|**Exhibit
99.5**
|----------------



TEMBEC INC.

NOTICE OF ANNUAL AND SPECIAL
MEETING OF SHAREHOLDERS

NOTICE IS HEREBY
GIVEN that the Annual and Special Meeting of shareholders (the Meeting) of Tembec
Inc. (the "Company") will be held in the Salons des Saisons A and B of the Omni
Hotel Mont-Royal, 1050 Sherbrooke Street West, Montréal, Québec, on Thursday,
February 1, 2007, at 11:00 a.m., local time, for the following
purposes:

|1. | to consider, and if deemed
      appropriate, adopt a resolution to confirm the enactment of a new By-Law
      No. 2006-1. The full text of the resolution and the new By-Law No. 2006-1
      are respectively reproduced in Schedule A of the accompanying management
      information circular (the Management Information Circular);                                                                                                                                             
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. | to consider, and if deemed
      appropriate, adopt a resolution to amend the Companys former Long-Term
      Incentive Plan (i) to adopt a new amendment procedure; and (ii) to provide
      for the extension of the expiry date of the options granted under the
      former Long-Term Incentive Plan if such options expire during a blackout
      period. The full text of the resolution is reproduced as Schedule B of
      the accompanying Management Information Circular;
|  
|3. | to receive the consolidated
      financial statements of the Company for the fiscal year ended September
      30, 2006 together with the auditors report thereon;                                                                                                                                                                                                                                                                                                                       
|  
|4. | to elect the directors of the
      Company for the ensuing year;                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|5. | to appoint the auditors and
      authorize the board of directors to fix their remuneration; and                                                                                                                                                                                                                                                                                                                                                                                          
|  
|6. | to transact such other business
      as may properly come before the meeting.                                                                                                                                                                                                                                                                                                                                                                                                             
|  

A copy of the
Management Information Circular accompanies this notice.

Since it is
desirable that as many shares as possible be represented and voted at the
meeting, you are requested if unable to attend the meeting in person, to
complete and return the enclosed form of proxy in the envelope provided for that
purpose.

Montréal, this
12thday of December 2006.



By Order of the
      board of directorsTONYFRATIANNIVice President, General
      Counsel and
Secretary





***Management Information
      Circular***
    ***Tembec
    Inc.***

---

|MANAGEMENT INFORMATION
      CIRCULAR                                     
|--------------------------------------------------------------------------
|                                                                          
|Table of
      Contents                                                   
|                                                                          
|                                                                          
|NOTICE OF ANNUAL AND SPECIAL MEETING OF
      SHAREHOLDERS                
|                                                                          
|MANAGEMENT INFORMATION CIRCULAR                                           
|                                                                          
|SOLICITATION OFPROXIES                                                    
|APPOINTMENT ANDREVOCATION OFPROXY                                         
|NON-REGISTEREDHOLDERS OFSHARES                                            
|EXERCISE OFDISCRETION BYAGENTS                                            
|VOTINGSHARES ANDPRINCIPALHOLDERSTHEREOF                                   
|ENACTMENT OF NEWBY-LAWNO. 2006-1                                          
|AMENDMENTS TO THEFORMERLONG-TERMINCENTIVEPLAN                             
|                                                                          
|ELECTION OF DIRECTORS                                                     
|                                                                          
|MAJORITYVOTING FORDIRECTORS                                               
|INFORMATIONCONCERNINGNOMINEEDIRECTORS                                     
|ATTENDANCERECORD OFDIRECTORS FORBOARD ANDCOMMITTEEMEETINGS                
|CORPORATEGOVERNANCE                                                       
|COMPENSATION OFDIRECTORS                                                  
|LIABILITYPROTECTION FORDIRECTORS ANDOFFICERS                              
|CODE OFETHICS                                                             
|DISCLOSUREPOLICY                                                          
|TEMBECCOMPENSATIONPROGRAM                                                 
|COMPOSITION OF THECORPORATEGOVERNANCE ANDHUMANRESOURCESCOMMITTEE          
|REPORT ONEXECUTIVE ANDOTHERCOMPENSATION                                   
|Compensation  Unionized Employees                                        
|Compensation  Non-Unionized/Management Employees and
      Executives    
|CEO
      COMPENSATION                                                    
|EXECUTIVECOMPENSATION                                                     
|                                                                          
|RETIREMENT PLANS                                                          
|                                                                          
|RETIREMENTPLANS UNIONIZEDEMPLOYEES                                       
|RETIREMENTPLANS MANAGEMENTEMPLOYEES ANDEXECUTIVES                        
|SUPPLEMENTARYPENSIONPLAN                                                  
|INDEBTEDNESS                                                              
|INTEREST OFINFORMEDPERSONS INMATERIALTRANSACTIONS                         
|TERMINATION OFEMPLOYMENT, CHANGE INRESPONSIBILITIES ANDEMPLOYMENTCONTRACTS
|PERFORMANCEGRAPH                                                          
|AUDITCOMMITTEEINFORMATION                                                 
|APPOINTMENT ANDREMUNERATION OFAUDITORS                                    
|OTHERMATTERS                                                              
|ADDITIONALINFORMATION                                                     
|                                                                          
|SCHEDULE A RESOLUTION AND TEXT OF NEW BY-LAW NO.
      2006-1           
|                                                                          
|SCHEDULE B RESOLUTION REGARDING AMENDMENTS TO THE FORMER
      LTIP     
|                                                                          
|SCHEDULE C CORPORATE GOVERNANCE PRACTICES                               
|                                                                          
|SCHEDULE D MANDATE OF THE BOARD                                         





*********Management
      Information Circular***
    **2**
    ***Tembec
Inc.***

---

TEMBEC
INC.MANAGEMENT INFORMATION
CIRCULAR

Solicitation of
ProxiesThis Circular is furnished in connection
with the solicitation by the management of Tembec Inc. (hereinafter the
"Company" or, when referenced as a consolidated entity or to one or more
of its subsidiaries, referred to as "Tembec") of proxies to be used at
the annual and special meeting of shareholders of the Company to be held at the
time and place and for the purposes set forth in the foregoing notice of
meeting. The solicitation will be primarily by mail. However, the directors,
officers and employees of the Company may also solicit proxies by telephone,
e-mail, telecopier or in person. The cost of solicitation by management will be
borne by the Company.

Appointment and Revocation of
ProxyThe persons named in the enclosed proxy form
are corporate officers and/or directors of the Company. A SHAREHOLDER WISHING
TO APPOINT SOME OTHER PERSON TO REPRESENT HIM OR HER AT THE MEETING MAY DO
SO by striking out the names of the persons designated and by inserting such
other person's name in the blank space provided in the proxy form or by
completing another proper form and, in either case, delivering the completed
proxy form to Tembec Inc., c/o Computershare Trust Company of Canada,
9th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1 or care
of the Secretary of the Company at its head office, 800 René-Lévesque Blvd.
West, Suite 1050, Montréal, Québec, H3B 1X9, before the
meeting.

Shareholders executing the proxy form may revoke
it at any time, as long as it has not been exercised, by instrument in writing
executed by the shareholder or his attorney authorized in writing and deposited
either at the head office of the Company at any time up to and including the
last business day preceding the date of the meeting, or any adjournment thereof,
or with the Chairman of the meeting on the day of the meeting, or adjournment
thereof.

Non-Registered Holders of
Shares

The
information set out in this section is of importance to the shareholders who do
not hold shares in their own name. Persons who hold shares through their
brokers, intermediaries, trustees or other persons, or who otherwise do not hold
such securities in their own name ("Beneficial Holders") should note that only
proxies deposited by persons whose names appear on the records of the Company
may be recognized and acted upon at the meeting. If shares are listed in an
account statement provided to a Beneficial Holder by a broker, then in almost
all cases, those shares will not be registered in the Beneficial Holder's name
on the records of the Company. Such shares will more likely be registered under
the names of the broker or an agent of that broker. In Canada, the vast majority
of shares are registered under the name of the CDS & Co., which acts as
nominee for many Canadian brokerage firms. Shares held by brokers, agents or
nominees can only be voted upon the instructions of the Beneficial Holder.
Without specific instructions, brokers, agents and nominees are prohibited from
voting securities for the brokers' clients. Beneficial Holders should ensure
that instructions respecting the voting of their shares are communicated to the
appropriate person at the appropriate time.

Intermediaries/brokers are required to seek
voting instructions from Beneficial Holders in advance of shareholders'
meetings. Each intermediary/broker has its own mailing procedures and provides
its own return instructions to clients, which should be carefully followed by
Beneficial Holders to ensure that their shares are voted at the appropriate
meeting. The purpose of the form of proxy or voting instruction form supplied to
a Beneficial Holder by its broker, agent or nominee is limited to instructing
the broker or agent of the broker how to vote on behalf of the Beneficial
Holder. The majority of brokers now delegate this responsibility to Independent
Investor Communications Corporation ("IICC"). IICC typically supplies a
voting instruction form, mails those forms to Beneficial Holders and asks them
to return the forms to IICC or follow specified telephone voting procedures.
IICC then tabulates the results of all instructions received and provides
appropriate instructions respecting the voting of shares to be represented at
the meeting. A Beneficial Holder receiving a voting instruction form from
IICC cannot use that form to vote shares directly at the meeting  the voting
instruction forms must be returned to IICC or the telephone procedures completed
well in advance of the





|******************Management
      Information
      Circular************ | **3** | ***Tembec
Inc.***
|------------------------------------------------------------------------- | ----- | -----------------

---

meeting in order to have such
shares voted. Non-registered shareholders that wish to vote in person at the
meeting must insert their name in the space provided on the voting instruction
form, and adhere to the signing and return instructions provided by IICC. By
doing so, non-registered shareholders are instructing their intermediary/broker
to appoint them as proxyholder.

Exercise of Discretion by
AgentsThe
shares represented by the enclosed proxy form will be voted in accordance with
the instructions of the shareholders executing it and, where a choice is
specified, the shares will be voted accordingly. WHERE NO CHOICE IS
SPECIFIED, THE SHARES SO REPRESENTED WILL BE VOTED IN FAVOUR OF THE ELECTION OF
THE PROPOSED NOMINEES TO THE BOARD OF DIRECTORS, IN FAVOUR OF THE APPOINTMENT OF
THE PROPOSED NOMINEE AS AUDITORS, IN FAVOUR OF ADOPTING A RESOLUTION TO CONFIRM
THE ENACTMENT OF A NEW BY-LAW NO. 2006-1 AND IN FAVOUR OF ADOPTING A RESOLUTION
TO AMEND THE COMPANYS FORMER LONG TERM INCENTIVE PLAN. The enclosed proxy
form confers discretionary authority upon the persons named therein with respect
to amendments or new matters submitted to the meeting. At the time of printing
of this Circular, the management of the Company knows of no such amendments or
new matters.

Voting Shares and Principal
Holders ThereofOn November 30, 2006, 85,616,232 common
shares of the Company were outstanding, each carrying the right to one vote, so
that the aggregate number of votes attaching to all the outstanding shares is
85,616,232.

The constating articles of the Company provide for two classes
of restricted shares: Class B and Class C
shares.

The
Class B shares, of which there are an unlimited amount authorized, are issuable
in series. There are currently two series authorized, namely Series 2 shares and
Series 4 shares, both of which are non-voting and participate in priority to the
common shares and Class C shares in the event of liquidation, dissolution,
winding-up of the Company or other distribution of its
assets.

250,000
Class C shares, which can only be issued to employees and are non-voting, are
authorized. They are entitled to dividends pari passu with the common
shares and after dividends on Class B shares and may participate in the event of
liquidation, dissolution, winding-up of the Company or other distribution of its
assets, subject to the preference rights of Class B shareholders. The holders
of Class B and Class C shares have no right to participate if a take-over bid is
made for common shares of the Company.

To the
knowledge of the directors and executive officers of the Company, no person or
company beneficially owns, directly or indirectly, or controls or directs ten
per cent (10%) or more of the voting rights attached to all common shares of the
Company, with the exception of Brandes Investment Partners, L.P., which owns
10,306,370 common shares representing approximately 12.037% of the Companys
outstanding common shares, and Emanuele (Lino) Saputo, who, together with
entities controlled by him and related persons for whom he holds powers of
attorney, beneficially owns 16,569,960 common shares representing approximately
19.35% of the Companys outstanding common
shares.

Only
shareholders of record at the close of business on December 11, 2006 will be
entitled to vote at the meeting.

