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PUBLIC VERSION

CT- COMPETITION TRIBUNAL

IN THE MATTER OF the Competition Act, R.S.C. 1985, c. C-34, and the Competition Tribunal Rules, SOR/2008-141; AND IN THE MATTER OF the proposed acquisition by Karta Halten B.V., together with its affiliates, of the issued and outstanding shares of Domtar Corporation; AND IN THE MATTER OF the filing and registration of a consent agreement pursuant to sections 92 and 105 of the Competition Act. B E T W E E N :

THE COMMISSIONER OF COMPETITION Applicant

and

KARTA HALTEN B.V. Respondent

CONSENT AGREEMENT

RECITALS: A. Karta Halten B.V., together with its affiliates, collectively doing business as Paper Excellence (“Paper Excellence”) proposes to acquire the issued and outstanding shares of Domtar Corporation (the “Transaction”). B. The Commissioner has concluded that the Transaction is likely to result in a substantial lessening of competition in the purchase of wood fibre from the Thompson/Okanagan region in British Columbia, and that the implementation of this Agreement is necessary to ensure that any substantial lessening of competition will not result from the Transaction. C. Paper Excellence does not admit but will not for the purposes of this Agreement, including execution, registration, enforcement, variation or rescission, contest the Commissioner’s conclusions that (i) the Transaction is likely to result in a substantial lessening of competition in the purchase of wood fibre from the Thompson/Okanagan

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PUBLIC VERSION

region in British Columbia; and (ii) the implementation of this Agreement is necessary to ensure that any substantial lessening of competition will not result from the Transaction. D. Nothing in this Agreement affects any investigation, inquiry or proceeding other than under section 92 of the Act in respect of the Transaction. THEREFORE Paper Excellence and the Commissioner agree as follows: I. DEFINITIONS [1] Whenever used in this Agreement, the following words and terms have the meanings set out below: (a) “Act” means the Competition Act, R.S.C. 1985, c. C-34, as amended; (b) “Affiliate” has the meaning given to it in subsection 2(2) of the Act; (c) “Agreement” means this Consent Agreement, including the schedules hereto, and references to a “Part”, “Section”, “Paragraph” or “Schedule” are, unless otherwise indicated, references to a part, section, paragraph or schedule of or to this Agreement; (d) “Business Day” means a day on which the Competition Bureau’s Gatineau, Quebec office is open for business; (e) “Closing” means the completion of the Transaction under the Transaction Agreement; (f) “Closing Date” means the date on which Closing occurs; (g) “Commissioner” means the Commissioner of Competition appointed under the Act and includes his authorized representatives; (h) “Confidential Information” means competitively sensitive, proprietary and all other information that is not in the public domain, and that is owned by or pertains to a Person or a Person’s business, and includes, but is not limited to, manufacturing, operations and financial information, customer lists, price lists, contracts, cost and revenue information, marketing methods, patents, technologies, processes, or other trade secrets; (i) “Designated Personnel” means the employees of Paper Excellence listed in Confidential Schedule C to this Agreement, as modified from time to time by agreement of Paper Excellence and the Commissioner, who shall have signed a confidentiality agreement in a form satisfactory to the Commissioner;

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PUBLIC VERSION

(j) (k)

(l)

(m)

(n)

(o) (p)

(q) (r) (s)

(t)

“Divested Business” means the business of Domtar’s pulp mill in Kamloops, British Columbia; “Divestiture” means the sale, conveyance, transfer, assignment or other disposal of the Divestiture Assets to a Purchaser pursuant to this Agreement and with the prior approval of the Commissioner, such that Paper Excellence will have no direct or indirect interest in the Divestiture Assets; “Divestiture Agreement” means a binding and definitive agreement between Paper Excellence and a Purchaser to effect the Divestiture pursuant to this Agreement and subject to the prior approval of the Commissioner; “Divestiture Applicant” means Paper Excellence during the Initial Sale Period or the Divestiture Trustee during the Divestiture Trustee Sale Period; “Divestiture Assets” means all of the right, title and interest in, to and under, or relating to, the tangible assets, Intangible Assets, property and undertaking owned or used by Paper Excellence or held by Paper Excellence for use in, or relating to, the Divested Business, including, for greater certainty, contracts for the purchase of wood fibre and customer contracts; “Divestiture Process Agreement” means the agreement described in Section 6 of this Agreement; “Divestiture Trustee” means the Person appointed pursuant to Part [III] of this Agreement (or any substitute appointed thereto) and any employees, agents or other Persons acting for or on behalf of the Divestiture Trustee; “Divestiture Trustee Sale” means the Divestiture to be conducted by the Divestiture Trustee pursuant to Part III of this Agreement; “Divestiture Trustee Sale Period” means the 6 month period commencing upon expiry of the Initial Sale Period; “Domtar” means Domtar Corporation and its Affiliates and their directors, officers, employees, agents, representatives, successors and assigns; “First Reference Date” shall have the meaning set out in Paragraph 22(d) of this Agreement;

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(u)

(v)

(w) (x) (y)

(z) (aa) “Monitor” means the Person appointed pursuant to Part X of this

(bb) “Monitor Agreement” means the agreement described in Section 40 of (cc) “Paper Excellence” means Karta Halten B.V. and its Affiliates and their

