market Value of the underlying Shares and the Option Price of the Options. 
 7.6 Post-Termination
Exercise 
 The Committee shall establish and set forth in each instrument that evidences an Option whether the Option shall continue to be exercisable,
and the terms and conditions of such exercise, after a Termination of Service, any of which provisions may be waived or modified by the Committee at any time. 
 (a) For Awards with a Grant Date in 2005: 
 (i) if a Participant’s employment is terminated due to
Retirement upon or after reaching age 65, such Participant’s Awards shall vest immediately upon Retirement and remain exercisable for the remainder of the term of the Award, at which time such Awards shall terminate and be canceled; 

 

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 (ii) if a Participant’s employment is terminated due to Early Retirement or Disability Retirement,
such Participant’s Awards shall remain outstanding and continue to vest for five years after the date of such Termination of Employment, at which time such Awards shall terminate and be canceled; 
 (iii) if a Participant’s employment is terminated due to job elimination or Disability, such Participant’s Awards shall remain outstanding and
continue to vest for three years after the date of such Termination of Employment, at which time such Awards shall terminate and be canceled; and 
 (iv) if a Participant’s employment is terminated for any other reason, such Participant’s vested Awards shall remain exercisable for three months after the date of Termination of Employment, at which time such Awards shall
terminate and be canceled, and such Participant’s unvested Awards shall immediately terminate and be canceled upon the Termination of Employment. 
 (b) For Awards with a Grant Date in 2006: 
 (i) if a Participant’s employment is terminated due to
Retirement upon or after reaching age 65, or between ages 62 and 64 with at least ten years of service with the Company or a Subsidiary, such Participant’s Awards shall vest immediately upon Retirement and remain exercisable for the remainder
of the term of the Award, at which time such Awards shall terminate and be canceled; 
 (ii) if a Participant’s employment is terminated
due to Early Retirement or Disability Retirement, such Participant’s Awards shall remain outstanding and continue to vest for five years after the date of such Termination of Employment, at which time such Awards shall terminate and be
canceled; 
 (iii) if a Participant’s employment is terminated due to job elimination or Disability, such Participant’s Awards
shall remain outstanding and continue to vest for three years after the date of such Termination of Employment, at which time such Awards shall terminate and be canceled; and 
 (iv) if a Participant’s employment is terminated for any other reason, such Participant’s vested Awards shall remain exercisable for three
months after the date of Termination of Employment, at which time such Awards shall terminate and be canceled, and such Participant’s unvested Awards shall immediately terminate and be canceled upon the Termination of Employment. 
  

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 7.7 Incentive Stock Options 
 The terms of any Incentive Stock Options shall comply in all respects with the provisions of Section 422 of the Code, or any successor provision, and any regulations promulgated thereunder. Individuals who are not employees of the
Company or one of its parent or subsidiary corporations (as such terms are defined for purposes of Section 422 of the Code) may not be granted Incentive Stock Options. To the extent that the aggregate Fair Market Value of Common Stock with
respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year exceeds $100,000 or, if different, the maximum limitation in effect at the time of grant under the Code (the Fair Market Value
being determined as of the Grant Date for the Option), such portion in excess of $100,000 shall be treated as Nonqualified Stock Options. 
 SECTION 8. STOCK APPRECIATION RIGHTS 
 8.1 Grant of Stock Appreciation Rights 
 The Committee may grant stock appreciation rights (“Stock Appreciation Rights” or “SARs”) to Participants at any time. A SAR may be granted in tandem
with an Option or alone (“freestanding”). The grant price of a tandem SAR shall be equal to the exercise price of the related Option, and the grant price of a freestanding SAR shall be equal to the price determined by the Transaction
Agreement. A SAR may be exercised upon such terms and conditions and for the term as the Committee determines in its sole discretion; provided, however, that, subject to earlier termination in accordance with the terms of the Plan and the instrument
evidencing the SAR, the term of a freestanding SAR shall be as established for that SAR by the Committee or, if not so established, shall be 10 years, and in the case of a tandem SAR, (a) the term shall not exceed the term of the related Option
and (b) the tandem SAR may be exercised for all or part of the shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option, except that the tandem SAR may be exercised only with
respect to the shares for which its related Option is then exercisable. 
 8.2 Payment of SAR Amount 
 Upon the exercise of a SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying: (a) the difference between
the market price at which the shares of Common Stock are trading on the New York Stock Exchange as of the time of exercise over the grant price by (b) the number of shares with respect to which the SAR is exercised. At the discretion of the
Committee, the payment upon exercise of a SAR may be in cash, in shares of equivalent value, in some combination thereof or in any other manner approved by the Committee in its sole discretion. 
  

 12 

 SECTION 9. RESTRICTED STOCK AND STOCK UNITS 
 9.1 Grant of Restricted Stock and Stock Units 
 The Committee may
grant Restricted Stock and Stock Units on such terms and conditions and subject to such repurchase or forfeiture restrictions, if any (which may be based on continuous service with the Company or a Related Company or the achievement of any of the
Performance Criteria set forth in Section 11.1), as the Committee shall determine in its sole discretion, which terms, conditions and restrictions shall be set forth in the instrument evidencing the Award. 
 9.2 Issuance of Shares 
 Upon the satisfaction of any terms,
conditions and restrictions prescribed with respect to Restricted Stock or Stock Units, or upon a Participant’s release from any terms, conditions and restrictions of Restricted Stock or Stock Units, as determined by the Committee, and subject
to the provisions of Section 13, (a) the shares of Restricted Stock covered by each Award of Restricted Stock shall become freely transferable by the Participant, and (b) Stock Units shall be paid in cash, shares of Common Stock or a
combination of cash and shares of Common Stock as the Committee shall determine in its sole discretion. Any fractional shares subject to such Awards shall be paid to the Participant in cash. 
 9.3 Dividends and Distributions 
 Participants holding shares of
Restricted Stock or Stock Units may, if the Committee so determines, be credited with dividends paid with respect to the underlying shares or dividend equivalents while they are so held in a manner determined by the Committee in its sole discretion.
The Committee may apply any restrictions to the dividends or dividend equivalents that the Committee deems appropriate. The Committee, in its sole discretion, may determine the form of payment of dividends or dividend equivalents, including cash,
shares of Common Stock, Restricted Stock or Stock Units. 
 SECTION 10. PERFORMANCE SHARES AND PERFORMANCE UNITS 
 10.1 Grant of Performance Shares 
 The Committee may grant Awards of
performance shares (“Performance Shares”) and designate the Participants to whom Performance Shares are to be awarded and determine the number of Performance Shares, the length of the performance period and the other terms and conditions
of each such Award. Each Award of Performance Shares shall, upon the attainment of performance goals and other terms and conditions specified by the Committee, entitle the Participant to a payment in the form established by the Committee. The form
of payment may be in cash, shares of Common Stock, Options, Share Appreciation Rights, Restricted Stock or other awards or any combination of cash, shares of Common Stock, Share Appreciation Rights, Restricted Stock or other awards. Notwithstanding
satisfaction of any performance goals, the number of shares of Common Stock issued under an Award of Performance Shares may be adjusted on the basis of such further consideration as the Committee shall determine in its sole discretion. However, the
Committee may not, in any event, increase the number of shares of Common Stock earned upon satisfaction of any performance goal by any Covered Employee. 
  