Enactment of new By-Law No.
2006-1On
September 28, 2006, the board of directors of the Company adopted a resolution,
subject to Shareholder confirmation, to enact a new By-Law No. 2006-1 (t he
New By-Law) relating generally to the business and affairs of the
Company. The New By-Law replaces the Companys former general by-laws (the
Old By-Laws). The New ByLaw contains more contemporary provisions
relating to a number of corporate governance matters, including expressly
permitting directors to participate in meetings by way of communications
facilities that allow all directors to hear one another. The New By-Law also
formalizes certain practices such as the requirement that directors hold shares,
other securities or share units of the Company.





|******************Management
      Information
      Circular************ | **4** | ***Tembec
      Inc.***
|------------------------------------------------------------------------- | ----- | -----------------------

---

The text of the proposed confirmatory resolution
which the shareholders are being asked to consider, and if deemed appropriate,
adopt, as well as the text of the New By-Law are respectively reproduced in
Schedule A of this Management Information Circular.

In addition, the text of the repealed Old
By-Laws of the Company may be obtained upon request addressed to the Secretary
of the Company at 800 René-Lévesque Blvd. West, Suite 1050, Montreal, Quebec,
H3B 1X9 (facsimile: (514) 871-1980) or may  be  consulted 
on  SEDAR 
(www.sedar.com)  or  EDGAR (www.sec.gov/edgar/searchedgar/companysearch.html)
websites.

Accordingly, the board of directors and
management are recommending that the shareholders vote FOR the approval of the
said resolution that requires an affirmative vote of the majority of the votes
cast at the Meeting in order to be adopted. Unless contrary instructions are
indicated on the proxy form or the voting instruction card, the persons
designated in the accompanying form of proxy or voting instructions card intend
to vote FOR the approval of the resolution.

Amendments to the Former
Long-Term Incentive Plan

On June 6, 2006, the Toronto Stock Exchange (the
TSX) published a Staff Notice respecting security based compensation
arrangements such as the Companys former Long-Term Incentive Plan (the
Former LTIP) relating to the amendment procedures and the extension of
option expiry dates which fall within or soon after a blackout
period.

The board of directors considers that the
flexibility afforded by the proposed change will enable the Former LTIP to
better achieve its purpose by enabling amendments to the Former LTIP and options
granted thereunder to be made on an expeditious basis in order to efficiently
address future regulatory and commercial requirements.

Regarding the amendment procedures, the board
proposes to replace the current amendment provision with one permitting the
board to amend the Former LTIP at any time without the consent of shareholders,
including where the change is (i) an amendment of a housekeeping nature, such
as those of a typographical, clerical or grammatical nature, (ii) a change to
the vesting provisions of any option; (iii) a change in the termination
provisions of any option that does not entail an extension beyond the original
expiration date; and (iv) a change to the eligible participants of the Former
LTIP.

Regarding the extension of option expiry dates
which fall within or soon after a blackout period, the board proposes to amend
the Former LTIP to provide that should the expiration date for an option fall
within a blackout period or within nine business days following the expiration
of a blackout period, such expiration date shall be automatically extended
without any further act or formality to that date which is the tenth business
day after the end of the blackout period, such tenth business day to be
considered the expiration date for such option for all purposes under the Former
LTIP.

The proposed amendment is subject to the
approval of the TSX. The text of the proposed confirmatory resolution which the
shareholders are being asked to consider, and if deemed appropriate, adopt, and
the amended Former LTIP are reproduced in Schedule B of this Management
Information Circular.

A copy of the Former LTIP is available upon
request to the Secretary of the Corporation.

The board of directors approved the proposed
amendment to the Former LTIP at a meeting held on December 4, 2006 and
recommends that shareholders vote for the approval of this resolution. Unless
contrary instructions are indicated on the proxy form or the voting instruction
card, the persons designated in the accompanying form of proxy or voting
instructions card intend to vote FOR the approval of the
resolution.

Election of
Directors

There will be eleven (11) nominees to be elected
at the meeting as directors. If elected, they will hold office until the next
annual meeting of shareholders or until his or her successor is elected or
appointed in accordance with the bylaws of the Company.





|******************Management
      Information
      Circular************ | **5** | ***Tembec
      Inc.***
|------------------------------------------------------------------------- | ----- | -----------------------

---

Unless
authority to vote on the election of directors is withheld, it is the intention
of the persons named in the enclosed form of proxy to vote the shares
represented thereby in favour of the eleven (11) nominees listed below or, in
the event of any vacancies among such nominees (an event that the management of
the Company has no reason to believe will occur) in favour of the remaining
nominees and of substitute nominees.

Majority Voting for
DirectorsThe board of directors has adopted a policy
stipulating that if the votes in favour of the election of a director nominee at
a shareholders meeting represent less than a majority of the shares voted and
withheld, the nominee will submit his or her resignation promptly after the
meeting for the Corporate Governance and Human Resources Committees
consideration. The Committee will make a recommendation to the board of
directors after reviewing the matter. If the board of directors decision is to
reject the resignation offer, a press release will be issued describing the
reasons why the resignation was not accepted. The nominee will not participate
in any Committee or board deliberations on the resignation offer. The policy
does not apply in circumstances involving contested director
elections.

Information Concerning Nominee
DirectorsSet forth below is information pertaining to
persons who are proposed to be nominated for election as
directors.

The following information is based on data
furnished by the nominee directors. The information with respect to ownership of
common shares includes those shares for which such persons have voting power or
investment power. Voting power and investment power are not shared with others
unless specifically stated. Each director, except for a director who is a
unionized employee of the Company, is required to own at least 3,500 common
shares of the Company or to acquire such amount of common shares within two
years after he or she has been elected as a director.



|ANDRÉ BÉRARD, Québec, Canada
|----------------------------
|                            



|**HOLDINGS**10,000 common
      shares43,479 deferred share units | **POSITION ON COMMITTEES OF THE BOARD**Member of the Corporate Governance and Human Resources
      CommitteeMember of the Special Committee
      for Strategic Purposes
|----------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|
|



|NORMAN M. BETTS, New Brunswick,
  Canada
|----------------------------------------
|                                        

|**HOLDINGS**2,512 common
      shares5,104 deferred share
      units | **POSITION ON COMMITTEES OF THE BOARD**Member of the Audit CommitteeMember of the Special Committee for Strategic Purposes
|--------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------
|
|
|
|



|******************Management
      Information
      Circular************ | **6** | ***Tembec
      Inc.***
|------------------------------------------------------------------------- | ----- | -----------------------





---







|JAMES E. BRUMM, New York, United States of
      America
|--------------------------------------------------------
|                                                        

|**HOLDINGS**40,246 common
      shares5,104 deferred share
      units | **POSITION ON COMMITTEES OF THE BOARD**Chairman of the Corporate Governance and Human Resources
      Committee
|---------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------
|
|
|
|
|

|GILLES CHEVALIER, Québec, Canada
|--------------------------------
|                                



|**HOLDINGS**5,539 common
      shares32,318 deferred share
      units | **POSITION ON COMMITTEES OF THE BOARD**Chairman of the Audit Committee
|---------------------------------------------------------------------- | ----------------------------------------------------------------------
|
|
|
|
|

GUY G. DUFRESNE(1), Québec,
    CanadaCORPORATE DIRECTOR SINCE JANUARY 2005
      Mr.
      Dufresne was President and CEO of La Compagnie Minière Québec Cartier, a
      producer of iron ore products from 1992 to October 2006. Mr. Dufresne
      served as Chairman of the board of directors of Cambior Inc. and served on
      its audit and corporate governance and human resources committees from
      April 1995 to November 2006. He is a director of IAMGold Corporation and
      Royal & Sun Alliance Insurance Company of Canada. He is Chairman of
      the Chamber of Maritime Commerce and was Chairman of Conseil du patronat du Québec from June
      2002 to October
      2006.

|**HOLDINGS**35,098 common
      shares16,023 deferred share
      units | **POSITION ON COMMITTEES OF THE BOARD**Member of the Audit CommitteeMember of the Special Committee for Strategic Purposes
|----------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------
|
|
|
|

PETER S. JANSON, Ontario, CanadaCORPORATE DIRECTOR SINCE JULY 2004
      Mr.
      Janson is the former Chief Executive Officer of AMEC Inc. and of ABB Inc.
      USA. He currently serves as a director of ATS Automation Tooling Systems
      Inc., Terra Industries Inc. and Teekay Shipping
      Corporation.

|**HOLDINGS**13,056 common
      shares5,104 deferred share
      units | **POSITION ON COMMITTEES OF THE BOARD**Member of the Corporate Governance and Human Resources
      CommitteeChairman of the Environment,
      Health and Safety CommitteeChairman of the
      Special Committee for Strategic Purposes
|---------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|
|
|



|
|





|******************Management
      Information
      Circular************ | **7** | ***Tembec
      Inc.***
|------------------------------------------------------------------------- | ----- | -----------------------

---

************************GORDON S.
      LACKENBAUER(1), Alberta,
      Canad*********************a***CORPORATE DIRECTOR SINCE 1973 AND CHAIRMAN SINCE JANUARY
      2005
      Mr.
      Lackenbauer was Deputy Chairman of BMO Nesbitt Burns from 1990 to 2004 and
      is currently a director of TransAlta Corporation, NAL Energy Inc. and Bell
      Globemedia Inc. He is also a member of the Board of Governors of Mount
      Royal
    College.

|**HOLDINGS** 33,756 common shares16,333 deferred
      share units | **POSITION ON COMMITTEES OF THE BOARD** Member of the Corporate Governance and Human
      Resources CommitteeMember of the Special
      Committee for Strategic Purposes
|------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|
|

****************JAMES M. LOPEZ, Ontario,
      Canad**************a**CORPORATE DIRECTOR SINCE JANUARY
      2006Mr. Lopez joined the Company in 1989
      and has been President and Chief Executive Officer of the Company since
      January 2006. Prior to his appointment on January 26, 2006, he served as
      Executive Vice President and President of the Tembec Forest Products Group
      from August 2003 to January 2006. From 1999 to August 2003, Mr. Lopez was
      Executive Vice President, Forest Resource Management Group of the Company.
      Mr. Lopez is past Chairman of the board of directors of the Ontario Forest
      Industry Association (OFIA) and of the Forest Engineering Research
      Institute of Canada (FERIC). He is Chairman of WoodWorks Canada Corp. and
      Vice Chairman of the board of directors of Forintek Canada Corp., a
      research organization involved in the Canadian wood products
      sector.

|**HOLDINGS** 84,589 common shares | ******POSITION ON COMMITTEES OF THE
      BOARD**Member of the Environment,
      Health and Safety Committee
|--------------------------------- | -------------------------------------------------------------------------------------------------------------
|
|
|

****************MARY THERESA McLEOD, Ontario,
      Canad**************a**********CORPORATE DIRECTOR SINCE JANUARY
      2003********
      Ms.
      McLeod was a part-time commissioner of the Ontario Securities Commission
      and a member of its Board of Directors from November 1999 to May 2006. At
      various times she was a member of the Ontario Securities Commissions
      Audit, Adjudicative, Compensation and Nominating and Corporate Governance
      committees. Ms. McLeod has held senior investment banking positions with
      Scotia McLeod Inc., Merrill Lynch Canada Inc., and Pitfield, MacKay, Ross
      & Company Ltd. She is currently a director and member of the Audit
      Committee and of the Corporate Governance Committee of Wescast Industries
      Inc.

|**HOLDINGS**7,768
      common shares10,196 deferred share units | **POSITION ON COMMITTEES OF THE BOARD** Member of the Audit
      CommitteeMember of the Special
      Committee for Strategic Purposes
|---------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------
|
|
|
|

****************LUC ROSSIGNOL, Québec,
      Canad**************a**********CORPORATE DIRECTOR SINCE JANUARY
      2000********
      Mr.
      Rossignol is the President of Local 233 of the Communications, Energy and
      Paper Workers
Union.

|**HOLDINGS**1,600
      common shares5,104 deferred share units | **POSITION ON COMMITTEES OF THE BOARD**Member of the Environment, Health and Safety Committee
|--------------------------------------------------------------- | ---------------------------------------------------------------------------------------------
|
|
|
|





|
|





|******************Management
      Information
      Circular************ | **8** | ***Tembec
      Inc.***
|------------------------------------------------------------------------- | ----- | -----------------------

---

************EMANUELE (LINO) SAPUTO, Québec,
      Canad*********a***CORPORATE
      DIRECTOR SINCE JANUARY 2006
      Mr. Saputo founded Saputo Inc.
      (Saputo), a dairy processor, with his parents in 1954. He became
      Chairman of the Board and President of Saputo in 1969. In 1997, following
      the initial public offering of Saputo, he was named Chairman of the Board
      and Chief Executive Officer of Saputo and remained in this position until
      March 2004, following which he remained Chairman of the
      Board.

|******HOLDINGS**16,569,960(2) common shares | **POSITION ON COMMITTEES OF THE
      BOARD****N/A******
|------------------------------------------- | --------------------------------------------------------
|
|
|

The average
age of the nominee directors is 60.

