Document:

exv4w4

EXHIBIT 4.4

SECURED PROMISSORY NOTE

			
	 	 	 
	$90,000,000
	 	January 14, 2011

     SECURED PROMISSORY NOTE (this “Note”), made as of January 14, 2011 (the “Effective
Date”), is made by AUGUSTA NEWSPRINT COMPANY LLC, a Delaware limited liability company (the
“Payor”), in favor of WOODBRIDGE INTERNATIONAL HOLDINGS LIMITED, an Ontario corporation
(the “Noteholder”).

     WHEREAS, the Payor and the Noteholder, inter alios, entered into a Stock Purchase Agreement,
made as of December 23, 2010 (as amended from time to time, the “Stock Purchase
Agreement”), pursuant to which Noteholder agreed to sell, and Payor agreed to purchase, 100% of
the common stock and preferred stock (the “ANI Stock”) of Augusta Newsprint Inc., a
Delaware corporation (“ANI”), which is a member of and owns a 47.5% membership interest in
the Payor, and this Note constitutes a portion of the purchase price therefor; and

     WHEREAS, in order to induce the Noteholder to enter into the Stock Purchase Agreement and this
Note, (i) Abitibi Consolidated Sales LLC, a Delaware limited liability company (“ACSC”),
has agreed to grant a continuing Lien on its membership interest in the Payor and all rights to
payment arising therefrom, including but not limited to, distributions and profits, (ii) ANI has
agreed to grant a continuing Lien on its membership interest in the Payor and all rights to payment
arising therefrom, including but not limited to, distributions and profits, and (iii) the Payor has
agreed to grant a continuing Lien on all of its personal and real property, whether now owned or
hereafter acquired;

     NOW, THEREFORE, FOR VALUE RECEIVED, the Payor hereby promises to pay to the Noteholder the
principal sum of NINETY MILLION DOLLARS ($90,000,000) (such amount, as may be reduced by repayments
of principal hereunder from time to time, the “Principal Amount”), plus interest thereon
pursuant to the terms of this Note. The parties hereto hereby agree as follows:

Article 1

Definitions

     1.1 Definitions. Capitalized terms used in this Note are used as defined in this
Article 1 or elsewhere in this Note.

          “AbiBowater” shall mean AbitibiBowater Inc. or its reorganized successor arising out
of the Proceedings.

          “AbiBowater Mills” shall mean, at any time, all mills, located in Canada or the United
States, devoted entirely or almost entirely to the production of newsprint for which AbiBowater has
absolute control, either directly or indirectly, over the operating rate and “AbiBowater
Mill” means any of such mills.

 

 

          “ACSC” shall have the meaning ascribed thereto in the recitals to this Note, and
references to ACSC shall include any successor by operation of law to Abitibi Consolidated Sales
LLC.

          “ACSC Collateral” shall have the meaning ascribed thereto in Section 8.1.1 of this
Note.

          “ACSC Pledged Interests” shall have the meaning ascribed thereto in Section 8.1.1 of
this Note.

          “ANI” shall have the meaning ascribed thereto in the recitals to this Note, and
references to ANI shall include any successor by operation of law to Augusta Newsprint Inc.

          “ANI Collateral” shall have the meaning ascribed thereto in Section 8.1.2 of this
Note.

          “ANI Pledged Interests” shall have the meaning ascribed thereto in Section 8.1.2 of
this Note.

          “ANI Stock” shall have the meaning ascribed thereto in the recitals to this Note.

          “Affiliate” shall mean, as to any Person, any Person that directly or indirectly,
through one or more intermediaries, controls or is controlled by or is under common control with
such Person, and in the case of Noteholder, includes any member of the Woodbridge Group.

          “Bankruptcy Code” means title 11 of the United States Code, as amended from time to
time.

          “Bankruptcy Court” means the United States Bankruptcy Court for the District of
Delaware.

          “Bankruptcy Proceedings” means the cases filed in the Bankruptcy Court under chapter
11 of the Bankruptcy Code by AbiBowater and its affiliated debtors and debtors-in-possession,
jointly administered as Case No. 09-11296.

          “Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the laws of, or are in fact closed in, New York (New
York), Toronto (Ontario) or Montreal (Quebec).

          “Call Agreement” means the Amended and Restated Call Agreement, dated as of July 1,
2004, as amended, restated, modified or supplemented from time to time, among The Woodbridge
Company Limited, the Noteholder, Woodbridge International Holdings SA, ACSC and
Abitibi-Consolidated Inc.

          “Canadian Court” means the Superior Court, Commercial Division, for the Judicial
District of Montreal, Canada.

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          “Canadian Debtors” means, collectively, AbiBowater and those of its subsidiaries and
affiliates who applied for protection from creditors in the CCAA Proceedings.

          “CCAA” means Canada’s Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, as
amended from time to time.

          “CCAA Proceedings” means the proceedings for provisional relief in support of the
Bankruptcy Proceedings commenced in the Canadian Court under section 18.6 of the CCAA by AbiBowater
and certain of its subsidiaries.

          “Capital Lease Obligations” of any Person shall mean the obligations of such Person to
pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real
or personal property, or a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP.

          “CERCLA” shall have the meaning ascribed thereto in Section 3.7(a) of this Note.

          “Change of Control” shall mean (a) the occurrence of any event (whether in one or more
transactions) which results in AbiBowater ceasing to own, directly or indirectly, 100% of the
outstanding Equity Interests in the Payor or (b) the sale of all or substantially all of the
property and assets of the Payor to any Person (excluding a merger transaction permitted pursuant
to Section 5.5(a)). For the sake of greater clarity, “Change of Control” shall not apply to
AbiBowater.

          “Collateral” shall have the meaning ascribed thereto in Section 8.1.2 of this Note.

          “Commercial Arbitration Rules” shall have the meaning ascribed thereto in Section 9.6
of this Note.

          “Debtors” means, collectively, AbiBowater and its affiliated debtors and
debtors-in-possession in the Bankruptcy Proceedings.

          “Default” means an Event of Default or any condition or event which, with notice or
lapse of time or both, would constitute an Event of Default.

          “Default Rate” shall mean the rate equal to 2.0% per annum in excess of the otherwise
applicable rate.

          “Distributable Cash” shall mean, with respect to any Fiscal Year, cash flow from
operating activities of the Payor calculated in accordance with GAAP, less capital
expenditures in an amount not to exceed $6 million in any Fiscal Year, less interest paid
under this Note; provided that, in the case of the Fiscal Year ending December 31, 2011,
such Fiscal Year shall be deemed to be the period from the date of this Note to and including
December 31, 2011.

          “Distribution” shall have the meaning ascribed thereto in Section 5.9 of this Note.

          “Effective Date” shall have the meaning ascribed thereto in the recitals to this Note.

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          “Environmental Laws” shall have the meaning ascribed thereto in Section 3.7(a) of this
Note.

          “EPA” shall have the meaning ascribed thereto in Section 3.7(b) of this Note.

          “Equity Interests” means, with respect to any Person, all of the shares of capital
stock of any class of, or other ownership or profit interests in, such Person, all of the warrants,
options or other rights for the purchase or acquisition from such Person of shares of capital stock
of (or other ownership or profit interests in) such Person, all of the securities convertible into
or exchangeable for shares of capital stock of (or other ownership or profit interests in) such
Person or warrants, rights or options for the purchase or acquisition from such Person of such
shares (or such other interests), and all of the other ownership or profit interests in such Person
(including partnership, member or trust interests therein), whether voting or nonvoting, and
whether or not such shares, warrants, options, rights or other interests are outstanding on any
date of determination.

          “ERISA” means the Employee Retirement Income Security Act of 1974.

          “Event of Default” shall mean the occurrence of any of the following:

          (a) the Payor’s failure to pay all amounts of principal when due and owing pursuant to the
terms of Article 2 hereof;

          (b) the Payor’s failure to pay all amounts of interest within five (5) Business Days of having
become due and owing pursuant to the terms of Article 2 hereof;

          (c) ACSC’s failure to pay any amounts when due and payable pursuant to the terms of the Sales
Agreement and such failure shall continue for a period of ten (10) Business Days (notwithstanding
any cure period with respect thereto under the Sales Agreement), provided that ordinary course
adjustments to payment amounts that are made pursuant to the terms of the Sales Agreement will not
give rise to an Event of Default under this clause (c) unless such adjustment amounts, to the
extent in favor of the Payor, are not paid within ten (10) Business Days after such adjustments are
determined;

          (d) except as set forth in clauses (a), (b) or (c) above, any Note Obligor’s failure to comply
in any material respect with any of its covenants contained in any of the Settlement Documents
which is continuing for fifteen (15) days or more after the earlier of (x) notice thereof is given
by Noteholder to the applicable Note Obligor or (y) the date on which a Responsible Officer of the
applicable Note Obligor has actual knowledge of such failure;

          (e) any representation or warranty of any Note Obligor in any of the Settlement Documents
shall prove to have been false in any material respect on the date when made;

          (f) a Change of Control;

          (g) any Note Obligor shall (A) apply for, consent to or suffer the appointment of, or the
taking of possession by, a receiver, custodian, trustee, liquidator or similar fiduciary of

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itself or of all or a substantial part of its property, (B) make a general assignment for the
benefit of creditors, (C) commence a voluntary case under any state, provincial or federal
bankruptcy laws (as now or hereafter in effect), (D) be adjudicated a bankrupt or insolvent, (E)
file a petition seeking to take advantage of any other law providing for the relief of debtors or
(F) fail to have dismissed, within sixty (60) days, any petition filed against it in any
involuntary case under such bankruptcy laws;

          (h) the Payor shall fail to pay at maturity or within any applicable period of grace any
Indebtedness for borrowed money in an aggregate amount in excess of $2,000,000, or fail to observe
or perform any material term, covenant or agreement contained in any agreement by which it is bound
evidencing or securing Indebtedness for borrowed money in an aggregate amount in excess of
$2,000,000, if the effect of any such failure is to cause such Indebtedness to become due prior to
its stated maturity;

          (i) there shall remain in force, undischarged, unsatisfied and unstayed, for more than thirty
(30) days, whether or not consecutive, any final judgment against the Payor, that, with other
outstanding final judgments, undischarged, against such Person exceeds in the aggregate $2,000,000,
after taking into account any insurance coverage;

          (j) (i) if the Note or any of the Security Documents shall cease to be in full force and
effect, or the Noteholder’s Liens in a material portion of the Collateral shall cease to be
perfected, or shall cease to have the priority contemplated herein, in each case other than in
accordance with the terms hereof or thereof or with the express prior written consent of the
Noteholder, or (ii) any Note Obligor shall challenge the enforceability of the Note or any of the
Security Documents or shall assert in writing that the Liens of the Noteholder do not have the
priority contemplated herein or therein;

          (k) subject to the provisions of Section 6.3 of this Note, (i) if any of the Sales Agreement,
the Stock Purchase Agreement or the Settlement Order shall be cancelled, terminated, rejected,
reversed, vacated, revoked or rescinded, (ii) any action at law, suit or in equity or other legal
proceeding to cancel, terminate, reject, reverse, vacate, revoke or rescind any of the Settlement
Documents shall be commenced by or on behalf of any Note Obligor or any Affiliate thereof (other
than a termination of any Settlement Document in accordance with its terms), (iii) any court or any
other Governmental Authority of competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, any of the Settlement Documents is modified
or amended in a manner that is adverse in any material respect to the Noteholder, or stayed,
vacated or deemed illegal, invalid or unenforceable in accordance with the terms thereof, or (iv)
any Note Obligor or any Affiliate thereof shall challenge the enforceability of any of the
Settlement Documents or shall assert in writing or engage in any action or inaction based on any
such assertions that any of the Settlement Documents has ceased to be or otherwise is not valid,
binding and enforceable in accordance with its terms;

          (l) the disallowance of (x) the allowed administrative claim held by the Payor against ACSC in
the amount of $9,246,580.00 pursuant to the Agreed Order With Respect to Motion of Augusta
Newsprint Company for Allowance of Administrative Expense Claim Pursuant to 11 U.S.C. § 503(b)(9)
[D.I. 1457] entered by the Bankruptcy Court on December 16,

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2009 or (y) any of Claim number 3612 made by the Payor in the Bankruptcy Proceedings of
Alabama River Newsprint Company, Case no. 09-11301, in the amount of $1,699.49; Claim number 3630
made by the Payor in the Bankruptcy Proceedings of Abitibi-Consolidated Corporation, Case no.
09-11302, in the amount of $1,848.01; Claim numbers 3631 and 3632 made by the Payor in the
Bankruptcy Proceedings of AbitibiBowater, Inc., Case no. 09-11296, in the amounts of $25,899.02 and
$85,247.34, respectively; the Claim listed on Schedule F of the Schedules of Assets and Liabilities
of Alabama River Newsprint Company, Case no. 09-11301, in the amount of $2,203.49; and Claim number
10005 made by the Payor in the Bankruptcy Proceedings of Abitibi-Consolidated Corporation, Case no.
09-11302, in the amount of $37,458,605.60; or

          (m) any material portion of the Collateral shall be seized or taken by a Governmental
Authority, or the title and rights of any Note Obligor in any material portion of the Collateral
shall have become the subject matter of claim, litigation, suit or other proceeding which could
reasonably be expected to result in impairment or loss of the security provided hereby.

          “Excluded Accounts” means any payroll, employee benefits, withholding tax, escrow or
other fiduciary accounts.

          “Existing Partnership Agreement” means the partnership agreement of Augusta Newsprint
Company, a Georgia general partnership and the predecessor of the Payor, as in effect immediately
prior to the date hereof.

          “Final Maturity Date” shall have the meaning ascribed thereto in Section 2.3 of this
Note.

          “Fiscal Year” means the fiscal year of the Payor commencing January 1 and ending
December 31.

          “Force Majeure” means an inability to produce or a reduced ability to produce,
newsprint in consequence of such act of God, war, terrorism, strike, lock-out, labor controversy,
flood, fire, explosion, drought, sabotage, riot, civil commotion, shortage of ships, trucks or
railway cars, default or failure of carriers or contractors, embargoes, shortages of labor or
material, or the laws, acts or orders a Governmental Authority or of any department, board or
Person acting or purporting to act with governmental authority.

          “GAAP” means generally accepted accounting principles in the United States set forth
in the opinions and pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial Accounting
Standards Board or such other principles as may be approved by a significant segment of the
accounting profession in the United States, that are applicable to the circumstances as of the date
of determination, consistently applied; provided, that in the event that the Payor shall change the
basis of its accounting to International Financial Reporting Standards (“IFRS”), GAAP shall mean
IFRS from and after the effective date of such adoption by the Payor.

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          “Governmental Authority” shall mean the United States of America or any other
government of any sovereign state or any political subdivision thereof, or of any political
subdivision of a political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory, administrative or other function of or pertaining to government.

          “Hazardous Materials” means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas,
infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to
any Environmental Law.

          “Indebtedness” means, as to any Person at a particular time, without duplication, all
of the following:

          (a) all obligations of such Person for borrowed money and all obligations of such Person
evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

          (b) the maximum amount of all direct or contingent obligations of such Person arising under
letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety
bonds and similar instruments, to the extent included as indebtedness in accordance with GAAP;

          (c) all net obligations of such Person under any swap contract;

          (d) every obligation of such Person issued or assumed as the deferred purchase price of
property or services, including securities repurchase agreements but excluding (x) trade accounts
payable or accrued liabilities arising in the ordinary course of business; and (y) holdbacks;

          (e) all indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned
or being purchased by such Person (including indebtedness arising under conditional sales or other
title retention agreements), whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse;

          (f) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any
payment in respect of any Equity Interest in such Person or any other Person, valued, in the case
of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends; and

          (g) all guarantees of such Person in respect of any of the foregoing.

          “Intellectual Property” shall mean all rights arising under any applicable law with
respect to patent, industrial design, copyright, trademark, service mark and other trademarks,
trade name, mask work, trade secret or confidential information, and any application or
registration for any of the foregoing, including any license or other right to use any of the
foregoing.

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          “Interest Rate” shall mean, for each day, (i) so long as the outstanding Principal
Amount on such day is equal to or greater than $60,000,000, a rate of 8.0% per annum, (ii) so long
as the outstanding Principal Amount on such day is less than $60,000,000 and equal to or greater
than $30,000,000, a rate of 6.5% per annum, and (iii) so long as the outstanding Principal Amount
on such day is less than $30,000,000, a rate of 5.0% per annum.

          “Knowledge” shall mean the actual knowledge of any member of the Partners Committee of
the Payor designated by the Noteholder or any other member of the Woodbridge Group at any time
prior to the Effective Date.

          “Lien” shall mean any lien, charge, claim, restriction, encumbrance, security interest
or pledge of interest of any kind.

          “LLC Agreement” means the limited liability company agreement of the Payor as in
effect from time to time.

          “Material Adverse Effect” shall mean a material adverse effect on (a) the financial
condition, results of operations, assets, business or properties of the Payor, (b) Payor’s ability
to duly and punctually pay or perform the Note Obligations in accordance with the terms thereof,
(c) Noteholder’s Liens on a material portion of the Collateral or the priority of any such Lien or
(d) the practical realization of the benefits of Noteholder’s material rights and remedies under
the Security Documents.

          “Maturity Date” shall mean January [14], 2015, subject to extension pursuant to
Section 2.3 hereof.

          “Mortgage” shall mean the deed of trust dated the date hereof with respect to all of
the real property and fixtures of the Payor located at 2434 Doug Barnard Parkway, Augusta, Georgia
30906, in form and substance reasonably satisfactory to Noteholder.

          “Note” shall have the meaning ascribed thereto in the recitals to this Note.

          “Note Obligations” means the Principal Amount and all interest or other amounts due
under the Note including, without limitation, any indemnification obligations under the Stock
Purchase Agreement and this Note.

          “Note Obligors” means, collectively, the Payor, ACSC and ANI.

          “Noteholder” shall have the meaning ascribed thereto in the recitals to this Note.

          “Operating Days” shall have the meaning ascribed thereto in the definition of
“Operating Rate”.

          “Operating Maintenance” shall mean any period of machine downtime resulting from mill
maintenance or operating problems extending for less than 24 hours. Any period of machine downtime
resulting from machine or mill maintenance extending 24 or more consecutive hours is not Operating
Maintenance, and the days or portions of days after deducting the initial 24 hour period are not
part of Operating Days. In mills with two or more paper

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machines, such determination will be made on a machine-by-machine basis with an average for
the entire mill being calculated based on the budgeted daily production of each machine.

          “Operating Rate” shall mean, during any particular 12-month period of any particular
mill producing newsprint, a percentage determined by multiplying 100 by a fraction (i) the
numerator of which is the number of days in such 12-month period in which the mill operates
(“Operating Days”) which number shall include days of Operating Maintenance, and (ii) the
denominator of which is the actual number of calendar days in any particular 12-month period.

          “Payment Date” shall have the meaning ascribed thereto in Section 2.2 of this Note.

          “Payor” shall have the meaning ascribed thereto in the recitals to this Note, and
references to the Payor shall include any successor by operation of law to Augusta Newsprint
Company LLC and any Person that assumes the Note Obligations in accordance with Section 5.5(a) of
this Note.

          “Payor Collateral” shall have the meaning ascribed thereto in Section 8.1.3 of this
Note.

          “Permitted Liens” shall mean

          (h) Liens in favor of Noteholder;

          (i) Liens in existence on the Effective Date;

          (j) Liens for taxes, assessments or other charges of any Governmental Authority not delinquent
or which are being contested in good faith by appropriate proceedings diligently pursued, provided
that full provision for the payment of all such taxes known to the applicable Person has been made
on the books of such Person if and to the extent required by GAAP;

          (k) deposits or pledges to secure obligations under worker’s compensation, social security or
similar laws, or under unemployment insurance;

          (l) deposits or pledges to secure bids, tenders, contracts, leases, statutory obligations,
surety and appeal bonds and other obligations of like nature (excluding in any case, obligations
incurred in connection with the borrowing of money or the payment of the deferred purchase price of
property) arising in the ordinary course of business;

          (m) mechanics’, workers’, materialmen’s or other like Liens arising in the ordinary course of
business with respect to obligations which are not overdue for a period of more than 30 days or are
being contested in good faith by appropriate proceedings diligently pursued, provided that in the
case of any such contest (i) any proceedings commenced for the enforcement of such Liens shall have
been duly suspended and (ii) full provision for the payment of such Liens has been made on the
books of the applicable Person if and to the extent required by GAAP;

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          (n) imperfections of title, statutory exceptions to title, restrictive covenants, rights of
way, easements, servitudes, mineral interest reservations, municipal and zoning by-laws and
ordinances or similar laws or rights reserved to or vested in any Governmental Authority to control
or regulate the use of any real property, general real estate taxes and assessments not yet
delinquent;

          (o) bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to
cash on deposit in one or more accounts maintained, in each case granted in the ordinary course of
business in favor of the bank or banks with which such accounts are maintained;

          (p) Liens arising from precautionary UCC financing statements (or analogous personal property
security filings or registrations in other jurisdictions) regarding operating leases;

          (q) Liens attaching solely to cash earnest money deposits made by the Payor in connection with
any letter of intent or purchase agreement entered into it in connection with an acquisition
permitted hereunder;

          (r) Liens arising from the granting of a lease or license to enter into or use any asset of
the Payor to any Person in the ordinary course of business that does not interfere in any material
respect with the use or application by the Payor of the asset subject to such license in the
business of the Payor;

          (s) Liens on insurance policies and proceeds thereof to secure premiums thereunder;

          (t) Liens arising out of judgments or awards in respect of which an appeal or proceeding for
review is being diligently prosecuted, provided that (i) a stay of execution pending such
appeal or proceeding for review has been obtained and (ii) full provision for the payment of such
Liens has been made on the books of such Person if and to the extent required by GAAP;

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

          (v) Liens securing Indebtedness permitted by Section 5.2(j) of this Note; provided
that any such Lien shall apply only to the property that is the subject of such Indebtedness;

          (w) other Liens incidental to the conduct of the Payor’s business or the ownership of its
property and assets which were not incurred in connection with the borrowing of money or the
obtaining of advances or credit, and which do not in the aggregate materially detract from the
value of the Payor’s property or assets or which do not materially impair the use thereof in the
operation of the Payor’s business; and

          (x) Liens arising in the ordinary course of business securing obligations in an aggregate
amount outstanding at any time not in excess of $1,000,000.

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          “Person” shall mean an individual, partnership, corporation, limited liability
company, joint venture, joint stock company, trust, unincorporated organization or a Governmental
Authority.

          “Pledged Interests” shall have the meaning ascribed thereto in Section 8.1.2 of this
Note.

          “Principal Amount” shall have the meaning ascribed thereto in the recitals to this
Note.

          “Proceedings” shall mean, individually and collectively, as the case may be, the
Bankruptcy Proceedings and the CCAA Proceedings.

          “RCRA” shall have the meaning ascribed thereto in Section 3.7(a) of this Note.

          “Real Estate” shall have the meaning ascribed thereto in Section 3.7(a) of this Note.

          “Release” has the meaning set forth in CERCLA; provided that in the event CERCLA is
amended so as to broaden the meaning of any term defined thereby, such broader meaning shall apply
as of the effective date of such amendment; and provided, further, to the extent that the laws of a
state wherein the property lies establishes a meaning for “Release” which is broader than specified
in CERCLA, such broader meaning shall apply.

          “Responsible Officer” shall mean any officer at the level of Vice President or higher
of the relevant Person or, with respect to the Payor, the General Manager of the Payor, the Chief
Financial Officer of the Payor, the Executive Vice President Operations and Sales of AbiBowater or
the Vice President US & Pulp Operations of AbiBowater.

          “Sales Agreement” shall have the meaning ascribed thereto in Section 4.2.1 of this
Note.

          “SARA” shall have the meaning ascribed thereto in Section 3.7(a) of this Note.

          “Security Documents” shall have the meaning ascribed thereto in the Stock Purchase
Agreement and shall include any other security document or security instrument delivered pursuant
to or in connection herewith or therewith.

          “Settlement Documents” shall mean, collectively, this Note, the Stock Purchase
Agreement, the Settlement Order, the Sales Agreement and the Security Documents.

          “Settlement Order” means, collectively, one or more final and non-appealable orders of
the Bankruptcy Court in form and substance acceptable to Noteholder approving (i) the settlement of
various disputes concerning (A) the rejection of the Call Agreement, and (B) the rejection of the
Existing Partnership Agreement, pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure
(other than the Woodbridge Claims), and (ii) the Stock Purchase Agreement and the transactions
contemplated thereby, pursuant to Sections 363 and 105 of the Bankruptcy Code, and authorizing the
applicable Debtors to perform all of the obligations under

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the Stock Purchase Agreement and all documents and agreements entered into in connection
therewith.

          “Stock Purchase Agreement” shall have the meaning ascribed thereto in the recitals to
this Note.

          “Term” shall mean that period commencing on the Effective Date and ending on the
Maturity Date.

          “Termination Date” shall have the meaning ascribed thereto in the first paragraph of
Article 4.

          “UCC” shall mean the Uniform Commercial Code as in effect in the State of New York;
provided that, if perfection or the effect of perfection or non-perfection or the priority of any
security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, “UCC” means the Uniform Commercial Code as in effect
from time to time in such other jurisdiction for purposes of the provisions hereof relating to such
perfection, effect of perfection or non-perfection or priority.

          “Weighted Average Operating Rate of the AbiBowater Mills” shall mean, for any
particular 12-month period, an amount determined by multiplying the Operating Rate for each
AbiBowater Mill for that period by the daily production of such AbiBowater Mill and dividing the
sum of the results thereof for all AbiBowater Mills by the total daily production of all AbiBowater
Mills.

          “Woodbridge Claims” means the claims of the Noteholder, The Woodbridge Company
Limited, Woodbridge International Holdings SA, or any of their affiliates, against the Debtors or
the Canadian Debtors, arising from the rejection of the Call Agreement and the guarantee dated as
of September 6, 2001 by Abitibi-Consolidated Inc. in favor of each of the Noteholder and Woodbridge
International Holdings SA.

          “Woodbridge Group” shall mean (a) The Woodbridge Company Limited, (b) Affiliates of
The Woodbridge Company Limited, and (c) the respective successors and assigns of The Woodbridge
Company Limited or any such Affiliate, as, at such time, are controlled directly or indirectly by
one or more corporations all of the shares of which are held by one or more individuals who are
members of the family of the late first Lord Thomson of Fleet or trusts for their benefit.

Article 2

Interest and Principal Payments; Other Material Terms

     2.1 Interest Rate. The Payor agrees that during the Term the unpaid Principal Amount
of this Note shall accrue interest at the Interest Rate. Interest shall be calculated on the basis
of a 360-day year for the actual number of days elapsed.

     2.2 Payment of Interest. Accrued interest on the unpaid Principal Amount of the Note
shall be payable by the Payor to the Noteholder in cash quarterly in arrears (x) on the last day of

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each fiscal quarter (each, a “Payment Date”), commencing on March 31, 2011, and (y) on
the Maturity Date.

     2.3 Payment of Principal. The Payor shall pay the Principal Amount of the Note on the
Maturity Date in cash, provided that the amount to be repaid on the Maturity Date may, provided no
Event of Default then exists and subject to the filing of any necessary prior written notice with
applicable securities regulatory authorities as required by applicable Canadian securities laws or
with the Toronto Stock Exchange as required by the rules of the Toronto Stock Exchange and the
filing of a resale registration statement with the United States Securities and Exchange Commission
and supplemental listing applications with the New York Stock Exchange and the Toronto Stock
Exchange, be satisfied, at the election of Payor, with payment in publicly traded, freely tradeable
common shares of AbiBowater in an amount of shares equal to the quotient of (x) the Principal
Amount then outstanding divided by (y) 95% of the 20 trading-day volume weighted average trading
price of AbiBowater common shares for the period ended five (5) Business Days prior to the Maturity
Date. The Payor may elect to repay the Principal Amount in common shares of AbiBowater on a
minimum of 45 days’ and a maximum of 180 days’ prior written notice to Noteholder;
provided, that Noteholder may elect to reject such election in writing within 20 Business
Days after receipt of such notice, but in no event less than 40 days prior to the Maturity Date.
In the event Noteholder rejects the Payor’s election, the Maturity Date shall be automatically
extended to the next anniversary of the Maturity Date; provided, however, that in
no event shall the Maturity Date be extended beyond January [14], 2019 (the “Final Maturity
Date”). For greater clarity, in the event the Payor elects to repay the Principal Amount in
common shares of AbiBowater on the Final Maturity Date and the Noteholder rejects such election,
Payor shall repay the Principal Amount in cash without further extension.

     2.4 Prepayment of Principal.

          2.4.1 The Payor shall prepay the Principal Amount of the Note in an amount equal to
(x) 70% of Distributable Cash for any Fiscal Year minus (y) an amount equal to the
aggregate amount of voluntary prepayments of this Note made in accordance with Section
2.4.2 of this Note during such Fiscal Year on or prior to the day that is 60 days after
the end of such Fiscal Year beginning with the Fiscal Year ending December 31, 2011.
Such amount shall be subject to adjustment in the amount of the Make Whole Payment to the
extent an Operating Rate Deficit occurs pursuant to Section 4.2.2 hereof.

          2.4.2 In the event that 52.5% of the Estimated Partnership Cash (as defined in the
Stock Purchase Agreement) is less than $15,000,000, the Payor shall prepay the Principal
Amount of the Note (a) in an amount equal to the excess, if any, of (x) $15,000,000 minus
52.5% of the Estimated Partnership Cash, over (y) $15,000,000 minus 52.5% of the Final
Partnership Cash Amount (as defined in the Stock Purchase Agreement) on or prior to the
date that is the 5th Business Day following the Settlement Date (as defined in the Stock
Purchase Agreement), and (b) in an amount equal to any cash distribution received by the
Payor on account of the Administrative Claim (excluding the Transferred Administrative
Claim Rights) (as such terms are defined in the Stock Purchase Agreement), to the extent
not included in the calculation

13

 

of the Estimated Partnership Cash or the Final Partnership Cash Amount, on or prior
to the date that is the 5th Business Day following the receipt thereof; provided,
that the sum of (i) the cash portion of the Purchase Price paid on the Closing Date (as
defined in the Stock Purchase Agreement) in accordance with Section 2.2(a) of the Stock
Purchase Agreement plus (ii) the aggregate amount of prepayments of the Principal Amount
of the Note required to be made pursuant to this Section 2.4.2 shall not exceed
$15,000,000 in the aggregate.

          2.4.3 In addition to the mandatory prepayment requirements set forth in Sections
2.4.1 and 2.4.2 above, the Payor may voluntarily prepay, in whole or in part, the unpaid
Principal Amount of this Note in cash on any Payment Date without premium or penalty in
an amount not less than $10,000,000 or an integral multiple of $1,000,000 in excess
thereof (or the aggregate unpaid Principal Amount, if such amount is less than
$10,000,000).

     2.5 Place and Form of Payment.

          2.5.1 All cash payments under this Note shall be made in United States dollars. The
Payor shall make any cash payment due hereunder not later than 5:00 p.m. (New York time)
on the day when due at the address specified in Section 9.1 below or by wire transfer of
immediately available funds in accordance with wire transfer instructions provided to the
Payor in accordance with Section 9.1 below. If any payment is due and payable on a day
other than a Business Day, such payment shall be extended to the next succeeding Business
Day and, with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension.

          2.5.2 In the event of the repayment of the Principal Amount in common shares of
AbiBowater in accordance with Section 2.3, the Payor will deliver or cause to be
delivered to the Noteholder at the address specified in Section 9.1 below a certificate
or certificates representing the number of fully paid and non-assessable AbiBowater
common shares determined in accordance with Section 2.3, together with an opinion of
counsel in form and substance satisfactory to the Noteholder, acting reasonably, that
such shares have been duly authorized, are validly issued, non-assessable, and freely
tradeable.

     2.6 Application of Payments. Any payments made by the Payor in cash hereunder shall
first be applied to the payment of any accrued but unpaid interest and then to the payment of the
outstanding Principal Amount.

     2.7 Setoff in Accordance with Stock Purchase Agreement. The Principal Amount of this
Note or any accrued interest thereon is subject to a dollar for dollar reduction to offset all or
any portion of indemnification amounts owed to any Abitibi Indemnitee (as defined in the Stock
Purchase Agreement) in accordance with Section 8.9 of the Stock Purchase Agreement.

     2.8 Limited Recourse. The Noteholder agrees with the Payor, ACSC and ANI that,
notwithstanding (A) that the Payor was, prior to the date hereof, a general partnership, (B) that

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ACSC and ANI are parties to this Note and (C) any other provisions in this Note, including
Section 6.1 hereof, (i) with respect to any payment or performance of the Payor’s obligations
hereunder and under the other Security Documents to which it is a party, the exercise of any rights
and remedies in connection herewith or therewith and any breach of any representation or warranty
of the Payor in connection herewith or therewith, the Noteholder shall have recourse only to the
Payor and the assets of the Payor, except as described in clause (iii) below, (ii) neither ACSC nor
ANI shall have any liability in respect of any obligations of the Payor hereunder or thereunder by
reason of its former status as a general partner of the Payor and (iii) the Noteholder shall have
no recourse to the assets of ACSC or ANI in respect of any obligations of the Payor hereunder or
thereunder except for the ACSC Collateral and the ANI Collateral as expressly set forth in Article
8 of this Note.

     2.9 Taxes.

     2.9.1 Withholding Rights. The Payor shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Note such amounts as it is
required to deduct and withhold with respect to the making of such payment under the
Internal Revenue Code, or any provision of state, local or foreign tax law. To the extent
that such amounts are so withheld by the Payor, such withheld and deducted amounts will be
treated for all purposes of this Note and the Stock Purchase Agreement as having been paid
to the Noteholder in respect of which such deduction and withholding was made by the Payor.

     2.9.2 Status of Noteholder or Assignee. The Noteholder and any assignee, if
requested by the Payor, shall deliver such other documentation prescribed by applicable law
or reasonably requested by the Payor as will enable the Payor to determine whether or not
such Noteholder or assignee is subject to backup withholding or information reporting
requirements.

     2.9.3 Tax Forms. The Noteholder and any assignee shall deliver to the Payor
(in such number of copies as shall be requested by the recipient) on or prior to the
Effective Date (and from time to time thereafter upon the reasonable request of the Payor,
but only if such Noteholder or assignee is legally entitled to do so), whichever of the
following is applicable:

     (i) duly completed copies of Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States is a
party;

     (ii) duly completed copies of Internal Revenue Service Form W-8ECI or Form W-9;

     (iii) in the case of a Noteholder or assignee claiming the benefits of the
exemption for portfolio interest under section 881(c) of the Internal Revenue Code:
(i) a certificate to the effect that such person is not: (1) a “bank” within the
meaning of section 881(c)(3)(A) of the Internal Revenue Code; (2) a “10 percent
shareholder” of the Payor within the meaning of section 881(c)(3)(B) of the

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Internal Revenue Code; or (3) a “controlled foreign corporation” described in
section 881(c)(3)(C) of the Internal Revenue Code; and (ii) two (2) duly completed
copies of Internal Revenue Service Form W-8BEN; or

     (iv) any other form prescribed by applicable law as a basis for claiming
exemption from or a reduction in United States Federal withholding tax duly
completed together with such supplementary documentation as may be prescribed by
applicable law to permit the Payor to determine the withholding or deduction
required to be made.

Article 3

Representations and Warranties

     The Payor hereby represents and warrants to the Noteholder on the date hereof that:

     3.1 Formation; Good Standing. The Payor (a) is a limited liability company duly
formed, validly existing and in good standing under the laws of its jurisdiction of formation, (b)
has all requisite limited liability company power to own its property and conduct its business as
now conducted and as presently contemplated, and (c) is in good standing as a foreign limited
liability company (or similar business entity) and is duly authorized to do business in each
jurisdiction where such qualification is necessary except where failure to be so qualified would
not have a Material Adverse Effect.

     3.2 Authorization. The execution, delivery and performance of this Note and the other
Settlement Documents to which it is a party and the transactions contemplated hereby and thereby
(w) are within the Payor’s limited liability company authority, (x) have been duly authorized by
all necessary limited liability company proceedings, (y) do not and will not conflict with or
result in any breach or contravention of any law to which the Payor is subject or any judgment,
order, writ, injunction, license or permit applicable to the Payor, and (z) do not conflict with
any provision of the LLC Agreement.

     3.3 Enforceability. The execution and delivery of this Note and the other Settlement
Documents to which it is a party will result in valid and legally binding obligations of the Payor
enforceable against it in accordance with the respective terms and provisions hereof and thereof,
except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium
or similar laws affecting creditors’ rights generally.

     3.4 Governmental Approvals. The execution, delivery and performance by the Payor of
this Note and the Settlement Documents to which it is a party and the transactions contemplated
hereby and thereby do not require the approval or consent of, or filing with, any Governmental
Authority other than those already obtained and filings made under the UCC and with respect to the
Mortgage.

     3.5 Title to Properties. The Payor owns all of its assets, subject to no Liens,
except Permitted Liens.

     3.6 Litigation. Except with respect to the Proceedings, there are no actions, suits,
proceedings or investigations of any kind pending or, to the Payor’s knowledge, threatened

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against the Payor before any Governmental Authority that, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect.

     3.7 Environmental Compliance. Except as set forth on Schedule 3.7:

          (a) to the knowledge of the Payor, no operator of any owned or leased real property of the
Payor (the “Real Estate”) or any operations thereon is in violation, or alleged violation,
of any judgment, decree, order, law, license, rule or regulation pertaining to environmental
matters, including without limitation, those arising under the Resource Conservation and Recovery
Act (“RCRA”), the Comprehensive Environmental Response, Compensation and Liability Act of
1980 (“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986 (“SARA”),
the Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or any
and all federal, state, local or foreign law, statutes, regulations, ordinances, rules, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to waste transportation or disposal, pollution and the protection of the
environment or the release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to public or private wastewater
systems (the “Environmental Laws”) that would reasonably be expected to have a Material
Adverse Effect;

          (b) The Payor has not received written notice from any third party including, without
limitation, any Governmental Authority relating to the Real Estate, (i) that it has been identified
by the United States Environmental Protection Agency (“EPA”) as a potentially responsible
party under CERCLA with respect to the listing of the Real Estate on the National Priorities List,
40 C.F.R. Part 300 Appendix B; (ii) that any hazardous waste, as defined by 42 U.S.C. §6903(5), any
hazardous substances as defined by 42 U.S.C. §9601(14), any pollutant or contaminant as defined by
42 U.S.C. §9601(33) and any other Hazardous Materials which any one of them has generated,
transported or disposed of at or from the Real Estate has been found at any site at which a
Governmental Authority has conducted or has ordered that the Payor conduct a remedial
investigation, removal or other response action pursuant to any Environmental Law; or (iii) that it
is or shall be a named party to any claim, action, cause of action, complaint, or legal or
administrative proceeding (in each case, contingent or otherwise) arising out of any third party’s
incurrence of costs, expenses, losses or damages of any kind whatsoever in connection with the
release of Hazardous Materials at or from the Real Estate that, with respect to any of clauses (i),
(ii) or (iii) of this paragraph, would reasonably be expected to have a Material Adverse Effect;
and

          (c) To the knowledge of the Payor and except as would not reasonably be expected to have a
Material Adverse Effect, (i) no portion of the Real Estate has been used for the handling,
processing, storage or disposal of Hazardous Materials except in accordance with applicable
Environmental Laws; and no underground tank or other underground storage receptacle for Hazardous
Materials is located on any portion of the Real Estate; (ii) in the course of any activities
conducted by the Payor or operators of its properties, no Hazardous Materials have been generated
or are being used on the Real Estate except in accordance with applicable Environmental Laws; (iii)
there have been no Releases or, to the knowledge of the Payor, threatened Releases of Hazardous
Materials on, upon, into or from the properties of the Payor; (iv) there have been no Releases on,
upon, from or into any real property in the vicinity of any of

17

 

the Real Estate which, through soil or groundwater contamination, may have come to be located
on; and (v) in addition, any Hazardous Materials that have been generated on any of the Real Estate
that are regulated as hazardous have been transported offsite only by carriers having an
identification number issued by the EPA (or the equivalent thereof in any foreign jurisdiction),
treated or disposed of only by treatment or disposal facilities maintaining valid permits as
required under applicable Environmental Laws, which transporters and facilities have been and are,
to the Payor’s knowledge, operating in compliance with such permits and applicable Environmental
Laws.

