Document:

exv10w16

Exhibit 10.16

Summary of 2011 AbitibiBowater Inc. Short-Term Incentive Plan

On January 7, 2011, the human resources and compensation/nominating and governance committee of
AbitibiBowater Inc.’s (the “Company”) board of directors adopted the material terms of the 2011
AbitibiBowater Inc. Short-Term Incentive Plan, or the “2011 STIP”. As of the date of the filing of
this Annual Report on Form 10-K, the 2011 STIP has not been reduced to writing. The following is a
summary of the expected terms of the 2011 STIP, as previously disclosed in the Company’s Current
Report on Form 8-K filed with the SEC on January 13, 2011.

The 2011 STIP, provides that participating employees, including each of the Company’s named
executive officers, are eligible to receive cash incentive awards expressed as a percentage of
their base salaries, based on certain quantitative Company performance goals over the 2011 annual
period. In respect of the Company’s named executive officers, the target and maximum incentive
awards are 100% and 150% of base salary, with no applicable minimum, and the applicable performance
metrics may include: income from operations, manufacturing cash cost reductions, reduction in
selling and administrative expenses, frequency of safety incidents and severity of safety
incidents.

Awards, if granted, are expected to be made in the first quarter of 2012. The aggregate amount
payable under the 2011 STIP for all eligible employees is limited to 7% of the Company’s 2011 free
cash flow (defined as income from operations adjusted for cash interest, cash reorganization costs,
depreciation, pension funding, cash taxes, working capital variation and maintenance capital
expenditures).

Employees remain eligible for pro rated awards if they voluntarily retire or are terminated other
than for cause during the year. Employees who voluntarily resign or are terminated for cause will
not be eligible. The 2011 STIP is administered by the human resources and compensation/nominating
and governance committee. The committee may adjust financial and cost metrics, and may adjust any
and all awards in its discretion. Awards are discretionary and subject to modification until they
are made, including increases, decreases, cancellations, deferrals and other conditions, even if
performance levels have been met.exv10w17

EXHIBIT 10.17

[LETTERHEAD OF ABITIBIBOWATER INC.]

October 26, 2010

Mr. David J. Paterson

2350 Mt. Paran Road NW

Atlanta, GA 30327

Re: Terms of Employment Post Emergence

Dear Dave,

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 President and Chief Executive
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$765,000.

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$765,000, 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 225% 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 pension, group insurance, and
vacation.

Upon emergence, you will continue your participation in your defined contributions (DC) pension
plan and you will participate in a new DC SERP to be put in place by the Company, at the following
levels of contribution:

	 	 	 	 	 
	 	 	Employee	 	Company
	Contributions	 	Contributions	 	Contributions
	Basic

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

	 	None
	 	12% 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. Lump sums will continue to be paid as per pre-filing
practice, provided that if you have accrued benefits pursuant to a 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 severance 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

Richard B. Evans

Chairman

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

	 	 	 	 	 

	/s/ David J. Paterson
 

David J. Paterson

	 	10/27/10
 

Date
	 	 

Enclosuresexv10w18

EXHIBIT 10.18

EXECUTION COPY

SEPARATION AGREEMENT

     THIS SEPARATION AGREEMENT (this “Agreement”) is made and entered into this 10th day of
December, 2010, by and between DAVID J. PATERSON (“Executive”) and ABITIBIBOWATER INC., a Delaware
corporation (“Company”). Executive and Company are sometimes hereinafter referred to together as
the “Parties” and individually as a “Party.”

BACKGROUND:

     A. Executive is employed as the Chief Executive Officer and President of Company.

     B. Executive and Company now mutually desire to end Executive’s employment pursuant to the
terms set forth herein.

     C. Company and Executive wish to avoid any disputes which could arise by agreeing to the terms
of this Agreement.

     NOW, THEREFORE, FOR AND IN CONSIDERATION of the premises, the mutual promises, covenants and
agreements contained herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree
as follows:

     1. Termination of Employment. The Parties agree that (a) Executive will resign as
Chief Executive Officer and President of Company, and from the Board of Directors of the Company as
well as any subsidiaries of the Company upon which Executive is serving, effective as of December
31, 2010, (b) Executive will remain employed by Company as Special Executive Advisor, reporting to
the Board of Directors of the Company, effective January 1, 2011 until January 31, 2011, (c)
Executive’s employment with the Company, and all benefits, privileges and authorities related to
Executive’s employment with Company, will end on January 31, 2011 (the “Separation Date”), except
as otherwise specifically set forth in this Agreement, and (d) the initial presentation of this
Agreement on December 7, 2010 constituted written notice to Executive of the separation and
delivery of the form Release (as defined below) for Executive’s consideration.

     2. No Admission. The Parties agree that their entry into this Agreement is not and
shall not be construed to be an admission of liability or wrongdoing on the part of either Party.

