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ABITIBI
CONSOLIDATED
RESTRICTED SHARE UNIT PLAN
ABITIBI-CONSOLIDATED INC. RESTRICTED SHARE UNIT
PLAN
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TABLE OF CONTENTS
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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...............................................3
(C) TERMINATION OF EMPLOYMENT.........................................3
(D) PAYMENT OF PLAN AWARD VALUE.......................................4
9. CHANGES IN SHARE CAPITAL................................................4
10. AMENDMENT...............................................................4
11. UNFUNDED PLAN...........................................................5
12. TERMINATION.............................................................5
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ABITIBI-CONSOLIDATED INC.
RESTRICTED SHARE UNIT PLAN
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1. PURPOSE
The purpose of the Abitibi-Consolidated 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 (the "BOARD") of
Abitibi-Consolidated Inc. or such other committee as may be designated by
the Board. The Committee and the Board 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 and the Board 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) "CLOSING VALUE" means the closing price of a Common Share
on the last trading day immediately prior to the end of the
Performance Period on the principal stock exchange on which
the Common Shares are traded;
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(ii) "COMMON SHARES" means the common shares in the capital of
Abitibi-Consolidated Inc., and includes any shares of
Abitibi-Consolidated Inc. into which such shares may be
converted, reclassified, redesignated, subdivided,
consolidated, exchanged or otherwise changed, pursuant to a
Reorganization or otherwise;
(iii) "FINANCIAL PERFORMANCE CRITERION" means such corporate
accounting or financial measure, ratio or calculation as
may be selected on an annual basis by the Committee;
(iv) "PERFORMANCE PERIOD" means 3 years or another period
specifically established by the Committee and set out in
the Grant Letter;
(v) "PLAN AWARD VALUE" means the dollar value of the number of
RSUs which vest multiplied by the Closing Value;
(vi) "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.
(vii) "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; and
(viii) "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.
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 to be granted
to each non-Executive and/or non-officer Participant.
(b) As soon as practical 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
vesting conditions.
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(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.
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. Such determination will be based upon
the Ranking Schedule. The Committee may modify the Financial
Performance Criterion at its discretion prior to the start of any
given Performance Period. The Committee may also adjust the Ranking
Schedule during the term of an award should one or more of the
companies become inappropriate or cease in its then current form
during the Performance Period.
(b) The number of Restricted Share Units earned by the Participant will
be based upon the Ranking Schedule that is set out in the Grant
Letter.
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 paragraphs 6(a) and 6(b) hereof multiplied by the Closing
Value.
(b) At the sole discretion of the Committee, the award payments will be
made in cash and/or by the delivery of Common Shares purchased by
the Company on the open market.
8. TERMS OF RESTRICTED SHARE UNITS
(a) VESTING
Awarded Restricted Share Units will vest in accordance with Section 6(a).
(b) 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, a Restricted Share Unit and shall not be subject to
execution, attachment or similar process.
(c) TERMINATION OF EMPLOYMENT
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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 shall be determined as follows:
(i) if the employment of such Participant shall terminate by
(1) the Company otherwise than for cause or (2) the Participant's
retirement or 3) death or permanent disability, then the Plan Award
Value with respect to such Restricted Share Units shall be paid to
the Participant (or in the case of death to his heirs or other
legal representatives) upon completion of the Performance Period as
per the Plan on a prorated basis based on time worked during the
Performance Period.
(ii) if the employment of such Participant shall be terminated
for cause or in the event the Participant voluntarily terminates
his employment with the Company, then all unvested Restricted Share
Units 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.
(d) 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 any change in the outstanding Common Shares by reason of
any stock dividend (other than an issue of shares to shareholders pursuant
to their election to receive dividends in the form of shares in lieu of
cash dividends declared payable in the ordinary course by
Abitibi-Consolidated Inc.), stock split or consolidation, or
Reorganization, the Committee shall make such substitution or adjustment
to the terms of the Restricted Share Units as it deems appropriate
including, without limiting the generality of the foregoing, appropriate
provisions for the continuance or other recognition of outstanding rights
under the Plan.
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 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.
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(b) The cost of the operation of the Plan shall be borne by the
Company.
(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
post 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 post to the Participant at the address which he
shall give for the purpose, or failing any such address to his last
known place of abode. If a notice is sent by post, 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 posting.
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. TERMINATION
The Committee may at any time terminate the Plan provided that the
existing rights of Participants will not thereby be affected.
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APPENDIX 1 - SPECIAL PROVISIONS FOR SENIOR MANAGEMENT PARTICIPANTS
1- Senior Executives and officers who have Company share ownership obligations
will receive the appropriate portion of their award in Common Shares until
their respective holding requirements have been met.
Consequently, all or a portion of a calculated earned payment (less applicable
income taxes) will be made to the Participant in the form of Common Shares
which must be held by the Participant in order to comply with his stock
ownership guidelines.
2- After the commencement of the Performance Period, the Committee may
designate additional eligible Senior Executives as Participants in the Plan
(the "Mid-Term Participants"). Mid-Term Participants' earned awards and
eventual award payments will be prorated based on time worked during the
Performance Period.
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APPENDIX 2 - FINANCIAL PERFORMANCE CRITERION, COMPARATOR GROUP AND RANKING
SCHEDULE FOR GRANT
[appropriate information from HRCC approved guidelines to be inserted for each
grant]
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