Attendance Record of Directors for
Board and Committee Meetings

The following
table summarizes for each of the directors the number of board and committee
meetings they attended since September 24, 2005.

|Directors                 |  | Board of       |  | Audit         |  | Corporate       |  | Environment, |  | Corporate    |  | Human        |  | Special            
|------------------------- |  | -------------- |  | ------------- |  | --------------- |  | ------------ |  | ------------ |  | ------------ |  | -------------------
|                          |  | Directors      |  | **Committee** |  | Governance      |  | Health and   |  | Governance   |  | Resources    |  | Committee          
|                          |  |                |  |               |  | and
      Human |  | Safety       |  | Committee(1) |  | Committee(1) |  | for
      Strategic
|                          |  |                |  |               |  | Resources       |  | Committee    |  |              |  |              |  | Purposes           
|                          |  |                |  |               |  | Committee(1)    |  |              |  |              |  |              |  |                    
|                         
|André Bérard(2)           |  | 7 of
      8   |  | n/a           |  | 4 of
      6    |  | n/a          |  | n/a          |  | n/a          |  | 9 of
      10      
|                         
|Norman M. Betts           |  | 9 of
      10  |  | 5 of
      5  |  | n/a             |  | n/a          |  | n/a          |  | 3 of
      3 |  | 14 of
      14     
|                         
|James E. Brumm(3)         |  | 10 of
      10 |  | 2 of
      2  |  | 6 of
      6    |  | n/a          |  | 3 of
      3 |  | n/a          |  | n/a                
|                         
|François Bujon de         |  | 8 of
      10  |  | n/a           |  | n/a             |  | 1 of
      2 |  | n/a          |  | 3 of
      3 |  | n/a                
|LEstang(4)               |  |                |  |               |  |                 |  |              |  |              |  |              |  |                    
|                         
|Gilles Chevalier          |  | 10 of
      10 |  | 5 of
      5  |  | n/a             |  | n/a          |  | n/a          |  | n/a          |  | n/a                
|                         
|Guy G. Dufresne(5)        |  | 8 of
      10  |  | 3 of
      3  |  | n/a             |  | 1 of
      2 |  | n/a          |  | 2 of
      3 |  | 13 of
      14     
|                         
|Peter S. Janson           |  | 10 of
      10 |  | n/a           |  | 6 of
      6    |  | 4 of
      4 |  | 3 of
      3 |  | n/a          |  | 14 of
      14     
|                         
|Gordon S. Lackenbauer     |  | 10 of
      10 |  | n/a           |  | 6 of
      6    |  | n/a          |  | 3 of
      3 |  | 3 of
      3 |  | 13 of
      14     
|                         
|James M. Lopez(6)         |  | 8 of
      8   |  | n/a           |  | n/a             |  | 2 of
      2 |  | n/a          |  | n/a          |  | n/a                
|                         
|Mary Theresa McLeod(7)    |  | 8 of
      10  |  | 4 of
      5  |  | n/a             |  | n/a          |  | 2 of
      3 |  | n/a          |  | 6 of
      7       
|                         
|Luc Rossignol             |  | 10 of
      10 |  | n/a           |  | n/a             |  | 4 of
      4 |  | n/a          |  | n/a          |  | n/a                
|                         
|Emanuele (Lino) Saputo(8) |  | 8 of
      8   |  | n/a           |  | n/a             |  | n/a          |  | n/a          |  | n/a          |  | n/a                
|                         
|Attendance Record         |  | 93.13%         |  | 96%           |  | 91.67%          |  | 80%          |  | 91.67%       |  | 91.67%       |  | 93.58%             
|                         

|(1) On January 26, 2006, the board of directors
      approved the merger of the Corporate Governance and Human Resources
      Committees into a single Committee.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) Mr. André Bérard was elected to the board of
      directors and appointed to the Corporate Governance and Human Resources
      Committee on January 26, 2006.
|(3) Mr. James E. Brumm resigned from the Audit
      Committee on January 26, 2006.                                                                                
|(4) Mr. François Bujon de lEstang was appointed
      to the Environment, Health and Safety Committee on January 26,
      2006.                                  
|(5) Mr. Guy G. Dufresne was appointed to the
      Audit Committee and resigned from the Environment, Health and Safety
      Committee on January 26, 2006.       
|(6) Mr. James M. Lopez was elected to the board
      of directors and appointed to the Environment, Health and Safety Committee
      on January 26, 2006.        
|(7) Ms. Mary Theresa McLeod was appointed to the
      Special Committee for Strategic Purposes on May 1,
    2006.                                                
|(8) Mr. Emanuele (Lino) Saputo was elected to
      the board of directors on January 26,
2006.                                                                    





|
|





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      Information
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      Inc.***
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The table
below summarizes the number of board and committee meetings held since September
24, 2005:

|Meeting Type                                     |  | Totals
|------------------------------------------------ |  | ------
|Board                                            |  | 10    
|Audit                                            |  | 5     
|Corporate Governance and Human Resources         |  | 6     
|Environment, Health and Safety                   |  | 4     
|Corporate Governance (prior to January 26, 2006) |  | 3     
|Human Resources (prior to January 26, 2006)      |  | 3     
|Special Committee for Strategic Purposes         |  | 14    
|                                                
|Total number of meetings held                    |  | 45    

Corporate
Governance

The Company's board of directors and management
consider good corporate governance to be central to the effective and efficient
operation of the Company. The Corporate Governance Policy of the Company (the
"Policy") adopted by the board of
directors defines the functions and the mandate of the board of directors in
respect of corporate governance. The board of directors has established the
following three standing committees, each with its own written mandate: the
Corporate Governance and Human Resources
Committee, the Audit
Committee and the Environment, Health
and Safety Committee. The Company's corporate governance practices
are described in Schedule "C" attached to this Management Information
Circular.

All current and proposed directors, except
Messrs. Lopez and Rossignol, qualify as independent within the meaning of
National Instrument 58-101  Disclosure of
Corporate Governance Practices and all Audit Committee members
qualify as independent within the meaning of Multilateral Instrument 52-110 
Audit Committees. Mr. James M. Lopez
(the President and Chief Executive Officer of the Company) and Mr. Luc Rossignol
(employee and President, Local 233 of the Communications, Energy and
Paperworkers Union of Canada) are not considered independent.

No shareholder of the Company has the ability to
exercise a majority of the votes for the election of the board of
directors.

The board of directors has an Audit Committee
which currently consists of Messrs. Gilles Chevalier (Chairman), Norman M.
Betts, Guy G. Dufresne and Ms. Mary Theresa McLeod. All the members of the Audit
Committee are financially literate. Messrs. Chevalier and Betts are considered
"financial experts" within the meaning of Section 407 of the Sarbanes-Oxley Act
of 2002. Information related to the Audit Committee may also be found in the
Companys Annual Information Form dated December 18, 2006.

Compensation of
DirectorsNon-management directors receive
compensation for acting as members of the board of directors and as members of
any committee of the board. Such directors receive the following annual and
attendance fees:

|**ANNUAL BOARD RETAINERS**                 
|-------------------------------------------
|                                           
|Chairman of the
      board                
|                                           
|Board
    members                          
|(excluding the Chairman of the
      Board)
|                                           
|**ANNUAL COMMITTEE RETAINERS**             
|***Audit Committee*********                
|                                           
|                                           
|                                           
|                                           





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      Information
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      Inc.***
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|********* ***Corporate Governance and Human Resources
      Committee****** ************
|----------------------------------------------------------------------------------------
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|***Environment, Health and Safety Committee***                                          
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|**MEETING ATTENDANCE
FEES******                                                         
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        

Non-management directors are reimbursed for
travel and other out-of-pocket expenses incurred in attending board or committee
meetings.

From time to time, the Company may ask a
director to attend other meetings or functions. Directors are paid $1,500 for
attending each such meeting or function.

During fiscal 2006, no ad hoc committees of the
board of directors were created. A Special Committee for Strategic Purposes was
created in fiscal 2005. This committees mandate involves considering and
advising the board of directors on matters of strategic importance to the
Company. It is still meeting from time to time to consider such matters. Members
of this committee are paid $1,500 per meeting attended in person and $1,000 for
each meeting in which they participated by telephone.

The total amount of fees paid by the Company to
its directors in respect of meetings of the board and its committees during
fiscal 2006 was $613,375.

**Former Long-Term Incentive Plan**

Prior to fiscal 2006, directors could,
twice-yearly, elect to subscribe for common shares under the stock purchase
program set forth in the Former LTIP up to an amount equal to their retainer and
attendance fees. In January and July of each year, directors were awarded
options to purchase that number of shares equal to their semi-annual retainer
and attendance fees divided by the market price of the shares multiplied by two
which vest according to the vesting schedule under the Former LTIP. Directors
who elected not to subscribe for the full amount of their semi-annual retainer
and attendance fees would lose a pro rata portion of the options granted.
Directors were not entitled to participating awards and bonuses and were not
eligible for the Long-Term Bonus in the Former LTIP. (See "Report on Executive
and Other Compensation  Long-Term Incentive Plan"). There are no longer any
share purchases or options granted under the Former LTIP.

**Deferred Share Unit Plan**

In January 2006, a Share Unit Plan for
Non-Executive Directors was approved (the DSU
Plan) intended to replace the Former LTIP regarding long term
incentive compensation for non-executive directors. The purpose of the DSU Plan
is to enhance the Companys ability to attract and retain high quality
individuals to serve as members of the board and to promote a greater alignment
of interests between non-executive members of the board and the shareholders of
the Company. The Corporate Governance and Human Resources Committee determines
directors annual entitlement to deferred share units (the DSUs). The Committee has decided that the
Chairman of the board is entitled to an annual grant equivalent to $40,000 worth
of DSUs and other non-executive directors receive annually the equivalent of
$12,500 in DSUs. Grants are issued on a semi-annual basis. Non-executive
directors may also elect to receive up to 100% of his or her annual retainer fee
and/or fees other than the annual retainer fee in the form of DSUs in lieu of
being paid in cash. The Committee may require that a percentage (up to 100%) of
all fees payable semi-annually that would otherwise be paid in cash to an
eligible director be received in the form of DSUs until such time as the
eligible director meets the ownership guideline established from time to time by
the Committee. The number of DSUs credited to a participants account is equal
to the dollar amount of the grant or fees divided by either (i) the average
market value of the Companys common shares for the twelve months immediately
preceding the applicable reference date for the fixed annual grant,
or





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      Inc.***
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---



(ii) the
average market value of the common shares for five days immediately preceding
the applicable reference date for the grant, when the director opts to have his
or her fees paid in DSUs.

Liability Protection for
Directors and OfficersThe Company has entered into
indemnification agreements with each of its directors. It also maintains
directors' and officers' liability insurance which provides coverage against
claims made against them during their term of office. The aggregate protection
under the policy is for an amount of $75 million with no deductible for
non-indemnifiable losses and deductibles of $250,000 for all other claims.
Aggregate premiums were $981,490 for the 2005 policy year.

Code of
EthicsThe board of directors of the Company has
adopted a Code of Ethics and Business Conduct which applies to directors and to
all Tembec employees, including its Chief Executive Officer and its Chief
Financial Officer. Consultants, suppliers and other individuals working with or
on behalf of Tembec are encouraged to adhere to it. The Companys Code of Ethics
and Business Conduct is available on its website at www.tembec.com and at
www.sedar.com. (See Corporate Governance Practices  Ethical Business
Conduct).

Disclosure
PolicyThe board of directors has adopted a
Disclosure Policy for the Company. This policy, which is reviewed annually,
provides guidance with respect to the Company's interaction with analysts and
the public.

Tembec Compensation
ProgramTembec's general philosophy is to pay for
performance at all levels of Tembec. As a consequence, Tembec's total
compensation for management employees is based on the achievement of certain
objectives, which include increasing shareholder value.

Specifically, the objectives of Tembec's
total compensation program are as follows:



| | 1. | to encourage employees
      to support defined corporate principles, objectives and
    priorities;
| | -- | ----------------------------------------------------------------------------------------------------
| |    |                                                                                                     
| | 2. | to
      encourage employees to become shareholders of the Company;                                 
| |    |                                                                                                     
| | 3. | to
      motivate and reward employees who contribute to increase shareholder
      value; and      
| |    |                                                                                                     
| | 4. | to retain
      key employees.                                                                      

Composition of the Corporate
Governance and Human Resources Committee

In January 2006, the Corporate Governance
Committee and the Human Resources Committee were merged into one committee,
forming the Corporate Governance and Human Resources Committee (the
"Committee"). The Committee is now composed of four members of the board
of directors: Mr. James E. Brumm, Chairman of the Committee, as well as Messrs.
André Bérard, Peter S. Janson and Gordon S. Lackenbauer, all of whom are
independent directors. Mr. Robert K. Rae ceased to be member of the Committee in
April 2006. The members of the Committee are neither officers, employees nor
former officers or employees of the Company or any of its subsidiaries. The
Committee may invite members of management and outside consultants and experts
to attend meetings to provide advice and consultation as required. The Vice
President, General Counsel and Secretary attends all meetings of the
Committee.