     3. Future Cooperation. Executive agrees that after the termination of his employment
and the Consulting Period (as defined below), Executive upon reasonable notice, and not interfering
with Executive’s other full-time business endeavors, will make himself available to Company or its
designated representatives for the purposes of providing information regarding any matter which
Executive was involved while employed by Company. Company shall pay for all reasonable and
documented travel expenses as may be incurred by Executive in connection with complying with this
Section 3.

 

 

     4. Consideration.

          (a) In consideration for Executive’s agreement to fully release Company from any and all
claims as described below, and to perform the other duties and obligations of Executive contained
herein, and provided Executive remains employed with Company until the Separation Date as described
above, or in the event, prior to the Separation Date, Company terminates Executive’s employment
without Cause (as defined below); Executives terminates his employment for Good Reason (as defined
below); Executive is incapacitated due to any mental or physical impairment which makes Executive
unable to perform the essential duties and responsibilities of his position, with or without
reasonable accommodation (“Disability”); or Executive dies (any such events occurring prior to the
Separation Date collectively referred to as an “Early Separation Date”), Company will, subject to
ordinary and lawful deductions and Sections 4(b) and 22 below:

          (i) Pay cash severance to Executive in the amount of One Million Three Hundred
Thirty-Eight Thousand Dollars ($1,338,000) in a single lump sum within fifteen (15) days
following the Separation Date or, if earlier, the Early Separation Date.

          (ii) Continue after the Separation Date or, if earlier, the Early Separation Date, any
health care (medical, dental, prescription drug and vision) plan coverage, other than under
a flexible spending account which shall be provided in accordance with applicable plan terms
and practices, provided to Executive and Executive’s spouse and dependents at such date, for
up to eighteen (18) months following such date, on the same basis, at no cost to Executive
(including tax cost), as available to similarly-situated active employees during such
eighteen (18) months, provided Executive and Executive’s spouse and dependents at such date
are eligible for, elect and remain eligible for such continued coverage pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”).

          (iii) Pay to Executive the cash amount of Four Hundred Thirty Thousand Dollars
($430,000), in lieu of any grant of awards under the Company’s LTIP (as described below) and
any continued vesting therein, in a single lump sum on July 31, 2011.

          (b) Notwithstanding anything else contained herein to the contrary, no payments shall be made
or benefits delivered under this Agreement (other than payments required to be made by Company
pursuant to Section 5 below) unless, within thirty (30) days after the Separation Date or, if
earlier, the Early Separation Date, (i) Executive (or his legal representative in the case of
Executive’s incapacity or death) has signed and delivered to Company a Release in the form attached
hereto as Exhibit A (the “Release”), which will release, discharge and hold harmless
Company and its subsidiaries, divisions and affiliates and their respective officers, directors,
employees, agents, insurers, assigns and successors in interest from any and all claims Executive
has or might have at such time, and (ii) the applicable revocation period under the Release has
expired without Executive (or his legal representative in the case of Executive’s incapacity or
death) having elected to revoke the Release. Executive agrees and acknowledges that Executive
would not be entitled to the consideration described herein absent execution of the Release. Any
payments to be made, or benefits to be delivered, under this

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Agreement (other than the payments required to be made by Company pursuant to Section 5 below)
prior to Executive’s execution of the Release and the applicable revocation period having expired
without Executive having revoked same, shall be accumulated and, subject to Section 22, paid as
soon as administratively practicable, but in no event later than March 15, 2011, in a lump sum
after Executive (or his legal representative in the case of his incapacity or death) delivers the
signed Release and the revocation period thereunder expires without Executive (or his legal
representative in the case of his incapacity or death) having elected to revoke same; provided, if
such payment date could occur in either of two taxable years of Executive, then such payment shall
be made in the later taxable year.

          (c) As a further condition to receipt of the payments and benefits in Section 4(a) above,
Executive also waives any and all rights to any other amounts payable to him upon the termination
of his employment relationship with Company, other than those specifically set forth in this
Agreement, including without limitation any severance, notice rights, payments, benefits and other
amounts to which Executive may otherwise be entitled, and Executive agrees not to pursue or claim
any such payments, benefits or rights.

          (d) For purposes of this Agreement, “Cause” shall mean:

          (i) Executive’s gross negligence or willful misconduct in connection with the
performance of Executive’s duties with Company (whether as an employee or consultant); or

          (ii) Executive’s conviction of, or entering of a guilty plea or plea of no contest with
respect to, any felony; or

          (iii) Executive’s material breach of a material term of this Agreement.

No act or omission to act by Executive shall be “willful” if conducted in good faith and
with a reasonable belief that such act or omission was in the best interests of the Company.

          (e) For purposes of this Agreement, “Good Reason” shall mean:

          (i) any action taken by Company which results in a substantial and material reduction
in Executive’s authority, duties or responsibilities, including reporting responsibilities
(except for any change in the foregoing as described herein);

          (ii) the relocation of Executive to any other primary place of employment other than
Montreal, Canada, prior to January 1, 2011, and Atlanta, Georgia, on and after January 1,
2011, which might require Executive to move Executive’s residence which, for this purpose,
means any reassignment to a place of employment located more than fifty (50) miles from
Montreal, Canada, prior to January 1, 2011, and Atlanta, Georgia, on and after January 1,
2011, without the Executive’s express written consent to such relocation; or

          (iii) any material failure by Company to comply with the material terms of this
Agreement.

