8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported)       March 25, 2008

ABITIBIBOWATER INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
001-33776	98-0526415
(Commission File Number)	(I.R.S. Employer Identification No.)
AbitibiBowater Inc. 1155 Metcalfe Street, Suite 800 Montreal, Quebec, Canada	H3B 5H2
(Address of principal executive offices)	(Zip Code)

(514) 875-2160

(Registrant’s Telephone Number, Including Area Code)

NOT APPLICABLE

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.

(e) On March 25, 2008, the Human Resources and Compensation Committee (the “HRCC”) of AbitibiBowater Inc. (the “Company”) approved the terms of the AbitibiBowater Inc. Executive Deferred Share Unit Plan (“DSU Plan”) and AbitibiBowater Inc. Restricted Share Unit Plan (“RSU Plan”).

DSU Plan. The Company has established the DSU Plan based on the prior plan that was used by Abitibi-Consolidated Inc. Under the terms of the DSU Plan, senior executives of the Company may elect to have a portion of their annual incentive compensation paid to them in the form of deferred share units (“DSUs”) which will become payable following termination of employment. Each DSU is equivalent in value to a common share of the company (and represents the right to receive a cash payment equal to the value of a common share of the Company on the applicable distribution date). The number of DSUs credited is determined by dividing the amount of the executive’s incentive compensation deferred by the average of the high and low prices per Company common share on the date on which the incentive compensation would otherwise have been paid (or, if such date is not a trading day, the immediately preceding trading day). Executives are required to make their DSU election by no later than December 31 (June 30 for U.S. taxpayers) of the calendar year immediately preceding the calendar year in which the annual incentive compensation would otherwise have been paid. When dividends on outstanding common shares of the Company are paid to shareholders, holders of DSUs receive dividend equivalent payments in respect of the underlying common shares which are then converted into additional DSUs based on the average of the high and low prices per Company common share on the date the dividends are paid (or, if such date is not a trading day, the immediately preceding trading day).

In the event of certain changes in capitalization, corporate transactions or unusual or nonrecurring events affecting the Company, any of its affiliates, or the financial statements of the Company or any of its affiliates, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange or inter-dealer quotation system, accounting principles or law, then the HRCC will make an equitable or proportionate adjustment to prevent undue dilution or enlargement of the intended benefits or potential benefits of the DSUs consistent with the purposes of the DSU Plan, including without limitation cancelling any one or more outstanding DSUs and paying out the value of the DSUs as determined by the HRCC (which if applicable may be based upon the price per Company common share received or to be received by other shareholders of the Company in such event).

It is intended that the provisions of the DSU Plan comply with Section 409A of the Internal Revenue Code. The value of an executive’s DSUs will be paid in a lump sum cash payment to U.S. taxpayers upon separation from service or within 90 days following the date of death (or, if a delayed payment is required under Section 409A of the Internal Revenue Code, on the day after the expiration of the six-month period immediately following the separation date, or, if earlier, the date of death) and to non-U.S. taxpayers on a distribution date designated by them which is on or before December 15 of the first calendar year commencing after the termination date (or within 90 days of the date of termination due to

death (or, if the executive dies after termination but before designating a payment date, not later than December 31 of the first calendar year following termination).

The amount of the cash to be distributed will be determined by multiplying the number of DSUs in the executive’s account by the average of the high and low prices per Company common share either (i) as of termination of employment for executives subject to U.S. tax, or, if a delayed payment is required under Section 409A of the Internal Revenue Code, as of the expiration of the six-month period immediately following the separation date or, if applicable, the date of death, or (ii) on the date the executive files the distribution request for non-U.S. taxpayers.

The HRCC may amend the DSU Plan as it deems necessary or appropriate, or terminate the DSU Plan at any time, but no such amendment or termination shall, without the consent of the executive or unless required by law, adversely affect the rights of the executive with respect to DSUs to which the executive is then entitled under the DSU Plan.

RSU Plan. The Company has established the RSU Plan based on the prior plan that was used by Abitibi-Consolidated Inc. The purpose of the RSU Plan is to allow the HRCC to establish annual plans on a rolling three-year basis to motivate and reward members of the executive group for achieving mid-term results, which will contribute to the prosperity of the Company and its shareholders. The RSU Plan will typically use financial benchmarks to measure the Company’s performance either against the performance of its peers or against internal financial benchmarks, although time-vesting criteria may also be used.

The RSU Plan provides that the HRCC may select any of the key employees of the Company (including directors but excluding directors who are not officers or salaried employees) to be participants in the RSU Plan. In addition, the HRCC may delegate to the Chief Executive Officer the authority to grant a certain number of Restricted Stock Units (“RSUs”) to high performing and/or high potential non-executive or non-officer employees of the Company selected by the Chief Executive Officer.

Each RSU is equivalent in value to a common share of the Company (and represents the right to receive a cash payment equal to the value of a common share of the Company on the applicable vesting date). The RSUs vest on the basis of performance or time vesting and are generally paid out at the end of the performance period, usually within three years from issuance. The vesting of the RSUs would typically be either based on the Company’s relative average financial performance as compared to other companies that comprise a comparator group during the applicable performance period or to any other internal financial performance measure approved by the HRCC, or based solely on the passage of time.