“Hold Separate Employees” means those employees of Paper Excellence who are employed in connection with the Divestiture Assets, and “Hold Separate Employee” means any one of them; “Hold Separate Manager” means the Person appointed pursuant to Part V of this Agreement (or any substitute appointed thereto) to manage the operation of the Divestiture Assets, and any employees, agents or other Persons acting for or on behalf of the Hold Separate Manager; “Hold Separate Period” means the period that commences at Closing and ends upon the completion of the Divestiture; “Initial Sale Period” means the period that commences at Closing and ends at the time set out in Confidential Schedule A to this Agreement; “Intangible Assets” means intellectual property of any nature and kind, including: (i) patents, copyrights, trademarks and software; (ii) trade dress, industrial designs, distinguishing guises, trade secrets, know-how, techniques, data, inventions, practices, methods and other confidential or proprietary technical, business, research, development and other information, and all rights in any jurisdiction to limit the use or disclosure thereof; (iii) rights to obtain and file for patents and registrations thereof; and (iv) rights to sue and recover damages or obtain injunctive relief for infringement, dilution, misappropriation, violation or breach of any of the foregoing; “Management Agreement” means the agreement described in Section 26 of this Agreement;

Agreement (or any substitute appointed thereto), and any employees, agents or other Persons acting for or on behalf of the Monitor, provided that if no Monitor is appointed, other than in Part X of this Agreement Monitor means the Commissioner;

this Agreement;

directors, officers, employees, agents, representatives, successors and assigns;

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II. [2]

(dd) “Paper Excellence’s Continuing Employees” means those employees of Paper Excellence who are not employed in connection with the Divestiture Assets; (ee) “Person” means any individual, corporation or partnership, sole proprietorship, trust or other unincorporated organization capable of conducting business, and any Affiliates thereof; (ff) “Purchaser” means a Person that acquires Divestiture Assets pursuant to this Agreement and a Divestiture Agreement; (gg) “Records” means records within the meaning of subsection 2(1) of the Act; (hh) “Second Reference Date” shall have the meaning set out in Paragraph 22(e) of this Agreement; (ii) “Shared Services” means human resources, payroll, pensions & benefits, finance & accounting, legal, compliance, information technology, central engineering, transportation and logistics, pulp technical and sales support, health & safety, environment, corporate communications and purchasing other than fibre procurement, as provided to the Divested Business by the Shared Services Employees prior to Closing; (jj) “Shared Services Employees” means the employees of Domtar Inc. based in its corporate head office in Montreal, Quebec and of Domtar Corporation based in its corporate head office in Fort Mill, South Carolina who provided the Shared Services prior to Closing and have signed a confidentiality undertaking in a form satisfactory to the Commissioner; (kk) “Third Party” means any Person other than the Commissioner, Paper Excellence or the Purchaser; (ll) “Transaction” means the transaction described in the first recital to this Agreement; (mm) “Transaction Agreement” means the Agreement and Plan of Merger between Paper Excellence and Domtar dated May 11, 2021; and (nn) “Tribunal” means the Competition Tribunal established by the Competition Tribunal Act, R.S.C. 1985, c.19 (2 nd Supp.). OBLIGATION TO COMPLETE DIVESTITURE Paper Excellence shall use commercially reasonable efforts to complete the Divestiture.

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[3]

[4]

III. [5]

[6]

[7]

[8]

During the Initial Sale Period, Paper Excellence shall use commercially reasonable efforts to complete the Divestiture in accordance with the provisions of this Part and Confidential Schedule A and subject to Part IV. During the Initial Sale Period, Paper Excellence shall provide to the Commissioner and to the Monitor every 30 days a written report describing the progress of its efforts to effect the Divestiture. The report shall include a description of contacts, negotiations, due diligence and offers regarding the Divestiture Assets, the name, address and phone number of all parties contacted and of prospective Purchasers who have come forward. Paper Excellence shall, within 3 Business Days, respond to any request by the Commissioner for additional information regarding the status of Paper Excellence’s efforts to complete the Divestiture. An officer or other duly authorized representative of Paper Excellence shall certify that he or she has examined the information provided in any such response and that such information is, to the best of his or her knowledge and belief, correct and complete in all material respects. DIVESTITURE TRUSTEE SALE PROCESS In the event that Paper Excellence fails to complete the Divestiture during the Initial Sale Period, the Commissioner shall appoint a Divestiture Trustee to complete the Divestiture in accordance with this Agreement. Such appointment may be made at any time prior to the expiry of the Initial Sale Period or on such later date as the Commissioner determines. Within 5 Business Days after the appointment of the Divestiture Trustee, Paper Excellence shall submit to the Commissioner for approval the terms of a proposed Divestiture Process Agreement with the Divestiture Trustee and the Commissioner that confers on the Divestiture Trustee all rights and powers necessary to permit the Divestiture Trustee to effect the Divestiture. Within 5 Business Days after receipt of the proposed Divestiture Process Agreement referred to in Section 6, the Commissioner shall advise Paper Excellence whether or not he approves the terms of the proposed Divestiture Process Agreement. If the Commissioner does not approve the terms of the proposed Divestiture Process Agreement, he shall prescribe alternative terms that Paper Excellence shall incorporate into a final Divestiture Process Agreement with the Divestiture Trustee and the Commissioner. Without limiting the Commissioner’s discretion to require additional terms, Paper Excellence consents to the following terms and conditions regarding the Divestiture Trustee’s rights, powers and duties, and shall include such terms in the Divestiture Process Agreement: (a) The Divestiture Trustee shall complete the Divestiture as expeditiously as possible, and in any event prior to expiry of the Divestiture Trustee Sale Period.