3

 

     Notwithstanding the above, and without limitation, “Good Reason” shall not include any
resignation by Executive where Cause for Executive’s termination by Company exists. Executive must
give Company notice of any event or condition that would constitute “Good Reason” within thirty
(30) days of Executive’s knowledge of the event or condition which would constitute “Good Reason,”
upon which notice Company shall have thirty (30) days to remedy such event or condition, and, if
such event or condition is not remedied within such period, Executive must terminate his employment
for “Good Reason” within thirty (30) days after the period for remedying such condition or event
has expired.

          (f) Notwithstanding the foregoing, Executive will not be entitled to receive any of the
payments or benefits set forth in Section 4(a) above or Section 6 below if, prior to the Separation
Date, Executive (i) terminates his employment voluntarily other than for Good Reason (and other
than due to Disability) or (ii) has his employment terminated involuntarily by Company for Cause.

     5. Other Benefits. Nothing in this Agreement or the Release shall:

          (a) alter or reduce any vested, accrued benefits (if any) Executive may be entitled to receive
under any 401(k), profit sharing, pension or other qualified retirement plan established Company;

          (b) affect Executive’s right (if any) to elect and (subject to Section 4(a)(ii) above) pay for
continuation of Executive’s health insurance coverage under Company’s health plans pursuant to the
COBRA;

          (c) affect Executive’s right (if any) to receive (i) any base salary that accrues through the
date of termination of Executive’s employment and is unpaid, (ii) any reimbursable expenses that
Executive incurs before the termination of Executive’s employment and are unpaid and (iii) any
unused vacation or paid time off days to which Executive is entitled to payment, all of which shall
be paid as soon as administratively practicable (and in any event within thirty (30) days) after
the termination of Executive’s employment;

          (d) alter or reduce the vested benefits to which Executive is entitled under Company’s
short-term incentive plan (“STIP”) and Company’s deferred compensation and other non-qualified
retirement/savings plans, which shall be paid in accordance with their terms and any related award
agreements, except that Executive will not receive any awards under Company’s long-term incentive
plan (“LTIP”) in return for the payment set forth in Section 4(a)(iii) above on the terms described
therein;

          (e) affect Executive’s right to receive the emergence bonus upon confirmation of Company’s
plan of reorganization; or

          (f) affect Executive’s right to continue to receive his base salary, bonuses and STIP,
perquisites and benefits (other than LTIP and any awards thereunder) through the date of
termination of Executive’s employment, as in effect or contemplated as of the date hereof, which
will continue through the date of termination of Executive’s employment, except with respect to any
changes that are applicable generally to the other executives of Company or otherwise specifically
set forth in this Agreement.

4

 

     6. Consulting Agreement.

          (a) Effective immediately after the Separation Date or, if earlier, the Early Separation Date,
and for the six (6)-month period thereafter (the “Consulting Period”), subject to Section 4(b)
above, Company will retain Executive, as an independent contractor, to consult with and advise
Company and to provide Company advice and other management consulting services on all aspects of
Company’s operations or as otherwise assigned and directed by Company’s Chief Executive Officer or
Board of Directors. Either Executive or Company may terminate this consulting arrangement prior to
end of the Consulting Period by giving sixty (60) days’ prior written notice of termination to the
other party.

          (b) Executive shall be reasonably available to Company during its normal business hours to
consult with and advise Company upon request during the Consulting Period. Executive shall have no
responsibilities or duties except the rendering of advisory services to Company when solicited for
such advice by the Chief Executive Officer or Board of Directors of Company.

          (c) Subject to Section 4(b) above, Company shall pay to Executive the amount of Executive One
Hundred Fifty Thousand Dollars ($150,000) per month, on the first day of each monthly period of the
Consulting Period, for each month or portion thereof Executive remains available to provide
consulting services as described above. Company shall reimburse Executive for all reasonable
out-of-pocket expenses actually incurred by Executive while rendering consulting services under
this Agreement upon the submission by Executive, from time to time but no later than thirty (30)
days after incurring such expenses, of an itemized account of such expenditures in accordance with
Company’s policies on expense reimbursements. In the event, if prior to the end of the Consulting
Period, (i) Company terminates this consulting arrangement without Cause; (ii) Executive terminates
this consulting arrangement for Good Reason; (iii) Executive is Disabled; or (iv) Executive dies,
Company shall continue to pay Executive (or Executive’s estate in the event of his death) the
consulting fees above, as set forth above, for the unexpired duration of the Consulting Period
notwithstanding Executive is no longer rendering consulting services. No further consulting fees
will be payable on and after the time this consulting arrangement terminates because (i) Executive
terminates this consulting arrangement voluntarily other than for Good Reason or due to Disability
or (ii) Company terminates this consulting arrangement for Cause. For purposes of this consulting
arrangement, “Cause” shall mean as described in Section 4(d) above and “Good Reason” shall mean as
described above in Section 4(e) (disregarding for this purpose Sections 4(e)(i) and (ii)).

