Documentation

@ABITIBI ~ CONSOLIDATED

Undertaking by Abitibi-Consolidated Inc. Following the acquisition of Donohue Inc.

c_ 1-01/ ooq Public version of the Undertaking

<.- Public a I• of the Undertaking c,.o c Cor"'J('i!:~ 0" 5ureau YoL.S'y i 1,::, ~~:; cc Bureau ae :ci concurrence

Montreal, February 13, 2001 Mr. John Pecman Competition Bureau Industry Canada Place du Portage 1 50 Victoria Street Hull, Quebec K1A OC9

Re: Final Undertaking by Abitibi-Consolidated Inc. Mr. Pecman: Please find enclosed two binders including our final undertaking and all related documentation. Please return to us one copy duly signed for our file.

Yours truly, Abitibi-Consolidated Inc. t;;a/LS/ /isabel Pou!i6t / Legal Counsel c.c.: Mark Katz Adam Fanaki

Abitibi·Consolidated Inc . 1155 Metcalfe Street, Suite 800 Montreal, Quebec. Canada H38 5H2 2001 Tel. 51.11-875-2160 Fax. 51.11-875-628.11 Postal address: Post Office Box 69 Montreal, Quebec, Canada H3C 2R5

Public version of the Undertaking UNDERTAKING WHEREAS, Abitibi-Consolidated Inc. ("ACI") purchased all of the outstanding shares of Donohue Inc. as ofJune 22, 2000 (the "Transaction");

AND WHEREAS, the Commissioner of Competition (the "Commissioner") has determined that based on a thorough assessment of the Transaction and the matters undertaken by ACI herein, that there are not sufficient grounds upon which to make an application, at this time, to the Competition Tribunal in respect of the transaction;

AND FURTHER to the information supplied to the Commissioner with respect to the Transaction;

ACI HEREBY UNDERTAKES AS FOLLOWS: Divestiture of Port-Alfred Newsprint Mill 1. ACI shall promptly commence its efforts to divest, and shall use best efforts to complete the divestiture of, the Port-Alfred newsprint mill as described in Schedule "A" hereto, including all of the assets necessary for the operation of the Port-Alfred mill as generally described in Schedule "B" hereto (the "Designated Assets"), as soon as possible in accordance with the procedure for divestiture set out herein.

2. Subject to any extensions of time granted in accordance with paragraph 14or15 below, if the divestiture of the Designated Assets is not completed by ACI by December 15, 2001, such divestiture shall be carried out by a sales agent in accordance with the procedure set out hereafter.

(

Public version of the Undertaking - 2 -Divestiture Procedure

3. The divestiture of the Designated Assets shall be completed on the following terms: (a) by sale, assignment, transfer, sale of shares or other disposition necessary to ensure that, by completion of the divestiture, ACI has, directly or indirectly, no remaining title, right or interest in the Designated Assets;

(b) by way of disposition of the Designated Assets for use as a going concern; (c) to an arm's length purchaser who has the ability to operate the newsprint mill as a gomg concern;

,_ (d) ACI undertakes to supply, or cause to be supplied, fibre to the purchaser from the same sources of supply and in no less than the same quantities as were supplied to the Designated Assets during the 2000 calendar year, subject only to all necessary third party approvals. ACI agrees to use its reasonable best efforts to obtain the agreement of such third parties. If desired by the purchaser, supply agreements with ACI shall be long term and, in addition, shall provide for the supply of fibre at fair market value;

(e) ACI will use reasonable commercial efforts to provide the purchaser with an order book that is the same as or substantially equivalent to the current order book applicable to the Designated Assets, subject always to the customers' own preferences;

(f) ACI also undertakes in respect of any such divestiture, not to require or otherwise (_ cause to be instituted, any restrictions in connection with such properties which

Public version of the Undertaking - 3 ­would prohibit or otherwise restrict in any way, the sale or use of the Designated Assets by the acquiror;

(g) ACI shall not receive as consideration for the divestiture of the Designated Assets any other assets located in eastern Canada relating to the production of newsprint; and

(h) the acquisition of the Designated Assets shall not be part of any joint venture, marketing, co-packing or other collaborative arrangement with the purchaser, but this provision shall not preclude ACI and the purchaser from entering into mutually agreeable transitional arrangements necessary or desirable to facilitate the sale of the Designated Assets, subject to the approval of the Commissioner.

