Document:

exv10w25

EXHIBIT 10.25

[LETTERHEAD OF ABITIBIBOWATER INC.]

October 26, 2010

Mr. Jacques Vachon

484 Wood Avenue

Westmount (Québec)

H3Y 3J2

Re: Terms of Employment Post Emergence

Dear Jacques,

This letter is intended to document for you important information concerning changes in your
compensation, benefits and other conditions of service upon the company’s anticipated emergence
from bankruptcy in the coming weeks. As you are aware from the emergence plan, these changes become
effective on the date of emergence or as otherwise described in the details that follow. Please
note that this is a summary of conditions, the whole intended to be in accordance with and pursuant
to the filed restructuring plans.

As of emergence, you will continue to occupy your position of Senior Vice President, Corporate
Affairs and Chief Legal Officer, in the new AbitibiBowater Inc.

The terms and conditions of your employment post emergence are detailed below.

	 	 	 

	Location:

	 	Montreal, Quebec, Canada
	 
	 	 
	Effective Date:

	 	These terms and conditions are contingent on approval of
the restructuring plans and will be effective on the date
of emergence.
	 
	 	 
	Compensation:

	 	Your annual base salary will be US$289,000.

You will be eligible to participate in a short-term incentive plan effective for quarters 3 and 4
of 2010, with target award payout of 50% of your base salary. For the 2011 short-term incentive
plan, you will be eligible for a target level of 100% of base salary.

The independent directors of the current Board of Directors recommend to the Human Resources
Compensation/Nominating and Governance Committee of the new Board of Directors (the “Committee”) to
award you a restructuring recognition award in the amount of US$289,000, to be paid as soon as
practical following emergence.

Additionally, we have put in place an equity award program, to be effective on the date of
emergence. The independent directors of the current Board of Directors recommend to

 

 

the Committee to award you an initial grant under this program equivalent to 125% of your base
salary as soon as practical following emergence.

You will also continue to be eligible for a perquisite allowance of US$12,000 per year as well as a
complete annual medical examination and parking.

Other benefits:

You will maintain participation in various benefit plans such as group insurance and vacation.

As regards pension benefits, you will start participating in the Company’s defined contributions
(DC) pension plan and new DC SERP at the following levels of contribution:

	 	 	 	 	 
	 	 	Employee	 	Company
	Contributions	 	Contributions	 	Contributions
	Basic

	 	5% of eligible earnings*
	 	10.5% of eligible earnings
	 
	Additional

	 	None
	 	10% of eligible earnings

 

			
	*	 	Up to the Compensation Limit (U.S.A.)

Provided you waive all your SERP claims in the creditor protection proceedings, your SERP benefits
accrued up to the date of emergence will be reinstated and fully recognized in new SERPs to be put
in place by the Company, provided that all defined benefits (DB) available under such new SERPs
will be frozen as of the date of emergence. Pursuant to the DC SERP, lump sums continue to be paid
as per pre-filing practice. As regards your Canadian DB SERP, the Company intends to pay you such
benefits as a lump sum once you retire, unless these benefits have been secured in part or in
total, in which case they would be paid in the form of monthly payments.

You will receive shortly a separate letter providing you more details with respect to the enrolment
in the DC pension plan.

Severance

You will be covered by the Company’s severance policy for the Chief Executive Officer and his
direct reports. Pursuant to this policy, you will be entitled to six weeks of eligible pay per year
of continuous service, with a minimum of 52 weeks and up to a maximum of 104 weeks. For a period of
12 months following a “change in control”, the severence pay is available in the event of
involuntary termination for a “good reason’’. The emergence of

 

 

the Company from creditor protection
and all related transactions will not constitute a change in control for the purpose of this
policy.

Prior Agreements

Pursuant to the restructuring plans, all your prior management agreements with the Company (e.g.
employment, severance pay and change in control agreements) are being rejected as of the date of
emergence.

***

Enclosed for your reference are the corresponding Fact Sheets for the various compensation and
benefits programs listed above. The complete 2010 Equity Plan is also available upon request, while
the complete plan text of other programs will be available at a later date.

We are excited about the outlook of the newly emerged company and look forward to your continued
leadership.

	 	 	 

	/s/ Richard B. Evans

	 	/s/ David J. Paterson
	Richard B. Evans

	 	David J. Paterson
	Chairman

	 	President and Chief Executive Officer

I have read the present letter and hereby accepted these terms and conditions.

	 	 	 	 	 

	/s/ Jacques Vachon 

Jacques Vachon

	 	Nov. 3, 2010 

Date

Enclosuresexv10w26

EXHIBIT 10.26

EXECUTIVE EMPLOYMENT AGREEMENT

          THIS AGREEMENT made as of the 1st day of January, 2011

B E T W E E N:

ABITIBIBOWATER INC.,

a corporation existing under the laws of Delaware

(hereinafter referred to as the “Corporation”),

- and -

RICHARD GARNEAU, of the City of Montréal,

in the Province of Québec,

(hereinafter referred to as the “Executive”).

          WHEREAS the Corporation has offered employment to the Executive in the capacity of President
and Chief Executive Officer and the Executive has accepted such offer of employment; and

          WHEREAS the Corporation and the Executive have agreed that the terms and conditions of such
employment relationship shall be as set out herein;

          NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the respective covenants and
agreements of the parties herein contained and for other good and valuable consideration (the
receipt and sufficiency of which are acknowledged by each party), the parties covenant and agree as
follows:

ARTICLE 1

INTERPRETATION

	1.1	 	Defined Terms

          For the purposes of this Agreement, unless the context otherwise requires, the following terms
shall have the respective meanings set out below and grammatical variations of such terms shall
have corresponding meanings:

	 	 	“Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect on the date hereof;

	 	 	“Annual Base Salary” has the meaning set out in Section 4.1;

	 	 	“Board” means the board of directors of the Corporation;

 

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	 	 	“Business Day” means any day, other than a Saturday, Sunday or statutory holiday in the
Province of Québec on which commercial banks in Montréal are open for business;