          (d) Executive will not be required to maintain an office in Montreal, Canada or any other
place during the Consulting Period and may perform his consulting services from a location of his
selection; however, Executive agrees to reasonable travel as may be required to render the
consulting services under this arrangement.

          (e) Both Company and Executive agree that Executive shall act as an independent contractor
with respect to Company in the performance of any and all duties under this consulting arrangement,
and that this consulting arrangement shall not be construed to create any employment or other form
of business relationship, agency, partnership or joint venture between Company and Executive.
Executive shall not be empowered to act on behalf of or bind

5

 

Company with third parties as a result of this consulting arrangement. Executive acknowledges
that he will not be eligible for any other compensation or benefits other than those specifically
discussed in Sections 4, 5 and 6 of this Agreement. Executive shall be solely responsible for
arranging withholding and payment of any taxes arising out of this consulting arrangement,
including, without limitation, federal, state, and local income taxes, social security taxes,
unemployment insurance taxes, and any other taxes or business license fees related to Executive’s
activities or duties under this consulting arrangement. Executive agrees to indemnify Company and
hold it harmless from and against all such tax obligations, as well as any penalties, assessments,
liabilities, damages, fees and attorneys’ fees incurred by Company as a result of Executive’s
failure to pay such amounts.

     7. Confidentiality of Agreement Terms. Except as otherwise expressly provided in this
Section 7, Executive agrees that the terms, conditions and amount of consideration set forth in
this Agreement (including the Exhibits hereto) are and shall be deemed to be confidential and
hereafter shall not be disclosed by Executive or Company to any other person or entity. The only
disclosures excepted by this paragraph are (a) as may be required by law; (b) as may be required by
either party to enforce this Agreement; (c) Executive may tell prospective employers the dates of
Executive’s employment, positions held, evaluations received, Executive’s duties and
responsibilities and salary history with Company; (d) Executive may disclose the terms and
conditions of this Agreement to Executive’s attorneys and tax and financial advisers; and (e)
Executive may disclose the terms of this Agreement to Executive’s spouse, if any; provided,
however, that any spouse, attorney or tax or financial adviser learning about the terms of this
Agreement must be informed about this confidentiality provision, and Executive will be responsible
for any breaches of this confidentiality provision by any such person to the same extent as if
Executive had directly breached this agreement. Executive acknowledges that Company may be required
by law to disclose information about this Agreement and its terms, and, if and only to the extent
that Company does so, Executive shall be relieved from his obligations to keep confidential under
this Section 7 any such information that Company may disclose publicly.

     8. Restrictive Covenants.

          (a) “Business of Company” means the manufacture and sale of the following forest and wood
products: newsprint, coated mechanical and uncoated mechanical specialty papers, containerboard and
packaging paper grades, and pulp; the recovery of old paper; and the operation of sawmills,
remanufacturing and engineered wood facilities.

          (b) “Confidential Information” means all valuable and/or proprietary information (in oral,
written, electronic or other forms) belonging to or pertaining to Company (including subsidiaries
or affiliates of Company), its customers and vendors, that would be useful to competitors of
Company or otherwise damaging to Company if disclosed. Confidential Information may include, but is
not necessarily limited to: (i) the identity of Company’s customers or potential customers, their
purchasing histories, and the terms or proposed terms upon which Company offers or may offer its
products and services to such customers, (ii) the identity of Company’s vendors or potential
vendors, and the terms or proposed terms upon which Company may purchase products and services from
such vendors, (iii) technology and methods used in Company products and services or planned
products and services, (iv) the terms and

6

 

conditions upon which Company employs its employees and independent contractors, (v) marketing
and/or business plans and strategies, (vi) financial reports and analyses regarding the revenues,
expenses, profitability and operations of Company, (vii) information provided to Company by
customers and other third parties under a duty to maintain the confidentiality of such information
and (viii) information relating to the plans or terms, or proposed plans or terms, of any actual,
potential or contemplated acquisitions, dispositions, spin-offs, reorganizations or other
transactions Company may have considered or may be considering. Confidential Information does not
include any information that is in the public domain or readily ascertainable from
publicly-available information, or disclosed to Executive outside the course and scope of the
performance of Executive’s duties on behalf of Company by a person or entity who has the legal
right to disclose such information.

          (c) “Restricted Territory” means the Countries of the United States of America, Canada, United
Kingdom, Mexico, South Korea and Italy.

          (d) “Material Contact” means contact in person, by telephone or by electronic or paper
correspondence in furtherance of the Business of Company.

          (e) “Trade Secrets” means Confidential Information that meets the requirements of a trade
secret under applicable law.