 13 

 10.2 Grant of Performance Units 
 The Committee may grant Awards of performance units (“Performance Units”) and designate the Participants to whom Performance Units are to be awarded and determine the number of Performance Units and the
terms and conditions of each such Award. Performance Units shall entitle the Participant to a payment in cash upon the attainment of performance goals and other terms and conditions specified by the Committee. Notwithstanding the satisfaction of any
performance goals, the amount to be paid under an Award of Performance Units may be adjusted on the basis of such further consideration as the Committee shall determine in its sole discretion. However, the Committee may not, in any event, increase
the amount earned under Awards of Performance Units upon satisfaction of any performance goal by any Covered Employee, and the maximum amount earned by such Covered Employee in any calendar year may not exceed $5,000,000. The Committee, in its
discretion, may substitute actual shares of Common Stock for the cash payment otherwise required to be made to a Participant pursuant to a Performance Unit. 
 SECTION 11. PERFORMANCE CRITERIA 
 11.1 Awards Subject to Performance Goals 
 Awards of Restricted Stock, Stock Units, Performance Shares, Performance Units and other Awards made pursuant to the Plan may be made subject to the attainment of
performance goals relating to one or more of the following business criteria within the meaning of Section 162(m) of the Code: profits (including, but not limited to, profit growth, net operating profit or economic profit); profit-related
return ratios; return measures (including, but not limited to, return on assets, capital, equity or sales); cash flow (including, but not limited to, operating cash flow, free cash flow or cash flow return on capital); earnings (including, but not
limited to, earnings growth, net earnings, earnings per share, or earnings before or after taxes); net sales growth; net income (before or after taxes, interest, depreciation and/or amortization); gross or operating margins; productivity ratios;
share price (including, but not limited to, growth measures and total shareholder return); expense targets; margins; cost reduction; cash value added; operating efficiency; customer satisfaction; and working capital targets (“Performance
Criteria”). Performance Criteria may be stated in absolute terms or relative to comparison companies or indices to be achieved during a period of time. 
 11.2 Use and Calculation of Performance Criteria 
 Any Performance Criteria may be used to measure the performance of the Company as a whole
or any business unit of the Company. Any Performance Criteria may include or exclude Non recurring Items. Performance Criteria shall be calculated in accordance with (a) the Company’s financial statements or generally accepted accounting
principles, or (b) under a methodology established by the Committee prior to the issuance of an Award that is consistently applied and identified in the audited financial statements, including footnotes, or the Management’s Discussion and
Analysis section of the 

  

 14 

 
Company’s annual report. The Committee may not in any event increase the amount of compensation payable to a Covered Employee upon the satisfaction of
any Performance Criteria. 
 SECTION 12. OTHER STOCK OR CASH BASED AWARDS 
 In addition to the Awards described in Sections 7 through 10, and subject to the terms of the Plan, the Committee may grant other incentives payable in cash or in shares
of Common Stock under the Plan as it determines to be in the best interests of the Company and subject to such other terms and conditions as it deems appropriate; provided, however, that the maximum amount that any Participant shall be eligible to
receive in any one calendar year shall be $5,000,000. 
 SECTION 13. WITHHOLDING 
 (a) The Company may require the Participant to pay to the Company the amount of (i) any taxes that the Company is required by applicable federal,
state, local or foreign law to withhold with respect to the grant, vesting or exercise of an Award (“tax withholding obligations”) and (ii) any amounts due from the Participant to the Company or to any Related Company (“other
obligations”). The Company shall not be required to issue any shares of Common Stock under the Plan until such tax withholding obligations and other obligations are satisfied. 
 (b) The Committee may permit or require a Participant to satisfy all or part of his or her tax withholding obligations and other obligations by
(i) paying cash to the Company, (ii) having the Company withhold an amount from any cash amounts otherwise due or to become due from the Company to the Participant, (iii) having the Company withhold a number of shares of Common Stock
that would otherwise be issued to the Participant (or become vested in the case of Restricted Stock) having a Fair Market Value equal to the tax withholding obligations and other obligations (up to the employer’s minimum required tax
withholding rate if such a limitation is necessary to avoid a charge to the Company for financial reporting purposes), or (iv) surrendering a number of shares of Common Stock the Participant already owns having a value equal to the tax
withholding obligations and other obligations (up to the employer’s minimum required tax withholding rate to the extent the Participant has owned the surrendered shares for less that six months if such a limitation is necessary to avoid a
charge to the Company for financial reporting purposes). 
 SECTION 14. ASSIGNABILITY 
 No Award or interest in an Award may be sold, assigned, pledged (as collateral for a loan or as security for the performance of an obligation or for any other purpose)
or transferred by the Participant or made subject to attachment or similar proceedings otherwise than by will or by the applicable laws of descent and distribution, except that to 

  

 15 

 
the extent permitted by the Committee, in its sole discretion, a Participant may designate one or more beneficiaries on a Company-approved form who may
receive payment under an Award after the Participant’s death. During a Participant’s lifetime, an Award may be exercised only by the Participant. 
 SECTION 15. AMENDMENT AND TERMINATION 
 15.1 Amendment, Suspension or Termination of the Plan 
 The Board or the Human Resources Committee of the Board may amend, suspend or terminate the Plan or any portion of the Plan at any time and in such respects as it shall
deem advisable; provided, however, that, to the extent required by applicable law, regulation or stock exchange rule, shareholder approval shall be required for any amendment to the Plan. 
 15.2 Term of the Plan 
 Unless sooner terminated as provided herein,
the Plan shall terminate on April 13, 2013. After the Plan is terminated, no future Awards may be granted, but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and the Plan’s terms
and conditions. Notwithstanding the foregoing, no Incentive Stock Options may be granted more than 10 years after April 13, 2004. 
 15.3 Consent of
Participant 
 The amendment, suspension or termination of the Plan or a portion thereof or the amendment of an outstanding Award shall not, without the
Participant’s consent, materially adversely affect any rights under any outstanding Award under the Plan. Any change or adjustment to an outstanding Incentive Stock Option shall not, without the consent of the Participant, be made in a manner
so as to constitute a “modification” that would cause such Incentive Stock Option to fail to continue to qualify as an Incentive Stock Option. Notwithstanding the foregoing, any adjustments made pursuant to Section 4.1 shall not be
subject to these restrictions. 
 SECTION 16. GENERAL 
 16.1 No Individual Rights 
 (a) No individual or Participant shall have any claim to be granted any
Award under the Plan, and the Company has no obligation for uniformity of treatment of Participants under the Plan. 
 (b) Nothing in the
Plan or any Award granted under the Plan shall be deemed to constitute an employment contract or confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any
Related Company or limit in any way the right of the Company or any Related Company to terminate a Participant’s employment or other relationship at any time, with or without cause. 
  

