WM1A #957520 v1 Formatted Litigation Trust Agreement

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LITIGATION TRUST AGREEMENT

PREAMBLE

This Litigation Trust Agreement dated as of July ____, 2010 (the "Agreement"),which pertains to the request for the formation of a Committee of Equity Shareholders (the"Litigation Trust"), in the bankruptcy proceeding for AbitibiBowater Inc., et al.

(collectively, the "Debtors"), and L. Jason Cornell, not individually, but solely in hiscapacity as trustee (the "Litigation Trustee") and together with the equity shareholders ofthe Debtors who signed this Agreement (the "Beneficiaries").

RECITALS:

(A) On April 16, 2009 (the "Petition Date"), each of the Debtorsfiled voluntary pet itions for relief under Chapter 11 of the United States BankruptcyCode (the "Bankruptcy Code") in the United States Bankruptcy Court for the District ofDelaware (the "Bankruptcy Court") and commencing their Chapter 11 cases (the "Chapter11 Cases").

(B) The Bene ficia ries are establishing the Litigation Trust forthe limited purpose of pursuing the formation of an Official Committee of EquitySecurit y Holders in Debtors Chapter 11 Cases. This Agreement is executed to establishthe Litigation Trust.

(C) The Litigation Trust is created on behalf of, and for the benefitof, the Beneficiaries.

(D) The powers, authority, responsibilities and duties of theLitigation Trustee shall be governed by this Agreement and under Delaware law.

NOW, THEREFORE, in consideration of the promises and the mutualcovenants and agreements contained herein, the Parties agree as follows:

DEFINITIONS

"Affiliates" means parents, subsidiaries, members, managers, limited partnersand general partners.

"Agreement" has the meaning specified in the Preamble to this Agreement.

"Bankruptcy Court" means the United States Bankruptcy Court for theDistrict of Delaware.

"Beneficiaries" means the Shareholders identified as signatories to this Agreement.

"Certificate of Trust" means the certificate of trust with respect to the Litigation Trust,filed with the Delaware Secretary of State pursuant to Section 3810 of the DelawareStatutory Trust Act, in substantially the form attached hereto as Exhibit A.


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"Debtors" has the meaning specified in the Preamble to this Agreement.

"Litigation Trust" has the meaning specified in the Preamble to this Agreement.

"Litigation Trust Assets" means the causes of action identified herein.

"Litigation Trustee" has the meaning specified in the Preamble to this Agreement or anysuccessor thereto.

ARTICLE INAME OF TRUST AND LITIGATION TRUSTEE

The name of the Litigation Trust is the Certain Shareholders of AbitibiBowater

Litigation Trust.

L. Jason Cornell is hereby appointed to serve as the initial LitigationTrustee under this Agreement, and hereby accepts this appointment and agrees toserve in such capacity effective upon the date hereof and pursuant to the terms ofthis Agreement. A successor Litigation Trustee shall be appointed in the event theLitigation Trustee is removed or resigns pursuant to this Agreement or if the Litigation

Trustee otherwise vacates the position.

A R T I C L E I I

DUTIES AND POWERS OF THE LITIGATION TRUSTEE

2.1 Generally

The Litigation Trustee shall be responsible for taking actions on behalf of, andrepresenting, the Litigation Trust. The Litigation Trustee shall have the authority to bind the Litigation Trust within the limitations set forth herein, but shall for allpurposes hereunder be acting in the capacity of Litigation Trustee and not individually.

2.2 Scope of Authority of Litigation Trustee

Within the limitations set forth herein, the responsibilities and authority of theLitigation Trustee shall include, without limitation: (i) evaluating and determining strategywith respect to the Causes of Action, and litigating, settling, transferring, releasing orabandoning any and all Causes of Action on behalf of the Litigation Trust, in each case, onany terms and conditions as he may determine in good faith based on the best interestsof the Beneficiaries, (ii) receiving reasonable compensation for performing services asLitigation Trustee and (vii) providing periodic reports and updates to the Beneficiaries,and (viii) carrying out such other responsibilities not specifically set forth herein as maybe vested in the Lit igation Trustee by this Agreement or as may be necessary and properto carry out the provisions of the this Agreement.

2.3 Obligations to Litigation Trust and Beneficiaries

The Litigation Trustee's actions as Litigation Trustee will be held to standardsrequired under Delaware law.