Report on Executive and Other
Compensation

The Committee oversees the application of the
policies, plans and compensation for all employees. The Companys general
philosophy is to pay for performance at all levels of the Company. The Committee
makes recommendations to the board of directors on compensation payable to
employees up to and including the Chief





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      Inc.***
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Executive
Officer and other senior executives and approves compensation levels and grants
for officers other than senior executives.

Compensation
 Unionized EmployeesThe majority of Tembec's
employees are covered under contractual agreements with unions representing the
employees. The agreements define rates of pay for specific responsibilities as
well as fringe benefits. The Company encourages flexibility and commitment, and
in return, where applicable, provides enhanced job security, performance based
incentive programs, and Tembec's Profit Sharing Plan. The Company also provides
an opportunity to employees to become shareholders via its Employee Stock
Purchase Plan.

Compensation 
Non-Unionized/Management Employees and Executives

The majority of Tembec's non-unionized employees
are paid a base salary plus an annual performance bonus determined by meeting
objectives set out under the Short-Term Incentive Plan.

Prior to January 2006, executives and key
employees would also be able to participate in the Company's Former LTIP. The
objective of this plan is to retain key employees and align their interests with
those of shareholders by providing incentives to create enhanced shareholder
value and encourage employees to own at least 50% of their annual salary on an
ongoing basis in common shares of the Company. Members of the board of directors
of the Company were also eligible to participate in the Former LTIP but were not
eligible for participating awards, participating bonuses or the Long-Term Bonus
(see Long-Term Incentive Plan below).

In establishing the compensation of senior
executives, the Committee refers to the average compensation levels from Hay
Group Limiteds All Industrial market. This market covers most sectors of the
economy with the exception of all Financial Organizations, Governments (at all
levels), Government Agencies, Health and Education Institutions and
Not-for-Profit Organizations and is felt to be the most representative for the
Companys activities. As of May 2005, this survey included 324
organizations.

Base
SalaryThe base salary midpoint is set at 95% of
the applicable All Industrial Average (AIA) for positions of similar
responsibility as determined from time to time by various surveys conducted by
independent professional compensation consultants. Annual salaries are then
adjusted on the basis of the individual's performance, experience and position
relative to peers in Tembec. Salary scales vary from 80% to 120% of the above
mid-point. The salary of employees who do not qualify under the Company's
incentive plans is set at the applicable median for total compensation and
adjusted as noted above.

In establishing the compensation of senior
executive positions, the Committee refers to the AIA data provided by Hay Group
Limited (the Hay Group), which is considered to be the most
representative for Tembecs activities and which surveys a total of 382
companies.

Employee Stock Purchase PlanThe Employee
Stock Purchase Plan is aimed at enabling employees to acquire an ownership
interest in the Company and to participate in its future growth. Employees can
purchase common shares of the Company up to 10% of their base salary or wage.
All contributions made by the employees to the Employee Stock Purchase Plan
shall constitute a trust fund which shall be held by a trustee. The trustee is
responsible for purchasing shares on the market. Under certain conditions and if
the shares are held for a minimum period of twelve months, participating
employees will receive a bonus in shares bought on their behalf by the trustee
on the open market equal to 25% of their total contributions.



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Short-Term Incentive PlanThe Short-Term
Incentive Plan (STIP) is designed to relate a portion of the
individual's compensation to the Company's performance via an objective-based
incentive program. The participants are compensated on corporate, business unit
and individual objectives. A bonus target established for each position is
expressed as a percentage of Salary Midpoint (AIA) and varies according to the
position of the individual, with the target being 70% of Salary Midpoint for the
Chief Executive Officer and senior executives and ranging down to 15% of Salary
Midpoint for front-line supervision level. Satisfactory performance of the
individual should result in an annual STIP pay-out equivalent to 100% of the
target. For outstanding performance, an employee could attain a maximum
potential of 200% of his target. The objectives and achievements for senior
executives under the STIP are reviewed by the Corporate Governance and Human
Resources Committee on an annual basis. Members of the board participate in the
Company's annual strategic planning meeting where corporate objectives to be
used under this plan are set.

Former
Long-Term Incentive PlanThe Former LTIP was designed
to:

| | 1. | align the interests of key
      employees with those of shareholders by participation in a stock purchase
      program and through the granting of options in order to ensure that key
      employees own at least 50% of their base salary in shares on an ongoing
      basis;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                    
| | 2. | reward key employees
      if the Company's relative performance is superior to its competitors;
      and                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                    
| | 3. | retain key
      employees.                                                                                                                                                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                    

Under the stock purchase program, participants
in the Former LTIP were granted an annual entitlement to purchase shares,
without any financial assistance from the Company, determined by multiplying the
individual's base salary by a factor applicable to the position. The factor
ranged from 0.50 for the Chief Executive Officer, down to 0.10 depending on the
level of the position. On the date of the grant of the entitlement, a key
employee was awarded options to purchase that number of shares which is equal to
the entitlement divided by the market price of the shares multiplied by two. An
option granted under the LTIP expires no later than ten years after the date on
which the option was granted. An option becomes vested and may be exercised
after 24 months following the date of grant for up to 40% of the number of
shares to which the participant is entitled, after 36 months following the date
of grant, up to another 20% of the number of shares to which the participant is
entitled, after 48 months following the date of grant, up to another 20% of the
number of shares to which the participant is entitled and, after 60 months
following the date of grant, up to the last 20% of the number of shares to which
the participant is entitled. If an optionholder retires at normal age, the
holders options vest immediately and may be exercised within five years. If an
optionholder retires earlier than normal retirement age, all of the holders
vested options may be exercised within five years and all of the holders
unvested options, at the discretion of the Committee, vest immediately and may
be exercised within five years. In case of a change of control of the Company
leading to termination of an optionholders employment, such holders options
will vest immediately and may be exercised within five years.

Options are exercisable at a price per share
equal to the weighted average closing price of the Companys common shares on
the TSX during the five trading days preceding the date of the option
grant.

As of November 30, 2006, the total number of
common shares of the Company reserved for issuance under the Former LTIP is
5,159,966, or approximately 6% of the issued and outstanding common shares of
the Company. 4,790,939 options to purchase 4,790,939 common shares representing
5.6% of the issued and outstanding common shares of the Company are outstanding
under predecessor plans as of November 30, 2006.





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Any
options granted under the Former LTIP will terminate (i) on the date of
expiration specified in the notice of grant, such date being no later than ten
years after the date the option is granted; (ii) immediately upon the
termination of the optionees employment when the employment is terminated for
cause; (iii) 90 days after the date of the termination of the optionees
employment due to his or her resignation; and (iv) 180 days after the date of
the optionees death, during which period the options may be exercised only by
the optionees legal personal representatives and only to the extent the
optionee would have been entitled to exercise the options at the time of his or
her death.

Key employees who committed to purchase
shares under an annual entitlement received a participating award and a
participating bonus and will be eligible to receive a Long-Term Bonus based on
the Company's performance compared with a sample of the return on capital
invested of companies in the Canadian forest products industry at the end of a
measurement period and based on the number of shares committed in the
subscription.

The rights of a participant pursuant to the
provisions of the Former LTIP are non-assignable. The board of directors of the
Company may, subject to approval of the TSX, amend or terminate the Former LTIP
at any time but, in such event, the rights of employees will be preserved and
maintained. The terms of the Former LTIP do not require that shareholder
approval be obtained in order for the Former LTIP to be amended. In accordance
with TSX Staff Notice 2006  0001 dated June 6, 2006, the Board is proposing
amendments to the Former LTIP to include a new amendment procedure and the
extension of the expiry date of options should such date fall within a blackout
period. See Amendments to the Former Long-Term Incentive Plan on page 5 for
more details on the proposed amendments.

Current
Long-Term Incentive Plan:The new long-term
incentive plan provides for the award of Performance Share Units (the PSUs). The purpose of the Performance Share
Unit Plan (the PSU Plan) is to
retain key employees and encourage the achievement of the Companys objectives
by key employees and to promote a greater alignment of interests between such
employees and the shareholders of the Company. The number of PSUs to be awarded
is determined by applying a factor to the Participants base salary and dividing
the result with the 12-month average month-end closing price market value of
common shares of the Company. These factors are defined in the PSU Plan as
follows:

|                                                                             
|-----------------------------------------------------------------------------
|                                                                             
|Participants                                                                 
|                                                                             
|Chief Executive Officer                                                      
|                                                                             
|Group Presidents, Executive Vice-Presidents
      and Chief Financial Officer
|                                                                             
|Corporate Vice-Presidents                                                    
|                                                                             
|Other Participants                                                           
|                                                                             

25% of the awarded PSUs vest following three
years after the effective date, provided that the participant is still an
employee of the Company. All or a portion of the remaining 75% vest after three
years following the effective date, based on actual financial performance versus
pre-determined objectives, as determined by the Committee. Following the
determination of the vesting percentage, a participant shall receive in
satisfaction of the number of vested PSUs, a cash payment determined as the
product of the number of vested PSUs and the average market value of the
Companys common shares over the last 5 trading days prior to the date of
payment. Upon receipt of a cash payment, a participant is required to use 50%
thereof to purchase common shares until he or she attains predetermined
ownership levels.



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      Information
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      Inc.***
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Key
Employee Retention PlanPrior to introducing the PSU
Plan, the Committee adopted a one-time Key Employee Retention Plan to reward and
retain a core group of executives and key employees. This plan provides for
payment of pre-determined lump sum bonuses based on increasing the Companys
market enterprise value. Market Enterprise Value is defined as the sum of market
value of equity, market value of public debt, bank indebtedness, other interest
bearing debt including proportionate share of 50% ventures, minority interest
and preferred shares; less cash on hand. A potential payment to each participant
will occur after a three-year period and a maximum lump sum amount has been
determined for each participant.

CEO
CompensationMr. James M. Lopez currently receives an
annual base salary of $850,000 as President and Chief Executive Officer of the
Company. The Committee has decided to adjust Mr. Lopezs base salary to $880,000
for the coming year.

With respect to his total compensation for
Fiscal 2006, Mr. Lopez earned a bonus of $358,505 under the short-term incentive
plan representing 50% of his target or 25% of his maximum bonus potential under
such plan.

The annual cash compensation package of the
President and Chief Executive Officer consists of an annual base salary and an
annual bonus with a target amount that is based on an anticipated level of
performance. The practice of the Committee when establishing the amount for each
element of the compensation is to align them to the median of a pertinent
reference market. This information reported by the Hay Group is based on an
analysis of compensation practices for positions similar to that of Mr. Lopez,
performed in relation to a selected group of 30 organizations in the Canadian
industrial sector. This approach is felt to be the most appropriate based on
Tembecs size and activities.

Mr. Lopezs total compensation package for
Fiscal 2006 places him at the P25 reference point for the sample organizations
found in Hays analysis.

The above report is submitted by the Corporate
Governance and Human Resources Committee which is composed of the following
members:

JAMES E.
BRUMM      ANDRÉ BÉRARD     
PETER S. JANSON      GORDON S.
LACKENBAUER

Executive
CompensationThe following summary compensation table
shows certain compensation components earned under the above programs by the
Chief Executive Officer, Chief Financial Officer and the three other most highly
compensated executive officers of the Company and the former Chief Executive
Officer of the Company ("Named Executive
Officers") for services rendered during the financial years ended
September 30, 2006, September 24, 2005 and September 25, 2004. This information
includes the dollar value of base salaries and bonus awards, the number of
shares covered by options and certain other compensation.