          (f) While employed by Company under this Agreement including the period during which Executive
provides consulting services to Company, and for one (1) year thereafter, Executive shall not:

          (i) In the Restricted Territory, engage in or become financially interested in, as a
principal, agent, officer, employee, manager, advisor, investor, or shareholder (except as a
completely passive investor in a public corporation), business activities which compete with
the Business of Company; or

          (ii) Directly or indirectly solicit any customer of Company with whom Executive had
Material Contact to purchase products or services which compete with the Business of
Company, or

          (iii) Directly or indirectly solicit any vendor of Company with whom Executive had
Material Contact to provide products or services to support business activities which
compete with the Business of Company, or

          (iv) Directly or indirectly solicit any employee or contractor of Company to terminate
or lessen such employment or contract.

          (g) While employed by Company under the Agreement (including the period during which Executive
provides consulting services to Company), and for two (2) years thereafter, Executive shall not use
on his own behalf or disclose to any other person or entity any Confidential Information. In the
event of doubt regarding the confidentiality of any information, Executive shall verify the
confidential nature of the information with the Company prior to its use or disclosure. Nothing
herein shall limit the right of Company to protect its Trade Secrets under applicable law.

7

 

          (h) In addition to any other remedies available at law or under this Agreement, Company may
seek injunctive relief to stop any violations by Executive of the restrictive covenants set forth
in (f) or (g) above.

          (i) Executive will forfeit the right to any payments or benefits set forth in Sections 4(a)
and 6 above, and Company shall be entitled to seek reimbursement of, and Executive will be required
to repay Company for, the gross amount of all payments made, and value of any benefits provided, to
Executive under Sections 4(a) and 6 above, in the event of any breach by Executive of the covenants
contained in (f) and (g) of this Section 8; except that Executive shall be entitled to retain in
any event the amount of Three Hundred Thousand Dollars ($300,000) as consideration for the Release
and Executive’s other obligations under the Agreement.

     9. Return of all Property and Information of Company. Executive agrees to return all
of Company’s property within fourteen (14) days following the Separation Date or, if earlier, the
day Company terminates Executive’s employment without Cause or Executives terminates his employment
for Good Reason, except as may be required for Executive to discharge his duties as a consultant
(in which case such property shall be returned within fourteen (14) days after the termination of
the consulting arrangement. Such property includes, but is not limited to, all Company-issued
equipment, supplies, accessories, vehicles, access cards and/or keys, instruments, tools, devices,
computers, cell phones, pagers, materials, documents, plans, records, notebooks, drawings, or
papers. Upon request by Company, Executive shall certify in writing that Executive has complied
with this provision, and has deleted all Company information from any computers or other electronic
storage devices owned by Executive. Except as provided above, Executive may only retain information
relating to Executive’s benefit plans and compensation to the extent needed to prepare Executive’s
tax returns.

     10. No Harassing or Disparaging Conduct. Executive and Company mutually further agree
and promise that neither such party will engage in, or induce other persons or entities to engage
in, any harassing or disparaging conduct or negative or derogatory statements directed at the other
such party or, in the case of Company its subsidiaries or affiliates, the activities of the other
such party (and Company’s subsidiaries or affiliates), or the Releasees (as defined in the Release)
at any time in the future. For such purpose, “Company” shall refer to its officers, members of the
Board of Directors of Company and Company’s human resources managers. Notwithstanding the
foregoing, this Section 10 may not be used to penalize either party for providing truthful
testimony under oath in a judicial or administrative proceeding or complying with an order of a
court or government agency of competent jurisdiction.

     11. Construction of Agreement and Venue for Disputes. This Agreement shall be deemed
to have been jointly drafted by the Parties and shall not be construed against either Party. Each
of the Parties (a) consents to submit itself to the personal jurisdiction of the Court of Chancery
of the State of Delaware or any court of the United States located in the State of Delaware, in the
event any dispute arises out of this Agreement or any of the transactions contemplated by this
Agreement, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court, (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated by this Agreement in any court
other than the Court of Chancery of the State of Delaware or, if

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under applicable law exclusive jurisdiction is vested in the federal courts, any court of the
United States located in the State of Delaware. Without limiting other means of service of process
permissible under applicable law, the Parties agree that service of any process summons, notice or
document by U.S. registered mail to their respective last known addresses shall be effective
service of process for any suit or proceeding in connection with this Agreement or the transactions
contemplated hereby.

     12. Waiver of Jury Trial. EACH OF THE PARTIES IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING BETWEEN THE PARTIES ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     13. Severability. If any provision of this Agreement shall be held void, voidable,
invalid or inoperative, no other provision of this Agreement shall be affected as a result thereof,
and accordingly, the remaining provisions of this Agreement shall remain in full force and effect
as though such void, voidable, invalid or inoperative provision had not been contained herein.

     14. No Reliance Upon Other Statements. This Agreement is entered into without
reliance upon any statement or representation of any Party hereto or any Party hereby released
other than the statements and representations contained in writing in this Agreement (including all
Exhibits hereto).