 16 

 16.2 Issuance of Shares 
 (a) Notwithstanding any other provision of the Plan, the Company shall have no obligation to issue or deliver any shares of Common Stock under the Plan or make any other distribution of benefits under the Plan unless,
in the opinion of the Company’s counsel, such issuance, delivery or distribution would comply with all applicable laws (including, without limitation, the requirements of the Securities Act or the laws of any state or foreign jurisdiction) and
the applicable requirements of any securities exchange or similar entity. 
 (b) The Company shall be under no obligation to any Participant
to register for offering or resale or to qualify for exemption under the Securities Act, or to register or qualify under the laws of any state or foreign jurisdiction, any shares of Common Stock, security or interest in a security paid or issued
under, or created by, the Plan, or to continue in effect any such registrations or qualifications if made. The Company may issue certificates for shares with such legends and subject to such restrictions on transfer and stop-transfer instructions as
counsel for the Company deems necessary or desirable for compliance by the Company with federal, state and foreign securities laws. The Company may also require such other action or agreement by the Participants as may from time to time be necessary
to comply with applicable securities laws. 
 (c) To the extent the Plan or any instrument evidencing an Award provides for issuance of stock
certificates to reflect the issuance of shares of Common Stock, the issuance may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange. 
 16.3 No Rights as a Shareholder 
 Unless otherwise provided by the
Committee or in the instrument evidencing the Award or in a written employment or services agreement, no Option or Award denominated in units shall entitle the Participant to any cash dividend, voting or other right of a shareholder unless and until
the date of issuance under the Plan of the shares that are the subject of such Award. 
 16.4 Compliance with Laws and Regulations 
 Notwithstanding anything in the Plan to the contrary, the Committee, in its sole discretion, may bifurcate the Plan so as to restrict, limit or condition the use of any
provision of the Plan to Participants who are officers or directors subject to Section 16 of the Exchange Act without so restricting, limiting or conditioning the Plan with respect to other Participants. Additionally, in interpreting and
applying the provisions of the Plan, any Option granted as an Incentive Stock Option pursuant to the Plan shall, to the extent permitted by law, be construed as an “incentive stock option” within the meaning of Section 422 of the
Code. 
  

 17 

 16.5 Participants in Other Countries 
 The Committee shall have the authority to adopt such modifications, procedures and subplans as may be necessary or desirable to comply with provisions of the laws of other countries in which the Company or any Related
Company may operate to ensure the viability of the benefits from Awards granted to Participants employed in such countries, to comply with applicable foreign laws and to meet the objectives of the Plan. 
 16.6 No Trust or Fund 
 The Plan is intended to constitute an
“unfunded” plan. Nothing contained herein shall require the Company to segregate any monies or other property, or shares of Common Stock, or to create any trusts, or to make any special deposits for any immediate or deferred amounts
payable to any Participant, and no Participant shall have any rights that are greater than those of a general unsecured creditor of the Company. 
 16.7
Successors 
 All obligations of the Company under the Plan with respect to Awards shall be binding on any successor to the Company, whether the existence
of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all the business and/or assets of the Company. 
 16.8 Severability 
 If any provision of the Plan or any Award is determined to be invalid, illegal or unenforceable in
any jurisdiction, or as to any person, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or, if it cannot be so construed or
deemed amended without, in the Committee’s determination, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award, and the remainder of the Plan and any such Award shall
remain in full force and effect. 
 16.9 Choice of Law 
 The Plan, all Awards granted thereunder and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the laws of the United States, shall be governed by the laws of the State of Washington without
giving effect to principles of conflicts of law. 
 16.10 Treatment of Awards Following a Change in Control 
 (a) Notwithstanding any other provision in the Plan to the contrary, upon the occurrence of a Change in Control, unless otherwise provided in the
instrument evidencing the Award or in a written employment or other agreement between the 

  

 18 

 
Participant and the Company, or specifically prohibited under applicable laws, or by the rules and regulations of any governing governmental agencies or
national securities exchanges: 
 (i) Any and all Options and Stock Appreciation Rights shall become fully vested and immediately exercisable,
and shall remain exercisable throughout their entire term; 
 (ii) Any restriction periods and restrictions imposed on Restricted Stock or
Stock Unit Awards that are not performance-based shall lapse; 
 (iii) The target pay out opportunities attainable under all outstanding
Awards that are performance-based shall be deemed to have been fully earned for the entire performance period(s) and deferral or other restriction shall lapse and such Awards shall be immediately settled or distributed; 
 (iv) The restrictions and deferral limitations and other conditions applicable to any other Stock Unit Awards or any other awards shall lapse, and such
other Stock Unit Awards or such other awards shall become free of all restrictions, limitations or conditions and become fully vested and transferable to the full extent of the original grant. 
 (b) Notwithstanding any other provision of the Plan, during the 60-day period from and after a Change in Control (the “Exercise Period”), if
the Committee shall determine at, or at any time after, the time of grant, a Participant holding an Option or Stock Appreciation Right shall have the right, whether or not the Option or Stock Appreciation Right is fully exercisable and in lieu of
the payment of the purchase price for the shares of Common Stock being purchased under the Option or Stock Appreciation Right and by giving notices to the Company, to elect (within the Exercise Period) to surrender all or part of the Option or Stock
Appreciation Right to the Company and to receive cash, within 30 days of such notice, in an amount equal to the amount by which the Change in Control Price per share on the date of such election shall exceed the purchase price per share of Common
Stock under the Option or Stock Appreciation Right (the “spread”) multiplied by the number of shares of Common Stock granted under the Option or Stock Appreciation Right as to which the right granted under this Section 16.10(b) shall
have been exercised. 
 SECTION 17. EFFECTIVE DATE 
 The Plan shall become effective (the “Effective Date”) immediately following shareholder approval of the Plan. 
  