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2.4 Additional Powers of Litigation Trustee

In connection with the administration of the Litigation Trust, subject toand except as otherwise set forth in this Agreement, the Litigation Trustee is herebyauthorized to perform those acts necessary to accomplish the purposes of the Litigation

Trust. Without limiting, but subject to, the foregoing, the Litigation Trustee, as applicable,shall be authorized, in his sole discretion, unless otherwise provided in this Agreement orBankruptcy Court order and subject to the limitations contained herein to:

(1) hold legal title (on behalf of the Litigation Trust as LitigationTrustee, but not individually) to the Litigation Trust Assets, including, but not limited to,the Causes of Action;

(2) protect and enforce the rights to the Litigation Trust Assets by anymethod deemed appropriate in his sole discretion, including, without limitation, by judicial proceedings or pursuant to any applicable bankruptcy, insolvency, moratorium or

similar law and general principles of equity;

(3) prosecute, defend, compromise, adjust, arbitrate, abandon,estimate, or otherwise deal with and settle, in accordance with the terms set forth herein,the Litigation Trust Assets;

(4) pay expenses and make disbursements necessary to preserve,liquidate, and enhance the Litigation Trust Assets, if any;

(5) assume such other powers as may be vested in or assumed by theLitigation Trust as may be necessary and proper to carry out the provisions of this Agreement.

2.5 Limitation of Litigation Trustee's Authority; No On-Going Business

(a) The Litigation Trustee shall have no power or authority except as setforth in this Agreement.

2.6 Other Activities

The Litigation Trustee shall be entitled to be employed by third partieswhile performing the duties required under this Agreement, so long as such other employmentdoes not involve holding or representing any interest adverse to the interests of theLitigation Trust, or otherwise preclude or impair the Litigation Trustee from performing his

respective duties under this Agreement. The Beneficiaries acknowledge and consent to theLitigation Trustees representation of Alan Gilbertson, a shareholder of the Debtors, in hisindividual capacity in Debtors bankruptcy proceeding.

A R T I C L E I I I

TERM AND COMPENSATION FOR LITIGATION TRUSTEE

3.1 Compensation


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The Litigation Trustee shall be entitled to receive (i) compensation at the hourlyrate of $390 per hour and (ii) reimbursement of out-of-pocket costs and expenses incurred inconnection with the duties of the Litigation Trustee. The compensation structure of theLitigation Trustee is more fully set forth in the retainer agreement attached hereto as Exhibit B.

3.2 Bond

The Litigation Trustee shall serve without bond.

3.3 Removal

The Litigation Trustee may be removed only by receiving signed written

notice by a majority of the Beneficiaries identified herein.

3.4 Resignation

The Litigation Trustee may resign by giving not less than ten (10) days prior

written notice thereof to the Beneficiaries.

A R T I C L E I V

TRUST FUNDING

4.1 Trust Funding

The costs and expenses of the Litigation Trust, including, without limitation, thecompensation to and reimbursement of expense to the Litigation Trustee and the fees, costs andexpenses of all professionals retained by the Litigation Trustee in connection withthe performance of the Litigation Trustee's duties in connection with this Agreement,

shall be initially paid from funds as provided by the Beneficiaries (the "LitigationTrust Funds").

A R T I C L E V

LIABILITY AND EXCULPATION PROVISIONS

5.1 Standard of Liability

(a) In no event shal l the Li t igat ion Trus tee, or Profess ionals ,NonProfessionals, Affiliates, or representatives be held personally liable for any claim,expense, liability or other obligation asserted against the Litigation Trust. The Litigation

Trustee, and all of his Non-Professionals, Professionals, Affiliates and representatives shall notbe liable for any negligence or any error of judgment made in good faith with respect toany action taken or omitted to be taken in good faith, except to the extent that the actiontaken or omitted to be taken by each of the same or their respective Professionals, Non-Professionals, Affiliates or representatives is determined to be solely due to theirown respective gross negligence, willful misconduct, fraud or, solely in the case of theLitigation Trustee, breach of fiduciary duty other than negligence.


