Document:

EX-10.1 Supplemental Retirement Plan

Exhibit 10.1

VECTOR GROUP LTD.

 SUPPLEMENTAL RETIREMENT PLAN

(as amended and restated April 24, 2008)

     WHEREAS, VECTOR GROUP LTD., a Delaware corporation (the “Company”), adopted the Vector Group
Ltd. Supplemental Retirement Plan as of January 1, 2002, as amended by Amendment No. 1 thereto
entered into on January 21, 2003, as amended and restated March 3, 2004, and as further amended and
restated January 27, 2006, for the purpose of providing certain select management employees of the
Company and its affiliates unfunded deferred compensation benefits payable upon retirement, death
or other termination of employment;

     WHEREAS, the Board has the right under Section 8.2 of the Plan to amend the Plan; and

     WHEREAS, the Board desires to make certain additional amendments to the Plan, to cause the
Plan to meet the applicable requirements of Section 409A of the Internal Revenue Code of 1986, as
amended, and to amend and restate the Plan in its entirety.

     NOW, THEREFORE, the Plan is amended and restated, as of January 1, 2008, to read as follows:

SECTION 1

DEFINITIONS

     Except as otherwise provided herein, the following terms shall be defined in accordance with
this Section 1:

 

 

          1.1 “Accrued Benefit” shall mean that amount of projected annual retirement benefit set forth
on Exhibit A hereto that a Participant who fulfills the terms and conditions of the Plan would
receive at his Normal Retirement Date.

          1.2 “Actuarial Equivalent” shall mean a form of benefit differing in time, period or manner of
payout from the normal form of Retirement Benefit provided under the Plan but having the same value
when computed using post-retirement mortality table 1983 Group Annuity (50% male/50% female) and
pre- and post-retirement interest rates of 7.5%.

          1.3 “Adopting Employer” means (a) any business entity in which the Company owns a majority
interest upon the Effective Date or (b) any other business entity, which, following the Effective
Date, is authorized by the Board to adopt the Plan.

          1.4 “Anniversary Date” shall mean the Effective Date and each anniversary thereof while the
Plan remains in effect.

          1.5 “Board” shall mean the Board of Directors of the Company.

          1.6 “Code” shall mean the Internal Revenue Code of 1986, as amended, and the regulations,
rulings and other guidance published thereunder by the Internal Revenue Service.

          1.7 “Committee” shall mean the person, persons or entity designated by the Company to
administer the Plan on behalf of the Company and the Adopting Employers. Unless otherwise
designated by the Board, the Compensation Committee of the Board shall serve as the Committee to
administer the Plan.

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          1.8 “Company” shall mean Vector Group Ltd., a Delaware corporation.

          1.9 “Disability” shall mean the date a Participant becomes “disabled” within the meaning of
Section 409A(a)(2) of the Code; provided, however, that a Participant shall be deemed to be
disabled if the Participant is determined to be totally disabled by the Social Security
Administration.

          1.10 “Disability Retirement Date” shall mean a date selected by the Committee as soon as
practicable following a determination by the Committee that a Participant has incurred a
Disability.

          1.11 “Effective Date” shall mean the date set forth in Section 8.1 of the Plan.

          1.12 “Employer” shall mean the Company and any Adopting Employer for which a Participant
renders service.

          1.13 “Employer Contribution” shall mean the contribution by an Employer to the Fund for each
Plan Year described in Section 3.1 hereof.

          1.14 “Fiscal Year” shall mean the fiscal year of the Company.

          1.15 “Fund” shall mean the fund established under the Trust Fund Agreement.

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          1.16 “Normal Retirement Date” shall mean the January 1 following the Participant’s attainment
of the later of age 60 during active Service or the completion of 8 Years of Participation with the
Company or an Adopting Employer following the Effective Date, provided, however, that Mr. Lorber’s
Normal Retirement Date for purposes of the supplemental benefit shown on Exhibit A shall be January
1, 2013.

          1.17 “Participant” shall mean any key employee of an Employer who from time to time may be
designated on Exhibit A hereto as a participant in the Plan by the Board and who is an active
participant in the Plan.