     3.8 Taxes. Except as would not be reasonably expected to have a Material Adverse
Effect, the Payor (a) has made or filed all federal income and all state and foreign income and all
other tax returns, reports and declarations required by any jurisdiction to which it is subject,
(b) has paid all taxes and other governmental assessments and charges shown or determined to be due
on such returns, reports and declarations, except those being contested in good faith and by
appropriate proceedings and (c) has set aside on its books provisions reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such returns, reports or
declarations apply.

     3.9 Insurance. The Payor maintains with financially sound and reputable insurers
insurance with respect to its properties and business against such casualties and contingencies as
shall be in accordance with the general practices of businesses engaged in similar activities in
similar geographic areas and in amounts, containing such terms, in such amount, in such forms and
for such periods as may be reasonable and prudent.

     3.10 Solvency. The Payor is solvent, able to pay its debts as they mature, has
capital sufficient to carry on its business and all businesses in which it is about to engage, and,
as of the Effective Date and immediately after giving effect to the transaction contemplated
hereby, the fair present saleable value of its assets, calculated on a going concern basis, is in
excess of the amount of its liabilities, including, without limitation, contingent liabilities.

     3.11 Settlement Documents. Each Note Obligor acknowledges and agrees that this Note
and the other Settlement Documents to which it is a party and the transactions contemplated hereby
and thereby collectively constitute a single, integrated transaction.

Article 4

Affirmative Covenants

     The Payor covenants and agrees with the Noteholder that from and after the date of this Note
and until the date on which the Note Obligations have been paid in full (other than contingent
claims for indemnification not yet asserted) (the “Termination Date”):

     4.1 Punctual Payment. The Payor will duly and punctually pay or cause to be paid the
Principal Amount and all interest under this Note and all other amounts provided for in this Note,
all in accordance with the terms of this Note.

     4.2 Mill Operations.

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          4.2.1 The Payor shall, prior to or contemporaneously with the execution of this
Note, enter into an agreement with ACSC or, at the option of the Payor, with AbiBow US
Inc. (f/k/a Bowater Incorporated), in the form attached as Exhibit A to this Note (the
“Sales Agreement”).

          4.2.2 The Payor shall conduct its operations so that the Operating Rate of the
Augusta mill for any Fiscal Year will be not less than the greater of: (a) the Weighted
Average Operating Rate of the AbiBowater Mills in such calendar year; (b) 90%; and (c)
the Operating Rate of the newsprint industry in the United States of America plus 3.5%
(not to exceed 100%); except (i) as prevented by Force Majeure or (ii) as required to
complete approved capital projects or machine or mill maintenance, including boiler and
other scheduled inspections; provided that, insofar as reasonably practicable,
all such capital projects and maintenance will be scheduled so as to minimize machine
downtime. Compliance with the foregoing covenant shall be calculated in a manner
consistent with past practice. Exhibit B to this Note sets forth some illustrative
examples regarding the calculation of the minimum Operating Rate. In the event the Payor
shall unintentionally operate the Augusta Mill at an Operating Rate lower than as
required by this Section 4.2.2 for any Fiscal Year, the Payor shall calculate the
negative effect of such deviation on Distributable Cash and, no later than 10 days after
the delivery of the annual financial statements for such Fiscal Year pursuant to Section
4.12, pay to Noteholder in cash 70% of such amount pursuant to the formula set forth on
Exhibit C hereto (the “Make Whole Payment”) as an additional prepayment of the
Principal Amount of the Note pursuant to Section 2.4.1 hereof.

          4.2.3 Subject to compliance with applicable laws, including, without limitation,
compliance with ERISA, the Payor shall at all times maintain the assets and conduct its
operations as separate and distinct from any of the assets and operations of AbiBowater
or its Affiliates, including but not limited to the observance of limited liability
company formalities and maintenance of separate books and records; provided, that
the Payor shall be permitted to participate in centralized cash management and other
services with AbiBowater and its subsidiaries for good faith business purposes so long as
accurate books and records as to the Payor’s assets are maintained and such assets are
identifiable and traceable.

     4.3 Conduct of Business and Maintenance of Existence and Assets. The Payor shall (a)
conduct its business according to good business practices and maintain all of its properties useful
or necessary in its business in good working order and condition (reasonable wear and tear excepted
and except as may be disposed of in accordance with the terms of this Note), including all
licenses, patents, copyrights, design rights, tradenames, trade secrets and trademarks, and take
all actions necessary to enforce and protect the validity of any Intellectual Property right or
other right included in the Collateral except where failure to do any of the foregoing would not
have a Material Adverse Effect; (b) keep in full force and effect its existence (except in the case
of a merger in accordance with Section 5.5(a) of this Note); and (c) make all such reports and pay
all such franchise and other taxes and license fees and do all such other acts and things as may be
lawfully required to maintain its rights, licenses, leases, powers and franchises that are material
to its business under the laws of the United States or any political subdivision thereof.

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     4.4 [Intentionally omitted]

     4.5 Payment of Indebtedness. Except where failure to do so would not have a Material
Adverse Effect, the Payor shall pay, discharge or otherwise satisfy at or before maturity (subject,
where applicable, to specified grace periods and, in the case of the trade payables, to normal
payment practices) all its obligations and liabilities of whatever nature.

     4.6 Records and Accounts. The Payor will (a) keep true and accurate records and books
of account in which full, true and correct entries will be made in accordance with GAAP, and (b)
maintain, in accordance with GAAP, adequate accounts and reserves for all taxes (including income
taxes), depreciation, depletion, obsolescence and amortization of its properties and the properties
of its subsidiaries, contingencies, and other reserves.

     4.7 Notices.

          (a) Defaults. The Payor will, promptly upon a Responsible Officer of the Payor
becoming aware thereof, notify the Noteholder in writing of the occurrence of any Event of Default,
together with a reasonably detailed description thereof, and the actions the Payor proposes to take
with respect thereto. If any Person shall give any notice or take any other action in respect of a
claimed default (whether or not constituting an Event of Default) under this Note or in respect of
any other note, evidence of indebtedness, indenture or other obligation to which or with respect to
which the Payor is a party or obligor in excess of $2,500,000, whether as principal, guarantor,
surety or otherwise, the Payor shall promptly give written notice thereof to the Noteholder.

          (b) Environmental Events. The Payor will promptly notify the Noteholder, in each
case, subject to applicable law and confidentiality requirements, (i) upon the Payor obtaining
knowledge of any material violation of any Environmental Law regarding the Real Estate or the
Payor’s operations; (ii) upon the Payor obtaining knowledge of any known Release or threat of
Release of any Hazardous Substance at, from, or into the Real Estate in material violation of any
Environmental Laws which it reports in writing or is reportable by it in writing to any
Governmental Authority; (iii) upon the Payor’s receipt of any notice of material violation of any
Environmental Laws or of any Release or threatened Release of Hazardous Materials, in either case,
relating to the Real Estate, including a notice or claim of liability or potential responsibility
from any third party (including without limitation any Governmental Authority) and including notice
of any formal inquiry, proceeding, demand, investigation or other action with regard to (A) the
Payor’s, or any Person’s operation of the Real Estate, (B) contamination on, from or into the Real
Estate, or (C) investigation or remediation of offsite locations at which the Payor, or any of its
predecessors is alleged to have directly or indirectly Released Hazardous Materials; or (iv) upon
the Payor’s obtaining knowledge that any expense or loss has been incurred by such Governmental
Authority in connection with the assessment, containment, removal or remediation of any Hazardous
Materials with respect to which a lien may be imposed on the Real Estate.

          (c) Notification of Claim against Collateral. Payor will, promptly, but in any event
no later than five (5) Business Days upon a Responsible Officer of the Payor becoming aware
thereof, notify the Noteholder in writing of any rights of setoff, claims, withholdings or

20

 

other defenses to which a material portion of the Collateral, or the Noteholder’s rights with
respect to the Collateral, are subject.

          (d) Notice of Litigation and Judgments. The Payor will give notice to the Noteholder
in writing within fifteen (15) days upon a Responsible Officer of the Payor becoming aware of any
pending litigation and proceedings affecting the Payor or to which the Payor is or becomes a party
involving an uninsured claim against the Payor which would reasonably be expected to have a
Material Adverse Effect, and stating the nature and status of such litigation or proceedings. The
Payor will give notice to the Noteholder, in writing within ten (10) days of any final judgment not
covered by insurance, against the Payor in an amount in excess of $5,000,000.

          (e) Notice of Violations of Law. The Payor will promptly upon a Responsible Officer
of the Payor becoming aware thereof notify the Noteholder in writing if the Payor is in violation
of any law, statute, regulation or ordinance of any Governmental Authority, or of any agency
thereof, which violation would reasonably be expected to have a Material Adverse Effect.

     4.8 Insurance. The Payor will maintain with financially sound and reputable insurers
insurance with respect to its properties and business against such casualties and contingencies as
shall be in accordance with the general practices of businesses engaged in similar activities in
similar geographic areas and in such amount, in such forms and for such periods as may be
reasonable and prudent. In addition, the Payor will furnish from time to time, upon Noteholder’s
request, a summary of the insurance coverage of the Payor.

     4.9 Taxes. The Payor will duly pay and discharge, or cause to be paid and discharged,
before the same shall become overdue, all material taxes, assessments and other governmental
charges imposed upon it; provided that any such tax, assessment, charge, levy or claim need not be
paid if the validity or amount thereof shall currently be contested in good faith by appropriate
proceedings and if the Payor shall have set aside on its books adequate reserves with respect
thereto in accordance with GAAP.

     4.10 Inspection of Properties and Books, etc. (a) The Payor shall permit the
Noteholder or any of the Noteholder’s designated representatives, at the Noteholder’s sole cost and
expense (unless an Event of Default exists), to visit and inspect the properties of the Payor, to
examine the books of account of the Payor (and to make abstracts therefrom), and to discuss the
affairs, finances and accounts of the Payor with, and to be advised as to the same by, its
officers, all upon reasonable notice provided in accordance with Section 9.1 of this Note, during
normal business hours and at such intervals as the Noteholder may reasonably request.

          (b) Subject to the terms and conditions of Section 4.10(a), upon the Noteholder’s reasonable
request, the Payor shall arrange for the Noteholder to participate in discussions with the Payor’s
accountants and the Payor, and shall authorize such accountants to disclose to the Noteholder such
financial statements and other supporting financial documents and schedules, including copies of
any management letter with respect to the business, financial condition and other affairs of the
Payor, as the Noteholder may reasonably request.

21

 

     4.11 Compliance with Laws, Contracts, Licenses, and Permits. Except where failure to
do so will not have a Material Adverse Effect, the Payor will comply with (a) all applicable laws,
including all Environmental Laws, regulations, orders, including the Settlement Order, decrees,
judgments, licenses and permits, including without limitation all Environmental Permits, wherever
its business is located, (b) the provisions of its organizational documents, and (c) all agreements
and instruments by which it or any of its properties may be bound. If any authorization, consent,
approval, permit or license from any officer, agency or instrumentality of any Governmental
Authority shall become necessary or required in order that the Payor may fulfill any of its
obligations hereunder or under any Settlement Document to which it is a party, the Payor will
promptly take or cause to be taken all reasonable steps within its power to obtain such
authorization, consent, approval, permit or license.

     4.12 Annual Financial Statements. The Payor shall furnish Noteholder within one
hundred and twenty (120) days after the end of each Fiscal Year, financial statements of the Payor
on a consolidated basis including, but not limited to, statements of income and stockholders’
equity and cash flow from the beginning of the current Fiscal Year to the end of such Fiscal Year
and the balance sheet as at the end of such Fiscal Year, all prepared in accordance with GAAP and
reported upon by an independent certified public accounting firm selected by the Payor. Such
financial statements shall be accompanied by a calculation of Distributable Cash for such Fiscal
Year.

     4.13 Monthly Financial Statements. The Payor shall furnish Noteholder within thirty
(30) days after the end of each month, monthly management reports which shall include (i) an
unaudited balance sheet of the Payor on a consolidated basis and unaudited statements of income and
stockholders’ equity and cash flow of the Payor on a consolidated basis reflecting results of
operations from the beginning of the Fiscal Year to the end of such month and for such month, which
shall be complete and correct in all material respects, subject to normal year end adjustments and
the absence of footnotes, and (ii) a certificate of a Responsible Officer of the Payor as specified
in clause (ii) of Section 8.3 of this Note.

     4.14 [Intentionally omitted]

     4.15 Additional Information. The Payor shall furnish Noteholder with such additional
information as Noteholder shall reasonably request in order to enable Noteholder to determine
whether the terms, covenants, provisions and conditions of this Note and the other Settlement
Documents have been complied with by the Payor.

     4.16 Noteholder Meetings. Within 30 days of each of November 15 and May 15 of each
Fiscal Year, upon reasonable prior notice, the Payor shall hold an in-person meeting with
Noteholder, at which meeting the financial results and financial condition of the Payor shall be
reviewed.

Article 5

Negative Covenants

     The Payor covenants and agrees with the Noteholder that from and after the date of this Note
and until the Termination Date occurs:

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     5.1 Prepayment of Indebtedness. The Payor shall not, at any time, directly or
indirectly, prepay any Indebtedness described in clause (a) of the definition thereof (other than
the Note Obligations), or repurchase, redeem, retire or otherwise acquire any such Indebtedness in
each case which Indebtedness exceeds $100,000 in aggregate principal amount in any Fiscal Year,
other than Indebtedness to AbiBowater and its subsidiaries incurred pursuant to Section 5.2(b) of
this Note in compliance with the applicable subordination terms.

     5.2 Indebtedness. The Payor shall not create, incur, assume or suffer to exist any
Indebtedness (exclusive of trade debt) except in respect of Indebtedness to Noteholder.
Notwithstanding the foregoing, the Payor may, without duplication, create, incur, assume or suffer
to exist:

          (a) any Indebtedness existing on the Effective Date as set forth in Schedule 5.2 hereof,
including any guarantees thereof;

          (b) intercompany loans and advances owed to AbiBowater or any of its subsidiaries, so long as
such Indebtedness is unsecured and subordinated in right of payment to the Note Obligations on
terms and conditions reasonably satisfactory to Noteholder;

          (c) Indebtedness (including guarantees) in respect of (i) performance, surety, bid, appeal or
similar bonds, completion guarantees or similar instruments, including letters of credit and
bankers acceptances (not incurred for the purpose of borrowing money), in each case provided in the
ordinary course of business, (ii) hedging agreements entered into in the ordinary course of
business as a risk management strategy and (iii) agreements providing for indemnification,
adjustment of purchase price or similar obligations, or from guarantees or letters of credit,
surety bonds or performance bonds securing any obligations pursuant to such agreement, incurred in
connection with an acquisition or disposition permitted hereunder;

          (d) Indebtedness incurred to pay premiums for insurance policies maintained by Payor in the
ordinary course of business not exceeding in aggregate the amount of such unpaid premiums;

          (e) guarantees with respect to bonds issued to support workers’ compensation, unemployment or
other insurance or self-insurance obligations, and similar obligations, in each case, incurred by
the Payor in the ordinary course of business;

          (f) Indebtedness in the form of any earnout or other similar contingent payment obligation
incurred in connection with an acquisition permitted hereunder;

          (g) Indebtedness arising in the ordinary course of business as an account party in respect of
trade letters of credit;

          (h) Indebtedness arising in the ordinary course of business in respect of netting services,
overdraft protections, cash management services and otherwise in connection with deposit accounts;

          (i) guarantees in the ordinary course of business of the obligations of suppliers, customers,
franchisees and licensees;

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          (j) Capital Lease Obligations and Indebtedness created, incurred or assumed in respect of the
purchase, improvement, repair or construction of property; provided that such Indebtedness
is created, incurred or assumed within 180 days after the earlier of (x) the placement in service
of such property or (y) the final payment on such property; provided that the aggregate
amount of the Indebtedness created, incurred or assumed pursuant to this clause (j) at any time
outstanding shall not exceed $2,000,000; and

          (k) other Indebtedness incurred in the ordinary course of business in an aggregate principal
amount at any time outstanding not in excess of $1,000,000.

     5.3 Creation of Liens. The Payor shall not create or suffer to exist any Lien on any
of its property or assets now owned or hereafter acquired, except for Permitted Liens.

     5.4 Acquisitions. The Payor shall not purchase or acquire (i) all or substantially
all assets (or assets of a division or business) of any other Person, or (ii) any obligations or
Equity Interests of, or any other interest in, any other Person, except (a) obligations issued or
guaranteed by the United States of America or Canada or any instrumentality or agency thereof, (b)
commercial paper with maturities of not more than 270 days and a published rating of not less than
A-1 or P-1 (or the equivalent rating), (c) certificates of time deposit and bankers’ acceptances
having maturities of not more than one year and repurchase agreements backed by United States
government securities or a commercial bank if (i) such bank provides cash management services to
AbiBowater or any of its subsidiaries, (ii) such bank has a combined capital and surplus of at
least $500,000,000, or (iii) its debt obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A (or the equivalent rating) by a nationally recognized
investment rating agency, (d) U.S. money market funds that invest solely in obligations issued or
guaranteed by the United States of America or an agency thereof, (e) demand deposits with any bank
or trust company, (f) asset or stock acquisitions to which Payor is contractually obligated but not
yet consummated as of the date hereof and (g) obligations and Equity Interests in any Person the
issuance of which results from the bankruptcy, restructure, reorganization or similar composition
of the obligations of such Person.

     5.5 Merger, Consolidation and Sale of Assets. The Payor will not:

          (a) Enter into any merger, consolidation or other reorganization with or into any other Person
or permit any other Person to consolidate with or merge with it; and

          (b) Sell, lease, transfer or otherwise dispose of any of its properties or assets in a single
transaction or a series of related transactions, except (i) dispositions of inventory in the
ordinary course of business and equipment and other property that is damaged, worn-out or obsolete,
(ii) dispositions of investments permitted under clauses (a) through (e) and (g) of Section 5.4 of
this Note, (iii) dispositions of receivables in connection with the compromise, settlement or
collection thereof in the ordinary course of business or in bankruptcy or similar proceedings and
exclusive factoring or similar arrangements, (iv) dispositions of personal property the proceeds of
which are applied or intended by the Payor in good faith to be applied to acquire property or
assets useful in the Payor’s business and (v) Distributions permitted under Section 5.9.

24

 

     5.6 Nature of Business. The Payor may not change the nature of the business in which
it is presently engaged, nor purchase or invest, directly or indirectly, in any assets or property
other than in the ordinary course of business for assets or property which are useful in, necessary
for and are to be used in its business as presently conducted.

     5.7 Amendment of Organizational Documents. The Payor may not amend, modify or waive
any term or provision of its organizational documents in a manner that would reasonably be expected
to be adverse to (i) the ability of the Payor to comply with its obligations under this Note and
the Security Documents to which it is a party, including without limitation Section 2.4.1 of this
Note, and (ii) the value of the Collateral or the ability of the Noteholder to exercise its rights
and remedies with respect thereto, in each case unless required by law.

     5.8 Amendment of Sales Agreement. The Sales Agreement may not be altered, amended or
otherwise changed or supplemented, or any provision or condition therein waived by any party
thereto, and the Payor may not consent to any action which would require the consent of the Payor
under the Sales Agreement, in each case, in a manner that would reasonably be expected to be
adverse to the interests of the Payor, without the Noteholder’s prior written consent.

     5.9 Distributions. The Payor may not authorize, declare or pay, directly or
indirectly, any distribution or return of any equity capital to the holders of its Equity Interests
or authorize or make any other distribution, payment or delivery of property or cash to such
holders as such, or redeem, retire, purchase or otherwise acquire, directly or indirectly, for
consideration any of its Equity Interests (or any options or warrants issued by the Payor with
respect to its Equity Interests), or set aside any funds for any of the foregoing purposes
(collectively, a “Distribution”), except that (a) a Distribution of up to 30% of
Distributable Cash for the prior Fiscal Year may be declared and paid at any time after the making
of the required prepayment with respect to Distributable Cash for such prior Fiscal Year in
accordance with Section 2.4.1, provided, that (i) no Default or Event of Default has occurred and
is then continuing after giving effect to such Distribution, (ii) the representation and warranty
set forth in Section 3.10 of this Note is true and correct with respect to the Payor on the date
of, both immediately before and immediately after giving effect to, such Distribution, and (iii)
the payment of such Distribution complies with all applicable laws; and (b) the Payor shall
distribute the ANI Stock to ACSC on the Closing Date.

     5.10 Transactions with Affiliates. The Payor may not enter into, directly or
indirectly, any transaction or series of related transactions, except in the ordinary course of
business, with any Affiliate, other than on terms and conditions at least as favorable to the Payor
as would reasonably be obtained by the Payor at that time in a comparable arm’s-length transaction
with a person other than an Affiliate, except for Distributions permitted under Section 5.9.

     5.11 Limitation on Certain Restrictions. The Payor may not, directly or indirectly,
create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on
its ability to pay a Distribution.

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Article 6

Events of Default

     6.1 If an Event of Default shall have occurred and be continuing, then, upon notice to the
Payor by the Noteholder (which notice shall not be required in the case of an Event of Default
pursuant to clause (g) of the definition thereof) (i) the Note, including all unpaid principal and
accrued interest, shall become immediately due and payable in cash, and (ii) all unpaid amounts
hereunder shall thereafter bear interest at the Default Rate (payable and calculated in accordance
with Section 2.1) until the Event of Default is no longer continuing or waived by the Noteholder.
If any Event of Default shall have occurred and is continuing, the Noteholder may, in addition to
all other rights and remedies granted to it in this Note and in any other instrument or agreement
securing, evidencing or relating to this Note, exercise all rights and remedies available to the
Noteholder at law or in equity.

     6.2 The Noteholder acknowledges and agrees that, to the extent that the Noteholder, by reason
of its partial ownership of the Payor through ANI before the date hereof, has Knowledge as of the
Effective Date that any representation or warranty made herein or in the Mortgage by the Payor is
inaccurate or untrue, no Event of Default shall arise out of such breach of representation or
warranty.

     6.3 Notwithstanding anything herein to the contrary, in the event that the Stock Purchase
Agreement or the Settlement Order is cancelled, terminated, rejected, reversed, vacated, revoked or
rescinded, and (x) ACSC is not permitted to retain the ANI Stock, and (y) the ANI Stock is returned
to the Noteholder or any of it Affiliates, such event shall be deemed not to be an Event of Default
hereunder (or any Event of Default that may have previously arisen in respect of such event shall
be deemed to no longer be continuing), and this Note and the Security Documents shall be canceled
(without any further payments in respect of this Note or the Security Documents or damages to the
Noteholder arising pursuant to the terms of this Note or the Security Documents, but for the sake
of clarity, without prejudice to any other damages found to be payable to Noteholder), the
Rejection Appeal and the Partnership Agreement Motion (as each such term is defined in the
Settlement Motion (as defined in the Stock Purchase Agreement)) shall be reinstated, and the
parties shall be returned to the status quo before entry into any of the Settlement Documents.

Article 7

[Intentionally Omitted]

Article 8

Security Agreement

     8.1 Grant of Lien.

          8.1.1 To secure the prompt and complete payment, performance and observance of all
of the Note Obligations of ANC, ACSC hereby grants, assigns, conveys, mortgages, pledges,
hypothecates and transfers to the Noteholder, a first priority Lien, subject to Permitted
Liens, upon all of its right, title and interest in, to and under the following property,
whether now owned by or owing to, or hereafter

26

 

acquired by or arising in favor of ACSC (all of which being hereinafter collectively
referred to as the “ACSC Collateral”):

          (a) all of its membership interest in the Payor (the “ACSC Pledged Interests”);

          (b) all distributions and profits arising from the ACSC Pledged Interests;

          (c) all of ACSC’s right in the LLC Agreement or equivalent governing document of the Payor;

          (d) all proceeds and products of any of the foregoing, in whatever form.

          8.1.2 To secure the prompt and complete payment, performance and observance of all
of the Note Obligations of ANC, ANI hereby grants, assigns, conveys, mortgages, pledges,
hypothecates and transfers to the Noteholder, a first priority Lien, subject to Permitted
Liens, upon all of its right, title and interest in, to and under the following property,
whether now owned by or owing to, or hereafter acquired by or arising in favor of ANI
(all of which being hereinafter collectively referred to as the “ANI
Collateral”):

          (a) all of its membership interest in the Payor (the “ANI Pledged Interests” and
together with the ACSC Pledged Interests, the “Pledged Interests”);

          (b) all distributions and profits arising from the ANI Pledged Interests;

          (c) all of ANI’s right in the LLC Agreement or equivalent governing document of the Payor;

          (d) all proceeds and products of any of the foregoing, in whatever form.

          8.1.3 To secure the prompt and complete payment, performance and observance of all
of the Note Obligations of the Payor, the Payor hereby grants, assigns, conveys,
mortgages, pledges, hypothecates and transfers to the Noteholder, a first priority Lien,
subject to Permitted Liens, upon all of its right, title and interest in, to and under
the following property, whether now owned by or owing to, or hereafter acquired by or
arising in favor of the Payor (all of which being hereinafter collectively referred to as
the “Payor Collateral”, and together with the ACSC Collateral and the ANI
Collateral, the “Collateral”):

          (a) all accounts, chattel paper, tangible chattel paper, commercial tort claims listed on
Schedule 8.1 hereto, commodity contracts, commodity accounts, deposit accounts, securities,
security accounts, security entitlements, investment property, financial assets, documents,
electronic chattel paper, equipment, fixtures, general intangibles, goods, health-care insurance
receivables, instruments, promissory notes, inventory, investment property, letter of credit rights
and supporting obligations, payment intangibles and software (in each case, as defined in the UCC);

27

 

          (b) all intellectual property of the Payor;

          (c) all owned real property of the Payor;

          (d) all of the Payor’s ledger sheets, ledger cards, files, correspondence, records, books of
account, business papers, computers, computer software, computer programs, tapes, disks and
documents relating to clause (a), (b) or (c) of this Section 8.1.3; and

          (e) all proceeds and products of property described in clause (a), (b) or (c) of this Section
8.1.3) in whatever form, including, but not limited to: cash, deposit accounts (whether or not
comprised solely of proceeds), certificates of deposit, insurance proceeds (including hazard, flood
and credit insurance), negotiable instruments and other instruments for the payment of money,
chattel paper, security agreements, documents, eminent domain proceeds, condemnation proceeds and
tort claim proceeds, and with respect to intellectual property, proceeds of any claim against third
parties in respect thereto, including for past, present or future infringement or any dilution of
any trademark or for injury to the goodwill associated with any trademark;

provided, however that the foregoing shall not include any permit, lease, license,
contract, instrument or other agreement held by Payor that validly prohibits the creation by Payor
of a security interest thereon or requires the consent of any person other than the Payor as a
condition to the creation of such security interest, or any permit, lease, license, contract,
instrument or other agreement held by Payor to the extent that any applicable law prohibits the
creation of a security interest thereon, but only, in each case, to the extent, and for so long as,
such prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the
UCC or any other applicable law, and subject in all cases to Payor’s obligation to use commercially
reasonable efforts to obtain consent to the creation of a security interest in favor of Noteholder
in any such permit, lease, license, contract, instrument or other agreement.

     8.2 Distributions; Voting. So long as no Event of Default shall have occurred and be
continuing, each of ACSC and ANI shall be entitled, subject to Section 5.9 of this Note, to
distributions paid in respect of the Pledged Interests, to vote the Pledged Interests and to give
consents, waivers and ratifications in respect of the Pledged Interests; provided, however, that no
vote shall be cast or consent, waiver or ratification given by ACSC or ANI if the effect thereof
would conflict with the rights of the Noteholder hereunder or any other Settlement Document, or be
inconsistent with or result in any violation of any of the provisions of this Note or any other
Settlement Document. All such rights of ACSC and ANI to receive cash distributions and to vote and
give consents, waivers and ratifications with respect to the Pledged Interests shall cease while an
Event of Default shall have occurred and be continuing if the Noteholder shall deliver notice
thereof to ACSC and ANI referring to this Section 8.2.

     8.3 Perfection. Each Note Obligor, as applicable, shall take all commercially
reasonable action that may be necessary or reasonably desirable, or that Noteholder may reasonably
request, so as at all times to maintain the validity, perfection, enforceability and priority of
Noteholder’s security interest in and Lien on the Collateral or to enable Noteholder to protect,
exercise or enforce its rights hereunder and in the Collateral, including, but not limited to,
promptly discharging all Liens on the Collateral other than Permitted Liens; provided, that

28

 

with respect to the perfection of the Noteholder’s security interest in and Lien on the
Collateral, the Note Obligors’ obligations shall be limited to the following: (i) in the case of
all Collateral in which a security interest may be perfected by filing a financing statement under
the UCC, the completion of such filings in the appropriate filing offices, (ii) in the case of all
Collateral consisting of instruments, certificated securities, registered intellectual property,
letter of credit rights, commercial tort claims, deposit accounts, commodity accounts and
securities accounts, the Payor shall provide, at the time it delivers its monthly management
reports pursuant to Section 4.13, a certificate of a Responsible Officer of the Payor describing
any such Collateral that was acquired by the Payor since the date the immediately precedent monthly
management report was delivered under Section 4.13 and upon Noteholder’s reasonable request in
connection therewith, (A) in the case of instruments in an outstanding principal amount equal to or
greater than $1,000,000 and certificated securities, deliver such instruments and certificated
securities to Noteholder, properly endorsed for transfer in blank, (B) in the case of registered
intellectual property, deliver promptly executed short form security agreements for filing with the
United States Copyright Office or United States Patent and Trademark Office, as applicable, in form
and substance reasonably satisfactory to Noteholder, (C) in the case of letter of credit rights in
an amount equal to or greater than $1,000,000 that are not supporting obligations, use commercially
reasonable efforts to obtain the consent to the assignment of proceeds of the relevant letter of
credit by the issuer or any nominated person in respect thereof, (D) in the case of commercial tort
claims, deliver to Noteholder a supplement to Schedule 8.1 hereto containing a specific description
of such commercial tort claim and (E) in the case of deposit accounts, commodity accounts and
securities accounts (other than Excluded Accounts), use commercially reasonable efforts to as
promptly as reasonably practicable provide “control” (as defined in the UCC) over such accounts
pursuant to an agreement with the applicable deposit bank, commodity intermediary or securities
intermediary in form and substance reasonably satisfactory to Noteholder, and (iii) in respect of
any assets (excluding broke) with an aggregate fair value in excess of $250,000 held on premises
owned by any third party, use commercially reasonable efforts to as promptly as reasonably
practicable cause such third party to enter into warehousing or landlord waivers in favor of
Noteholder. By its signature hereto, each Note Obligor hereby authorizes Noteholder to file one or
more financing, continuation or amendment statements pursuant to the UCC as in effect in any
jurisdiction in each jurisdiction and with such filing offices that Noteholder deems necessary or
desirable in order to perfect its security interests in all or any portion of the Collateral owned
by such Note Obligor. With respect to Payor, such financing statements may describe the collateral
in the same manner as described in this Note or as “all assets whether now owned or hereafter
acquired” or words of similar meaning. All charges, expenses and fees Noteholder may incur in
doing any of the foregoing, and any local taxes relating thereto, shall be borne by the Noteholder.

     8.4 Representations and Warranties. (a) Each of ACSC and ANI represents and warrants
that as of the date hereof:

     (i) The execution, delivery and performance of this Note and the other
Settlement Documents to which it is a party and the transactions contemplated hereby
and thereby (w) are within such Person’s corporate or limited liability company
authority, as applicable, (x) have been duly authorized by all necessary corporate
or limited liability company proceedings, as applicable, (y) do not and will not
conflict with or result in any breach or contravention of any law to which

29

 

ACSC or ANI are subject or any judgment, order, writ, injunction, license or
permit applicable to such Persons, and (z) do not conflict with any provision of
their charter, by-laws or similar governing documents.

     (ii) The execution and delivery of this Note and the other Settlement Documents
to which it is a party will result in valid and legally binding obligations of each
of ACSC and ANI enforceable against them in accordance with the respective terms and
provisions hereof and thereof, except as such enforceability may be limited by any
applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’
rights generally.

     (iii) It will derive substantial direct and indirect benefits from the issuance
of the Note and the transactions contemplated by the Stock Purchase Agreement.

          (b) Each of the Payor, ACSC and ANI represents and warrants that as of the date hereof:

     (i) No effective security agreement, financing statement, equivalent security
or Lien instrument or continuation statement covering all or any part of the
Collateral is on file or of record in any public office, except such as may have
been filed in favor of the Noteholder pursuant to this Note and Permitted Liens.

     (ii) This Note is effective to create a valid and continuing Lien on and, upon
the filing of the appropriate financing statements, a perfected Lien in favor of the
Noteholder on the Collateral with respect to which a Lien may be perfected by filing
pursuant to the UCC. Such Lien is prior to all other Liens, subject to Permitted
Liens, and is enforceable as such as against any and all creditors of and purchasers
from the applicable Note Obligor.

     (iii) The Mortgage is effective to create a valid and continuing Lien on and,
upon registration thereof in the appropriate office, a perfected Lien in favor of
the Noteholder on the collateral described therein. Such Lien is prior to all other
Liens, subject to Permitted Liens, and is enforceable as such as against any and all
creditors of and purchasers from the Payor.

     8.5 Covenants. Each of ACSC and ANI covenants and agrees with the Noteholder that
from and after the date of this Note and until the Termination Date occurs:

          (a) Additional Equity Interests. In the event either Person shall acquire (i) any
additional Equity Interests of the Payor (but excluding any debt security convertible into or
exchangeable for Equity Interests of the Payor), or (ii) any security exchangeable for or
convertible into Equity Interests of the Payor (but excluding any debt security convertible into or
exchangeable for Equity Interests of the Payor), whether by purchase, dividend, distribution, stock
split or otherwise, then such interest or other securities shall be subject to the Lien granted to
the Noteholder under this Note.

30

 

          (b) Treatment and Certification of Equity Interests. Each of ACSC and ANI will not
elect to (x) treat Pledged Interests as securities as contemplated by the definition of “security”
in Section 8-102(15) and by Section 8-103 of Article 8 of UCC or (y) certificate its Pledged
Interests.

          (c) Notification of Claim against Collateral. ACSC or ANI, as applicable will,
promptly, but in any event no later than five (5) Business Days upon a Responsible Officer of the
Payor becoming aware thereof, notify the Noteholder in writing of any rights of setoff, claims,
withholdings or other defenses to which a material portion of the Collateral, or the Noteholder’s
rights with respect to a material portion of the Collateral, are subject.

          (d) Limitation on Liens on Collateral. ACSC and ANI will not create, permit or suffer
to exist, and will defend the Pledged Interests against, and take such other action as is necessary
to remove, any Lien on the Pledged Interests, except to the extent such Lien is in favor of the
Noteholder or Permitted Liens.

          (e) Limitations on Disposition. ACSC and ANI will not sell, lease, transfer or
otherwise dispose of any of the Pledged Interests.

          (f) Notices. Each of the Note Obligors will advise the Noteholder promptly, in
reasonable detail, upon learning (i) of any Lien or claim made or asserted against a material
portion of the Collateral, and (ii) of the occurrence of any other event which would have a
material adverse effect on the value of the Collateral or on the Liens created hereunder.

     8.6 Remedies; Rights Upon Default. If an Event of Default shall have occurred and be
continuing, the Noteholder shall thereafter have the following rights and remedies (to the extent
permitted by applicable law) in addition to the rights and remedies of a secured party under the
UCC, all such rights and remedies being cumulative, not exclusive, and enforceable alternatively,
successively or concurrently, at such time or times as the Noteholder deems expedient:

          (a) the Noteholder may vote any or all of the Pledged Interests (whether or not the same shall
have been transferred into its name or the name of its nominee or nominees) for any lawful purpose,
including, without limitation, if the Noteholder so elects, for the liquidation of the assets of
the Payor, and give all consents, waivers and ratifications in respect of the Pledged Interests and
otherwise act with respect thereto as though it were the outright owner thereof (each of ACSC and
ANI hereby irrevocably constituting and appointing the Noteholder the proxy and attorney-in-fact of
such Person, with full power of substitution, to do so during the term of this Note);

          (b) the Noteholder may demand, sue for, collect or make any compromise or settlement the
Noteholder deems suitable in respect of any Collateral;

          (c) the Noteholder may sell, resell, assign and deliver, or otherwise dispose of any or all of
the Collateral, for cash or credit or both and upon such terms at such place or places, at such
time or times and to such entities or other persons as the Noteholder thinks expedient, all without
demand for performance by any Note Obligor or any notice or advertisement whatsoever except as
expressly provided herein or as may otherwise be required by law; and

31

 

          (d) the Noteholder may cause all or any part of the Pledged Interests held by it to be
transferred into its name or the name of its nominee or nominees.

     8.7 Sale of Collateral. In the event of any sale or other disposition of the
Collateral and to the extent that any notice thereof is required to be given by law, the Noteholder
shall give to the Note Obligors at least ten (10) Business Days’ prior authenticated notice of the
time and place of any public sale or other disposition of the Collateral or of the time after which
any private sale or any other intended disposition is to be made. Each of the Note Obligors,
hereby acknowledges that ten (10) Business Days’ prior written notice of such sale or other
disposition shall be reasonable notice. The Noteholder may enforce its rights hereunder without
any other notice and without compliance with any other condition precedent now or hereafter imposed
by statute, rule of law or otherwise (all of which are hereby expressly waived by each of the Note
Obligors to the fullest extent permitted by law). The Noteholder may buy or otherwise acquire any
part or all of the Collateral at any public sale or other disposition and if any part or all of the
Collateral is of a type customarily sold or otherwise disposed of in a recognized market or is of
the type which is the subject of widely-distributed standard price quotations, the Noteholder may
buy or otherwise acquire at private sale or other disposition and may make payments thereof by any
means. Any proceeds of any sale or other disposition of the Collateral remaining after the
occurrence of the Termination Date shall be promptly paid over to the applicable Note Obligor.

     8.8 Release of Collateral. Noteholder agrees that it shall (i) release its Lien on
all of the Collateral upon occurrence of the Termination Date and (ii) release its Lien on any
Collateral that is sold or to be sold as part of or in connection with any sale or other
disposition permitted under this Note. If any Collateral is so released, Noteholder agrees that it
will promptly execute and deliver or authorize the filing of appropriate documentation to evidence
such release as the applicable Note Obligor may reasonably request.

     8.9 Reinstatement. This Note shall remain in full force and effect and continue to be
effective should any petition be filed by or against any Note Obligor for liquidation or
reorganization, should any Note Obligor become insolvent or make an assignment for the benefit of
any creditor or creditors or should a receiver or trustee be appointed for all or any significant
part of any Note Obligor’s assets, and shall continue to be effective or be reinstated, as the case
may be, if at any time payment and performance of the Note Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Note Obligations, whether as a “voidable preference,” “fraudulent
conveyance,” or otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Note
Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.

     8.10 Consent to Liens. Each of ACSC and ANI hereby consent to each Lien granted
pursuant to Section 8.1 of this Note, notwithstanding any restriction set forth in the LLC
Agreement with respect to the granting of any Lien hereunder or any enforcement action which
Noteholder may take in respect of such Lien, and agree that ACSC and ANI comprise all of the
members of the Payor after giving effect to the transactions contemplated by the Stock Purchase
Agreement.

