ABITIBIBOWATER INC. OUTSIDE DIRECTOR DEFERRED COMPENSATION PLAN

1.

Purpose

1

2.

Definitions

1

3 .

Eligibility

3

4.

Administration 

3

5 .

Deferral Election

3

6.

Accounts

4

7.

Distributions

5

8.

Designation of Beneficiary

6

9.

Voting Rights

6

10.

Transferability

6

11.

Covenants of Director

6

12.

Remedies of the Company

6

13.

Limitation of Rights of the Director

7

14.

Payments To Incompetents

7

15.

Construction

7

16.

Amendment or Termination

7

17.

Funding

8

18.

Governing Law

8

1.

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 serving on the Board as of December 31, 2008 were eligible to participate in the Plan and enjoy the benefits of the Plan as set forth below upon the Effective Date.  Non-employee directors elected or appointed to the Board after the Effective Date are eligible to participate in the Plan 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 was 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.

The Plan is hereby amended and restated effective as of June 16, 2009 to permit US Directors to change previously elected allocations between cash and deferred share units for deferrals credited to the Plan on or after June 16, 2009.

2.

Definitions .  The following words and phrases, when used in this Plan with an initial capital letter, unless the context clearly indicates otherwise, shall have the following meanings, or the meanings as set forth elsewhere in this Plan.  Wherever applicable the masculine pronoun shall include the feminine pronoun and the singular shall include the plural.

(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, the date the Company established the Plan.

(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.

3.

Eligibility .  Participation in the Plan shall be extended to all Directors.

4.

Administration .  The Committee shall administer the Plan, provided that the Committee may delegate responsibility for administration to such person or persons as it deems appropriate from time to time.  Subject to the express provisions of the Plan, the Committee shall have the authority to do all things that it may deem necessary or desirable in connection with the administration of the Plan, including without limitation (a) to establish, modify and revoke rules relating to the Plan; (b) to interpret and construe the terms of the Plan, any rules under the Plan and the terms and conditions of any award or benefit under the Plan; (c) to approve the form and content of any documentation relating to awards or benefits under the Plan or Plan administration; and (d) consistent with the express provisions of the Plan, to approve, establish and amend the terms governing a benefit under the Plan.  All determinations, interpretations and decisions made by the Committee under or with respect to the Plan shall be final, conclusive and binding on the Company, and Directors and any beneficiary of a benefit.  No member of the Committee shall be liable for any action taken in good faith with respect to the Plan.   Notwithstanding the foregoing, the Administrator shall have the authority to approve the form and content of any election or beneficiary forms for the efficient administration of the Plan.

5.

Deferral Election .  A Director may elect to defer all or a portion of his cash compensation including, without limitation, his annual retainer and/or other fees for service as a Director (for example, for serving as chair), if he completes and delivers to the Administrator a written deferral election (i) designating the portion of such compensation to be deferred under the Plan in 10% increments and (ii) specifying whether the deferrals are to be allocated to the Cash Account or the DSU Account (or both Accounts in 10% increments).  Notwithstanding the foregoing, a Canadian Director cannot allocate a deferral to a Cash Account; any deferral by a Canadian Director will be allocated to a DSU Account.  To be considered timely, a Director must deliver the written deferral election as follows.

(a)

For Directors in office on the Effective Date, the deferral election must have been 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.

An election made in accordance with t