          1.18 “Participant Payment Date” shall mean the date on which a Participant’s Retirement
Benefit shall be paid to the Participant. Such date shall be: (a) the Disability Retirement Date
of a Participant who has incurred a Disability, (b) that date which falls 30 days following the
later to occur of (i) the Normal Retirement Date of a Participant and (ii) the Participant’s actual
termination of Service with the Company or an Adopting Employer, (c) that date selected by the
Committee as soon as practicable following the death of a Participant, if the Participant’s death
takes place prior to any date described in clauses (a), (b) or (d) of this Section 1.18, or (d)
that date that falls 30 days following the termination of the Service of a Participant without
cause (as defined in Section 4.4 hereof), but only to the extent that any such termination of
Service constitutes a “separation from service” described in Section 409A(a)(2) of the Code.

          1.19 “Participation Ratio” shall mean that percentage equal to a fraction, the numerator of
which consists of that number of full Years of Participation of the Participant in the Plan that
were completed by the Participant prior to the Participant’s termination of Service or incurrence
of a Disability and the denominator of which consists of that total number of Years of
Participation that would have been required on the part of the Participant for the Participant to
attain the Participant’s Normal Retirement Date.

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          1.20 “Plan” shall mean the Vector Group Ltd. Supplemental Retirement Plan, as set forth herein
and as the same may be amended from time to time hereafter.

          1.21 “Retirement Benefit” shall mean the benefit payable to a Participant in accordance with
Section 4.

          1.22 “Service” shall mean the period of full time continuous employment of the Participant by
the Company or an Adopting Employer, following the Effective Date.

          1.23 “Specified Employee” shall mean each Participant who is considered to be a “specified
employee” under Section 409A(a)(2) of the Code, and the determination of Specified Employee status
shall be made as of December 31st of each year.

          1.24 “Trust Fund Agreement” shall mean the Vector Group Ltd. Supplemental Retirement Plan
Trust, the purpose of which agreement is to hold the Fund.

          1.25 “Trustee” shall mean the trustee serving in such capacity under the Trust Fund Agreement.

          1.26 “Year of Participation” shall mean a Year of Service in which the Participant
participated in the Plan. A Participant shall be deemed to have commenced participation in the
Plan on the participation date set forth on Exhibit A hereto.

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          1.27 “Year of Service” shall mean a 12 consecutive month period, in each month of which a
Participant is entitled to compensation by reason of Service.

SECTION 2

DESIGNATION OF PARTICIPANTS

AND ELIGIBILITY FOR BENEFITS

          2.1 Designation of Participants. The Participants shall be those key employees of the
Company or an Adopting Employer that the Board designates to participate in the Plan.

          2.2 Eligibility for Benefits. Except as otherwise provided herein, benefits under the
Plan shall be payable in respect of a Participant at the Participant Payment Date applicable to the
Participant and only by reason of the circumstances provided in Sections 4.1 through 4.4 hereof.

SECTION 3

CONTRIBUTION

          3.1 Amount of Employer Contribution. For the Fiscal Year ending with the Effective
Date or within which falls the Effective Date and thereafter for each Fiscal Year (or portion
thereof) that the Plan remains in effect, an Employer may, in the discretion of the Board, make an
Employer Contribution to the Fund in that amount that the Employer shall determine to be necessary
or appropriate to provide the benefits under the Plan.

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SECTION 4

CIRCUMSTANCES OF PAYMENT; EXCLUSIVITY

          4.1 Attainment of Normal Retirement Date. Upon the attainment of a Participant of the
Participant’s Normal Retirement Date, the Participant shall be vested in the Participant’s Accrued
Benefit, which shall be paid in the manner set forth in Section 5 hereof to the Participant at the
Participant Payment Date of such Participant, as provided in Section 1.18(b) hereof.

          4.2 Disability. A Participant in the Service of an Employer who incurs a Disability
prior to the attainment of the Participant’s Normal Retirement Date shall be vested at the
Participant’s Disability Retirement Date in that amount equal to: (i) the Actuarial Equivalent of
the Participant’s Accrued Benefit, multiplied by (ii) the Participant’s Participation Ratio, which
amount shall be paid in the manner set forth in Section 5 hereof to the Participant at the
Participant Payment Date of such Participant, as provided in Section 1.18(a) hereof.