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Article 9

Miscellaneous

     9.1 Notices. All notices or other communications to be given or delivered under or by
reason of the provisions of this Note shall be given in writing and shall be delivered personally,
or mailed by certified or registered mail, return receipt requested and postage prepaid, or sent
via a recognized overnight courier (with signed receipt) at the address set forth below (or to such
other address as the Payor, ACSC, ANI or the Noteholder may designate by written notice) or via any
form of electronic transmission:

	 	 	 

	if to the Note Obligors, to:

	 	c/o Abitibi Consolidated Sales LLC
	 

	 	1155 Metcalfe Street, Suite 800 
	 

	 	Montreal, Quebec
	 

	 	H3B 5H2 
	 

	 	Attn: Executive Vice President,
	 

	 	Operations and Sales
	 

	 	Facsimile: 514.394.2241 
	 

	 	With a copy to: Vice President Legal Affairs
	 

	 	Facsimile: 514.394.3644 
	 
	 	 
	 

	 	With a copy to:
	 
	 	 
	 

	 	Paul, Weiss, Rifkind, Wharton & Garrison LLP
	 

	 	1285 Avenue of the Americas
	 

	 	New York, NY 10019-6064 
	 

	 	Attn: Ariel J. Deckelbaum
	 

	 	Facsimile: 212.492.0546 
	 
	 	 
	if to the Noteholder, to:

	 	Woodbridge International Holdings Limited
	 

	 	65 Queen Street West
	 

	 	Toronto, Ontario M5H 2M8 
	 

	 	Attn: Gregory Dart
	 

	 	Facsimile: 416.365.9293 
	 
	 	 
	 

	 	With a copy to:
	 
	 	 
	 

	 	Torys LLP
	 

	 	79 Wellington Street West
	 

	 	Suite 3000, Box 270 
	 

	 	TD Centre
	 

	 	Toronto, Ontario M5K 1N2 
	 

	 	Attn: Michael J. Siltala
	 

	 	Facsimile: 416.865.7380 

33

 

     9.2 Waiver and Consent. The Note Obligors: (a) except for any notice expressly
required by the terms of the Note or the Security Documents, waive presentment, demand, protest,
notice of intent to accelerate, notice of acceleration of maturity, notice of protest, notice of
nonpayment, notice of dishonor, and any other notice required to be given under the law to the Note
Obligors in connection with the delivery, acceptance, performance, default or enforcement of this
Note or any other documents executed in connection with this Note and (b) consent to all waivers of
any term hereof or of the other Security Documents, or the failure to act on the part of
Noteholder, or any indulgence shown by the Noteholder (without notice to or further assent from the
Note Obligors), and agree that no such action, failure to act or failure to exercise any right or
remedy by the Noteholder shall in any way affect or impair the obligations of the Note Obligors or
be construed as a waiver by the Noteholder of, or otherwise affect, any of the Noteholder’s rights
under this Note or under any of the other Security Documents.

     9.3 Assignment and Amendment. Neither this Note nor any of the rights, interests or
obligations hereunder shall be assigned, transferred or negotiated by one party to this Note
without the prior consent of the other party to this Note; provided, however, Noteholder may assign
its rights and interests in this Note to any Affiliate. Upon notice of any assignment by
Noteholder as permitted hereunder, the Payor shall record the details of such assignment and
transfer, including the name and address of such assignee, in a register and maintain such register
in its principal place of business. The foregoing requirements are intended to result in this Note
being in “registered form” within the meaning of United States Treasury Regulations Section
1.871-14(c) and Sections 163(f), 871(h) and 881(c) of the Code, and shall be interpreted and
applied in a manner consistent therewith. No term of this Note may be amended without the written
consent of each Note Obligor and the Noteholder.

     9.4 Taxes. The Payor agrees to pay any stamp or other documentary taxes which may be
payable in connection with the execution or delivery of this Note.

     9.5 Expenses. Except as otherwise expressly provided herein, each of the parties
hereto shall pay its own expenses in connection herewith and the other Settlement Documents. The
Payor agrees to pay or reimburse Noteholder for all reasonable and documented out-of-pocket costs
and expenses incurred by Noteholder after the Closing Date in connection with the enforcement or
attempted enforcement of this Note or any Security Documents (including all such costs and expenses
incurred during any “workout” or restructuring in respect of the Note Obligations and during any
legal proceeding, including any proceeding under any debtor relief law), including, in each case,
the reasonable fees and expenses of external counsel. All amounts due under this Section 9.5 shall
be payable within five (5) Business Days after demand therefor. The agreements in this Section
shall survive the termination of this Note and repayment of all the other Note Obligations.

     9.6 Governing Law; Venue. This Note shall be governed by, and interpreted and
enforced in accordance with, the Laws in force in the State of New York (excluding any conflict of
laws rule or principle which might refer such questions to the laws of another jurisdiction). All

34

 

disputes, disagreements, controversies, questions or claims arising out of or relating to this
Note, including, without limitation, with respect to its formation, execution, validity,
application, interpretation, performance, breach, termination or enforcement, shall be determined
by arbitration administered by the American Arbitration Association under its commercial
arbitration rules (the “Commercial Arbitration Rules”) provided that:

          (a) any hearing in the course of the arbitration shall be held in New York, New York in the
English language;

          (b) if the parties are able to agree in writing to a single arbitrator within twenty (20)
days, the number of arbitrators shall be one; otherwise, each party shall select one arbitrator and
those two arbitrators shall select a third arbitrator, and the tree arbitrators so chosen shall
serve as the arbitrators of such dispute;

          (c) any award or determination of the arbitrator shall be final and binding on the parties and
there shall be no appeal on any ground, including, for greater certainty, on the ground of alleged
errors of Law;

          (d) despite Article M-10 of the Commercial Arbitration Rules, the arbitrator shall not,
without the written consent of all parties to the arbitration, retain any expert;

          (e) all costs and expenses of arbitration shall be split equally between the parties hereto;
and

          (f) all matters in relation to the arbitration shall be kept confidential to the full extent
permitted by Law, and no individual shall be appointed as an arbitrator unless he or she agrees in
writing to be bound by this dispute resolution provision.

     9.7 Counterparts. This Note may be executed in several counterparts, each of which
will be deemed original but all of which will constitute one and the same instrument. Any proof of
execution, however, will require production of only one copy signed by the party to be charged.

     9.8 Confidentiality. Noteholder agrees to keep confidential all non-public
information provided to it by or on behalf of any Note Obligor pursuant to or in connection with
this Note or any of the Security Documents; provided that nothing herein shall prevent Noteholder
from disclosing any such information (a) subject to an agreement to comply with the provisions of
this Section 9.8, to any Affiliate of the Noteholder who is an actual or prospective transferee
permitted under Section 9.3, (b) to its employees, directors, officers, agents, attorneys,
accountants and other professional advisors on a need-to-know basis, (c) upon the request or demand
of any Governmental Authority, (d) in response to any order of any court or other Governmental
Authority or as may otherwise be required under applicable law or (e) in connection with the
exercise of any remedy hereunder or any Security Document.

[signature page follows]

35

 

     IN WITNESS WHEREOF, the Note Obligors and the Noteholder have executed and delivered this Note
as of the date hereof.

	 	 	 	 	 	 	 

	 	 	AUGUSTA NEWSPRINT COMPANY LLC	 	 
	 	 	as Payor	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	ABITIBI CONSOLIDATED SALES

LLC, as Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	ABITIBIBOWATER, INC., 

as Sole Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Pierre Rougeau
 

Name: Pierre Rougeau
	 	 
	 

	 	 	 	Title: Executive Vice President, 

Sales and Operations	 	 

Signature Page to Secured Promissory Note

 

 

	 	 	 	 	 	 	 

	 	 	WOODBRIDGE INTERNATIONAL 

HOLDINGS LIMITED	 	 
	 	 	as Noteholder	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Gregory J. Dart
 

Name: Gregory J. Dart
	 	 
	 

	 	 	 	Title: Vice President	 	 

Signature Page to Secured Promissory Note

 

 

	 	 	 	 	 	 	 

	 	 	ABITIBI CONSOLIDATED SALES LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	ABITIBIBOWATER, INC.,

as Sole Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Pierre Rougeau
 

Name: Pierre Rougeau
	 	 
	 

	 	 	 	Title: Executive Vice President, 

Sales and Operations	 	 
	 
	 	 	 	 	 	 
	 	 	AUGUSTA NEWSPRINT INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jacques P. Vachon
 

Name: Jacques P. Vachon
	 	 
	 

	 	 	 	Title: Vice President and Secretary	 	 

Signature Page to Secured Promissory Note

 

 

Schedule 3.7

Environmental Compliance

1. In the 1990’s, the Payor shipped used oil and a small amount of chlorinated solvent to the AER
hazardous waste storage and management site in Augusta, Georgia. The site closed, went into
bankruptcy and became a superfund site. The Payor is part of the Potential Responsible Party
group.

2. In 2009, the Payor voluntarily disclosed to U.S. EPA and Georgia EPD, the discovery of reporting
discrepancies under the Emergency Planning and Community Right-to-Know Act of 1986
(“EPCRA”) section 313 for reporting years 2004 thru 2007. Corrections were submitted for
lead, dioxin and dioxin-like compounds and methanol. The U.S. EPA corrected the federal database
to reflect these changes. Neither Georgia EPD nor U.S. EPA has issued a Notice of Violation or
investigated the matter further as of the date hereof.

Disclosure on this schedule is not to be construed as an admission by the Payor that the item
herein disclosed is material.

 

 

EXHIBIT A

Sales Agreement

 

 

EXHIBIT B

Examples

The following examples are illustrative of the application of the minimum Operating Rate formula in
Section 4.2.2 of the Note. In each example, the minimum Operating Rate generated by the formula
(i.e. the greater of (i) the Weighted Average Operating Rate of the AbitibiBowater Mills in such
calendar year, (ii) 90% and (iii) the Operating Rate of the newsprint industry in the United States
of America plus 3.5%) is referred to as “MOR”. It is also assumed that the year has 365 days; that
the total of 14 days for approved capital projects and mill maintenance can be scheduled to overlap
by 3 days for a total of 11 days elapsed time; and that a Force Majeure event involving 3 days
downtime occurs sometime during the year.

Example 1

	 	 	 	 	 

	MOR                     90%
	 	 	 	 
	 
	 	 	 	 
	mill maintenance & boiler inspection

	 	4 days}	 	 
	 
	 	 	 	 
	approved capital projects

	 	10 days}
	 	11 days
	 
	 	 	 	 
	Force Majeure event

	 	3 days	 	 

The mill is required to operate a minimum of 328.5 days (365 x. 9).

Up to 36.5 days (365-328.5) downtime is permitted and this is more than ample to schedule and
complete approved capital projects and mill maintenance. Accordingly, downtime for approved
capital projects and mill maintenance must be scheduled within the 36.5 days downtime permitted.
Up to 25.5 days could be scheduled for market related downtime (36.5-11). Subject to scheduling
difficulties, the 36.5 days downtime would also be sufficient to recover from the Force Majeure
event.

If all 36.5 days downtime have been taken before an unforeseen Force Majeure event occurs later in
the year, permitted downtime would increase to 39.5 days (36.5 + 3). If less than 36.5 days
downtime have been taken when the Force Majeure event occurs, there would be no incremental
downtime due to Force Majeure, except to the extent that any remaining approved capital projects or
mill maintenance work and work related to the Force Majeure event could not be completed within the
36.5 days.

Example 2

	 	 	 	 	 

	MOR                    95%
	 	 	 	 
	 
	 	 	 	 
	mill maintenance & boiler inspection

	 	4 days}	 	 
	 
	 	 	 	 
	approved capital projects

	 	10 days}
	 	11 days
	 
	 	 	 	 
	Force Majeure event

	 	3 days	 	 

 

 

The mill is required to operate a minimum of 346.8 days (365 x. 95).

Up to 18.2 days (365-346.8) downtime is permitted and this is more than ample to schedule and
complete approved capital projects and mill maintenance. Accordingly, downtime for approved
capital projects and mill maintenance must be scheduled within the 18.2 days downtime permitted.
Up to 7.2 days could be scheduled for market related downtime (18.2 — 11). Subject to scheduling
difficulties, the 18.2 days downtime would also be sufficient to recover from the Force Majeure
event.

If all 18.2 days downtime have been taken before an unforeseen Force Majeure event occurs later in
the year, permitted downtime would increase to 21.2 days (18.2 + 3). If less than 18.2 days
downtime have been taken when the Force Majeure event occurs, there would be no incremental
downtime due to Force Majeure, except to the extent that any remaining approved capital projects or
mill maintenance work and work related to the Force Majeure event could not be completed within the
18.2 days.

Example 3

	 	 	 	 	 

	MOR                    99%
	 	 	 	 
	 
	 	 	 	 
	mill maintenance & boiler inspection

	 	4 days}	 	 
	 
	 	 	 	 
	approved capital projects

	 	10 days}
	 	11 days
	 
	 	 	 	 
	Force Majeure event

	 	3 days	 	 

The mill is required to operate a minimum of 361.4 days (365 x. 99). However, this is insufficient
to complete approved capital projects and mill maintenance requiring 11 days in total.
Accordingly, the mill is required to operate a minimum of 354 days (365-11).

Up to 11 days (365 — 354) downtime is permitted. Accordingly, approved capital projects and mill
maintenance must be scheduled within the 11 days downtime permitted. No incremental days could be
scheduled for market related downtime. Subject to scheduling difficulties, it may be possible to
recover from the Force Majeure event within the 11 days of scheduled downtime.

If all 11 days downtime have been taken before an unforeseen Force Majeure event occurs later in
the year, permitted downtime would increase to 14 days (11+3). If less than 11 days downtime have
been taken when the Force Majeure event occurs, there would be no incremental downtime due to Force
Majeure, except to the extent that any remaining approved capital projects or mill maintenance work
and work related to the Force Majeure event could not be completed within the 11 days.

 

 

Example 4

	 	 	 	 	 

	MOR 102% (i.e. U.S. 98.5% + 3.5%)
	 	 	 	 
	 
	 	 	 	 
	mill maintenance & boiler inspection

	 	4 days}	 	 
	 
	 	 	 	 
	approved capital projects

	 	10 days}
	 	11 days
	 
	 	 	 	 
	Force Majeure event

	 	3 days	 	 

The mill is required to operate a minimum of 372.3 days (365 x 1.02). However, this exceeds the
number of calendar days in the year and is also insufficient to carry out approved capital projects
and mill maintenance requiring 11 days in total. Accordingly, the mill is required to operate a
minimum of 354 days (365-11).

In all other respects Example 4 is the same as Example 3.

 

 

EXHIBIT C

Mill Operations

For purposes of Section 4.2.2 of this Note, the amount of the Make-Whole Payment in the event of an
Operating Rate Deficit shall be calculated in accordance with the following formula:

Make Whole Payment = (Operating Rate Deficit X 365 days X Average Tonnes per Day X Average Margin
per Tonne) X 70%

Whereby:

“Operating Rate Deficit” shall mean the minimum Operating Rate (in percentage) for any given Fiscal
Year required in accordance with Section 4.2.2 of this Note less the actual Operating Rate of the
Augusta mill for such Fiscal Year (in percentage).

“Average Tonnes per Day” shall mean the average number of tonnes produced by the Augusta mill per
Operating Day in any given Fiscal Year.

“Average Margin per Tonne” shall mean the weighted average Mill Net (as defined below) of the
Augusta Mill in any given Fiscal Year less sales commissions (including the Discounts to ACSC
pursuant to the Sales Agreement (as defined therein)) minus the weighted average cash manufacturing
costs per tonne.

“Mill Net” shall mean the selling price billed by AbitibiBowater to the Augusta customers net of
all discounts and/or allowances granted to such customers for newsprint per tonne minus all costs
incurred in connection with the transfer of newsprint from the Augusta mill to an Augusta customer
including, without limitation, transportation costs and warehousing.exv10w2

EXHIBIT 10.2

Execution Copy

WOODBRIDGE INTERNATIONAL HOLDINGS LIMITED, 

a corporation incorporated under the laws of the Province of

Ontario

- and -

THE WOODBRIDGE COMPANY LIMITED, a corporation

incorporated under the laws of the Province of Ontario

- and -

ABITIBI CONSOLIDATED SALES CORPORATION, a

corporation incorporated under the laws of the State of Delaware

- and -

ABITIBIBOWATER INC., a corporation incorporated under the

laws of the State of Delaware (solely for the purpose of the

provisions stated herein)

- and -

AUGUSTA NEWSPRINT COMPANY, a Georgia partnership

- and-

AUGUSTA NEWSPRINT INC., a corporation incorporated

under the laws of the State of Delaware

 

STOCK PURCHASE AGREEMENT

 

December 23, 2010

 

 

TABLE OF CONTENTS

	 	 	 	 	 

	ARTICLE 1
	 	 	 	 
	DEFINITIONS AND SCHEDULES
	 	 	2	 
	1.1 Definitions
	 	 	2	 
	1.2 Schedules
	 	 	11	 
	 
	 	 	 	 
	ARTICLE 2
	 	 	 	 
	PURCHASE AND SALE
	 	 	12	 
	2.1 Purchase and Sale
	 	 	12	 
	2.2 Purchase Price
	 	 	12	 
	2.3 Payment Instructions
	 	 	13	 
	2.4 Closing
	 	 	13	 
	2.5 Distribution
	 	 	13	 
	2.6 Intercompany Payables and Receivables
	 	 	13	 
	2.7 Redemption of ANI Preferred Stock
	 	 	13	 
	2.8 Assignment of Bankruptcy Claims
	 	 	13	 
	2.9 Assignment of Administrative Claim
	 	 	14	 
	2.10 Wood Fraud Claim Payment
	 	 	14	 
	2.11 Distribution Adjustment
	 	 	15	 
	2.12 Adjustment Payment
	 	 	16	 
	2.13 Withholding Rights
	 	 	16	 
	 
	 	 	 	 
	ARTICLE 3
	 	 	 	 
	CONDITIONS TO CLOSING
	 	 	16	 
	3.1 Mutual Conditions
	 	 	16	 
	3.2 Additional Conditions to ACSC and AbitibiBowater’s Obligations
	 	 	16	 
	3.3 Additional Conditions to Woodbridge’s Obligations
	 	 	17	 
	3.4 Unsatisfied Closing Conditions
	 	 	17	 
	3.5 Releases
	 	 	18	 
	 
	 	 	 	 
	ARTICLE 4
	 	 	 	 
	COVENANTS
	 	 	18	 
	4.1 Further Actions
	 	 	18	 
	4.2 Settlement Motion
	 	 	19	 
	4.3 Conduct of Business
	 	 	19	 
	4.4 Bank Account
	 	 	20	 
	4.5 WIHSA Share Transfer
	 	 	20	 
	4.6 Notice of Withdrawal of Appeal
	 	 	20	 
	4.7 Resignation of Directors and Officers of ANI
	 	 	20	 

- ii -

 

TABLE OF CONTENTS

	 	 	 	 	 

	4.8 LLC Conversion
	 	 	20	 
	 
	 	 	 	 
	ARTICLE 5
	 	 	 	 
	REPRESENTATIONS AND WARRANTIES
	 	 	21	 
	5.1 ACSC and AbitibiBowater Representations and Warranties
	 	 	21	 
	5.2 Woodbridge and Woodbridge Parent Representations and Warranties
	 	 	23	 
	5.3 Woodbridge Representations and Warranties Regarding ANI
	 	 	25	 
	5.4 Survival of Representations and Warranties
	 	 	30	 
	 
	 	 	 	 
	ARTICLE 6
	 	 	 	 
	TAX MATTERS
	 	 	30	 
	6.1 ANI Pre-Closing Tax Returns
	 	 	30	 
	6.2 ANI Straddle Period Returns
	 	 	31	 
	6.3 Cooperation
	 	 	31	 
	6.4 Indemnified Taxes
	 	 	32	 
	6.5 Amended Tax Returns
	 	 	32	 
	6.6 Pre-Closing Period Tax Refund
	 	 	33	 
	6.7 Audits and Proceedings
	 	 	33	 
	6.8 Termination of Tax Sharing Agreements
	 	 	34	 
	6.9 Taxes and Fees
	 	 	34	 
	6.10 Tax Attributes
	 	 	34	 
	 
	 	 	 	 
	ARTICLE 7
	 	 	 	 
	DISPUTE RESOLUTION
	 	 	34	 
	7.1 Commercial Arbitration
	 	 	34	 
	7.2 Proposed Adjustment Disputes
	 	 	35	 
	 
	 	 	 	 
	ARTICLE 8
	 	 	 	 
	INDEMNIFICATION
	 	 	35	 
	8.1 Indemnification by Woodbridge and Woodbridge Parent
	 	 	35	 
	8.2 Indemnification by ACSC and AbitibiBowater
	 	 	36	 
	8.3 Indemnification by ACSC and AbitibiBowater of Woodbridge Indemnitees
	 	 	36	 
	8.4 Indemnification by Woodbridge and Woodbridge Parent of Abitibi Indemnitees
	 	 	37	 
	8.5 Resolution of Indemnification Claims
	 	 	37	 
	8.6 Indemnification for Tax Contests
	 	 	39	 
	8.7 Limitations on Liability
	 	 	39	 
	8.8 Indemnification Payment
	 	 	39	 

- iii-

 

TABLE OF CONTENTS

	 	 	 	 	 

	ARTICLE 9
	 	 	 	 
	GENERAL
	 	 	39	 
	9.1 Assignment
	 	 	39	 
	9.2 Notices
	 	 	39	 
	9.3 Governing Law
	 	 	42	 
	9.4 Time of Performance
	 	 	42	 
	9.5 Entire Agreement
	 	 	42	 
	9.6 Amendment
	 	 	43	 
	9.7 Time of the Essence
	 	 	43	 
	9.8 Waiver
	 	 	43	 
	9.9 Further Assurances
	 	 	43	 
	9.10 Costs and Expenses
	 	 	43	 
	9.11 Currency
	 	 	43	 
	9.12 Confidentiality
	 	 	43	 
	9.13 Counterparts
	 	 	43	 
	9.14 Sections and Headings
	 	 	44	 
	9.15 Successors and Assigns
	 	 	44	 
	9.16 Availability of Equitable Relief; Specific Performance
	 	 	44	 

- iv -

 

 

          STOCK PURCHASE AGREEMENT made as of the 23rd day of December, 2010

BETWEEN:

WOODBRIDGE INTERNATIONAL HOLDINGS LIMITED, a corporation incorporated
under the laws of the Province of Ontario

- and -

THE WOODBRIDGE COMPANY LIMITED, a corporation incorporated under the
laws of the Province of Ontario

- and -

ABITIBI CONSOLIDATED SALES CORPORATION, a corporation incorporated
under the laws of the State of Delaware

- and -

ABITIBI BOWATER INC., a corporation incorporated under the laws of
the State of Delaware

- and -

AUGUSTA NEWSPRINT COMPANY, a Georgia partnership

- and-

AUGUSTA NEWSPRINT INC., a corporation incorporated under the laws of
the State of Delaware

     WHEREAS Woodbridge owns (beneficially and of record) all of the outstanding ANI Preferred
Stock;

     AND WHEREAS WIHSA owns (beneficially and of record) all of the outstanding ANI Common Stock;

     AND WHEREAS, prior to the Closing, Woodbridge Parent will cause WIHSA to sell, transfer and
assign all of its rights, title and interest in all of the outstanding ANI Common Stock to
Woodbridge;

     AND WHEREAS as of the Closing, Woodbridge will own all of the outstanding ANI Preferred Stock
and ANI Common Stock;

 

 - 2 - 

     AND WHEREAS ANI owns a 47.5% interest in the Partnership and ACSC owns a 52.5% interest in the
Partnership;

     AND WHEREAS Woodbridge Parent is the indirect parent company of Woodbridge and AbitibiBowater
is the indirect parent company of ACSC;

     AND WHEREAS the Debtors have commenced the Bankruptcy Proceedings and Canadian Debtors have
commenced the CCAA Proceedings;

     AND WHEREAS Woodbridge wishes to sell, transfer and assign, and the Partnership wishes to
purchase, the Purchase Stock, on and subject to the terms and conditions set forth in this
Agreement;

     AND WHEREAS in connection with the Bankruptcy Proceedings, AbitibiBowater has filed the
Settlement Motion pursuant to which AbitibiBowater and ACSC is seeking the approval of the
Bankruptcy Court of (i) the terms of settlement of various disputes concerning (A) the rejection of
the Call Agreement and (B) the motion to compel rejection of the Partnership Agreement, pursuant to
Rule 9019 of the Federal Rules of Bankruptcy Procedure (other than the Woodbridge Claims), and (ii)
this Agreement and the transactions contemplated hereby, pursuant to Sections 363 and 105 of the
Bankruptcy Code, and authority for the applicable Debtors to perform all of the obligations under
this Agreement and all documents and agreements entered into in connection herewith;

     NOW THEREFORE for good and valuable consideration (the receipt and sufficiency of which are
hereby acknowledged) the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS AND SCHEDULES

1.1 Definitions. Wherever used in this Agreement, unless the context otherwise requires,
the following terms have the following meanings, respectively:

“AbitibiBowater” means AbitibiBowater Inc., a corporation incorporated under the laws of the
State of Delaware, and references to AbitibiBowater shall include any successor by operation
of law to AbitibiBowater Inc.

“AbitibiBowater Release” means the release in the form attached hereto as Schedule C.

“Accounting Firm” has the meaning set forth in Section 2.11(b).

“Action or Proceeding” means any action, suit, hearing, proceeding, arbitration or
Governmental or Regulatory Authority investigation or audit, whether civil, criminal,
administrative or otherwise. For purposes of this Agreement, “pending” Actions and
Proceedings include written demands, claims, notices of violations or demand letters.

 

 - 3 - 

“ACSC” means Abitibi Consolidated Sales Corporation, a corporation incorporated under the
laws of the State of Delaware, and references to ACSC shall include any successor by
operation of law to Abitibi Consolidated Sales Corporation.

“Adjustment Payment” has the meaning set forth in Section 2.12.

“Administrative Claim” means the allowed administrative claim held by the Partnership
against ACSC in the amount of $9,246,580.00 pursuant to the Agreed Order With Respect to
Motion of Augusta Newsprint Company for Allowance of Administrative Expense Claim Pursuant
to 11 U.S.C. § 503(b)(9) [D.I. 1457] entered by the Bankruptcy Court on December 16, 2009.

“Administrative Claim Assignment” has the meaning set forth in Section 2.9.

“Agreement”, “this Agreement”, “the Agreement”, “hereto”, “hereof”, “herein”, “hereby”,
“hereunder”, and similar expressions mean and refer to this Agreement, including the
recitals, as amended, supplemented, restated or replaced from time to time (including the
Schedules hereto, unless indicated to the contrary by the text), and the expressions
“Article”, “Section” and “Schedule” followed by a number or letter mean and refer to the
specified article, section or schedule of this Agreement.

“ANI” means Augusta Newsprint Inc., a corporation incorporated under the laws of the State
of Delaware, and references to ANI shall include any successor by operation of law to
Augusta Newsprint Inc.

“ANI Class A Preferred Stock” means the outstanding Class A preferred stock, par value $0.01
per share, in the share capital of ANI.

“ANI Class B Preferred Stock” means the outstanding Class B preferred stock, par value $0.01
per share, in the share capital of ANI.

“ANI Common Stock” means the outstanding common stock, par value $0.01 per share, in the
share capital of ANI.

“ANI Financial Statements” has the meaning set forth in Section 5.3(i).

“ANI Preferred Stock” means the ANI Class A Preferred Stock and the ANI Class B Preferred
Stock.

“ANI Redemption Amount” has the meaning set forth in Section 2.7.

“Approval Date” means the date on which the Settlement Order is approved by the Bankruptcy
Court.

“Assets and Properties” of any Person means all assets and properties of every kind, nature,
character and description (whether real, personal or mixed, whether tangible or intangible,
whether absolute, accrued, contingent, fixed or otherwise and wherever situated), operated,
owned or leased by such Person, including cash, cash equivalents,

 

 - 4 - 

Investment Assets, accounts and notes receivable, chattel paper, documents, instruments,
general intangibles, real estate, equipment, inventory, goods and intellectual property.

“Bankruptcy Claims” means the following Claims made, filed, scheduled or otherwise asserted
by or on behalf of the Partnership in the Bankruptcy Proceedings: Claim number 3612 made by
the Partnership in the Bankruptcy Proceedings of Alabama River Newsprint Company, Case no.
09-11301, in the amount of $1,699.49; Claim number 3630 made by the Partnership in the
Bankruptcy Proceedings of Abitibi-Consolidated Corporation, Case no. 09-11302, in the amount
of $1,848.01; Claim numbers 3631 and 3632 made by the Partnership in the Bankruptcy
Proceedings of AbitibiBowater, Inc., Case no. 09-11296, in the amounts of $25,899.02 and
$85,247.34, respectively; the Claim listed on Schedule F of the Schedules of Assets and
Liabilities of Alabama River Newsprint Company, Case no. 09-11301, in the amount of
$2,203.49; and Claim number 10005 made by the Partnership in the Bankruptcy Proceedings of
Abitibi-Consolidated Corporation, Case no. 09-11302, in the amount of $37,458,605.69.

“Bankruptcy Claims Assignment” has the meaning set forth in Section 2.8.

“Bankruptcy Code” means title 11 of the United States Code, as amended from time to time.

“Bankruptcy Court” means the United States Bankruptcy Court for the District of Delaware, or
such other court that exercises jurisdiction over the Bankruptcy Proceedings.

“Bankruptcy Proceedings” means the cases filed in the Bankruptcy Court under chapter 11 of
the Bankruptcy Code by AbitibiBowater and its affiliated debtors and debtors-in-possession,
jointly administered as Case No. 09-11296.

“Business Day” means a day of the year, other than a Saturday or a Sunday, on which banks
are generally open for business in each of Montreal, Quebec, Toronto, Ontario, and New York,
New York.

“Call Agreement” means the Amended and Restated Call Agreement, dated as of July 1, 2004,
among Woodbridge, WIHSA, Woodbridge Parent, ACSC and Abitibi-Consolidated Inc., as amended
or supplemented pursuant to amendments made as of May 27, 2005 and February 23, 2007,
respectively.

“Canadian Court” means the Superior Court, Commercial Division, for the Judicial District of
Montreal, Canada.

“Canadian Debtors” means, collectively, AbitibiBowater and those of its subsidiaries and
affiliates who applied for protection from creditors in the CCAA Proceedings.

“CCAA” means Canada’s Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended
from time to time.

 

 - 5 - 

“CCAA Proceedings” means the proceedings for provisional relief in support of the Bankruptcy
Proceedings commenced in the Canadian Court under section 18.6 of the CCAA by AbitibiBowater
and certain of its subsidiaries.

“Claim Notice” has the meaning set forth in Section 8.5(a).

“Claim” has the meaning ascribed to such term in Section 1.01(5) of the Bankruptcy Code.

“Closing” means the consummation of the purchase and sale of the Purchase Stock pursuant to
this Agreement.

“Closing Date” means the first fourteenth day of a month following the Approval Date, or
such other date as the parties shall agree in writing, provided that, if the fourteenth day
of the month is not a Business Day, the Closing Date shall be the first Business Day
immediately preceding the fourteenth day. Notwithstanding the foregoing, in no event shall
the Closing Date be earlier than January 14, 2011.

“Closing Date Cash Statement” has the meaning set forth in Section 2.11(a).

“Closing Time” means 10:00 a.m. (New York time) on the Closing Date.

“Code” means the U.S. Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder, and any anomalous provisions of state law, and any successor
legislation to the foregoing.

“Commercial Arbitration Rules” has the meaning set forth in Section 7.1.

“Conditions” means the presence of any Regulated Material in, on, under, above, or emanating
from the real property on which the mill operated by the Partnership is situated, where the
presence of such Regulated Material does not arise from or pertain to Operations.

“Contract” means any agreement, instrument, lease, deed, evidence of indebtedness, mortgage,
indenture, security agreement or other contract or understanding (whether written or oral)
and “Contractual” means arising under any such Contract.

“Debtors” means, collectively, AbitibiBowater and its affiliated debtors and
debtors-in-possession in the Bankruptcy Proceedings.

“Encumbrance” means any encumbrance of any kind whatever and includes a security
interest, mortgage, lien, hypothec, pledge, hypothecation, assignment, charge, trust or
deemed trust, right of set-off, adverse claim, or any other Option, right or claim of others
of any kind whatever, whether Contractual, statutory or otherwise arising.

“Environmental Damages” means any Loss arising from any investigation, notice, violation,
demand, allegation, suit, proceeding, order or claim made by any third party or Governmental
or Regulatory Authority that arises from or pertains to any Environmental

 

 - 6 - 

Law or the Release or threatened Release of any Regulated Material, including claims for
personal injury, emotional distress, medical monitoring, property damage, trespass,
nuisance, negligence, strict liability, diminution in property value, compensatory damages,
natural resource damages, investigation or Remediation costs.

“Environmental Law” means any Law relating to environmental health and safety matters,
pollution or protection of the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata), investigation or Remediation of
contaminated sites or the protection of human health and safety from environmental hazards,
including any Law or permit relating to Releases or threatened Releases of Regulated
Materials, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, handling or Remediation of Regulated Materials,
including the Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Clean Air Act, the Clean Water Act, and state
Laws, whether or not they embody a delegation of authority under federal Laws.

“Equity Holder” means (i) in the case of a corporation, a stockholder, (ii) in the case of a
general or limited partnership, a partner, (iii) in the case of a limited liability company,
a member, and (iv) in the case of any other Person other than an individual, a holder of
comparable equity interests therein.

“Equity Interest” means (i) in the case of a corporation, shares of stock, (ii) in the case
of a general or limited partnership, partnership units or interests, (iii) in the case of a
limited liability company, membership units or interests, and (iv) in the case of any other
Person other than an individual, the comparable equity interests therein.

	 	 	“ERISA” means the Employee Retirement Income Security Act of 1974.

	 	 	“ERISA Affiliate” means, with respect to any Person, any other Person that is or may be
treated as a single employer together with such first Person within the meaning of Section
4001 of ERISA or Section 414(b), (c) (m) or (o) of the Code.

“ERISA Affiliate Liability” means any actual or contingent obligation, liability or expense
of ANI or any of its subsidiaries to, under or in respect of any employee benefit plan under
any statute or regulation that imposes liability on a so-called “controlled group” basis (as
used in Sections 52 and 414 of the Code) including by reason of ANI’s affiliation with any
of its ERISA Affiliates or ACSC being deemed a successor to any ERISA Affiliate of
Woodbridge or its subsidiaries.

“Estimated Closing Date Cash Statement” has the meaning set forth in Section 2.5.

“Estimated Partnership Cash” has the meaning set forth in Section 2.5.

“Final Order” means a final and non-appealable order of the Bankruptcy Court.

“Final Partnership Cash Amount” has the meaning set forth in Section 2.11(b).

 

 - 7 - 

“GAAP” means United States generally accepted accounting principles, consistently applied
throughout the specified period.

“Governmental or Regulatory Authority” means any court, tribunal, arbitrator, board, bureau,
department, authority, agency, commission, official or other instrumentality of the United
States, any foreign country or any domestic or foreign state, county, city or other
political subdivision.

“HSR” means the Hart-Scott-Rodino Antitrusts Improvement Act of 1976, as amended.

“Indemnified Party” and “Indemnifying Party” have the respective meanings set forth in
Section 8.5(a).

“Indemnified Taxes” has the meaning set forth in Section 6.4.

“Indemnity Notice” has the meaning set forth in Section 8.5(c).

“Interim Period” has the meaning set forth in Section 6.4.

“Investment Assets” means all debentures, notes and other evidences of indebtedness, Equity
Interests (including Options for Equity Interests or other securities), interests in joint
ventures, mortgage loans and other investment or portfolio assets owned beneficially,
whether or not of record.

“know” or “knowledge” means, with respect to any Person, the actual knowledge of such Person
or, if not a natural Person, its Managing Persons, in each case after reasonable inquiry.

“Laws” means all laws (including common law), statutes, rules (including rules of relevant
stock exchanges or similar self-regulatory organizations), regulations, ordinances, and
other pronouncements having the effect of law, policies and directives of the United States,
any foreign country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental or Regulatory Authority.

“Liabilities” means all indebtedness, obligations and other liabilities of a Person (whether
absolute, accrued, contingent, known or unknown, fixed or otherwise, or whether due or to
become due).

“Licenses” means all identification numbers, licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents required by any
Laws administered by any Governmental or Regulatory Authority.

“LLC Conversion” has the meaning set forth in Section 4.8.

“Loss” means any and all damages, fines, fees, penalties, deficiencies, losses and
reasonable expenses, including reasonable fees and expenses of attorneys, accountants and
other experts or other expenses of litigation or other proceedings or of any claim,

 

 - 8 - 

default or assessment (such fees and expenses to include all fees and expenses incurred in
connection with the defense of any third party claims).

“Managing Persons” means, to the extent applicable, (i) in the case of a corporation, its
directors and Senior Officers, (ii) in the case of a general or limited partnership, its
general partners and their respective Senior Officers, (iii) in the case of a limited
liability company, its managers or managing members, and any Senior Officers, and (iv) in
the case of any other Person other than an individual, Persons holding like positions or
performing like functions.

“Measurement Time” means 11:59 p.m. as of the day immediately prior to the Closing Date.

“Notice” has the meaning set forth in Section 9.2.

“Operations” means any conduct or activity of the Partnership.

“Option” with respect to any Person means any security, right, subscription, warrant,
option, “phantom” stock right, stock appreciation right, convertible security or other
Contract that gives the right to (i) purchase or otherwise receive (including pursuant to a
right of first refusal or offer) or be issued any Equity Interest of such Person or any
security of any kind convertible into or exchangeable or exercisable for any Equity Interest
of such Person, or (ii) receive any benefits or rights similar to any rights enjoyed by or
accruing to the holder of Equity Interests of such Person, including any rights to
participate in the equity and income or in the election of Managing Persons.

“Order” means any writ, judgment, decree, injunction or similar order of any Governmental or
Regulatory Authority (in each such case whether preliminary or final).

“Organizational Documents” means with respect to any Person that is a corporation, its
articles or certificate of incorporation or memorandum and articles of association, as the
case may be, and bylaws; with respect to any Person that is a partnership, its certificate
of partnership and partnership agreement; with respect to any Person that is a limited
liability company, its certificate of formation and limited liability company or operating
agreement; and, with respect to any other Person other than an individual, its comparable
organizational documents.

“Partnership” means Augusta Newsprint Company, a Georgia partnership, established pursuant
to the Partnership Agreement, and references to the Partnership shall include any successor
by operation of law to Augusta Newsprint Company, or any successor entity following the LLC
Conversion.

“Partnership Agreement” means the partnership agreement establishing and governing the
Partnership, dated as of August 17, 1981, as amended or supplemented from time to time.

“Partnership Cash” means the cash balance of the Partnership as of the Measurement Time, it
being understood and agreed that it is anticipated that payment for newsprint

 

 - 9 - 

purchased by ACSC from the Partnership for the preceding month will be received on the first
or second Business Day following the day on which the Measurement Time occurs and such
amount shall not be included in the determination of Partnership Cash at the Measurement
Time.

“Partnership Interest” means the 47.5% interest in the Partnership held by ANI.

“Person” means any individual, partnership, limited partnership, joint venture, syndicate,
sole proprietorship, company or corporation with or without share capital, unincorporated
association, trust, trustee, executor, administrator or other legal personal representative,
or Governmental or Regulatory Authority, however designated or constituted.

“Pre-Closing Periods” has the meaning set forth in Section 6.4.

“Proposed Final Partnership Cash Amount” has the meaning set forth in Section 2.11(a).

“Purchase Price” has the meaning set forth in Section 2.2, adjusted pursuant thereto and
pursuant to Section 2.11.

“Purchase Stock” means, collectively, the ANI Common Stock and the ANI Preferred Stock.

“Regulated Material” means any contaminants, chemicals, wastes, petroleum, petroleum
hydrocarbons, petroleum products and compounds containing them (including kerosene, fuel
oil, gasoline, diesel fuel, and fuel additives), explosives, flammable materials,
radioactive materials, polychlorinated biphenyls, lead and lead-based paint, asbestos or
asbestos-containing materials, underground or aboveground storage tanks (whether empty or
containing any substance), ozone depleting substances, and any and all other substances or
contaminants (whether solid, liquid or gas) now or in the future regulated by any
Environmental Law.

“Release” means any release, deposit, discharge, emission, leaking, leaching, spilling,
seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposal, or
other movement of any Regulated Material.

“Remediation” means any activity, response, removal or corrective action to cleanup,
decontaminate, contain or otherwise address any Regulated Material, any action to prevent,
cure or mitigate any Release or threatened Release, any action to comply with any
Environmental Law, and any inspection, investigation, study, monitoring, assessment, audit,
sampling, testing, analysis or other evaluation relating to any Regulated Material.

“Secured Promissory Note” has the meaning set forth in Section 2.2.

“Security Documents” means all documents listed in Section B(II) of Schedule D.

 

 - 10 - 

“Senior Officer” means, in respect of any party, any senior officer of such party, which
shall include the president, treasurer, secretary and any other senior or executive
vice-president thereof (or any comparable authorized person).

“Settlement Date” has the meaning set forth in Section 2.11(c).

“Settlement Motion” has the meaning set forth in Section 4.2.

