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 his
capacity as trustee (the "Litigation Trustee") and together with the equity shareholders of
the Debtors who signed this Agreement (the "Beneficiaries").
RECITALS:

(A) On April 16, 2009 (the "Petition Date"), each of the Debtors
filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy
Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court") and commencing their Chapter 11 cases (the "Chapter
11 Cases").

(B) The Beneficiaries are establishing the Litigation Trust for

the limited purpose of pursuing the formation of an Official Committee of Equity
Security Holders in Debtors’ Chapter 11 Cases. This Agreement is executed to establish
the Litigation Trust.

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

(D) The powers, authority, responsibilities and duties of the

Litigation Trustee shall be governed by this Agreement and under Delaware law.

NOW, THEREFORE, in consideration of the promises and the mutual

covenants and agreements contained herein, the Parties agree as follows:

DEFINITIONS

"Affiliates" means parents, subsidiaries, members, managers, limited partners

and general partners.

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

"Bankruptcy Court" means the United States Bankruptcy Court for the
District 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 Delaware
Statutory 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 any
successor thereto.
ARTICLE I
NAME 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 Litigation

Trustee under this Agreement, and hereby accepts this appointment and agrees to
serve in such capacity effective upon the date hereof and pursuant to the terms of
this Agreement. A successor Litigation Trustee shall be appointed in the event the
Litigation Trustee is removed or resigns pursuant to this Agreement or if the Litigation
Trustee otherwise vacates the position.

ARTICLE II
DUTIES AND POWERS OF THE LITIGATION TRUSTEE

2.1 Generally

The Litigation Trustee shall be responsible for taking actions on behalf of, and
representing, the Litigation Trust. The Litigation Trustee shall have the authority to
bind the Litigation Trust within the limitations set forth herein, but shall for all
purposes 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 the
Litigation Trustee shall include, without limitation: (i) evaluating and determining strategy
with respect to the Causes of Action, and litigating, settling, transferring, releasing or
abandoning any and all Causes of Action on behalf of the Litigation Trust, in each case, on
any terms and conditions as he may determine in good faith based on the best interests
of the Beneficiaries, (ii) receiving reasonable compensation for performing services as
Lit igat ion Trustee and (vii) providing periodic reports and updates to the Beneficiaries,
and (viii) carrying out such other responsibilities not specifically set forth herein as may
be vested in the Litigation Trustee by this Agreement or as may be necessary and proper
to 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 standards

required under Delaware law.

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 2.4 Additional Powers of Litigation Trustee
In connection with the administration of the Lit igation Trust, subject to
and except as otherwise set forth in this Agreement, the Litigation Trustee is hereby
authorized 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 or
Bankruptcy Court order and subject to the limitations contained herein to:

(1) hold legal title (on behalf of the Litigation Trust as Litigation
Trustee, 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 any
method 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 the

Litigation 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 set
forth in this Agreement.
2.6 Other Activities

The Litigation Trustee shall be entitled to be employed by third parties

while performing the duties required under this Agreement, so long as such other employment
does not involve holding or representing any interest adverse to the interests of the
Litigation Trust, or otherwise preclude or impair the Litigation Trustee from performing his
respective duties under this Agreement. The Beneficiaries acknowledge and consent to the
Litigation Trustee’s representation of Alan Gilbertson, a shareholder of the Debtors, in his
individual capacity in Debtors’ bankruptcy proceeding.

ARTICLE III
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 hourly
rate of $390 per hour and (ii) reimbursement of out-of-pocket costs and expenses incurred in
connection with the duties of the Litigation Trustee. The compensation structure of the
Litigation Trustee is more fully set forth in the retainer agreement attached hereto as Exhibit B.
3.2 Bo nd

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.

ARTICLE IV
TRUST FUNDING
4.1 Trust Funding

The costs and expenses of the Litigation Trust, including, without limitation, the
compensation to and reimbursement of expense to the Litigation Trustee and the fees, costs and
expenses o f all professionals retained by the Lit igat ion Trustee in connect ion wit h
the performance of the Litigation Trustee's duties in connection with this Agreement,
shall be initially paid from funds as provided by the Beneficiaries (the "Litigation
Trust Funds").