	 	 	“Cause” has the meaning set out in Section 5.2;

	 	 	“Change in Control” has the meaning ascribed thereto in the Change in Control Agreement
being executed between the Executive and the Corporation in conjunction with this Agreement;

	 	 	“Common Shares” means the outstanding common shares in the capital of the Corporation at any
time;

	 	 	“Confidential Information” has the meaning set out in Section 6.1;

	 	 	“Date of Termination” means the effective date of any termination of the Executive’s
employment with the Corporation;

	 	 	“Eligible Pay” means Annual Base Salary as in effect at the Date of Termination and the
lower of (i) the average of the last two (2) Incentive Awards paid to the Executive and (ii)
125% of the Executive’s target incentive (expressed in dollars) for the year in which the
Date of Termination occurs;

	 	 	“Good Reason” has the meaning ascribed thereto in the Change in Control Agreement;

	 	 	“Improvements” has the meaning set out in Section 6.2(a);

	 	 	“Incentive Award” means the amount(s), if any, to which the Executive is entitled for the
relevant period in question under a regular cash incentive plan or program of the
Corporation established from time to time, including the 2011 STIP (as defined in Section
4.2), as same may be amended or replaced from time to time, it being understood that other
cash recognition, non-recurring or multi-year incentive awards shall not be considered as an
Incentive Award for the purpose hereof;

	 	 	“Non-Disclosure Period” has the meaning set out in Section 6.1;

	 	 	“Permanent Disability” has the meaning set out in Section 5.3;

	 	 	“person” includes, without limitation, an individual, corporation, partnership, joint
venture, association, trust, firm, unincorporated organization or other legal or business
entity;

	 	 	“Prohibited Area” means the territorial limits of Canada, the United States, Mexico, Italy,
the United Kingdom and South Korea;

	 	 	“Restricted Period” means the period from the date hereof to (i) the Date of termination in
the event of termination of this Agreement by the Corporation without Cause or

 

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	 	 	termination of this Agreement by the Executive for Good Reason pursuant to the terms of the
Change in Control Agreement or (ii) the end of the ninth month following the Date of
Termination in all other circumstances, except in the case of termination for Cause, in
which case the Restricted Period shall end on the twelfth (12th) month following
the Date of Termination;

	 	 	“Subsidiary” has the meaning ascribed thereto in the Canada Business Corporations Act;

	 	 	“Voting Shares” means any securities of the Corporation ordinarily carrying the right to
vote at elections of directors.

1.2 Rules of Construction

          Except as may be otherwise specifically provided in this Agreement and unless the context
otherwise requires, in this Agreement:

	 	(a)	 	the terms “Agreement”, “this Agreement”, “the Agreement”, “hereto”, “hereof”,
“herein”, “hereby”, “hereunder” and similar expressions refer to this Agreement in its
entirety and not to any particular provision hereof;
	 
	 	(b)	 	references to an “Article”, “Section”, “Schedule” or “Exhibit” followed by a
number or letter refer to the specified Article or Section of or Schedule or Exhibit to
this Agreement;
	 
	 	(c)	 	the division of this Agreement into articles and sections and the insertion of
headings are for convenience of reference only and shall not affect the construction or
interpretation of this Agreement;
	 
	 	(d)	 	words importing the singular number only shall include the plural and vice
versa and words importing the use of any gender shall include all genders;
	 
	 	(e)	 	the word “including” is deemed to mean “including without limitation”;
	 
	 	(f)	 	the terms “party” and “the parties” refer to a party or the parties to this
Agreement;
	 
	 	(g)	 	any reference to a statute, regulation or rule shall be construed to be a
reference thereto as the same may from time to time be amended, re-enacted or replaced,
and any reference to a statute shall include any regulations or rules made thereunder;
and
	 
	 	(h)	 	all dollar amounts refer to United States dollars unless expressly provided to
the contrary.

 

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1.3 Severability

          If any provision of this Agreement, including the breadth or scope of the provisions contained
in Article 6 (whether as to the Non-Disclosure Period, the Restricted Period, the Prohibited Area,
or otherwise), shall be held by any court of competent jurisdiction to be invalid or unenforceable,
in whole or in part, such invalidity or unenforceability shall not affect the validity or
enforceability of the remaining provisions, or part thereof, of this Agreement and such remaining
provisions, or part thereof, shall remain enforceable and binding.

1.4 Prior Agreements

          This Agreement cancels and replaces any prior agreements between the Executive and the
Corporation, other than (i) the indemnification agreement executed by the Executive dated December
9, 2010 (the “Indemnification Agreement”) and (ii) the prospective grant under the LTIP of stock
options approved by the Board on December 9, 2010, granted to the Executive in his capacity as a
Director of the Corporation. Such grant will be documented in an award agreement to be executed on
the date of the grant (to occur on January 9, 2011), and all options so awarded will continue to
vest in accordance with the terms of such award agreement.

1.5 Related Plans, Policies and Agreements

          In the event of any conflict or inconsistency between the provisions of this Agreement and any
other plans, policies and agreements referred to herein, including without limitation the 2011
STIP, the LTIP (as defined in Section 4.3) and any and all related award agreements to be entered
into by the Corporation and the Executive from time to time, the DC SERP (as defined in Section
4.4) and the Indemnification Agreement (as defined in Section 1.4) (all of which are collectively
referred to as the “Collateral Agreements”), the provisions of the Collateral Agreements, as same
may be amended from time to time by the Corporation, shall prevail, all of which shall be in the
corporate records of the Corporation and available for review from time to time by the Executive.
It is further acknowledged that in conjunction with this Agreement, the Executive and the
Corporation are executing a Change in Control Agreement, the provisions of which shall govern all
matters relating to the substance thereof notwithstanding anything herein to the contrary.