          4.3 Death. In the event a Participant in the Service of an Employer dies prior to
incurring a Disability or attaining his Normal Retirement Date, such Participant’s beneficiary
shall be vested in the Actuarial Equivalent of the Participant’s Accrued Benefit, which shall be
paid in the manner set forth in Section 5 hereof at the Participant Payment Date provided in
Section 1.18(c) hereof.

          4.4 Termination of Service. In the event of the termination of the Service of a
Participant hereunder by an Employer without “cause” (as defined herein), such Participant shall be
vested upon the effective date of such termination of Service in

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that amount equal to: (i) the Actuarial Equivalent of the Participant’s Accrued Benefit,
multiplied by (ii) the Participant’s Participation Ratio, which amount shall be paid in the manner
set forth in Section 5 hereof at the Participant Payment Date provided in Section 1.18(d) hereof.
For purposes of this Section 4.4, the term “cause” shall mean solely an act of fraud or dishonesty
by the Participant which constitutes a violation of the penal law of the State of New York and
which results in gain or personal enrichment of the Participant at the expense of an Employer or
any entity affiliated therewith.

          4.5 Exclusivity. A Participant whose Service is terminated upon the Participant’s own
initiative or for any reason other than as set forth in the foregoing provisions of this Section 4
shall be entitled to no benefits whatsoever under the Plan.

SECTION 5

METHOD AND RECIPIENTS OF PAYMENTS;

PLAN ADMINISTRATION

          5.1 Normal Payment Method and Recipients of Payments. Except as provided in Section
5.2 hereof, the form of distribution payable to a Participant pursuant to this Section 5.1 shall be
a lump sum payment on the Participant Payment Date of the Participant which shall be the Actuarial
Equivalent of the Participant’s Accrued Benefit on such date. In the event of the death of a
Participant prior to the applicable Participant Payment Date of the Participant, the amount of the
death benefit payable in accordance with Section 4.3 hereof shall be paid in a lump sum to the
Participant’s beneficiary or beneficiaries theretofore designated by the Participant by filing with
the Participant’s Employer or the Committee a notice in writing in such form as the Committee may
prescribe, and in the absence of such designation, shall be paid to the executors or

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administrators of the estate of the Participant. The beneficiaries named as aforesaid may be
changed at any time by the Participant by amending and forwarding to the Participant’s Employer or
the Committee a further written designation. Any payment required under this Section 5.1 shall in
all events be made no later than the later of (i) the end of the calendar year in which the event
giving rise to the distribution occurs and (ii) the 15th day of the third calendar month
following the occurrence of the event giving rise to the distribution.

          5.2 Distributions to Specified Employees. Notwithstanding the other provisions of the
Plan, any payment required to be made under the Plan upon the termination of Service of a
Participant who is a Specified Employee shall be made promptly after the sixth month anniversary of
the Participant’s date of termination of Service to the extent necessary to avoid the imposition
upon the Participant of any additional tax imposed under Section 409A of the Code. All payments
due and owing for the six month period shall be paid on the first day following the six month
anniversary of the Participant’s date of termination, with interest at the prime lending rate as
published in The Wall Street Journal and in effect as of the date the payment should otherwise have
been provided.

          5.3 Distribution Limitations. The Committee may, but shall not be required to, defer
any distribution to any Participant to the first date on which it determines in it sole and
absolute discretion that such distribution would not be subject to the limits on deductions
contained in Section 162(m) of the Code; provided that the date selected by the Committee shall not
be earlier than the earliest date on which such distribution could be
made to the Participant without causing the Participant to be subject to any additional tax
imposed under Section 409A of the Code.

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          5.4 Determination of Payment. If a Participant’s applicable Participant Payment Date
occurs following the Participant’s Normal Retirement Date, as provided in Section 1.18(b) hereof,
the Participant shall be entitled upon his actual Participant Payment Date to the Actuarial
Equivalent on such date of the Participant’s Accrued Benefit on the Participant’s Normal Retirement
Date.

          5.5 Plan Administration. The general administration of the Plan shall be the
responsibility of the Committee, which is hereby authorized, in its discretion, to delegate said
responsibilities to an administrator or administrative committee.