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PUBLIC VERSION

(b)

(c)

(d)

(e)

The Divestiture Trustee shall use reasonable efforts to negotiate terms and conditions for the Divestiture that are as favourable to Paper Excellence as are reasonably available at that time; however, the Divestiture shall not be subject to any minimum price. The Divestiture Trustee’s opinion of what constitutes favourable terms and conditions and what constitutes reasonably available terms and conditions, is subject to review and approval by the Commissioner. Subject to oversight and approval by the Commissioner, the Divestiture Trustee shall have full and exclusive authority during the Divestiture Trustee Sale Period: (i) to complete the Divestiture in accordance with the provisions of this Part; (ii) to solicit interest in a possible Divestiture by whatever process or procedure the Divestiture Trustee believes is suitable to allow a fair opportunity for one or more prospective good faith Purchasers to offer to acquire the Divestiture Assets, and for greater certainty, in determining whether to pursue negotiations with a prospective Purchaser, may have regard to the approval criteria in Section 23; (iii) to enter into a Divestiture Agreement with a Purchaser that will be legally binding on Paper Excellence; (iv) to negotiate reasonable commercial covenants, representations, warranties and indemnities to be included in a Divestiture Agreement; and (v) to employ, at the expense of Paper Excellence, such consultants, accountants, legal counsel, investment bankers, business brokers, appraisers, and other representatives and assistants as the Divestiture Trustee believes are necessary to carry out the Divestiture Trustee’s duties and responsibilities. Where any Person makes a good faith inquiry respecting a possible purchase of Divestiture Assets, the Divestiture Trustee shall notify such Person that the Divestiture is being made and shall provide to such Person a copy of this Agreement, with the exception of the provisions hereof that are confidential pursuant to Section 66 of this Agreement. Where, in the opinion of the Divestiture Trustee, a Person has a good faith interest in purchasing Divestiture Assets and has executed a confidentiality agreement, in a form satisfactory to the Commissioner, with the Divestiture Trustee protecting any Confidential Information that such Person may receive in the course of its due diligence review of the Divestiture Assets, the Divestiture Trustee shall:

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PUBLIC VERSION

(i)

(ii)

(iii) give such Person as full and complete access as is reasonable in the

(f) (g)

promptly provide to such Person all information respecting the Divestiture Assets that is determined by the Divestiture Trustee to be relevant and appropriate; permit such Person to make reasonable inspection of the Divestiture Assets and of all financial, operational or other non-privileged Records and information, including Confidential Information, that may be relevant to the Divestiture; and

circumstances to the personnel involved in managing the Divestiture Assets.

(h)

[9]

The Divestiture Trustee shall have no obligation or authority to operate or maintain the Divestiture Assets. The Divestiture Trustee shall provide to the Commissioner and to the Monitor, within 30 days after the later of the Divestiture Trustee’s appointment and the commencement of the Divestiture Trustee Sale Period and thereafter every 30 days, a written report describing the progress of the Divestiture Trustee’s efforts to complete the Divestiture. The report shall include a description of contacts, negotiations, due diligence and offers regarding the Divestiture Assets, the name, address and phone number of all parties contacted and of prospective Purchasers who have come forward. The Divestiture Trustee shall, within 3 Business Days, respond to any request by the Commissioner for additional information regarding the status of the Divestiture Trustee’s efforts to complete the Divestiture. The Divestiture Trustee shall notify Paper Excellence and the Commissioner immediately upon the signing of any letter of intent or agreement in principle relating to the Divestiture Assets, and shall provide to Paper Excellence a copy of any executed Divestiture Agreement upon receipt of the Commissioner’s approval of the Divestiture contemplated in such Divestiture Agreement.

[10] Subject to any legally recognized privilege, Paper Excellence and the Hold

Paper Excellence shall not be involved in the Divestiture process during the Divestiture Trustee Sale Period or in any negotiations with prospective Purchasers undertaken by the Divestiture Trustee, nor will Paper Excellence have contact with prospective Purchasers during the Divestiture Trustee Sale Period.

Separate Manager shall provide to the Divestiture Trustee full and complete access to all personnel, Records, information (including Confidential Information) and facilities relating to the Divestiture Assets, to enable the Divestiture Trustee to conduct its own investigation of the Divestiture Assets and to provide access and information to prospective Purchasers.

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PUBLIC VERSION

[11] Paper Excellence shall take no action that interferes with or impedes, directly or indirectly, the Divestiture Trustee’s efforts to complete the Divestiture. [12] Paper Excellence and the Hold Separate Manager shall fully and promptly respond to all requests from the Divestiture Trustee and shall provide all information the Divestiture Trustee may request. Paper Excellence shall identify an individual who shall have primary responsibility for fully and promptly responding to such requests from the Divestiture Trustee on behalf of Paper Excellence. [13] Paper Excellence will do all such acts and execute all such documents, and will cause the doing of all such acts and the execution of all such documents as are within its power to cause the doing or execution of, as may be reasonably necessary to ensure that the Divestiture Assets are divested in the Divestiture Trustee Sale Period and that agreements entered into by the Divestiture Trustee are binding upon and enforceable against Paper Excellence. [14] Paper Excellence shall be responsible for all reasonable fees and expenses properly charged or incurred by the Divestiture Trustee in the course of carrying out the Divestiture Trustee’s duties and responsibilities under this Agreement. The Divestiture Trustee shall serve without bond or security, and shall account for all fees and expenses incurred. Paper Excellence shall pay all reasonable invoices submitted by the Divestiture Trustee within 30 days after receipt and, without limiting this obligation, Paper Excellence shall comply with any agreement it reaches with the Divestiture Trustee regarding interest on late payments. In the event of any dispute: (i) such invoice shall be subject to the approval of the Commissioner; and (ii) Paper Excellence shall promptly pay any invoice approved by the Commissioner. Any outstanding monies owed to the Divestiture Trustee by Paper Excellence shall be paid out of the proceeds of the Divestiture. [15] Paper Excellence shall indemnify the Divestiture Trustee and hold the Divestiture Trustee harmless against any losses, claims, damages, liabilities or expenses arising out of, or in connection with, the performance of the Divestiture Trustee’s duties, including all reasonable fees of counsel and other expenses incurred in connection with the preparation or defence of any claim, whether or not resulting in any liability, except to the extent that such losses, claims, damages, liabilities, or expenses result from malfeasance, gross negligence or bad faith by the Divestiture Trustee. [16] Paper Excellence shall indemnify the Commissioner and hold the Commissioner harmless against any losses, claims, damages, liabilities or expenses arising out of, or in connection with, the performance of the Divestiture Trustee’s duties, including all reasonable fees of counsel and other expenses incurred in connection with the preparation or defence of any claim, whether or not resulting in any liability. [17] If the Commissioner determines that the Divestiture Trustee has ceased to act or has failed to act diligently, the Commissioner may remove the Divestiture Trustee