ARTICLE 2

EMPLOYMENT

2.1 Employment

          The Corporation hereby agrees to employ the Executive and the Executive hereby accepts such
employment effective January 1, 2011, all in accordance with and subject to the terms and
conditions hereof. The Executive shall serve the Corporation in the capacity of President and Chief
Executive Officer.

 

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2.2 Location of Executive

          The Executive’s office will be located at the current offices of the Corporation in the Sun
Life Building in Montréal, Québec, provided that the Corporation may subsequently require that the
Executive relocate to such other corporate office of the Corporation in the general area of
Montréal as may be determined by the Board from time to time. The Executive will furthermore be
required to travel to other locations from time to time, including offices, production facilities,
customers and suppliers of the Corporation or of its Affiliates.

ARTICLE 3

DUTIES

3.1 Employment Duties

          The Executive shall perform such duties and exercise such powers as are normally associated
with and incidental and ancillary to the position of President and Chief Executive Officer and
shall perform such additional duties and exercise such additional powers as may from time to time
be assigned to him by the Board, acting reasonably. Without limiting the foregoing, during the
term of his employment hereunder, the Executive shall, to the best of his ability:

	 	(a)	 	devote his full time and attention during normal business hours and such other
times as may be reasonably required to the business and affairs of the Corporation and
its Affiliates and shall not, without the prior written consent of the Board, undertake
any other business or occupation or public office which may detract from the proper and
timely performance of his duties hereunder;
	 
	 	(b)	 	perform diligently and faithfully those duties as are consistent with the
position and status of President and Chief Executive Officer that may be assigned to
the Executive;
	 
	 	(c)	 	promote the interests and goodwill of the Corporation and its Affiliates and
not knowingly do, or willingly permit to be done, anything to the prejudice, loss or
injury of the Corporation or any of its Affiliates; and
	 
	 	(d)	 	at all times keep the Corporation regularly informed (in writing if so
requested) of his conduct of the business and affairs of the Corporation and provide
such explanations of his conduct as the Board may require.

3.2 Board Membership

          The Executive agrees to serve as a Director of the Corporation if elected, and further agrees
to become a Director and/or Officer of the Corporation’s Subsidiaries or Affiliates as designated
by the Corporation. Subject to approval of the Board, the Executive shall be permitted to serve as
an outside director of one (1) public company that does not, directly or

 

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indirectly, compete with the Corporation and provided furthermore that no conflict of interest
exists or would reasonably be expected to arise as a consequence thereof.

3.3 Reporting

          The Executive shall report to the Board. The Executive shall report fully on the management
and operations of the Corporation and shall advise to the best of his ability and in accordance
with reasonable business standards on business matters that may arise from time to time during the
term of this Agreement.

ARTICLE 4

COMPENSATION

4.1 Annual Base Salary

          The annual base salary (“Annual Base Salary”) payable to the Executive for his services
hereunder shall be $765,000, payable in equal semi-monthly instalments in arrears in accordance
with the usual compensation practices of the Corporation from time to time.

          The Annual Base Salary shall be subject to a periodic increase adjustment if as and when
determined by the Board from time to time at its discretion.

4.2 Short-Term Incentive Plan

          In addition to the Annual Base Salary, the Executive shall be eligible to participate in the
Short-Term Incentive Plans that are adopted by the Corporation from time to time, including without
limitation the 2011 Short-Term Incentive Plan (“2011 STIP”), pursuant to which the Executive will
be eligible to receive discretionary Incentive Awards as approved by the Human Resources and
Compensation/Nominating and Governance Committee of the Board. Under the 2011 STIP, the Executive’s
target Incentive Award will be one hundred percent (100%) of the Annual Base Salary, with a
threshold of fifty percent (50%) and a maximum of one hundred fifty percent (150%), it being
understood that Incentive Awards are based on performance targets established by the Board and that
Incentive Awards under the Short-Term Incentive Plans adopted as aforesaid from time to time are
discretionary and subject to modifications by the Board, including increases, decreases,
cancellation, deferral or other conditions as determined by the Board, at its discretion, even if
and after performance levels have been met.

4.3 Long-Term Incentive Plan

          The Executive will be eligible to participate in the long-term incentive plans adopted by the
Corporation and in effect from time to time, including without limitation under the Corporation’s
2010 Equity Incentive Plan (the “LTIP”), and to receive grants thereunder as determined by the
Board from time to time at its discretion, with an initial grant equivalent to

 

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two hundred twenty-five percent (225%) of the Executive’s Annual Base Salary to be awarded in
the spring of 2011.

4.4 Pension

          The Executive shall be entitled to participate in the Corporation’s 2010 defined contribution
program (comprised of a registered defined contribution pension plan for Canadian non-unionized
employees and the 2010 DC Supplemental Executive Retirement Plan (“DC SERP”) (collectively the “DC
Program”)), pursuant to which the Executive contributes five percent (5%) and the Corporation
contributes twenty-two point five percent (22.5%) of the aggregate of the Executive’s Annual Base
Salary and the Incentive Award paid to the Executive from time to time.

4.5 Fringe Benefits

          During the term of the Executive’s employment hereunder, the Executive shall be entitled to
participate in all medical, dental, disability and group life plans and other employee benefit
programs established by the Corporation from time to time for the benefit of its non-unionized
employees in Canada. The benefits will be provided in accordance with and subject to the terms and
conditions of the applicable plan, fund or arrangement relating to such benefits in effect from
time to time. The Executive acknowledges that the Corporation may amend or terminate the benefits
from time to time as provided in the applicable plan, fund or arrangement. The Executive shall also
be provided with a fully paid club membership at the Mount-Royal Club in Montreal during the term
of employment and, in addition, an annual perquisite allowance of $16,000 to cover all perquisites
such as other club memberships, fiscal and financial advice and tax preparation by professionals
selected by the Executive. The Corporation will provide for an annual medical examination at its
expense for the Executive and his wife.