SECTION 6

SOURCE OF BENEFITS;

NO GUARANTEE OF EMPLOYMENT;

NO FUNDING; CONSTRUCTIVE RECEIPT

          6.1 Source of Benefits. Benefits payable under the Plan shall be payable either from
the general assets of the Company or an Adopting Employer or, in the discretion of the Board, from
the Fund. No one of the Trustees, directors, officers, agents or shareholders of the Company or an
Adopting Employer, or of the Committee or of any administrator or administrative committee to which
any function is delegated pursuant to Section 5.5 hereof, assumes any personal liability for
obligations incurred on behalf of the Company or an Adopting Employer or under the Trust Agreement.
No Participant’s or beneficiary’s interest in a Participant’s benefits under the Plan shall be
greater than that of an unsecured creditor of the Company or an Adopting Employer, as appropriate.

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          6.2 No Guarantee of Employment. Nothing contained herein shall be construed as a
contract of employment or deemed to give any Participant the right to be retained in the employ of
any Employer.

          6.3 Unfunded Plan. In adopting the Plan and entering into the Trust Fund Agreement,
it is the intention of the Company and the Adopting Employers that any benefits to be provided
under the Plan shall be deemed unfunded for tax and pension law purposes and that any assets
acquired by or held within the Trust shall not be deemed to constitute funding for the benefit of
the Participant, or the Participant’s beneficiary or estate. Consequently, at all times while the
Plan is in effect, the Accrued Benefit of a Participant shall be understood to reflect only a means
for the measurement and determination of the amounts to be paid to the Participant pursuant to the
terms of the Plan, and a Participant’s Accrued Benefit shall not constitute or be treated as a
trust fund of any kind, nor shall any assets held under the Trust be deemed to represent security
for the performance of any obligation of the Company or an Adopting Employer hereunder but shall at
all times be, and remain, their general, unpledged and unrestricted assets.

SECTION 7

NONASSIGNABILITY

          7.1 No benefit payable hereunder may be assigned, pledged, mortgaged or hypothecated and,
except to the extent required by applicable law, no such benefit shall be subject to legal process
or attachment for the payment of any claims of a creditor of a Participant or the beneficiary of
such Participant.

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SECTION 8

EFFECTIVE DATE; AMENDMENT AND TERMINATION

          8.1 Effective Date. This Plan shall be effective as of January 1, 2002 and shall
remain in effect through its termination, subject to the provisions of Section 8.2 hereof.

          8.2 Amendment and Termination. The Board may at any time, or from time to time, amend
this Plan in any respect on a prospective basis or terminate this Plan without restriction and
without the consent of any Participant or beneficiary, provided that any such amendment or
termination shall not impair the right of any Participant or any beneficiary to be paid benefits
earned and vested hereunder prior to such amendment or termination. In the event of the
termination of the Plan, each Participant shall be deemed to have attained the Participant’s Normal
Retirement Date as of the date of such termination, and the Participant’s Accrued Benefit shall be
paid to the Participant in accordance with the terms of Sections 4 and 5 hereof.

          8.3 Plan Sponsor. The Company shall be the sponsor and named fiduciary of the Plan,
which the Company and Adopting Employers have adopted for the benefit of certain designated highly
compensated and key management personnel.

SECTION 9

CLAIMS PROCEDURES

          9.1 Initial Claim. If the Participant or the Participant’s beneficiary (hereinafter
referred to as a “Claimant”) is denied all or any portion of an expected benefit under this Plan
for any reason, the Claimant may file a claim with the Committee. The Committee shall notify the
Claimant within 60 days of its allowance or denial of the claim,

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unless the Claimant receives written notice from the Committee prior to the end of the 60-day
period stating that special circumstances require an extension of the time for decision for an
additional period not to exceed an additional 60 days. The notice of the Committee’s decision
shall be in writing, sent by mail to the Claimant’s last known address, and, if a denial of the
claim, must contain the following information:

               (a) the specific reasons for denial;

               (b) specific reference to pertinent provisions of the Plan on which the denial is based; and

               (c) if applicable, a description of any additional information or material necessary to
perfect the claim, an explanation of why such information or material is necessary, and an
explanation of the claims review procedure.

          9.2 Review. A Claimant may request a review by the Committee of any denial of the
Claimant’s claim by submitting in writing such a request within 60 days of the mailing of notice of
the denial. The Claimant or the Claimant’s representative shall be entitled to review all
pertinent documents, and to submit issues and comments in writing. Absent a request for review
within such 60-day period, the claim shall be deemed to be conclusively denied.