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PUBLIC VERSION

[18] Paper Excellence may require the Divestiture Trustee and each of the Divestiture

[19] The Commissioner may require the Divestiture Trustee and each of the Divestiture

[20] Notwithstanding any term of this Agreement, the rights, powers and duties of the

IV.

and appoint a substitute Divestiture Trustee. The provisions of this Agreement respecting the Divestiture Trustee shall apply in the same manner to any substitute Divestiture Trustee.

Trustee’s consultants, accountants, legal counsel, investment bankers, business brokers, appraisers, and other representatives and assistants to sign an appropriate confidentiality agreement in a form satisfactory to the Commissioner; provided, however, that such agreement shall not restrict the Divestiture Trustee from providing any information to the Commissioner.

Trustee’s consultants, accountants, legal counsel, investment bankers, business brokers, appraisers, and other representatives and assistants to sign an appropriate confidentiality agreement relating to materials and information the Divestiture Trustee may receive from the Commissioner in connection with the performance of the Divestiture Trustee’s duties.

Divestiture Trustee under this Agreement shall not expire until the Divestiture is completed. COMMISSIONER APPROVAL OF DIVESTITURE

[21] The Divestiture shall be made to a single Purchaser and may proceed only with the prior approval of the Commissioner in accordance with this Part. For greater certainty, if a Divestiture is a notifiable transaction nothing in this Agreement affects the operation of Part IX of the Act. [22] The Divestiture Applicant shall comply with the following process for seeking and obtaining a decision of the Commissioner regarding his approval of a proposed Divestiture: (a) The Divestiture Applicant shall promptly: (i) inform the Commissioner of any negotiations with a prospective Purchaser that may lead to a Divestiture; and (ii) forward to the Commissioner copies of any agreement that is signed with a prospective Purchaser, including non-binding expressions of interest. (b) The Divestiture Applicant shall immediately notify the Commissioner that it intends to enter a Divestiture Agreement with a prospective Purchaser, or has entered into an agreement that, if approved by the Commissioner, will be a Divestiture Agreement within the meaning of this Agreement. If the Divestiture Applicant has entered into or intends to enter into more

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PUBLIC VERSION

(c)

(d)

than one agreement in respect of the same Divestiture Assets, the Divestiture Applicant shall identify the agreement in respect of which it seeks the Commissioner’s approval and the remainder of this Part shall apply only to that agreement unless the Divestiture Applicant designates a substitute agreement. The notice described in Paragraph 22(b) shall be in writing and shall include: the identity of the proposed Purchaser; the details of the proposed Divestiture Agreement and any related agreements; and information concerning whether and how the proposed Purchaser would, in the view of the Divestiture Applicant, likely satisfy the terms of this Agreement. Within 14 days following receipt of the notice described in Paragraph 22(b), the Commissioner may request additional information concerning the proposed Divestiture from any or all of Paper Excellence, the Monitor, the Hold Separate Manager, the prospective Purchaser and, in the Divestiture Trustee Sale Period, the Divestiture Trustee. These Persons shall each provide any additional information requested from them. When they have provided a complete response to the Commissioner’s request, these Persons shall comply with the following procedures: (i) the Divestiture Trustee shall provide written confirmation to the Commissioner that the Divestiture Trustee has provided to the Commissioner all additional information requested from the Divestiture Trustee; (ii) the Monitor shall provide written confirmation to the Commissioner that the Monitor has provided to the Commissioner all additional information requested from the Monitor; (iii) an officer or other duly authorized representative of Paper Excellence shall certify that he or she has examined the additional information provided by Paper Excellence in response to the Commissioner’s request and that such information is, to the best of his or her knowledge and belief, correct and complete in all material respects; (iv) an officer or other duly authorized representative of the Hold Separate Manager shall certify that he or she has examined the additional information provided by the Hold Separate Manager in response to the Commissioner’s request and that such information is, to the best of his or her knowledge and belief, correct and complete in all material respects; and (v) an officer or other duly authorized representative of the prospective Purchaser shall certify that he or she has examined the additional information provided by the prospective Purchaser in

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PUBLIC VERSION

(e)

(f)

(g) [23] In exercising his discretion to determine whether to approve a proposed Divestiture, the Commissioner shall take into account the likely impact of the Divestiture on competition, and may consider any other factor he considers relevant. Prior to granting his approval, the Commissioner must also be satisfied that: (a) (b) (c)

The date on which the last of the Divestiture Trustee, Paper Excellence, the Monitor, the Hold Separate Manager and the prospective Purchaser provides to the Commissioner a confirmation or certification required under this Paragraph is the “First Reference Date”. Within 7 days after the First Reference Date, the Commissioner may request further additional information concerning the proposed Divestiture from any or all of the Persons identified in Paragraph 22(d). These Persons shall each provide any further additional information requested from them. When they have provided a complete response to the Commissioner’s request, if any, these Persons shall comply with the procedures outlined in Paragraph 22(d) in regard to the further additional information provided. The date on which the last of the Divestiture Trustee, Paper Excellence, the Monitor, the Hold Separate Manager and the prospective Purchaser provides to the Commissioner a confirmation or certification required under this Paragraph is the “Second Reference Date”. The Commissioner shall notify the Divestiture Applicant of the approval of, or the objection to, the proposed Divestiture as soon as possible, and in any event within 14 days after the date on which the Commissioner receives the notice described in Paragraph 22(b) or, if he requests any additional information under Paragraph 22(d) or further additional information under Paragraph 22(e), within 14 days after the later of: (i) (ii) The Commissioner’s determination as to whether to approve a proposed Divestiture shall be in writing.