4.6 Vacation

          The Executive shall be entitled to five (5) weeks plus an additional three (3) “floating” or
discretionary days of paid vacation in each calendar year in accordance with the policies of the
Corporation in effect from time to time applicable to its senior executives, to be taken during
such calendar year subject to the need for the timely performance of the Executive’s
responsibilities hereunder. In the event that the Executive’s employment is terminated, he shall
be entitled to a pro-rated vacation leave with pay for the portion of the year in which such
termination occurs that he has been actively employed. It is the responsibility of the Executive to
ensure that his vacation entitlement is taken in each calendar year, as there shall be no carry
forward of vacation entitlement to a year other than for which it has accrued without the
permission of the Board.

4.7 Expenses

          The Executive shall be reimbursed for all reasonable travel and other out-of-pocket expenses
properly incurred by the Executive from time to time in connection with the carrying out of his
duties hereunder in accordance with the Corporation’s travel and

 

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entertainment policy as amended from time to time. For all such expenses, the Executive shall
furnish to the Corporation originals or true copies of all invoices or statements in respect of
which the Executive seeks reimbursement. Any Corporation credit card shall be used only for
expenses incurred in the course of carrying out the Executive’s duties.

          The Executive shall furthermore be entitled to reimbursement of reasonable legal fees and
expenses incurred by him in the negotiation and documentation of this Agreement and the Change in
Control Agreement.

4.8 Deductions and Withholdings

          The Corporation shall be entitled to make such deductions and withholdings from the
Executive’s remuneration as may be required by law and as may be required by the Executive’s
participation in or receipt of any benefit, stock option or other program contemplated hereby, and
the Corporation’s obligations in respect thereof shall thereby be satisfied to the extent of such
deductions and withholdings.

4.9 Compensation Exhaustive

          For greater certainty, the Executive shall not be entitled to any salary, bonus, participation
in profits or other remuneration, or payment or compensation in lieu thereof, except as expressly
set forth in this Agreement.

ARTICLE 5

TERMINATION OF EMPLOYMENT

5.1 Term of Employment

          The employment of the Executive hereunder shall continue for an indefinite period until it is
terminated in accordance with the provisions of this Article 5.

5.2 Cause

          The Corporation may terminate the employment of the Executive at any time for Cause, effective
immediately, by giving written notice of termination to the Executive setting out the basis for
termination. “Cause” shall mean any of the following:

	 	(a)	 	the wilful failure of the Executive to carry out his duties hereunder, to
comply in all material respects with the rules and policies of the Corporation or to
follow any reasonable instruction or directive of the Board which is consistent with
the Executive’s duties and responsibilities under this Agreement;
	 
	 	(b)	 	the Executive acting dishonestly or fraudulently in connection with the
business of the Corporation, or the wilful gross misconduct of the Executive in the
course of his employment hereunder, in each case resulting in adverse consequences to
the Corporation or to any of its Affiliates;

 

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	 	(c)	 	if the Executive or his spouse or child under the age of majority makes any
personal profit arising out of or in connection with any transaction to which the
Corporation or any of its Affiliates is a party or with which the Corporation or any of
its Affiliates is associated without making disclosure to and obtaining the prior
written consent of the Board, or other material breach of the Executive’s fiduciary
duties to the Corporation;
	 
	 	(d)	 	the conviction of the Executive for, or a guilty plea by the Executive to, any
criminal offence punishable by imprisonment that may reasonably be considered to be
likely to adversely affect the Corporation or any of its Affiliates or the suitability
of the Executive to perform his duties hereunder, including without limitation any
offence involving fraud, theft, embezzlement, forgery, wilful misappropriation of funds
or property, or other fraudulent or dishonest acts;
	 
	 	(e)	 	any material breach of any provisions of this Agreement by the Executive;
	 
	 	(f)	 	misconduct on the part of the Executive that is materially detrimental to the
business or financial position of the Corporation or to any of its Affiliates;
	 
	 	(g)	 	personal misconduct by the Executive which is of such a serious and substantial
nature that it has or would injure the reputation of the Corporation or of any of its
Affiliates;
	 
	 	(h)	 	the habitual inability by the Executive to carry out functions of his
employment hereunder due to alcohol or drug related causes, provided that the Executive
shall have been provided with written notice thereof at least thirty (30) days prior to
the Date of Termination and shall have failed to remedy such alcohol or drug related
causes during such period of time; or
	 
	 	(i)	 	any serious reason pursuant to Article 2094 of the Civil Code of Québec.

          For purposes of this provision, no act or omission on the part of the Executive shall be
considered “wilful” unless it is done or omitted in bad faith or without reasonable belief that the
act or omission was in the best interests of the Corporation. Any act or omission based upon a
resolution duly adopted by the Board or advice of counsel for the Corporation shall be conclusively
presumed to have been done or omitted in good faith and in the best interests of the Corporation.
Cessation of employment of the Executive shall not be deemed to be for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted by the Board at a
meeting of the Board called and held for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity to be heard before the Board) determining that
the employment of the Executive is to be terminated for Cause.

 

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5.3 Termination Where Executive Disabled

          If at any time the Executive is unable to perform his duties properly because of ill health,
accident or otherwise, for a period or periods totalling at least twenty-six (26) weeks in any
period of twelve (12) consecutive calendar months (“Permanent Disability”), the Corporation may
terminate the Executive’s employment in accordance with the applicable corporate practices of the
Corporation in effect at the time the Executive becomes permanently disabled. The Executive shall
submit to such reasonable medical examinations as may be requested by a doctor or other medical
practitioner selected jointly by the Executive and the Corporation in order to determine whether
the condition or conditions suffered by the Executive constitute Permanent Disability. In no event
shall the Executive be considered to have a Permanent Disability for the purposes of this Agreement
unless the Executive is deemed disabled and eligible for benefits pursuant to the Company’s
long-term disability plan.

5.4 Death

          The Executive’s employment shall terminate automatically upon the death of the Executive.

5.5 Other Termination by the Corporation

          The Corporation may terminate this Agreement (other than as provided in the foregoing
provisions of this Article 5) at any time and for any reason if the Board, in its sole discretion,
so determines, by giving three (3) months’ prior written notice of termination to the Executive.