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5.2 Reliance by Litigation Trustee Except as otherwise provided herein:(a) the Litigation Trustee may rely, and shall be protected in acting upon, any

resolution, certificate, statement, installment, opinion, report, notice, request, consent, order,or other paper or document reasonably believed to be genuine and to have been signed orpresented by the proper party or parties;

(b) the Litigation Trustee shall not be liable for any action reasonably takenor not taken by him in accordance with the advice of a Professional or Non-Professional; andpersons dealing with t he Lit igation Trustee shall look on ly to the Litigation TrusteeFunds to satisfy any liability incurred by the Litigation Trustee to such person in carryingout the terms of this Agreement, and the Litigation Trustee shall not have any personalobligation to satisfy any such liability, except to the extent that actions taken or not takenafter the date hereof by the Litigation Trustee are determined to be solely due to theLitigation Trustee's own gross negligence, willful misconduct, fraud or breach of fiduciaryduty, other than negligence.

5.3 Exculpation; Indemnification

(a) Exculpation. From and after the date hereof, the Litigation Trustee and hisrespective Professionals, Non-Professionals, Affiliates and representatives, shall be andhereby are exculpated by all Persons and Entities, from any and all claims, causes ofaction and other assertions of liability arising out of the discharge of the powers and dutiesconferred upon said parties pursuant to or in furtherance of this Agreement, or applicable lawor otherwise, except only for actions taken or not taken, from and after the date hereof onlyto the extent determined by a final order to be solely due to their own respective grossnegligence, willful misconduct, fraud, or, solely in the case of the Litigation Trustee,breach of fiduciary duty other than negligence.

(b) Indemnification. The Litigation Trust shall indemnify, defend and holdharmless the Litigation Trustee and its Professionals and Non-Professionals from andagainst any and all claims, causes of action, liabilities, obligations, losses, damages orexpenses (including attorneys' fees and expenses) occurring after the date hereof, other than tothe extent determined by a final order to be solely due to their own respective gross negligence,willful misconduct, or, solely in the case of the Litigation Trustee, breach of fiduciary duty,other than negligence, to the fullest extent permitted by applicable law.

A R T I C L E V I

ESTABLISHMENT OF THE LITIGATION TRUST

6.1 Transfer of Assets to Litigation Trust

The Beneficiaries hereby establish the Litigation Trust on behalf of theBeneficiaries, to be treated as the grantors and deemed owners of the Litigation TrustAssets and the Beneficiaries hereby transfer, assign, and deliver to the Litigation Trust,on behalf of the Beneficiaries, their right, title, and interest in the Litigation Trust Assets,including claims and causes of act ion relating solely to the Motion for the Appointmentof An Equity Security Holders Committee in this Bankruptcy Proceeding.


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6.2 Title to Assets

(a) On the date hereof, the Beneficiaries shall transfer to the LitigationTrust Assets to the Litigation Trust for the benefit of the Beneficiaries.

A R T I C L E V I I

ADMINISTRATION

7.1 Purpose of the Litigation Trust

The Litigation Trust shall be established for the primary purpose of pursuing theMotion for the Appointment of An Equity Security Holders Committee in Debtors Chapter 11Cases.

7.2 Books and Records

Except as otherwise provided herein, nothing in this Agreement requires theLitigation Trustee to file any accounting or seek approval of any court with respect to theadministration of the Litigation Trust, or as a condition for making any payment ordistribution out of the Litigation Trust Assets.

A R T I C L E V I I I

SUCCESSOR LITIGATION TRUSTEE

In the event the Litigation Trustee is removed or resigns pursuant to thisAgreement or the Litigation Trustee otherwise vacates his position, a successorLit igation Trustee shall be appointed by the Beneficiaries.

A R T I C L E I X

TRUSTEE PROFESSIONALS

AND NON-PROFESSIONALS

9.1 Retention of Trustee Professionals and Non-Professionals

(a) The Litigation Trustee shall have the right to retain his own legalcounsel and other professionals in accordance with procedures for retaining other estate retainedprofessionals in the Chapter 11 Cases (the "Trustee Professionals") and on such terms as the

Litigation Trustee deems appropriate. The Trustee Professionals may include, withoutlimitation, counsel and financial advisors, subject to the approval of the Beneficiaries.

(b) The Litigation Trustee shall have the right to retain non-professionalsincluding, without limitation, employees, independent contractors or other agents asthe Litigation Trustee deems appropriate (the "Trustee Non-Professionals") and on suchterms as the Litigation Trustee deems appropriate and subject to the approval of theBeneficiaries.