“Settlement Order” means, collectively, one or more Final Orders of the Bankruptcy Court
approving (i) the settlement of various disputes concerning (A) the rejection of the Call
Agreement and (B) the motion to compel rejection of the Partnership Agreement, pursuant to
Rule 9019 of the Federal Rules of Bankruptcy Procedure (other than the Woodbridge Claims),
and (ii) this Agreement, and the transactions contemplated hereby, pursuant to Sections 363
and 105 of the Bankruptcy Code, and authorizing the applicable Debtors to perform all of
the obligations under this Agreement, and all documents and agreements entered into in
connection herewith, which Final Orders shall be in form and substance reasonably acceptable
to Woodbridge.

“Tax” or “Taxes” means all federal, state, local or foreign net or gross income, gross
receipts, net proceeds, sales, use, ad valorem, value added, franchise, bank interests,
withholding, payroll, employment, excise, sales, use, property, alternative or add-on
minimum, transfer, environmental or other taxes, assessments, duties, fees, levies, customs
or other governmental charges of any nature whatever, whether disputed or not, together with
any interest, penalties, additions to tax or additional amounts with respect thereto.

“Taxing Authority” means any Governmental or Regulatory Authority having or purporting to
exercise jurisdiction with respect to any Tax.

“Tax Returns” means any returns, reports or statements (including any information returns,
claims for refunds, amended returns or declarations of estimated Tax) required to be filed
with respect to a particular Tax and any schedules or attachment thereto.

“Third Party Claim” has the meaning set forth in Section 8.5(a).

“TNI” means Thomson Newsprint Inc., a corporation incorporated under the laws of the State
of Florida, and references to TNI shall include any successor by operation of law to Thomson
Newsprint Inc.

“Transmission” has the meaning set forth in Section 9.2.

“WIHSA” means Woodbridge International Holdings S.A., and references to WIHSA shall include
any successor by operation of law to Woodbridge International Holdings S.A..

“WIHSA Transfer Agreement” means the agreement substantially in the form of Schedule F
hereto, to be entered into between WIHSA and Woodbridge pursuant to

 

 - 11 - 

which, prior to the Closing, WIHSA will sell, transfer and assign to Woodbridge all of the
outstanding ANI Common Stock.

“Wood Fraud Claim” means claim number 005-112442 held by AbitibiBowater against Chartis
Insurance Company of Canada, under policy number 138-21-37, in the net amount of Canadian
$1,469,282.04.

“Wood Fraud Claim Payment” means amounts received by the Partnership from time to time in
satisfaction of the Wood Fraud Claim.

“Woodbridge” means Woodbridge International Holdings Limited, and references to Woodbridge
shall include any successor by operation of law to Woodbridge International Holdings
Limited.

“Woodbridge Claims” has the meaning set forth in Section 4.2.

“Woodbridge Indemnitees” has the meaning set forth in Section 8.3.

“Woodbridge Parent” means The Woodbridge Company Limited, and references to Woodbridge
Parent include any successor by operation of law to The Woodbridge Company Limited.

“Woodbridge Release” means the release in the form attached hereto as Schedule B.

     Unless the context of this Agreement otherwise requires, (i) words of any gender include each
other gender; (ii) words using the singular or plural number also include the plural or singular
number, respectively; and (iii) the phrases “include” and “including” shall mean “include without
limitation” and “including without limitation”. All accounting terms used herein and not expressly
defined herein shall have the meanings given to them under GAAP.

1.2 Schedules. The following Schedules and Exhibits are attached to and incorporated into
this Agreement:

	 	 	 	 	 

	Schedule A

	 	—
	 	Form of Secured Promissory Note
	Schedule B

	 	—
	 	Form of Woodbridge Release
	Schedule C

	 	—
	 	Form of AbitibiBowater Release
	Schedule D

	 	—
	 	Closing Deliveries
	Schedule E

	 	—
	 	Form of Settlement Motion
	Schedule F

	 	—
	 	Form of WIHSA Transfer Agreement
	Schedule G

	 	—
	 	Form of Assignment and Assumption of Bankruptcy Claims Agreement
	Schedule H

	 	—
	 	Form of Assignment and Assumption of Administrative Claim Agreement
	Schedule I

	 	—
	 	Known Environmental Conditions

 

 - 12 - 

ARTICLE 2

PURCHASE AND SALE

2.1 Purchase and Sale. Subject to the terms of this Agreement, at the Closing, Woodbridge
shall sell, transfer and assign and the Partnership shall purchase, the Purchase Stock,
constituting all of the issued and outstanding stock in the share capital of ANI, free and clear of
all Encumbrances.

2.2 Purchase Price. The Purchase Price shall consist of the following:

	 	(a)	 	An amount in cash equal to the lesser of (i) fifteen million dollars
($15,000,000) and (ii) 52.5% of the Estimated Partnership Cash, payable by the
Partnership at the Closing; plus
	 
	 	(b)	 	a secured, first priority promissory note issued, at the Closing, by the
Partnership, payable to Woodbridge in the aggregate original principal amount of
ninety million dollars ($90,000,000), plus the excess, if any, of fifteen million
dollars ($15,000,000) over 52.5% of the Estimated Partnership Cash (the “Secured
Promissory Note”); plus
	 
	 	(c)	 	an assignment of 47.5% of the Partnership’s right, title and interest in
and to the Bankruptcy Claims pursuant to Section 2.8 hereof, except to the extent
such claims are paid to the Partnership in cash prior to the Measurement Time;
	 
	 	(d)	 	an assignment of 47.5% of the Partnership’s right, title and interest in
and to the Administrative Claim pursuant to Section 2.9 hereof, except to the extent
such claims are paid to the Partnership in cash prior to the Measurement Time; plus
	 
	 	(e)	 	an amount in cash equal 47.5% of any Wood Fraud Claim Payments received
by the Partnership from time to time to the extent such amount was not distributed
by the Partnership to ANI on or prior to the Closing Date, including pursuant to
Section 2.5 hereof.

The Secured Promissory Note shall be in substantially the form attached hereto as Schedule
A. In connection with the purchase of the Purchase Stock and the issuance of the Secured
Promissory Note, ACSC, ANI and the Partnership shall enter into the applicable Security
Documents as of the Closing and the Partnership shall deliver (i) a certificate of a senior
officer of each of the Partnership and ACSC as to the solvency of the Partnership and (ii)
an opinion dated the Closing Date, from counsel to ANI, ACSC and the Partnership as to
enforceability and perfection. The Purchase Price shall be allocated as to two hundred
dollars ($200) to the ANI Common Stock and the remainder to the ANI Preferred Stock.

 

 - 13 - 

2.3 Payment Instructions. Woodbridge shall deliver to the Partnership no later than two
(2) Business Days before the anticipated Closing Date a notice which shall contain payment
instructions.

2.4 Closing. The Closing shall take place at the offices of Paul, Weiss, Rifkind, Wharton
& Garrison LLP, 1285 Avenue of the Americas, New York, New York 10019-6064 at the Closing Time, or
at such other location as the parties may agree in writing.

2.5 Distribution. No later than five (5) Business Days prior to the Closing Date, ACSC
shall deliver a notice to Woodbridge (the “Estimated Closing Date Cash Statement”) which shall set
forth its good faith estimate of the Partnership Cash (the “Estimated Partnership Cash”). On the
Business Day immediately prior to the Closing, ACSC and ANI shall cause the Partnership to, and the
Partnership shall, distribute to ANI 47.5% of the Estimated Partnership Cash.

2.6 Payables and Receivables. Immediately prior to the Closing, ANI shall apply a portion
of the distribution of the Estimated Partnership Cash received by ANI pursuant to Section 2.5
hereof to repay any outstanding accounts payable, and shall collect or eliminate any accounts
receivable.

2.7 Redemption of ANI Preferred Stock. Immediately prior to the Closing, ANI shall redeem,
in exchange for an aggregate amount equal to the sum of the amount of Estimated Partnership Cash
received by ANI pursuant to Section 2.5 hereof plus the amount of the available cash in ANI, if
any, after the settlement of its accounts payable and accounts receivable pursuant to Section 2.6
(the “ANI Redemption Amount”), that number of shares of outstanding ANI Class A Preferred Stock
that can be redeemed for the Class A Redemption Amount (as defined in ANI’s Amended and Restated
Certificate of Incorporation) per share with the ANI Redemption Amount.

2.8 Assignment of Bankruptcy Claims.

	 	(a)	 	Subject to Section 2.8(b), prior to Closing, except to the extent that
the Bankruptcy Claims are paid to the Partnership in cash prior to the Measurement
Time, pursuant to an Assignment and Assumption in the form attached hereto as
Schedule G, ACSC and ANI shall cause the Partnership to, and the Partnership shall,
assign, grant, convey and transfer to Woodbridge, 47.5% of the Partnership’s right,
title and interest in and to the Bankruptcy Claims (the “Bankruptcy Claims
Assignment”), which shall include, without limitation or offset, 47.5% of ((i)
through (iv) below collectively, the “Transferred Bankruptcy Claims Rights”):

	 	(i)	 	the Bankruptcy Claims;

	 	(ii)	 	the Partnership’s right, title and interest in and to the
Bankruptcy Claims, including all agreements, instruments, subscriptions,
statements, proofs of claim, proofs of investment and other documents evidencing, or supporting
the Bankruptcy Claims and any agreements, stipulations, or 

 

 - 14 - 

	 	 	 	other settlement rights or documentation relating to the allowance or disallowance of the
Bankruptcy Claims;

	 	(iii)	 	the Partnership’s right to receive principal, interest, fees,
expenses, damages and other amounts in respect of, or in connection with, the
Bankruptcy Claims; and

	 	(iv)	 	cash, securities, instruments, proceeds, collateral, guarantees
and/or other property distributed, received or paid from and after the Closing,
on account of, or exchanged in return for the Bankruptcy Claims.

	 	(b)	 	Prior to the first distribution in respect of Bankruptcy Claims to be
made in shares of AbitibiBowater, each of AbitibiBowater, ACSC and the Partnership
shall take all necessary actions so that such distribution shall be deferred until
as promptly as practicable following the Closing and the rights thereto (as to
47.5%) shall be assigned to Woodbridge pursuant to the Bankruptcy Claims Assignment.

2.9 Assignment of Administrative Claim. Prior to Closing, except to the extent that the
Administrative Claim is paid to the Partnership in cash prior to the Measurement Time, pursuant to
an Assignment and Assumption in the form attached hereto as Schedule H, ACSC and ANI shall cause
the Partnership to, and the Partnership shall, assign, grant, convey and transfer to Woodbridge,
47.5% of the Partnership’s right, title and interest in and to the Administrative Claim (the
“Administrative Claim Assignment”), which shall include, without limitation or offset, 47.5% of
((a) through (d) below collectively, the “Transferred Administrative Claim Rights”):

	 	(a)	 	the Administrative Claim;
	 
	 	(b)	 	the Partnership’s right, title and interest in and to the Administrative
Claim, including all agreements, instruments, subscriptions, statements, proofs of
claim, proofs of investment and other documents evidencing, or supporting the
Administrative Claim and any agreements, stipulations, or other settlement rights or
documentation relating to the allowance or disallowance of the Administrative Claim;
	 
	 	(c)	 	the Partnership’s right to receive principal, interest, fees, expenses,
damages and other amounts in respect of, or in connection with, the Administrative
Claim; and
	 
	 	(d)	 	cash, securities, instruments, proceeds, collateral, guarantees and/or
other property distributed, received or paid from and after the Closing, on account
of, or exchanged in return for the Administrative Claim.

2.10 Wood Fraud Claim Payment. Except to the extent that the Wood Fraud Claim is paid to
the Partnership in cash prior to the Measurement Time, the Partnership shall pay the amount that is
47.5% of any Wood Fraud Claim Payment to Woodbridge or as Woodbridge otherwise directs

 

 - 15 - 

as soon as
practicable after such time as such Wood Fraud Claim Payment is received by the Partnership.
Payments pursuant to this Section 2.10 shall satisfy the amount payable under Section 2.2(e).

2.11 Distribution Adjustment.

	 	(a)	 	Not later than 60 days after the Closing Date, ANI shall cause a
statement (the “Closing Date Cash Statement”) setting forth the amount of the
Partnership Cash (the “Proposed Final Partnership Cash Amount”) to be prepared and
delivered to Woodbridge. The Closing Date Cash Statement shall be prepared in
accordance with the normal procedures of the Partnership.
	 
	 	(b)	 	If Woodbridge notifies ANI that it agrees with the Proposed Final
Partnership Cash Amount within 20 days after receipt of the Closing Date Cash
Statement or, within such 20-day period, fails to deliver notice to ANI that it
disagrees with the Proposed Final Partnership Cash Amount or that it believes an
error is contained in the Closing Date Cash Statement, the Proposed Final
Partnership Cash Amount shall be conclusive and binding on the parties to this
Agreement and the parties shall be deemed to have agreed thereto, in the first case,
on the date ANI receives the notice and, in the second case, on such 20th
day. If Woodbridge notifies ANI that it disagrees with the Proposed Final
Partnership Cash Amount or believes that an error is contained in the Closing Date
Cash Statement within the 20-day period immediately following the delivery required
under Section 2.11(a), then ANI and Woodbridge shall meet and attempt, in good
faith, to resolve their differences with respect to such matters and determine the
amount of the Partnership Cash within 30 days after ANI’s receipt of Woodbridge’s
notice of disagreement. If Woodbridge and ANI cannot agree within such 30-day
period, then Deloitte Financial Advisory Services LLP (the “Accounting Firm”),
acting as an expert shall be retained by the parties to determine the amount of
Partnership Cash (the expense of such determination by the Accounting Firm to be
shared equally among ANI and Woodbridge). ANI and Woodbridge shall use commercially
reasonable efforts to cause the Accounting Firm to determine the amount of
Partnership Cash in accordance with the normal procedures of the Partnership. The
amount of Partnership Cash as determined by such accounting firm shall not be
greater than the amount proposed by Woodbridge or lesser than the amount proposed by
ANI. The amount of the Partnership Cash as determined (or deemed determined) by the
parties or by the Accounting Firm pursuant to this Section 2.11(b), shall be
conclusive of the amount of the Partnership Cash (the amount of the Partnership Cash
as so determined, the “Final Partnership Cash Amount”).
	 
	 	(c)	 	On the 5th Business Day following the date on which the Final Partnership
Cash Amount is determined pursuant to Section 2.11(b)(the “Settlement Date”), the
payment contemplated by Section 2.12 shall be made.

 

 - 16 - 

2.12 Adjustment Payment. On the Settlement Date, either (i) Woodbridge shall pay to the
Partnership in immediately available funds the amount, if any, by which 47.5% of the Estimated
Partnership Cash exceeds 47.5% of the Final Partnership Cash Amount, or (ii) the Partnership shall
pay to Woodbridge in immediately available funds the amount, if any, by which 47.5% of the Final
Partnership Cash Amount exceeds 47.5% of the Estimated Partnership Cash Amount (any such payment,
the “Adjustment Payment”). Woodbridge shall deliver to the Partnership, or the Partnership shall
deliver to Woodbridge, as applicable, no later than two (2) Business Days before the Settlement
Date, a notice which shall contain payment instructions.

2.13 Withholding Rights. The Partnership shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement such amounts as it is required to deduct
and withhold with respect to the making of such payment under the Code, or any provision of state,
local or foreign Tax law. To the extent that such amounts are so withheld by the Partnership, such
withheld and deducted amounts will be treated for all purposes of this Agreement as having been
paid to the holders of the Partnership Interest in respect of which such deduction and withholding
was made by the Partnership.

ARTICLE 3

CONDITIONS TO CLOSING

3.1 Mutual Conditions. Subject to Section 3.2 and 3.3, the Parties’ obligation to effect
the Closing shall be subject to the fulfillment (or express written waiver), at or prior to Closing
of the following conditions:

	 	(a)	 	there shall be no Order or Law prohibiting the purchase and sale of the
Purchase Stock;
	 
	 	(b)	 	any waiting period (and any extension thereof) under The notification
required by Section X of the Final Judgment in United States of America v.
Abitibi-Consolidated Inc. and Bowater Incorporated, Case No. 07-1912, 15-17 (D.D.C.
Nov. 6, 2008) (the “DOJ Order”) applicable to the transaction shall have expired or
shall have been terminated;
	 
	 	(c)	 	the effective date of the Chapter 11 plans for AbitibiBowater and its
affiliated debtors and debtors-in-possession shall have occurred; and
	 
	 	(d)	 	the Settlement Order shall have been approved and entered by the
Bankruptcy Court.

3.2 Additional Conditions to ACSC’s and the Partnership’s Obligations. The obligation of
ACSC and the Partnership to effect the Closing shall be subject to the fulfillment (or express
written waiver by ACSC and AbitibiBowater), at or prior to Closing of the following conditions:

	 	(a)	 	the representations and warranties of (i) Woodbridge and Woodbridge
Parent contained in Section 5.2 shall be true and correct when made and as of the
Closing Date as though restated on the Closing Date and (ii) Woodbridge, 

 

 - 17 - 

	 	 	 	Woodbridge
Parent and ANI contained in Section 5.3 shall be true and correct when made and as
of the Closing Date as though restated on the Closing Date;
	 	(b)	 	Woodbridge shall have delivered to the Partnership a certificate or
certificates, in compliance with Treasury Regulations Section 1.1445-2, certifying
that the transactions contemplated hereby are exempt from withholding under Section
1445 of the Code;
	 
	 	(c)	 	Woodbridge and Woodbridge Parent shall have delivered the closing
documents set forth on Schedule D that are required to be delivered by Woodbridge
and/or Woodbridge Parent, in form and substance reasonably acceptable to ACSC and
AbitibiBowater;
	 
	 	(d)	 	all covenants contained in this Agreement to be performed by Woodbridge,
Woodbridge Parent or ANI at or prior to the Closing Time shall have been performed
in all material respects; and
	 
	 	(e)	 	as of immediately prior to the Closing Time, Woodbridge shall own
(beneficially and of record) all of the ANI Common Shares, free and clear of all
Encumbrances.

3.3 Additional Conditions to Woodbridge’s Obligations. Woodbridge and Woodbridge Parent’s
obligation to effect the Closing shall be subject to the fulfillment (or express written waiver by
Woodbridge and Woodbridge Parent), at or prior to Closing of the following conditions:

	 	(a)	 	the representations and warranties of ACSC and AbitibiBowater contained
in Section 5.1 shall be true and correct when made and as of the Closing Date as
though restated on the Closing Date;
	 
	 	(b)	 	ACSC, AbitibiBowater and the Partnership shall have delivered (i) the
closing documents set forth on Schedule D that are required to be delivered by ACSC,
AbitibiBowater and/or the Partnership, and (ii) the Security Documents, in each case
in form and substance reasonably acceptable to Woodbridge and Woodbridge Parent;
	 
	 	(c)	 	all covenants contained in this Agreement to be performed by ACSC, the
Partnership and AbitibiBowater at or prior to the Closing Time shall have been
performed in all material respects; and
	 
	 	(d)	 	the Bankruptcy Claim and the Administrative Claim shall be allowed in the
full amount as asserted or claimed by the Partnership.

3.4 Unsatisfied Closing Conditions.

	 	(a)	 	In the event that (i) the transactions contemplated by this Agreement
shall not have been consummated on or prior to March 31, 2011; and (ii) the party
seeking to terminate this Agreement pursuant to this Section 3.4(a) shall not 

 

 - 18 - 

	 	 	 	have
breached in material respect any obligation under this Agreement in any manner that
shall have proximately caused the failure to consummate the transactions
contemplated by this Agreement prior to March 31, 2011, then this Agreement may be
terminated by such party.
	 	(b)	 	In the event that either party shall have breached any of its
representations, warranties, covenants or agreements and such breach is not cured
within 20 Business Days of notice to such party by the other party, then this
Agreement may be terminated by such other party, provided such other party is not
then in breach of its representations, warranties, covenants or agreements where
such other party’s breach would give such first party the right to terminate this
Agreement pursuant to this Section 3.4(b).
	 
	 	(c)	 	For the purposes of this Section 3.4, (i) AbitibiBowater and ACSC
collectively shall be deemed one party and (ii) Woodbridge Parent, Woodbridge and
ANI collectively shall be deemed one party.
	 
	 	(d)	 	If this Agreement is terminated pursuant to this Section 3.4 all further
obligations of the parties under or pursuant to this Agreement shall terminate
without further liability of any party to the other except for the provisions of (i)
this Section 3.4(d) (Unsatisfied Closing Conditions), (ii) Article 7 (Dispute
Resolution) and (iii) Article 9 (Miscellaneous); provided, that neither the
termination of this Agreement nor anything in this Section 3.4(d) shall relieve any
party from Liability for any breach of this Agreement occurring prior to such
termination hereof.

3.5 Releases. At the Closing Time:

	 	(a)	 	ACSC, AbitibiBowater and the Partnership shall deliver the Woodbridge
Release (attached hereto as Schedule B) to Woodbridge; and
	 
	 	(b)	 	Woodbridge and Woodbridge Parent shall deliver the AbitibiBowater Release
(attached hereto as Schedule C) to ACSC.

ARTICLE 4

COVENANTS

4.1 Further Actions. Each of ACSC and Woodbridge shall use all commercially reasonable
efforts to complete the transaction contemplated hereby, including (a) completing all necessary
filings and notices (b) providing such information as may be requested by Governmental or
Regulatory Authorities, and (c) pursuing the termination of any applicable waiting period under the
notification required by Section X of the DOJ Order. In connection with the foregoing, each of ACSC
and Woodbridge shall cooperate with each other and keep the other informed with respect to such
effort.

 

 - 19 - 

4.2 Settlement Motion. On December 1, 2010, AbitibiBowater filed with the Bankruptcy Court
a motion and order (the “Settlement Motion”) seeking entry of the Settlement Order in the form of
Schedule E. AbitibiBowater shall consult and cooperate with Woodbridge, and consider in good faith
the views of Woodbridge, with respect to any modifications to the Settlement Motion or Settlement
Order. The Settlement Motion shall not seek to affect in any way the claims of Woodbridge,
Woodbridge Parent, WIHSA, or any of their affiliates, against the Debtors or the Canadian Debtors,
arising from the rejection of the Call Agreement and the guarantee dated as of September 6, 2001 by
Abitibi-Consolidated Inc. in favor of each of Woodbridge and WIHSA (all such claims, the
“Woodbridge Claims”). For the avoidance of doubt, the Woodbridge Claims, and all rights thereto
and thereunder, are preserved.

4.3 Conduct of Business.

	 	(a)	 	From the date hereof until the earlier of the Closing Date or the
termination of this Agreement in accordance with its terms, ACSC and ANI shall cause
the Partnership to, and the Partnership shall, conduct the business of the
Partnership in all material respects in the ordinary course of business on a basis
consistent with past practice, and use commercially reasonable efforts to preserve
its business operation, including the services of its officers and employees, and
its business relationships with customers, suppliers and others having business
dealings with the Partnership. By way of amplification and not of limitation, from
the date hereof until the Closing Date, ACSC and ANI shall cause the Partnership to,
and the Partnership shall, refrain from (i) shortening or lengthening the customary
payment cycles of the Partnership with respect to accounts payable and accounts
receivable, (ii) changing customary payment terms of the Partnership with respect to
accounts receivable and accounts payable, and (iii) changing the customary inventory
management practices of the Partnership.
	 
	 	(b)	 	From the date hereof until the earlier of the Closing or the termination
of this Agreement in accordance with its terms, ANI shall not, and Woodbridge shall
cause ANI not do any of the following:

	 	(i)	 	enter into any Contract;

	 	(ii)	 	(A) issue, sell, transfer, pledge, grant, dispose of, encumber
or deliver (whether through the issuance or granting of any options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any equity
securities of any class or any securities convertible into or exercisable or
exchangeable for voting or equity securities of any class (except for the
issuance of certificates in replacement of lost certificates) or (B) adjust,
split, combine, or reclassify any of its equity securities;

	 	(iii)	 	redeem, purchase or otherwise acquire any outstanding shares
of the capital stock of ANI, other than as contemplated by Section 2.7 of this
Agreement.

 

 - 20 - 

	 	(iv)	 	acquire in any manner any Assets or Properties;

	 	(v)	 	mortgage, pledge or subject to any Encumbrances, any of its
Assets or Properties;

	 	(vi)	 	amend or restate, or propose to amend or restate, any
Organizational Document of ANI;

	 	(vii)	 	merge or consolidate with or into any other Person or dissolve
or liquidate;

	 	(viii)	 	incur or assume any Liabilities, assume, guarantee, endorse or otherwise
become liable or responsible for the Liabilities of any other Person;

	 	(ix)	 	lease, sell or otherwise dispose of any Assets or Properties,
other than as contemplated by Section 2.6 of this Agreement;

	 	(x)	 	commence or settle any claim, action or proceeding; or

	 	(xi)	 	agree in writing or otherwise to do anything contained in this
clause (b).

4.4 Bank Account. ANI shall close its account at UBS in New York, New York as soon as
practicable after the Closing.

4.5 WIHSA Share Transfer. Woodbridge Parent shall cause WIHSA to enter into the WIHSA
Transfer Agreement and pursuant thereto to transfer all right, title and interest in the ANI Common
Shares, free and clear of all Encumbrances, to Woodbridge prior to the Closing Time. Woodbridge
Parent covenants and agrees to cause WIHSA not to sell, transfer or assign or subject to (or fail
to object to the imposition of) any Encumbrance upon, the ANI Common Shares to any other Person.

4.6 Notice of Withdrawal of Appeal. Within five (5) Business Days of the Closing Date,
Woodbridge and Woodbridge Parent shall, and shall cause WIHSA to, take such action as is necessary
to withdraw with prejudice the Appeal filed on November 3, 2009, with the District Court for the
District of Delaware (Case No. 1:09-cv-00907-LPS) from the Order Authorizing the Rejection of a
Certain Call Agreement entered on the docket (Docket No. 1200) in the Bankruptcy Proceedings on
October 27, 2009.

4.7 Resignation of Directors and Officers of ANI. Prior to the Closing, Woodbridge shall
obtain the resignation of all directors and officers of ANI and releases from such individuals of
all claims they may have against ANI in a form satisfactory to ACSC, which shall be no less
favorable than the release set forth on Schedule C.

4.8 LLC Conversion. Immediately prior to the Closing, the Partnership may elect to, and,
in such case, the parties shall take all reasonable action and execute such documents as reasonably
necessary to, effect a conversion of the Partnership from a Georgia partnership to a Delaware
limited liability company in accordance with Georgia and Delaware law (such conversion, the
“LLC Conversion”).

 

 - 21 - 

ARTICLE 5

REPRESENTATIONS AND WARRANTIES

5.1 ACSC and AbitibiBowater Representations and Warranties.

     Subject, as applicable, to entry of the Settlement Order and the application of the Bankruptcy
Code in the Bankruptcy Proceedings, each of ACSC and AbitibiBowater hereby jointly and severally
represents and warrants in respect of itself and the Partnership (except with respect to the
representations and warranties in Section 5.1(f)(iii), which representations and warranties are
made solely by ACSC in respect of itself and the Partnership and not by AbitibiBowater) to each of
Woodbridge and Woodbridge Parent as follows as at the date hereof and as of the Closing Date, and
each of ACSC and AbitibiBowater acknowledge that each of Woodbridge and Woodbridge Parent is
relying on such representations and warranties in connection with entering into this Agreement:

	 	(a)	 	in the case of ACSC and AbitibiBowater, it is a corporation duly and
validly incorporated under the laws of the jurisdiction of its incorporation and, in
the case of the Partnership, it is a partnership, or, in the case of a LLC
Conversion, at the Closing, will be a limited liability company, duly formed and
validly existing under the laws of its jurisdiction of formation;
	 
	 	(b)	 	it has the requisite power and authority to own its Assets and Properties
and to carry on its business as currently conducted;
	 
	 	(c)	 	in the case of ACSC and AbitibiBowater, it has the corporate power and
corporate capacity and, in the case of the Partnership, has the partnership power
and partnership capacity, or at Closing, if applicable, it will have the limited
liability company power and limited liability company capacity, to execute and
deliver, and to observe and perform its covenants and obligations under, this
Agreement and the documents being entered into in connection herewith, and to
consummate the transactions contemplated hereby and thereby;
	 
	 	(d)	 	in the case of ACSC and AbitibiBowater, it has taken all corporate action
and, in the case of the Partnership, it has taken all partnership action, or at
Closing, if applicable, it will have taken all limited liability company action,
necessary to duly and validly authorize the execution and delivery of, and the
observance and performance of its covenants and obligations under, this Agreement
and the documents being entered into in connection herewith, and to consummate the
transactions contemplated hereby and thereby;
	 
	 	(e)	 	this Agreement and each of the documents entered into in connection
herewith have been duly and validly executed and delivered by it, and constitute
legal, valid and binding obligations of it enforceable against it in accordance with
their respective terms, subject to the fact that (i) specific performance,
injunctive relief and other equitable remedies are discretionary and may not be
available where damages are considered an adequate remedy and (ii) 

 

 - 22 - 

	 	 	 	enforcement may
be limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction,
moratorium, arrangement and other similar Laws generally affecting the
enforceability of creditors’ rights and remedies generally and general principles of
equity;

	 	(f)	 	none of the execution and delivery of, or the observance and performance
by it of any covenant or obligation under this Agreement and the documents entered
into in connection herewith and the consummation of the transactions contemplated
hereby:

	 	(i)	 	conflicts with or results in a violation or breach of any of
the terms, conditions or provisions of its Organizational Documents;

	 	(ii)	 	conflicts with or results in a violation or breach of any term
or provision of any applicable Law or Order applicable to it or to its Assets
and Properties;

	 	(iii)	 	(A) conflicts with or results in a violation or breach of, (B)
constitutes (with or without notice or lapse of time or both) a default under,
(C) requires it to obtain any consent, approval or action of, make any filing
with or give any notice to any Person as a result or under the terms of, (D)
results in, or gives to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, (E) results in or gives to
any Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under, or (F) results in the creation or
imposition of any Encumbrance upon its Assets and Properties under, any
material Contract to which it is a party or by which its material Assets and
Properties are bound or affected, other than the Secured Promissory Note or the
Security Documents; or

	 	 	 	except, in the case of (ii) and (iii) above, as required pursuant to the DOJ
Order and for such defaults, violations, actions and notifications that would not
reasonably be expected to, individually or in the aggregate, materially delay or
prevent, the performance by ACSC or the Partnership of any of its obligations
hereunder or the Partnership’s obligations under the Secured Promissory Note;
	 
	 	(g)	 	other than pursuant to the DOJ Order, in connection with the sale of the
Purchase Stock, no consent, approval or action of, filing with or notice to any
Governmental or Regulatory Authority is required by it in connection with the
execution, delivery and performance of this Agreement or any of the documents being
entered into in connection herewith or the consummation of the transactions
contemplated hereby or thereby, except for such defaults, violations, actions and
notifications that would not reasonably be expected to, individually or in the
aggregate, materially delay or prevent, the performance by ACSC or the Partnership
of any of its obligations hereunder or the Partnership’s obligations under the
Secured Promissory Note; and

 

 - 23 - 

	 	(h)	 	it has not taken and agrees it will not take any action that would cause
any other party hereto to become liable to any claim or demand for a brokerage
commission, finders fee or other similar payment.

5.2 Woodbridge and Woodbridge Parent Representations and Warranties. Each of Woodbridge
and Woodbridge Parent hereby jointly and severally represents and warrants (except with respect to
the representations and warranties in Section 5.2(g)(iii), which representations and warranties are
made solely by Woodbridge and not by Woodbridge Parent) to each of the Partnership, ACSC and
AbitibiBowater as follows as at the date hereof and as of the Closing Date, and each of Woodbridge
and Woodbridge Parent acknowledge that each of the Partnership, ACSC and AbitibiBowater is relying
on such representations and warranties in connection with entering into this Agreement:

	 	(a)	 	it is a corporation duly and validly incorporated under the laws of the
jurisdiction of its incorporation;
	 
	 	(b)	 	no Actions or Proceedings have been taken or authorized by it, or to the
best of its knowledge, by any other Person, with respect to bankruptcy, insolvency,
liquidation, reconstruction, moratorium, dissolution or winding-up or other similar
Actions or Proceedings of or affecting it;
	 
	 	(c)	 	it has the requisite power and authority to own its Assets and Properties
and to carry on its business as currently conducted;
	 
	 	(d)	 	it has the corporate power and corporate capacity to execute and deliver,
and to observe and perform its covenants and obligations under, this Agreement and
the documents being entered into in connection herewith, and to consummate the
transactions contemplated hereby and thereby;
	 
	 	(e)	 	it has taken all corporate action necessary to duly and validly authorize
the execution and delivery of, and the observance and performance of its covenants
and obligations under, this Agreement and the documents being entered into in
connection herewith, and to consummate the transactions contemplated hereby and
thereby;
	 
	 	(f)	 	this Agreement and each of the documents entered into in connection
herewith have been duly and validly executed and delivered by it, and constitute
legal, valid and binding obligations of it enforceable against it in accordance with
their respective terms, subject to the fact that (i) specific performance,
injunctive relief and other equitable remedies are discretionary and may not be
available where damages are considered an adequate remedy and (ii) enforcement may
be limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction,
moratorium, arrangement and other similar Laws generally affecting the
enforceability of creditors’ rights and remedies generally and general principles of
equity;

 

 - 24 - 

	 	(g)	 	none of the execution and delivery of, or the observance and performance
by it of any covenant or obligation under this Agreement and the documents entered
into in connection herewith and the consummation of the transactions contemplated
hereby:

	 	(i)	 	conflicts with or results in a violation or breach of any of
the terms, conditions or provisions of its Organizational Documents;

	 	(ii)	 	conflicts with or results in a violation or breach of any term
or provision of any applicable Law or Order applicable to it or to its Assets
and Properties; or

	 	(iii)	 	(A) conflicts with or results in a violation or breach of, (B)
constitutes (with or without notice or lapse of time or both) a default under,
(C) requires it to obtain any consent, approval or action of, make any filing
with or give any notice to any Person as a result or under the terms of, (D)
results in, or gives to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, (E) results in or gives to
any Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under, or (F) results in the creation or
imposition of any Encumbrance upon its Assets and Properties under, any
Contract to which it is a party or by which its Assets and Properties are bound
or affected,

except, in the case of (ii) and (iii) above, for such defaults, violations, actions
and notifications that would not reasonably be expected to, individually or in the
aggregate, materially delay or prevent, the performance by Woodbridge of any of its
obligations hereunder;

	 	(h)	 	other than filings under, and waiting periods mandated by HSR in
connection with the sale of the Purchase Stock, no consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority is required by it
in connection with the execution, delivery and performance of this Agreement or
any of the documents being entered into in connection herewith or the
consummation of the transactions contemplated hereby or thereby, except for such
defaults, violations, actions and notifications that would not reasonably be
expected to, individually or in the aggregate, materially delay or prevent, the
performance by Woodbridge of any of its obligations hereunder; and
	 
	 	(i)	 	it has not taken and agrees it will not take any action that would cause
any other party hereto to become liable to any claim or demand for a brokerage
commission, finders fee or other similar payment.

 

 - 25 - 

5.3 Woodbridge, Woodbridge Parent and ANI Representations and Warranties Regarding ANI.
Woodbridge, Woodbridge Parent and ANI hereby jointly and severally represents and warrants to the
Partnership, ACSC and AbitibiBowater as follows as at the date hereof and as of the Closing Date
and acknowledges that each of the Partnership, ACSC and AbitibiBowater is relying on such
representations and warranties in connection with entering into this Agreement:

	 	(a)	 	ANI is a corporation duly and validly incorporated and existing in good
standing under the laws of the State of Delaware;
	 
	 	(b)	 	ANI is duly qualified, Licensed or admitted to transact business as a
foreign corporation, and is in good standing, in the State of Georgia, which is the
only jurisdiction in which the ownership, use or leasing of the Assets and
Properties of ANI, or the conduct and nature of the business of ANI, makes such
qualification, Licensing or admission necessary;
	 
	 	(c)	 	ANI has the corporate power and corporate capacity to execute and
deliver, and to observe and perform its covenants and obligations under, this
Agreement and the documents being entered into in connection herewith, and to
consummate the transactions contemplated hereby and thereby;
	 
	 	(d)	 	ANI has taken all corporate action necessary to duly and validly
authorize the execution and delivery of, and the observance and performance of its
covenants and obligations under, this Agreement and the documents being entered into
in connection herewith, and to consummate the transactions contemplated hereby and
thereby;
	 
	 	(e)	 	this Agreement and each of the documents entered into in connection
herewith have been duly and validly executed and delivered by ANI, and constitute
legal, valid and binding obligations of it enforceable against it in accordance with
their respective terms, subject to the fact that (i) specific performance,
injunctive relief and other equitable remedies are discretionary and may not be
available where damages are considered an adequate remedy and (ii) enforcement may
be limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction,
moratorium, arrangement and other similar Laws generally affecting the
enforceability of creditors’ rights and remedies generally and general principles of
equity;
	 
	 	(f)	 	none of the execution and delivery of, or the observance and performance
by ANI of any covenant or obligation under this Agreement and the documents entered
into in connection herewith and the consummation of the transactions contemplated
hereby or thereby:

	 	(i)	 	conflicts with or results in a violation or breach of any of
the terms, conditions or provisions of ANI’s Organizational Documents;

 

 - 26 - 

	 	(ii)	 	conflicts with or results in a violation or breach of any term
or provision of any applicable Law or Order applicable to ANI or to ANI’s
Assets and Properties; or

	 	(iii)	 	(A) conflicts with or results in a violation or breach of, (B)
constitutes (with or without notice or lapse of time or both) a default under,
(C) requires it to obtain any consent, approval or action of, make any filing
with or give any notice to any Person as a result or under the terms of, (D)
results in or gives to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, (E) results in or gives to
any Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under, or (F) results in the creation or
imposition of any Encumbrance upon ANI’s Assets and Properties under, any
Contract to which ANI is a party or by which ANI’s Assets and Properties are
bound or affected;

	 	(g)	 	ANI has the requisite power and authority to own its Assets and
Properties;
	 
	 	(h)	 	ANI has no outstanding Liabilities of any kind other than (i) Liabilities
to the other partners in the Partnership under the terms of the Partnership
Agreement, (ii) the contingent Liabilities of a general partner arising directly and
exclusively from the operation and business of the Partnership, (iii) Liabilities
for Taxes not yet due for which Woodbridge has agreed to reimburse or indemnify ACSC
under this Agreement (provided, however neither Woodbridge nor Woodbridge Parent has
any obligation to reimburse or indemnify ACSC for Liabilities for Taxes in respect
of which Abitibi-Consolidated Corp. agreed to indemnify ANI pursuant to the
Indemnity Agreement made as of February 23, 2007 between Abitibi-Consolidated Corp.,
ANI and ACSC).
	 