SECTION 10

MISCELLANEOUS

          10.1 Payment to Representatives. If an individual entitled to receive any benefits
hereunder is determined by the Committee or is otherwise adjudged to be legally incompetent, they
shall be paid to such individual’s duly appointed and acting guardian, if
any, and if no such guardian is appointed and acting, to such persons as the Committee may
designate for the benefit of such individual. Such payment shall, to the extent made, be deemed a
complete discharge for such payments under the Plan.

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          10.2 Timing of Payments. If the Committee is unable to make the determinations
required under the Plan in sufficient time for payments to be made when due, the Committee shall
make such payments upon the completion of such determinations with interest at a reasonable rate
from such due date and may, at its option, make provisional payments, subject to adjustment,
pending the completion of such determinations, all in a manner which would not cause the
Participant to be subject to any additional tax under Section 409A of the Code.

          10.3 Withholding, etc. The Employer shall deduct from each payment under the Plan any
Federal, state or local withholding or other taxes or charges which an Employer would be required
to deduct under applicable law, and any amount so deducted shall be treated as a payment hereunder
to the Participant or the Participant’s beneficiaries.

          10.4 Governing Law. The provisions of this Plan shall be construed according to the
laws of the United States and the State of New York, excluding the provisions of any such laws that
would require the application of the laws of another jurisdiction.

          10.5 Gender and Number. The masculine pronoun wherever used shall include the
feminine. Wherever any words are used herein in the singular, they shall be construed as though
they were also used in the plural in all cases where they shall so apply.

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          10.6 Binding Effect. This Agreement shall be binding upon the Company and the
Adopting Employers and their successors or assigns.

          10.7 Captions. The captions at the head of an article, section or a paragraph of the
Plan are designed for convenience of reference only and are not to be resorted to for the purposes
of interpreting any provision of the Plan, and in the case of any conflict with the text of the
Plan, the text of the Plan shall control.

          10.8 Severability. The invalidity of any portion of the Plan shall not invalidate the
remainder thereof, which shall continue in full force and effect.

          10.9 Communications. Any election, application, claim, notice, or other communication
required or permitted to be made by a Participant pursuant to the Plan shall be made in writing and
in such form as the Committee shall prescribe. Such communication or notice shall be effective
upon receipt, if sent by first class mail, postage prepaid, and addressed to the Committee, c/o the
Company’s offices at 100 S.E. Second Street, 32nd Floor, Miami, Florida 33131.

          10.10 Interpretation and Administration. Notwithstanding any provisions of the Plan
to the contrary, the provisions of the Plan shall be interpreted and administered and the reserved
powers of the Company shall be exercised, including on a retroactive basis to the extent necessary,
in accordance with the requirements of Section 409A of the Code (or disregarded to the extent that
a provision cannot be so administered, interpreted or exercised), so that no Plan Participant will
be subject to any additional tax under Section 409A of the Code.

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     IN WITNESS WHEREOF, the Company has caused this amended and restated Agreement to be executed
in its name by its duly authorized officer on April 24, 2008, to be effective as set forth above.

	 	 	 	 	 
	 	VECTOR GROUP LTD.

 	 
	 	/s/ Richard J. Lampen
 	 
	 	By:  Authorized Signatory 	 
	 	 	 

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EXHIBIT A

	 	 	 	 	 	 	 
	 	 	Projected Annual	 	 
	 	 	Single Life Annuity	 	 
	Participant	 	Retirement Benefit	 	Participation Date
	 	 	 	 	 	 	 
	Bennett S. LeBow

	 	$	2,524,163	 	 	1/1/02
	 
	 	 	 	 	 	 
	Howard M. Lorber

	 	$	1,051,875	 	 	1/1/02
	 
	 	 	 	 	 	 
	Howard M. Lorber

(supplemental benefit)