After the commencement of a performance period, the HRCC or the Chief Executive Officer may designate additional eligible key employees as participants in the Plan, provided that their initial grants will be prorated based on time to be worked during the performance period. For RSUs that are based on performance, the HRCC will approve for each performance period a ranking schedule (which is a list of comparator companies indicating the percentage of a participant’s RSU award that vests based on the number of comparator companies that the Company beats in terms of the corporate accounting or financial measure, ratio or calculation as may be selected on an annual basis by the HRCC or any other vesting

schedule based on such measure, ratio or calculation as approved by the HRCC). The HRCC in its sole discretion may provide for the grant of RSUs that are subject solely to time-based vesting conditions, in which case references to the performance period shall be deemed to refer to the time period or periods over which the RSUs shall vest as determined by the HRCC, and the other provisions of the RSU Plan that are applicable to performance-based vesting conditions shall not apply to such RSUs.

At the end of each performance period, the HRCC shall determine the extent, if any, to which the participant has earned the RSUs. The HRCC may modify the applicable performance criteria at its discretion within ninety days after the start of any given performance period. The HRCC may also adjust the ranking schedule during the term of an award should the continued inclusion of one or more of the companies become inappropriate or inconsistent with the intent of the RSU Plan (for example, because any such company ceases to exist in its then current form, or is acquired by another company) or for any other reason during the performance period. The number of RSUs earned by a participant will be based upon the ranking schedule (if applicable). At the end of each performance period, the value of the participant’s RSUs will be equal to the number of RSUs earned multiplied by the closing price of a share of Company common stock on the last trading day of the performance period. The award payments will be made in cash. The award payments shall be made by no later than March 15 of the calendar year immediately following the calendar year in which the award payment vests.

Upon termination of employment, a participant’s entitlement to a payment in respect of RSUs at the end of the performance period shall be determined as follows:

• if the participant’s employment is terminated for cause (as determined by the HRCC in its sole discretion), or voluntarily by the participant (other than due to voluntary retirement), then all unvested RSUs as of the date of termination of employment shall become void and no amount shall be payable to the Participant unless otherwise determined by the HRCC;

• if the participant’s employment is terminated by voluntary retirement (as determined by the HRCC in its sole discretion) or involuntary termination by the Company leading to retirement eligibility at such termination (or immediately following any applicable severance period), then vesting of previously granted RSUs will be determined as if the participant was actively at work through the end of the performance period;

• if the participant’s employment is terminated by involuntary termination other than as referred to in the preceding two bullets, then vesting of previously awarded RSUs will be determined based on time worked, including any applicable severance period, prorated over the performance period;

• if the participant’s employment is terminated by death, vesting of the previously unvested RSUs will be determined based on time worked, prorated over the performance period;

• if the participant dies following voluntary retirement, vesting will be determined based on time worked, including the period of retirement up to the date of death, prorated over the performance period;

• if death occurs after involuntary termination (including if termination is immediately followed by retirement), vesting of the previously unvested RSUs will be determined based on time worked, including any portion of the severance period up to the date of death, prorated over the performance period; and

• if the participant’s employment is terminated because of disability (as determined by the HRCC in its sole discretion), then vesting of previously awarded RSUs will be determined based on time worked, including any short term disability period (as defined under the Company’s short term disability policies), up to the time any long term disability period begins, prorated over the performance period.

In the event of certain changes in capitalization, corporate transactions or unusual or nonrecurring events affecting the Company, any of its affiliates, or the financial statements of the Company or any of its affiliates, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange or inter-dealer quotation system, accounting principles or law, then the HRCC will make an equitable or proportionate adjustment to prevent undue dilution or enlargement of the intended benefits or potential benefits of the RSUs consistent with the purposes of the RSU Plan, including without limitation cancelling any one or more outstanding RSUs and paying out the value of the RSUs as determined by the HRCC (which if applicable may be based upon the price per Company common share received or to be received by other shareholders of the Company in such event).

It is intended that the provisions of the RSU Plan comply with Section 409A of the Internal Revenue Code. If necessary to comply with Section 409A, any payments in respect of RSUs that would otherwise be payable to a participant during the six-month period following his or her separation from service will not be made before the date which is six months after the date of his or her separation from service (and shall be paid in a single lump sum on the first day of the seventh month following the date of such separation from service) or, if earlier, the participant’s date of death; in such event, the value of the payment will be determined based on the closing price of a share of Company common stock as of the expiration of such six-month period or the date of death. in such event, the Final Payment will be equal to the number of RSUs credited to the U.S. Eligible Executive’s account multiplied by the Fair Market Value per Common Share as of the expiration of such six-month period or the date of death.

The HRCC may at any time, and from time to time, by resolution and without other formality amend the RSU Plan in any respect, provided that no amendment shall operate to adversely affect materially any rights already acquired by a participant under the RSU Plan. Without amending the Plan the HRCC may with the consent of any participant, approve any variation in terms of that participant’s RSUs. The HRCC may at any time terminate the RSU Plan provided that the existing rights of participants will not thereby be materially adversely affected.

