ABITIBIBOWATER INC. OUTSIDE DIRECTOR DEFERRED COMPENSATION PLAN

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Purpose . The AbitibiBowater Inc. Outside Director Deferred Compensation Plan (the “Plan”) is intended to enhance the Company’s ability to attract and retain talented individuals to serve as members of the Board of Directors and to promote a greater alignment of interests between non-employee members of the Board and the shareholders of the Company. All non-employee directors are eligible to participate in the Plan and enjoy the benefits of the Plan as set forth below upon the Effective Date or, for non-employee directors elected or appointed to the Board after the Effective Date, on the date of election or appointment.

In conjunction with the termination of Prior Plans (as defined herein) effective as of December 31, 2008, any outstanding balance credited on behalf of a current Director under one or more Prior Plans shall be transferred to the Plan and credited hereunder as an opening Account balance on the Effective Date. Unless otherwise stated, all Prior Plan amounts transferred to the Plan are subject to the terms set forth herein.

(a)

“Account” means a bookkeeping account established for the benefit of a Director under Section 6 used solely to measure and determine the amounts credited under the Plan on his behalf. A Director’s Account may include sub-accounts consisting of a Cash Account and a Deferred Share Unit Account.

(b)

“Administrator” means the Corporate Secretary of the Company.

(c)

“Affiliate” means any entity directly or indirectly controlled by, controlling, or under common control with the Company.

(d)

“Beneficiary” means the person or persons (including, without limitation, any trustee) last designated by a Director to receive the balance of his Account in the event of the Director’s death. If there is no effective designated Beneficiary on file or surviving Beneficiary, the Participant’s estate shall be the Director’s Beneficiary.

(e)

“Board” means the Board of Directors of the Company.

(f)

“Canadian Director” means a Director who is a Canadian resident for purposes of the Income Tax Act (Canada) (the “Canadian Tax Act”).

(g)

“Cash Account” means the sub-account used to record (i) deferrals made hereunder that are designated by the Director for allocation to the Cash Account and (ii) earnings on such amounts.

(h)

“Committee” means Human Resources and Compensation Committee of the Board or such members of the Board as are selected by the Board from time to time to administer the Plan.

(i)

“Company” means AbitibiBowater Inc.

(j)

“Crediting Date” is, unless otherwise determined by the Committee, the last business day of the calendar quarter.

(k)

“Deferred Share Unit Account” or “DSU Account” means the sub-account used to record (i) deferrals made hereunder which are designated by the Director for allocation to the DSU Account and (ii) any credits on and adjustments of such amounts pursuant to Section 6.

(l)

“Director” means any individual qualified to serve as a member of the Board who is elected or appointed and who is not an employee or a full-time officer of the Company or any Affiliate.

(m)

“Effective Date” means January 1, 2009.

(n)

“Fair Market Value” means the average of the high and low trading prices of a share of Stock as reported for the New York Stock Exchange Composite Transactions during the previous five business days ending, and including, the Valuation Date, rounded to the nearest number within two decimal places.

(o)

“Prior Plans” means the Deferred Compensation Plan for Outside Directors of Bowater Incorporated, the Bowater Incorporated Outside Directors’ Stock-Based Deferred Fee Plan, the Bowater Incorporated 2004 Non-Employee Director Stock Unit Plan and the Abitibi-Consolidated Inc. Stock Plan for Non-Employee Directors.

(p)

“Separation from Service” means a separation from service with the Company and other entities affiliated with the Company, as determined in accordance with Section 409A of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) and guidance issued thereunder. For purposes of the foregoing, whether an entity is affiliated with the Company shall be determined pursuant to the controlled group rules of Code Section 414, as modified by Code Section 409A.

(q)

“Share Unit” means the right to receive payment in cash in an amount equal to the Fair Market Value of one share of Stock, determined as of the Valuation Date with respect to that Share Unit.

(r)

“Stock” means the common stock of the Company, par value $1.00.

(s)

“US Director” means a Director who is considered a US resident for tax purposes.

(t)

“Valuation Date” means the date of the Director’s Separation from Service.

(a)

For Directors in office on the Effective Date, deferral election must be completed and filed with the Administrator by December 31, 2008 to be effective to defer compensation earned on and after the Effective Date under the Plan.

(b)

With respect to any calendar year, the deferral election must be made before the commencement of that calendar year. Notwithstanding the foregoing, if an individual first becomes elected or appointed as a Director during the calendar year, the deferral election must be completed and filed with the Administrator within 30 days after the Director is first elected or appointed.