     15. Entire Agreement. This Agreement, including all Exhibits hereto (which are
incorporated herein by this reference), contains the entire agreement and understanding concerning
the subject matter hereof between the Parties hereto. No waiver, termination or discharge of this
Agreement, or any of the terms or provisions hereof, shall be binding upon either Party hereto
unless confirmed in writing. This Agreement may not be modified or amended, except by a writing
executed by both Parties hereto. No waiver by either Party hereto of any term or provision of this
Agreement or of any default hereunder shall affect such Party’s rights thereafter to enforce such
term or provision or to exercise any right or remedy in the event of any other default, whether or
not similar.

     16. Further Assurance. Upon the reasonable request of the other Party, each Party
hereto agrees to take any and all actions, including, without limitation, the execution of
certificates, documents or instruments, necessary or appropriate to give effect to the terms and
conditions set forth in this Agreement.

     17. No Assignment. Neither Party may assign this Agreement, in whole or in part,
without the prior written consent of the other Party, and any attempted assignment not in
accordance herewith shall be null and void and of no force or effect. The foregoing to the
contrary notwithstanding, Company shall assign this Agreement and delegate all of its obligations
hereunder to any successor to all or substantially all of its business.

     18. Binding Effect. This Agreement shall be binding on and inure to the benefit of
the Parties and their respective heirs, representatives, successors and permitted assigns. In the
event of the death of Executive prior to payment of all amounts due under this Agreement, such
amounts shall be paid to the legal representative of his estate.

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     19. Indemnification. Company understands and agrees that any indemnification
obligations under its governing documents or the indemnification agreement between Company and
Executive, a copy of which is attached hereto as Exhibit B, with respect to Executive’s
service as an officer of Company and/or director of Company or any of its subsidiaries shall remain
in effect and survive the termination of Executive’s employment under this Agreement as set forth
in such governing documents or indemnification agreement. Notwithstanding Section 6(e) of this
Agreement, in the event that Executive is authorized in writing to act as an agent of Company
during the Consulting Period, such indemnification, and coverage as an insured under any applicable
officers’ and directors’ liability insurance, shall apply to Executive’s consulting services to the
same scope and effect as applies to Executive’s acts and omissions to act while employed by
Company.

     20. Disclosure. Company and Executive agree to cooperate and collaborate on all
communications, including (i) press releases, (ii) internal communications and (iii) public
disclosures (including but not limited to any Form 8-K or comparable Canadian filings), as may
apply to this Agreement, the transition of Executive from Chief Executive Officer and President to
Special Executive Advisor and the termination of Executive’s employment with Company.

     21. Reimbursement of Attorneys’ Fees. Company agrees to reimburse Executive for any
reasonable attorneys’ fees and expenses Executive incurs in connection with the negotiation and
documentation of this Agreement and any related agreements, up to a maximum of Thirty-Five Thousand
Dollars ($35,000). Company will pay Executive such reimbursement as soon as administratively
practicable after execution of this Agreement and upon the submission by Executive, no later than
sixty (60) days after the execution of this Agreement, of an itemized account of such expenditures.

     22. Nonqualified Deferred Compensation.

          (a) It is intended that any payment or benefit which is provided pursuant to or in connection
with this Agreement which is considered to be deferred compensation subject to Section 409A of the
Code shall be paid and provided in a manner, and at such time and form, as complies with the
applicable requirements of Section 409A of the Code to avoid the unfavorable tax consequences
provided therein for non-compliance.

          (b) Neither Company nor Executive shall take any action to accelerate or delay the payment of
any monies and/or provision of any benefits in any manner which would not be in compliance with
Section 409A of the Code (including any transition or grandfather rules thereunder).

          (c) If Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the
Code at such time, any payments to be made or benefits to be delivered in connection with
Executive’s “Separation from Service” (as determined for purposes of Section 409A of the Code) that
constitute deferred compensation subject to Section 409A of the Code shall not be made until the
earlier of (i) Executive’s death or (ii) six months after Executive’s Separation from Service (the
“409A Deferral Period”) as required by Section 409A of the Code. Payments otherwise due to be made
in installments or periodically during the 409A Deferral Period shall be accumulated and paid in a
lump sum as soon as the 409A Deferral Period ends,

10

 

and the balance of the payment shall be made as otherwise scheduled. Any such benefits subject
to the rule may be provided under the 409A Deferral Period at Executive’s expense, with Executive
having a right to reimbursement from Company once the 409A Deferral Period ends, and the balance of
the benefits shall be provided as otherwise scheduled.

          (d) For purposes of this Agreement, all rights to payments and benefits hereunder shall be
treated as rights to receive a series of separate payments and benefits to the fullest extent
allowed by Section 409A of the Code.

          (e) For purposes of this Agreement, with respect to any amounts that that constitute deferred
compensation subject to Section 409A of the Code, termination of employment shall mean a
“separation from service” within the meaning of Section 409A of the Code where it is reasonably
anticipated that no further services would be performed after such date or that the level of bona
fide services Executive would perform after that date (whether as an employee or independent
contractor) would permanently decrease to less than fifty percent (50%) of the average level of
bona fide services Executive performed over the immediately preceding thirty-six (36) month period.
The Parties agree that a “separation from service” will occur no later than the Separation Date and
Executive will not be expected to perform any consulting or other services thereafter that would
negate a separation from service on the Separation Date.