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|SUMMARY
      COMPENSATION TABLE   
|-----------------------------------
|                                   
|                                   
|                                   
|                                   
|                                   
|Name and
      Principal           
|Position                           
|                                   
|James M.
      Lopez               
|President and Chief
      Executive
|Officer                            
|                                   
|Terrence P.
      Kavanagh         
|Executive
      Vice-President,    
|Chief Operating
      Officer      
|                                   
|Michel
      Dumas                 
|Executive
      Vice-President,    
|Finance and
      Chief            
|Financial
      Officer            
|                                   
|John
      Valley(5)               
|Executive Vice
      President,    
|Business Development
      and     
|Corporate
      Affairs            
|                                   
|Yvon
      Pelletier               
|Executive Vice
      President,    
|President Pulp
      Group         
|                                   
|Frank A.
      Dottori             
|Former President and
      Chief   
|Executive
      Officer            

|(1) | Amounts shown in this column
      include the taxable benefit from loans by Tembec which were granted for
      relocation purposes and/or for the purchase of Company shares and the
      benefit from the exercise of options and/or the sale of shares related to
      such options.                                                                                                                                                                                                                                                                                                      
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(2) | Amounts shown in this column
      include the participating awards used by the trustee to purchase shares
      and the participating bonuses in cash granted under the Former LTIP. See
      "Compensation  Non-Unionized / Management Employees and Executives 
      Former Long-Term Incentive Plan".                                                                                                                                                                                                                                                                                   
|   
|(3) | Amounts shown in this column
      include the Company's contribution under the Employee Stock Purchase Plan.
      The executive officers of the Company participate in this plan on the same
      basis as all other employees of the Company. Under this plan, employees
      can purchase common shares of the Company up to 10% of their base salary
      or wage. The Company contributes 25% of the amount invested by the
      employee if the shares are held for a minimum period of twelve months.
      Purchases of common shares under this plan occur on the open
    market.
|   
|(4) | Amounts shown in this column also
      include Tembec's contributions under the defined contribution pension plan
      which were made for all the Named Executive Officers.                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(5) | Mr. Valley has been engaged as
      Executive Vice-President, Business Development and Corporate Affairs of
      the Company since October 15, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(6) | $442,292 of this amount
      represents the salary earned by Mr. Dottori as President and Chief
      Executive Officer from October 1, 2005 to January 26, 2006 and as employee
      from January 26, 2006 to March 14, 2006. $270,833 of this amount
      represents fees received by Mr. Dottori as a consultant from March 15,
      2006 to September 30, 2006.                                                                                                                                                                                                                         
|   
|(7) | $21,000 of this amount represents
      the estimated taxable benefit to Mr. Dottori in relation to his use of a
      residence owned by Tembec Industries Inc. for the 2006 fiscal year,
      $300,000 of this amount represents a special retirement bonus, $2,306,131
      of this amount represents a payment under the Supplementary Pension Plan
      and $25,183 of this amount represents pension payments received by Mr.
      Dottori during the 2006 fiscal year.                                                                                                               
|   
|(8) | This amount represents the
      estimated taxable benefit to Mr. Dottori in relation to his use of a
      residence owned by Tembec Industries Inc. for the 2005 fiscal
    year.                                                                                                                                                                                                                                                                                                                                                                                                             
|   



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      Information
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      Inc.***
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SECURITIES AUTHORIZED FOR
ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table sets out information as of
September 30, 2006 with respect to the Former LTIP.

|              |  | Number of securities to be |  | Weighted-average     |  | Number of securities
remaining                 
|------------- |  | -------------------------- |  | -------------------- |  | -----------------------------------------------
|              |  | issued upon exercise of    |  | exercise price of    |  | available for future issuance
    under        
|              |  | outstanding options,       |  | outstanding options, |  | equity compensation plans
    (excluding       
|Plan Category |  | warrants and rights        |  | warrants and rights  |  | securities reflected in the first
      column)
|             
|Former LTIP   |  | 4,829,239                  |  | $7.35                |  | 330,727                                        

OPTION GRANTS DURING THE MOST
RECENTLY COMPLETED FINANCIAL YEAR

The
following table summarizes the option grants made to the Named Executive
Officers during the financial year ended September 30, 2006 under the Former
LTIP.

|Name                                                |  | Securities |  | %
      of Total |  | Exercise or  |  | Market Value of |  | Performance       |  | Expiration Date        
|--------------------------------------------------- |  | ---------- |  | ---------------- |  | ------------ |  | --------------- |  | ----------------- |  | -----------------------
|                                                    |  | Under      |  | Options          |  | Base Price   |  | Securities      |  | or
      Other(1) |  |                        
|                                                    |  | Options    |  | Granted to       |  | ($/Security) |  | Underlying      |  | Period Until      |  |                        
|                                                    |  | Granted    |  | Employees in     |  |              |  | Option on the   |  | Maturation        |  |                        
|                                                    |  | (#)        |  | Financial        |  |              |  | Date of Grant   |  | or
      Payout   |  |                        
|                                                    |  |            |  | Year             |  |              |  | ($/Security)    |  |                   |  |                        
|                                                    |  |            |  |                  |  |              |  |                 |  |                   |  |                        
|James M. Lopez                                      |  | 182,160    |  | 17.0%            |  | 2.1300       |  | 2.1300          |  | 10
      years    |  | November
      24, 2015
|                                                   
|Michel Dumas                                        |  | 86,854     |  | 8.1%             |  | 2.1300       |  | 2.1300          |  | 10
      years    |  | November
      24, 2015
|                                                    |  | 50,000     |  | 4.7%             |  | 0.9700       |  | 0.9700          |  | 10
      years    |  | January
      25, 2016 
|                                                   
|John Valley                                         |  | 50,000     |  | 4.7%             |  | 2.4000       |  | 2.4000          |  | 10
      years    |  | October
      17, 2015 
|                                                    |  | 82,160     |  | 7.6%             |  | 2.1300       |  | 2.1300          |  | 10
      years    |  | November
      24, 2015
|                                                    |  | 50,000     |  | 4.7%             |  | 0.9700       |  | 0.9700          |  | 10
      years    |  | January
      25, 2016 
|                                                   
|Yvon Pelletier                                      |  | 6,000      |  | 0.6%             |  | 0.9700       |  | 0.9700          |  | 10
      years    |  | January
      25, 2016 
|                                                    |  |            |  |                  |  |              |  |                 |  |                   |  |                        
|                                                   
|(1) See description of the Former LTIP
      above. |  |            |  |                  |  |              |  |                

The securities under options granted are common
shares of the Company.

The following table summarizes for each of the
Named Executive Officers, the number of options exercised in the financial year
ended September 30, 2006, the aggregate value realized upon exercise and the
total number of unexercised options held at September 30, 2006. The value
realized upon exercise is the difference between the market value of the common
shares on the exercise date and the exercise or base price of the options. The
value of unexercised in-the-money options at financial year-end is the
difference between their exercise price and $1.39 per share, which was the
market value of the common share on September 30, 2006. These options have not
been and, in some cases, may not be exercised. Actual gains on exercise, if any,
will depend on the value of the Company's common shares on the date of
exercise.





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      Information
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      Inc.***
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AGGREGATED OPTION EXERCISES
DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR AND FINANCIAL YEAR-END OPTION
VALUES

|                     |  | Securities  |  |                |  |                     |  |                      |  | Value of Unexercised     
|-------------------- |  | ----------- |  | -------------- |  | ------------------- |  | -------------------- |  | -------------------------
|                     |  | Acquired On |  | Aggregate      |  | Unexercised Options |  | in-the-Money Options
|                     |  | Exercise    |  | Value Realized |  | at
      FY-End     |  | at
      FY-End     
|                     |  | (#)         |  | ($)            |  | (#)                 |  | ($)                 
|                     |  |             |  |                |  | Exercisable         |  | Unexercisable        |  | Exercisable Unexercisable
|Frank A. Dottori     |  | 0           |  | 0              |  | 444,526             |  | 362,104              |  | 0                        
|Terrence P. Kavanagh |  | 0           |  | 0              |  | 102,900             |  | 149,892              |  | 0                        
|Michel Dumas         |  | 0           |  | 0              |  | 106,531             |  | 253,730              |  | 0                        
|James M. Lopez       |  | 0           |  | 0              |  | 66,731              |  | 281,054              |  | 0                        
|John Valley          |  | 0           |  | 0              |  | 0                   |  | 182,160              |  | 0                        
|Yvon Pelletier       |  | 0           |  | 0              |  | 37,000              |  | 22,531               |  | 0                        

RETIREMENT PLANS
Retirement Plans  Unionized
EmployeesThe purpose of retirement plans is to
provide an adequate income replacement upon retirement. Tembec provides certain
benefits through basic pension plans. The basic plans for unionized employees
will vary from defined benefit plans to defined contribution plans to RRSPs,
pursuant to the various labour agreements.

Retirement Plans  Management
Employees and Executives

The Company provides certain benefits through
basic pension plans, as well as supplemental pension benefits for certain
individuals.

Base
PlanFor services prior to January 1, 2000, the
basic plan for management employees and executives is a defined benefit plan
which provides for a benefit of 1.0% of the average of the best consecutive five
years of earnings (base salary and bonus) of the last ten years, multiplied by
the years of credited service up to December 31, 1999.

For services after January 1, 2000, the basic
plan for management employees and executives is a defined contribution plan
which provides for a contribution by Tembec of 6% of the employee's base salary
and bonus. Individual accounts are set up for each employee who can direct their
investments amongst a selection of mutual funds and a 5-year GIC. A group RRSP
is also available to allow employees to save additional amounts for their
retirement.

Earnings under this plan are limited to $100,000
for executives participating in the Supplementary Pension Plan. The cap of
$100,000 in the base plan for Mr. Dottori and Mr. Kavanagh was introduced in
1990.

Supplementary Pension
PlanA Supplementary Pension Plan is in place for
the executives who participated in this plan prior to January 1, 2000. The plan
provides coverage for earnings in excess of $100,000 per year. The benefit of
the Supplementary Pension Plan is fixed at 1.6% of the average of the best
consecutive five years of earnings (base salary plus bonus earned) of the last
ten years, in excess of the base salary as defined in the basic plan above,
multiplied by the years of credited service.





|******************Management
      Information
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      Inc.***
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The following tables show the estimated annual
benefits payable to participants under the retirement plans (base plan) and the
Tembec Supplementary Pension Plan upon retirement after a certain number of
credited years of service.

|PLAN TABLE                                                                                                                                                    
|--------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                              
|Remuneration                                                                                                                                                  
|($)                                                                                                                                                           
|                                                                                                                                                              
|Base Plan                                                                                                                                                     
|$100,000+                                                                                                                                                     
|Supplementary Plan                                                                                                                                            
|$150,000                                                                                                                                                      
|$175,000                                                                                                                                                      
|$200,000                                                                                                                                                      
|$250,000                                                                                                                                                      
|$300,000                                                                                                                                                      
|$400,000                                                                                                                                                      
|$500,000                                                                                                                                                      
|$600,000                                                                                                                                                      
|$700,000                                                                                                                                                      
|$800,000                                                                                                                                                      
|$900,000                                                                                                                                                      
|$1,000,000                                                                                                                                                    
|$1,100,000                                                                                                                                                    
|$1,200,000                                                                                                                                                    
|$1,300,000                                                                                                                                                    
|$1,400,000                                                                                                                                                    
|                                                                                                                                                              
|$1,500,000                                                                                                                                                    
|                                                                                                                                                              
|(1) Under the
      Plans, the following Named Executive Officers have earned the following
      number of credited years of service on September 30,
  2006.
|                                                                                                                                                              





|******************Management
      Information
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      Inc.***
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The benefits listed in the table above are not
subject to any deduction for social security or other offset amounts such as
Canadian Pension Plan or Québec Pension Plan amounts.

|                                                                                              |  | Supplementary Plan Years |  | Basic Plan Years
|--------------------------------------------------------------------------------------------- |  | ------------------------ |  | ----------------
|                                                                                             
|F.A. DOTTORI                                                                                  |  | 32.4                     |  | 26.1            
|T.P. KAVANAGH                                                                                 |  | 31.2                     |  | 25.4            
|M. DUMAS*                                                                                     |  | 20.1                     |  | 14.3            
|J. M. LOPEZ                                                                                   |  | 15.8                     |  | 10.0            
|Y. PELLETIER                                                                                  |  | 24.1                     |  | 18.3            
|J. VALLEY (Defined contribution plan
      only)                                              |  | n/a                      |  | n/a             
|                                                                                              |  |                          |  |                 
|* Mr. Dumas service includes years with a
      subsidiary of the Company in a similar plan. |  |                          |  |                 

**Indebtedness**

The aggregate indebtedness to Tembec as at
November 14, 2006 of all executive officers, directors, employees and former
executive officers, directors and employees entered into regarding the purchase
of securities of the Company and all other indebtedness, excluding routine
indebtedness (as defined under applicable securities laws), was approximately
$4,400,000. The table below represents the approximate aggregate indebtedness,
excluding routine indebtedness, outstanding as at November 18, 2006 entered into
in connection with a purchase of securities and all other
indebtedness.

|AGGREGATE INDEBTEDNESS (MILLION
  $)                                                        
|--------------------------------------------------------------------------------------------
|                                                                                            
|                                                                                            
|Purpose                                                                                     
|                                                                                            
|Share Purchase                                                                              
|Other                                                                                       
|                                                                                            
|                                                                                            
|                                                                                            
|The
      table below represents amounts outstanding on loans made prior to July
      2002.
|                                                                                            
|                                                                                            
|TABLE OF INDEBTEDNESS OF DIRECTORS AND EXECUTIVE
      OFFICERS                             
|UNDER SECURITIES PURCHASE AND OTHER
      PROGRAMS                                          
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Name and Principal Position                                                                 
|                                                                                            
|Securities Purchase Programs                                                                
|JAMES M. LOPEZ                                                                              
|President and Chief Executive
    Officer                                                   
|ÉRIC BERGERON                                                                               
|Vice-President, Human Resources                                                             
|PAOLO DOTTORI                                                                               
|Vice-President, Environment, Energy
    and                                                 
|Technology                                                                                  
|MICHEL DUMAS                                                                                
|Executive Vice-President, Finance                                                           
|and Chief Financial Officer                                                                 
|CHARLES GAGNON                                                                              
|Former Vice-President, Corporate
      Culture                                              
|and Social Responsibility                                                                   
|THOMAS MCANDREW GALE                                                                        
|Executive Vice-President, President                                                         
|Chemical Group                                                                              