	 	$	735,682	 	 	1/1/10
	 
	 	 	 	 	 	 
	Ronald J. Bernstein

	 	$	438,750	 	 	1/1/02
	 
	 	 	 	 	 	 
	Gregory Sulin

	 	$	148,500	 	 	1/1/02
	 
	 	 	 	 	 	 
	Richard J. Lampen

	 	$	250,000	 	 	1/1/04
	 
	 	 	 	 	 	 
	Marc N. Bell

	 	$	200,000	 	 	1/1/04
	 
	 	 	 	 	 	 
	J. Bryant Kirkland III

	 	$	202,500	 	 	1/1/04
	 
	 	 	 	 	 	 
	Dr. Anthony Albino

	 	$	175,000	 	 	1/1/04

-17-Exhibit 10.12

Exhibit 10.12

ABITIBIBOWATER INC. 2008 EQUITY INCENTIVE PLAN

NONQUALIFIED STOCK OPTION AGREEMENT

     THIS OPTION AGREEMENT (the “Agreement”), dated as of [Insert Date] (the “Date of
Grant”), is made by and between AbitibiBowater Inc., a Delaware corporation (the
“Company”), and                      (“Participant”).

     WHEREAS, the Company has adopted the AbitibiBowater Inc. 2008 Equity Incentive Plan (the
“Plan”), pursuant to which options may be granted to purchase shares of the Company’s
common stock, par value $1.00 per share (“Stock”); and

     WHEREAS, the Human Resources and Compensation Committee of the Company (the
“Committee”) has determined that it is in the best interests of the Company and its
stockholders to grant the stock option award provided for herein to Participant subject to the
terms set forth herein.

     NOW, THEREFORE, for and in consideration of the premises and the covenants of the parties
contained in this Agreement, and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto, for themselves, their successors and assigns, hereby agree
as follows:

     1. Grant of Option.

          (a) Grant. The Company hereby grants to Participant an option (the “Option”)
to purchase [                    ] shares of Stock (such shares of Stock, the “Option Shares”), on
the terms and conditions set forth in this Agreement and as otherwise provided in the Plan. The
Option is not intended to qualify as an incentive stock option within the meaning of Section 422 of
the Code.

          (b) Incorporation by Reference, Etc. The provisions of the Plan are hereby
incorporated herein by reference. Except as otherwise expressly set forth herein, this Agreement
shall be construed in accordance with the provisions of the Plan and any interpretations,
amendments, rules and regulations promulgated by the Committee from time to time pursuant to the
Plan. Any capitalized terms not otherwise defined in this Agreement shall have the definitions set
forth in the Plan. The Committee shall have final authority to interpret and construe the Plan and
this Agreement and to make any and all determinations under them, and its decision shall be binding
and conclusive upon Participant and his legal representative in respect of any questions arising
under the Plan or this Agreement.

          (c) Approval of the Plan. The Option granted under this Agreement is subject to the
Plan being approved by the shareholders of the Company, as set forth in the Plan. If the
shareholders do not approve the Plan, then the Option granted under this Agreement shall become
automatically void and of no further force or effect.

          (d) Acceptance of Agreement. Unless you notify your local human resources in writing
within 14 days after the Date of Grant that you do not wish to accept this

 

 

Agreement, you will be
deemed to have accepted this Agreement and will be bound by the terms of the Agreement and the
Plan.

     2. Terms and Conditions.

          (a) Exercise Price. The Exercise Price, being the price at which Participant shall be
entitled to purchase the Option Shares upon the exercise of all or any portion of the Option, shall
be $      per Option Share.

          (b) Exercisability of the Option. Except as may otherwise be provided herein, the
Option shall become vested and exercisable in four equal installments on each of the first four
anniversaries of the Date of Grant, subject to the Participant’s continued employment or service
through the applicable vesting date.

     3. Termination of Employment or Service with the Company.

          (a) Retirement. If the Participant’s employment or service with the Company terminates
as a result of (i) “Retirement” or (ii) involuntarily termination by the Company when the
Participant would otherwise be eligible for Retirement as of the date of such termination (or
following the expiration of any applicable severance period), then any portion of the outstanding
Option shall continue to vest on its regular schedule for up to four years after such termination
and any vested portion of the Option will remain exercisable during the five-year period
immediately following such termination; provided that if the Participant dies after such
termination during such five-year period, then any portion of the outstanding and vested Option
shall remain exercisable for two years following the death of the Participant. The term
“Retirement” shall mean termination of employment at a time when the Participant qualifies for the
payment of benefits immediately due to the Participant’s status as a “retired” employee under any
qualified or registered defined benefit pension plan maintained by the Company (or would so qualify
if the Participant was a participant in such plan).