5.6 Other Termination by the Executive

          The Executive may terminate his employment at any time and for any reason by giving three (3)
months’ prior notice in writing to the Corporation. For greater certainty, such notice shall not be
required in respect of termination by the Executive for Good Reason pursuant to the terms of the
Change in Control Agreement.

5.7 Cessation of Duties

          The Corporation shall have the right, at any time prior to the end of the applicable notice
period pursuant to Sections 5.5 or 5.6, notwithstanding the provisions of the relevant Section, by
giving written notice to the Executive, to require that the Executive cease to perform his duties
and responsibilities and cease attending the Corporation’s premises immediately upon giving such
notice and in such event, the employment of the Executive hereunder shall terminate on the
termination date stipulated in the written notice of termination, it being understood that the
Executive shall continue to receive the employment benefits during the balance of such three (3)
month period. A termination by the Executive pursuant to Section 5.6 shall remain as such even if
the Corporation exercises its right hereunder.

 

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5.8 Severance Payments

          The following severance pay provisions shall apply notwithstanding anything to the contrary in
or inconsistent with the provisions of the Corporation’s Severance Policy — Chief Executive
Officer and Direct Reports (“Severance Policy”):

	 	(a)	 	Upon termination of the Executive’s employment (i) for Cause pursuant to
Section 5.2, or (ii) voluntarily by the Executive pursuant to Section 5.6, the
Executive shall not be entitled to any pay in lieu of notice of termination, severance
or similar payment in respect of such termination other than (A) accrued and unpaid
Annual Base Salary earned by the Executive up to the Date of Termination and (B)
vacation pay earned up to the Date of Termination and (C) in the event of early
termination by the Corporation of the notice period in Section 5.6, the portion of the
Annual Base Salary that would have otherwise been payable during such notice period,
and (D) any amount of or entitlement to Incentive Awards, other awards, pension
benefits and other benefits in accordance with any then applicable plans and
agreements. In addition, any unvested stock option, SAR, full value award (including,
without limitation, unrestricted stock, restricted stock or restricted stock units,
performance stock or performance stock units, and deferred stock or deferred stock
units) in the Corporation held by the Executive under a long term incentive plan
adopted by the Corporation from time to time shall vest and shall remain exercisable by
the Executive subject to and with in accordance with the relevant plan and award
agreements.
	 
	 	(b)	 	Upon termination of the Executive’s employment (i) as a result of the Permanent
Disability of the Executive pursuant to Section 5.3, or (ii) by the death of the
Executive pursuant to Section 5.4, the Executive (or his estate, as the case may be)
shall be entitled to receive (A) accrued and unpaid Annual Base Salary earned by the
Executive up to the Date of Termination, (B) vacation pay earned up to the Date of
Termination and (C) any amount or entitlement to Incentive Awards, other awards,
pension benefits and other benefits in accordance with any then applicable plans and
agreements. In addition, any unvested stock option, SAR, full value award (including,
without limitation, unrestricted stock, restricted stock or restricted stock units,
performance stock or performance stock units, and deferred stock or deferred stock
units) in the Corporation held by the Executive under a long term incentive plan
adopted by the Corporation from time to time shall vest and shall remain exercisable by
the Executive subject to and in accordance with the relevant plan and award agreements.
	 
	 	(c)	 	If the Executive’s employment is terminated pursuant to Section 5.5, other than
within two years following a Change in Control (in which case the Change in Control
Agreement shall govern and the Executive shall not be entitled to any payment pursuant
to this Agreement), the Executive shall be entitled to receive:

 

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	 	(i)	 	accrued and unpaid Annual Base Salary earned by the
Executive up to the Date of Termination;
	 
	 	(ii)	 	vacation pay earned up to the Date of Termination;
	 
	 	(iii)	 	severance pay in an amount equal to six (6) weeks of
Eligible Pay per year of continuous service, subject to a minimum of
fifty-two (52) weeks and a maximum of one hundred four (104) weeks, and
pro-rated for partial years of service; and
	 
	 	(iv)	 	any amount or entitlement to Incentive Awards, other
awards, pension benefits and other benefits in accordance with the relevant
plans and agreements.

          In addition, any unvested stock option, SAR, full value award (including, without limitation,
unrestricted stock, restricted stock or restricted stock units, performance stock or performance
stock units, and deferred stock or deferred stock units) in the Corporation held by Executive under
a long term incentive plan adopted by the Corporation from time to time shall vest and shall remain
exercisable by the Executive subject to and in accordance with the relevant plan and award
agreements.

          All amounts payable to the Executive as a result of the termination of the Executive’s
employment pursuant to any statute, regulation or other provision of law are included in and are
not in addition to the amounts payable pursuant to this Section 5.8. Amounts payable pursuant to
Section 5.8(c)(i), (ii) and (iii) shall be paid on the tenth (10th) day following the
effectiveness of the release described above; provided however that, if the sixtieth
(60th) day following termination of employment falls in the subsequent calendar year,
then the payment shall be the later of (i) the first (1st) business day of that
subsequent year or (ii) the tenth (10th) day following the effectiveness of the release.
For greater certainty, the Corporation agrees that payment of undisputed claims will not be delayed
should there exist any disputed claims.

5.9 Resignation on Termination

          The Executive agrees that upon any termination of his employment with the Corporation he shall
immediately tender his resignation from any position he may hold as an officer or director of the
Corporation or any of its Affiliates. In the event of the Executive failing within three days to
comply with his obligation hereunder, he hereby irrevocably authorizes and appoints any other
director or officer of the Corporation as his agent and attorney to sign in his name and on his
behalf any written resignations or other documents and do all other things necessary to give effect
to such resignation.