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      Information
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      Inc.***
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|                                                 |  |                     |  |                    |  |                   |  |                      |  |                      |  | Amount     
|------------------------------------------------ |  | ------------------- |  | ------------------ |  | ----------------- |  | -------------------- |  | -------------------- |  | -----------
|                                                 |  |                     |  | Largest Amount     |  | Amount            |  | Financially Assisted |  |                      |  | Forgiven   
|                                                 |  | Involvement         |  | Outstanding During |  | Outstanding as at |  | Securities Purchases |  |                      |  | During     
|                                                 |  | of
      Company    |  | 2006 Fiscal Year   |  | November 2, 2006  |  | During 2006 Fiscal   |  | Security for         |  | 2006 Fiscal
|Name and Principal Position                      |  | or
      Subsidiary |  | ($)                |  | ($)               |  | Year                 |  | Indebtedness         |  | Year       
|                                                
|TERRENCE P.
      KAVANAGH                       |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Executive Vice-President
      and               |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Chief Operating
      Officer                    |  | Lender              |  | 350,071.00         |  | 324,935.70        |  | N/A                  |  | 28,150 common shares |  | N/A        
|STEPHEN
    NORRIS                               |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Treasurer                                        |  | Lender              |  | 52,813.10          |  | 49,067.70         |  | N/A                  |  | 4,925 common shares  |  | N/A        
|YVES
    OUELLET                                 |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Vice-President,
      Administration             |  | Lender              |  | 86,286.00          |  | 80,678.10         |  | N/A                  |  | 7,450 common shares  |  | N/A        
|MAHENDRA A.
    PATEL                            |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Vice-President,
      Engineering, Purchasing    |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|and
    Services                                 |  | Lender              |  | 89,580.00          |  | 84,613.50         |  | N/A                  |  | 6,750 common shares  |  | N/A        
|YVON
    PELLETIER                               |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Executive Vice-President,
      President Pulp   |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Group                                            |  | Lender              |  | 43,456.00          |  | 38,400.00         |  | N/A                  |  | 3,500 common shares  |  | N/A        
|JACQUES
    ROCHON                               |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Vice-President,
      Information Technology     |  | Lender              |  | 47,637.00          |  | 43,173.00         |  | N/A                  |  | 3,750 common shares  |  | N/A        
|JACQUES
    ROCRAY                               |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Former Vice-President,
      Environment and     |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Technology                                       |  | Lender              |  | 94,260.60          |  | 90,151.80         |  | N/A                  |  | 7,450 common shares  |  | N/A        
|DENNIS
    ROUNSVILLE                            |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Executive Vice-President,
      President Forest |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Products
    Group                               |  | Lender              |  | 10,199.00          |  | 9,179.10          |  | N/A                  |  | 700 common shares    |  | N/A        
|JEAN-LOUIS
    TÉTRAULT                          |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Vice-President, Insurance
      and Risk         |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Management                                       |  | Lender              |  | 82,002.00          |  | 77,538.00         |  | N/A                  |  | 7,000 common shares  |  | N/A        
|RICHARD
    TREMBLAY                             |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Corporate
      Controller                       |  | Lender              |  | 61,370.00          |  | 56,806.95         |  | N/A                  |  | 5,175 common shares  |  | N/A        
|MEL
    ZANGWILL                                 |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Senior Vice-President,
      President           |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Paperboard
    Group                             |  | Lender              |  | 104,620.00         |  | 98,700.00         |  | N/A                  |  | 11,000 common shares |  | N/A        
|Other Programs                                   |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|ÉRIC
    BERGERON                                |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Vice-President, Human
      Resources            |  | Lender              |  | 13,666.00          |  | 12,222.00         |  | N/A                  |  | N/A                  |  | N/A        
|TERRENCE P.
      KAVANAGH                       |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Executive Vice-President
      and               |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Chief Operating
      Officer                    |  | Lender              |  | 214,167.00         |  | 208,750.00        |  | N/A                  |  | N/A                  |  | N/A        
|YVES
    OUELLET                                 |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Vice-President,
      Administration             |  | Lender              |  | 1,749.00           |  | 666.00            |  | N/A                  |  | N/A                  |  | N/A        
|YVON
    PELLETIER                               |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Executive Vice-President,
      President Pulp   |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Group                                            |  | Lender              |  | 68,922.00          |  | 68,922.00         |  | N/A                  |  | N/A                  |  | N/A        
|RICHARD
    TREMBLAY                             |  |                     |  |                    |  |                   |  |                      |  |                      |  |            
|Corporate
      Controller                       |  | Lender              |  | 456.00             |  | 0.00              |  | N/A                  |  | N/A                  |  | N/A        

The loans granted by Tembec to the persons named
above to purchase shares of the Company were made for a term of ten years
bearing an interest rate determined by the Human Resources Committee, one of two
predecessor committees to the Corporate Governance and Human Resources
Committee. The loans granted by Tembec under other programs relate to home
purchases and are not interest-bearing, except for the home purchase loan made
to Yvon Pelletier in the amount of $68,922.00 which bears interest at an annual
rate of 5.3% . All loans were made prior to July 2002. Directors and executive
officers are no longer entitled to be granted loans in connection with a
purchase of securities.

Interest of Informed Persons in
Material TransactionsTembec completed the sale of
its oriented strandboard (OSB) business located in Saint-Georges-de-Champlain,
Quebec to Jolina Capital Inc., on February 27, 2006, for total consideration of
$98 million, with $88 million payable at closing, and the balance being payable
in the form of a $10 million interest-bearing note, repayable in equal annual
instalments over a five-year period. As a result of this transaction, the
Company recorded a gain of $63.5 million in the quarter ending March 25, 2006
with an after tax effect of $47.2 million or $0.55 per share. Jolina Capital
Inc. is a company controlled by Mr. Emanuele (Lino) Saputo, a significant
shareholder and current director of Tembec.



|******************Management
      Information
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      Inc.***
|------------------------------------------------------------------------- | ------ | -----------------------

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Termination of Employment,
Change in Responsibilities and Employment Contracts

The Company has employment contracts in force
with each of the officers listed under the Table of Indebtedness above and
Antonio Fratianni, except for Jean-Louis Tétrault, Charles Gagnon and Jacques
Rocray.

Pursuant to these employment agreements, in the
event of a substantial change to the essential terms of the employees contract
resulting from a sale or lease of all or substantially all of the Companys
assets, the amalgamation, consolidation or merger of the Company, or the
Companys insolvency (the Substantial Change), each employee, other
than Mr. James M. Lopez, shall be entitled to the payment of the equivalent of
24 months of salary as well as monetary compensation for all benefits that would
otherwise be paid for the two years following the termination of his employment.
In similar circumstances, Mr. James M. Lopez shall be entitled to the payment of
the equivalent of 30 months of salary as well as monetary compensation for all
benefits that would otherwise be paid for the 30 months following termination of
his employment.

Performance
GraphThe following performance graph shows the
yearly change in the cumulative total shareholder return on the Company's common
shares compared with the S&P/TSX Composite Index and the S&P/TSX
Canadian Materials Index over the five-year period ended September 30,
2006.

The year-end values of each investment are based
on share appreciation plus dividends paid in cash, with the dividends reinvested
on the date they were paid. The calculation excludes trading commissions and
taxes. Total shareholder returns from each investment, whether measured in
dollars or percentage terms, can be calculated from the year-end investment
values in the graph below.



| | Notes:
| | ------
| | 1.    
| | 2.    
| | 2.    
| | 3.    





|******************Management
      Information
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      Inc.***
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Audit Committee
InformationInformation required by Schedule 52-110F1 of
Multilateral Instrument 52-110 relating to the Audit Committee is available in
the Companys Annual Information Form for the fiscal year ended September 30,
2006. A copy of the Companys Annual Information Form is available on SEDAR
(www.sedar.com) or can be obtained upon request to the Secretary of the Company
at 800 René-Lévesque Blvd. West, Suite 1050, Montreal, Quebec, H3B 1X9
(facsimile: (514) 871-1980).

Appointment and Remuneration of
AuditorsKPMG LLP, chartered accountants, are
currently the auditors of the Company. The board of directors of the Company, on
the recommendation of its Audit Committee, proposes that KPMG LLP be
reappointed as auditors of the Company.

It is the intention of the persons named in the
enclosed form of proxy to vote the shares represented thereby for the
appointment as auditors of the Company of the firm KPMG LLP, at a remuneration
to be fixed by the board of directors. Except
where the authority to vote in favour of the appointment of auditors is
withheld, the persons whose names are printed on the form of proxy or voting
instructions card intend to vote FOR the appointment of KPMG LLP, chartered
accountants, as auditors of the Company and to vote FOR authorizing the Board of
Directors to determine their remuneration.

The following table shows fees paid to KPMG LLP
in Canadian dollars in the past two fiscal years for various services provided
to the Company and its subsidiaries:

Year Ended
    
    Year EndedSeptember 24, 2005
    
    September 30, 2006KPMGAudit Fees
    
    $
    
    1,100,000
    
    $
    
    2,015,000Audit-Related Fees
    
    $
    
    335,000
    
    $
    
    407,000Tax Fees
    
    $
    
    223,000
    
    $
    
    264,000Other Fees
    
    $
    
    37,000
    
    $
    
    17,000Total
    
    $
    
    1,695,000
    
    $
    
    2,703,000


Audit
Fees

These fees include professional services
rendered by the external auditors for statutory audits of the annual financial
statements and for other audits.

Audit-Related Fees

These fees include professional services that
reasonably relate to the performance of the audit or review of Tembecs
financial statements, including audit of the pension plans.

Tax
FeesThese fees include professional services for
tax compliance, tax advice and tax planning.

Other
FeesThe fees include the total fees paid to the
auditors for all services other than those presented in the categories of audit
fees, audit related fees and tax fees, including the consultation services for
the diligent audit for the purposes of acquisition, expatriates fees and certain
filings.





|******************Management
      Information
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      Inc.***
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Other Matters

Unless otherwise specified, the information
contained herein is given as of November 30, 2006. The management knows of no
matters which will come before the meeting other than the matters referred to in
the notice of meeting. If any amendments or new matters are submitted to the
meeting, the accompanying proxy instrument will be voted on such amendments or
new matters in accordance with the best judgment of the person voting
it.

Additional
InformationFinancial information is provided
in the Companys comparative financial statements and managements discussion
and analysis for its most recently completed financial year. Copies of the
Companys latest annual information form and annual report, including audited
financial statements and managements discussion and analysis, may be obtained
on request from the Secretary of the Company at 800 René-Lévesque Blvd. West,
Suite 1050, Montreal, Quebec, H3B 1X9 (facsimile: (514) 871-1980). Additional
information relating to the Company is available on SEDAR at
www.sedar.com.

Montréal, Québec,
December 12, 2006.

TONY FRATIANNIVice President, General Counsel and
Secretary



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SCHEDULE A

RESOLUTION AND TEXT OF NEW
BY-LAW NO. 2006-1



Enactment of new By-Law No.
2006-1**WHEREAS**
it is deemed expedient and in the best interest of the Company to repeal and
replace the current by-laws of the Company; and

**WHEREAS**it is deemed
expedient and in the best interest of the Company for the shareholders to
confirm the repeal of the current by-laws and the adoption of new By-Law No.
2006-1.

BE IT
RESOLVED:**THAT**the repeal of the current by-laws of the Company and the adoption of
By-Law No. 2006-1, as approved by the directors on September 28, 2006, be hereby
confirmed and approved.