the proposed Purchaser is fully independent of and operates at arm’s length from Paper Excellence; Paper Excellence will have no direct or indirect interest in the Divestiture Assets following the Divestiture; the proposed Purchaser is committed to carrying on the Divested Business;

response to the Commissioner’s request and that such information is, to the best of his or her knowledge and belief, correct and complete in all material respects.

the First Reference Date; and the Second Reference Date, if any.

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PUBLIC VERSION

(d)

(e)

V. HOLD SEPARATE

the proposed Purchaser has the managerial, operational and financial capability to compete effectively in the purchase of wood fibre and the sale of the Divested Business’s products; and the proposed Purchaser will (i) if the Commissioner grants his approval during the Initial Sale Period, complete the Divestiture prior to the expiry of the Initial Sale Period; or (ii) if the Commissioner grants his approval during the Divestiture Trustee Sale Period, complete the Divestiture during the Divestiture Trustee Sale Period.

[24] During the Hold Separate Period, Paper Excellence shall: (a) hold the Divestiture Assets separate, apart and independent of Paper Excellence and shall confer on the Hold Separate Manager all rights and powers necessary to conduct the business of the Divestiture Assets; (b) not exercise direction or control over, or influence directly or indirectly, the Divestiture Assets or the Hold Separate Manager; and (c) take no action that interferes with or impedes, directly or indirectly, the Hold Separate Manager’s duties and responsibilities. [25] Prior to or at Closing, the Commissioner shall appoint a Hold Separate Manager, responsible for managing and operating the Divestiture Assets independently of Paper Excellence during the Hold Separate Period. [26] Within 5 Business Days after the appointment of the Hold Separate Manager, Paper Excellence shall submit to the Commissioner for approval the terms of a proposed Management Agreement with the Hold Separate Manager and the Commissioner that confers on the Hold Separate Manager all rights and powers necessary to permit the Hold Separate Manager to manage and operate the Divestiture Assets independently of Paper Excellence during the Hold Separate Period in accordance with this Agreement. [27] Within 5 Business Days after receipt of the proposed Management Agreement referred to in Section 26, the Commissioner shall advise Paper Excellence whether or not he approves the terms of the proposed Management Agreement. If the Commissioner does not approve the terms of the proposed Management Agreement, he shall prescribe alternative terms for the Management Agreement that Paper Excellence shall incorporate into a final Management Agreement with the Hold Separate Manager and the Commissioner. [28] Without limiting the Commissioner’s discretion to require additional terms, Paper Excellence consents to the following terms and conditions regarding the Hold

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PUBLIC VERSION

Separate Manager’s rights, powers and duties, and shall include such terms in the Management Agreement: (a) The Hold Separate Manager shall report solely and exclusively to the Monitor. (b) The Hold Separate Manager shall not have any involvement with, or receive any Confidential Information respecting, the businesses or assets of Paper Excellence other than in respect of the Divestiture Assets. (c) Subject to the oversight of the Monitor, the Hold Separate Manager shall manage and maintain the operation of the Divestiture Assets independently and separately from Paper Excellence, in the regular and ordinary course of business and in accordance with past practice, and shall use commercially reasonable efforts to ensure the ongoing economic viability, marketability and competitiveness of the Divestiture Assets. (d) Without limiting the generality of Paragraph 28(c) above, the Hold Separate Manager shall: (i) maintain and hold the Divestiture Assets in good condition and repair, normal wear and tear excepted, and to standards at least equal to those that existed prior to the date of this Agreement; (ii) take all commercially reasonable steps to honour all customer and supplier contracts and to maintain quality and service standards for customers of and suppliers to the Divestiture Assets at least equal to those that existed prior to the date of this Agreement; (iii) not knowingly take or allow to be taken any action that adversely affects the competitiveness, operations, financial status or value of the Divestiture Assets; (iv) not alter or cause to be altered, to any material extent, the management of the Divestiture Assets as it existed prior to the date of this Agreement, except with the prior approval of the Monitor; (v) not terminate or alter any employment, salary or benefit agreements, as they existed at the date of this Agreement, for Persons employed in connection with the Divestiture Assets, except with the prior approval of the Monitor; (vi) ensure that the Divestiture Assets are staffed with sufficient employees to ensure their viability and competitiveness, including by replacing any departing employees with other qualified employees subject to the prior approval of the Monitor; and

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PUBLIC VERSION

(e)

(f)

(g)

(h)

(i)

[29] Paper Excellence shall be responsible for all reasonable fees and expenses properly charged or incurred by the Hold Separate Manager in the course of carrying out the Hold Separate Manager’s duties under this Agreement. The Hold Separate Manager shall serve without bond or security, and shall account for all