 19Domtar Corporation 1998 Replacement Long-Term Incentive Compensation Plan

 Exhibit 10.31 
 Domtar Corporation 
 1998 Replacement Long-Term 
 Incentive Compensation Plan for 
 Former Employees of Weyerhaeuser Company 

 Table of Contents 
  

					
	ARTICLE I. GENERAL	  	1
	 1.1
	    	NAME OF PLAN	  	1
	 1.2
	    	PURPOSES	  	1
	 1.3
	    	LIMITATION ON ELIGIBILITY AND GRANTS	  	1
	 1.4
	    	EFFECTIVE DATE	  	1
	 1.5
	    	NUMBER OF SHARES.	  	1
		    	1.5.1     Authorized Number of Shares	  	1
		    	1.5.2     No Reuse of Shares	  	1
		    	1.5.3     Adjustment of Shares	  	2
	 1.6
	    	ADMINISTRATION	  	2
		    	1.6.1     Administration and Interpretation by the Committee	  	2
		    	1.6.2     Delegation	  	3
		    	1.6.3     Jurisdictions Outside the United States	  	3
		
	ARTICLE II. DEFINITIONS	  	3
		
	ARTICLE III. STOCK OPTIONS; STOCK APPRECIATION RIGHTS	  	7
	 3.1
	    	TYPES OF STOCK OPTIONS	  	7
		    	3.1.1     Types of Options	  	7
		    	3.1.2     Stock Appreciation Rights	  	7
		    	3.1.3     Exercise/Sell Election	  	8
		    	3.1.4     Exercise/Hold Election	  	8
	 3.2
	    	OPTION PRICE	  	8
	 3.3
	    	VESTING; EXERCISE UPON TERMINATION OF EMPLOYMENT	  	8
		    	3.3.1     Initial Vesting Period	  	8
		    	3.3.2     Term of Options and Stock Appreciation Rights	  	9
		    	3.3.3     Exercise by Personal Representative	  	9
		    	3.3.4     Post-Termination Exercises	  	9
	 3.4
	    	PAYMENT FOR SHARES	  	11
		    	3.4.1     Form of Payment	  	11
		
	ARTICLE IV. STOCK AWARDS	  	11
	 4.1
	    	COMMITTEE AUTHORITY	  	11
	 4.2
	    	ISSUANCE OF SHARES	  	11
	 4.3
	    	WAIVER OF RESTRICTIONS	  	11
		
	ARTICLE V. PERFORMANCE SHARE AWARDS	  	12
	 5.1
	    	PERFORMANCE SHARE AWARDS AUTHORITY	  	12
	 5.2
	    	PAYOUT UPON TERMINATION	  	12
		
	ARTICLE VI. GENERAL	  	12
	 6.1
	    	AMENDMENT AND TERMINATION OF PLAN	  	12

  

 i 

					
	 6.2
	    	CONTINUED EMPLOYMENT; RIGHTS IN OPTIONS AND AWARDS	  	13
	 6.3
	    	OTHER COMPENSATION PLANS	  	13
	 6.4
	    	CERTIFICATES FOR SHARES; REGISTRATION	  	13
	 6.5
	    	NO RIGHTS AS SHAREHOLDER	  	13
	 6.6
	    	NO ASSIGNMENT OR TRANSFER OF INTERESTS	  	13
	 6.7
	    	COMPLIANCE WITH LAWS AND REGULATIONS	  	13
	 6.8
	    	WITHHOLDING OF TAXES	  	14
	 6.9
	    	NO TRUST OR FUND	  	14
	 6.10
	    	GOVERNING LAW	  	14
	 6.11
	    	SEVERABILITY	  	14
		
	ARTICLE VII. CHANGE IN CONTROL	  	14
	 7.1
	    	TREATMENT OF OUTSTANDING AWARDS	  	14
	 7.2
	    	TERMINATION, AMENDMENT, AND MODIFICATION OF CHANGE-IN-CONTROL
PROVISIONS	  	15
	 7.3
	    	POOLING OF INTERESTS ACCOUNTING	  	15

  

 ii 

 Domtar Corporation 
 1998 Replacement Long-Term Incentive Compensation Plan 
 for Former Employees of Weyerhaeuser
Company 
 ARTICLE I. GENERAL 
 1.1 NAME OF PLAN. The name of the plan set forth herein is the “Domtar Corporation 1998 Replacement Long-Term Incentive Compensation Plan for Former Employees of
Weyerhaeuser Company,” herein called the “Plan.” 
 1.2 PURPOSES. The purposes of the
Plan are to enhance the long-term profitability and shareholder value of Domtar Corporation (the “Company”) by offering stock-based incentives to those employees of the Company and Subsidiaries who are key to the growth and success of the
Company, to attract and retain executives with experience and ability on a basis competitive with industry practices, and to motivate executives to focus on strategies that will increase stock price over time through the surrender of awards granted
under the Amended and Restated Weyerhaeuser Company 1998 Long-Term Incentive Compensation Plan (the “Prior Plan”) in exchange for awards granted under this Plan in accordance with the Transaction Agreement (as hereinafter defined).

 1.3 LIMITATION ON ELIGIBILITY AND GRANTS.
An Award may be granted under this Plan only to an employee or officer of the Company who held a Prior Plan Award who has elected to surrender all of his or her Weyerhaeuser Equity Awards in exchange for an Award granted by the Company under the
Plan. The Committee shall have the authority to grant only Substituted Spinco Options, Substituted Spinco RSUs and Substituted Spinco SARs under the Plan having the terms and provisions set forth in the Transaction Agreement. 
 1.4 EFFECTIVE DATE. The effective date of the Plan is the date immediately prior to the Closing of
the transaction contemplated by the Transaction Agreement. 
 1.5 NUMBER OF
SHARES. 
 1.5.1 Authorized Number of Shares. The number of Shares that may be issued under the Plan
shall not exceed 674,083. Shares issued pursuant to the Plan will be authorized and unissued Shares which may include Shares which from time to time have been reacquired by the Company. 
 1.5.2 No Reuse of Shares. To the extent that (a) any Stock Option or Stock Appreciation Right expires, or is terminated, canceled or
surrendered, without being exercised; (b) Shares are not issued upon exercise of any Stock Appreciation Right; (c) the underlying Shares are not issued because the Award is forfeited, terminated, surrendered or canceled; or (d) Shares
are not issued pursuant to any Performance Share 

 
Award, then Shares underlying or subject to such Stock Option, Stock Appreciation Right or Award shall revert to the Company and shall no longer be available
for issuance under the Plan. 
 1.5.3 Adjustment of Shares. In the event that at any time or from time to time a stock dividend, stock
split, recapitalization, merger, consolidation, or other change in capitalization of the Company, or a sale by the Company of all or part of its assets, or any distribution to shareholders other than a cash dividend, results in (a) the
outstanding Shares, or any securities exchanged therefor or received in their place being exchanged for a different number or class of securities of the Company or of any other corporation, or (b) new, different or additional securities of the
Company or of any other corporation being received by the holders of Shares of the Company, then: 
 (i) the limitation to 674,083 Shares set
forth in Section 1.5.1 of Article I; 
 (ii) the number and class of Shares that may be made subject to Stock Options, Stock Appreciation
Rights and Awards; 
 (iii) the Option Price of unexercised Stock Options and Stock Appreciation Rights; and 
 (iv) Share values or prices used for calculation purposes 
 shall in each case be equitably adjusted as determined by the Committee in its sole discretion. 
 1.6
ADMINISTRATION 
 1.6.1 Administration and Interpretation by the Committee. The Plan shall be administered by the
Committee. The Board shall consider in selecting members of the Committee, the provisions regarding (a) “outside directors” as contemplated by Section 162(m) of the Code and (b) “nonemployee directors” as
contemplated by Rule 16b-3 under the Exchange Act. The Committee shall have exclusive authority to designate the employees of the Company and Subsidiaries who are eligible to participate in the Plan as Participants. The Committee shall also have
exclusive authority to interpret the Plan and may from time to time adopt, and change, rules and regulations of general application for the administration of the Plan, including rules and regulations relating to the manner of exercise and settlement
of Stock Options and Stock Appreciation Rights, issuance and custody of Restricted Stock and the manner of settlement of Performance Share Awards. The Committee’s interpretation of the Plan and its rules and regulations, and all actions taken
and determinations made by the Committee pursuant to the Plan, shall be conclusive and binding on all parties involved or affected. 
  