	 	(i)	 	The financial statements delivered to ACSC as of the date hereof, which
are the last annual financial statements of ANI prior to the Closing Date (the “ANI
Financial Statements”), are true and complete copies of the financial statements of
ANI as at the dates provided therein. The ANI Financial Statements have been
prepared in accordance with GAAP, and fairly present the financial condition,
results of operations, changes in equity and cash flows of ANI as of the date
thereof and for the period covered thereby, except for changes to such amounts
resulting from (A) distributions (x) by the Partnership to ANI, (y) as contemplated
by Section 2.5 of this Agreement and (z) as
contemplated by Section 2.6 of this Agreement and (B) the redemption contemplated
by Section 2.7 of this Agreement. Since the date of the ANI Financial Statements
there has not been any change or any event or development, except for such
change, event or development contemplated by this Agreement, which, individually
or together with other such events, could reasonably be expected to result in a
change in the condition, financial or otherwise, of ANI;

 

 - 27 - 

	 	(j)	 	ANI has no Assets or Properties other than the Partnership Interest.
Except for the Partnership Agreement, there are no other Contracts to which ANI is a
party or by which ANI or its Assets and Properties are bound as of the date hereof
and at the Closing Date;
	 
	 	(k)	 	no Actions or Proceedings have been taken or authorized by ANI,
Woodbridge, WIHSA or Woodbridge Parent, or to the best of ANI’s, Woodbridge’s,
WIHSA’s or Woodbridge Parent’s knowledge, by any other Person, with respect to
bankruptcy, insolvency, liquidation, reconstruction, moratorium, dissolution or
winding-up or other similar Actions or Proceedings of or affecting ANI, other than
the Bankruptcy Proceedings;
	 
	 	(l)	 	there are no Actions or Proceedings pending or threatened to the best of
ANI’s, Woodbridge’s, WIHSA’s or Woodbridge Parent’s knowledge against ANI, or
affecting ANI’s Assets and Properties;
	 
	 	(m)	 	ANI is and has at all times been, in compliance in all material respects
with all Licenses, Laws and Orders applicable to it;
	 
	 	(n)	 	ANI has never had and now has no employees;
	 
	 	(o)	 	ANI has no direct or indirect, contingent or otherwise, ERISA Affiliate
Liability or any other liability that is imposed on a controlled group basis;
	 
	 	(p)	 	attached hereto as Exhibit A is a true and complete copy of the
Certificate of Incorporation of ANI as in effect on the date hereof;
	 
	 	(q)	 	attached hereto as Exhibit B is a true and complete copy of the By-laws
of ANI as in effect on the date hereof;
	 
	 	(r)	 	Woodbridge has provided ACSC with access to true and correct copies of
the transfer ledgers and minute books of ANI, which accurately reflect all issues
and transfers of Equity Interests prior to the date hereof and all actions taken by
the directors and stockholders of ANI prior to the date hereof;
	 
	 	(s)	 	except for its interest in the Partnership, ANI neither owns, nor has it
heretofore owned, directly or indirectly, any Equity Interest in, or any Option with
respect to any Equity Interest in, any Person;
	 
	 	(t)	 	ANI is the sole legal and beneficial owner of the Partnership Interest,
free of all Encumbrances;
	 
	 	(u)	 	all of the shares of Purchase Stock (i) have been duly authorized and
validly issued, (ii) are fully paid and non-assessable, and (iii) have not been
issued in violation of pre-emptive, subscription or other rights or of any Law or
Order; the authorized capital of ANI is 20,000 shares of ANI Class A Preferred
Stock, 20,000 shares of ANI Class B Preferred Stock and 20,000 shares of ANI Common
Stock; and the Purchase Stock constitute all of the issued and 

 

 - 28 - 

	 	 	 	outstanding Equity
Interests of ANI; and no Person has an Option to purchase any of the Equity
Interests of ANI (other than pursuant to the WIHSA Transfer Agreement);

	 	(v)	 	Woodbridge (together with WIHSA, from which Woodbridge will acquire all
of the outstanding ANI Common Stock prior to Closing pursuant to the WIHSA Transfer
Agreement) is the sole legal and beneficial owner of the Purchase Stock, free and
clear of all Encumbrances, and upon the delivery of certificates evidencing the
Purchase Stock to ACSC, duly endorsed in blank, ACSC shall acquire good and
marketable legal and beneficial title to the Purchase Stock, free and clear of all
Encumbrances; no Person has an Option to purchase any of the Purchase Stock (other
than Woodbridge pursuant to the WIHSA Transfer Agreement); there are no Actions or
Proceedings pending or threatened with respect to any of the Purchase Stock,
Woodbridge’s or WIHSA’s, as applicable, ownership of the Purchase Stock or
Woodbridge’s or WIHSA’s, as applicable, right to sell the Purchase Stock and there
is no basis for any such Action or Proceeding; and no Person enjoys any right of
first refusal, right of first opportunity, tag along/drag along right or similar
right with respect to the Purchase Stock;
	 
	 	(w)	 	the Purchase Stock is not subject to any voting trust agreement or other
Contract relating to the voting or transfer of the Purchase Stock (other than the
WIHSA Transfer Agreement);
	 
	 	(x)	 	ANI conducts no business, and at no time has conducted any business or
operations or pursued any activities, other than the holding of the Partnership
Interest;
	 
	 	(y)	 	except as disclosed in writing by Woodbridge to ACSC prior to the date
hereof:

	 	(i)	 	all Tax Returns that are required to be filed with respect to
ANI have been filed. All such Tax Returns were correct and complete in all
material respects. All Taxes owed by ANI (whether or not shown on any Tax
Return) have been paid. ANI is not currently the beneficiary of any extension
of time within which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where ANI does not file Tax Returns that ANI is or
may be subject to taxation by that jurisdiction.
There are no Encumbrances on any of the Assets or Properties of ANI that
arose in connection with any failure (or alleged failure) to pay any Tax;

	 	(ii)	 	ANI has withheld and timely paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party;

	 	(iii)	 	there is no dispute or claim concerning any Tax Liability of
ANI either (A) claimed or raised by any Taxing Authority in writing, or (B) as
to 

 

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	 	 	 	which Woodbridge and their respective directors and officers (and other
Persons responsible for their Tax matters) has knowledge. Woodbridge has
delivered to ACSC correct and complete copies of all United States federal
income Tax Returns for the years ended June 30, 2010, June 30, 2009 and June
30, 2008, and all Georgia state income Tax Returns for the years ended June 30,
2010, June 30, 2009 and June 30, 2008. There have been no audits of ANI by any
Taxing Authority;

	 	(iv)	 	ANI has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency and no request for any such waiver or extension is currently
pending;

	 	(v)	 	ANI has not filed a consent under Code Section 341(f)
concerning collapsible corporations. ANI has not made any payments, is not
obligated to make any payments, and is not a party to any agreement that under
certain circumstances could obligate it to make any payments that will not be
deductible under Code Section 280G. ANI is not a party to any Tax allocation or
sharing agreement. ANI (A) has not been a member of an Affiliated Group (as
defined in Code Section 1504(a)) filing a consolidated federal income Tax
Return (other than a group the common parent of which was ANI), or (B) has no
Liability for the Taxes of any other Person under Code Reg. Section 1.1502-6 or
1.1502-78, as a transferee or successor, by contract, or otherwise;

	 	(vi)	 	ANI has not constituted a “distributing corporation” or a
“controlled corporation” (within the meaning of Section 355(a)(1)(A) of the
Code) in a distribution of shares qualifying for tax-free treatment under
Section 355 of the Code (A) in the two years prior to the date of this
Agreement or (B) in a distribution that could otherwise constitute part of a
“plan” or “series of related transactions” (within the meaning of Section
355(e) of the Code) in conjunction with this acquisition;

	 	(vii)	 	except for income recognized by ANI attributable to any
transactions entered into by ACSC, its affiliates or ANI after the Closing Date
or occurring after the Closing Date, ANI will not be required to include in a
taxable period ending after the Closing Date taxable income attributable to
income that accrued in a taxable period prior to the Closing Date but was
not recognized for Tax purposes in such prior taxable period (or to exclude
from taxable income in a taxable period ending after the Closing Date any
deduction the recognition of which was accelerated from such taxable period
to a taxable period prior to the Closing Date) as a result of the
installment method of accounting, the completed contract method of
accounting, the long-term contract method of accounting, the cash method of
accounting, Section 481 of the Code or Section 108(i) of the Code or
comparable provisions of state, local or foreign Tax law; and

 

 - 30 - 

	 	(viii)	 	ANI has not executed or entered into a closing agreement pursuant to Section
7121 of the Code or any similar provision of state, local or foreign Tax law,
and is not subject to any private letter ruling of the IRS or comparable ruling
of any other Governmental Authority;

	 	(z)	 	ANI has not taken and agrees it will not take any action that would cause
any other party hereto to become liable to any claim or demand for a brokerage
commission, finders fee or other similar payment.

5.4 Survival of Representations and Warranties. The representations and warranties set out
in this Agreement shall terminate on the date that is eighteen (18) months following the Closing
Date, except that the representations and warranties contained in Sections 5.3(h), 5.3(i), 5.3(j),
5.3(n), 5.3(o), 5.3(p), 5.3(q), 5.3(r), 5.3(s), 5.3(t), 5.3(u), 5.3(v), 5.3(w), 5.3(x) and 5.3(y)
shall survive indefinitely. For greater certainty, other than those representations and warranties
contained in Section 5.3(y)(vii) and 5.3(y)(viii), the representations and warranties made refer
only to pre-closing activities of ANI and are not intended to serve as representations and
warranties regarding, or a guarantee of, nor can they be relied upon with respect to, Taxes
attributable to any Tax period (or portion thereof) beginning after or any Tax position taken
after, the Closing Date.

ARTICLE 6

TAX MATTERS

     The following provisions shall govern the allocation of responsibility as between the
Partnership and ACSC, on the one hand, and Woodbridge and Woodbridge Parent, on the other hand, for
certain Tax matters following the Closing Date (references in this Article 6 to (x) ACSC shall be
deemed to include the Partnership and (y) Woodbridge shall be deemed to include Woodbridge Parent):

6.1 ANI Pre-Closing Tax Returns. Woodbridge shall cause to be prepared, in a manner
consistent with past practice, all Tax Returns for ANI required for the fiscal period ending on the
Closing Date and for all other periods ending prior to the Closing Date. Woodbridge shall permit
ACSC to review and comment on each such Tax Return required to be filed after the Closing Date
described in the preceding sentence prior to filing (and shall deliver each such return to ACSC at
least thirty (30)
days prior to the date such Tax Return is required to be filed), and ACSC shall cause each such Tax
Return to be filed on a timely basis. If ACSC disputes any item on such Tax Return, it shall notify
Woodbridge of such disputed item (or items) and the basis for its objection. The parties shall act
in good faith to resolve any such dispute prior to the date on which the relevant Tax Return is
required to be filed. If the parties cannot resolve any disputed item, the item in question shall
be resolved by the Accounting Firm as set forth in Section 2.11(b). The fees and expenses of the
Accounting Firm shall be borne equally by Woodbridge and ACSC. Woodbridge shall be responsible for
and shall reimburse ACSC for Taxes of ANI reflected on such Tax Returns within five (5) Business
Days after payment by ACSC or ANI of such Taxes.

 

 - 31 - 

6.2 ANI Straddle Period Returns. ACSC shall prepare or cause to be prepared and file or
cause to be filed on a timely basis any Tax Returns of ANI for Tax periods which begin before the
Closing Date and end after the Closing Date (“straddle periods”). Unless otherwise required by law,
such Tax Returns shall be prepared on a basis consistent with the last previous such Tax Returns.
ACSC will use an acquisition structure which will cause the ANI Tax year to close for United States
federal tax purposes on the Closing Date. ACSC shall permit Woodbridge to review and comment on
each such Tax Return prior to filing (and shall deliver each such Tax Return to Woodbridge at least
thirty (30) days prior to the date such Tax Return is required to be filed). If Woodbridge
disputes any item on such Tax Return, it shall notify ACSC of such disputed item (or items) and the
basis for its objection. The parties shall act in good faith to resolve any such dispute prior to
the date on which the relevant Tax Return is required to be filed. If the parties cannot resolve
any disputed item, the item in question shall be resolved by an independent accounting firm
selected in accordance with the procedures set forth in Section 6.1(b). The fees and expenses of
such accounting firm shall be borne equally by Woodbridge and ACSC. Woodbridge shall pay to ACSC
within five (5) Business Days after the date on which Taxes are paid by ACSC or ANI with respect to
such straddle periods an amount equal to the portion of such Taxes that relates to the portion of
such straddle period ending on the Closing Date. For purposes of this Section 6.2, in the case of
any Taxes that are imposed on a periodic basis and are payable for a straddle period, the portion
of such Tax which relates to the portion of such straddle period ending on the Closing Date shall
(x) in the case of any Taxes other than Taxes based upon or related to income or receipts, be
deemed to be the amount of such Tax for the entire straddle period multiplied by a fraction the
numerator of which is the number of days in the portion of such straddle period ending on the
Closing Date and the denominator of which is the number of days in the entire straddle period, and
(y) in the case of any Tax based upon or related to income or receipts be deemed equal to the
amount which would be payable if the relevant straddle period ended on the Closing Date. Any
credits relating to a straddle period shall be taken into account as though the relevant straddle
period ended on the Closing Date. All determinations necessary to give effect to the foregoing
allocations shall be made in a manner consistent with prior practice of ANI, provided that the
practice of ANI is not inconsistent with the books and records of the Partnership.

6.3 Cooperation. Woodbridge, ANI and ACSC shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing of Tax Returns pursuant to
this Article 6 and in connection with any audit, litigation or other proceeding with respect to
Taxes. Such cooperation shall include the retention and (upon
the other party’s request) the provision of records and information which are reasonably relevant
to any such audit, litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any material provided
hereunder. Woodbridge, ANI and ACSC agree (a) to retain all books and records with respect to Tax
matters pertinent to ANI relating to any Tax period beginning before the Closing Date until the
expiration of the statutory period of limitations (and, to the extent notified by ACSC or
Woodbridge, any extensions thereof) of the respective Tax periods, and to abide by all record
retention agreements entered into with any Taxing Authority, and (b) to give the other party
reasonable written notice prior to transferring, destroying or discarding any such books and
records and, if the other party so requests, ACSC or Woodbridge, as the case may be, shall allow
the other party to take possession of such books and records. ACSC and Woodbridge further agree,
upon request, to use

 

 - 32 - 

all commercially reasonable efforts to obtain any certificate or other
document from any Taxing Authority or any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including with respect to the transactions contemplated
hereby). ACSC and Woodbridge further agree, upon request, to provide the other party with all
information that either party may be required to report pursuant to Section 6043 of the Code and
all Treasury Regulations promulgated thereunder.

6.4 Indemnified Taxes. Subject to the limitations set forth in this Section 6.4, after the
Closing Date, Woodbridge and Woodbridge Parent hereby agree jointly and severally to indemnify and
hold harmless each of ACSC and ANI against the following amounts (including any Loss incurred in
contesting or otherwise in connection with any such amounts (collectively, the “Indemnified
Taxes”)): (i) Taxes imposed on or required to be withheld by ANI with respect to any Tax period
ending on or before the Closing Date; (ii) with respect to any straddle period, Taxes imposed on or
required to be withheld by ANI which are allocable, pursuant to Section 6.2 above, to the portion
of such straddle period ending at the end of the day on the Closing Date (an “Interim Period”)
(Interim Periods and any Tax periods that end on or prior to the Closing Date being referred to
collectively hereinafter as “Pre-Closing Periods”); (iii) Taxes imposed on ANI pursuant to Treasury
Regulations Section 1.1502-6, 1.1502-78 or any similar provision under any Law, as a result of ANI
being or having been a member of any group of companies with which ANI files or has filed a Tax
Return on a consolidated, combined or unitary basis for a taxable year or period (or portion
thereof) ending on or before the Closing Date; (iv) without duplication, Taxes imposed on ACSC or
ANI as a result of (x) a breach of a representation or warranty set forth in Section 5.3(x) of this
Agreement or (y) a breach of a covenant or agreement set forth Article 6 of this Agreement;
provided, that for purposes of this Section 6.4(iii), any breach of a representation, warranty,
covenant or agreement shall be determined without reference to any materiality qualifier with
respect thereto; (v) Taxes arising out of any transactions contemplated by this Agreement and (vi)
Taxes or other payments required to be paid after the date hereof by ANI to any party under any Tax
Sharing Agreement (whether written or not) or by reason of being a successor-in-interest or
transferee of another entity. Woodbridge and Woodbridge Parent shall pay any Tax indemnity required
to be paid pursuant to this Section 6.4 within fifteen (15) days of receipt of written request
therefor from ANI or ACSC describing in reasonable detail the Indemnified Taxes which are the
subject of and basis for such Tax indemnity and the computation of the amount so payable;
provided, that if Indemnified Taxes are being contested in accordance with Section 6.7,
Woodbridge and Woodbridge Parent shall pay any required Tax indemnity within fifteen (15) days of
final
resolution of such contest. The indemnification provided in this Section 6.4 in respect of any
particular Tax Period shall terminate on the date that is 60 days following the expiration of the
applicable statutory period of limitations for that Tax period. Notwithstanding anything to the
contrary in this Section 6.4, neither Woodbridge nor Woodbridge Parent shall have any obligation to
reimburse or indemnify ACSC or ANI for Liabilities for Taxes in respect of which
Abitibi-Consolidated Corp. agreed to indemnify ANI pursuant to the Indemnity Agreement made as of
February 23, 2007 between Abitibi-Consolidated Corp., ANI and ACSC.

6.5 Amended Tax Returns. Except to the extent required by Law, neither ACSC nor ANI will
amend or adjust any Tax Return of ANI for any Tax period ending on or before the Closing Date or
any straddle period without the prior written consent of Woodbridge, which consent maybe

 

 - 33 - 

withheld
in the reasonable discretion of Woodbridge; provided, that if the amended Tax Return is to
be filed solely to claim a refund arising as a result of the carryback of a tax attribute from
either a Pre-Closing Tax Period or a Post-Closing Tax Period, such consent may be withheld only if
such amended Tax Return would have an adverse effect on Woodbridge.

6.6 Pre-Closing Period Tax Refund. Any Tax refund relating to a Pre-Closing Period of ANI
shall be the property of Woodbridge and, if received by ANI or ACSC, shall be paid or caused to be
paid to Woodbridge within fifteen (15) Business Days following receipt thereof, except
for any such Tax refunds attributable to the carry back of losses arising in any Tax period
beginning on or after the Closing Date. For the purpose of this Section 6.6, a refund shall include
actual receipt of a refund or interest, as well as a credit or offset of or against any other
actual or estimated Tax liability or any other interest or penalties on such Tax liability.

6.7 Audits and Proceedings.

	 	(a)	 	After the Closing Date, ANI and ACSC shall promptly notify Woodbridge, or
Woodbridge shall promptly notify ANI and ACSC, in writing, of any written notice by
a Taxing Authority of a proposed Tax assessment or claim against ANI or an audit or
administrative or judicial proceeding involving ANI which, would reasonably be
expected to give rise to indemnification under Section 6.4 (“Tax Contest”);
provided, however, that failure to give prompt written notice of any
such claim shall bar indemnification hereunder only to the extent such failure
materially prejudices Woodbridge.
	 
	 	(b)	 	Except as provided in Section 6.7(c) below, in the case of a Tax Contest
that relates to any Pre-Closing Period, Woodbridge shall have the right, at its own
expense, to control the conduct of such a Tax Contest (including any settlement or
litigation), provided that ANI and ACSC also may participate in any such a Tax
Contest at their own expense and, if Woodbridge does not assume the defense of any
such a Tax Contest, ANI or ACSC may defend the same in such manner as it may deem
appropriate, including settling such a Tax Contest, without any effect on any right
to indemnification under Section 6.4.
	 
	 	(c)	 	Woodbridge and ACSC may each participate in a Tax Contest relating to a
straddle period, and such Tax Contest shall be controlled by Woodbridge or ACSC,
whichever group would bear the burden of the greatest portion of any potential Tax
adjustment to which the Tax Contest relates.
	 
	 	(d)	 	All indemnification payments for Losses made pursuant to this Article 6
shall be made on an after-Tax basis. Accordingly, in determining the amount of any
indemnification payment for a Loss suffered or incurred by an indemnitee hereunder,
the amount of such Loss shall be (i) increased to take into account any additional
Tax cost incurred by the indemnitee arising from the receipt of indemnification
payments and (ii) decreased to take into account any deduction, credit or other Tax
benefit actually realized by the indemnitee with respect to such Loss (“Tax Costs”).
In computing the amount of any such Tax Cost or Tax Benefit, the indemnitee shall
be deemed to recognize all other 

 

 - 34 - 

	 	 	 	items of income, gain, loss, deduction or credit
before recognizing any item arising from the receipt of any indemnification payment
hereunder or the incurrence or payment of any indemnified Loss; provided,
that, if a Tax Cost or Tax Benefit is not realized in the taxable period during
which an indemnifying party makes an indemnification payment or the indemnitee
incurs or pays any Loss, the parties hereto shall thereafter make payments to one
another at the end of each subsequent taxable period to reflect the net Tax Costs
and Tax Benefits realized by the parties hereto in each such subsequent taxable
period.

6.8 Termination of Tax Sharing Agreements. All tax sharing agreements or similar
agreements with respect to or involving ANI shall be terminated as of immediately prior to the
Closing Date and, from and after the Closing Date, ANI shall not be bound thereby or have any
Liability thereunder.

6.9 Taxes and Fees. All transfer, documentary, stamp, registration and other similar Taxes
and fees (including any penalties and interest) incurred in connection with this Agreement, shall
be paid by Woodbridge when due, and Woodbridge will, at its own expense, file all necessary Tax
Returns and other documentation with respect to all such transfer, documentary, stamp, registration
and other similar Taxes and fees, and, if required by applicable Law, ACSC will, and will cause its
affiliates to, join in the execution of any such Tax Returns and other documentation.

6.10 Tax Attributes. If ANI has, as of the Closing Date, any available carryovers of net
operating losses, credits or other tax attributes, ACSC agrees that after the Closing Date it will
not cause or permit ANI to relinquish or waive the ability to carry back (to the extent permitted
by applicable law) any such losses, credits or other tax attributes to any Pre-Closing Period for
the purpose of reducing the amount of Indemnified Taxes for which Woodbridge may be liable pursuant
to Section 6.4.

ARTICLE 7

DISPUTE RESOLUTION

7.1 Commercial Arbitration. Subject to Section 7.2, all disputes, disagreements,
controversies, questions or claims arising out of or relating to this Agreement and all other
agreements entered into pursuant to the terms of this Agreement, including with respect to its, or
their, formation, execution, validity, application, interpretation, performance, breach,
termination or enforcement, shall be determined by arbitration administered by the American
Arbitration Association under its commercial arbitration rules (the “Commercial Arbitration Rules”)
provided that:

	 	(a)	 	any hearing in the course of the arbitration shall be held in New York,
New York in the English language;
	 
	 	(b)	 	if the parties are able to agree in writing to a single arbitrator within
twenty (20) days of the institution of any arbitration hereunder, the number of

 

 - 35 - 

	 	 	 	arbitrators shall be one; otherwise, each party shall select one arbitrator and
those two arbitrators shall select a third arbitrator, and the three arbitrators so
chosen shall serve as the arbitrators of such dispute;

	 	(c)	 	any award or determination of the arbitrator shall be final and binding
on the parties and there shall be no appeal on any ground, including, for greater
certainty, on the ground of alleged errors of Law;
	 
	 	(d)	 	despite Article M-10 of the Commercial Arbitration Rules, the arbitrator
shall not, without the written consent of all parties to the arbitration, retain any
expert;
	 
	 	(e)	 	all costs and expenses of arbitration shall be split equally between the
parties hereto; and
	 
	 	(f)	 	all matters in relation to the arbitration shall be kept confidential to
the full extent permitted by Law, and no individual shall be appointed as an
arbitrator unless he or she agrees in writing to be bound by this dispute resolution
provision.

7.2 Proposed Adjustment Disputes. Section 7.1 shall not apply in respect of any Proposed
Adjustment, which dispute is governed by Section 2.11, or any Tax Dispute, which shall be governed
by Section 6.1.

ARTICLE 8

INDEMNIFICATION

8.1 Indemnification by Woodbridge and Woodbridge Parent.

	 	(a)	 	Woodbridge and Woodbridge Parent hereby agree jointly and severally, to
indemnify and to hold ACSC, AbitibiBowater and the Partnership harmless from and
against any and all Loss (other than Losses indemnified pursuant to Section 6.4)
suffered or incurred by ACSC, AbitibiBowater or the Partnership (and following the
Closing, ANI) in connection with or arising from:

	 	(i)	 	any breach by Woodbridge or Woodbridge Parent of any of its
covenants or agreements in this Agreement or any failure by Woodbridge or
Woodbridge Parent to perform any of its obligations in this Agreement; and

	 	(ii)	 	any breach of any warranty or the inaccuracy of any
representation of Woodbridge or Woodbridge Parent contained in this Agreement.

	 	(b)	 	The indemnifications provided for in Section 8.1(a)(i) shall continue
indefinitely. The indemnifications provided for in Section 8.1(a)(ii) shall
terminate on the date that is eighteen (18) months following the Closing Date 

 

 - 36 - 

	 	 	 	(and
no claims may be made by ACSC, AbitibiBowater or the Partnership (and following the
Closing, ANI) under Section 8.1(a)(ii) thereafter), except that the indemnification
by Woodbridge and Woodbridge Parent shall continue indefinitely as to the
representations and warranties contained in Sections 5.3(h), 5.3(i), 5.3(j), 5.3(n),
5.3(o), 5.3(p), 5.3(q), 5.3(r), 5.3(s), 5.3(t), 5.3(u), 5.3(v), 5.3(w), 5.3(x) and
5.3(y).

8.2 Indemnification by ACSC and AbitibiBowater.

	 	(a)	 	ACSC and AbitbiBowater hereby agree to indemnify and to hold Woodbridge
and Woodbridge Parent harmless from and against any and all Loss suffered or
incurred by Woodbridge or Woodbridge Parent in connection with or arising from:

	 	(i)	 	any breach by ACSC, the Partnership or AbitibiBowater of any of
its covenants or agreements in this Agreement or any failure by ACSC, the
Partnership or AbitibiBowater to perform any of its obligations in this
Agreement; and

	 	(ii)	 	any breach of any warranty or the inaccuracy of any
representation of ACSC or AbitibiBowater contained or referred to in this
Agreement.

	 	(b)	 	The indemnifications provided for in Section 8.1(a)(i) shall continue
indefinitely. The indemnifications provided for in Section 8.2(a)(ii) shall
terminate on the date that is eighteen (18) months following the Closing Date (and
no claims may be made by Woodbridge or Woodbridge Parent under Section 8.2(a)(ii)
thereafter).

8.3 Indemnification by ACSC and AbitibiBowater of Woodbridge Indemnitees. ACSC and
AbitibiBowater hereby agree jointly and severally, at any time or times after the Closing Date, to
indemnify Woodbridge, Woodbridge Parent and all direct and indirect subsidiaries of Woodbridge
Parent including Thomson Reuters Corporation and TNI, and each present and former director,
officer, agent, servant, and employee of each such entity, including any persons who have
maintained a position on the management committee of the Partnership (collectively, the “Woodbridge
Indemnitees”), harmless from and against:

	 	(a)	 	52.5% of any and all Environmental Damages incurred by the Woodbridge
Indemnitees that arise from or pertain to Conditions or Operations known to the
parties as listed on Schedule I hereto; and
	 
	 	(b)	 	100% of

	 	(i)	 	any and all Environmental Damages incurred by the Woodbridge
Indemnitees arising from or pertaining to Conditions or Operations that are not
covered under clause (a); and

 

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	 	(ii)	 	any and all Losses and Liabilities incurred by the Woodbridge
Indemnitees arising directly or indirectly by reason of or as a consequence of
the Operations of the Partnership.

	 	(c)	 	The indemnifications provided in Section 8.3(a) and 8.3(b) shall continue
indefinitely.

8.4 Indemnification by Woodbridge and Woodbridge Parent of Abitibi Indemnitees.

	 	(a)	 	Woodbridge and Woodbridge Parent hereby agree jointly and severally, at
any time or times after the Closing Date, to indemnify ACSC, AbitibiBowater, the
Partnership, ANI and all direct and indirect subsidiaries of AbitibiBowater, and
each present and former director, officer, agent, servant, employee of each such
entity, including any persons who have maintained a position on the management
committee of the Partnership (collectively, the “Abitibi Indemnitees”), harmless
from and against 47.5% of any and all Environmental Damages incurred by the Abitibi
Indemnitees that that arise from or pertain to Conditions or Operations known to the
parties as listed on Schedule I hereto.
	 
	 	(b)	 	The indemnifications provided in Section 8.4(a) shall continue
indefinitely.

8.5 Resolution of Indemnification Claims. All claims for indemnification under this
Article 8 will be asserted and resolved as follows:

	 	(a)	 	The party claiming indemnification (the “Indemnified Party”) in respect
of, arising out of or involving a claim or demand made by a third party against the
Indemnified Party (a “Third Party Claim”) shall deliver notice (a “Claim Notice”)
to the other party (the “Indemnifying Party”) within twenty (20) days after
receipt by such Indemnified Party of written notice of the Third Party Claim;
provided, however, that failure to give such Claim Notice shall not affect the
indemnification provided hereunder except to the extent the Indemnifying Party
shall have been actually prejudiced as a result of such failure.

	 	(b)	 	If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party shall have the right to assume the defense of such Third Party
Claim with counsel selected by the Indemnifying Party. Should the Indemnifying Party
so assume the defense of a Third Party Claim, except as provided in this Section
8.5(b), the Indemnifying Party shall not be liable to the Indemnified Party for
legal expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof. If the Indemnifying Party assumes such defense, the Indemnified
Party shall have the right to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by the Indemnifying
Party. If (i) the Indemnifying Party shall not assume the defense of a Third Party
Claim within thirty (30) days of any Claim Notice, or (ii) legal counsel for the
Indemnified Party notifies the Indemnifying Party that there are or may be legal
defenses available to the Indemnified Party 

 

 - 38 - 

	 	 	 	that are different from or additional to
those available to the Indemnifying Party, that, if the Indemnified Party and the
Indemnifying Party were to be represented by the same counsel, would constitute a
conflict of interest for such counsel or prejudice prosecution of the defenses
available to such Indemnified Party, or (iii) if the Indemnifying Party shall assume
the defense of a Third Party Claim and fail to prosecute such defense with
reasonable diligence following notice of such failure by the Indemnified Party, then
in each such case the Indemnified Party, by notice to the Indemnifying Party, may
employ its own counsel and the Indemnifying Party shall be liable for the reasonable
fees, charges and disbursements of one counsel employed by the Indemnified Party and
the Indemnified Party shall be promptly reimbursed for any such fees, charges and
disbursements, as and when incurred. Whether the Indemnifying Party or the
Indemnified Party controls the defense of any Third Party Claim, the parties shall
cooperate in the defense thereof. Such cooperation shall include the retention and
provision to the counsel of the controlling party of records and information that
are reasonably relevant to such Third Party Claim, and making employees available on
a mutually convenient basis to provide additional information and explanation of any
material provided hereunder. The Indemnifying Party shall have the right to settle,
compromise or discharge a Third Party Claim (other than any such Third Party Claim
in which criminal conduct is alleged) without the Indemnified Party’s consent if
such settlement, compromise or discharge (i) constitutes a complete and
unconditional discharge and release of the Indemnified Party (and, if Woodbridge is
the Indemnifying Party, of ANI and the Partnership), and (ii) provides for no relief
other than the payment of monetary damages and such monetary damages are paid in
full by
the Indemnifying Party. No Third Party Claim may be settled by the Indemnified
Party without the written consent of the Indemnifying Party.

	 	(c)	 	If any Indemnified Party should have a claim under Article 8 against any
Indemnifying Party that does not involve a Third Party Claim, the Indemnified Party
shall deliver notice (an “Indemnity Notice”) within thirty (30) days after an
Indemnified Party first obtains knowledge of any claim that the Indemnified Party
has determined has given or could reasonably be expected to give rise to a right of
indemnification under this Agreement describing in reasonable detail the facts
giving rise to any claim for indemnification hereunder and shall include in such
Indemnity Notice (if then known) the amount or the method of computation of the
amount of the Loss relating to such claim, and a reference to the provision of this
Agreement upon which such claim is based. The failure by any Indemnified Party to
give the Indemnity Notice shall not impair such party’s rights hereunder except to
the extent that an Indemnifying Party shall have been actually prejudiced as a
result of such failure. If the Indemnifying Party notifies the Indemnified Party
that it does not dispute the claim described in such Indemnity Notice, the Loss in
the amount specified in the Indemnity Notice will be conclusively deemed a liability
of the Indemnifying Party under Article 8 and the Indemnifying Party shall pay such
amount to the Indemnified 

 

 - 39 - 

	 	 	 	Party on demand. If the Indemnifying Party disputes its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party will proceed in good faith to negotiate a resolution of such dispute, and if
not resolved through negotiations within thirty (30) days of the Indemnity Notice,
such dispute shall be resolved in accordance with Article 7 hereof.

8.6 Indemnification for Tax Contests. If there shall be any conflicts between the
provisions of this Article 8 and Article 6, the provisions of Article 6 shall control with respect
to Tax contests.

8.7 Limitations on Liability. Except for remedies that cannot be waived as a matter of law
and injunctive or provisional relief, from and after the Closing, none of the parties hereto shall
be liable or responsible in any manner whatsoever to any other party, whether for indemnification
or otherwise, except for the indemnity obligations expressly provided in this Agreement, which
provide the exclusive remedies and causes of action of the parties hereto with respect to any
matter arising out of or in connection with this Agreement.

8.8 Indemnification Payment. ACSC and the Partnership, on the one hand, and Woodbridge, on
the other hand, agree that for purposes of computing the amount of any indemnification payment
under Article 6 or this Article 8, any such indemnification payment shall be treated as an
adjustment to the Purchase Price for all Tax purposes.

8.9 To the extent ACSC, AbitibiBowater, the Partnership or any other Abitibi Indemnitee shall be
entitled to indemnification pursuant to this Article 8 and payment in respect of such
indemnification is not made within five (5) Business Days of written notice thereof, ACSC shall
have the right, at its election (in its sole and absolute discretion) to offset all or any portion
of the amount of such indemnification against the principal or interest payable on the Secured
Promissory Note pursuant to Section 2.2(b), payable by the Partnership as of or following such
date.

ARTICLE 9

GENERAL

9.1 Assignment. No party shall assign this Agreement or any of its rights and benefits
hereunder without the written consent of all other parties.

9.2 Notices. Any notice or other communication (a “Notice”) required or permitted to be
given or made hereunder shall be in writing and shall be well and sufficiently given or made if
hand delivered (including by commercial courier) during normal business hours on a Business Day and
left with a receptionist or other responsible employee of the relevant party at the applicable
address set forth below, sent by facsimile transmission that produces a paper record (a
“Transmission”), charges prepaid and confirmed by prepaid first class mail.

 

 - 40 - 

	 	 	 

	In the case of a Notice to Woodbridge, addressed to it at:
	 
	 	 
	 

	 	Woodbridge International Holdings Limited
	 

	 	65 Queen Street West
	 

	 	Suite 2400 
	 

	 	Toronto, Ontario
	 

	 	M5H 2M8 
	 
	 

	 	Attention: Gregory J. Dart
	 
	 	 
	 

	 	Facsimile No.:                    416.365.9293 
	 
	 	 
	In the case of a Notice to Woodbridge Parent, addressed to it at:
	 
	 

	 	The Woodbridge Company Limited
	 

	 	65 Queen Street West
	 

	 	Suite 2400 
	 

	 	Toronto, Ontario
	 

	 	M5H 2M8 
	 
	 

	 	Attention: Gregory J. Dart
	 
	 	 
	 

	 	Facsimile No.:                    416.365.9293 
	 
	 	 
	With a copy of any Notice sent to Woodbridge or Woodbridge Parent to:
	 
	 	 
	 

	 	Torys LLP
	 

	 	79 Wellington Street West
	 

	 	Suite 3000, Box 270 TD Centre
	 

	 	Toronto, Ontario M5K 1N2 
	 
	 	 
	 

	 	Attention: Michael J. Siltala
	 
	 	 
	 

	 	Facsimile No.:                    416.865.7380 

 

 - 41 - 

	 	 	 

	In the case of a Notice to ACSC, addressed to it at:
	 
	 

	 	Abitibi Consolidated Sales Corporation
	 

	 	1155 Metcalfe Street, Suite 800 
	 

	 	Montreal, Quebec
	 

	 	H3B 5H2 
	 
	 	 
	 

	 	Attention: Executive Vice President Operations and Sales
	 
	 	 
	 

	 	Facsimile No.:                    514.394.2241 
	 
	 	 
	In the case of a Notice to AbitibiBowater, addressed to it at:
	 
	 

	 	AbitibiBowater Inc.
	 

	 	1155 Metcalfe Street, Suite 800 
	 

	 	Montreal, Quebec
	 

	 	H3B 5H2 
	 
	 	 
	 

	 	Attention: Executive Vice President Operations and Sales
	 
	 	 
	 

	 	Facsimile No.:                    514.394.2241 
	 
	 	 
	With a copy of any Notice sent to ACSC, AbitibiBowater, the Partnership or, following the Closing,
ANI to:
	 
	 	 
	 

	 	AbitibiBowater Inc.
	 

	 	1155 Metcalfe Street, Suite 800 
	 

	 	Montreal, Quebec
	 

	 	H3B 5H2 
	 

	 	Attention: Vice President Legal Affairs
	 
	 	 
	 

	 	Facsimile No.:                    514.394.3644 
	 
	 	 
	 

	 	and to
	 
	 	 
	 

	 	Paul, Weiss, Rifkind, Wharton & Garrison LLP
	 

	 	1285 Avenue of the Americas
	 

	 	New York, NY 10019-6064 
	 

	 	Attention: Ariel J. Deckelbaum
	 
	 	 
	 

	 	Facsimile No.:                     212.757.3990 

 

 - 42 - 

	 	 	 

	In the case of a Notice to the Partnership, addressed to it at:
	 
	 

	 	Augusta Newsprint Company
	 

	 	c/o AbitibiBowater
	 

	 	1155 Metcalfe Street, Suite 800 
	 

	 	Montreal, Quebec
	 

	 	H3B5H2 
	 
	 	 
	 

	 	Attention: Executive Vice President Operations and Sales
	 
	 	 
	 

	 	Facsimile No.:                    514.394.3644 
	 
	 	 
	In the case of any pre-Closing Notice to Augusta Newsprint Inc., addressed to it at:
	 
	 

	 	Woodbridge International Holdings Limited
	 

	 	65 Queen Street West
	 

	 	Suite 2400 
	 

	 	Toronto, Ontario
	 

	 	M5H 2M8 
	 
	 	 
	 

	 	Attention: Gregory J. Dart
	 
	 	 
	 

	 	Facsimile No.:                    416.365.9293 

Any Notice given or made in accordance with this Section shall be deemed to have been given or made
and to have been received:

	 	(i)	 	on the day it was delivered, if delivered as aforesaid; or

	 	(ii)	 	on the day of sending, if sent by Transmission during normal
business hours of the addressee on a Business Day and, if not, then on the
first Business Day after the sending thereof.

Any party may from time to time change its address for Notice by giving notice to each other party
in accordance with the provisions of this Section.

9.3 Governing Law. This Agreement shall be governed by, and interpreted and enforced in
accordance with, the Laws in force in the State of New York (excluding any conflict of laws rule or
principle which might refer such questions to the Laws of another jurisdiction).

9.4 Time of Performance. If anything is required to be done or any action is required to
be taken pursuant to the Agreement on or by a specified date which is not a Business Day, then such
action shall be valid if taken on or by the next succeeding Business Day.

9.5 Entire Agreement. This Agreement, the Settlement Order, the Secured Promissory Note
and all Schedules and Exhibits hereto and all related documents constitute the entire agreement
between the parties pertaining to the subject matter hereof and supersede all prior agreements,
negotiations, discussions and understandings, written or oral, between the parties.

 

 - 43 - 

9.6 Amendment. This Agreement may be amended, modified or supplemented only by a written
agreement signed by each of the parties hereto.

9.7 Time of the Essence. Time shall be of the essence of this Agreement and each of its
provisions.

9.8 Waiver. Any waiver of, or consent to depart from, the requirements of any provision of
this Agreement shall be effective only if it is in writing and signed by the party giving it, and
only in the specific instance and for the specific purpose for which it has been given. No failure
on the part of any party to exercise, and no delay in exercising, any right under this Agreement
shall operate as a waiver of such right. No exercise or partial exercise of any such right shall
preclude any other or further exercise of such right or the exercise of any other right.

9.9 Further Assurances. Each party hereto shall do all such acts and shall execute and
deliver all such further agreements, documents, conveyances, deeds, assignments, transfers,
instruments and the like, and shall cause the doing of all such acts and the execution and delivery
of all such further items as are within its power and as any other party may in writing at any time
and from time to time reasonably request, in order to give full effect to the provisions and intent
of this Agreement.

9.10 Costs and Expenses. Each party shall pay all costs and expenses incurred by it in
connection with entering into this Agreement and completing the transactions provided for herein;
provided that the costs, fees and expenses charged or paid in connection with HSR filings in
connection with the purchase of the Purchase Stock and the completion of such transaction shall be
paid in equal portions by ACSC and Woodbridge.

9.11 Currency. Unless specified otherwise, all statements of or references to dollar
amounts in this Agreement are to lawful money of the United States.