          (b) Termination by the Company without Cause. If the Participant’s employment or
service with the Company is involuntarily terminated without Cause, other than on account of
Disability, Retirement, or eligibility for Retirement on the date of termination, then any portion
of the Option which was vested in accordance with its terms on such date shall remain exercisable
for five years after such termination of employment or service; provided that if the
Participant dies during such five-year period, then any portion of the outstanding and vested
Option shall remain exercisable for two years following the death of the Participant.

          (c) Death. If the Participant’s employment or service with the Company terminates due
to the Participant’s death, then any portion of the Option which was vested of the date of death
shall remain exercisable for two years after such death.

          (d) Disability. For the avoidance of doubt, the Option shall continue vesting during
any applicable short-term disability period prior to termination of employment. If the
Participant’s employment or service with the Company terminates due to the Participant’s
Disability, the Option shall continue to vest following such termination until the expiration of
the two-year period commencing on the start of the corresponding short-term disability period, and

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any portion of the outstanding and vested Option shall remain exercisable during such two-year
period.

          (e) Termination by the Company for Cause. If the Participant’s employment or service
with the Company terminates for Cause, then the entire Option (including any portion which was
previously vested) shall immediately terminate.

          (f) Other Termination. If the Participant’s employment or service with the Company
terminates other than as otherwise described in the foregoing provisions of this Section 3, then
any vested Option as of the date of such termination shall remain exercisable for 90 days following
such termination of employment or service; provided that if the Participant dies during
such 90-day period, then any portion of the outstanding and vested Option as of the date of death
shall remain exercisable for one year following the death of the Participant.

Notwithstanding anything contained to the contrary in this Section 3, in no event shall all or any
portion of the Option be exercisable after the ten-year anniversary of the Date of Grant.

     4. Method of Exercise. Subject to applicable law, the Exercise Price shall be payable
in cash, check, cash equivalent or by tendering, by either actual delivery of shares or by
attestation, shares of Stock acceptable to the Committee, and valued at Fair Market Value as of the
day of exercise, or in any combination thereof, as determined by the Committee; provided that,
except as otherwise provided by the Committee, payments made with shares of Stock shall be limited
to shares held by the Participant for not less than six months prior to the payment date. Subject
to applicable law, the Committee may permit a Participant to elect to pay the Exercise Price upon
(i) the exercise of an Option by irrevocably authorizing a third party to sell shares of Stock (or
a sufficient portion of the shares) acquired upon exercise of the Option and remit to the Company a
sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax withholding
resulting from such exercise, (ii) upon a “net exercise” procedure approved by the Committee or
(iii) such other method which is approved by the Committee. Notwithstanding the foregoing, if on
the last day of the Option Period, the Fair Market Value exceeds the Exercise Price, the
Participant has not exercised the Option, and the Option has not expired, such Option shall be
deemed to have been exercised by the Participant on such last day by means of a net exercise and
the Company shall deliver to the Participant the number of shares of Stock for which the Option was
deemed exercised less such number of shares of Stock required to be withheld to cover the payment
of the Exercise Price and all applicable required withholding taxes.

     5. Compliance with Legal Requirements. The granting and exercising of the Option, and
any other obligations of the Company under this Agreement, shall be subject to all applicable
federal, state, local and foreign laws, rules and regulations and to such approvals by any
regulatory or governmental agency as may be required. The Committee, in its sole discretion, may
postpone the issuance or delivery of Option Shares as the Committee may consider appropriate and
may require the Participant to make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of Option Shares in compliance
with applicable laws, rules and regulations.

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          (a) Transferability. Unless otherwise provided by the Committee in writing, the
Option shall not be transferable by Participant other than by will or the laws of descent and
distribution.

          (b) Rights as Stockholder. The Participant shall not be deemed for any purpose to be
the owner of any shares of Stock subject to this Option unless, until and to the extent that (i)
this Option shall have been exercised pursuant to its terms, (ii) the Company shall have issued
and delivered to the Participant the Option Shares and (iii) the Participant’s name shall have been
entered as a stockholder of record with respect to such Option Shares on the books of the Company.