5.10 Continuance in Effect

          For greater certainty, notwithstanding any termination of the employment of the Executive, the
provisions of this Agreement shall continue in full force and effect in accordance with their
terms, including, without limitation, (i) the provisions of Article 6, (ii) rights to

 

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indemnification and insurance under the Indemnification Agreement, Charter, By-Laws and
directors’ and officers’ insurance policies maintained by the Corporation and (iii) rights to which
the Executive is entitled by virtue of his participation in the employee benefits plans, policies
and arrangements of the Corporation, all in accordance with the terms of the relevant plans and
agreements.

ARTICLE 6

EXECUTIVE’S COVENANTS

6.1 Non-Disclosure

          The Executive acknowledges and agrees that:

	 	(a)	 	in the course of performing his duties and responsibilities hereunder, he will
have access to and will be entrusted with detailed confidential information and trade
secrets concerning past, present, future and contemplated company strategy, plans and
activities (including acquisition plans and activities), products, services,
operations, technology, intellectual property, methodologies and procedures of the
Corporation or its Affiliates, whether in written, printed, pictorial, diagrammatic,
electronic or any other form or medium, including, without limitation, information
relating to names, addresses, contact persons, preferences, needs and requirements of
past, present and prospective clients, customers, suppliers and employees of the
Corporation and its Affiliates (collectively, “Confidential Information”), the
disclosure of any of which to competitors of the Corporation or of any of its
Affiliates or to the general public, or the use of any of which by the Executive or any
competitor of the Corporation or of any of its Affiliates, could reasonably be expected
to be detrimental to the interests of the Corporation and its Affiliates;
	 
	 	(b)	 	in the course of performing his duties and responsibilities hereunder, the
Executive will be a representative of the Corporation and its Affiliates to its and
their customers, clients and suppliers and as such will have significant responsibility
for maintaining and enhancing the goodwill of the Corporation and its Affiliates with
such customers, clients and suppliers and would not have, except by virtue of his
employment with the Corporation, developed a close and direct relationship with the
customers, clients and suppliers of the Corporation and its Affiliates; and
	 
	 	(c)	 	the right to maintain the confidentiality of the Confidential Information, the
right to preserve the goodwill of the Corporation and its Affiliates and the right to
the benefit of the contacts and connections previously developed by the Executive with
prospective clients, customers and others and any relationships that will be developed
between the Executive and the customers, clients and suppliers of the Corporation and
its Affiliates by virtue of the Executive’s employment with the

 

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	 	 	 	Corporation constitute proprietary rights of the Corporation and its Affiliates
which the Corporation and its Affiliates are entitled to protect.

          In accordance with the matters acknowledged and agreed to by the Executive above and in
consideration of the payments and other benefits to be received by the Executive pursuant to this
Agreement, the Executive hereby covenants and agrees with the Corporation that he will not, except
with the specific prior written consent of the Board, either during the term of this Agreement or
at any time within five (5) years thereafter (the “Non-Disclosure Period”), directly or indirectly,
disclose to any person or in any way make use of (other than for the benefit of the Corporation or
its Affiliates), in any manner, any of the Confidential Information, provided that such
Confidential Information shall be deemed not to include information which is or becomes generally
available to the public other than as a result of disclosure by the Executive.

6.2 Intellectual Property

     (a) The Executive shall disclose to the Corporation or one or more of its Affiliates, as the
Board may direct, all ideas, suggestions, discoveries, inventions and improvements (collectively,
the “Improvements”) which he may make solely, jointly or in common with other employees, during the
term of his employment with the Corporation and which relate to the business activities of the
Corporation or its Affiliates. Any Improvements coming within the scope of the business of the
Corporation or of any of its Affiliates made and/or developed by the Executive while in the employ
of the Corporation, whether or not conceived or made during regular working hours, or whether or
not the Executive is specifically instructed to make or develop the same, shall be for the benefit
of the Corporation and/or its Affiliates and shall be considered to have been made by virtue of
this Agreement and shall immediately become the exclusive property of the Corporation and/or its
Affiliates.

     (b) The Executive shall assign, set over and transfer to the Corporation or one or more of its
Affiliates, as the Board may direct, his entire right, title and interest in and to any and all the
Improvements and to all patents, copyrights or other intellectual property rights (or applications
therefor) which may be or have been filed and/or issued by or to him or on his behalf, and the
Executive agrees to execute and deliver to the Corporation or any such Affiliate, any and all
instruments necessary or desirable to accomplish the foregoing and, in addition, to do all lawful
acts which may be necessary or desirable to assist the Corporation or any such Affiliate to obtain
and enforce protection of the Improvements.

     (c) The Executive waives all moral rights in any Improvements and all work produced by the
Executive during the term of this Agreement.

6.3 Non-Competition

          The Executive represents and warrants that he is not subject to and will not bring any
material that is subject to any non-competition, non-disclosure, discoveries and works or other
agreements that would prevent or restrict him from rendering services to the Corporation pursuant
to this Agreement. Executive further represents and warrants that his employment and

 

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use of any material he brings will not violate the rights of any third party, including
without limitation, pursuant to any competition or non-solicitation agreement.

          The Executive hereby agrees that he shall not (without the prior written consent of the Board
which shall not be unreasonably withheld taking into account (i) the Executive’s career in the pulp
and paper industry and (ii) his non-disclosure obligations under Section 6.1) during the Restricted
Period and within the Prohibited Area whether on his own account or in conjunction with or on
behalf of any other person, and whether as an employee, director, officer, shareholder, partner,
principal, agent, or in any other capacity whatsoever other than as a consultant, in competition
with the Corporation or any of its Affiliates, directly or indirectly, operate, manage, control,
participate in, carry on, be employed by, be engaged in, perform services in respect of, be
concerned with, be financially interested in or financially assist, or permit his name to be used
in connection with the activities from time to time of the Corporation (the “Restricted Business”),
including the manufacture, sale and/or dealing in newsprint, commercial printing and packaging
papers, market pulp and wood products, as well as research into, development, production,
manufacture, sale, supply, import, export or marketing of any product which is the same or similar
to or competitive with any product researched, developed, produced, manufactured, sold, supplied,
imported, exported or marketed by the Corporation or by any of its Affiliates in the context of the
above described activities during the term of this Agreement.