9.12 Confidentiality. No party shall make any public statement or issue any press release
concerning or otherwise disclose the transactions contemplated by this Agreement except as may be
necessary to comply with the requirements of all applicable Laws and the requirements of the
Bankruptcy Court in connection with the Bankruptcy Proceedings. If any such public statement or
release is so required, to the extent practicable, the party making such disclosure shall consult
the other party prior to making such statement or release and the parties shall use reasonable
efforts, acting in good faith, to agree upon a text for such statement or release which is
satisfactory to both parties provided that, if such consultation is not practicable, such first
party shall be entitled to finally determine the
timing and content of such disclosure, but shall use reasonable efforts to cause such disclosure to
be redacted to the extent requested by the other.

9.13 Counterparts. This Agreement may be executed in counterparts. Each executed
counterpart shall be deemed to be an original and all counterparts taken together shall constitute
one and the same agreement. Delivery of an executed counterpart of a signature page to this
Agreement by facsimile, pdf or other electronic means shall be effective as delivery of a manually
executed counterpart of this Agreement.

 

 - 44 - 

9.14 Sections and Headings. The division of this Agreement into articles, sections and
clauses or other divisions and the insertions of headings and a table of contents are for
convenience of reference only and shall not affect the construction or interpretation of this
Agreement.

9.15 Successors and Assigns. Without limiting Section 9.1, this Agreement shall be binding
upon and enure to the benefit of the parties hereto, their respective successors by operation of
law (including any successor by reason of amalgamation or statutory arrangement of either party)
and permitted assigns, and shall be binding upon any chapter 7 or chapter 11 trustee or receiver
appointed in the Bankruptcy Proceedings or in any subsequent case under the Bankruptcy Code or any
similar receiver in the CCAA Proceedings or subsequent proceedings under the CCAA or the Canadian
Bankruptcy and Insolvency Act.

9.16 Availability of Equitable Relief; Specific Performance. The Parties agree that
irreparable damage would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. Accordingly, subject
to the limitations set forth in this Section 9.16, each of the Parties shall, without the posting
of bond or other security (any requirement for which the Parties hereby waive), be entitled to
equitable relief to prevent or remedy breaches of this Agreement, without the proof of actual
damages, including in the form of an injunction or injunctions or orders for specific performance
in respect of such breaches. Each Party agrees to waive any requirement for the security or
posting of any bond in connection with any such equitable remedy. Each Party further agrees that
the only permitted objections that it may raise in response to any action for such equitable relief
is that it contests the existence of a breach or threatened breach of the provisions of this
Agreement and no Party will allege, and each Party hereby waives the defense or counterclaim, that
there is an adequate remedy at Law except as expressly provided in this Section 9.16. For the
avoidance of doubt, the Parties agree that specific performance shall not constitute the sole and
exclusive remedy of the Parties, whether at Law or equity, for any and all breaches after Closing
of the terms and conditions of this Agreement. In no event shall any Party be liable for special,
exemplary, consequential or punitive damages.

[Remainder of page intentionally left blank]

 

 - 45 - 

          IN WITNESS WHEREOF the parties hereto have duly signed and delivered this Agreement as of the
date first above written.

	 	 	 	 	 
	 	WOODBRIDGE INTERNATIONAL HOLDINGS LIMITED

 	 
	 	By:  	/s/ Gregory J. Dart
 	 
	 	 	Authorized Officer 	 
	 	 	 	 
	 
	 	THE WOODBRIDGE COMPANY LIMITED

 	 
	 	By:  	/s/ Gregory J. Dart
 	 
	 	 	Authorized Officer 	 
	 	 	 	 
	 
	 	ABITIBI CONSOLIDATED SALES CORPORATION

 	 
	 	By:  	/s/ Pierre Rougeau
 	 
	 	 	Name:  	Pierre Rougeau 	 
	 	 	Title:  	President 	 
	 
	 	ABITIBIBOWATER INC.

 	 
	 	By:  	/s/ Pierre Rougeau
 	 
	 	 	Name:  	Pierre Rougeau 	 
	 	 	Title:  	Executive Vice President, Operations and Sales 	 
	 

 

 - 46 - 

	 	 	 	 	 	 	 

	 	 	AUGUSTA NEWSPRINT COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	ABITIBI CONSOLIDATED SALES CORPORATION

its General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Pierre Rougeau
 

Name: Pierre Rougeau
	 	 
	 

	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 
	 	 	AUGUSTA NEWSPRINT INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Gregory J. Dart
 

Authorized Officer
	 	 

 

 

SCHEDULE A

FORM OF SECURED PROMISSORY NOTE

See Exhibit 4.4 of AbitibiBowater Inc.’s Form 10-K

for the fiscal year ended December 31, 2010.

 

 

SCHEDULE B

FORM OF WOODBRIDGE RELEASE

1.            For purposes hereof, the following terms have the respective definitions set forth below:

	 	a.	 	“Stock Purchase Agreement” means that certain Stock Purchase Agreement
by and among the Releasors, Woodbridge, Woodbridge Parent and Augusta Newsprint
Inc. made as of n, 2010 and/or any document entered into in connection
therewith.
	 
	 	b.	 	“Demands” means all Actions and Proceedings, causes of action, suits,
debts, losses, expenses, judgments, damages, obligations, Liabilities, dues,
accounts, bonds, covenants, Contracts, claims, contributions, indemnifications,
executions and demands whatsoever.
	 
	 	c.	 	“Releasees” means The Woodbridge Company Limited (“Woodbridge Parent”),
Woodbridge International Holdings Limited (“Woodbridge”), and all of the other
direct and indirect subsidiaries of Woodbridge Parent (collectively, the
“Corporations”), each present and former director, officer, agent, servant and
employee of the Corporations including, without limitation, any of such persons who
have maintained a position on the management committee of the Partnership, and each
of their respective successors, assigns, heirs, executors, estate trustees,
personal representatives and administrators, as applicable.
	 
	 	d.	 	“Releasors” means the undersigned companies, including for these
purposes their respective successors by operation of law.
	 
	 	e.	 	Terms capitalized herein but not defined herein shall have the
respective meanings set forth in the Stock Purchase Agreement.

2.            In consideration of the transactions contemplated by the Stock Purchase Agreement and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
each of the Releasors hereby acknowledges and agrees and unconditionally and irrevocably,
fully, finally and forever releases, waives, acquits and discharges each of the Releasees from
any and all Demands (or facts upon which such Demand could be premised) of any kind or
character that the Releasors ever had, now have or may hereafter have, and each of them,
whether, now known or unknown, suspected or unsuspected or claimed, in contract, at law or in
equity, against the Releasees, or any of them, for or by reason of, or in any way arising out
of any cause, matter or thing existing from the beginning of the world up to the date hereof
relating to, or arising directly or indirectly by reason of or as a consequence of, the
Operations of the Partnership.

3.            Notwithstanding anything provided for herein, this release shall not in any way limit or
restrict the rights of the Releasors (i) to make a claim against, or to require
indemnification by Woodbridge pursuant to and subject to the terms and conditions of the

 

 - 2 - 

Stock Purchase Agreement or any documents delivered in connection with the transactions
contemplated thereby or (ii) in connection with the Secured Promissory Note.

4.            Each Releasor hereby represents, warrants and covenants that (a) such Releasor has not
heretofore made or filed and will not make or file any allegations or any Action against any
of the Releasees in connection with, based upon or arising out of any claim released and
discharged pursuant to this AbitibiBowater Release, and (b) the undersigned cannot, have not
and will not assign to any Person any claim or rights including any claim (or part thereof)
released or discharged pursuant to this AbitibiBowater Release. Each Releasor hereby
acknowledges that the consent and waiver made by such Releasor pursuant to this AbitibiBowater
Release is voluntary, that it has been carefully considered and that such Releasor has
consulted with counsel or has been advised it should do so in connection therewith.

[Signature Page Follows]

 

 - 2 - 

          DATED:

	 	 	 	 	 
	 	ABITIBI CONSOLIDATED SALES CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title 	 
	 
	 	ABITIBIBOWATER INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	AUGUSTA NEWSPRINT INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	AUGUSTA NEWSPRINT COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

SCHEDULE C

FORM OF ABITIBIBOWATER RELEASE

1.            For purposes hereof, the following terms have the respective definitions set forth below:

	 	a.	 	“Stock Purchase Agreement” means that certain Stock Purchase Agreement
by and among the Releasors, ACSC, AbitibiBowater, Augusta Newsprint Company and ANI
made as of n, 2010 and/or any document entered into in connection therewith.
	 
	 	b.	 	“Demands” means all Actions and Proceedings, causes of action, suits,
debts, losses, expenses, judgments, damages, obligations, Liabilities, dues,
accounts, bonds, covenants, Contracts, claims, contributions, indemnifications,
executions and demands whatsoever.
	 
	 	c.	 	“Releasees” means AbitibiBowater Inc. (“AbitibiBowater”), Abitibi
Consolidated Sales Corporation (“ACSC”), Augusta Newsprint Inc. (“ANI”) and all of
the other direct and indirect subsidiaries of AbitibiBowater (collectively, the
“Corporations”) the Partnership and each present and former director, officer,
agent, servant and employee of the Corporations or the Partnership including,
without limitation, any of such persons who have maintained a position on the
management committee of the Partnership, and each of their respective successors,
assigns, heirs, executors, estate trustees, personal representatives and
administrators, as applicable.
	 
	 	d.	 	“Releasors” means the undersigned companies, including for these
purposes their respective successors by operation of law.
	 
	 	e.	 	Terms capitalized herein but not defined herein shall have the
respective meanings set forth in the Stock Purchase Agreement.

2.            In consideration of the transactions contemplated by the Stock Purchase Agreement and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
each of the Releasors hereby acknowledges and agrees and unconditionally and irrevocably,
fully, finally and forever releases, waives, acquits and discharges each of the Releasees from
any and all Demands (or facts upon which such Demand could be premised) of any kind or
character that the Releasors ever had, now have or may hereafter have, and each of them,
whether, now known or unknown, suspected or unsuspected or claimed, in contract, at law or in
equity, against the Releasees, or any of them, for or by reason of, or in any way arising out
of any cause, matter or thing existing from the beginning of the world up to the date hereof
relating to, or arising directly or indirectly by reason of or as a consequence of, the
Operations of the Partnership.

3.            Notwithstanding anything provided for herein, this release shall not in any way limit or
restrict the rights of the Releasors (i) to make a claim against, or require

 

-2-

indemnification by, either AbitibiBowater and ACSC pursuant to and subject to the terms and
conditions of the Stock Purchase Agreement or any documents delivered in connection with the
transactions contemplated thereby; (ii) in connection with the Secured Promissory Note; (iii) in
connection with the Administrative Claim; (iv) in connection with the Bankruptcy Claim; or (v)
in connection with the Woodbridge Claims.

4.            Each Releasor hereby represents, warrants and covenants that (a) such Releasor has not
heretofore made or filed and will not make or file any allegations or any Action against any
of the Releasees in connection with, based upon or arising out of any claim released and
discharged pursuant to this AbitibiBowater Release, and (b) the undersigned cannot, have not
and will not assign to any Person any claim or rights including any claim (or part thereof)
released or discharged pursuant to this AbitibiBowater Release. Each Releasor hereby
acknowledges that the consent and waiver made by such Releasor pursuant to this AbitibiBowater
Release is voluntary, that it has been carefully considered and that such Releasor has
consulted with counsel or has been advised it should do so in connection therewith.

[Signature Page Follows]

 

-2-

          DATED:

	 	 	 	 	 
	 	WOODBRIDGE INTERNATIONAL HOLDINGS LIMITED

 	 
	 	By:  	 	 
	 	 	 	 
	 	

THE WOODBRIDGE COMPANY LIMITED

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 
	 

 

 

SCHEDULE D

CLOSING DELIVERIES

A. Woodbridge Closing Deliveries

	1.	 	The Purchase Stock, together with a stock power with respect to the Purchase Stock executed
in blank;
	 
	2.	 	certificates from the appropriate authorities, dated not more than ten (10) Business Days
prior to the Closing Date, to the effect that each of Woodbridge, Woodbridge Parent and ANI
each is in good standing in their jurisdiction of incorporation;
	 
	3.	 	a certificate dated not more than ten (10) Business Days prior to the Closing Date from the
Secretary of State of the State of Georgia to the effect that ANI is duly qualified as a
foreign corporation and in good standing in Georgia;
	 
	4.	 	the AbitibiBowater Release;
	 
	5.	 	a certificate of a Senior Officer of each of Woodbridge and Woodbridge Parent to the effect
that all of the representations and warranties made by each of Woodbridge and Woodbridge
Parent are true and correct in all respects and that each of Woodbridge and Woodbridge Parent
has complied with all covenants required to be complied with by it prior to Closing in all
material respects;
	 
	6.	 	at least two (2) Business Days prior to the Closing Date, the notice contemplated by Section
2.3;
	 
	7.	 	the resignations of all directors and officers of ANI and releases from such individuals from
all claims ANI, as contemplated by Section 3.5 of the Agreement;
	 
	8.	 	the Assignment and Assumption of Bankruptcy Claims Agreement;
	 
	9.	 	the Assignment and Assumption of Administrative Claim Agreement; and
	 
	10.	 	all other documents reasonably required to be delivered by Woodbridge to ACSC in connection
with the purchase and sale of the Purchase Stock.

B(I). Partnership, ACSC and AbitibiBowater Closing Deliveries

	1.	 	In immediately available funds, an amount equal to the lesser of (i) fifteen million dollars
($15,000,000) and (ii) 52.5% of the Estimated Partnership Cash;
	 
	2.	 	the Secured Promissory Note;
	 
	3.	 	at least five (5) Business Days prior to the Closing Date, the Estimated Closing Date Cash
Statement;

 

-2-

	4.	 	a certificate dated not more than ten (10) Business Days prior to the Closing Date from the
appropriate authorities, to the effect that each of ACSC and AbitibiBowater is in good
standing in their jurisdictions of incorporation;
	 
	5.	 	the Woodbridge Release;
	 
	6.	 	a certificate of a Senior Officer of each of the Partnership, ACSC and AbitibiBowater to the
effect that all of the representations and warranties made by each of the Partnership, ACSC
and AbitibiBowater are true and correct in all respects and that each of the Partnership, ACSC
and AbitibiBowater has complied with all covenants required to be complied with by it prior to
Closing in all material respects;
	 
	7.	 	a certified copy of the Settlement Order;
	 
	8.	 	the Assignment and Assumption of Bankruptcy Claims Agreement;
	 
	9.	 	the Assignment and Assumption of Administrative Claim Agreement; and
	 
	10.	 	all other documents reasonably required to be delivered by the Partnership and ACSC to
Woodbridge in connection with the purchase and sale of the Purchase Stock.

B(II). Security Documents

	1.	 	Form UCC-1 financing statements naming ACSC and ANI as debtor and Woodbridge as secured party
in proper form for filing in the appropriate filing office.
	 
	2.	 	Deed of Trust, dated as of the Closing Date, with respect to all of the real property and
fixtures of the Partnership located at 2434 Doug Barnard Parkway, Augusta, Georgia 30906,
including an assignment of leases and rents, in form and substance reasonably satisfactory to
Noteholder.
	 
	3.	 	Form UCC-1 financing statements naming the Partnership as debtor and Woodbridge as secured
party in proper form for filing in the appropriate filing offices.
	 
	4.	 	Deposit account control agreements with respect to the Partnership’s accounts, other than
Excluded Accounts.

 

 

SCHEDULE E

FORM OF SETTLEMENT MOTION

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

	 	 	 	 	 	 	 

	 

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	In re:

	 	 	)	 	 	Chapter 11
	 
	 

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	ABITIBIBOWATER INC., et al.,1

	 	 	)	 	 	Case No. 09-11296 (KJC)
	 
	 	 	 	 	 	 
	 

	 	 	)	 	 	Jointly Administered
	 
	Debtors.

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	)	 	 	Hearing Date: December 22, 2010 at 1:00 p.m. (ET)
Objection Deadline: December 15, 2010 at 4:00 p.m.
	 
	 	 	 	 	 	(ET)
	 

	 	 	)	 	 	 

DEBTORS’ MOTION FOR AN ORDER PURSUANT TO SECTIONS 105

AND 363(b) OF THE BANKRUPTCY CODE AND FEDERAL RULE OF

BANKRUPTCY PROCEDURE 9019: (I) APPROVING A SETTLEMENT

AND COMPROMISE BETWEEN WOODBRIDGE INTERNATIONAL HOLDINGS

LIMITED, THE WOODBRIDGE COMPANY LIMITED, ABITIBI CONSOLIDATED

SALES CORPORATION, ABITIBIBOWATER INC., AUGUSTA NEWSPRINT

 

			
	1	 	The Debtors in these cases, along with the
last four digits of each Debtor’s federal tax identification number, are:
AbitibiBowater Inc. (6415), AbitibiBowater US Holding 1 Corp. (N/A),
AbitibiBowater US Holding LLC (N/A), AbitibiBowater Canada Inc. (N/A),
Abitibi-Consolidated Alabama Corporation (4396), Abitibi-Consolidated
Corporation (9050), Abitibi-Consolidated Finance LP (4528), Abitibi
Consolidated Sales Corporation (7144), Alabama River Newsprint Company (7247),
Augusta Woodlands, LLC (9050), Bowater Alabama LLC (7106), Bowater America Inc.
(8645), Bowater Canada Finance Corporation (N/A), Bowater Canadian Forest
Products Inc. (N/A), Bowater Canadian Holdings Incorporated (N/A), Bowater
Canadian Limited (N/A), Bowater Finance Company Inc. (1715), Bowater Finance II
LLC (7886), Bowater Incorporated (1803), Bowater LaHave Corporation (N/A),
Bowater Maritimes Inc. (N/A), Bowater Newsprint South LLC (1947), Bowater
Newsprint South Operations LLC (0168), Bowater Nuway Inc. (8073), Bowater Nuway
Mid-States Inc. (8290), Bowater South American Holdings Incorporated (N/A),
Bowater Ventures Inc. (8343), Catawba Property Holdings, LLC (N/A), Coosa Pines
Golf Club Holdings LLC (8702), Donohue Corp. (9051), Lake Superior Forest
Products Inc. (9305) and Tenex Data Inc. (5913). The Debtors’ corporate
headquarters are located at, and the mailing address for each Debtor is, 1155
Metcalfe Street, Suite 800, Montreal, Quebec H3B 5H2, Canada.

 

 

COMPANY AND AUGUSTA NEWSPRINT INC.; (II) AUTHORIZING ABITIBI

CONSOLIDATED SALES CORPORATION

TO PURCHASE AN INTEREST IN THE AUGUSTA NEWSPRINT

COMPANY; AND (III) GRANTING RELATED RELIEF

          AbitibiBowater Inc. (“AbitibiBowater”) and its affiliated debtors and
debtors-in-possession in the above-captioned cases (each a “Debtor,” and collectively, the
“Debtors”), by and through their undersigned counsel, hereby move (the “Motion”)
this Court, pursuant to sections 105 and 363(b) of title 11 of the United States Code (the
“Bankruptcy Code”) and Rule 9019 of the Federal Rules of Bankruptcy Procedure (the
“Bankruptcy Rules”), for entry of an order substantially in the form attached hereto as
Exhibit A (the “Order”): (i) authorizing the Debtors to enter into a settlement
and compromise with Woodbridge International Holdings Limited (“WIHL”), The Woodbridge
Company Limited (“TWCL”), Augusta Newsprint Company (“Augusta”) and Augusta
Newsprint Inc. (“ANI” and along with WIHL, TWCL, Augusta, AbitibiBowater, Abitibi
Consolidated Sales Corporation (“ACSC”), the “Parties”) with respect to various
disputes among the Parties; (ii) in furtherance of that settlement and compromise, authorizing ACSC
to purchase all of the outstanding shares of the common and preferred stock of ANI, which would
result in the transfer of ANI’s 47.5% interest in Augusta, pursuant to a certain stock purchase
agreement, substantially in the form attached hereto as Exhibit B (the “Stock Purchase
Agreement”), and to enter into a certain Note (defined below) for the partial payment of the
purchase price for such stock and granting of liens thereunder; and (iii) granting related relief.
In support of this Motion, the Debtors respectfully represent as follows:

JURISDICTION

          1. This Court has jurisdiction to hear this Motion under 28 U.S.C. §§ 157 and 1334. This is a
core proceeding pursuant to 28 U.S.C. § 157(b). Venue is proper pursuant to 28 U.S.C. §§ 1408 and
1409.

2

 

          2. The statutory predicates for the relief requested herein are sections 105(a) and 363(b) of
the Bankruptcy Code and Bankruptcy Rule 9019.

BACKGROUND

General Background

          3. AbitibiBowater (together with its subsidiaries and affiliates, the “Company”) is
incorporated in Delaware and headquartered in Montreal, Quebec. The Company is the world’s largest
producer of newsprint by capacity and one of the largest publicly traded pulp and paper
manufacturers worldwide. It produces an extensive range of commercial printing papers, market pulp
and wood products, serving customers in over 90 countries. The Company is also among the world’s
largest recyclers of newspapers and magazines, and has third-party certified 100% of its managed
woodlands to sustainable forest management standards. The Company owns and operates 19 pulp and
paper facilities and 24 wood products facilities located in the United States, Canada and South
Korea. Employing around 11,900 people, the Company realized sales of approximately $4.4
billion2 in 2009.

          4. The Company’s financial performance depends primarily on the market demand for its products
and the prices at which they can be sold. These products are globally traded commodities, and as
such, the balance between supply and demand drives their pricing and shipment levels. Supply and
demand, in turn, are affected by global economic conditions, changes in consumption and capacity,
the level of customer and producer inventories and fluctuations in currency exchange rates. The
recent downturn in the global economy has resulted in an unprecedented decline in demand for
newsprint, the Company’s primary product. In addition, substantial price competition and
volatility in the pulp and paper industry, along with

 

			
	2	 	All monetary figures are presented in U.S.
dollars unless specifically noted otherwise.

3

 

negative trends in advertising, electronic data transmission and storage and continued
expansion of the Internet, have exacerbated downward pressure on revenue. At the same time, the
global credit markets suffered a significant contraction, including the failure of some large
financial institutions, which has resulted in a severe decline in the credit markets and overall
availability of credit. These market disruptions, as well as the Company’s high debt levels and
the overall weakness in consumer demand, have adversely impacted the Company’s financial
performance and have necessitated the commencement of these Chapter 11 Cases and coordinated
Canadian filings.

          5. Specifically, on April 16, 2009 (the “Petition Date”), certain of the Debtors filed
a voluntary petition for relief under chapter 11 of the Bankruptcy Code (the “Chapter 11
Cases”).3 On April 17, 2009, certain of the Debtors (the “Cross-Border
Debtors”)4 and non-debtor subsidiaries of AbitibiBowater (the “CCAA Debtors”
and together with the Cross-Border Debtors, the “Canadian Debtors”)5 applied for
protection from their creditors under Canada’s Companies’ Creditors Arrangement Act, R.S.C. 1985,
c. C-36, as amended (the “CCAA”), in the Superior Court, Commercial Division, for the
Judicial District of Montreal, Canada (the “Canadian Court” and the filing, the
“Canadian Proceedings”). Two of the CCAA

 

			
	3	 	The SPV Debtors commenced their Chapter 11
Cases on December 22, 2009.
	 
	4	 	The Cross-Border Debtors are: Bowater Canada
Finance Corporation, Bowater Canadian Holdings Incorporated, AbitibiBowater
Canada Inc., Bowater Canadian Forest Products Inc., Bowater Maritimes Inc.,
Bowater LaHave Corporation and Bowater Canadian Limited.
	 
	5	 	The CCAA Debtors are: Bowater Mitis Inc.,
Bowater Guerette Inc., Bowater Couturier Inc., Alliance Forest Products (2001)
Inc., Bowater Belledune Sawmill Inc., St. Maurice River Drive Company, Bowater
Treated Wood Inc., Canexel Hardboard Inc., 9068-9050 Quebec Inc., Bowater
Canada Treasury Corporation, Bowater Canada Finance Limited Partnership,
Bowater Shelburne Corporation, 3231078 Nova Scotia Company, Bowater Pulp and
Paper Canada Holdings Limited Partnership, Abitibi-Consolidated Inc.,
Abitibi-Consolidated Company of Canada, Abitibi-Consolidated Nova Scotia
Incorporated, 32117925 Nova Scotia Company, Terra-Nova Explorations Ltd., The
Jonquiere Pulp Company, The International Bridge and Terminal Company, Scramble
Mining Limited, 9150-3383 Quebec Inc., Star Lake Hydro Partnership, Saguenay
Forest Products Inc., 3224112 Nova Scotia Limited, La Tuque Forest Products
Inc., Marketing Donohue Inc., Abitibi-Consolidated Canadian Office Products
Holdings Inc., 3834328 Canada Inc., 6169678 Canada Incorporated, 4042410 Canada
Inc., Donohue Recycling and 1508756 Ontario Inc.

4

 

Debtors — Abitibi-Consolidated Inc. (“ACI”) and Abitibi-Consolidated Company of
Canada (“ACCC” and together with ACI, the “Chapter 15 Debtors”) — thereafter filed
petitions for recognition under chapter 15 of the Bankruptcy Code (the “Chapter 15 Cases”)
in this Court seeking relief in support of the Canadian Proceedings. AbitibiBowater and certain of
the Debtors also filed for ancillary relief in Canada seeking relief in support of the Chapter 11
Cases in Canada under the Canadian equivalent of chapter 15, section 18.6 of the CCAA.6

          6. On April 28, 2009, the Office of the United States Trustee for the District of Delaware
appointed a statutory Creditors Committee of unsecured creditors (the “Creditors
Committee”) in these Chapter 11 Cases pursuant to section 1102 of the Bankruptcy Code.

          7. On August 2, 2010, the Debtors filed the Debtors’ Second Amended Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code (the “Plan”) as well as the
Disclosure Statement for Debtors’ Second Amended Joint Plan of Reorganization Under Chapter 11 of
the Bankruptcy Code (the “Disclosure Statement”).

          8. On August 3, 2010, the Court entered an order approving the Disclosure Statement and
scheduling a hearing to consider confirmation of the Plan for September 24, 2010 at 10:00 a.m.
(ET), which was continued for several dates thereafter (the “Confirmation Hearing”). On
November 22, 2010, the Court rendered an Opinion on Confirmation confirming the Plan and on
November 23, 2010, the Court entered its Finding of Facts, Conclusions of Law and Order Confirming
Debtors’ Second Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code (As
Amended). The Effective Date for the Plan has yet to occur.

 

			
	6	 	The Debtors who obtained section 18.6 relief
are: AbitibiBowater Inc., AbitibiBowater US Holding 1 Corp., Bowater Ventures
Inc., Bowater Incorporated, Bowater Nuway Inc., Bowater Nuway-Midstates, Inc.,
Catawba Property Holdings LLC, Bowater Finance Company Inc., Bowater South
American Holdings Incorporated, Bowater America Inc., Lake Superior Forest
Products Inc., Bowater Newsprint South LLC, Bowater Newsprint South Operations
LLC, Bowater Finance II, LLC, Bowater Alabama LLC and Coosa Pines Golf Club
Holdings LLC.

5

 

Augusta Newsprint Company

          9. Augusta is a partnership that owns and operates a newsprint mill in Augusta, Georgia.
AbitibiBowater’s indirect subsidiary, ACSC, and an unrelated third party, ANI, an indirect
subsidiary of TWCL (together with WIHL and Woodbridge International Holdings S.A.,
“Woodbridge”), own 52.5% and 47.5% of the partnership interests in Augusta, respectively.
ACSC manages the facility. Pursuant to the governing agreements, Augusta sells 100% of its product
to ACSC at arm’s length market-determined rates, but otherwise operates as an independent company
with its own employees and accounting systems. Augusta was created, and is governed, by that
certain partnership agreement dated as of August 17, 1981 (as amended on December 23, 1981, June
23, 1987, September 15, 1989, June 9, 1997, October 8, 1997, September 30, 1999, September 6, 2001
and July 1, 2004, the “Partnership Agreement”).

          10. On June 15, 2009, the Debtors moved to reject a certain call agreement (the “Call
Agreement”) in respect of Augusta. The Call Agreement obligated ACSC to either buy-out its
partner at a price well above market, or risk losing all of its equity in the partnership pursuant
to forced sale provisions in the Call Agreement.

          11. The Bankruptcy Court conducted a hearing on the rejection motion on September 11, 2009,
and on October 27, 2009, the Bankruptcy Court issued a decision authorizing the Debtors’ rejection
of the Call Agreement (the “Rejection Order”). On November 3, 2009, Woodbridge filed its
notice of appeal of the Bankruptcy Court’s order (the “Rejection Appeal”). The appeal is
currently pending in the District Court for Delaware. If the Bankruptcy Court’s judgment is not
upheld and a forced sale is consummated, the Debtors could lose their equity in Augusta.

6

 

          12. On March 9, 2010, Woodbridge filed a motion in the Bankruptcy Court to compel ACSC to
reject the Partnership Agreement (the “Augusta Partnership Motion”). If ACSC were forced
to reject the Partnership Agreement, the future of the Augusta mill would be uncertain, including
the possibility of a dissolution of the partnership. The Debtors filed an objection to the Augusta
Partnership Motion on April 9, 2010. The Augusta Partnership Motion is now pending before the
Bankruptcy Court.

The Stock Purchase Agreement

          13. The Debtors and Woodbridge have been in discussions to determine whether a consensual
resolution of the various issues surrounding the Partnership Agreement could be reached. The
Parties recently reached an agreement settling most of the outstanding disputes among them and, in
connection therewith, ACSC has agreed to purchase all of Woodbridge’s interest in Augusta. The
form of the Stock Purchase Agreement pursuant to which ACSC will purchase Woodbridge’s interest is
set forth as Exhibit B annexed hereto.7

          14. This Motion does not seek to affect in any way the claims of Woodbridge or any of their
affiliates, against the Debtors or the Canadian Debtors, arising from the rejection of the Call
Agreement and the guarantee dated as of September 6, 2001 by ACI in favor of each of WIHL and
Woodbridge International Holdings S.A. (all such claims, the “Woodbridge Claims”). For the
avoidance of doubt, the Woodbridge Claims, and all rights thereto and thereunder, are preserved.
The Woodbridge Claims will be addressed in the claims processes administered by the Bankruptcy
Court and the Canadian Court.

 

			
	7	 	The descriptions of the Stock Purchase
Agreement in this Motion are for summary purposes only and shall in no way
operate to alter, modify, or contradict the terms of the actual Stock Purchase
Agreement. Unless otherwise defined herein, all capitalized terms shall have
the meanings ascribed to them in the Stock Purchase Agreement.

7

 

          15. Through the Stock Purchase Agreement, Woodbridge has agreed to sell to ACSC its common and
preferred stock in ANI, which holds a 47.5% interest in Augusta. In consideration for the sale,
among other things, ACSC will pay an amount in cash equal to the lesser of (i) $15,000,000 and (ii)
52.5% of the Partnership Cash (as defined in the Stock Purchase Agreement), and Augusta will issue
a secured first-priority note (the “Note”) in favor of WIHL in the principal amount of $90
million plus the excess, if any, of $15,000,000 over 52.5% of the Partnership Cash. The Note will
have a maturity date occurring on the fourth anniversary of the issue date of the Note, subject to
extension in certain circumstances as set forth in the Note. The Note will accrue interest at (i)
a rate of 8% per annum so long as the outstanding Principal Amount (as defined in the Note) on such
day is equal to or greater than $60,000,000, (ii) a rate of 6.5% per annum so long as the
outstanding Principal Amount on such day is less than $60,000,000 and equal to or greater than
$30,000,000, and (iii) a rate of 5.0% per annum so long as the outstanding Principal Amount on such
day is less than $30,000,000.

          16. To induce WIHL to enter into the Stock Purchase Agreement, the Note will be secured as
follows: (i) ACSC has agreed to grant a continuing Lien on its partnership interest in Augusta and
all rights to payment arising therefrom, including but not limited to, distributions and profits,
all of its rights in the Partnership Agreement or other governing documents and proceeds of the
foregoing, (ii) ANI has agreed to grant a continuing Lien on its partnership interest in Augusta,
all rights to payment arising therefrom, including but not limited to, distributions and profits,
all of its rights in the Partnership Agreement or other governing documents, and proceedings of the
foregoing, and (iii) Augusta has agreed to grant a continuing Lien on all of its personal and real
property, whether now owned or hereafter acquired.

8

 

          17. In addition to the cash and Note, the Purchase Price for the sale of ANI’s interest will
also include the assignment to Woodbridge of 47.5% of Augusta’s rights, title and interest to (i)
certain Bankruptcy Claims against AbitibiBowater and certain of the Debtors in the aggregate amount
of $37,575,503.04, and (ii) an Administrative Claim against ACSC in the amount of $9,246,580, all
of which are set forth in the Stock Purchase Agreement and are Allowed Claims (as defined in the
Plan) in the Chapter 11 Cases. Finally, the parties have agreed to indemnify each other for
certain liabilities as set forth in the Stock Purchase Agreement.

RELIEF REQUESTED

          18. By this Motion, the Debtors request the entry of an order under sections 363(b) and 105(a)
of the Bankruptcy Code and Rule 9019 of the Bankruptcy Rules authorizing and approving the Debtors’
settlement and compromise of various disputes arising from or relating to the Augusta partnership.

          19. Further, the Debtors seek entry of an order pursuant to sections 105 and 363(b) of the
Bankruptcy Code authorizing and approving the Debtors’ entry into the Stock Purchase Agreement, the
Note and related documents.

          20. Under either the standard by which the Court considers the approval of compromises or
settlements, or the standard by which the Court considers approval of the use of estate property
outside of the ordinary course of business, sufficient grounds exist to approve the Debtors’
compromise with Woodbridge, including ACSC’s entry into the Stock Purchase Agreement, the Note and
related documents.

A. Bankruptcy Rule 9019

9

 

          21. Bankruptcy Rule 9019(a) provides that “on motion by the trustee and after notice and a
hearing, the Court may approve a compromise or settlement.” Fed. R. Bankr. P. 9019(a). Under
Bankruptcy Rule 9019(a), the Court has the authority to approve a settlement if it is fair and
equitable and in the best interests of the estate. See In re Louise’s Inc., 211 B.R. 798 (D. Del.
1997); Fischer v. Pereira (In re 47-49 Charles St., Inc.), 209 B.R. 618, 620 (S.D.N.Y. 1997). The
settlement of time-consuming and burdensome litigation, especially in the bankruptcy context, is
encouraged. See In re Penn Central Transp. Co., 596 F.2d 1102 (3d Cir. 1979) (“administering
reorganization proceedings in an economical and practical manner it will often be wise to arrange
the settlement of claims”) (quoting In re Protective Comm. for Indep. Stockholders of TMT Ferry,
Inc. v. Anderson, 390 U.S. 414, 424 (1968)), see also In re Sassalos, 160 B.R. 646, 653 (D. Or.
1993) (stating that “compromises are favored in bankruptcy, and the decision of the bankruptcy
judge to approve or disprove a compromise rests in the sound discretion of the judge.”) In
determining the fairness and equity of a compromise in bankruptcy, the United States Court of
Appeals for the Third Circuit has stated that it is important that the bankruptcy court “apprise
itself of all facts necessary to form an intelligent and objective opinion of the probabilities of
ultimate success should the claims be litigated. .. and estimate the complexity, expense and likely
duration of such litigation, and other factors relevant to a full and fair assessment of the
[claims].” Penn Central, 596 F.2d at 1153.

          22. More recently, the Third Circuit Court of Appeals enumerated the following four-factor
test to be used in deciding whether a settlement should be approved: “(1) the probability of
success in litigation; (2) the likely difficulties in collection; (3) the complexity of the
litigation involved and the expense, inconvenience and delay necessarily attending it; and

10

 

(4) the paramount interest of creditors.” Will v. Northwestern Univ. (In re Nutraquest,
Inc.), 434 F.3d 639, 644 (3d Cir. 2006).

          23. Approval of a proposed settlement is within the “sound discretion” of the bankruptcy
court. See In re Neshaminy Office Bldg. Assocs., 62 B.R. 798, 803 (E.D. Pa. 1986). The bankruptcy
court should not substitute its judgment for that of the debtor. Id. The court is not to decide
numerous questions of law or fact raised by litigation, but rather should canvass the issues to see
whether the settlement falls below the lowest point in the range of reasonableness. See In re W.T.
Grant & Co., 699 F.2d 599, 608 (2d Cir. 1983), cert. denied, 464 U.S. 22 (1983); see also In re
Sea Containers Ltd., 2008 WL 4296562, at *5 (Bankr. D. Del. Sept. 19, 2008).

          24. Entry into the Stock Purchase Agreement and Note as part of a compromise with Woodbridge
resolves several contested matters between the parties. Approval of this Motion will effectively
moot the Rejection Appeal and the Augusta Partnership Motion, as Woodbridge will no longer be a
partner in the Augusta partnership. Once an order is entered approving this Motion, Woodbridge
will withdraw the Rejection Appeal and the Augusta Partnership Motion.8

          25. Based on the anticipated cost of further litigation with Woodbridge with respect to the
Rejection Appeal and the Augusta Partnership Motion, the risk of a ruling adverse to the Debtors in
connection with either of those matters, and the likelihood of additional litigation with
Woodbridge (including possible partnership dissolution proceedings in Georgia), the Debtors
determined that a compromise with Woodbridge is in the best interest of the Debtors, their estates
and their creditors.

 

			
	8	 	While the Rejection Appeal will be
resolved by entry of an order approving this Motion, Woodbridge will retain its
right to assert the damages arising from the rejection of the Call Agreement
and the guarantee dated as of September 6, 2001 by ACI in favor of each of WIHL
and Woodbridge International Holdings S.A., and the Debtors will retain their
rights to object to the same.

11

 

B. Bankruptcy Code §363

          26. Section 363(b) provides in relevant part that “[t]he trustee, after notice and a hearing,
may use, sell, or lease, other than in the ordinary course of business, property of the estate.” A
court can authorize a debtor to use property of the estate pursuant to section 363(b)(1) of the
Bankruptcy Code when such use is an exercise of the debtor’s sound business judgment and when the
use of the property is proposed in good faith and for value. See In re Delaware & Hudson R.R. Co.,
124 B.R. 169, 176 (D. Del. 1991) (explaining that the Third Circuit has adopted the “sound business
purpose” test to evaluate motions brought pursuant to section 363(b)); see also In re Abbotts
Dairies of Pennsylvania, Inc., 788 F.2d 143 (3d Cir. 1986). In addition, section 105(a) of the
Bankruptcy Code further authorizes “[t]he court [to] issue any order, process, or judgment that is
necessary or appropriate to carry out the provisions of [the Bankruptcy Code].” 11 U.S.C. §
105(a).

          27. The debtor has the burden to establish that a valid business purpose exists for the use of
estate property in a manner that is not in the ordinary course of business. See In re Lionel
Corp., 722 F.2d 1063, 1070-71 (2d Cir. 1983). Once the debtor has articulated a valid business
purpose, however, a presumption arises that the debtor’s decision was made on an informed basis, in
good faith and in the honest belief the action was in the best interest of the company. See In re
Integrated Resources, Inc., 147 B.R. 650, 656 (S.D.N.Y. 1992).

          28. The Debtors submit that good business reasons justify the Debtors’ entry into the Stock
Purchase Agreement and Note as part of a compromise and resolution between the Debtors and
Woodbridge, and that entry into the Stock Purchase Agreement and Note is in the best interests of
the Debtors’ estates. Specifically, the Stock Purchase Agreement allows ACSC

12

 

to obtain 100% ownership of Augusta, which supplies newsprint to ACSC and is a profitable
enterprise, at a fair and reasonable price. The Note is an integral part of the purchase price
under the Stock Purchase Agreement.

          29. Further, the Debtors determined in their business judgment that reaching a resolution with
Woodbridge on these various issues was an important component to maximizing the value of the
Debtors’ estates for the benefit of all creditors. The Debtors have determined that, rather than
litigating with Woodbridge regarding the assumption of the Partnership Agreement and (presuming the
Debtors’ victory on that point) continuing as a partner in Augusta post-confirmation, acquiring a
100% interest in Augusta pursuant to the terms of the Stock Purchase Agreement is a more sound
business decision. Thus, the Debtors entered into the Stock Purchase Agreement and Note for a
valid business purpose, in good faith and in the honest belief that the action was in the best
interests of the Debtors.