Executive Severance Policy.  The Company adopted an executive severance policy, effective April 1, 2008, for its senior executives, including senior vice-presidents and designated vice-president positions reporting to senior vice-presidents, which provides that upon an involuntary termination by the Company of the executive's employment other than for cause, the executive would receive severance pay in an amount equal to 6 weeks of eligible pay per year of service, with a minimum of 52 weeks and a maximum of 104 weeks. Eligible pay includes base pay, plus average of the last 2 annual incentive bonuses received, up to a maximum of 125% of the executive’s target bonus.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits.

EXHIBIT NO.		DESCRIPTION
	10.1	AbitiBowater Inc. Restricted Share Unit Plan
	10.2	AbitiBowater Inc. Executive Deferred Share Unit Plan

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 8-K to be signed on its behalf by the undersigned, thereunto duly authorized.

	ABITIBIBOWATER INC.
Date:  March 31, 2008	By:	/s/ William G. Harvey
		Name:  William G. Harvey Title:    Senior Vice President, and              Chief Financial Officer

EX-10

EXHIBIT 10.1.

ABITIBIBOWATER INC.

RESTRICTED SHARE UNIT PLAN

AbitibiBowater Inc. RESTRICTED SHARE UNIT PLAN

Table of contents

1.	PURPOSE		1
2.	ADMINISTRATION		1
3.	PARTICIPANTS		1
4.	DEFINITIONS		1
5.	GRANT OF RESTRICTED SHARE UNITS		2
6.	EARNED AWARDS		3
7.	AWARD PAYMENTS		3
8.	TERMS OF RESTRICTED SHARE UNITS		3
		(a)  Vesting	3
		(b)  Non-transferability	4
		(c)  Termination of Employment	4
		(d)  Payment of Plan Award Value	5
9.	CHANGES IN SHARE CAPITAL		5
10.		AMENDMENT	5
11.		UNFUNDED PLAN	6
12.		RELATIONSHIP TO OTHERS	6
13.		GOVERNING LAW	6
14.		OBLIGATIONS BINDING ON SUCCESSORS	6
15.		SECTION 409a	6
16.		TERMINATION	7

ABITIBIBOWATER INC.

RESTRICTED SHARE UNIT PLAN

1.         PURPOSE

The purpose of the AbitibiBowater Inc. (together with its subsidiaries, the “Company”) Restricted Share Unit Plan (the “Plan”) is to: 1) promote a greater alignment between the interests of shareholders and key employees (executives and high-potential/high performing managers); 2) reward and retain key employees of the Company; and 3) link key employees’ total direct compensation with the long term performance of the Company.

2.         ADMINISTRATION

The Plan shall be administered by the Human Resources and Compensation Committee (the “Committee”) of the Board of Directors of AbitibiBowater Inc. or such other committee as may be designated by the Board. The Committee shall have the full and complete authority to interpret and to modify the Plan, prescribe such rules and regulations, as appropriate, and make such other determinations as it deems necessary or desirable for the administration of the Plan. All decisions and determinations of the Committee respecting the Plan shall be binding and conclusive on the Plan and the Participants (as defined herein).

3.         PARTICIPANTS

The Committee shall, in its sole discretion, designate, from time to time, any of the key employees of the Company, as described in Section 1 hereof, (including directors but excluding directors who are not officers or salaried employees) as participants in the Plan (the “Participants”). The Committee may delegate to the Chief Executive Officer the authority to grant a certain number of Restricted Share Units to high performing and/or high potential non-executive or non-officer employees of the Company selected by the Chief Executive Officer, who shall then be treated as Participants. No person shall be entitled to participate in the Plan and the decision as to who shall have the opportunity to participate in the Plan and the extent of the participation will, subject to the terms hereof, be made by the Committee in its sole and absolute discretion.

4.         DEFINITIONS

For purposes of this Plan:

(i) “Common Shares” means the common shares in the capital of AbitibiBowater Inc., and includes any shares of AbitibiBowater Inc. into which such shares may be converted, reclassified, redesignated, subdivided, consolidated, exchanged or otherwise changed, pursuant to a Reorganization or otherwise;

(ii) “Financial Performance Criterion” means such corporate accounting or financial measure, ratio or calculation as may be selected on an annual basis by the Committee;

(iii) “Performance Period” means three years or another period specifically established by the Committee and set out in the Grant Letter;

(iv) “Reorganization” means any (i) capital reorganization, (ii) merger, (iii) amalgamation, (iv) offer for Common Shares, which, if successful, would entitle the offeror to acquire all of the Common Shares, or (v) arrangement or other scheme of reorganization;

(v) “Ranking Schedule” means a list of comparator companies indicating the percentage (%) of a Participant’s RSU award that vests based on the number of comparator companies the Company beats in terms of the selected Financial Performance Criterion or any other vesting schedule based on Financial Performance Criterion as approved by the Committee;

(vi) “Restricted Share Unit(s)” or “RSU(s)” means a phantom unit with a value pegged to the Common Shares’ actual stock price and which has time and financial performance vesting restrictions tied to it that define the portion and when any given award is actually earned by the Participant.

(vii) “Closing Value” means the closing price of a Common Share on the last trading day of the Performance Period on the principal stock exchange on which the Common Shares are traded;

(viii) “Plan Award Value” means the value obtained by multiplying the number of RSUs which vest by the Closing Value;

(ix) “Section 409A” means Section 409A of the U.S. Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder as in effect from time to time.