4. ACI may not divest the Designated Assets to Bowater Inc. or any of its affiliates, subsidiaries or assigns.

(i) Public Sale Process 5. ACI shall use its best efforts to complete the divestiture of the Designated Assets in such manner as it deems appropriate in the circumstances, acting reasonably, instituted in a manner to allow a fair opportunity to any bona fide prospective purchaser to make an offer to acquire the Designated Assets (the "Public Sale").

6. Any bona fule prospective purchaser shall be furnished, subject to the execution of a customary confidentiality agreement, with all pertinent information regarding the Designated Assets in the form of what is generally known as a "Confidential Information Memorandum". In addition, such information shall be provided to the Commissioner upon written request. During the period up to and including September 15, 2001, any

- 4 ­bona fide prospective purchaser with which A CI is engaged in serious negotiations shall be permitted, subject to the execution of a customary confidentiality agreement, to make such inspection of the Designated Assets and of all financial, operational or other documents and information as may be relevant to the sale. During the remaining period of the Public Sale following September 15, 2001, any bona fide prospective purchaser shall be permitted, subject to the execution of a customary confidentiality agreement, to make such inspection of the Designated Assets and of all financial, operational or other documents and information as may be relevant to the sale, irrespective of whether ACI is engaged in serious negotiations with that prospective purchaser.

7. Throughout the Public Sale, ACI shall, every 30 days, file reports with the Commissioner setting out the progress of its efforts to accomplish the divestiture, including a description, with all reasonable detail, of contacts or negotiations with prospective purchasers and including the identity of all prospective purchasers who have contacted ACI and any material change to the Designated Assets that could affect the market value of these assets.

Agent Sale Procedure 8. In the event that the Designated Assets have not been divested in accordance with the procedure set out above by . or by such other date fixed in accordance with paragraphs 14 or 15 below, the Commissioner may appoint an agent for the sale of the Designated Assets (the "Agent_") within five (5) business days of such outside date, as the case may be, who shall carry out the sale of the Designated Assets in accordance with the following procedure:

(a) the Designated Assets may be sold by the Agent within- from the date of the appointment of the Agent at a price and on terms that are then most (_ advantageous to ACI and consistent with accomplishing the sale, in the opinion of

Public version of the Undertaking - 5 ­the Agent, acting reasonably (the "Agent Sale"), and, without in any manner limiting the foregoing, in no event will the price and terms of an Agent Sale equate to those of a "going out of business", "fire" or liquidation sale;

(b) after the appointment of the Agent becomes effective, the Agent shall have the sole right to effect a sale of the Designated Assets during the period of its mandate, which mandate shall terminate following the Agent's appointment or by such other date fixed in accordance with paragraph 16 below, and neither the Agent nor the Commissioner shall have further rights in respect of the Designated Assets following the expiry of that period of time;

(c) the Agent shall have the full power and authority to effect the sale and shall use all reasonable efforts to do so;

(d) ACI shall use its best efforts to assist the Agent in accomplishing the Agent Sale. In connection therewith, the Agent shall have full and complete access as is reasonable in the circumstances, subject to an appropriate confidentiality agreement, to the personnel, books, records and facilities of ACI relating to the Designated Assets and ACI shall take no action to interfere with or impede the Agent's accomplishment of the Agent Sale;

(e) the Agent shall, every 30 days, file reports with ACI and the Commissioner setting out the Agent's efforts to sell the Designated Assets;

(Q the Agent shall promptly notify ACI and the Commissioner of any negotiations with a prospective purchaser regarding the sale of the Designated Assets that, in the opinion of the Agent, may lead to a sale of the Designated Assets; (_

Public version of the Undertaking - 6 -(g) the Agent shall provide ACI and the Commissioner with notice of any proposed sale, including the identity of the proposed purchaser and all details of the proposed sale; (h) all direct expenses and fees reasonably and properly incurred by the Agent in the course of the sale shall be paid by A CI;

(i) the net proceeds of any sale by the Agent shall be paid to ACI or as ACI may direct; and

G) the Agent appointed by the Commissioner in accordance with this paragraph shall not be a person that has a direct or indirect conflict of interest with ACI or that has been disqualified pursuant to agreement between the parties.