(vii) maintain inventory levels and payment terms consistent with the practices of the Divested Business that existed, with respect to the Divestiture Assets, prior to the date of this Agreement. Paper Excellence shall provide sufficient financial resources, including general funds, capital funds, working capital and reimbursement for any operating, capital or other losses, to permit the Hold Separate Manager to comply with its obligations under this Section. The Hold Separate Manager, subject to the prior approval of the Monitor, may request funds at any time, and Paper Excellence shall comply with any such request. If the Monitor believes that Paper Excellence has not provided, is not providing or will not provide sufficient financial and other resources under this Paragraph, the Monitor shall forthwith refer the matter to the Commissioner, who shall make a final determination respecting the financial and other resources that Paper Excellence must provide. Paper Excellence shall comply with any determination made by the Commissioner on this issue. The Hold Separate Manager shall have no financial interests affected by Paper Excellence’s revenues, profits or profit margins, except that Paper Excellence shall provide to the Hold Separate Manager reasonable incentives to undertake this position. The Monitor shall determine the type and value of such incentives, which shall include continuation of all employee benefits, and such additional incentives as the Monitor determines may be necessary to assure the continuation and prevent any diminution of the viability, marketability and competitiveness of the Divestiture Assets. In addition to those Persons employed in connection with the Divestiture Assets on the Closing Date, the Hold Separate Manager may employ such other Persons as the Monitor believes are necessary to assist the Hold Separate Manager in managing and operating the Divestiture Assets. Subject to any legally recognized privilege, the Hold Separate Manager shall provide to the Monitor full and complete access to all personnel, Records, information (including Confidential Information) and facilities relevant to monitoring Paper Excellence’s compliance with this Agreement. The Hold Separate Manager shall fully and promptly respond to all requests from the Monitor and, subject to any legally recognized privilege, shall provide all information the Monitor may request.

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PUBLIC VERSION

fees and expenses incurred. Paper Excellence shall pay all reasonable invoices submitted by the Hold Separate Manager within 30 days after receipt and, without limiting this obligation, Paper Excellence shall comply with any agreement it reaches with the Hold Separate Manager regarding interest on late payments. In the event of any dispute: (i) such invoice shall be subject to the approval of the Commissioner; and (ii) Paper Excellence shall promptly pay any invoice approved by the Commissioner. [30] Paper Excellence shall indemnify the Hold Separate Manager and hold the Hold Separate Manager harmless against any losses, claims, damages, liabilities or expenses arising out of, or in connection with, the performance of the Hold Separate Manager’s duties, including all reasonable fees of counsel and other expenses incurred in connection with the preparation or defence of any claim, whether or not resulting in any liability, except to the extent that such losses, claims, damages, liabilities, or expenses result from malfeasance, gross negligence or bad faith by the Hold Separate Manager. [31] If the Commissioner determines that the Hold Separate Manager has ceased to act or has failed to act diligently, the Commissioner may remove the Hold Separate Manager and appoint a substitute Hold Separate Manager. The provisions of this Agreement respecting the Hold Separate Manager shall apply in the same manner to any substitute Hold Separate Manager. [32] Paper Excellence and the Hold Separate Manager shall jointly implement, and at all times during the Hold Separate Period maintain in operation, a system, as approved by the Monitor in consultation with the Commissioner of access and data controls to prevent unauthorized access to or dissemination of Confidential Information. The system shall include the following protocols: (a) The Monitor shall review all proposed communications between the Hold Separate Manager and Paper Excellence before such communications occur. (b) Paper Excellence’s Continuing Employees shall not receive, have access to or use any Confidential Information respecting the Divestiture Assets. If any of Paper Excellence’s Continuing Employees possesses Confidential Information respecting the Divestiture Assets as of the date of this Agreement, such Person shall, within 5 Business Days following appointment of the Hold Separate Manager, (i) deliver any Records containing such Confidential Information to the Hold Separate Manager (or, at the Hold Separate Manager’s option, destroy such Records) and a signed statement confirming that he or she is no longer in possession of any Records containing Confidential Information respecting the Divestiture Assets; and (ii) submit to the Monitor a signed statement confirming that he or she undertakes not to share any Confidential Information respecting the Divestiture Assets with any of Paper Excellence’s Continuing Employees.

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PUBLIC VERSION

(c)

(d)

(e)

VI. THIRD PARTY CONSENTS

Notwithstanding Paragraph 32(b), Designated Personnel of Paper Excellence may receive aggregate financial and operational information relating to the Divestiture Assets only to the extent necessary to comply with securities laws, prepare financial and regulatory reports, tax returns, administer employee benefits, defend litigation and comply with this Agreement. Any such information shall be: (i) reviewed by the Monitor prior to its receipt by any Designated Personnel; (ii) maintained in a separate confidential file that is accessible only to the Designated Personnel; and (iii) used only for the purposes set forth in this Section. Notwithstanding Paragraphs 32(a) and (b), at the request and direction of the Hold Separate Manager and subject to the oversight of the Monitor, the Shared Services Employees shall provide the Divested Business with the Shared Services in a manner that is, in the view of the Hold Separate Manager and Monitor, reasonably consistent in nature, scope and magnitude with past practices and generally accepted industry practices, and in compliance with all applicable laws. Neither the Hold Separate Manager nor any Hold Separate Employee shall receive, have access to or use any Confidential Information relating to Paper Excellence’s businesses other than the Divestiture Assets.

[33] It shall be a condition in any Divestiture Agreement (whether negotiated by Paper Excellence or by the Divestiture Trustee) that Paper Excellence shall, as a condition of closing, obtain any consents and waivers from Third Parties that are necessary to permit the assignment to, and assumption by, a Purchaser of all material contracts, approvals and authorizations relating to the Divestiture Assets; provided, however, that Paper Excellence may satisfy this requirement by certifying that the Purchaser has executed agreements directly with one or more Third Parties which make such assignment and assumption unnecessary. VII. TRANSITIONAL SUPPORT ARRANGEMENTS [34] Paper Excellence, or the Divestiture Trustee on behalf of Paper Excellence, shall enter into agreements to supply such transitional services requested by the Purchaser and approved by the Commissioner as are reasonably necessary to ensure the effectiveness of the Divested Business for up to two years following the completion of the Divestiture. VIII. EMPLOYEES [35] Paper Excellence (during the Initial Sale Period), the Divestiture Trustee (during the Divestiture Trustee Sale Period) and the Hold Separate Manager (for the Hold Separate Employees) shall provide to any prospective Purchaser, the Commissioner and the Monitor information relating to the employees whose

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[36] Paper Excellence shall:

[37] For a period of one year following completion of the Divestiture, Paper

IX. [38] If, by the end of the Divestiture Trustee Sale Period, the Divestiture has not been

responsibilities involve the operation of the Divestiture Assets (including the Divestiture Assets), to enable such Purchaser to make decisions regarding offers of employment to such employees. The Monitor shall review the information provided to ensure that it is sufficient to enable the Purchaser to make such decisions.