          Notwithstanding the foregoing restrictions, the Executive may acquire securities (i) of a
class or series that is traded on any stock exchange or over the counter if such securities
represent not more than two percent (2%) of the issued and outstanding securities of such class or
series, (ii) of a mutual fund or other investment entity that invests in a portfolio the selection
and management of which is not within the control of the investor, or (iii) held in a fully managed
account where the Executive does not direct or influence in any manner the selection of any
investment in such securities.

6.4 Non-Solicitation of Customers

          The Executive hereby agrees that he shall not during the Restricted Period, whether on his own
behalf or in conjunction with or on behalf of any other person, directly or indirectly, except on
behalf of the Corporation or its Affiliates, solicit, assist in soliciting, accept, facilitate the
acceptance of the business of any person (i) to whom the Corporation or its Affiliates has supplied
goods or services at any time prior to the Date of Termination, or (ii) to whom the Corporation or
any of its Affiliates has offered to supply goods or services prior to the Date of Termination, or
(iii) to whom the Corporation or any of its Affiliates has provided details of the terms on which
it would or might be willing to supply goods or services prior to the Date of Termination, or (iv)
with whom the Corporation or any of its Affiliates has had any negotiations or discussions
regarding the possible supply of goods or services prior to the Date of Termination.

 

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6.5 Non-Solicitation of Employees

          The Executive hereby agrees that he will not during the Restricted Period, either on his own
behalf or in conjunction with or on behalf of any other person, directly or indirectly, except on
behalf of or with the prior written consent of the Corporation or its Affiliates, (a) induce or
solicit any person who was employed by the Corporation or by any of its Affiliates to leave such
employment; or (b) hire or accept into employment or otherwise engage or use the services of any
person who was so employed within the immediately preceding six months. Notwithstanding the
foregoing, the general advertisement of open positions, not targeted at any individual, shall not
be a violation of this provision.

6.6 Non-interference with Suppliers

          The Executive hereby agrees that he will not during the Restricted Period, either on his own
behalf or in conjunction with or on behalf of any other person, directly or indirectly, interfere,
seek to interfere, induce and/or incite another person to interfere, or take steps to interfere
with the continuance of supplies (or the terms relating to such supplies) from any suppliers who
have been supplying products, materials or services to the Corporation or any of its Affiliates at
any time during the term of this Agreement.

6.7 Applicability to Affiliates or Purchasers

          The obligations undertaken by the Executive pursuant to this Article 6 may be enforced
directly against the Executive by any Affiliate of the Corporation or any purchaser from the
Corporation of all or any part of its business, to the extent applicable by their terms to such
Affiliate or such purchased business, and shall, with respect to each Affiliate of the Corporation
or such purchased business, constitute a separate and distinct covenant and the invalidity or
unenforceability of any such covenant shall not affect the validity or enforceability of the
covenant in favour of the Corporation or any other Affiliate of the Corporation or any such
purchaser. If for any reason any of the obligations of the Executive pursuant to this Article 6
cannot be directly enforced by an Affiliate or purchaser as contemplated hereby, the Executive
acknowledges that such obligations may be enforced by the Corporation on behalf of such Affiliate
or purchaser, as the case may be.

6.8 Provisions in the Event of Breach

          The Executive agrees that, in the event of any actual or threatened breach by the Executive of
any of the covenants or agreements contained in this Article 6, without prejudice to any and all
other rights and recourses of the Corporation, the Corporation shall have the right to enforce the
terms and provisions thereof by means of compelling specific performance and/or by means of
injunction (including, without limitation, provisional, interlocutory and permanent). In addition,
and without restriction to the foregoing, in the event of a breach by the Executive of any of the
covenants or agreements contained in this Article 6, any payments otherwise payable to the
Executive as severance pay pursuant to the provisions of Section 5.8(c)(iii) hereof shall be deemed
to have been forfeited in their entirety by the Executive and the running of the Non-

 

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Disclosure Period and Restricted Period shall be stayed and shall recommence upon the date the
Executive ceases to be in breach thereof, whether voluntarily or by injunction.

6.9 Disclosure

          During the term of this Agreement, the Executive shall promptly disclose to the Board full
information concerning any interest, direct or indirect, of the Executive (whether as owner,
shareholder, partner, lender or other investor, director, officer, employee, consultant or
otherwise) or his spouse or child under the age of majority in any business which is reasonably
known to the Executive to purchase or otherwise obtain services or products from, or to sell or
otherwise provide services or products to the Corporation or to any of its Affiliates or to any of
their respective suppliers or customers.

          During the Non-Disclosure Period and the Restricted Period, the Executive shall inform any
prospective employer of the existence of this Agreement and the obligations which it imposes upon
the Executive under Sections 6.1, 6.2, 6.3, 6.4, 6.5 and 6.6.

6.10 Merger Transactions

          The Executive shall not, during the term of this Agreement and during the Restricted Period,
solicit, initiate or encourage proposals or offers from, or provide information relating to the
Corporation or any of its Affiliates to, any person in connection with or relating to any proposed
acquisition or disposition of all or any material part of the issued and outstanding Common Shares
or other securities of the Corporation or any of its Affiliates, or any proposed amalgamation,
merger, sale of all or any material part of the assets of the Corporation or any of its Affiliates,
take-over bid, reorganization, recapitalization, liquidation, winding-up, or other business
combination or any similar transaction involving the Corporation or any of its Affiliates, without
in each case the consent of the Board.

6.11 Consulting Services after Date of Termination

          Notwithstanding the foregoing restrictions of this Article 6, the Executive may provide
consulting services to any person after the date of termination and within the Prohibited Area
subject to his obligations under Article 6 and provided furthermore that the Executive shall not
become an employee of or enter into an employment agreement with a Restricted Business relating to
the Prohibited Area during the Restricted Period.