5.         GRANT OF RESTRICTED SHARE UNITS

(a) At the time of the grant, the Committee shall determine the number of Restricted Share Units to be granted to each Participant and the vesting and other terms of such grant. The Chief Executive Officer shall determine the number of Restricted Share Units for which the granting authority was delegated to him by the Committee to be granted to each non-executive and/or non-officer Participant. After the commencement of the Performance Period, the Committee or the Chief Executive Officer may designate additional eligible key employee as Participants in the Plan (the “Mid-Term Participants”). Mid-Term Participants’ initial grants will be prorated based on time to be worked during the Performance Period.

(b) As soon as practicable after determining the grant of a Participant, the Committee shall cause a notice in writing (the “Grant Letter”) to be given to the Participant. The Grant Letter shall set out the following information: (i) the number of Restricted Share Units granted to the Participant; (ii) the Ranking Schedule (which is subject to adjustment, if required, per section 6(a)); (iii) the length of the Performance Period; and (iv) any additional time-based vesting

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conditions. The Committee in its sole discretion may provide for the grant of RSUs that are subject solely to time-based vesting conditions, in which case references to the Performance Period shall be deemed to refer to the time period or periods over which the RSUs shall vest as determined by the Committee, and the other provisions of the Plan that are applicable to performance-based vesting conditions (including but not limited to the Ranking Schedule and Financial Performance Criterion) shall not apply to such RSUs.

(c) All Restricted Share Units granted under the Plan shall be subject to the terms and conditions of the Grant Letter as well as the terms of this Plan.

(d) The Committee will approve a Ranking Schedule for each Performance Period (provided that no Ranking Schedule shall apply to RSUs that are subject solely to time-based vesting conditions).

6.         EARNED AWARDS

(a) At the end of each Performance Period, the Committee shall determine the extent, if any, to which the Participant has earned his Restricted Share Units. The Committee may modify the Financial Performance Criterion at its discretion within ninety days after the start of any given Performance Period. The Committee may also adjust the Ranking Schedule during the term of an award should the continued inclusion of one or more of the companies become inappropriate or inconsistent with the intent of the Plan (for example, because any such company ceases to exist in its then current form, or is acquired by another company) or for any other reason during the Performance Period.

(b) The number of Restricted Share Units earned by the Participant will be based upon the Ranking Schedule (if applicable) that is set out in the Grant Letter, reflecting any adjustments pursuant to Section 6(a).

7.         AWARD PAYMENTS

(a) At the end of each Performance Period, the value of the Participant’s Restricted Share Units will be equal to the number of Restricted Share Units earned by such Participant in accordance with Sections 6(a) and 6(b) hereof multiplied by the Closing Value.

(b) The award payments will be made in cash. The award payments shall be made by no later than March 15 of the calendar year immediately following the calendar year in which the award payment vests in accordance with Section 6.

8.         TERMS OF RESTRICTED SHARE UNITS

Unless otherwise provided by the Committee in the Grant Letter:

Vesting

Awarded Restricted Share Units will vest in accordance with Section 6.

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Non-transferability

The Plan Award Value is payable only to the Participant or, in the event of his death, his heirs or other legal representatives, as hereinafter provided. A Participant shall not be entitled to transfer, assign, charge, pledge or hypothecate, or otherwise alienate, whether by operation of law or otherwise, any Restricted Share Units, and Restricted Share Units shall not be subject to execution, attachment or similar process.

Termination of Employment

Notwithstanding the foregoing provisions of this Section 8, if the employment of any Participant shall be terminated so that he is no longer employed by the Company, his entitlement to a payment in respect of his Restricted Share Units at the end of the Performance Period shall be determined as follows:

(i)            if the employment of such Participant shall terminate due to termination by the Company for cause (as determined by the Committee in its sole discretion) or in the event the Participant voluntarily terminates his employment with the Company (other than due to voluntary retirement under Section 8(c)(ii)), then all unvested RSUs as of the date of termination of employment, shall forthwith become void and no amount shall be payable to the Participant unless otherwise determined by the Committee.

(ii)          if the employment of such Participant shall terminate by retirement (as determined by the Committee in its sole discretion) or involuntary termination by the Company leading to retirement eligibility at such termination (or immediately following any applicable severance period), then vesting of previously granted RSUs will be determined as if the Participant was actively at work through the end of the Performance Period, subject to Section 8(c)(iv).

(iii)         if the employment of such Participant shall terminate by involuntary termination otherwise than as referred to in Section 8(c)(i) or (ii), then vesting of previously awarded RSUs will be determined based on time worked, including any applicable severance period, prorated over the Performance Period, subject to Section 8(c)(iv).

(iv)         if the employment of such Participant shall terminate by death, or if the Participant dies following termination of employment but prior to payout of previously granted RSUs, then vesting of the previously unvested RSUs will be determined:

a- if death occurs during employment: vesting will be determined based on time worked, prorated over the Performance Period;

b- if death occurs after voluntary retirement under Section 8(c)(ii): vesting will be determined based on time worked, including the period of retirement up to the date of death, prorated over the Performance Period;

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c- if death occurs after involuntary termination described in Section 8(c)(ii) or 8(c)(iii) (including if termination is immediately followed by retirement): vesting will be determined based on time worked, including any portion of the severance period up to the date of death, prorated over the Performance Period.