A R T I C L E V
LIABILITY AND EXCULPATION PROVISIONS
5.1 Standard of Liability

( a ) I n no e v e n t s h a l l t he L it ig a t io n T r u s t e e , o r P r o fe s s io n a l s ,
N o n Professionals, 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 not
be liable for any negligence or any error of judgment made in good faith with respect to
any action taken or omitted to be taken in good faith, except to the extent that the action
taken or omitted to be taken by each of the same or their respect ive Professionals,
Non-Professionals, Affiliates or representatives is determined to be solely due to their
own respective gross negligence, willful misconduct, fraud or, solely in the case of the
Litigation 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 or
presented by the proper party or parties;

(b) the Litigation Trustee shall not be liable for any action reasonably taken
or not taken by him in accordance with the advice of a Professional or Non-Professional; and
persons dealing wit h the Lit igation Trustee shall look only to the Litigation Trustee
Funds to satisfy any liability incurred by the Litigation Trustee to such person in carrying
out the terms of this Agreement, and the Litigation Trustee shall not have any personal
obligation to satisfy any such liability, except to the extent that actions taken or not taken
after the date hereof by the Litigation Trustee are determined to be solely due to the
Litigation Trustee's own gross negligence, willful misconduct, fraud or breach of fiduciary
duty, other than negligence.

5.3 Exculpation; Indemnification

(a) Exculpation. From and after the date hereof, the Litigation Trustee and his
respective Professionals, Non-Professionals, Affiliates and representatives, shall be and
hereby are exculpated by all Persons and Entities, from any and all claims, causes of
action and other assertions of liability arising out of the discharge of the powers and duties
conferred upon said parties pursuant to or in furtherance of this Agreement, or applicable law
or otherwise, except only for actions taken or not taken, from and after the date hereof only
to the extent determined by a final order to be solely due to their own respective gross
negligence, 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 hold
harmless the Litigation Trustee and its Professionals and Non-Professionals from and
against any and all claims, causes of action, liabilities, obligations, losses, damages or
expenses (including attorneys' fees and expenses) occurring after the date hereof, other than to
the 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 the

Beneficiaries, to be treated as the grantors and deemed owners of the Litigation Trust
Assets 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 action relating solely to the Motion for the Appointment
of 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 Litigation
Trust 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 the
Motion for the Appointment of An Equity Security Holders Committee in Debtors’ Chapter 11
Cases.

7.2 Books and Records

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

A R T I C L E V I I I
SUCCESSOR LITIGATION TRUSTEE

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

ARTICLE IX
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 legal
counsel and other professionals in accordance with procedures for retaining other estate retained
professionals in the Chapter 11 Cases (the "Trustee Professionals") and on such terms as the
Litigation Trustee deems appropriate. The Trustee Professionals may include, without
limitation, counsel and financial advisors, subject to the approval of the Beneficiaries.

(b) The Lit igat ion Trustee shall have the right to retain non-professionals
including, without limitation, employees, independent contractors or other agents as
the Litigation Trustee deems appropriate (the "Trustee Non-Professionals") and on such
terms as the Litigation Trustee deems appropriate and subject to the approval of the
Beneficiaries.

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 9.2 Payment to Trustee Professionals and Non-Professionals

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

A R T I C L E X
TERMINATION OF LITIGATION TRUST

10.1 Duration and Extension

The Litigation Trust will terminate on the sixtieth (60th) day following a final
determination by the Bankruptcy Court of the Beneficiaries’ Motion for the Appointment
of An Equity Security Holders Committee in this Bankruptcy Proceeding, but in no
event 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 is
necessary to the purpose of the Litigation Trust, further provided that such extension is
approved by a simple majority of the Beneficiaries within six (6) months of the beginning
of 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 materially

amended or waived only with the written consent of the Litigation Trustee and a
simple majority of the Beneficiaries. Technical or non-material amendments to or
waivers of portions of this Agreement may be made as necessary, to clarify this
Agreement 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 the

laws 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 or

circumstance 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 of
such provision to Persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and shall be valid and enforceable
to the fullest extent permitted by law.

11.3 Notices

Any notice or other communication hereunder shall be in writing and shall be

deemed to have been sufficiently given, for all purposes, if delivered by electronic
mail.

11.4 Survivability

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

IN WITNESS WHEREOF, t he Parties hereto have eit her executed

and acknowledged this Agreement, or caused it to be executed and acknowledged on their
behalf by their duly authorized officers all as of the date first above written.

TRUSTEE:

________________________________________, not individually, but solely as Litigation

Trustee.

(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: ____________________

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