9. ACI shall not object to any sale by the Agent on any other grounds other than the Agent's malfeasance, gross misconduct or breach of this undertaking.

Commissioner's Approval 10. ACI or the Agent, whichever is then responsible for effecting the divestiture of the Designated Assets, shall notify the Commissioner of any proposed divestiture and provide reasonable particulars of the proposed purchase and the identity of the proposed purchaser, as well as any additional information requested by the Commissioner

11. The divestiture of the Designated Assets by A CI or the Agent is subject to the approval of the Commissioner and the provisions of the Competition Act.

Public version of the Undertaking - 7 -Consent Order

12. Should the Commissioner appoint an Agent to conduct the sale of the Designated Assets pursuant to paragraph 8 hereof, ACI hereby irrevocably consents to an application by the Commissioner for a consent order under section 105 of the Competition Act on the terms set out below (the "Consent Order"):

(a) the Designated Assets may be sold by the Agent within rom the date of the appointment of the Agent at a price and on terms that are then most advantageous to ACI and consistent with accomplishing the sale, in the opinion of the Agent, acting reasonably and, without in any manner limiting the foregoing, in no event will the price and terms of an Agent Sale equate to those of a "going out of business", "fire" or liquidation sale;

(b) after the appointment of the Agent becomes effective, the Agent shall have the sole right to effect a sale of the Designated Assets during the period of its mandate, which mandate shall terminate! following the Agent's appointment or by such other date fixed in accordance with paragraph 16 below and neither the Agent nor the Commissioner shall have further rights in respect of the Designated Assets following the expiry of that period of time;

(c) after the appointment of the Agent becomes effective, the Agent shall have the sole right to effect a sale of the Designated Assets;

(d) the Agent shall have the full power and authority to effect the sale and shall use all reasonable efforts to do so; (

Public version of the Undertaking - 8 -(e) ACI shall use its best efforts to assist the Agent in accomplishing the Agent Sale. In connection therewith, the Agent shall have full and complete access as is reasonable in the circumstances, subject to an appropriate confidentiality agreement, to the personnel, books, records and facilities of ACI relating to the Designated Assets and ACI shall take no action to interfere with or impede the Agent's accomplishment of the Agent Sale;

(~ the Agent shall, every 30 days, file reports with ACI and the Commissioner setting out the Agent's efforts to sell the Designated Assets;

(g) the Agent shall promptly notify ACI and the Commissioner of any negotiations with a prospective purchaser regarding the sale of the Designated Assets that, in the opinion of the Agent, may lead to a sale of the Designated Assets;

(h) the Agent shall provide ACI and the Commissioner with notice of any proposed sale, including the identity of the proposed purchaser and all details of the proposed sale;

(i) all direct expenses and fees reasonably and properly incurred by the Agent in the course of the sale shall be paid by A CI;

G) the net proceeds of any sale by the Agent shall be paid to ACI or as ACI may direct;

(k) the Agent shall not be a person that has a direct or indirect conflict of interest with ACI or that has been disqualified pursuant to agreement between the parties; and l.

Public version of the Undertaking - 9 -0) ACI shall not object to any sale by the Agent on grounds other than the Agent's malfeasance, gross misconduct or breach of this Undertaking.

13. ACI hereby irrevocably consents to the form and content of all documents and pleadings required to be filed with the Competition Tribunal to secure the issuance of the Consent Order, including, but not limited to: the draft Consent Order, Agreed Statement of Grounds and Material Facts, Consent Order Impact Statement, Notice of Application and affidavit attached hereto as Schedule "C", subject only to such modification as may be subsequently agreed upon to reflect the circumstances at the time of the application.

Extensions of Time 14. If in the opinion of the Commissioner, ACI is using its best efforts to accomplish the divestiture as provided herein, the Commissioner may extend any of the time periods applicable to the Public Sale as set out herein.