NOTICE

          30. Notice of this Motion has been provided to the following parties, or, in lieu thereof,
their counsel: (a) counsel to the Official Committee of Unsecured Creditors; (b) the Office of the
United States Trustee; (c) counsel to the agents for the Debtors’ prepetition secured bank
facilities; (d) counsel to the agent for the Debtors’ postpetition lenders; (e) counsel to the
agent for the Debtors’ securitization facility; (f) counsel to ANI and Woodbridge; (g) the Monitor
appointed in the Canadian Proceeding; and (h) those parties entitled to notice pursuant to
Bankruptcy Rule 2002, in accordance with Local Rule 2002-1(b). The Debtors submit that, in light
of the nature of the relief requested, no other or further notice need be given.

13

 

PRIOR REQUEST FOR RELIEF

          31. No previous requests for the relief requested herein have been made to this Court.

          WHEREFORE, the Debtors respectfully request that this Court grant (i) the relief requested
herein by entering an order in the form attached hereto as Exhibit A authorizing the
Debtors to enter into the Stock Purchase Agreement to purchase Woodbridge’s interest in Augusta and
the Note, including the granting of liens thereunder, and (ii) such other and further relief as
this Court deems just and appropriate.

Dated: Wilmington, Delaware            YOUNG CONAWAY STARGATT & TAYLOR, LLP
December __, 2010

	 	 	 	 	 

	 

	 	 

Pauline K. Morgan (No. 3650)
	 	 
	 

	 	Sean T. Greecher (No. 4484)	 	 
	 

	 	Andrew L. Magaziner (No. 5426)	 	 
	 

	 	The Brandywine Building	 	 
	 

	 	1000 West Street, 17th Floor	 	 
	 

	 	Wilmington, Delaware 19801 	 	 
	 

	 	Telephone: (302) 571-6600 	 	 
	 

	 	Facsimile: (302) 571-1253 	 	 
	 
	 	 	 	 
	 

	 	- and -	 	 
	 
	 	 	 	 
	 

	 	PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP	 	 
	 

	 	Jeffrey D. Saferstein	 	 
	 

	 	Kelley A. Cornish	 	 
	 

	 	Alice Belisle Eaton	 	 
	 

	 	1285 Avenue of the Americas	 	 
	 

	 	New York, New York 10019-6064 	 	 
	 

	 	Telephone: (212) 373-3000 	 	 
	 

	 	Facsimile: (212) 757-3990 	 	 
	 

	 	Counsel for the Debtors and Debtors-in-Possession	 	 

14

 

EXHIBIT A

 

 

EXHIBIT B

 

 

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

	 	 	 	 	 	 	 

	 

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	In re:

	 	 	)	 	 	Chapter 11
	 
	 	 	 	 	 	 
	 

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	ABITIBIBOWATER INC., et al.,9

	 	 	)	 	 	Case No. 09-11296 (KJC)
	 
	 	 	 	 	 	 
	 

	 	 	)	 	 	Jointly Administered
	 
	 	 	 	 	 	 
	Debtors.

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	)	 	 	Ref. Docket No. ____________
	 
	 	 	 	 	 	 
	 

	 	 	)	 	 	 

ORDER PURSUANT TO SECTIONS 105 AND 363(b) OF THE BANKRUPTCY CODE

AND FEDERAL RULE OF BANKRUPTCY PROCEDURE 9019:

(I) APPROVING A SETTLEMENT AND COMPROMISE BETWEEN WOODBRIDGE

INTERNATIONAL HOLDINGS LIMITED, WOODBRIDGE COMPANY LIMITED,

ABITIBI CONSOLIDATED SALES CORPORATION, ABITIBIBOWATER INC.,

AUGUSTA NEWSPRINT COMPANY AND AUGUSTA NEWSPRINT INC.; (II)

AUTHORIZING ABITIBI CONSOLIDATED SALES CORPORATION TO PURCHASE

AN INTEREST IN THE AUGUSTA

NEWSPRINT COMPANY; AND (II) GRANTING RELATED RELIEF

 

			
	9	 	The Debtors in these cases, along with the
last four digits of each Debtor’s federal tax identification number, are:
AbitibiBowater Inc. (6415), AbitibiBowater US Holding 1 Corp. (N/A),
AbitibiBowater US Holding LLC (N/A), AbitibiBowater Canada Inc. (N/A),
Abitibi-Consolidated Alabama Corporation (4396), Abitibi-Consolidated
Corporation (9050), Abitibi-Consolidated Finance LP (4528), Abitibi
Consolidated Sales Corporation (7144), Alabama River Newsprint Company (7247),
Augusta Woodlands, LLC (9050), Bowater Alabama LLC (7106), Bowater America Inc.
(8645), Bowater Canada Finance Corporation (N/A), Bowater Canadian Forest
Products Inc. (N/A), Bowater Canadian Holdings Incorporated (N/A), Bowater
Canadian Limited (N/A), Bowater Finance Company Inc. (1715), Bowater Finance II
LLC (7886), Bowater Incorporated (1803), Bowater LaHave Corporation (N/A),
Bowater Maritimes Inc. (N/A), Bowater Newsprint South LLC (1947), Bowater
Newsprint South Operations LLC (0168), Bowater Nuway Inc. (8073), Bowater Nuway
Mid-States Inc. (8290), Bowater South American Holdings Incorporated (N/A),
Bowater Ventures Inc. (8343), Catawba Property Holdings, LLC (N/A), Coosa Pines
Golf Club Holdings LLC (8702), Donohue Corp. (9051), Lake Superior Forest
Products Inc. (9305) and Tenex Data Inc. (5913). The Debtors’ corporate
headquarters are located at, and the mailing address for each Debtor is, 1155
Metcalfe Street, Suite 800, Montreal, Quebec H3B 5H2, Canada.

 

 

          Upon the Motion10 (the “Motion”) of AbitibiBowater, Inc.
(“AbitibiBowater”) and its affiliated debtors and debtors-in-possession in the above
captioned cases (collectively, the “Debtors”), requesting entry of an order (the
“Order”), pursuant to sections 105 and 363(b) of title 11 of the United States Code (the
“Bankruptcy Code”) and Rule 9019 of the Federal Rules of Bankruptcy Procedure (the
“Bankruptcy Rules”): (i) authorizing the Debtors to enter into a settlement and compromise
with Woodbridge with respect to various disputes among the parties, (ii) in furtherance of that
settlement and compromise, authorizing ACSC to purchase all of the outstanding shares of the common
and preferred stock of ANI, which would result in the transfer of ANI’s 47.5% interest in Augusta;
and it appearing that the relief requested in the Motion is in the best interests of the Debtors’
estates, their creditors and other parties in interest; and it appearing that this Court has
jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334; and it appearing that the
Motion is a core proceeding pursuant to 28 U.S.C.§ 157(b); and it appearing that venue is proper
before this Court pursuant to 28 U.S.C.§§ 1408 and 1409; and adequate notice of the Motion and
opportunity for objection having been given; and this Court having reviewed and considered the
Motion and any objections thereto; and it appearing that no other notice need be given; and it
further appearing that the legal and factual bases set forth in the Motion establish just cause for
the relief granted herein; and after due deliberation and sufficient cause therefor:

IT IS HEREBY FOUND AND DETERMINED THAT:

          A. This Court has core jurisdiction over this matter pursuant to 28 U.S.C. §§ 157(b) and 1334
and this matter is a core proceeding that the Court can determine pursuant to 28 U.S.C. § 157(b).
Venue is proper before this Court pursuant to 28 U.S.C.§§ 1408 and 1409.

 

			
	10	 	Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to them in the Motion.

2

 

          B. The Debtors have articulated good and sufficient cause for, among other things, the
purchase of Woodbridge’s interest in ANI and subsequent ownership of ANI’s 47.5% interest in
Augusta by ACSC pursuant to which ACSC shall thereafter be the sole member of Augusta with all
powers, rights and privileges of ownership attendant thereto.

          C. Good and sufficient notice of the relief sought in the Motion has been given and no further
notice is required.

          D. The Stock Purchase Agreement and Note were negotiated at arm’s length and entered into in
good faith by the Parties and are fair, reasonable and appropriate and benefit the Debtors’
estates, their creditors and other parties in interest.

          E. The Debtors have demonstrated a compelling and sound business justification for authorizing
the relief requested in the Motion.

IT IS HEREBY ORDERED AND ADJUDGED THAT:

          1. The Motion is granted. Any objection not made to the Motion is waived. Any objection made
to the Motion is overruled with prejudice.

          2. The Debtors are authorized to enter into the Stock Purchase Agreement and the Note. The
Debtors are authorized to take any and all actions necessary or appropriate to implement the Stock
Purchase Agreement and the Note, in accordance with the terms thereof and with the agreement of the
Parties thereto.

          3. The Debtors are authorized and empowered to, and may in their discretion take any action
and perform any act necessary to implement and effectuate the terms of this Order, the Stock
Purchase Agreement or the Note.

          4. The Bankruptcy Claims and Administrative Claims shall be Allowed Claims in the Chapter 11
Cases.

3

 

          5. This Order is binding upon the Debtors, all creditors of the Debtors, any subsequent
trustees that may be appointed and all parties in interest.

          6. Except as otherwise provided in the Stock Purchase Agreement, this Court shall retain
jurisdiction over the Debtors and Woodbridge with respect to any matters, claims, rights or
disputes arising from or related to the Motion or the implementation of this Order.

Dated: Wilmington, Delaware

     December __ ,2010

	 	 	 	 	 

	 

	 	 

Honorable Kevin J. Carey
	 	 
	 

	 	Chief United States Bankruptcy Judge	 	 

4

 

SCHEDULE F

FORM OF WIHSA TRANSFER AGREEMENT

INDENTURE made as of the n day of n, 2011

B E T W E E N:

WOODBRIDGE INTERNATIONAL HOLDINGS S.A., a corporation incorporated
under the laws of Luxembourg

(hereinafter referred to as the “Vendor”)

                    OF THE FIRST PART

- and -

WOODBRIDGE INTERNATIONAL HOLDINGS LIMITED, a corporation incorporated
under the laws of the Province of Ontario

(hereinafter referred to as the “Purchaser”)

                    OF THE SECOND PART

          WHEREAS pursuant to that certain stock purchase agreement made as of n among the
Purchaser, The Woodbridge Company Limited, Abitibi Consolidated Sales Corporation, AbitibiBowater
Inc., Augusta Newsprint Company and Augusta Newsprint Inc., the Vendor wishes to sell to the
Purchaser and the Purchaser wishes to purchase from the Vendor on the date hereof all of the shares
of common stock of ANI held by the Vendor (the “ANI Common Stock”), free and clear of all
encumbrances;

          NOW THEREFORE for good and valuable consideration (the receipt and sufficiency of which are
hereby acknowledged) the parties hereto agree as follows:

5. Subject to the terms and conditions herein contained, the Vendor hereby sells, transfers and
assigns to the Purchaser and the Purchaser hereby purchases all the Vendor’s right, title and
interest in and to the ANI Common Stock, free and clear of all encumbrances.

6. The aggregate purchase price for the ANI Common Stock shall be US$200 (the “Purchase Price”),
such amount being equal to the aggregate fair market value of the ANI

 

 

Common Stock on the date hereof and shall be paid and satisfied in full by delivery by the
Purchaser to the Vendor of a cheque or bank draft in the amount of the Purchase Price.

7. The Vendor hereby declares that, as to any of the ANI Common Stock, the title to which may not
have passed to the Purchaser by virtue of this Indenture or any transfer or assignment which may be
executed and delivered pursuant to the provisions hereof on the date hereof or from time to time
thereafter, the Vendor will hold such ANI Common Stock in trust for the Purchaser to transfer and
assign the same as the Purchaser may from time to time direct.

8. The Vendor covenants with the Purchaser to execute and deliver to the Purchaser at any time
after the date hereof when requested to do so by the Purchaser all such further documents or
instruments and to do such further things as may be necessary to effect the purpose of this
Indenture and to carry out its provisions and to vest the ANI Common Stock fully in the Purchaser.

9. The Vendor hereby constitutes and appoints the Purchaser, its successors and assigns, the true
and lawful attorney of the Vendor for and in the name of or otherwise on behalf of the Vendor with
full power of substitution to do and execute all deeds, matters and things whatsoever necessary for
the assignment, transfer and/or conveyance of any interest in the ANI Common Stock to the
Purchaser, its successors and assigns.

10. This Indenture shall be construed in accordance with the laws of the Province of Ontario, which
shall be the forum with respect to any and all actions or suits brought with respect hereto.

11. This Indenture shall enure to the benefit of and be binding upon the successors and assigns of
the parties hereto.

[Signature page follows]

 

 

	 	 	 	 	 	 	 

	 	 	WOODBRIDGE INTERNATIONAL HOLDINGS S.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	WOODBRIDGE INTERNATIONAL HOLDINGS LIMITED	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 

 

 

SCHEDULE G

FORM OF ASSIGNMENT AND ASSUMPTION OF

BANKRUPTCY CLAIMS AGREEMENT

ASSIGNMENT AND ASSUMPTION AGREEMENT

          ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of [______________], (this “Agreement”)
by and between Augusta Newsprint Company, a Georgia partnership (the “Assignor”),
Woodbridge International Holdings Limited, an Ontario corporation (the “Assignee”), and
Abitibi Consolidated Sales Corporation, a Delaware corporation (“ACSC”).

          WHEREAS, the Assignor, the Assignee and ACSC have entered into that certain Stock Purchase
Agreement, dated as of [_________], 2010 (the “Stock Purchase Agreement”), by and among the
Assignor, the Assignee, ACSC, AbitibiBowater Inc., a Delaware corporation
(“AbitibiBowater”), The Woodbridge Company Limited, an Ontario corporation (“Woodbridge
Parent”), and Augusta Newsprint Inc., a Delaware corporation (“ANI”). Capitalized
terms used but not defined herein shall have the meanings ascribed to them in the Stock Purchase
Agreement;

          WHEREAS, this Agreement is being delivered pursuant to Section 2.8 of the Stock Purchase
Agreement; and

          WHEREAS, pursuant to and in accordance with the terms and conditions of this Agreement and the
Stock Purchase Agreement, the Assignor will assign, grant, convey and transfer to the Assignee,
47.5% of the Assignor’s right, title and interest in and to the following claims made, filed,
scheduled or otherwise asserted by or on behalf of the Assignor in the cases filed in the
Bankruptcy Court under chapter 11 of the Bankruptcy Code by AbitibiBowater and its affiliated
debtors and debtors-in-possession, jointly administered as Case No. 09-11296 (the “Bankruptcy
Proceedings”): Claim number 3612 made by the Assignor in the Bankruptcy Proceedings of Alabama
River Newsprint Company, Case no. 09-11301, in the amount of $1,699.49; Claim number 3630 made by
the Assignor in the Bankruptcy Proceedings of Abitibi-Consolidated Corporation, Case no. 09-11302,
in the amount of $1,848.01; Claim numbers 3631 and 3632 made by the Assignor in the Bankruptcy
Proceedings of AbitibiBowater; Case no. 09-11296, in the amounts of $25,899.02 and $85,247.34,
respectively; the Claim listed on Schedule F of the Schedules of Assets and Liabilities of Alabama
River Newsprint Company, Case no. 09-11301, in the amount of $2,203.49; and Claim number 10005 made
by the Assignor in the Bankruptcy Proceedings of Abitibi-Consolidated Corporation, Case no.
09-11302, in the amount of $37,458,605.69 (such claims, collectively, the “Bankruptcy
Claims”).

          NOW THEREFORE, in consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged and upon the
terms and subject to the conditions set forth herein, the parties hereto hereby agree as follows:

     1. Assignment. Pursuant to and in accordance with the terms and conditions of this
Agreement and the Stock Purchase Agreement, effective as of the date hereof, the Assignor

 

 

hereby assigns, grants, conveys and transfers to the Assignee, 47.5% of the Assignor’s right,
title and interest in and to the Bankruptcy Claims, which shall include, without limitation or
offset, 47.5% of ((a) through (d) below, the “Transferred Bankruptcy Claims Rights”):

	 	(a)	 	the Bankruptcy Claims;
	 
	 	(b)	 	the Assignor’s right, title and interest in and to the Bankruptcy Claims,
including all agreements, instruments, subscriptions, statements, proofs of claim,
proofs of investment and other documents evidencing, or supporting the Bankruptcy
Claims and any agreements, stipulations, or other settlement rights or documentation
relating to the allowance or disallowance of the Bankruptcy Claims;
	 
	 	(c)	 	the Assignor’s right to receive principal, interest, fees, expenses, damages
and other amounts in respect of, or in connection with the Bankruptcy Claims; and
	 
	 	(d)	 	cash, securities, instruments, proceeds, collateral, guarantees and/or other
property distributed, received or paid from and after the Closing, on account of, or
exchanged in return for the Bankruptcy Claims;

provided, however, that the Transferred Bankruptcy Claims Rights shall exclude any
Bankruptcy Claims to the extent such claims are paid in cash to the Assignor prior to the
Measurement Time.

     3. Assumption. Effective as of the date hereof, the Assignee hereby accepts the
assignment, grant, conveyance and transfer of the Transferred Bankruptcy Claims Rights.

     4. Absolute Assignment. This Agreement shall be deemed an absolute and unconditional
assignment of the Transferred Bankruptcy Claims Rights for the purpose of collection and
satisfaction, and shall not be deemed to create a security interest. If the total amount of the
Bankruptcy Claims is more than the aggregate amount of those claims set forth in the definition of
Bankruptcy Claims in this Agreement or the Stock Purchase Agreement, the Assignee shall
nevertheless be deemed the owner of the Bankruptcy Claims to the extent of the Transferred
Bankruptcy Claims Rights, subject to the terms of this Agreement and the Stock Purchase Agreement,
and shall be entitled to identify itself as owner of the Bankruptcy Claims to the extent of the
Transferred Bankruptcy Claims Rights on the records of the Bankruptcy Court.

     5. Further Assurances. The Assignor covenants and agrees to take such actions and
execute and deliver to the Assignee such further assignments or other transfer documents as the
Assignee may reasonably request to effectively assign, grant, transfer and convey and to evidence
such assignment, transfer, grant and conveyance of, the Transferred Bankruptcy Claims Rights, in
each case, at the sole cost and expense of the Assignee and in conformity with the applicable
conditions, terms and provisions of the Stock Purchase Agreement.

     6. Benefit and Binding Effect. Except as provided and in conformity with assignments
permitted herein, no party hereto may assign any of its right or obligations under this Agreement
without the written consent of the other parties hereto. Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their successors and
permitted assigns.

2

 

     7. Counterparts. This Agreement may be executed in counterparts. Each executed
counterpart shall be deemed to be an original and all counterparts taken together shall constitute
one and the same agreement. Delivery of an executed counterpart of a signature page to this
Agreement by facsimile, pdf or other electronic means shall be effective as delivery of a manually
executed counterpart of this Agreement.

[Signature page follows]

3

 

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the ___day of __________, 20_.

	 	 	 	 	 	 	 

	 	 	ASSIGNOR:	 	 
	 
	 	 	 	 	 	 
	 	 	AUGUSTA NEWPRINT CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	ASSIGNEE:	 	 
	 
	 	 	 	 	 	 
	 	 	WOODBRIDGE INTERNATIONAL HOLDINGS LIMITED	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	ACSC	 	 
	 
	 	 	 	 	 	 
	 	 	ABITIBI CONSOLIDATED SALES CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

 

 

SCHEDULE H

FORM OF ASSIGNMENT AND ASSUMPTION OF

ADMINISTRATIVE CLAIM AGREEMENT

ASSIGNMENT AND ASSUMPTION AGREEMENT

          ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of [______________], (this “Agreement”)
by and between Augusta Newsprint Company, a Georgia partnership (the “Assignor”),
Woodbridge International Holdings Limited, an Ontario corporation (the “Assignee”), and
Abitibi Consolidated Sales Corporation, a Delaware corporation (“ACSC”).

          WHEREAS, the Assignor, the Assignee and ACSC have entered into that certain Stock Purchase
Agreement, dated as of [_________], 2010 (the “Stock Purchase Agreement”), by and among the
Assignor, the Assignee, ACSC, AbitibiBowater Inc., a Delaware corporation
(“AbitibiBowater”), The Woodbridge Company Limited, an Ontario corporation (“Woodbridge
Parent”), and Augusta Newsprint Inc., a Delaware corporation (“ANI”). Capitalized
terms used but not defined herein shall have the meanings ascribed to them in the Stock Purchase
Agreement;

          WHEREAS, this Agreement is being delivered pursuant to Section 2.9 of the Stock Purchase
Agreement; and

          WHEREAS, pursuant to and in accordance with the terms and conditions of this Agreement and the
Stock Purchase Agreement, the Assignor will assign, grant, convey and transfer to the Assignee,
47.5% of the Assignor’s right, title and interest in and to the allowed administrative claim held
by the Assignor against ACSC in the amount of $9,246,580.00 pursuant to the Agreed Order With
Respect to Motion of Augusta Newsprint Company for Allowance of Administrative Expense Claim
Pursuant to 11 U.S.C. § 503(b)(9) [D.I. 1457] entered by the Bankruptcy Court on December 16, 2009
(the “Administrative Claim”).

          NOW THEREFORE, in consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged and upon the
terms and subject to the conditions set forth herein, the parties hereto hereby agree as follows:

	1.	 	Assignment. Pursuant to and in accordance with the terms and conditions of this
Agreement and the Stock Purchase Agreement, effective as of the date hereof, the Assignor
hereby assigns, grants, conveys and transfers to the Assignee, 47.5% of the Assignor’s right,
title and interest in and to the Administrative Claim, which shall include, without limitation
or offset, 47.5% of ((a) through (d) below, the “Transferred Administrative Claim
Rights”):

	 	(a)	 	the Administrative Claim;
	 
	 	(b)	 	the Assignor’s right, title and interest in and to the Administrative Claim,
including all agreements, instruments, subscriptions, statements, proofs of claim,

 

 

	 	 	 	proofs of investment and other documents evidencing, or supporting the
Administrative Claim and any agreements, stipulations, or other settlement rights or
documentation relating to the allowance or disallowance of the Administrative Claim;

	 	 (c)	 	the Assignor’s right to receive principal, interest, fees, expenses, damages
and other amounts in respect of, or in connection with the Administrative Claim; and

	 	 (d)	 	cash, securities, instruments, proceeds, collateral, guarantees and/or other
property distributed, received or paid from and after the Closing, on account of, or
exchanged in return for the Administrative Claim;

provided, however, that the Transferred Administrative Claim Rights shall exclude any
Administrative Claim to the extent such claim is paid in cash to the Assignor prior to the
Measurement Time.

     2. Assumption. Effective as of the date hereof, the Assignee hereby accepts the
assignment, grant, conveyance and transfer of the Transferred Administrative Claim Rights.

     3. Absolute Assignment. This Agreement shall be deemed an absolute and unconditional
assignment of the Transferred Administrative Claim Rights for the purpose of collection and
satisfaction, and shall not be deemed to create a security interest. If the total amount of the
Administrative Claim is more than the aggregate amount of that claim set forth in the definition of
Administrative Claim in this Agreement or the Stock Purchase Agreement, the Assignee shall
nevertheless be deemed the owner of the Administrative Claim to the extent of the Transferred
Administrative Claim Rights, subject to the terms of this Agreement and the Stock Purchase
Agreement, and shall be entitled to identify itself as owner of the Administrative Claim to the
extent of the Transferred Administrative Claim Rights on the records of the Bankruptcy Court.

     4. Further Assurances. The Assignor covenants and agrees to take such actions and
execute and deliver to the Assignee such further assignments or other transfer documents as the
Assignee may reasonably request to effectively assign, grant, transfer and convey and to evidence
such assignment, transfer, grant and conveyance of, the Transferred Administrative Claim Rights, in
each case, at the sole cost and expense of the Assignee and in conformity with the applicable
conditions, terms and provisions of the Stock Purchase Agreement.

     5. Benefit and Binding Effect. Except as provided and in conformity with assignments
permitted herein, no party hereto may assign any of its right or obligations under this Agreement
without the written consent of the other parties hereto. Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their successors and
permitted assigns.

     6. Counterparts. This Agreement may be executed in counterparts. Each executed
counterpart shall be deemed to be an original and all counterparts taken together shall constitute
one and the same agreement. Delivery of an executed counterpart of a signature page to this
Agreement by facsimile, pdf or other electronic means shall be effective as delivery of a manually
executed counterpart of this Agreement.

2

 

[Signature page follows]

3

 

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the ___day of __________, 20_.

	 	 	 	 	 
	 	ASSIGNOR:

AUGUSTA NEWPRINT CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	ASSIGNEE:

WOODBRIDGE INTERNATIONAL HOLDINGS LIMITED

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	ACSC

ABITIBI CONSOLIDATED SALES CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

SCHEDULE I

	 	1.	 	In the 1990’s, the Partnership shipped used oil and a small
amount of chlorinated solvent to the AER hazardous waste storage and management
site in Augusta, Georgia. The site closed, went into bankruptcy and became a
superfund site. The Partnership is part of the Potential Responsible Party
group.

	 	2.	 	In 2009, the Partnership voluntarily disclosed to U.S. EPA and
Georgia EPD, the discovery of reporting discrepancies under the Emergency
Planning and Community Right-to-Know Act of 1986 (“EPCRA”) section 313
for reporting years 2004 thru 2007. Corrections were submitted for lead,
dioxin and dioxin-like compounds and methanol. The U.S. EPA corrected the
federal database to reflect these changes. Neither Georgia EPD nor U.S. EPA
has issued a Notice of Violation or investigated the matter further as of the
date hereof.

 

 

EXHIBIT A

CERTIFICATE OF INCORPORATION OF ANI

 

 

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

AUGUSTA NEWSPRINT INC.

Pursuant to Sections 242 and 245 of the

General Corporation Law of the State of Delaware

     Augusta Newsprint Inc., a corporation existing under the laws of the State of Delaware (the
“Corporation”), does hereby certify as follows:

     (a) the name of the Corporation is Augusta Newsprint Inc.;

     (b) the Certificate of Incorporation of the Corporation was filed with the Secretary of State
of the State of Delaware on the 2nd day of July 2001;

     (c) this Amended and Restated Certificate of Incorporation has been duly adopted in accordance
with the provisions of Sections 242 and 245 of the General Corporation Law of the State of
Delaware, (i) the Board of Directors of the Corporation having duly adopted a resolution approving
such amendment and declaring its advisability at a meeting of the Board of Directors of the
Corporation duly called and held on November 5, 2001 and (ii) in lieu of a meeting and vote of the
stockholders, the holders of all the capital stock of the Corporation duly consented in writing to
the adoption of such amendment; and

     (d) the Certificate of Incorporation of the Corporation is hereby amended and restated to read
in full as follows:

1

 

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

AUGUSTA NEWSPRINT INC.

     THE UNDERSIGNED, for the purpose of forming a corporation pursuant to the provisions of the
General Corporation Law of the State of Delaware, hereby certifies as follows:

     FIRST: The name of the corporation is Augusta Newsprint Inc. (the “Corporation”).

     SECOND: The address of the Corporation’s registered office in the State of Delaware is 2711
Centerville Road, Suite 400, Wilmington, Delaware 19808, which address is located in the County of
New Castle, and the name of the Corporation’s registered agent at such address is Corporation
Service Company.

     THIRD: The purpose for which the Corporation is organized is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation Law of the State of
Delaware (the “Act”).

     FOURTH: The total number of shares of all classes of stock which the Corporation has
authority to issue is Sixty Thousand (60,000) shares, consisting of Twenty Thousand (20,000) shares
of Common Stock, par value $0.01 per share (the “Common Stock”), Twenty Thousand (20,000) shares of
Class A preferred stock, par value $0.01 per share (the “Class A Preferred Stock”) and Twenty
Thousand (20,000) shares of Class B preferred stock, par value $0.01 per share (the “Class B
Preferred Stock” and, together with the Class A Preferred Stock, the “Preferred Stock”).

A. PREFERRED STOCK

     The voting powers, preferences and rights (and the qualifications, limitations, or
restrictions thereof) of the Class A Preferred Stock and Class B Preferred Stock are as follows:

     1. Voting. Except as may be otherwise provided by law,
the holders of Preferred Stock shall vote together and with the
holders of all other classes of stock of the Corporation which have
a voting right, as a single class, on all actions to be taken by the
stockholders of the Corporation, other than at meetings of holders
of another class of shares. Each share of Preferred Stock shall
entitle the holder thereof to one vote per share on each such
action.

     2. Dividends. The holders of each of the Class A
Preferred Stock and Class B Preferred Stock shall be entitled to
receive, and the Corporation shall pay thereon any dividend declared
by the Board of Directors of the Corporation out of moneys of the
Corporation properly applicable to the payment of dividends,
provided that the dividend rate on each of the Class A

2

 

Preferred Stock and Class B Preferred Stock (the “Dividend
Rate”) in any fiscal year shall not exceed on a per annum basis the
aggregate of eight percent (8%) plus, for dividends declared in
fiscal years of the Corporation subsequent to June 30, 2002, any
Carry Forward Amount (as defined below) (such aggregate amount
being, the “Maximum Dividend Rate”).

     The Dividend Rate for a share of Class A Preferred Stock will
be applied to the amount of ten thousand Canadian dollars (Cdn
$10,000) (the “Class A Redemption Amount” of a share of Class A
Preferred Stock). The Dividend Rate for a share of Class B Preferred
Stock will be applied to the amount of six thousand U.S. dollars
(U.S. $6,000) (the “Class B Redemption Amount” of a share of Class B
Preferred Stock).

     Dividends which are declared pursuant to this subsection A(2)
shall be payable in Canadian or U.S. dollars as determined by the
Board of Directors and at an exchange rate determined by the Board
of Directors at the time of declaration.

     In the event that the Board of Directors does not declare a
dividend for either the Class A Preferred Stock or Class B Preferred
Stock for a year or declares a dividend for either the Class A
Preferred Stock or Class B Preferred Stock for a year which is at a
Dividend Rate that is less than the Maximum Dividend Rate for such
year for the Class A Preferred Stock or Class B Preferred Stock, as
applicable, the shortfall shall constitute the “Carry Forward
Amount” for determining the Maximum Dividend Rate of the subsequent
year for the Class A Preferred Stock or Class B Preferred Stock, as
applicable.

     The Carry Forward Amount with respect to each outstanding share
of Preferred Stock shall be calculated from the date immediately
following the earlier of the date:

	 	(i)	 	on which such share of Preferred Stock was
first issued by the Corporation, or

	 	(ii)	 	on which any Predecessor Share (as defined
below) was first issued by the Corporation. The term
“Predecessor Share” shall mean the share of Preferred Stock
which was originally issued by the Corporation and which,
directly or indirectly through one or more conversions, was
subsequently converted into such outstanding share of Preferred
Stock.

     Declared dividends on shares of Preferred Stock shall be
payable on the day determined by the Board of Directors of the
Corporation.

3

 

     In the case of shares of Preferred Stock outstanding for less
than a full fiscal year of the Corporation at the time of a dividend
payment, dividends shall be pro rated based upon the portion of each
year during which such shares of Preferred Stock are outstanding.

     For greater certainty, a dividend may be declared and paid on shares of Preferred Stock in accordance with the terms of this
Amended and Restated Certificate of Incorporation notwithstanding
that a dividend has, or has not been declared and paid on shares of
Common Stock.

     3. Redemption at the Option of the Holder. Subject to
the provisions of this subsection A(3) and subsection A(5) and the
Act, a holder of shares of Preferred Stock shall be entitled to
require the Corporation to redeem at any time and from time to time
all or any of the shares of Preferred Stock registered in the name
of such holder on the books of the Corporation by tendering to the
Corporation at its registered office the certificate or certificates
representing the Preferred Stock which such holder desires to have
the Corporation redeem together with a written request specifying
that such holder desires to have all or a specified number and class
of the shares of Preferred Stock represented by such certificate or
certificates redeemed by the Corporation. After receipt of the
share certificate or certificates representing the shares of
Preferred Stock which the holder desires the Corporation to redeem
together with a request for redemption specified above (if such
notice is not waived), the Corporation shall, on such redemption
date as may be specified by the Corporation (the “Redemption Date”)
but being not later than thirty (30) days following such receipt,
redeem such shares of Preferred Stock by paying to such registered
holder for each share of Class A Preferred Stock or share of Class B
Preferred Stock to be redeemed, the Class A Redemption Amount or
Class B Redemption Amount, as applicable, plus all dividends
declared and unpaid thereon to and including the Redemption Date
(the “Class A Redemption Price” of a share of Class A Preferred
Stock and the “Class B Redemption Price” of a share of Class B
Preferred Stock, as applicable). Such payment shall be made to each
holder by check payable in Canadian dollars for shares of Class A
Preferred Stock and in U.S. dollars for shares of Class B Preferred
Stock, provided that the payment may be made in such other manner
and in such other currency as is acceptable to the holder. The shares of Preferred Stock shall be redeemed on the Redemption Date.
From and after the Redemption Date such shares of Preferred Stock
shall cease to be entitled to dividends or any other participation
in the assets of the Corporation and the holders thereof shall not
be entitled to exercise any of the other rights of a holder in
respect

4

 

thereof unless payment of the Class A Redemption Price or Class
B Redemption Price, as applicable, shall not be made on the
Redemption Date, in which event the rights of the holder shall
remain unaffected. If a part only of the shares of Preferred Stock
represented by any certificate shall be redeemed, a new certificate
representing the balance of such shares of Preferred Stock shall be
issued to the holder thereof at the expense of the Corporation upon
the presentation and surrender of the first mentioned certificate.

     4. Redemption at the Option of the Corporation.
Subject to the provisions of this subsection A(4) and subsection
A(5) and the Act, the Corporation may upon giving written notice as
hereinafter provided, redeem at any time the whole or from time to
time any part of the then outstanding shares of Class A Preferred
Stock or Class B Preferred Stock on payment for each share to be
redeemed at the Class A Redemption Price or Class B Redemption
Price, as applicable, thereof. In case a part only of the shares of
Preferred Stock is at any time to be redeemed, the shares so to be
redeemed may be selected by lot in such manner as the directors of
the Corporation in their sole discretion shall by resolution
determine or redemption may be effected on a pro rata basis
disregarding fractions. In any case of redemption of shares of
Preferred Stock under this subsection A(4), the Corporation shall at
least ten (10) days (which period may be waived by the holders)
before the Redemption Date deliver to each person who is a
registered holder of Preferred Stock to be redeemed a written notice
of the intention of the Corporation to redeem such shares of
Preferred Stock. Such notice shall set out the number and class of
shares of Preferred Stock held by the person to whom it is addressed
which are to be redeemed, the Class A Redemption Price or Class B
Redemption Price, as applicable, and the Redemption Date. On or
after the Redemption Date, the Corporation shall pay or cause to be
paid to or to the order of the registered holders of the Class A
Preferred Stock or Class B Preferred Stock to be redeemed the Class
A Redemption Price or Class B Redemption Price, as applicable, of
such shares on presentation and surrender, at the registered office
of the Corporation or at any other place or places specified in such
notice of redemption, of the certificate or certificates
representing the shares of Preferred Stock so called for redemption.
Such payment shall be made to each holder by check payable in
Canadian dollars for shares of Class A Preferred Stock and in U.S.
dollars for shares of Class B Preferred Stock, provided that the
payment may be made in such other manner and in such other currency
as is acceptable to the holder. From and after the Redemption Date,
the shares of Preferred Stock called for redemption shall cease to
be entitled to dividends or any other participation in the assets of
the

5

 

Corporation and the holders thereof shall not be entitled to
exercise any of the other rights of shareholders in respect thereof
unless payment of the Class A Redemption Price or Class B Redemption
Price, as applicable, shall not be made upon presentation and
surrender of the certificates in accordance with the foregoing
provisions, in which case the rights of the holders shall remain
unaffected. If a part only of the shares of Preferred Stock
represented by any certificate shall be redeemed, a new certificate
representing the balance of such shares of Preferred Stock shall be
issued to the holder thereof at the expense of the Corporation upon
presentation and surrender of the first mentioned certificate.

     5. Redemption Subject to Laws. If the Corporation does
not have sufficient funds legally available to redeem all shares to
be redeemed on a Redemption Date, then it shall redeem shares of
Preferred Stock pro rata (based on the portion of the aggregate
Class A Redemption Price and Class B Redemption Price, as
applicable, payable to each holder of shares of Preferred Stock to
be redeemed) and shall redeem the remaining shares pro rata as soon
as sufficient funds are legally available.

     6. Liquidation, Dissolution or Winding Up. In the
event of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation or in the event of any
other distribution of assets of the Corporation among its
stockholders for the purpose of winding up its affairs, the holders
of the Class A Preferred Stock and Class B Preferred Stock shall be
entitled to receive from the property and assets of the Corporation
a sum equal to the Class A Redemption Price or Class B Redemption
Price, as applicable, for each share of the Class A Preferred Stock
or Class B Preferred Stock held by them respectively, the whole
before any amount shall be paid by the Corporation or any property
or assets of the Corporation shall be distributed to holders of the
shares of Common Stock or the shares of any other class of stock
ranking junior to the Preferred Stock in liquidation preference.
After payment to the holders of the Preferred Stock of the amounts
payable to them, they shall not be entitled to share in any further
distribution of the property or assets of the Corporation.

     7. Conversion of Class A Preferred Stock. Subject to
the provisions of this subsection A(7) and upon written notice to
the Corporation as set forth in subsection A(9), a holder of Class A
Preferred Stock shall be entitled to require the Corporation to
convert at any time and from time to time all or any of the shares
of Class A Preferred Stock registered in the name of such holder on
the books of the Corporation into shares of Class B Preferred Stock
on the basis that each share of Class A Preferred Stock to be

6

 

converted will be converted into that number of shares of Class
3 Preferred Stock equal to the product obtained when 1 2/3 is
multiplied by the value of a Canadian dollar expressed in U.S.
dollars as at the Conversion Date (as defined below) based on a fair
market exchange rate as determined by the Board of Directors of the
Corporation.

     8. Conversion of Class B Preferred Stock. Subject to
the provisions of this subsection A(8) and upon written notice to
the Corporation as set forth in subsection A(9), a holder of Class B
Preferred Stock shall be entitled to require the Corporation to
convert at any time and from time to time all or any of the shares
of Class B Preferred Stock registered in the name of such holder on
the books of the Corporation into shares of Class A Preferred Stock
on the basis that each share of Class B Preferred Stock to be
converted will be converted into that number of shares of Class A
Preferred Stock equal to the product obtained when 0.6 is multiplied
by the value of a U.S. dollar expressed in Canadian dollars as at
the Conversion Date (as defined below) based on a fair market
exchange rate as determined by the Board of Directors of the
Corporation.

     9. Notice of Conversion. In order to convert shares of
Preferred Stock pursuant to subsections A(7) or A(8), a holder of
shares of Preferred Stock shall tender to the Corporation at its
registered office the certificate or certificates representing the
Preferred Stock which such holder desires to have the Corporation
convert together with a written request specifying that such holder
desires to have all or a specified number and class of shares of
Preferred Stock represented by such certificate or certificates
converted by the Corporation on a certain date (the “Conversion
Date”). After receipt of the share certificate or certificates
representing the shares of Preferred Stock which the holder desires
the Corporation to convert together with a request for conversion
specified above (if such notice is not waived), the Corporation
shall, on such Conversion Date, convert such shares of Preferred
Stock. The shares of Preferred Stock shall be converted on the
Conversion Date. If a part only of the shares of Preferred Stock
represented by any certificate shall be converted, a new certificate
representing the balance of such shares of Preferred Stock shall be
issued to the holder thereof at the expense of the Corporation upon
the presentation and surrender of the first mentioned certificate.

     10. Subdivisions, Consolidations and Reclassification.
Neither class of Preferred Stock shall be subdivided, consolidated,
reclassified or otherwise changed unless contemporarily therewith
the other class of Preferred Stock shall be correspondingly

7

 

subdivided, consolidated, reclassified or otherwise changed on
the same basis.

     11. Fractional Shares. The shares of Preferred Stock
may be issued in fractions of a share up to six decimal places.

     12. Other Rights. Except as otherwise set forth
herein, the Class A Preferred Stock and the Class B Preferred Stock
shall be equal in all respects.