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TEMBEC INC. (the
Company)BY-LAW
NO. 2006-1

GENERAL BY-LAWS OF THE
COMPANY

****

****

****

****

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******

******

******

******

******



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TEMBEC INC. (the
Company)BY-LAW
NO. 2006-1 GENERAL BY-LAWS OF
THE COMPANY

|1.                                                                                                                                                                                                                                                                                                         | INTERPRETATION                                                                                                                                                                                                                                    
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                          
|1.1                                                                                                                                                                                                                                                                                                        | **Definitions**Unless there exists an
      express provision which contradicts the following definitions or unless
      the context otherwise requires, the expression:                                                                         
|                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                           | Act designates the
      Companies Act, L.R.Q. 1977, c. C-38, as amended by An Act to
      Amend the Companies Act and Other Legislation, L.Q. 1979, c. 31, and
      by any subsequent amendment, including any act that may replace
      it;
|                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                           | articles designates the
      articles of the Company, including any amendment to the said
      articles;                                                                                                                                      
|                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                           | Board or Board of
      Directors designates all the directors of the
    Company;                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                           | by-laws designates the
      present by-laws as well as any other by-law actually in force and includes
      any amendment to the said by-laws;                                                                                                
|                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                           | directors designates the
      Board of Directors and includes a single director;                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                           | officer designates the
      Chairman of the Board, the President, the Executive Vice-President(s), the
      Secretary and the Treasurer or such officers as the Board of Directors may
      by resolution determine.                         
|                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                           | Save as aforesaid, words and
      expressions defined in the Act have the same meaning when used herein.
      Where the context so requires, words importing the singular number include
      the plural and vice versa.                       
|                                                                                                                                                                                                                                                                                                          
|1.2                                                                                                                                                                                                                                                                                                        | Head
office                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                   
|The head
      office of the Company is situated in judicial district of the Province of
      Quebec as shown in the articles of the Company. The directors may, by
      resolution, change the address of the head office of the Company, within
      the judicial district indicated in its articles.
|                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                   
|**1.3**                                                                                                                                                                                                                                                                                                    | **Fiscal
    year**                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                          
|The fiscal
      year of the Company shall terminate on the last Saturday of September in
      each year or on such other date as the directors may from time to time by
      resolution determine.                                                                                                     

|2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | DIRECTORS        
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2.1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Number and quorum
|Subject to
      the provisions of the Act, the Board of Directors shall be entitled from
      time to time, to fix by resolution the number of directors within the
      minimum and maximum numbers indicated in the articles of the Company. The
      directors shall determine the quorum for the meetings of the Board of
      Directors, but until otherwise determined, simple majority of the
      directors in office constitutes a quorum, provided that, after the
      commencement of the meeting, one-third (1/3) of the number of directors
      shall constitute a quorum for the transaction of business at the meeting.
      If there is no quorum at a meeting, a majority of the directors present
      may adjourn the meeting to a fixed time and place, but no other business
      may be transacted.







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|2.2                                                                                                                                       |  | Qualifications                                                                                                                
|----------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                         
|                                                                                                                                          |  | A director is required to hold shares, other securities of the
      Company or share units either directly or
    indirectly.
|The precise number of shares,
      other securities or share units required to be held by a director shall be
      determined by the   
|Board of Directors from time to
      time. A director is not required to be a resident of Canada or of the
      Province of Quebec.    
|Any individual may be a director
      of the Company, with the exception of the following
      individuals:                            
|                                                                                                                                         
|                                                                                                                                          |  | a)                                                                                                                            
|                                                                                                                                          |  | b)                                                                                                                            
|                                                                                                                                          |  |                                                                                                                               
|                                                                                                                                          |  | c)                                                                                                                            
|                                                                                                                                         
|2.3                                                                                                                                       |  | Powers                                                                                                                        
|                                                                                                                                         
|                                                                                                                                          |  | The Board of Directors administers the affairs of the Company in
      all things and makes or causes to be made for          
|the Company, in its name, any
      contract which the Company may lawfully enter into and generally exercises
      all such other      
|powers and do all such other
      acts and things as the Company is by its articles or otherwise entitled to
      exercise and do.     
|                                                                                                                                         
|                                                                                                                                          |  | Subject to applicable law and the delegation of authority to
      officers of the Company, the Board of Directors
  is       
|expressly empowered to purchase,
      lease or otherwise acquire, alienate, sell, exchange or otherwise dispose
      of shares,        
|stocks, rights, warrants,
      options, bonds, debentures and other securities, lands, buildings, patents
      and any and all other   
|property, moveable or
      immoveable, real or personal, or any right or interest therein for such
      consideration and upon such    
|terms and conditions as the
      Board of Directors may deem advisable.                                                                 
|                                                                                                                                         
|2.4                                                                                                                                       |  | Election and term of
  office                                                                                                 
|                                                                                                                                         
|                                                                                                                                          |  | Unless the articles of the Company confer upon the holders of a
      category or a series of shares the exclusive
  right    
|to elect one (1) or more
      directors, in which case, the provisions of the articles of the Company
      prevail, each director shall
|be elected by a majority of
      votes cast at the annual meeting of shareholders. A vote by ballot shall
      not be necessary for    
|the election of the directors of
      the Company, unless it is required by someone present and entitled to vote
      at the meeting at
|which such election takes place.
      Outgoing directors shall be eligible for re-election if otherwise
      qualified. An outgoing    
|director shall retain office
      until the dissolution or adjournment of the meeting at which his or her
      successor is elected.   
|                                                                                                                                         
|                                                                                                                                          |  | Subject to the following, the directors shall hold office from the
      date of the meeting at which they are elected or     
|appointed until the close of the
      following annual meeting of the shareholders at which an election of
      directors takes place  
|or until his or her office is
      vacated. So long as a quorum of directors remains in office, any vacancies
      occurring in the    
|Board of Directors may be
      filled, for the remainder of the term, by the directors, from among
      qualified persons.             
|                                                                                                                                         
|2.5                                                                                                                                       |  | Meetings of directors                                                                                                         
|                                                                                                                                         
|                                                                                                                                          |  | The Board of Directors shall, without notice, meet as soon as
      practicable after the annual meeting of
  shareholders    
|to elect a Chairman of the
      Board, the President of the Company and all other officers of the Company,
      as well as to          
|transact all other business as
      deemed necessary. Meetings of the Board of Directors may be held at such
      time and place as    
|the directors may from time to
      time by resolution decide. Meetings may be held at any time without formal
      notice being       
|given if all the directors are
      present, or if a quorum is present and those directors who are absent have
      signified either   
|before, during or after the
      meeting of directors, their consent in writing, by any electronic or other
      communication         
|facilities, to the holding of a
      meeting in their absence, and any resolution passed, or proceeding had, or
      action taken at   
|such meeting shall be as valid
      and effectual as if it had been passed at or taken at a meeting duly
      called and constituted.  
|                                                                                                                                         
|2.6                                                                                                                                       |  | Participation by communication
      facilities                                                                               
|                                                                                                                                         
|                                                                                                                                          |  | The directors may participate at a meeting of the Board of
      Directors by means of telephone or other means
of            
|communication which would enable
      all persons participating at the meeting to hear each other. The directors
      who              
|participate at a meeting by such
      means are deemed to be
present.                                                                   





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|2.7                                                                                                                                        |  | Notice of meeting of the
  directors                                                                                            
|------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                          
|                                                                                                                                           |  | Meetings of the
      Board of Directors may be called at any time by the Chairman of the Board
      or the Secretary on       
|the direction of the
      Chairman of the Board or any two (2) directors by mail, facsimile, or by
      any electronic or other         
|communications
      facilities. Notice of a time and place of each meeting of the Board shall
      be given to each director at least   
|forty-eight (48)
      hours before the meeting. A notice of the meeting of the Board need not
      specify the business to be           
|transacted at the
      meeting except as may be required by the Act. When, in the opinion of the
      Chairman of the Board or any      
|two (2) directors,
      the calling of a meeting of the Board of Directors is a matter of urgency,
      he, she or they may call such   
|meeting by
      telephone, electronic mail or facsimile at least twenty-four (24) hours
      before the said meeting. Such notice
    is
|deemed sufficient,
      as to the validity of such
meeting.                                                                              
|                                                                                                                                          
|                                                                                                                                           |  | The accidental
      failure to give notice of a meeting of the Board to a director or any
      error in such notice shall not 
|invalidate any
      action taken at the meeting. It shall not be necessary to give notice of
      the first meeting of the Board to
  be
|held following the
      election of directors at a meeting of the shareholders if a quorum is
      present at the Board meeting.        
|                                                                                                                                          
|2.8                                                                                                                                        |  | Adjournment of meetings                                                                                                         
|                                                                                                                                          
|                                                                                                                                           |  | The chairman of the
      meeting of the Board of Directors may, with the consent of a majority of
      the directors          
|present, adjourn any
      meeting to another date and place. The reconvening of any meeting so
      adjourned may take place            
|without formal
      notice, provided a quorum is attained. If a quorum of directors exists at
      the adjourned meeting, the           
|directors may hold
      the meeting in conformity with the modalities established before its
      adjournment. The directors            
|constituting a
      quorum at the meeting so reconvened need not be the same persons who were
      present at the original              
|meeting. If a quorum
      of directors does not exist at the commencement of the reconvened meeting,
      the meeting is deemed         
|to have terminated
      at the adjournment of the original
      meeting.                                                                
|                                                                                                                                          
|2.9                                                                                                                                        |  | Chairman of the meetings                                                                                                        
|                                                                                                                                          
|                                                                                                                                           |  | The Chairman of the
      Board shall preside at all meetings of the Board of Directors. If there is
      no Chairman of the   
|Board or if he or
      she is absent, the meeting shall be chaired by any director chosen by the
      majority of the members of the    
|Board of Directors
      in attendance.                                                                                                   
|                                                                                                                                          
|2.10 Secretary of the
      meetings                                                                                                      
|                                                                                                                                          
|                                                                                                                                           |  | At any meeting of
      the Board of Directors, the Secretary or, in his or her absence, an
      Assistant Secretary, or in the
|absence of an
      Assistant Secretary, any person appointed by the chairman of the meeting
      shall act as secretary of the          
|meeting.                                                                                                                                  
|                                                                                                                                          
|2.11 Voting                                                                                                                               
|                                                                                                                                          
|                                                                                                                                           |  | Subject to the
      present by-laws, each director is entitled to one (1) vote. Any matter
      presented to the Board of     
|Directors shall be
      decided by the affirmative vote of at least a simple majority of the
      directors voting. In the case of
an   
|equality of votes,
      the chairman of the meeting shall not be entitled to a second or casting
      vote. Voting shall be held by a   
|show of hands,
      unless the chairman of the meeting or a director demands a ballot. If a
      ballot is demanded, the secretary
  of 
|the meeting serves
      as scrutineer, and counts the ballots. Voting by proxy is not permitted at
      any meeting of directors.       
|                                                                                                                                          
|2.12 Resolutions in
      writing                                                                                                         
|                                                                                                                                          
|                                                                                                                                           |  | A resolution in
      writing, signed by all the directors entitled to vote on such a resolution
      at a meeting of the Board
|of Directors, is as
      valid as if it had been passed at a meeting of the Board of Directors. A
      copy of such resolution is kept  
|with the minutes of
      the proceedings of the Board of
      Directors.                                                                





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2.13   Validity
of the acts of the directorsNotwithstanding any subsequent discovery that there was some defect in the
election of the Board of Directors or in the election or appointment of a
director, or that one or more members of the Board of Directors was
disqualified, acts done by them shall be as valid and as binding on the Company
as if the election had been regular or each person eligible.

2.14  
RemunerationThe
remuneration to be paid to the directors shall be such remuneration as the Board
shall from time to time determine. The directors shall also be entitled to be
paid their travelling and other expenses properly incurred by them in going to,
attending and returning from Board, committee and shareholders meetings and any
other expenses properly incurred by them in connection with the affairs of the
Company or to receive a fixed allowance in respect thereof as may be determined
by the Board from time to time.

2.15   VacanciesSo long as the
directors remaining in office constitute a quorum, they shall be entitled to act
even if there is a vacancy on the Board of Directors.

A quorum of the
Board of Directors remaining in office may fill a vacancy in the Board of
Directors, except a vacancy resulting from an increase in the number of
directors or from a failure of shareholders to elect the minimum number of
directors. In the absence of a quorum of the Board, or if the vacancy has arisen
from a failure of the shareholders to elect the minimum number of directors, the
Board of Directors shall forthwith call a special meeting of shareholders to
fill any vacancy. If the Board of Directors fails to call such meeting or if
there are no directors then in office, any shareholder or shareholders holding
at least ten percent (10%) of the total number of issued and outstanding voting
shares of the Company may call the special meeting.

|2.16 | Ceasing to hold office; removal                                                                                                           
|---- | ------------------------------------------------------------------------------------------------------------------------------------------
|    
|     | A                                                                                                                                         
|    
|     | a)     he or she dies or
      resigns, such resignation to be effective at the time a written
      resignation is sent to the           
|     |                                                                                                                                           
|    
|     | b)     he or she no longer
      possesses the qualities described in article 2.2; or
      c)     he or she is removed from
      office.
|    

Any director may
be removed from office upon the vote of a majority of the shareholders at a
special meeting duly called for such purpose and may be replaced by the same
meeting which so removes him or her but the director so replacing him or her
shall hold office only for the remainder of the term of office of the director
he replaces.

2.17  Delegation of
powersThe Board of
Directors may delegate to a director, a committee of the Board of Directors, to
an officer or a mandatary, all powers which he or she can exercise, except those
powers which cannot be delegated pursuant to applicable law. The Board of
Directors determines the terms and conditions of the delegation of
power.