(v)           if the employment of such Participant shall terminate because of disability (as determined by the Committee in its sole discretion), then vesting of previously awarded RSUs will be determined based on time worked, including any short term disability period (as defined under the Corporation’s short term disability policies), up to the time any long term disability period begins, prorated over the Performance Period.

Payment of Plan Award Value

The Company shall deduct any taxes that are required to be deducted by any applicable law from payments to Participants. All taxes due are the full and sole responsibility of the Participant.

9.         CHANGES IN SHARE CAPITAL

In the event of (x) a corporate transaction involving the Company (including, without limitation, any dividend or other distribution (whether in the form of cash, Common Shares, other securities or other property), stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, sale of assets or subsidiaries, combination or exchange of shares, issuance of warrants or other rights to acquire Common Shares or other securities of the Company), (y) other similar corporate transaction or event that affects the Common Shares, or (z)  unusual or nonrecurring events affecting the Company, any affiliate, or the financial statements of the Company or any affiliate, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange or inter-dealer quotation system, accounting principles or law, then the Committee shall make an equitable or proportionate adjustment to prevent undue dilution or enlargement of the intended benefits or potential benefits of the Restricted Share Units consistent with the purposes of the Plan, including without limitation cancelling any one or more outstanding RSUs and causing to be paid to the holders thereof, in cash, Common Shares, other securities or other property, or any combination thereof, the value of such RSUs, if any, as determined by the Committee (which if applicable may be based upon the price per Common Share received or to be received by other shareholders of the Company in such event).

10.        AMENDMENT

(a) The Committee may at any time, and from time to time, by resolution and without other formality amend the Plan in any respect, provided that no amendment shall operate to adversely affect materially any rights already acquired by a Participant under the Plan. Without amending the Plan the Committee may with the consent of any Participant, approve any variation in terms of that Participant’s Restricted Share Units.

(b) The cost of the operation of the Plan shall be borne by the Company.

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(c ) All notices under the Plan shall be in writing and, if to the Company, shall be delivered to the Company or sent by first class mail to their respective head or registered offices for the time being, and if to a Participant, shall be delivered personally or sent by first class mail to the Participant at the address which he shall give for the purpose, or failing any such address to his last known place of residence. If a notice is sent by mail, service thereof shall be deemed to be effected by properly addressing, prepaying and posting a letter containing the same to such address and shall be deemed to be served forty-eight hours after such mailing.

11.        UNFUNDED PLAN

The Plan shall be unfunded. To the extent that a Participant holds any rights by virtue of a grant of Restricted Share Units such rights shall be no greater than the rights of an unsecured general creditor of the Company.

12.        RELATIONSHIP TO OTHERS

No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, profit sharing, group insurance or other benefit plan of the Company except as otherwise specifically provided in such other plan.

13.        GOVERNING LAW

The Plan shall be governed by and construed in accordance with the laws of the Province of Québec and the federal laws of Canada applicable therein.

14.        OBLIGATIONS BINDING ON SUCCESSORS

The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company.

15.        SECTION 409a

It is intended that the provisions of this Plan comply with Section 409A, and all provisions of this Plan shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A. Except as permitted under Section 409A, any deferred compensation (within the meaning of Section 409A) payable to or for the benefit of a Participant subject to U.S. tax (a “U.S. Participant”) may not be reduced by, or offset against, any amount owing by the Participant to the Corporation or any of its affiliates. Notwithstanding anything in this Plan to the contrary, if a U.S. Participant becomes entitled to receive payment in respect of any Restricted Share Units as a result of his or her “separation from service” (within the meaning of Section 409A), and the U.S Participant is a “specified employee” (within the meaning of Section 409A) at the time of his or her separation from service, and the Committee makes a good faith determination that (i) all or a portion of the Restricted Share Units constitute “deferred compensation” (within the meaning of Section 409A) and (ii) any such deferred compensation that would otherwise be payable during the six-month period following such separation from service is required to be delayed pursuant to the six-month delay

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rule set forth in Section 409A in order to avoid taxes or penalties under Section 409A, then payment of such “deferred compensation” shall not be made to the U.S Participant before the date which is six months after the date of his or her separation from service (and shall be paid in a single lump sum on the first day of the seventh month following the date of such separation from service) or, if earlier, the U.S Participant’s date of death; in such event, the Closing Value will be determined based on the closing price as of the expiration of such six-month period or the date of death. (For illustrative purposes only, if a U.S Participant who is a specified employee subject to the provisions of the previous sentence incurs a separation from service on January 16 of a calendar year, any payments of deferred compensation that would be payable to such U.S Participant during the six-month period from such January 16 through July 16 shall be accumulated and paid in a single lump sum to such U.S Participant on July 17 of such calendar year, or, if earlier, such U.S Participant’s date of death.) Each U.S Participant, any beneficiary or the U.S Participant’s estate, as the case may be, is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on or for the account of such U.S Participant in connection with this Plan (including any taxes and penalties under Section 409A), and neither the Company nor any affiliate shall have any obligation to indemnify or otherwise hold such U.S Participant or beneficiary or the U.S Participant’s estate harmless from any or all of such taxes or penalties. Notwithstanding any provision of the Plan to the contrary, in the event that the Committee determines that any amounts payable hereunder will be taxable to a U.S. Participant under Section 409A prior to payment to such U.S. Participant of such amount, the Company may (i) adopt such amendments to the Plan and RSUs and appropriate policies and procedures, including amendments and policies with retroactive effect, that the Committee determines necessary or appropriate to preserve the intended tax treatment of the benefits provided by the Plan and RSUs hereunder and/or (ii) take such other actions as the Committee determines necessary or appropriate to avoid or limit the imposition of an additional tax under Section 409A.