B. COMMON STOCK

     The voting powers, preferences and rights (and the qualifications, limitations, or
restrictions thereof) of the Common Stock are as follows:

     1. Voting Rights. Except as may be otherwise provided
by law, the holders of Common Stock shall vote together and with the
holders of all other classes of stock of the Corporation which have
a voting right, as a single class, on all actions to be taken by the
stockholders of the Corporation, other than at meetings of holders
of another class of shares. Each share of Common Stock shall
entitle the holder thereof to one vote per share on each such
action.

     2. Dividends. The holders of the Common Stock shall be
entitled to receive, and the Corporation shall pay thereon, any
dividends declared by the Board of Directors of the Corporation in
respect of the Common Stock out of moneys properly applicable to the
payment of dividends.

     For greater certainty, a dividend may be declared and paid on
shares of Common Stock in accordance with the terms of this Amended
and Restated Certificate of Incorporation notwithstanding that a
dividend has, or has not been declared and paid on shares of
Preferred Stock.

     3. Liquidation Rights. Subject to the prior and
superior right of the Preferred Stock and any other class of stock
ranking senior to the Common Stock in liquidation preference, if
any, upon any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation or any other
distribution of the assets of the Corporation among its stockholders
for the purposes of winding up its affairs, the holders of Common
Stock shall be entitled to receive the remaining property and assets
of the Corporation. Such property and assets shall be paid to the
holders of Common Stock pro rata on the basis of the number of
shares of Common Stock held by each of them.

     FIFTH: Subject to the provisions of the Act, the number of Directors of the Corporation shall
be determined as provided by the By-Laws of the Corporation.

8

 

     SIXTH: To the fullest extent permitted by Section 145 of the Act, or any comparable successor
law, as the same may be amended and supplemented from time to time, the Corporation (i) may
indemnify all persons whom it shall have power to indemnify thereunder from and against any and all
of the expenses, liabilities or other matters referred to in or covered thereby, (ii) shall
indemnify each such person if he or she is or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding by reason of the fact that he or she is or was a
director, officer, employee or agent of the Corporation or because he or she was serving the
Corporation or any other legal entity in any capacity at the request of the Corporation while a
director, officer, employee or agent of the Corporation and (iii) shall pay the expenses of such a
current or former director, officer, employee or agent incurred in connection with any such action,
suit or proceeding in advance of the final disposition of such action, suit or proceeding. The
indemnification and advancement of expenses provided for herein shall not be deemed exclusive of
any other rights to which those entitled to indemnification or advancement of expenses may be
entitled under any by-law, agreement, contract or vote of stockholders or disinterested directors
or pursuant to the direction (however embodied) of any court of competent jurisdiction or
otherwise, both as to action in his or her official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.

     SEVENTH: In furtherance and not in limitation of the general powers conferred by the laws of
the State of Delaware, the Board of Directors is expressly authorized to make, alter or repeal the
By-Laws of the Corporation, except as specifically stated therein.

     EIGHTH: Whenever a compromise or arrangement is proposed between the Corporation and its
creditors or any class of them and/or between the Corporation and its stockholders or any class of
them, any court of equitable jurisdiction within the State of Delaware may, on the application in a
summary way of the Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for the Corporation under the provisions of Section 291 of the
Act or on the application of trustees in dissolution or of any receiver or receivers appointed for
the Corporation under the provisions of Section 279 of the Act, order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, to be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of the Corporation as a consequence of such
compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if
sanctioned by the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of stockholders of the
Corporation, as the case may be, and also on the Corporation.

     NINTH: Except as otherwise required by the laws of the State of Delaware, the stockholders
and directors shall have the power to hold their meetings and to keep the books, documents and
papers of the Corporation outside of the State of Delaware, and the Corporation shall have the
power to have one or more offices within or without the State of Delaware, at such places as may be
from time to time designated by the By-Laws or by resolution of the stockholders or Board of
Directors of the Corporation.

9

 

     TENTH: Elections of directors need not be by ballot unless the By-Laws of the Corporation
shall so provide.

     ELEVENTH: The Corporation reserves the right to amend, alter, change or repeal any provision
contained in this Amended and Restated Certificate of Incorporation, in the manner now or hereafter
prescribed by statute, and all right; conferred upon stockholders herein are granted subject to
this reservation.

     TWELFTH: A director of the Corporation shall not be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director’s duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Act, or (iv) for any transaction from
which the director derived any improper personal benefit. If the Act is amended to further
eliminate or limit the personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by the Act, as so
amended. Any repeal or modification of this Article TWELFTH by the stockholders of the Corporation
shall be by the affirmative vote of the holders of not less than eighty percent (80%) of the
outstanding shares of each class of stock of the Corporation and entitled to vote in the election
of directors, considered for the purposes of this Article TWELFTH as one class, shall be
prospective only and shall not adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.

     THIRTEENTH: The name and address of the incorporator is Darren D. Baccus, Torys, 237 Park
Avenue, New York, New York 10017.

     IN WITNESS WHEREOF, the undersigned, does hereby execute this Amended and Restated Certificate
of Incorporation as of the day of November, 2001.

	 	 	 	 	 
	 	 	 
	 	                       /s/ Joseph J. Romagnoli
 	 
	 	Name:  	Joseph J. Romagnoli 	 
	 	Title:  	Secretary 	 
	 

10

 

CERTIFICATE OF INCORPORATION

OF

AUGUSTA NEWSPRINT INC.

     THE UNDERSIGNED, for the purpose of forming a corporation pursuant to the provisions of the
General Corporation Law of the State of Delaware, hereby certifies as follows:

     FIRST: The name of the corporation is Augusta Newsprint Inc. (the “Corporation”).

     SECOND: The address of the Corporation’s registered office in the State of Delaware is 2711
Centerville Road, Suite 400, Wilmington, Delaware 19808, which address is located in the County of
New Castle, and the name or the Corporation’s registered agent at such address is Corporation
Service Company.

     THIRD: The purpose for which the Corporation is organized is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation Law of the State of
Delaware.

     FOURTH: The total number of shares of all classes of stock which the Corporation has
authority to issue is Thirty Three Thousand (33,000) shares, consisting of Twenty Thousand (20,000)
shares of Common Stock, par value $0.01 per share (the “Common Stock”), and Thirteen Thousand
(13;000) shares of Preferred Stock, par value $0.01 per share (the “Preferred Stock”), which
Preferred Stock shall have such designations, powers, preferences and rights as may be authorized
by the Board of Directors from time to time.

A. PREFERRED STOCK

   The voting powers, preferences and rights (and the qualifications, limitations, or
restrictions thereof) of the Preferred Stock are as follows:

     1. Voting. Except as may be otherwise provided in
these terms of the Preferred Stock or by law, the holders of
Preferred Stock shall vote together and with the holders of all
other classes of stock of the Corporation which have a voting right,
as a single class, on all actions to be taken by the stockholders of
the Corporation, other than at meetings of holders of another class
of shares. Each share or Preferred Stock shall entitle the holder
thereof to one vote per share on each such action.

     2. Dividends. The holders of the Preferred Stock shall
be entitled to receive, and the Corporation shall pay thereon any
dividend declared by the Board of Directors of the Corporation out
of moneys of the Corporation properly applicable to the payment of
dividends, provided that the dividend rate on the Preferred Stock
(the “Dividend Rate”) in any fiscal year shall not exceed on a per
annum basis the aggregate of eight percent (8%) plus, for dividends
declared in fiscal years of the Corporation subsequent to June 30,
2002, any Carry Forward Amount (as defined below) (such aggregate
amount being, the “Maximum Dividend Rate”).

 

 

The Dividend Rate for a share of Preferred Stock will be
applied to the amount of ten thousand Canadian dollars (Cdn $10,000)
(the “Redemption Amount” of a share of Preferred Stock).

     Dividends which are declared pursuant to this Section 2 shall
be payable in Canadian dollars, however the Board of Directors may
elect to pay such dividend in U.S. dollars at an exchange rate
determined by the Board of Directors.

     In the event that the Board of Directors declares a dividend
for a year which is at a Dividend Rate that is less than the Maximum
Dividend Rate for such year, the shortfall shall constitute the
“Carry Forward Amount” for determining the Maximum Dividend Rate of
the subsequent year.

     Declared dividends on shares of Preferred Stock shall be
payable on the day determined by the Board of Directors of the
Corporation.

     In the case of shares of Preferred Stock outstanding for less
than a full fiscal year of the Corporation at the time of a dividend
payment, dividends shall be pro rated based upon the portion of each
year during which such shares of Preferred Stock are outstanding.

     For greater certainty, a dividend may be declared and paid on shares of Preferred Stock in accordance with the terms of this
Certificate notwithstanding that a dividend has, or has not been
declared and paid on shares of Common Stock.

     3. Redemption at the Option of the Holder. Subject to
the provisions of this clause 3 and clause 5 and the General
Corporation Law of the State of Delaware (the “Act”), a holder of
shares of Preferred Stock shall be entitled to require the
Corporation to reject at any time all or any of the shares of
Preferred Stock registered in the name of such holder on the books
of the Corporation by tendering to the Corporation at its registered
office the certificate or certificates representing the Preferred
Stock which such holder desires to have the Corporation redeem
together with a written request specifying that such holder desires
to have all or a specified number of the shares of Preferred Stock
represented by such certificate or certificates redeemed by the
Corporation. After receipt of the share certificate or certificates
representing the shares of Preferred Stock which the holder desires
the Corporation to redeem together with a request for redemption
specified above (if such notice is not waived), the Corporation
shall, on such redemption date as may be specified by the
Corporation (the “Redemption Date”) but being not later than thirty
(30) days following such receipt, redeem such shares of Preferred
Stock by paying to such registered holder for each share

2

 

of Preferred Stuck to be redeemed the Redemption Amount thereof
plus all dividends declared and unpaid thereon to and including the
Redemption Date (the “Redemption Price” of a share of Preferred
Stock). Such payment shall he made by cheque payable in Canadian
dollars. The shares of Stock shall be redeemed on the Redemption
Date. From and after the Redemption Date such shares of Preferred
Stock shall cease to be entitled to dividends or any other
participation in the assets of the Corporation and the holders
thereof shall not be entitled to exercise any of the other rights of
a holder in respect thereof unless payment of the Redemption Price
shall not be made on the Redemption Date, in which event the rights
of the holder shall remain unaffected. If a part only of the shares
of Preferred Stock represented by any certificate shall be redeemed,
a new certificate representing the balance of such shares of
Preferred Stock shall be issued to the holder thereof at the expense
of the Corporation upon the presentation and surrender of the first
mentioned certificate.

     4. Redemption at the Option of the Corporation.
Subject to the provisions of this clause 4 and clause 5 and the Act,
the Corporation may upon giving notice as hereinafter provided,
redeem at any time the whole or from time to time any part of the
then outstanding shares of Preferred Stock on payment for each share
to be redeemed at the Redemption Price thereof. In case a part only
of the shares of Preferred Stock is at any time to be redeemed, the
shares so to be redeemed may be selected by lot in such manner as
the directors of the Corporation in their sole discretion shall by
resolution determine or redemption may be effected on a pro rain
basis disregarding fractions. In any case of redemption of shares
of Preferred Stock under this clause 4, the Corporation shall at
least ten (10) days (which period may be waived by the holders)
before the Redemption Date deliver to each person who is a
registered holder of Preferred Stock to be redeemed a notice in
writing of the intention of the Corporation to redeem such shares of
Preferred Stock. Such notice shall set out the number of shares of
Preferred Stock held by the person to whom it is addressed which are
to be redeemed, the Redemption Price and the Redemption Date. On or
after the Redemption Date, the Corporation shall pay or cause to be
paid to or to the order of the registered holders of the Preferred
Stock to be redeemed the Redemption Price of such shares on
presentation and surrender, at the registered office of the
Corporation or at any other place or places specified in such notice
of redemption, of the certificate or certificates representing the
shares of Preferred Stock so called for redemption. Such payment
shall be made by cheque payable in Canadian dollars. From and after
the Redemption Date, the shares of Preferred Stock called for
redemption shall cease to be entitled

3

 

to dividends or any other participation in the assets of the
Corporation and the holders thereof shall not be entitled to
exercise any of the other rights of shareholders in respect thereof
unless payment of the Redemption Price shall not be made upon
presentation and surrender of the certificates in accordance with
the foregoing provisions, in which case the rights of the holders
shall remain unaffected. If a part only of the shares of Preferred
Stock represented by any certificate shall be redeemed, a new
certificate representing the balance of such shares of Preferred
Stock shall be issued to the holder thereof at the expense of the
Corporation upon presentation and surrender of the first mentioned
certificate.

     5. Redemption Subject to Laws. If the Corporation does
not have sufficient funds legally available to redeem all shares to
be redeemed on a Redemption Date, then it shall redeem shares of
Preferred Stock pro rata (based on the portion of the aggregate
Redemption Price payable to each holder of shares of Preferred Stock
to be redeemed) and shall redeem the remaining shares pro rata as
soon as sufficient funds are legally available.

     6. Liquidation, Dissolution or Winding Up. In the
event of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation or in the event of any
other distribution of assets of the Corporation among its
Stockholders for the purpose of winding up its affairs, the holders
of the Preferred Stock shall be entitled to receive from the
property and assets of the Corporation a sum equal to the Redemption
Price for each share of the Preferred Stock held by them
respectively, the whole before any amount shall be paid by the
Corporation or any property or assets of the Corporation shall be
distributed to holders of the shares of Common Stock or the shares
of any other class of stock ranking junior to the Preferred Stock in
liquidation preference. After payment to the holders of the
Preferred Stock of the amounts payable to them, they shall not be
entitled to share in any further distribution of the property or
assets of the Corporation.

B. COMMON STOCK

     The voting powers, preferences and rights (and the qualifications, limitations, or
restrictions thereof) of the Common Stock are as follows:

     1. Voting Rights. Except as may be otherwise provided
in these terms of the Common Stock or by law, the holders of Common
Stock shall vote together and with the holders of all other classes
of stock of the Corporation which have a voting right, as a single
class, on all actions to be taken by the stockholders of the
Corporation, other than at meetings of holders

4

 

of another class of shares. Each share of Common Stock shall
entitle the holder thereof to one vote per share on each such
action.

     2. Dividends. The holders of the Common Stock shall be
entitled to receive, and the Corporation shall pay thereon, any
dividends declared by the Board of Directors of the Corporation out
of moneys properly applicable to the payment of dividends.

     For greater certainty, a dividend may be declared and paid on
shares of Common Stock in accordance with the terms of this
Certificate notwithstanding that a dividend has, or has not been
declared and paid on shares of Preferred Stock.

     3. Liquidation Rights. Subject to the prior and
superior right of the Preferred Stock and any other class of stock
ranking senior to the Common Stock in liquidation preference, if
any, upon any voluntary or involuntary liquidation, dissolution or
winding up of the affairs or the Corporation or any other
distribution of the assets of the Corporation among its Stockholders
for the purposes of winding up its affairs, the holders of Common
Stock shall be entitled to receive the remaining property and assets
of the Corporation. Such property and assets shall be paid to the
holders of Common Stock pro rata on the basis of the number of
shares of Common Stock held by each of them.

     4. Merger, Consolidation, Sale of Assets. Subject to
the prior and superior rights of the Preferred Stock, if any, in the
event of any merger or consolidation of the Corporation with or into
another corporation in which the Corporation shall not survive, or
the sale or transfer of all or substantially all of the assets of
the Corporation to another entity, or a merger or consolidation in
which the Corporation shall be the surviving entity but its Common
Stock is exchanged for stock, securities or property of another
entity, the holders of Common Stock shall be entitled to receive all
cash, securities and other property received by the Corporation pro
rata on the basis of the number of shares of Common Stock held by
each of them.

     5. Residual Rights. All rights accruing to the
outstanding shares of the Corporation not expressly provided for to
the contrary in this Certificate of Incorporation, as it may from
time to time be amended or supplemented, including without
limitation any supplement effected pursuant to a certificate of
designations, shall be vested in the Common Stock.

     FIFTH: Subject to the provisions of the Act, the number of Directors of the Corporation shall
be determined as provided by the By-Laws of the Corporation.

     SIXTH: To the fullest extent permitted by Section 145 of the Delaware General Corporation
Law, or any comparable successor law, as the same may be amended and

5

 

supplemented from time to time, the Corporation (i) may indemnify all persons whom it shall
have power to indemnify thereunder from and against any and all of the expenses, liabilities or
other matters referred to in or covered thereby, (ii) shall indemnify each such person if he is or
is threatened to be made a party to an action, suit or proceeding by reason of the fact that he is
or was a director, officer, employee or agent of the Corporation or because he was serving the
Corporation or any other legal entity in any capacity at the request of the Corporation while a
director, officer, employee or agent of the Corporation and (iii) shall pay the expenses of such a
current or former director, officer, employee or agent incurred in connection with any such action,
suit or proceeding in advance of the final disposition of such action, suit or proceeding. The
indemnification and advancement of expenses provided for herein shall not be deemed exclusive of
any other rights to which those entitled to indemnification or advancement of expenses may be
entitled under any by-law, agreement, contract or vote of stockholders or disinterested Board of
Directors or pursuant to the direction (however embodied) of any court of competent jurisdiction or
otherwise, both as to action in his official capacity and as to action in another capacity while
holding such office, and shall continuo as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and administrators of such
a person.

     SEVENTH: In furtherance and not in limitation of the general powers conferred by the laws of
the State of Delaware, the Board of Directors is expressly authorized to make, alter or repeal the
By-Laws of the Corporation, except as specifically stated therein.

     EIGHTH: Except as otherwise required by the laws of the State of Delaware, the stockholders
and directors shall have the power to hold their meetings and to keep the book, documents and
papers of the Corporation outside of the State of Delaware, and the Corporation shall have the
power to have one or more offices within or without the State of Delaware, at such places as may be
from time to time designated by the By-Laws or by resolution of the stockholders or Board of
Directors of the Corporation.

     NINTH: Elections of directors need not be by ballot unless the By-Laws of the Corporation
shall so provide.

     TENTH: The Corporation reserves the right to amend, alter, change or repeal any provision
contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders herein are granted subject to this reservation.

     ELEVENTH: A director of the Corporation shall not be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director’s duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) for the unlawful payment of dividends or unlawful stock
purchases under Section 174 of the General Corporation Law of Delaware, or (iv) for any transaction
from which the director derived any improper personal benefit, if the Act is amended to further
eliminate or limit the personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by the Act, as so
amended. Any repeal or modification of this Article by the stockholders of the Corporation shall
be by the affirmative vote of the holders of not less than eighty percent (80%) of the outstanding
shares of each class of stock of the Corporation and entitled to vote in the election of directors,

6

 

considered for the purposes of this Article ELEVENTH as one class, shall be prospective only
and shall not adversely affect any right or protection of a director of the Corporation existing at
the time of such repeal or modification.

     TWELFTH: The name and address of the incorporator is Alexandra Kau, Tory’s, 237 Park Avenue,
New York, New York 10017.

     IN WITNESS WHEREOF, the undersigned, being the incorporator hereinabove named, does hereby
execute this Certificate of Incorporation this 2nd day of July, 2001.

	 	 	 	 	 
	 	 	 
	 	                       /s/ Alexandra Kau
 	 
	 	Alexandra Kau 	 
	 	Incorporator 	 
	 

7

 

EXHIBIT B

BY-LAWS OF ANI

 

 

AUGUSTA NEWSPRINT INC.

BY-LAWS

ARTICLE I

Offices

          The registered office of the Corporation shall be in the City of Wilmington, County of New
Castle, State of Delaware. The Corporation may also have offices at such other places, both within
and without the State of Delaware, as may from time to time be designated by the Board of
Directors.

ARTICLE II

Books

          The books and records of the Corporation may be kept (except as otherwise provided by the laws
of the State of Delaware) outside of the State of Delaware and at such place or places as may from
time to time be designated by the Board of Directors.

ARTICLE III

Stockholders

          Section 1. Annual Meetings. The annual meeting of the stockholders of the Corporation
for the election of Directors and the transaction of such other business as may properly come
before said meeting shall be held at the principal business office of the Corporation or at such
other place or places either within or without the State of Delaware as may be designated by the
Board of Directors and stated in the notice of the meeting, on the first Monday of June in each
year, if not a legal holiday, and, if a legal holiday, then on the next day

1

 

not a legal holiday, at 10:00 o’clock in the forenoon, or such other day and time as shall be
determined by the Board of Directors.

          Written notice of the place designated for the annual meeting of the stockholders of the
Corporation shall be delivered personally or mailed to each stockholder entitled to vote thereat
not less than ten (10) and not more than sixty (60) days prior to said meeting, but at any meeting
at which all stockholders shall be present, or of which all stockholders not present have waived
notice in writing, the giving of notice as above described may be dispensed with. If mailed, said
notice shall be directed to each stockholder at such stockholder’s address as the same appears on
the stock ledger of the Corporation unless such stockholder shall have filed with the Secretary of
the Corporation a written request that notices intended for such stockholder be mailed to some
other address, in which case it shall be mailed to the address designated in such request.

          Section 2. Special Meetings. Special meetings of the stockholders of the Corporation
shall be held whenever called in the manner required by the laws of the State of Delaware for
purposes as to which there are special statutory provisions, and for other purposes whenever called
by resolution of the Board of Directors, or by the President, or by the holders of a majority of
the outstanding shares of capital stock of the Corporation the holders of which are entitled to
vote on matters that are to be voted on at such meeting. Any such special meeting of stockholders
may be held at the principal business office of the Corporation or at such other place or places,
either within or without the State of Delaware, as may be specified in the notice thereof. Business
transacted at any special meeting of stockholders of the Corporation shall be limited to the
purposes stated in the notice thereof.

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          Except as otherwise expressly required by the laws of the State of Delaware, written notice of
each special meeting, stating the day, hour and place, and in general terms the business to be
transacted thereat, shall be delivered personally or mailed to each stockholder entitled to vote
thereat not less than ten (10) and not more than sixty (60) days prior to said meeting, but at any
special meeting at which all stockholders shall be present, or of which all stockholders not
present have waived notice in writing, the giving of notice as above described may be dispensed
with. If mailed, said notice shall be directed to each stockholder at such stockholder’s address
as the same appears on the stock ledger of the Corporation unless such stockholder shall have filed
with the Secretary of the Corporation a written request that notices intended for such stockholder
be mailed to some other address, in which case it shall be mailed to the address designated in said
request.

          Section 3. List of Stockholders. The officer of the Corporation who shall have charge
of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at said meeting,
arranged in alphabetical order and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business hours for a period of
at least ten (10) days prior to the meeting, either at a place within the city where the meeting is
to be held, which place shall be specified in the notice of the meeting, or, if not so specified,
at the place where the meeting is to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may be inspected by any stockholder who
is present.

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          Section 4. Quorum. At any meeting of the stockholders of the Corporation, except as
otherwise expressly provided by the laws of the State of Delaware, the Certificate of Incorporation
or these By-Laws, there must be present, either in person or by proxy, in order to constitute a
quorum, stockholders owning a majority of the issued and outstanding shares of the capital stock of
the Corporation entitled to vote at said meeting. At any meeting of stockholders at which a quorum
is not present, the holders of, or proxies for, a majority of the stock which is represented at
such meeting, shall have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be transacted which
might have been transacted at the meeting as originally noticed. If the adjournment is for more
than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.

          Section 5. Organization. The President, or in the President’s absence any Vice
President, shall call to order meetings of the stockholders and shall act as chairman of such
meetings. The Board of Directors or the stockholders may appoint any stockholder or any Director
or officer of the Corporation to act as chairman of any meeting in the absence of the President and
all of the Vice Presidents.

          The Secretary of the Corporation shall act as secretary of all meetings of the stockholders,
but in the absence of the Secretary the presiding officer may appoint any other person to act as
secretary of any meeting.

          Section 6. Voting. Except as otherwise provided in the Certificate of Incorporation
or these By-Laws, each stockholder of record of the Corporation shall, at every

4

 

meeting of the stockholders of the Corporation, be entitled to one (1) vote for each share of
stock standing in such stockholder’s name on the books of the Corporation on any matter on which
such stockholder is entitled to vote, and such votes may be cast either in person or by proxy,
appointed by an instrument in writing, subscribed by such stockholder or by such stockholder’s duly
authorized attorney, and filed with the Secretary before being voted on, but no proxy shall be
voted after three (3) years from its date, unless said proxy provides for a longer period. If the
Certificate of Incorporation provides for more or less than one (1) vote for any share of capital
stock of the Corporation, on any matter, then any and every reference in these By-Laws to a
majority or other proportion of capital stock shall refer to such majority or other proportion of
the votes of such stock.

          The vote on all elections of Directors and on any other questions before the meeting need not
be by ballot, except upon demand of any stockholder.

          When a quorum is present at any meeting of the stockholders of the Corporation, the vote of
the holders of a majority of the capital stock entitled to vote at such meeting and present in
person or represented by proxy shall decide any question brought before such meeting, unless the
question is one upon which, under any provision of the laws of the State of Delaware or of the
Certificate of Incorporation, a different vote is required in which case such provision shall
govern and control the decision of such question.

          Section 7. Consent. Except as otherwise provided by the Certificate of Incorporation,
whenever the vote of the stockholders at a meeting thereof is required or permitted to be taken in
connection with any corporate action by any provision of the laws of the State of Delaware or of
the Certificate of Incorporation, such corporate action may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth

5

 

the action so taken, shall be signed by the holders of outstanding capital stock of the
Corporation having not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not consented thereto in
writing.

          Section 8. Judges. At every meeting of the stockholders of the Corporation at which a
vote by ballot is taken, the polls shall be opened and closed, the proxies and ballots shall be
received and taken in charge, and all questions touching the qualifications of voters, the validity
of proxies and the acceptance or rejection of votes shall be decided by, two (2) judges. Said
judges shall be appointed by the Board of Directors before the meeting, or, if no such appointment
shall have been made, by the presiding officer of the meeting. If for any reason any of the judges
previously appointed shall fail to attend or refuse or be unable to serve, judges in place of any
so failing to attend, or refusing or unable to serve, shall be appointed in like manner.

ARTICLE IV

Directors

          Section 1. Number, Election and Term of Office. The business and affairs of the
Corporation shall be managed by the Board of Directors. The number of Directors which shall
constitute the whole Board shall be between one (1) and nine (9). Within such limits, the number
of Directors may be fixed from time to time by vote of the stockholders or of the Board of
Directors, at any regular or special meeting, subject to the provisions of the Certificate of
Incorporation. Directors need not be stockholders. Directors shall be elected at the annual
meeting of the stockholders of the Corporation, except as provided in Section 2 of this Article, to

6

 

serve until the next annual meeting of stockholders and until their respective successors are
duly elected and have qualified.

     In addition to the powers by these By-Laws expressly conferred upon them, the Board may
exercise all such powers of the Corporation as are not by the laws of the State of Delaware, the
Certificate of Incorporation or these By-Laws required to be exercised or done by the stockholders.

          Section 2. Vacancies and Newly Created Directorships. Except as hereinafter provided,
any vacancy in the office of a Director occurring for any reason other than the removal of a
Director pursuant to Section 3 of this Article, and any newly created Directorship resulting from
any increase in the authorized number of Directors, may be filled by a majority of the Directors
then in office or by a sole remaining Director. In the event that any vacancy in the office of a
Director occurs as a result of the removal of a Director pursuant to Section 3 of this Article, or
in the event that vacancies occur contemporaneously in the offices of all of the Directors, such
vacancy or vacancies shall be filled by the stockholders of the Corporation at a meeting of
stockholders called for the purpose. Directors chosen or elected as aforesaid shall hold office
until the next annual meeting of stockholders and until their respective successors are duly
elected and have qualified.

          Section 3. Removals. At any meeting of stockholders of the Corporation called for the
purpose, the holders of a majority of the shares of capital stock of the Corporation entitled to
vote at such meeting may remove from office, with or without cause, any or all of the Directors.

          Section 4. Regular Meetings. Regular meetings of the Board of Directors may be held
without notice at such time and place, either within or without the State of

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Delaware, as shall from time to time be determined by resolution of the Board. The Board of
Directors may appoint any Director or office of the Corporation to act as chairman of any meeting
of the Board of Directors.

          Section 5. Special Meetings. Special meetings of the Board of Directors may be called
by the President or any two Directors on notice given to each Director, and such meetings shall be
held at the principal business office of the Corporation or at such other place or places, either
within or without the State of Delaware, as shall be specified in the notices thereof.

          Section 6. Annual Meetings. The first meeting of each newly elected Board of
Directors shall be held as soon as practicable after each annual election of Directors and on the
same day, at the same place at which regular meetings of the Board of Directors are held, or at
such other time and place as may be provided by resolution of the Board. Such meeting may be held
at any other time or place which shall be specified in a notice given, as hereinafter provided, for
special meetings of the Board of Directors.

          Section 7. Notice. Notice of any meeting of the Board of Directors requiring notice
shall be given to each Director by mailing the same, addressed to the director at such director’s
residence or usual place of business, at least forty-eight (48) hours, or shall be sent to such
director at such place by facsimile transmission, courier, telegraph, cable or wireless, or shall
be delivered personally or by telephone, at least twelve (12) hours, before the time fixed for the
meeting. At any meeting at which every Director shall be present or at which all Directors not
present shall waive notice in writing, any and all business may, be transacted even though no
notice shall have been given.

          Section 8. Quorum. At all meetings of the Board of Directors, the presence of a
majority of the Directors constituting the Board shall constitute a quorum for the transaction

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of business. Except as may be otherwise specifically provided by the laws of the State of
Delaware, the Certificate of Incorporation or these By-Laws, the affirmative vote of a majority of
the Directors present at the time of such vote shall be the act of the Board of Directors if a
quorum is present. If a quorum shall not be present at any meeting of the Board of Directors, the
Directors present thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.

          Section 9. Consent. Unless otherwise restricted by the Certificate of Incorporation
or these By-Laws, any action required or permitted to be taken at any meeting of the Board of
Directors may be taken without a meeting, if all members of the Board consent thereto in writing,
and the writing or writings are filed with the minutes of proceedings of the Board.

          Section 10. Telephonic Meetings. Unless otherwise restricted by the Certificate of
Incorporation or these By-Laws, members of the Board of Directors may participate in a meeting of
the Board by means of conference telephone or similar communications equipment by means of which
all persons participating in such meeting can hear each other, and participation in a meeting
pursuant to this Section 10 shall constitute presence in person at such meeting.

          Section 11. Compensation a Directors. Directors, as such, shall not receive any
stated salary for their services, but, by resolution of the Board, a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special meeting of the Board,
provided that nothing herein contained shall be construed to preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor.

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          Section 12. Resignations. Any Director of the Corporation may resign at any time by
giving written notice to the Board of Directors or to the President or the Secretary of the
Corporation. Any such resignation shall take effect at the time specified therein, or, if the time
be not specified, upon receipt thereof; and unless otherwise specified therein, acceptance of such
resignation shall not be necessary to make is effective.

ARTICLE V

Officers

          Section 1. Number, Election and Term of Office. The officers of the Corporation shall
be a President, a Secretary and an Assistant Secretary, and may at the discretion of the Board of
Directors include one or more Vice Presidents and Assistant Treasurers. The officers of the
Corporation shall be elected annually by the Board of Directors at its meeting held immediately
after the annual meeting of the stockholders, and shall hold their respective offices until their
successors are duly elected and have qualified. Any number of offices may be held by the same
person. The Board of Directors may from time to time appoint such other officers and agents as the
interest of the Corporation may require and may fix their duties and terms of office.

          Section 2. President. The President shall be the chief executive officer of
Corporation and shall have general and active management of the business of the Corporation, and
shall see that all orders and resolutions of the Board are carried into effect. The President
shall ensure that the books, reports, certificates and other records of the Corporation are kept,
made or filed in accordance with the laws of the State of Delaware. The President shall preside at
all meetings of the Board of Directors and at all meetings of the stockholders unless all of the
directors authorize another director to preside at a meeting. The President shall cause to be

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called regular and special meetings of the stockholders and of the Board of Directors in
accordance with these By-Laws. The President may sign, execute and deliver in the name of the
Corporation all deeds, mortgages, bonds, contracts or other instruments authorized by the Board of
Directors, except in cases where the signing, execution or delivery thereof shall be expressly
delegated by the Board of Directors or by the By-Laws to some other officer or agent of the
Corporation or where any of them shall be required by law otherwise to be signed, executed or
delivered. The President may sign, with the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary, certificates of stock of the Corporation. The President shall appoint
and remove, employ and discharge, and fix the compensation of all servants, agents, employees and
clerks of the Corporation other than the duly elected or appointed officers, subject to the
approval of the Board of Directors. In addition to the powers and duties expressly conferred upon
the President by these By-Laws, the President shall, except as otherwise specifically provided by
the laws of the State of Delaware, have such other powers and duties as shall from time to time be
assigned to the President by the Board of Directors.

          Section 3. Vice Presidents. The Vice Presidents shall perform such duties as the
President or the Board of Directors shall require. Any Vice President shall, during the absence or
incapacity of the President, assume and perform the President’s duties.

          Section 4. Secretary. The Secretary may sign all certificates of stock of the
Corporation. The Secretary shall record all the proceedings of the meetings of the Board of
Directors and of the stockholders of the Corporation in books to be kept for that purpose. The
secretary shall have custody of the seal of the Corporation and may affix the same to any
instrument requiring such seal when authorized by the Board of Directors, and when so affixed the
Secretary may attest the same by the Secretary’s signature. The Secretary shall keep the

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transfer books, in which all transfers of the capital stock of the Corporation shall be
registered, and the stock books, which shall contain the names and addresses of all holders of the
capital stock of the Corporation and the number of shares held by each; and the Secretary shall
keep such stock and transfer books open daily during business hours to the inspection of every
stockholder and for transfer of stock. The Secretary shall notify the Directors and stockholders
of their respective meetings as required by law or by these By-Laws, and shall perform such other
duties as may be required by law or by these By-Laws, or which may be assigned to the Secretary
from time to time by the Board of Directors.

          Section 5. Assistant Secretaries. The Assistant Secretaries shall, during the absence
or incapacity of the Secretary, assume and perform all functions and duties which the Secretary
might lawfully do if present and not under any incapacity.

          Section 6. Treasurer. The Treasurer shall have charge of the funds and securities of
the Corporation. The Treasurer may sign all certificates of stock. The Treasurer shall keep full
and accurate accounts of all receipts and disbursements of the Corporation in books belonging to
the Corporation and shall deposit all monies and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the Board of Directors. The
Treasurer shall disburse the funds of the Corporation as may be ordered by the Board, and shall
render to the President or the Directors, whenever they may require it, an account of all the
Treasurer’s transactions as Treasurer and an account of the business and financial position of the
Corporation.

          Section 7. Assistant Treasurers. The Assistant Treasurers shall, during the absence
or incapacity of the Treasurer, assume and perform all functions and duties which the Treasurer
might lawfully, do if present and not under any incapacity.

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          Section 8. Treasurer’s Bond. The Treasurer and Assistant Treasurers shall, if
required so to do by the Board of Directors, each give a bond (which shall be renewed every six (6)
years) in such sum and with such surety or sureties as the Board of Directors may require.

          Section 9. Transfer of Duties. The Board of Directors in its absolute discretion may
transfer the power and duties, in whole or in part, of any officer to any other officer, or
persons, notwithstanding the provisions of these By-Laws, except as otherwise provided by the laws
of the State of Delaware.

          Section 10. Vacancies. If the office of President, Vice President, Secretary or
Treasurer, or of any other officer or agent becomes vacant for any reason, the Board of Directors
may choose a successor to hold office for the unexpired term.

          Section 11. Removals. At any meeting of the Board of Directors called for each
purpose, any officer or agent of the Corporation may be removed from office, with or without cause,
by the affirmative vote of a majority of the Board of Directors.

          Section 12. Compensation of Officers. The officers shall receive such salary or
compensation as may be determined by the Board of Directors.

          Section 13. Resignations. Any officer or agent of the Corporation may resign at any
time by giving written notice to the Board of Directors or to the President or the Secretary of the
Corporation. Any such resignation shall take effect at the time specified therein or, if the time
be not specified, upon receipt thereof; and unless otherwise specified therein, acceptance of such
resignation shall not be necessary to make it effective.

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ARTICLE VI

Contracts, Checks and Notes

          Section 1. Contracts. Unless the Board of Directors shall otherwise specifically
direct, all contracts of the Corporation shall be executed in the name of the Corporation by the
President.

          Section 2. Checks and Notes. All checks, drafts, bills of exchange and promissory
notes and other negotiable instruments of the Corporation shall be signed by such officers or
agents of the Corporation as may be designated by the Board of Directors.

ARTICLE VII

Stock

          Section 1. Certificates of Stock. The certificates for shares of the stock of the
Corporation shall be in such form, not inconsistent with the Certificate of Incorporation, as shall
be prepared or approved by the Board of Directors. Every holder of stock in the Corporation shall
be entitled to have a certificate signed by, or in the name of the Corporation by, the President or
a Vice President, and by the Treasurer or an Assistant Treasurer or the secretary or an Assistant
Secretary certifying the number of shares owned by the stockholder and the date of issue; and no
certificate shall be valid unless so signed. All certificates shall be consecutively numbered and
shall be entered in the books of the Corporation as they are issued.

          Where a certificate is countersigned (1) by a transfer agent other than the Corporation or its
employee, or, (2) by a registrar other than the Corporation or its employee, any other signature on
the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if the officer, transfer agent or registrar were such officer,
transfer agent or registrar at the date of issue.

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          All certificates surrendered to the Corporation shall be cancelled and, except in the case of
lost or destroyed certificates, no new certificates shall be issued until the former certificates
for the same number of shares of the same class of stock shall have been surrendered and cancelled.

          Section 2. Transfer of Stock. Upon surrender to the Corporation or the transfer agent
of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a
new certificate to the person entitled thereto, cancel the old certificate and record the
transaction upon its books.

ARTICLE VIII

Registered Stockholders

          The Corporation shall be entitled to treat the holder of record of any share or shares of
stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable
or other claim to, or interest in, such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, save as expressly provided by the laws of the
State of Delaware.

ARTICLE IX

Lost Certificates

     Any person claiming a certificate of stock to be lost or destroyed, shall make an affidavit or
affirmation of the fact and advertise the same in such manner as the Board of Directors may
require, and the Board of Directors may, in its discretion, require the owner of the lost or
destroyed certificate, or such person’s legal representative, to give the Corporation a bond in a

15

 

sum sufficient, in the opinion of the Board of Directors, to indemnify the Corporation against
any claim that may be made against it on account of the alleged loss of any such certificate. A
new certificate of the same tenor and for the same number of shares as the one alleged to be lost
or destroyed may be issued without requiring any bond when, in the judgment of the Directors, it is
proper so to do.

ARTICLE X

Fixing of Record Date

          In order that the Corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or to receive payment of any dividend or other distribution or
allotment of any rights, or to exercise any rights in respect of any change, conversion or exchange
of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty (60) nor less than ten (10) days before the date
of such meeting, nor more than sixty (60) days prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.

ARTICLE XI

Dividends

          Subject to the relevant provisions of the Certificate of Incorporation, dividends upon the
capital stock of the Corporation may be declared by the Board of Directors as any regular or
special meeting, pursuant to law. Dividends may be paid in cash, in property, or in

16

 

shares of the capital stock of the Corporation, subject to the provisions of the Certificate
of Incorporation.

          Before payment of any dividend, there may be set aside out of any funds of the Corporation
available for dividends such sums as the Directors from time to time, in their absolute discretion,
think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other purpose as the
Directors shall think conducive to the interest of the Corporation, and the Directors may modify or
abolish any such reserve in the manner in which it was created.

ARTICLE XII

Waiver of Notice

          Whenever any notice whatever is required to be given by statute or under the provisions of the
Certificate of Incorporation or these By-Laws, a waiver thereof in writing signed by the person or
persons entitled to said notice, whether before or after the time stated therein, shall be
equivalent thereto.

ARTICLE XIII

Seal

          The corporate seal of the Corporation shall have inscribed thereon the name of the
Corporation, the year of its organization and the words “Corporate Seal, Delaware.”

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ARTICLE XIV

Amendments

          Subject to the provisions of the Certificate of Incorporation, these By-Laws may be altered,
amended or repealed or new By-Laws may be adopted by the stockholders or by the Board of Directors,
at any regular meeting of the stockholders or of the Board of Directors or at any special meeting
of the stockholders or of the Board of Directors if notice of such alteration, amendment or repeal
of the By-Laws or of adoption of new By-Laws be contained in the notice of such special meeting.

18

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