 2 

 1.6.2 Delegation. The Board or the Committee may delegate the responsibility for administering the
Plan with respect to designated classes of eligible Participants to a different committee or committees appointed by the Board consisting of two or more members of the Board, subject to such limitations as the Board or the Committee deems
appropriate. The Committee may delegate administrative duties to such of the officers of the Company as it so determines. 
 1.6.3
Jurisdictions Outside the United States. The Committee shall have the authority and discretion to establish terms and conditions of awards as the Committee determines to be necessary or appropriate to conform to applicable requirements or
practices of jurisdictions outside of the United States. 
 ARTICLE II. DEFINITIONS 
 For purposes of the Plan, the following terms shall be defined as set forth below: 
 2.1 “Award” means any award or grant of Shares under Article IV and any award or grant of Performance Shares under Article V. 

2.2 “Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act. 
 2.3 “Board” means the Board of Directors of the Company. 
 2.4 “Change in Control” or “CIC” of the Company shall be deemed to have occurred as of the first day that any one or
more of the following conditions shall have been satisfied: 
 (i) Any Person, but excluding the Company and any subsidiary of the Company and
any employee benefit plan sponsored or maintained by the Company or any subsidiary of the Company (including any trustee of such plan acting as trustee), directly or indirectly, becomes the Beneficial Owner of securities of the Company representing
twenty percent (20%) or more of the combined voting power of the Company’s then outstanding securities with respect to the election of directors of the Company and such ownership continues for at least a period of thirty (30) days
(with the end of such period being deemed the effective date of the CIC); or 
 (ii) During any twenty-four (24) consecutive month
period, the individuals who, at the beginning of such period, constitute the Board (the “Incumbent Directors”) cease for any reason other than death to constitute at least a majority thereof, provided, however, that a director who was not
a director at the beginning of such twenty-four (24) month period shall be deemed to have satisfied such twenty-four (24) month requirement (and be 

  

 3 

 
an Incumbent Director) if such director was elected by, or on the recommendation of or with the approval of, at least two-thirds (2/3) of the directors
who then qualified as Incumbent Directors either actually (because they were directors at the beginning of such period) or by prior operation of the provisions of this Section 2.4; or 
 (iii) There is consummated: (a) a plan of complete liquidation of the Company; or (b) a sale or disposition of all or substantially all the
Company’s assets in one or a series of related transactions; or (c) a merger, consolidation, or reorganization of the Company with or involving any other corporation, other than a merger, consolidation, or reorganization that would result
in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than sixty-five percent (65%) of
the combined voting power of the voting securities of the Company (or such surviving entity) outstanding immediately after such merger, consolidation, or reorganization.” 
 2.5 “Code” means the Internal Revenue Code as amended from time to time. 
 2.6 “Committee” means the Human Resources Committee of the Board of Directors of the Company. 
 2.7 “Company” means Domtar Corporation, a Delaware corporation. 
 2.8 “Disability” means a medical condition in which a Participant is either entitled to total and permanent disability benefits under
the Social Security Act or judged to be totally and permanently disabled by the Committee or any person or committee delegated by the Committee to make such determinations. 
 2.9 “Disability Retirement” means a termination that is due to Disability, but does not satisfy the conditions of an Early Retirement or
Retirement, and the onset of Disability occurred on or after the date the Participant accrued 10 years of service with the Company or a Subsidiary. 
 2.10 “Early Retirement” means retirement on a date after an individual reaches age 55 with at least 10 years of service, but prior to the individual reaching age 65. 
 2.11 “Exchange Act” means the Securities Act of 1934 as amended from time to time. 
  

 4 

 2.12 “Exercise/Sell Election” means the election set forth in Section 3.1.3 of
Article III. 
 2.13 “Fair Market Value” means the arithmetic average of the highest and lowest sales prices per Share on a
day as reported on the consolidated transaction reporting system for New York Stock Exchange issues or such other source the Committee deems reliable for the day. 
 2.14 “Grant Date” means the grant date of the Prior Plan Award surrendered in exchange for the Award. 
 2.15 “Holder” means the Participant to whom is granted a Stock Option, Stock Appreciation Right or Award, or the personal representative of the Holder who has died. 
 2.16 “Incentive Stock Option” means an option to purchase Shares granted under Article III of the Plan with the intention that it
qualify as an “incentive stock option” as that term is defined in Section 422 of the Code. 
 2.17 “Non-Qualified
Stock Option” means an option to purchase Shares granted under Article III of the Plan other than an Incentive Stock Option. 
 2.18
“Option Price” means the purchase price of Shares, as prescribed by the Committee, in respect to any Stock Option or Stock Appreciation Right. 
 2.19 “Participant” means an individual who is a Holder of Stock Options, Stock Appreciation Rights and/or Awards. 
 2.20 “Performance Measures” means objective criteria specifically defined by the Committee on a Company-specific basis, business-unit basis or in comparison with peer group performance, which may
include or exclude specified items of an unusual or nonrecurring nature, and are based on one or more of the following: earnings before interest and taxes, net earnings, earnings per share, return on equity, return on assets, return on capital
employed, cash flow, cost reduction, stock price appreciation, total shareholder return, economic value added, cash flow return on investment, and cash value added. 
 2.21 “Performance Share” means a unit of value, equal on the Grant Date to the Fair Market Value of a Share on such Date or such greater value as the Committee shall prescribe, used to calculate the
total value of a Performance Share Award. 
 2.22 “Performance Share Award” means an award granted under Article V of the
Plan the payout of which is subject to achievement through a performance period of performance goals prescribed by the Committee. 
  