15. In the event that during the Public Sale described above, ACI provides to the Commissioner a letter of intent, offer or similar written communication of intention to purchase the Designated Assets from a bona fide purchaser, the time period for the Public Sale shall be extended for such reasonable period of time required to complete the divestiture of the Designated Assets or otherwise conclude negotiations with that prospective purchaser, but in no ~vent shall the period of such extension exceed three months from the date of the termination of the Public Sale, unless further extended by the Commissioner in accordance with paragraph 14 above.

16. In the event that during the Agent Sale described above, the Agent receives a letter of intent, offer or similar written communication of intention to purchase the Designated Assets from a bona fide purchaser, the time period for the Agent Sale shall be extended for

Public version of the Undertaking - 10 ­such reasonable period of time required to complete the divestiture of the Designated Assets or otherwise conclude negotiations with that prospective purchaser, but in no event shall the period of such extension exceed .. __ from the date of the termination of the Agent Sale, unless further extended by the parties in writing.

Media Guidelines 17. Each party shall have the opportunity to review and consult with the other party in respect of any press releases to be issued by that party concerning the Transaction or any matter related to this Undertaking.

18. Notwithstanding paragraph 17 hereof, it is agreed and understood that at no time during the Public Sale and Agent Sale described above shall any press release or other public disclosure, in writing or otherwise, relating to the sale of the Designated Assets refer to the period of time permitted for such divestiture or sale under this Undertaking, except as provided for in paragraph 19 hereof.

19. Notwithstanding paragraph 18 hereof, the Commissioner and A CI agree that at the time the Consent Order is sought under paragraph 12 hereof, they shall consent to an order protecting against the public disclosure of the period of time permitted for such divestiture or sale under this Undertaking to any person who has not executed a customary confidentiality agreement and wher_e such disclosure is necessary, in the opinion of the Agent, to negotiate a divestiture or sale of the Designated Assets within the Agent Sale period.

Public version of the Undertaking - 11 -Consideration

20. ACI acknowledges and agrees that the Commissioner's decision in respect of the acquisition and decision not to refer the matter to the Competition Tribunal pursuant to section 92 of the Competition A ct is conditional upon, and subject to, the Commissioner's continuing jurisdiction under section 92 of the Competition Act including his jurisdiction to apply to the Competition Tribunal for an order as a result of any material change in the circumstances set out herein.

21. ACI further acknowledges and agrees that the Commissioner's decision in respect of the Transaction and forbearance not to refer the matter to the Competition Tribunal is conditional upon and provides adequate consideration for the enforcement of this undertaking.

Enforcement 22. AC! acknowledges and agrees that the Commissioner shall be entitled to an order for injunctive relief to prevent breaches of this undertaking or to specifically enforce the terms and provisions hereof, in addition to any other remedy under the Competition Act or at law, in the Federal Court of Canada or any court of superior jurisdiction in a provmce.

23. For the purposes of acknowledging that there is adequate consideration for enforcement of this Undertaking or for the purpose of a proceeding commenced to enforce this Undertaking, including an order for injunctive relief or specific performance, ACI agrees that the public interest would be irreparably harmed if the relief sought by the Commissioner was not granted. This acknowledgment is without prejudice to any i \... defence by ACI that it has complied with the terms of the Undertaking.

Public version of the Undertaking - 12 -24. Other than as provided for in paragraphs 22 and 23 hereof, nothing in this Undertaking shall be taken as an admission by ACI, now or in the future, of any facts or law which would support an allegation that the Transaction has prevented or lessened, or is likely to prevent or lessen competition substantially, nor shall it derogate from any rights or defences of ACI under the Competition Act or otherwise.

25. Alternatively, provided that no Consent Order has been issued by the Competition Tribunal in accordance with paragraph 12 hereof, ACI and the Commissioner acknowledge and agree that any disputes arising between the parties in respect of a breach of this undertaking or any application for an interpretation of this undertaking, may be submitted by either party for resolution to an arbitral tribunal in accordance with the procedure outlined in Schedule "D" attached.

26. The parties acknowledge and agree that, for all purposes of this Undertaking, the parties shall act in good faith and in a commercially reasonable manner so as to effectuate the intent of this Undertaking.