(a)

Excellence shall not, without the prior written consent of the Commissioner, directly or indirectly solicit or employ any Persons employed in connection with the Divestiture Assets who has accepted an offer of employment with the Purchaser unless such Person’s employment has been terminated by the Purchaser. Nothing in this Agreement shall restrict the solicitation or employment by Paper Excellence of any Person who is solicited by advertising placed in a newspaper, trade journal, through a web site or via other media of general circulation which is not directed at or focused on Persons employed in connection with the Divestiture Assets. FAILURE OF DIVESTITURE TRUSTEE SALE

completed, or if the Commissioner is of the opinion that the Divestiture likely will not be completed prior to the end of the Divestiture Trustee Sale Period, the Commissioner may apply to the Tribunal, at his election, for either (i) such order as is necessary to complete the Divestiture; or (ii) such order as is necessary to ensure that the Transaction is not likely to prevent or lessen competition substantially.

(b) (c) (d)

(e)

not interfere, directly or indirectly, with any negotiations by a Purchaser to employ any employees whose responsibilities involve the operation of the Divestiture Assets; not offer any incentive to such employees to decline employment with the Purchaser or to accept other employment with Paper Excellence; remove any impediment that may deter such employees from accepting employment with the Purchaser; waive any non-compete or confidentiality provisions of employment or other contracts that could impair the ability of such employees to be employed by the Purchaser; and pay or transfer to the employees subsequently employed by the Purchaser all current and accrued bonuses, pensions and other current and accrued benefits to which such employees would otherwise have been entitled had they remained in the employment of Paper Excellence.

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X. MONITOR

[39] The Commissioner shall appoint a Monitor, responsible for monitoring compliance by Paper Excellence with this Agreement. Such appointment may occur at any time following registration of this Agreement. A reference in this Agreement to specific monitoring functions or tasks that are to be undertaken by the Monitor shall in no way detract from the Monitor’s general right, power and duty to monitor all aspects of Paper Excellence’s compliance with this Agreement. [40] Within 5 Business Days after the appointment of the Monitor, Paper Excellence shall submit to the Commissioner for approval the terms of a proposed Monitor Agreement with the Monitor and the Commissioner that confers on the Monitor all rights and powers necessary to permit the Monitor to monitor compliance by Paper Excellence with this Agreement. [41] Within 5 Business Days after receipt of the proposed Monitor Agreement referred to in Section 40, the Commissioner shall advise Paper Excellence whether or not he approves the terms of the proposed Monitor Agreement. If the Commissioner does not approve the terms of the proposed Monitor Agreement, he shall prescribe alternative terms for the Monitor Agreement that Paper Excellence shall incorporate into a final Monitor Agreement with the Monitor and the Commissioner. [42] Paper Excellence consents to the following terms and conditions regarding the Monitor’s rights, powers and duties, and shall include such terms in the Monitor Agreement: (a) The Monitor shall have the power and authority to monitor Paper Excellence’s compliance with this Agreement, and shall exercise such power and authority and carry out the duties and responsibilities of the Monitor in a manner consistent with the purposes of this Agreement and in consultation with the Commissioner. (b) The Monitor shall have the authority to employ, at the expense of Paper Excellence, such consultants, accountants, legal counsel and other representatives and assistants as the Monitor believes are necessary to carry out the Monitor’s duties and responsibilities. (c) The Monitor shall have no obligation or authority to operate or maintain the Divestiture Assets or Divestiture Assets. (d) The Monitor shall act for the sole benefit of the Commissioner, maintain all confidences and avoid any conflict of interest. (e) The Monitor shall have no duties of good faith (except as required by law), of a fiduciary nature, or otherwise, to Paper Excellence.

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(f)

[43] Subject to any legally recognized privilege, Paper Excellence shall provide to the Monitor full and complete access to all personnel, Records, information (including Confidential Information) and facilities relevant to monitoring Paper Excellence’s compliance with this Agreement. [44] Paper Excellence shall take no action that interferes with or impedes, directly or indirectly, the Monitor’s efforts to monitor Paper Excellence’s compliance with this Agreement. [45] Paper Excellence shall fully and promptly respond to all requests from the Monitor and, subject to any legally recognized privilege, shall provide all information the Monitor may request. Paper Excellence shall identify an individual who shall have primary responsibility for fully and promptly responding to such requests from the Monitor on behalf of Paper Excellence. [46] Paper Excellence may require the Monitor and each of the Monitor’s consultants, accountants, legal counsel and other representatives and assistants to sign an appropriate confidentiality agreement in a form satisfactory to the Commissioner; provided, however, that such agreement shall not restrict the Monitor from providing any information to the Commissioner. [47] The Commissioner may require the Monitor and each of the Monitor’s consultants, accountants, legal counsel and other representatives and assistants to sign an appropriate confidentiality agreement relating to materials and information the Monitor may receive from the Commissioner in connection with the performance of the Monitor’s duties. [48] Paper Excellence shall be responsible for all reasonable fees and expenses properly charged or incurred by the Monitor in the course of carrying out the Monitor’s duties under this Agreement. The Monitor shall serve without bond or security, and shall account for all fees and expenses incurred. Paper Excellence shall pay all reasonable invoices submitted by the Monitor within 30 days after receipt and, without limiting this obligation, Paper Excellence shall comply with any agreement it reaches with the Monitor regarding interest on late payments. In the event of any dispute: (i) such invoice shall be subject to the approval of the Commissioner; and (ii) Paper Excellence shall promptly pay any invoice approved by the Commissioner. Any outstanding monies owed to the Monitor by Paper Excellence shall be paid out of the proceeds of the Divestiture.