          (f) Notwithstanding any other provision of this Agreement, neither Company nor its
subsidiaries or affiliates shall be liable to Executive if any payment or benefit which is to be
provided pursuant to this Agreement and which is considered deferred compensation subject to
Section 409A of the Code otherwise fails to comply with, or be exempt from, the requirements of
Section 409A of the Code.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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     IN WITNESS WHEREOF, the Parties have executed, or caused their duly authorized representatives
to execute, this Agreement as of the day and year first above written.

	 	 	 	 	 	 	 

	 	 	“Executive”	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ David J. Paterson	 	 
	 	 	 	 	 
	 	 	David J. Paterson	 	 
	 
	 	 	 	 	 	 
	 	 	“Company”	 	 
	 
	 	 	 	 	 	 
	 	 	AbitibiBowater Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Richard B. Evans	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 

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EXHIBIT A 

FORM OF RELEASE

ABITIBIBOWATER INC.

WAIVER AND RELEASE AGREEMENT

     (1) General Release. In consideration of the benefits (the “Benefits”) to be provided
to me under the terms of that certain Separation Agreement, dated December __, 2010, between me and
AbitibiBowater Inc. (the “Separation Agreement”), I, on behalf of myself and my family and heirs,
executors, administrators, attorneys, agents and assigns, hereby waive, release and forever
discharge AbitibiBowater Inc. (the “Company”) and its subsidiaries, divisions and affiliates,
whether direct or indirect, its and their joint ventures and joint venturers (including its and
their respective directors, officers, associates, employees, shareholders, partners and agents,
past, present and future), and each of its and their respective predecessors, successors and
assigns (collectively referred to as “Releasees”), from any and all known or unknown actions,
causes of action, claims or liabilities of any kind which have been or could be asserted against
the Releasees arising out of or related to my employment with and/or separation from employment
with the Company and/or any of the other Releasees and/or any other occurrence up to and including
the date of this Waiver and Release Agreement (this “Agreement”), including but not limited to:

	 	(a)	 	claims, actions, causes of action or liabilities arising under Title VII of the Civil
Rights Act of 1964, as amended, the Age Discrimination in Employment Act, as amended (the “ADEA”),
Sections 1981 through 1988 of Title 42 of the United States Code, as amended, and the Civil Rights
Act of 1991, as amended, the Fair Labor Standards Act, as amended, the Federal Occupational Safety
and Health Act, as amended, the Employee Retirement Income Security Act, as amended, the
Rehabilitation Act of 1973, as amended, the Americans with Disabilities Act, as amended, the Family
and Medical Leave Act, as amended, and/or any other federal, state, municipal or local employment
discrimination statutes, laws, regulations, ordinances or executive orders (including, but not
limited to, claims based on age, sex, attainment of benefit plan rights or entitlement to plan
benefits, race, color, religion, national origin, source of income, union activities, marital
status, sexual orientation, ancestry, harassment, parental status, handicap, disability,
retaliation and veteran status); and/or
	 
	 	(b)	 	claims, actions, causes of action or liabilities arising under any other federal, state,
municipal or local statute, law, ordinance, regulation, constitution or executive order; and/or
	 
	 	(c)	 	any other claim whatsoever including, but not limited to, claims for severance pay, claims
for salary/wages/commissions/bonus, claims for expense reimbursement, claims based upon breach of
contract, wrongful termination, defamation, intentional infliction of emotional distress, tort,
personal injury, invasion of privacy, violation of public policy, negligence and/or any other

1

 

	 	 	 	common law, statutory or other claim whatsoever arising out of or relating to my employment
with and/or separation from employment with the Company and/or any of the other Releasees.

     (2) Exclusions from General Release. Excluded from the general release above (i) are
any claims or rights which cannot be waived by law, including my right, if any, to accrued
vacation. In addition, nothing in this Waiver and Release Agreement limits my rights (or the
rights of any government agency) of access to, or to cooperate or participate with, any government
agency, or to file a charge with any administrative agency or participate in any agency
investigation, including without limitation, the United States Equal Employment Opportunity
Commission or (ii) claims for enforcement of the Separation Agreement. I am, however, freely
waiving my right to any recovery of money or other relief in connection with such a charge or
investigation for a claim under clause (i). I am also waiving my right to recover money or other
relief in connection with a charge filed by any other individual or by the Equal Employment
Opportunity Commission or any other federal, state or local agency.

     (3) Covenant Not to Sue. I understand that a “covenant not to sue” is a legal term
which means I am promising not to file a lawsuit in court. It is different from the General Release
of claims contained in paragraph (1) above because, in addition to waiving and releasing the claims
covered by paragraph (1) above, I further agree never to sue any of the Releasees or become party
to a lawsuit in any forum for any reason, including but not limited to claims of any type or based
on any laws or theories whatsoever covered by the General Release language in paragraph (1) above
or arising out of or relating to my employment with and/or separation from employment with the
Company and/or any of the other Releasees. Notwithstanding this covenant not to sue, I may bring a
claim or lawsuit to challenge the validity of this Agreement under the ADEA or to enforce my rights
under the Separation Agreement and this Agreement.