16.        TERMINATION

The Committee may at any time terminate the Plan provided that the existing rights of Participants will not thereby be materially adversely affected.

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EX-10

EXHIBIT 10.2.

ABITIBIBOWATER INC.

EXECUTIVE DEFERRED SHARE UNIT PLAN

AbitibiBowater Inc. Executive Deferred
Share Unit Plan

Table of contents

SECTION 1.			General Provisions	1
	1.1.	Purpose		1
	1.2.	Definitions		1
	1.3.	Effective Date		2
	1.4.	Administration		2
	1.5.	Governing Law		2
SECTION 2.			Election under the Plan	2
	2.1	Payment and Deferral of Annual Remuneration		2
	2.2.	Adjustments and Reorganizations		3
	2.3.	Termination of Service			4
SECTION 3.			General		5
	3.1.	Transferability of Awards		5
	3.2.	No Right to Service		5
	3.3.	Unfunded Plan		5
	3.4.	Successors and Assigns		5
	3.5.	Section 409A		5
	3.6.	Plan Amendment		6
	3.7.	Plan Termination		6

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SECTION 1.		General Provisions
1.1.	Purpose

The purpose of the AbitibiBowater Inc. Executive Deferred Share Unit Plan is to promote a greater alignment of interests between eligible officers and executives of the Corporation and the shareholders of the Corporation.

1.2 Definitions

As used in the Plan, the following terms have the following meanings:

(a) “Board” means the Board of Directors of the Corporation;

(b) “Committee” means the Human Resources Compensation Committee of the Board, or such other persons designated by the Board;

(c) “Common Share” means a common share of AbitibiBowater Inc.;

(d) “Corporation” means AbitibiBowater Inc.;

(e) “Deferred Share Unit” means a right granted by the Corporation to an Eligible Executive to receive on a deferred payment basis the cash equivalent of a Common Share on the terms contained herein;

 

(f) “Eligible Executive” means any officer or executive of the Corporation or any subsidiary of the Corporation determined to be an Eligible Executive pursuant to Section 1.4;

 

(g) “Executive’s Incentive Remuneration” means all bonus amounts (if any) payable to an Eligible Executive by the Corporation or a subsidiary of the Corporation in respect of the services provided to the Corporation or subsidiary by the Eligible Executive in any calendar year;

(h) “Fair Market Value” means the average of the high and low prices per Common Share at which Common Shares are traded on the principal stock exchange on which the Common Shares are traded on the applicable day or, if such stock exchange is not open on such day, or if there are no prices per Common Share quoted on such day, on the immediately preceding day on which such stock exchange is open or there is a quoted price, as the case may be. If the Common Shares are not listed on a stock exchange, the Fair Market Value shall be the value established by the Committee based on the price per Common Share on any other public exchange on which the shares are listed, or if the Common Shares are not listed on any public exchange, by the Committee acting in good faith;

(i) “Filing Date” has the meaning ascribed to that term in Section 2.3(a);

(j) “Final Payment” has the meaning ascribed to that term in Section 2.3(a);

(k) “Plan” means this AbitibiBowater Inc. Executive Deferred Share Unit Plan; and

(l) “Section 409A” means Section 409A of the U.S. Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder as in effect from time to time.

1.3. Effective Date

The Plan shall be effective as of March [26], 2008.

1.4. Administration

The Committee shall, in its sole and absolute discretion: (i) determine from time to time which officers or executives of the Corporation or any subsidiary of the Corporation shall be Eligible Executives for the purposes of the Plan; (ii) interpret and administer the Plan; (iii) establish, amend and rescind any rules and regulations relating to the Plan; and (iv) make any other determinations that the Committee deems necessary or desirable for the administration of the Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan in the manner and to the extent the Committee deems, in its sole and absolute discretion, necessary or desirable. Any decision of the Committee with respect to the administration and interpretation of the Plan shall be conclusive and binding on the Eligible Executive.

1.5. Governing Law

The Plan shall be governed by and construed in accordance with the laws of the Province of Québec and the federal laws of Canada applicable therein.

SECTION 2.		Election under the Plan
2.1.	Payment and Deferral of Remuneration

Subject to such rules, approvals and conditions as the Committee may impose, an Eligible Executive may elect to receive the Executive’s Incentive Remuneration, in whole or in part, in the form of Deferred Share Units or cash.