This Undertaking is provided by each of the undersigned in their capacity as Senior Vice-ehal~~~~~~-am1

Dan Perkins,· e or ice-President and Chief Financial Officer (

Public version of the Undertaking - 13 -This Undertaking is accepted by the Commissioner of Competition without prejudice in any manner whatsoever to his jurisdiction under the Competition Act, including without limiting the foregoing, the right to make an application to the Competition Tribunal as provided for therein._

Konrad von Finckenstein, Q.C. Commissioner of Competition

SCHEDULE "A"

Public version of the Undertaking

Public version of the Undertaking CADASTRE : Ville de La Baie MUNICIPALITE : Ville de La Baie USAGE ACTUEL : Usine de pates et papiers de Port Alfred lots 1896, 1899, 1982, 1983 et 1984; Centrale hydro-electrique # 2 : lot 682 Aqueduc souterrain : lots 785, 801

1. a} Le lot originaire numero six cent quatre-vingt-deux cadastre officiel de Ville de La Baie;

b} Le lot originaire numero sept cent quatre-vingt-cinq cadastre of ficiel de Ville de La Baie;

c} Tous ses droits, titres et interets dans le lot originaire numero huit cent un (801) du cadastre officiel de Ville de La Baie;

d) Les lots originaires numero mille huit cent quatre-vingt-seize, mille huit cent quatre-vingt-dix-neuf, mille neuf cent quatre-vingt-deux, mille neuf cent quatre-vingt-trois, mille neuf cent quatre-vingt-quatre, 1896, 1899, 1982, 1983 et 1984du cadastre officiel de Ville de La Baie.

CADASTRE : Paroisse de Saint-Alexis MONICIPALITE : Ville de La Baie USAGE ACTUEL : Site d'enfouissement de dechets de fabrique : 19-9, 20-3, 21-2, 23-3 Prise d'eau lots 265, 266, 267 I 268, 310A-1, 310B, lit de la riviere Ha! Ha!, 317-A, 318-A, 319-A, 321 ptie, 321-A ptie, 321-B ptie, 322-A ptie, 322-B ptie, 323-A ptie, 324-A, 324-1,324-2 pties, 324 ptie, 330 pties, 330-A, 330-B, 330-C

2. La subdivision numero neuf du lot originaire numero dix-neuf (19-9), la subdivision numero trois du lot originaire numero vingt (20-3) , la subdivision numero deux du lot originaire numero vingt et un (21-2) et la subdivision numero trois du lot originaire numero vingt-trois (23-3) du cadastre officiel de la Paroisse de Saint-Alexis.

3. Les lots originaires numero deux cent soixante-cinq, deux cent soixante-six, deux cent soixante-sept et deux cent soixante-huit (265, 266, 267 et 268) du cadastre officiel de la paroisse de Saint-Alexis.

4. La subdivision numero un du lot or1g1naire numero trois cent dix A (310A-l) et la subdivision lettre B du lot originaire numero trois cent dix (310-B) du cadastre officiel de la paroisse de Saint-Alexis.

5. Une partie du lit de la riviere Ha! Ha! situee dans le cadastre officiel de la paroisse de Saint-Alexis et plus specifiquement decrite comme suit : bornee a ses extremites au nord-ouest et au sud-est, par

(682) du

(785) du

Public version of the Undertaking d'autres parties du lit de la riviere Ha!· Ha!, d'un cote, au nord, au nord-est, a 1 1 est, au sud-est et au sud par le lot originaire numero trois cent dix A (310A), par la subdivision numero un du lot originaire numero trois cent dix A (310A-1), par la subdivision lettre B du lot originaire numero trois cent dix (310-B) et de l'autre cote, au sud, au sud-est, a 1 1 ouest, au nord-ouest et au nord par les lots originaires numero deux cent soixante-six, deux cent soixante-sept et deux cent soixante-huit (266, 267 et 268); l'extremite nord-ouest est le prolongement vers le nord-est de la ligne de div ision entre les lots originaires numero deux cent soixante-cinq et deux cent soixante-six (265 et 266); l'extremite sud-est est le prolongement vers le nord-est de la ligne de div ision entre les lots originaires numero deux cent soixante-huit et deux cent soixante-neuf (268 et 269) .