 5 

 2.23 “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of
the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a ‘group’ as defined in Section 13(d). 
 2.24
“Prior Plan” has the meaning set forth in Section 1.2. 
 2.25 “Prior Plan Award” means an award
granted to a Participant under the Prior Plan that has been surrendered by the Participant in exchange for an Award granted under this Plan pursuant to the terms of the Transaction Agreement. 
 2.26 “Restricted Stock Award” means an Award of Shares granted under Article IV of the Plan the rights of ownership of which are subject
to restrictions prescribed by the Committee. 
 2.27 “Retirement” means retirement upon or after an individual reaches age
65, Early Retirement or Disability Retirement. 
 2.28 “Shares” means the common shares (par value $0.01 per share) of the
Company. 
 2.29 “Stock Appreciation Right” means a right, granted under Section 3.1.2 of Article III, to surrender to
the Company all or a portion of the related Stock Option, if any, and to receive an amount (in Shares or cash or any combination of Shares and cash, as the Committee shall determine) equal to the excess of the fair market value per Share, as
determined in Section 3.1.2, for the date the Stock Appreciation Right is exercised over the Option Price per Share. 
 2.30
“Stock Option” or “Option” means the right to purchase Shares granted under Section 3.1.1 of Article III of the Plan. 
 2.31 “Subsidiary” means a corporation the voting share ownership of which, by the Company or another Subsidiary, is sufficient for the election of a majority of the directors of the corporation.

 2.32 “Substituted Spinco Options” shall have the meaning set forth in the Transaction Agreement. 
 2.33 “Substituted Spinco RSUs” shall have the meaning set forth in the Transaction Agreement. 
 2.34 “Substituted Spinco SARs” shall have the meaning set forth in the Transaction Agreement. 
 2.35 “Transaction Agreement” means the Amended and Restated Transaction Agreement, dated as of January 25, 2007, among Weyerhaeuser
Company, the Company, 

  

 6 

 
Domtar Paper Company, LLC, Domtar Delaware Holdings Inc., Domtar Pacific Papers Inc., Domtar Pacific Papers ULC, Domtar (Canada) Paper Inc. and Domtar Inc.
as the same may be amended from time to time. 
 2.36 “Weyerhaueser” means Weyerhaeuser Company, a Washington corporation.

 2.37 “Weyerhaeuser Equity Award” shall have the meaning set forth in the Transaction Agreement. 
 ARTICLE III. STOCK OPTIONS; STOCK APPRECIATION RIGHTS 
 3.1 TYPES OF STOCK OPTIONS 
 3.1.1
Types of Options. The Committee is authorized to grant Stock Options to Participants either alone or wholly or partially in connection with Stock Appreciation Rights, for such number of Shares and at such Option Price, and exercisable in such
installments over such periods of time and subject to such vesting provisions, as the Committee shall determine. The Committee shall designate each Option issued hereunder as an “Incentive Stock Option” or a “Non-Qualified Stock
Option.” To the extent the aggregate Fair Market Value (determined as of the Grant Date) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time during any calendar year (under the Plan and all other
stock option plans of the Company) exceeds $100,000, such portion in excess of $100,000 shall be treated as a Nonqualified Stock Option. In the event the participant holds two or more such Options that become exercisable for the first time in the
same calendar year, such limitation shall be applied on the basis of the order in which such Options are granted. 
 3.1.2 Stock
Appreciation Rights. The Committee is authorized to grant Stock Appreciation Rights, either alone or wholly or partly in conjunction with Stock Options, for such numbers of Shares and at such Option Prices as the Committee shall determine. Upon
exercise of a Stock Appreciation Right, the Holder shall be entitled to receive cash equivalent to the difference per Share between the fair market value and the Option Price, multiplied by the number of Shares as to which the Stock Appreciation
Right is exercised; provided that for purposes of this Section 3.1.2, the fair market value per Share shall be the market price at which Shares are trading on the New York Stock Exchange as of the time the Stock Appreciation Right is exercised;
and, provided further, that the Committee shall have the sole discretion to determine in any case or cases such other form in which payment will be made to the Holder, i.e. all cash, all Shares, or any combination thereof. If the Holder is to
receive Shares upon exercise of a Stock Appreciation Right, the number of Shares so determined is not a whole number, such number shall be reduced to the next lower number and there shall be paid to the Holder in cash an amount equal to the product
of multiplying the remaining fractional share by the fair market value, as determined pursuant to the prior sentence, of one share on the exercise date. 
  

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 3.1.3 Exercise/Sell Election. Holders of Stock Options not granted in conjunction with Stock
Appreciation Rights shall have, at each time of exercise of such an Option, the right to elect to exercise such Option by causing a cash payment of the Option Price to be made to the Company and simultaneously having such number of such Shares sold
through a Company-designated registered broker in an open market transaction, such “exercise/sell election” to be effected in accordance with procedures and documentation established by the Secretary of the Company. The Holder of such
Exercise/Sell election shall have the right to elect either to: (A) have the number of Shares to be sold approximate the number of Shares that upon sale on the exercise date would be required to yield cash proceeds equivalent to the sum of
(i) the total Option Price for the Shares as to which the option is exercised and (ii) the applicable tax withholding due upon exercise of the Option; or (B) have the number of Shares sold be the number of shares as to which the
option is exercised. The Holder of the Stock Option with the Exercise/Sell Election electing under (A) above shall be entitled to receive (i) the proceeds of sale of the Shares to be sold remaining after payment to the Company of the
Option Price and the applicable tax withholding; and (ii) the number of Shares remaining after the sale of Shares as provided above. The Holder of the Stock Option with the Exercise/Sell Election electing under (B) above shall be entitled
to receive the proceeds of the sale of the Shares to be sold remaining after payment to the Company of the Option Price and the applicable tax withholding. 
 3.1.4 Exercise/Hold Election. Holders of Stock Options not granted in conjunction with Stock Appreciation Rights shall have, at each time of exercise of such an Option, the right to elect to exercise such
Option by causing a cash payment of the Option Price plus any applicable tax withholding due upon the exercise of the Option to be made to the Company. For purposes of determining the amount to be paid to the Company under this Section 3.1.4
for applicable tax withholding, the value of the Shares obtained upon exercise shall be deemed to be the Fair Market Value per Share on the trading day immediately prior to the exercise date. 
 3.2 OPTION PRICE. The Option Price of the Shares subject to any Stock Option or Stock Appreciation
Right shall be determined by the Committee, as provided in the Transaction Agreements. 
 3.3 VESTING;
EXERCISE UPON TERMINATION OF EMPLOYMENT 
 3.3.1
Initial Vesting Period. Each Stock Option and Stock Appreciation Right shall become initially exercisable after such period as may be determined by the Committee. 
  

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 3.3.2 Term of Options and Stock Appreciation Rights. Except as otherwise provided in this Article
3, each Stock Option and Stock Appreciation Right shall by its terms expire at such time as the Committee may determine in granting it, but not later than ten years from the date the Option or Right is granted. 
 3.3.3 Exercise by Personal Representative. Any Stock Option or Stock Appreciation Right exercisable at the time of death of the Holder may be
exercised by the personal representative of the Holder entitled thereto at any time or from time to time within two years after the date of death, but in no event later than ten years (or such shorter period as determined under Section 3.3.2)
from the Grant Date. 
 3.3.4 Post-Termination Exercises. In case of termination of employment of the Holder other than by reason of
death, 
 (i) For Awards with a Grant Date prior to 2001: 
 (a) if a Participant’s employment is terminated due to Retirement upon or after reaching age 65, such Participant’s Awards shall vest immediately upon Retirement and remain exercisable for three years after
the date of Retirement, at which time such Awards shall terminate and be canceled; 
 (b) if a Participant’s employment is terminated due
to Early Retirement or job elimination, such Participant’s Awards shall remain outstanding and continue to vest for three years after the date of such Termination of Employment, at which time such Awards shall terminate and be canceled; and

 (c) if a Participant’s employment is terminated for any other reason, such Participant’s vested Awards shall remain exercisable
for three months after the date of Termination of Employment, at which time such Awards shall terminate and be canceled, and such Participant’s unvested Awards shall immediately terminate and be canceled upon the Termination of Employment.