(a) Method of Electing. To elect a form or forms of payment of an Executive’s Incentive Remuneration, the Eligible Executive shall complete and deliver to the Secretary of the Corporation a written election by no later than December 31 (June 30 for U.S. Eligible Executives) of the calendar year preceding the calendar year in which the Executive’s Incentive Remuneration becomes payable. The Eligible Executive’s written election shall designate the percentage of the Executive’s Incentive Remuneration for the applicable calendar year that is to be deferred into Deferred Share Units and the percentage to be paid in cash. In the absence of a designation to the contrary, the Eligible Executive’s election for the latest calendar year with respect to the percentage of the Executive’s Incentive Remuneration that is to be deferred into Deferred Share Units and the percentage that is to be paid in cash shall continue to apply to all subsequent Executive’s Incentive Remuneration payments until the Eligible Executive submits another written election in accordance with this Section. An Eligible Executive shall only file one election in respect of the Executive’s Incentive Remuneration

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payable in any calendar year and the election shall be irrevocable for that year. If no election is made, and no prior election remains effective, the Eligible Executive shall be deemed to have elected to be paid all the Executive’s Incentive Remuneration for the applicable calendar year in cash.

(b) Payment of Executive’s Incentive Remuneration. The portion of the Executive’s Incentive Remuneration shall be paid in cash or credited as Deferred Share Units, as elected by the Eligible Executive, on the date on which bonus awards are payable under the applicable incentive arrangement.

(c) Deferred Share Units. Deferred Share Units elected by an Eligible Executive pursuant to the Plan shall be credited to an account maintained for the Eligible Executive by the Corporation. The number of Deferred Share Units (including fractional Deferred Share Units) to be credited on each of the dates prescribed by Section 2.1(b) shall be determined by dividing the amount of the Executive’s Incentive Remuneration to be deferred into Deferred Share Units on such date by the Fair Market Value per Common Share on such date.

(d) Dividends. When dividends are paid on Common Shares, an Eligible Executive shall be credited with dividend equivalents in respect of Deferred Share Units credited to the Eligible Executive’s account as of the record date for payment of dividends. Such dividend equivalents shall be converted into additional Deferred Share Units (including fractional Deferred Share Units) based on the Fair Market Value per Common Share on the date credited.

2.2. Adjustments and Reorganizations

In the event of (x) a corporate transaction involving the Company (including, without limitation, any dividend or other distribution (whether in the form of cash, Common Shares, other securities or other property), stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, sale of assets or subsidiaries, combination or exchange of shares, issuance of warrants or other rights to acquire Common Shares or other securities of the Company), (y) other similar corporate transaction or event that affects the Common Shares, or (z)  unusual or nonrecurring events affecting the Company, any affiliate, or the financial statements of the Company or any affiliate, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange or inter-dealer quotation system, accounting principles or law, then the Committee shall make an equitable or proportionate adjustment to prevent undue dilution or enlargement of the intended benefits or potential benefits of the Deferred Share Units consistent with the purposes of the Plan, including without limitation cancelling any one or more outstanding Deferred Share Units and causing to be paid to the holders thereof, in cash, Common Shares, other securities or other property, or any combination thereof, the value of such Deferred Share Units, if any, as determined by the Committee (which if applicable may be based upon the price per Common Share received or to be received by other shareholders of the Company in such event).

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2.3. Termination of Service

(a) Termination of Service.

(i) Non-U.S. Executives. An Eligible Executive who is not subject to U.S. tax (a “Non-U.S. Eligible Executive”) and who has retired from all positions with the Corporation and any subsidiary of the Corporation as officer, executive and director, or who, except as a result of death, has otherwise ceased to hold any such positions with the Corporation and any such subsidiaries, may redeem the Deferred Share Units credited to the Non-U.S. Eligible Executive’s account by filing with the Secretary of the Corporation a notice of redemption of the Deferred Share Units in the prescribed form on or before December 15 of the first calendar year commencing after the date the Non-U.S. Eligible Executive retires from or otherwise ceases to hold such positions. If the Non-U.S. Eligible Executive fails to file a notice of redemption o f the Deferred Share Units on or before such December 15, the Non-U.S. Eligible Executive shall be deemed to have filed with the Secretary of the Corporation a notice of redemption on such December 15. The date on which a notice of redemption is filed or deemed to be filed with the Secretary of the Corporation is the “Filing Date”. The notice of redemption filed by the Non-U.S. Eligible Executive shall specify that the Non-U.S. Eligible Executive will receive a lump sum cash payment (net of any applicable withholdings) (the “Final Payment”) equal to the number of Deferred Share Units credited to the Non-U.S. Eligible Executive’s account as of the Filing Date multiplied by the Fair Market Value per Common Share on the Filing Date. Within 7 days following the Filing Date, the Corporation shall make the Final Payment to the Non-U.S. Eligible Executive.

(ii) U.S. Executives. The Final Payment due to an Eligible Executive who is subject to U.S. tax (a “U.S. Eligible Executive”) will be made the earlier of (i) “separation from service” within the meaning of Section 409A of the Code, or (ii) within 90 days of the U.S. Eligible Executive’s death. The Final Payment will be equal to the number of Deferred Share Units credited to the U.S. Eligible Executive’s account multiplied by the Fair Market Value per Common Share as of the date his or her employment terminates.

(b) Death of Non-U.S. Eligible Executive. In the event of the death of a Non-U.S. Eligible Executive, the Corporation shall, within 90 days of the Non-U.S. Eligible Executive’s death, make a lump sum cash payment to or for the benefit of the legal representative or beneficiary of the Non-U.S. Eligible Executive. The lump sum cash payment shall equal the number of Deferred Share Units credited to the Non-U.S. Eligible Executive’s Account on the date of payment multiplied by the Fair Market Value per Common Share on the day immediately preceding the date of payment.