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9.2 Payment to Trustee Professionals and Non-Professionals

(a) The funds for payment of the Trustee Professionals and Trustee NonProfessionalsshall be paid by the Beneficiaries.

A R T I C L E XTERMINATION OF LITIGATION TRUST

10.1 Duration and Extension

The Litigation Trust will terminate on the sixt ieth (60th) day following a finaldetermination by the Bankruptcy Court of the Beneficiaries Motion for the Appointmentof An Equity Security Holders Committee in this Bankruptcy Proceeding, but in noevent later than the second (2nd) anniversary of the date hereof; provided, however,that, the Beneficiaries may extend the term of the Litigation Trust for a finite period if such

an extension is warranted by the facts and based upon a finding that such an extension isnecessary to the purpose of the Litigation Trust, further provided that such extension isapproved by a simple majority of the Beneficiaries within six (6) months of the beginningof the extended term. Notwithstanding the foregoing, multiple extensions may be obtained.

10.2 Diligent Administration

The Litigation Trustee shall (i) not unduly prolong the duration of the Litigation Trust;and; ( ii) endeavor to terminate the Litigation Trust as soon as practicable.

A R T I C L E X I

AMENDMENT AND WAIVER

Any substantive provision of this Agreement may be materiallyamended or waived only with the written consent of the Litigation Trustee and asimple majority of the Beneficiaries. Technical or non-materia l amendments to orwaivers of portions of this Agreement may be made as necessary, to clarify thisAgreement or to enable the Litigation Trust to effectuate the terms of this Agreement,with the consent of the Litigation Trustee.

11.1 Laws as to Construction

This Agreement shall be governed by and construed in accordance with thelaws of the State of Delaware, without giving effect to rules governing the conflict of law.

11.2 Severability

If any provision of this Agreement or the application thereof to any person orcircumstance shall be finally determined by a court of competent jurisdiction to be invalid or


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unenforceable to any extent, the remainder of this Agreement, or the application ofsuch provision to Persons or circumstances other than those as to which it is heldinvalid or unenforceable, shall not be affected thereby, and shall be valid and enforceableto the fullest extent permitted by law.

11.3 Notices

Any notice or other communication hereunder shall be in writing and shall bedeemed to have been sufficiently given, for all purposes, if delivered by electronicmail.

11.4 Survivability

The terms and provisions of this Agreement shall remain fully binding andenforceable notwithstanding any vacancy in the position of the Litigation Trustee.

IN WITNESS WHEREOF, the Parties hereto have either executedand acknowledged this Agreement, or caused it to be executed and acknowledged on theirbehalf by their duly authorized officers all as of the date first above written.

TRUSTEE:

________________________________________, not individually, but solely as LitigationTrustee.

(Name: L. Jason Cornell) Date: ____________________

BENEFICIARIES:

________________________________________, Beneficiary

(Name: Alan Gilbertson) Date: ____________________

________________________________________, Beneficiary

(Name: Henry Romero) Date: ____________________

________________________________________, Beneficiary

(Name: Elizabeth Romero) Date: ____________________

________________________________________, Beneficiary

(Name:_____________________) Date: ____________________


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________________________________________, Beneficiary

(Name:_____________________) Date: ____________________

________________________________________, Beneficiary

(Name:_____________________) Date: ____________________

________________________________________, Beneficiary

(Name:_____________________) Date: ____________________

________________________________________, Beneficiary

(Name:_____________________) Date: ____________________

________________________________________, Beneficiary

(Name:_____________________) Date: ____________________

________________________________________, Beneficiary

(Name:_____________________) Date: ____________________

________________________________________, Beneficiary

(Name:_____________________) Date: ____________________

________________________________________, Beneficiary

(Name:_____________________) Date: ____________________

________________________________________, Beneficiary

(Name:_____________________) Date: ____________________

________________________________________, Beneficiary

(Name:_____________________) Date: ____________________

________________________________________, Beneficiary

(Name:_____________________) Date: ____________________

________________________________________, Beneficiary

(Name:_____________________) Date: ____________________

________________________________________, Beneficiary

(Name:_____________________) Date: ____________________

WM1A #957520 v1 Formatted Litigation Trust Agreement

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Transcript of WM1A #957520 v1 Formatted Litigation Trust Agreement