     (4) Company’s Remedies. I further acknowledge and agree in the event that I breach
the provisions of paragraph (3) above and I fail to cure such breach within thirty (30) days after
I have been given notice of such breach, (a) the Company shall be entitled to apply for and receive
an injunction to restrain any violation of paragraph (3) above, (b) the Company shall not be
obligated to provide the Benefits, (c) the Benefits shall be deemed canceled if already granted,
(d) I shall be obligated to pay to the Company its costs and expenses in enforcing this Agreement
and defending against such lawsuit (including court costs, expenses, reasonable legal fees and any
other litigation costs), and (e) I shall be obligated upon demand to pay to the Company all but
$300,000 of the cost of the Benefits (as further set forth in the Separation Agreement) and the
foregoing shall not affect the validity of this Agreement.

     (5) Exclusion. As stated in paragraph (3), I would not violate any part of this
Agreement by bringing a lawsuit against the Company to enforce my rights under the Separation
Agreement or this Agreement or to challenge the validity of this Agreement under the ADEA.
However, as stated in paragraph (2), I further waive my right to any monetary recovery or other
relief that may become payable to me pursuant to any claim that is pursued by any federal, state,
or local administrative agency for my benefit arising out of or related to my employment with
and/or separation from employment with the Company and/or any of the other Releasees.

2

 

     (6) Employee Acknowledgements. I further agree that I have been paid for all hours
worked, including overtime. I also acknowledge that I have not suffered any on-the-job injury for
which I have not already filed a claim.

     (7) Future Employment. To the extent permitted by law, I further waive, release and
discharge the Company and/or any of the other Releasees from any reinstatement rights which I have
or could have. I further promise not to seek future employment with the Company and/or any of the
other Releasees in any position or capacity.

     (8) Non-Admissions. The facts and terms of this Agreement are not an admission by the
Company and/or any of the other Releasees of liability or other wrongdoing under any law.

     (9) Additional Employee Acknowledgements. I further agree that:

	 	•	 	I am entering into this Agreement knowingly and voluntarily;
	 
	 	•	 	I have been advised to consult with an attorney before signing this
Agreement;
	 
	 	•	 	I understand I may take at least forty-five (45) days to consider this
Agreement before signing it;
	 
	 	•	 	I have carefully read and fully understand all the provisions of this
Agreement and that I voluntarily enter into this Agreement by signing below;
	 
	 	•	 	I am not otherwise entitled to the Benefits; and
	 
	 	•	 	the Separation Agreement, including the exhibits attached thereto, is the
entire agreement between me and the Releasees regarding the termination of my
employment with the Releasees.

     (10) Revocation/Payment. I further understand I may revoke this Agreement within
seven (7) days after its signing and that any revocation shall be made in writing and submitted
within this seven (7) day period to the Company’s Chief Legal Officer at the address listed on the
following page. If I do not revoke this Agreement within the seven (7) day period, the Agreement
shall become irrevocable. I further understand that if I revoke this Agreement, I shall not receive
the Benefits.

     (11) Known and Unknown Claims. I FURTHER UNDERSTAND THAT THIS AGREEMENT INCLUDES A
RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

     (12) Severability. I further acknowledge and agree that if any provision of this
Agreement is found, held or deemed by a court of competent jurisdiction to be void, unlawful or
unenforceable under any applicable statute or controlling law, the remainder of this Agreement
shall continue in full force and effect.

     (13) Venue for Disputes. Each of the parties (a) consents to submit itself to the
personal jurisdiction of the Court of Chancery of the State of Delaware or any court of the United
States located in the State of Delaware, in the event any dispute arises out of this

3

 

Agreement or any of the transactions contemplated by this Agreement, (b) agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from
any such court, (c) agrees that it will not bring any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any court other than the Court of Chancery of
the State of Delaware or, if under applicable law exclusive jurisdiction is vested in the federal
courts, any court of the United States located in the State of Delaware. Without limiting other
means of service of process permissible under applicable law, the parties agree that service of any
process summons, notice or document by U.S. registered mail to their respective last known
addresses shall be effective service of process for any suit or proceeding in connection with this
Agreement or the transactions contemplated hereby.

     (14) Waiver of Jury Trial. EACH OF THE PARTIES IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING BETWEEN THE PARTIES ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

	 	 	 	 	 

	 

	 	/s/ David J. Paterson	 	 
	 

	 	 

	 	 
	 

	 	(Signature)	 	 
	 
	 	 	 	 
	 

	 	 

(Date)
	 	 

PLEASE RETURN THE SIGNED AND DATED WAIVER AND RELEASE AGREEMENT TO THE COMPANY’S CHIEF LEGAL
OFFICER AT THE FOLLOWING ADDRESS:

AbitibiBowater Inc.

1155 Metcalfe Street

Suite 800

Montreal, Quebec

H3B 5H2

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EXHIBIT B 

INDEMNIFICATION AGREEMENT

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