(c) Death of Non-U.S. Eligible Executive after Retirement. If a Non-U.S. Eligible Executive dies after ceasing to hold all positions as officer, executive and director of the Corporation or any of its subsidiaries but before filing a notice of redemption with the Secretary of the Corporation, Sections 2.3(a)(i) and (b) shall

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apply with such modifications as the circumstances require provided that, in no event shall payment be made later than December 31 of the first calendar year commencing after the Non-U.S. Eligible Executive ceases to hold the aforementioned positions.

(d) Appointment of Beneficiary. If permitted by applicable law, the Eligible Executive may appoint a beneficiary of his rights under the Plan. “Beneficiary” for the purpose of the Plan means a person who is a relation or dependent of the Eligible Executive.

SECTION 3.		General
3.1.	Transferability of Awards

Except as provided in Section 2.3(d), rights in respect of Deferred Share Units shall not be transferable or assignable other than by will or the laws of descent and distribution.

3.2. No Right to Service

Neither participation in the Plan nor any action under the Plan shall be construed to give any Eligible Executive a right to be retained as an employee, officer or otherwise in the service of the Corporation.

3.3. Unfunded Plan

Unless otherwise determined by the Committee, the Plan shall be unfunded. To the extent any individual holds any rights by virtue of an election under the Plan, such rights (unless otherwise determined by the Committee) shall be no greater than the rights of an unsecured general creditor of the Corporation.

3.4. Successors and Assigns

The Plan shall be binding on all successors and assigns of the Corporation and an Eligible Executive, including without limitation, the estate of such Eligible Executive and the legal representative of such estate, or any receiver or trustee in bankruptcy or representative of the Corporation’s or Eligible Executive’s creditors.

3.5. Section 409A

It is intended that the provisions of this Plan comply with Section 409A, and all provisions of this Plan shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A. Except as permitted under Section 409A, any deferred compensation (within the meaning of Section 409A) payable to or for the benefit of a U.S. Eligible Executive may not be reduced by, or offset against, any amount owing by the U.S. Eligible Executive to the Corporation or any of its affiliates. Notwithstanding anything in this Plan to the contrary, if a U.S. Eligible Executive becomes entitled to receive payment in respect of any Deferred Share Units as a result of his or her “separation from service” (within the meaning of Section 409A), and the U.S Eligible Executive is a “specified employee” (within the meaning of Section 409A) at the time of his or her separation from service, and the

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Committee makes a good faith determination that (i) all or a portion of the Deferred Share Units constitute “deferred compensation” (within the meaning of Section 409A) and (ii) any such deferred compensation that would otherwise be payable during the six-month period following such separation from service is required to be delayed pursuant to the six-month delay rule set forth in Section 409A in order to avoid taxes or penalties under Section 409A, then payment of such “deferred compensation” shall not be made to the U.S Eligible Executive before the date which is six months after the date of his or her separation from service (and shall be paid in a single lump sum on the first day of the seventh month following the date of such separation from service) or, if earlier, the U.S Eligible Executive’s date of death; in such event, the Final Payment will be equal to the number of Deferred Share Units credited to the U.S. Eligible Executive’s account multiplied by the Fair Market Value per Common Share as of the expiration of such six-month period or the date of death. (For illustrative purposes only, if a U.S Eligible Executive who is a specified employee subject to the provisions of the previous sentence incurs a separation from service on January 16 of a calendar year, any payments of deferred compensation that would be payable to such U.S Eligible Executive during the six-month period from such January 16 through July 16 shall be accumulated and paid in a single lump sum to such U.S Eligible Executive on July 17 of such calendar year, or, if earlier, such U.S Eligible Executive’s date of death.) Each U.S Eligible Executive, any beneficiary or the U.S Eligible Executive’s estate, as the case may be, is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on or for the account of such U.S Eligibl e Executive in connection with this Plan (including any taxes and penalties under Section 409A), and neither the Company nor any affiliate shall have any obligation to indemnify or otherwise hold such U.S Eligible Executive or beneficiary or the U.S Eligible Executive’s estate harmless from any or all of such taxes or penalties. Notwithstanding any provision of the Plan to the contrary, in the event that the Committee determines that any amounts payable hereunder will be taxable to a Participant under Section 409A prior to payment to such Participant of such amount, the Company may (i) adopt such amendments to the Plan and Deferred Share Units and appropriate policies and procedures, including amendments and policies with retroactive effect, that the Committee determines necessary or appropriate to preserve the intended tax treatment of the benefits provided by the Plan and Deferred Share Units hereunder and/or (ii) take such other actions as the Committee determines necessary or appropriate to avoid or limit the imposition of an additional tax under Section 409A.

3.6. Plan Amendment

The Committee may amend the Plan as it deems necessary or appropriate, but no such amendment shall, without the consent of the Eligible Executive or unless required by law, adversely affect the rights of an Eligible Executive with respect to Deferred Share Units to which the Eligible Executive is then entitled under the Plan.

3.7. Plan Termination

The Committee may terminate the Plan at any time, but no such termination shall, without the consent of the Eligible Executive or unless required by law, adversely affect the rights of an Eligible Executive with respect to Deferred Share Units to which the Eligible Executive is then entitled under the Plan.

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