 (ii) For Awards with a Grant Date in 2001 or 2002: 
 (a) if a Participant’s employment is terminated due to Retirement upon or after reaching age 65, such Participant’s Awards shall vest immediately upon Retirement and remain exercisable for the remainder of
the term of the Award, at which time such Awards shall terminate and be canceled; 
 (b) if a Participant’s employment is terminated due
to Early Retirement, such Participant’s Awards shall remain outstanding and continue to vest for five years after the date of such Early Retirement, at which time such Awards shall terminate and be canceled; 
  

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 (c) if a Participant’s employment is terminated due to job elimination, such Participant’s
Awards shall remain outstanding and continue to vest for three years after the date of such Termination of Employment, at which time such Awards shall terminate and be canceled; and 
 (d) if a Participant’s employment is terminated for any other reason, such Participant’s vested Awards shall remain exercisable for three months
after the date of Termination of Employment, at which time such Awards shall terminate and be canceled, and such Participant’s unvested Awards shall immediately terminate and be canceled upon the Termination of Employment. 
 (iii) For Awards with a Grant Date in 2003 or 2004: 
 (a) if a Participant’s employment is terminated due to Retirement upon or after reaching age 65, such Participant’s Awards shall vest immediately upon Retirement and remain exercisable for the remainder of the term of the Award,
at which time such Awards shall terminate and be canceled; 
 (b) if a Participant’s employment is terminated due to Early Retirement or
Disability Retirement, such Participant’s Awards shall remain outstanding and continue to vest for five years after the date of such Termination of Employment, at which time such Awards shall terminate and be canceled; 
 (c) if a Participant’s employment is terminated due to job elimination or Disability, such Participant’s Awards shall remain outstanding and
continue to vest for three years after the date of such Termination of Employment, at which time such Awards shall terminate and be canceled; and 
 (d) if a Participant’s employment is terminated for any other reason, such Participant’s vested Awards shall remain exercisable for three months after the date of Termination of Employment, at which time such Awards shall
terminate and be canceled, and such Participant’s unvested Awards shall immediately terminate and be canceled upon the Termination of Employment. 
 Neither transfer of employment between or among the Company and Subsidiaries, or a leave of absence approved in accordance with Company procedures, shall be considered termination of employment. Notwithstanding
anything in this Section 3.3 to the contrary, no Award shall remain outstanding beyond the normal expiration date of such Award. 
  

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 3.4 PAYMENT FOR SHARES 
 3.4.1 Form of Payment. Upon exercise of a Stock Option not involving exercise of a related Stock Appreciation Right, in whole or in part, the
Option Price for Shares to which the exercise relates shall be paid in cash (including payment in accordance with Section 3.1.3 and 3.1.4) or, unless otherwise designated by the Committee at the time the Stock Option is granted, paid for with
Shares already owned by the Holder for at least six months (or any shorter period necessary to avoid a charge to the Company’s earnings for financial reporting purposes) in the manner designated by the Secretary of the Company, valued at their
Fair Market Value on the trading day immediately preceding the exercise date. Such payment may be made by tendering by attestation Shares already owned by the Holder that on the day immediately prior to the exercise date have a Fair Market Value
equal to the aggregate exercise price of the Shares being purchased under the Option. No Shares shall be issued until such payment in full of cash or previously owned Shares has been made. The Holder shall have none of the rights of a shareholder
with respect to Shares subject to a Stock Option or Stock Appreciation Right unless and until the Shares are issued to the Holder. 
 ARTICLE IV. STOCK AWARDS 
 4.1 COMMITTEE AUTHORITY. The Committee is
authorized to make awards of Shares of the Company subject to Performance Measures established by the Committee, in writing, no later than the first 90 days of the period in which the Performance Measure shall apply. Performance periods shall not be
shorter than one year from the Grant Date. Other terms, conditions and restrictions of such awards shall be set forth in an agreement or agreements between the Company and the recipient of the Award. The terms, conditions and restrictions which the
Committee shall have the power to determine shall include the manner in which Shares subject to Restricted Stock Awards are held during the periods they are subject to restrictions and the circumstances under which forfeiture of Restricted Stock
Share Awards and Shares subject to Restricted Stock Awards shall occur by reason of termination of employment of the Holder. 
 4.2
ISSUANCE OF SHARES. Upon the satisfaction of the terms, conditions and restrictions prescribed in respect to a Restricted Stock Award, or upon the Holder’s release from the
terms, conditions and restrictions of a Restricted Stock Award, as determined by the Committee, the Company shall deliver, as soon as practicable, to the Holder, or in the case of the Holder’s death, to the personal representative of the Holder
or as the appropriate court directs, a stock certificate for the appropriate number of Shares. 
 4.3 WAIVER
OF RESTRICTIONS. Notwithstanding any other provisions of the Plan, the Committee may, in its sole discretion, waive the forfeiture period and any other 

  

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terms, conditions or restrictions of any Stock Award under circumstances (including the death, Disability, Retirement or Early Retirement of the Holder, or
material change in the Holder’s circumstances arising after the date of the Award), and subject to such terms and conditions (including forfeiture of the Shares) as the Committee shall deem appropriate. 
 ARTICLE V. PERFORMANCE SHARE AWARDS 
 5.1 PERFORMANCE SHARE AWARDS AUTHORITY. The Committee is authorized to grant Performance Share Awards to Participants using Performance Measures established
by the Committee, in writing, no later than the first 90 days of the period in which the Performance Measure shall apply. In addition, the Committee is authorized to determine: (a) the length of performance periods except that no performance
period may be shorter than one year from the Grant Date, (b) the amount and frequency of grants of Performance Share Awards, both independently and in relation to grants of Stock Options and other Awards, and (c) the form of payment of
Awards, which may be in cash, shares, Options, Rights or Awards or any combination of cash, Shares, Options, Rights and Awards. The Committee may not adjust performance goals and performance periods established for any Award if such adjustment would
increase the amount of the Award. 
 5.2 PAYOUT UPON TERMINATION. In the
event a Holder’s employment by the Company or a Subsidiary terminates during the performance period of a Performance Share Award, payout shall be as follows: 
 (a) If the termination of employment is the result of discharge for cause or resignation, or Early Retirement prior to age 62 at the request of the Holder, the Award shall be forfeited in full. 
 (b) If the termination is the result of Retirement, death, Disability, position elimination, or Early Retirement at the request of the Company, payout
shall be made at the end of the applicable performance period and prorated for service during the performance period. 
 ARTICLE VI.
GENERAL 
 6.1 AMENDMENT AND TERMINATION OF
PLAN. The Board or the Committee may from time to time discontinue or terminate the Plan and may from time to time amend, modify, or otherwise alter the Plan or any provision thereof without shareholder approval,
except as may be required to comply with the federal securities laws, the listing requirements of a national securities exchange or the Internal Revenue Code; provided, however, that no amendment may be made without shareholder approval if such
amendment would decrease the Option Price set by the Committee upon grant of the Option, except for adjustments made pursuant to Section 1.5.3. No amendment or discontinuance of the Plan shall, without the written consent of the Holder
adversely affect the Holder’s Stock Option, Stock Appreciation Right or Award. 
  