The Monitor shall provide to the Commissioner every 30 days after the date of the Monitor’s appointment until the Divestiture is complete and thereafter annually on or before the anniversary of the Divestiture, a written report concerning performance by Paper Excellence of its obligations under this Agreement. The Monitor shall, within 3 Business Days, respond to any request by the Commissioner for additional information regarding Paper Excellence’s compliance.

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[49] Paper Excellence shall indemnify the Monitor and hold the Monitor harmless against any losses, claims, damages, liabilities or expenses arising out of, or in connection with, the performance of the Monitor’s duties, including all reasonable fees of counsel and other expenses incurred in connection with the preparation or defence of any claim, whether or not resulting in any liability, except to the extent that such losses, claims, damages, liabilities, or expenses result from malfeasance, gross negligence or bad faith by the Monitor. [50] If the Commissioner determines that the Monitor has ceased to act or has failed to act diligently, the Commissioner may remove the Monitor and appoint a substitute Monitor. The provisions of this Agreement respecting the Monitor shall apply in the same manner to any substitute Monitor. [51] The Monitor shall serve for such time as is necessary to monitor Paper Excellence’s compliance with this Agreement. XI. COMPLIANCE

[52] Within 5 Business Days after the Closing Date, Paper Excellence shall provide written confirmation to the Commissioner of the date on which the Transaction was completed. [53] Paper Excellence shall provide a copy of this Agreement to each of its own and its Affiliates’ directors, officers, employees and agents having managerial responsibility for any obligations under this Agreement, within 3 Business Days after the date of registration of this Agreement. Paper Excellence shall ensure that its directors, officers, employees and agents with responsibility for any obligations under this Agreement receive sufficient training respecting Paper Excellence’s responsibilities and duties under this Agreement, and the steps that such individuals must take in order to comply with this Agreement. [54] Paper Excellence shall not, for a period of 10 years after the date when the Divestiture is completed, directly or indirectly acquire any interest in the Divestiture Assets, without the prior written approval of the Commissioner. [55] For a period of 2 years after the date when the Divestiture is completed, Paper Excellence shall not, without providing advance written notification to the Commissioner in the manner described in this Section, directly or indirectly: (a) acquire any assets or shares of, or any other interest in, any pulp mill business in British Columbia; or (b) consummate any merger or other combination relating to the pulp mill business in British Columbia. If a transaction described in (a) or (b) is one for which notice is not required under section 114 of the Act, Paper Excellence shall supply to the Commissioner the

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information described in section 16 of the Notifiable Transactions Regulations at least 30 days before completing such transaction (or such shorter period as the Commissioner may agree). Paper Excellence shall certify such information in the same manner as would be required if section 118 of the Act applied. The Commissioner may accept a competitive impact brief from Paper Excellence instead of such information. The Commissioner may, within 30 days after receiving the information described in this Section, request that Paper Excellence supply additional information that is relevant to the Commissioner’s assessment of the transaction. In the event that the Commissioner issues such a request for additional information, Paper Excellence shall supply information to the Commissioner in the form specified by the Commissioner and shall not complete such transaction until at least 30 days (or such shorter period as the Commissioner may agree) after Paper Excellence has supplied all such requested information in the form specified by the Commissioner. [56] One year after the date of registration of this Agreement and annually thereafter, and at such other times as the Commissioner may require, Paper Excellence shall file an affidavit or certificate, substantially in the form of Schedule B to this Agreement, certifying its compliance with Parts VII, VIII and XI of this Agreement and setting out the following information in detail: (a) the steps taken to ensure compliance; (b) the controls in place to verify compliance; and (c) the names and titles of employees who have oversight of compliance. [57] If any of Paper Excellence, the Hold Separate Manager, the Divestiture Trustee or the Monitor becomes aware that there has been a breach or possible breach of any of the terms of this Agreement, such Person shall, within 5 Business Days after becoming aware of the breach or possible breach, notify the Commissioner thereof, and shall provide details sufficient to describe the nature, date and effect (actual and anticipated) of the breach or possible breach, provided that notification of a possible breach is not required if such Person determines within those 5 Business Days that it could not reasonably be considered a breach of any of the terms of this Agreement. Paper Excellence shall provide confirmation of its compliance with this provision in all affidavits and certificates of compliance filed with the Commissioner pursuant to Section 56 of this Agreement. [58] Paper Excellence shall notify the Commissioner at least 30 days prior to: (a) any proposed dissolution of Paper Excellence; or (b) any other change in Paper Excellence if such change may affect compliance obligations arising out of this Agreement including, but not limited to, a reorganization, material acquisition, disposition or transfer of assets, or any fundamental change for purposes of Paper Excellence’s incorporating statute.

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[59] For purposes of determining or securing compliance with this Agreement, and subject to any legally recognized privilege, Paper Excellence shall, upon written request given at least 5 Business Days in advance to Paper Excellence, permit any authorized representative(s) of the Commissioner, without restraint or interference: (a) to access, during regular office hours of Paper Excellence on any Business Day(s), all facilities and to inspect and copy all Records in the possession or control of Paper Excellence related to compliance with this Agreement,