          (c) Tax Withholding. All distributions under the Plan are subject to withholding of
all applicable federal, state, local and foreign taxes, and the Committee may condition the
delivery of any shares or other benefits under the Plan on satisfaction of the applicable
withholding obligations. If permitted by the Committee (in its sole discretion), such withholding
obligations may be satisfied (i) through cash payment by the Participant; (ii) through the
surrender of shares of Stock which the Participant already owns (provided, however, that to the
extent shares described in this clause (ii) are used to satisfy more than the minimum statutory
withholding obligation, as described below, then, except as otherwise provided by the Committee,
payments made with shares of Stock in accordance with this clause (ii) shall be limited to shares
held by the Participant for not less than six months prior to the payment date); (iii) through the
surrender of shares of Stock to which the Participant is otherwise entitled under the Plan,
provided, however, that such shares under this clause (iii) may be used to satisfy not more than
the Company’s minimum statutory withholding obligation (based on minimum statutory withholding
rates for Federal and state tax purposes, including payroll taxes, that are applicable to such
supplemental taxable income) or (iv) by such other method as specified by the Committee.

     6. Miscellaneous.

          (a) Waiver. Any right of the Company contained in this Agreement may be waived in
writing by the Committee. No waiver of any right hereunder by any party shall operate as a waiver
of any other right, or as a waiver of the same right with respect to any subsequent occasion for
its exercise, or as a waiver of any right to damages. No waiver by any party of any breach of this
Agreement shall be held to constitute a waiver of any other breach or a waiver of the continuation
of the same breach.

          (b) Notices. Any written notices provided for in this Agreement or the Plan shall be
in writing and shall be deemed sufficiently given if either hand delivered or if sent by fax or
overnight courier, or by postage paid first class mail. Notices sent by mail shall be deemed
received three business days after mailing but in no event later than the date of actual receipt.
Notices shall be directed, if to the Participant, at the Participant’s address indicated by the
Company’s records, or if to the Company, at the Company’s principal executive office.

          (c) Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this

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Agreement, and each other provision of this Agreement shall be severable and enforceable to
the extent permitted by law.

          (d) No Rights to Employment. Nothing contained in this Agreement shall be construed
as giving Participant any right to be retained, in any position, as an employee, consultant or
director of the Company or its Affiliates or shall interfere with or restrict in any way the right
of the Company or its Affiliates, which are hereby expressly reserved, to remove, terminate or
discharge Participant at any time for any reason whatsoever.

          (e) Fractional Shares. In lieu of issuing a fraction of a share of the Stock
resulting from any exercise of the Option, resulting from an adjustment of the Option pursuant to
Section 8.3 of the Plan or otherwise, the Company will be entitled to pay to the Participant an
amount equal to the fair market value of such fractional share.

          (f) Beneficiary. The Participant may file with the Committee a written designation of
a beneficiary on such form as may be prescribed by the Committee and may, from time to time, amend
or revoke such designation. If no designated beneficiary survives the Participant, the
Participant’s estate shall be deemed to be Participant’s beneficiary.

          (g) Successors. The terms of this Agreement shall be binding upon and inure to the
benefit of the Company and its successors and assigns, and of the Participant and the
beneficiaries, executors, administrators, heirs and successors of the Participant.

          (h) Entire Agreement. This Agreement and the Plan contain the entire agreement and
understanding of the parties hereto with respect to the subject matter contained herein and
supersede all prior communications, representations and negotiations in respect thereto. No
change, modification or waiver of any provision of this Agreement shall be valid unless the same be
in writing and signed by the parties hereto, except for any changes permitted without consent under
Section 9 of the Plan.

          (i) Governing Law.  This Agreement shall be construed and interpreted in accordance
with the laws of the State of Delaware without regard to principles of conflicts of law thereof, or
principals of conflicts of laws of any other jurisdiction which could cause the application of the
laws of any jurisdiction other than the State of Delaware.

          (j) Headings. The headings of the Sections hereof are provided for convenience only
and are not to serve as a basis for interpretation or construction, and shall not constitute a
part, of this Agreement.

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     IN WITNESS WHEREOF, the Company has executed this Agreement as of the day first written above.

	 	 	 	 	 
	 	ABITIBIBOWATER, INC.

 	 
	 	By:  	                                                          
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[Signature Page to Nonqualified Stock Option Agreement]

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