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 6.2 CONTINUED EMPLOYMENT; RIGHTS IN
OPTIONS AND AWARDS. Neither the Plan, participation in the Plan as a Participant, or any action of the Committee taken under the Plan shall be construed as giving any Participant or
employee of the Company or a Subsidiary any right to be retained in the employ of the Company or a Subsidiary or limit the right of the Company or a Subsidiary to terminate the employment of the Participant or employee. In addition, neither the
Plan, participation in the Plan as a Participant, or any action of the Committee taken under the Plan shall be construed as giving the Participant or employee of the Company or a Subsidiary any right to continued rights to options or awards under
the plan. 
 6.3 OTHER COMPENSATION PLANS. Neither the adoption of the
Plan nor anything contained in the Plan shall prevent the Company or any Subsidiary from adopting or continuing other or additional compensation arrangements, or discontinuing or terminating such arrangements, and such other arrangements may be
either generally applicable or applicable only in specific cases. 
 6.4 CERTIFICATES FOR
SHARES; REGISTRATION. The Company shall be under no obligation to any Participant to register for offering or resale under the Securities Act of 1933, or register or qualify under state securities
laws, any Shares, security or interest in a security paid or issued under, or created by the Plan. The Company may issue certificates for Shares with such legends and subject to such restrictions on transfer and stop transfer instructions as counsel
for the Company deem necessary or desirable for compliance by the Company with federal and state securities laws. 
 6.5 NO
RIGHTS AS SHAREHOLDER. No Stock Option, Stock Appreciation Right or Award shall entitle the Holder to any dividend, voting or other right of a shareholder unless and until the date of
issuance under the Plan of the Shares that are the subject of the Option, Right or Award, free of all applicable restrictions. 
 6.6
NO ASSIGNMENT OR TRANSFER OF INTERESTS. No Stock Option, Stock Appreciation Right or Award shall be assignable or otherwise transferable
by the Holder except as provided for herein in the case of death of the Holder. If a Holder makes an assignment or transfer in violation of this Section 6.6, any obligation of the Company with respect to such Option, Right or Award shall
thereupon terminate. 
 6.7 COMPLIANCE WITH LAWS AND
REGULATIONS. In interpreting and applying the provisions of the Plan, any Stock Option granted as an Incentive Stock Option pursuant to the Plan shall to the extent permitted by law, be construed as an
“incentive stock option” within the meaning of Section 422 of the Code. 
  

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 6.8 WITHHOLDING OF TAXES. The Company
may require the Holder to pay to the Company the amount of any withholding taxes which the Company is required to withhold with respect to the grant, exercise, payment or settlement of any Stock Option, Stock Appreciation Right or Award. In such
instances, the Committee may, in its discretion and subject to the Plan and applicable law, permit the Holder to satisfy withholding obligations, in whole or in part, by paying cash or by electing to have the Company withhold Shares, or to transfer
Shares to the Company, in such amounts as are equivalent to the Fair Market Value of the withholding obligation. 
 6.9 NO
TRUST OR FUND. The Plan is intended to constitute an “unfunded” plan. Nothing contained herein shall require the Company to segregate any monies or other property, or Shares,
or to create any trusts, or to make any special deposits for any immediate or deferred amounts payable to any Participant, and no Participant shall have any rights that are greater than those of a general unsecured creditor of the Company.

 6.10 GOVERNING LAW. The Plan and all interpretations of its provisions shall be
governed by the laws of the State of Washington and applicable Federal laws. 
 6.11 SEVERABILITY. If
any provision of the Plan or any Stock Option, Stock Appreciation Right or Award is determined to be invalid, illegal or unenforceable in any jurisdiction, or as to any person, or would disqualify the Plan or any Option, Right or Award under any law
deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or, if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent
of the Plan or the Option, Right or Award, such provision shall be stricken as to such jurisdiction, person or Option, Right or Award, and the remainder of the Plan and any such Option, Right or award shall remain in full force and effect.

 ARTICLE VII. CHANGE IN CONTROL 
 7.1 TREATMENT OF OUTSTANDING AWARDS. Upon the occurrence of a Change in Control, unless otherwise specifically prohibited under the applicable laws, or by the
rules and regulations of any governing governmental agencies or national securities exchanges: 
 (i) Any and all Options and Stock
Appreciation Rights shall become immediately exercisable, and shall remain exercisable throughout their entire term; 
 (ii) Any restriction
periods and restrictions imposed on Restricted Stock Awards which are not performance-based shall lapse; 
 (iii) The target payout
opportunities attainable under all outstanding Awards shall be deemed to have been fully earned for the entire 

  

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performance period(s) as of the effective date of the Change in Control. The vesting of all Awards denominated in Shares shall be accelerated as of the
effective date of the Change in Control, and there shall be paid out in cash to Participants within thirty (30) days following the effective date of the Change in Control a pro rata number of shares based upon an assumed achievement of all
relevant targeted performance goals and upon the length of time within the performance period which has elapsed prior to the Change in Control; provided, however, that there shall not be an accelerated cash payout with respect to Awards which
qualify as “derivative securities” under Section 16 of the Exchange Act which were granted less than six (6) months prior to the effective date of the Change in Control. 
 7.2 TERMINATION, AMENDMENT, AND MODIFICATION OF
CHANGE-IN-CONTROL PROVISIONS. Notwithstanding any other provision of this Plan (but subject to the limitations of Section 6.1 hereof) or any award agreement
provision, the provisions of this Article 7 may not be terminated, amended, or modified on or after the date of a Change in Control to affect adversely any Award theretofore granted under the Plan without the prior written consent of the Participant
with respect to said Participant’s outstanding Awards; provided, however, the Committee, may terminate, amend, or modify this Article 7 at any time and from time to time prior to the date of a Change in Control. 
 7.3 POOLING OF INTERESTS ACCOUNTING. Notwithstanding any other
provision of the Plan to the contrary, in the event that the consummation of a Change in Control is contingent on using pooling of interests accounting methodology, the Committee may take any action necessary to preserve the use of pooling of
interests accounting. 
  

 15

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