6.12 Return of Materials

          All files, forms, brochures, books, materials, written correspondence, memoranda, documents,
manuals, computer disks, software products and lists (including financial and other information and
lists of customers, suppliers, products and prices) pertaining to the Corporation or to any of its
Affiliates and containing Confidential Information which may come into the possession or control of
the Executive shall at all times remain the property of the Corporation or such Affiliate, as the
case may be. Upon termination of the Executive’s employment hereunder for any reason, the
Executive agrees to immediately return all such property of the Corporation

 

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or of any of its Affiliates in the possession of the Executive or directly or indirectly under
the control of the Executive and to destroy all electronic copies thereof. The Executive agrees not
to make, for his personal or business use or that of any other person, reproductions or copies of
any such property or other property of the Corporation or of any of its Affiliates.

ARTICLE 7

GENERAL

7.1 Reasonableness of Restrictions and Covenants

          The Executive hereby confirms and agrees that the covenants and restrictions pertaining to the
Executive contained in this Agreement, including, without limitation, those contained in Article 6,
are reasonable and valid and hereby further acknowledges and agrees that the Corporation and its
Affiliates would suffer irreparable injury in the event of any breach by the Executive of his
obligations under any such covenant or restriction. Accordingly, the Executive hereby acknowledges
and agrees that damages would be an inadequate remedy at law in connection with any such breach and
that the Corporation and its Affiliates shall therefore be entitled, in addition to any other right
or remedy which they may have at law, in equity or otherwise, to temporary and permanent injunctive
relief enjoining and restraining the Executive from any such breach.

7.2 Amendments and Waivers

          No amendment or waiver of any provision of this Agreement shall be binding on any party unless
consented to in writing by such party. No waiver of any provision of this Agreement shall
constitute a waiver of any other provision, nor shall any waiver of any provision of this Agreement
constitute a continuing waiver unless otherwise expressly provided.

7.3 Successors and Assigns

          This Agreement shall enure to the benefit of and shall be binding on and enforceable by and
against the heirs, executors, administrators and legal personal representatives of the Executive
and the successors and permitted assigns of the Corporation. This Agreement is personal to the
Executive and none of his rights may be assigned, made subject to a security interest or otherwise
disposed of or encumbered, nor may any of his obligations be delegated or transferred, except as
permitted in writing by the Board, or in accordance with the written policies, governance
procedures and management practices of the Corporation, if any, as approved by the Board from time
to time.

7.4 Notices

       (a) Any notice or other communication required or permitted to be given hereunder shall be in
writing and shall be delivered or sent in person, by courier, by registered mail, charges prepaid,
or by fax in the case of the Corporation and by electronic mail in the case of the Executive,
addressed as follows:

 

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	 	(i)	 	If to the Executive: 
111, rue Vinet

Montréal, Québec H3J 2W2

	 
	 	 	 	Email: rgar1234@gmail.com
	 
	 	(ii)	 	If to the Corporation:

AbitibiBowater Inc.

1155 Metcalfe Street

Suite 800

Montréal, Québec H3B 5H2

	 
	 	 	 	Attention: Chief Legal Officer

Fax number: 514-394-3644

     (b) Any such notice or other communication shall be deemed to have been given and received on
the day on which it was delivered or transmitted (or, if such day is not a Business Day or if
delivery or transmission is made on a Business Day after 5:00 p.m. at the place of receipt, then on
the next following Business Day) or, if mailed, on the third (3rd) Business Day
following the date of mailing; provided, however, that if at the time of mailing or within three
(3) Business Days thereafter there is or occurs a labour dispute or other event which might
reasonably be expected to disrupt the delivery of documents by mail, any notice or other
communication hereunder shall be delivered or transmitted by any aforesaid permitted means of
communication.

     (c) Any party may at any time change its address for service from time to time by giving
notice to the other parties in accordance with this Section 7.4.

7.5 Entire Agreement

          This Agreement constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior agreements, understandings, negotiations and
discussions, whether written or oral. There are no conditions, covenants, agreements,
representations, warranties or other provisions, express or implied, collateral, statutory or
otherwise, relating to the subject matter hereof except as provided herein.

7.6 Rules and Policies

          In addition to this Agreement, all written rules and policies of the Corporation adopted by
the Board from time to time apply to the Executive except to the extent that they are inconsistent
with the express provisions of this Agreement, in which case such provisions will prevail.

 

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7.7 Governing Law

          This Agreement shall be interpreted and enforced in accordance with, and the respective rights
and obligations of the parties shall be governed by, the laws of the Province of Quebec and the
federal laws of Canada applicable in that province, without regard to the principles of conflict of
laws.

7.8 Acknowledgements

          The Executive acknowledges that:

	 	(a)	 	the Executive has had sufficient time to review and consider this Agreement
thoroughly;
	 
	 	(b)	 	the Executive has read and understands the terms of this Agreement and the
Executive’s obligations hereunder;
	 
	 	(c)	 	the Executive has been given an opportunity to obtain independent legal advice,
or such other advice as the Executive may desire, concerning the interpretation and
effect of this Agreement; and
	 
	 	(d)	 	this Agreement is entered into voluntarily and without any pressure.

7.9 Counterparts

          This Agreement and all documents contemplated by or delivered under or in connection with this
Agreement may be executed and delivered in any number of counterparts, with the same effect as if
all parties had signed and delivered the same document, and all counterparts shall be construed
together to be an original and will constitute one and the same agreement.

 

- 21 -

7.10 Language

          The parties have requested that this Agreement be drawn up in the English Language. Les
parties ont demandé que ce contrat soit rédigé en anglais.

          IN WITNESS WHEREOF this Agreement has been executed by the parties as of the date first above
written.

	 	 	 	 	 	 	 

	 	 	ABITIBIBOWATER INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Sarah Nash
 

Sarah Nash
	 	 
	 

	 	 	 	Chair of the Human Resources and Compensation/Nominating and
Governance Committee	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ Richard Garneau
 

Richard Garneau

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