2.18  Executive
CommitteeThe Board of
Directors, if it consists of more than six (6) directors, may elect from among
its members an Executive Committee, which shall comprise no fewer than three (3)
directors. Each member of the Executive Committee shall serve during the
pleasure of the Board of Directors and, in any event, only so long as he or she
shall be a director. Subject to the provisions of article 2.17, the Executive
Committee shall exercise all of the powers and prerogatives of the Board of
Directors in the management and direction of the affairs of the Company between
meetings of the Board of Directors. However, the Executive Committee shall at no
time have the power to allot, or grant options with respect
to,





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shares of the
Company, remove or replace directors, declare or authorize the payment of
dividends or enact, amend or repeal by-laws. The Executive Committee shall
report on its activities at every meeting of the Board of Directors. The Board
of Directors may fill vacancies in the Executive Committee by election from
among its number. If and whenever a vacancy shall exist in the Executive
Committee, the remaining members may exercise all its powers so long as a quorum
remains in office.

Subject to the above and subject to any restrictions imposed from time to time
by the Board of Directors, meetings of the Executive Committee shall be subject
to the rules of procedure governing meetings of the Board of Directors, mutatis mutandis.

2.19     Other
committeesThe Board of Directors may, by resolution, appoint one or more committees of
directors, consisting of such number of directors, as the Board of Directors may
by resolution determine. Each member of any such committee shall serve during
the pleasure of the Board and, in any event, only so long as he or she shall be
a director. The Board of Directors may from time to time remove from office any
member of any such committee of directors. The Board of Directors may fill
vacancies in any such committee by election from among its number. If and
whenever a vacancy shall exist in any such committee, the remaining members may
exercise all its powers so long as a quorum remains in office.

The Board of Directors may delegate to any such committee of directors any of
the powers of the Board except those which, by law, a committee of directors has
no authority to exercise.

Unless otherwise determined by the Board, each such committee shall have the
power to fix its quorum at not less than a majority of its members, to elect its
chairman and to fix its own rules of procedure from time to
time.

The powers of any such committee of directors may be exercised at a meeting at
which a quorum is present or by resolution in writing signed by all the members
of such committee who would have been entitled to vote on that resolution at a
meeting of such committee.

2.20    
Advisory committeesThe Board may from time to time, by resolution, appoint such other committees as
it may deem advisable. The Board may appoint to such committees such number of
directors and other individuals as the Board of Directors may, by resolution,
determine. Each member of any such committee shall serve during the pleasure of
the Board. Unless the Board of Directors indicates otherwise by resolution, such
committees shall act merely in an advisory capacity.

The Board of Directors may authorize the President to appoint external
committees as he or she may deem advisable. Such external committees are to be
composed of individuals who are not members of the Board of Directors, except
for the President & Chief Executive Officer who may be a member of such
committees. Each external committee shall act merely in an advisory
capacity.

|3.  | OFFICERS               
|--- | -----------------------
|   
|3.1 | Officers of the Company
|   

The officers of the Company shall be a Chairman of the Board, a President, one
or more Executive Vice-President(s), a Secretary, a Treasurer and such other
officers as the Board of Directors may from time to time by resolution
determine. With the exception of the Chairman of the Board who must be a
director, no other officer need be a director of the Company. Any such officer
may be removed at any time by the Board of Directors, or may resign at any time
upon notice to the Company. Any duly qualified person may be the holder of any
one or more such offices, except the office of President and an Executive
Vice-President.





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All officers
are named by the Board of Directors and can be dismissed with or without cause
by a resolution adopted during a meeting held for that
purpose.

3.2    
Chairman of the Board

The Chairman
of the Board shall, when present, preside at all meetings of the directors. He
or she shall have such other powers and duties as the Board may delegate to him
or her, from time to time, by resolution of the Board.

The
directors may determine, as they shall deem appropriate from time to time, that
the Chairman of the Board shall act solely in a non-executive capacity. Should
the directors at any time determine that the Chairman of the Board shall act in
an executive capacity, they shall as soon as practicable appoint a lead director
from among themselves who is not an employee of the Company or any of its
subsidiaries to ensure that the Board of Directors can function independently of
management of the Company.

3.3      PresidentThe
President shall be the Chief Executive Officer of the Company. He or she shall
sign such contracts, documents or instruments in writing as require his or her
signature and shall have such other powers and duties as may from time to time
be assigned to him or her by the Board of Directors.

He or
she shall have full authority, subject to the authority of the Board of
Directors, to manage and direct the business and affairs of the Company (except
such matters and duties as by law must be transacted or performed by the Board
of Directors or by the shareholders in a special or annual general meeting) and
to employ and discharge agents and employees of the Company. The Board of
Directors may delegate to him or her any less power. He or she shall conform to
all lawful orders given to him or her by the Board of Directors of the
Company.

3.4      Executive
Vice-PresidentAn
Executive Vice-President (as determined by the Board) shall be vested with all
the powers and shall perform all the duties of the President in the absence,
disability or refusal to act of the President. If an Executive Vice-President
exercises any such duty or power, the absence, disability or refusal to act of
the President shall be presumed with reference thereto. The Executive
Vice-President, or if more than one, the executive vice-presidents, shall also
have such other powers and duties as may from time to time be assigned to him,
her or them respectively by the Board or the President.

3.5      SecretaryThe
Secretary shall issue or cause to be issued notices for all meetings of the
Board of Directors, of committees thereof and of shareholders when directed so
to do and shall have charge of the minute books and corporate records of the
Company, of the corporate seal (if any), and of the books and records referred
to in the Act. The Secretary shall sign such instruments as may require his or
her signature and shall perform such other duties as the terms of his or her
engagement call for or as the Board of Directors or the President may from time
to time properly require of him or her.

3.6      TreasurerThe
Treasurer shall have the care and custody of all funds and securities of the
Company and shall deposit the same in the name of the Company in such bank or
banks or with such depositaries as the Board of Directors may by resolution
direct. He or she shall prepare, maintain and keep or cause to be kept adequate
books of account and accounting records. Unless otherwise provided by resolution
of the directors, he or she shall sign all cheques, drafts, notes and orders for
the payment of money and he or she shall pay out and dispose of the same under
the direction of the Board of Directors. He or she shall at all reasonable times
exhibit his or her books and accounts to any director of the Company upon
application at the office of the Company during business hours. Unless otherwise
provided by resolution of the Board of Directors, he or she shall sign or
countersign such instruments as require his or her signature and shall perform
all duties incident to his or her office or that are properly required of him or
her by the Board. He or she may be required





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to give such bond
for the faithful performance of his or her duties as the Board of Directors in
their uncontrolled discretion may require and no director shall be liable for
failure to require any bond or for the insufficiency of any bond or for any loss
by reason of the failure of the Company to receive any indemnity thereby
provided. The Treasurer shall also perform such other duties as the terms of his
or her engagement call for or as the Board of Directors or the President may
from time to time properly require of him or her.

3.7    
Duties may be delegatedIn case of the
absence or inability to act of the President, an Executive Vice-President or of
any other officer of the Company or for any other reason that the Board may deem
sufficient, the Board may delegate all or any of the powers of such officer to
any other officer or director for the time being.

|4.  | DISCLOSURE OF
      INTEREST
|--- | ----------------------------
|   
|4.1 | Disclosure of
      interest
|   

The
Company may enter into contracts or transact business with one or more of its
directors or officers, or with the companies, corporations, partnerships or
associations, of which one or more of its directors or officers, are
shareholders, directors, officers or employees, and no such contract or
transaction shall be void, voidable or in any way affected by the fact that such
director(s) or officer(s) have or may have interests contrary to those of the
Company, or by the fact that a director with an interest in the contract or
transaction is present at or is counted to determine the presence of a quorum at
a meeting of directors that authorised the contract or transaction, provided
however that the director or officer declared his or her interest in accordance
with the following provisions.

A director or
officer of the Company who is a party to, or who is a director or officer of or
has an interest in any person who is a party to, or an individual acting in a
similar capacity to such directors or officers who is a party to, a contract or
transaction, whether made or proposed, with the Company shall disclose to the
Company the nature and extent of his or her interest at the time and in the
manner provided by the Act and such interest shall be entered in the minutes of
the meetings of directors or otherwise noted in the records of the Company. Any
such contract or transaction shall be disclosed to the Board of Directors in the
manner provided by the Act even if such contract or transaction is one that in
the ordinary course of the Companys business would not require approval by the
Board of Directors or shareholders. Such a director shall not vote on any
resolution to approve the same except as provided by the Act.

The Board of
Directors may require any director that has an interest in a contract,
transaction or proposed contract or other matter, other than an interest flowing
from his or her current capacity as a director or officer, to withdraw from a
board meeting during discussions relating to the matter in
question.

|5.  | INDEMNIFICATION
|--- | ---------------
|5.1 | Indemnification

Any director or
officer of the Company shall be indemnified and saved harmless for all costs,
charges and expenses sustained or incurred as the result of an action, suit or
proceeding brought or exercised against him or her for an act done in the
execution of his or her duties, with the exception of those resulting from gross
misconduct, bad faith or a personal fault separable from the execution of his or
her duties.

In the case of
criminal or penal proceedings, the Company shall indemnify all costs, charges
and expenses to directors or officers who were not found guilty by a court of
competent jurisdiction.

Subject to the
limitations set out in the Act, the Company shall indemnify a director or
officer, a former director or officer, or a person who acts or acted at the
Companys request as a director or officer of a corporation of which the Company
is or was a shareholder or creditor, and his or her heirs and legal
representatives, against all costs, charges and expenses, including an amount
paid to settle an action or satisfy a judgment, reasonably incurred by him or
her in respect of any civil, criminal or administrative action or proceeding to
which he or she is made a party by reason of being or having been a director or
officer of the Company or such corporation, if,





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|a) | he
      or she acted honestly and in good faith with a view to the best interests
      of the Company; and                                                                                   
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|b) | in
      the case of a criminal or administrative action or proceeding that is
      enforced by a monetary penalty, he or she was not found guilty by a court
      of competent jurisdiction.



The Company
shall also indemnify such person in such other circumstances as the Act permits
or requires.

6.****      
**INSURANCE**

**6.1**     **Insurance**

The Company
may purchase and maintain insurance for the benefit of any person referred to in
article 5.1 against such liabilities and in such amounts as the Board of
Directors may from time to time determine and are permitted by the
Act.

|7.  | SHAREHOLDERS   
|--- | ---------------
|   
|7.1 | Annual meetings
|   

The
shareholders shall meet annually to receive and consider the balance sheet, the
financial statements and the report of the auditors, to elect directors, to
appoint auditors and to fix or to authorize the Board of Directors to fix their
remuneration, and to consider, deal with and dispose of such other business as
may lawfully come before the meeting. Any annual meeting may also constitute a
special meeting to consider, deal with and dispose of any business to be
considered, dealt with and disposed of at any special meeting.

**7.2**    **Special
meetings**A special meeting of
shareholders, whether or not it constitutes a general meeting, may be called at
any time as determined by the Chairman of the Board or the Board of Directors or
may be called whenever the holders of the minimum number of the outstanding
shares of the Company carrying voting rights required by law at such meeting
shall, in writing, request the same. Any such request, shall specify the object
for which the meeting is to be called. The Board of Directors must call and hold
a special meeting of shareholders within twenty-one (21) days from the date of
reception of the request. A special meeting whether or not it constitutes a
general meeting, may be held separately or as part of an annual
meeting.

It shall be the
duty of the President or, in his or her absence, any one of the Executive
Vice-Presidents, upon adoption of such a resolution or on receipt of such a
request, to cause the meeting to be called by the Secretary or other officer of
the Company in conformity with the terms of the resolution or request. In
default of his or her so doing, any director may call such meeting or the same
may be called by such shareholders themselves in accordance with and subject to
the provisions of the laws governing the Company.

**7.3**     **Record
date**The Board of
Directors may fix a date prior to the notice or holding of a meeting as the
record date to determine which shareholders are entitled to receive notice of or
to vote at the meeting. Therefore, only shareholders of record on the date so
fixed shall be entitled to receive notice thereof or to vote thereat, as the
case may be, regardless of any transfer of shares recorded in the registers of
the Company between the record date and the notice or holding of such meeting.
Notwithstanding the foregoing, the Board of Directors may permit shareholders
registered in the Companys registers after the record date to receive notice
of, to attend and to vote at the meeting on the terms that it shall
determine.





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7.4      Place and time of
meetingsMeetings of
shareholders of the Company shall be held at such place and time as the Chairman
of the Board or the Board of Directors may determine; provided, however, that
the annual meeting of shareholders shall be held no later than six months from
the end of the Companys fiscal year.

The annual meeting
of shareholders shall be held at the head office of the Company or at any other
place in the Province of Québec, which may be determined by the Board of
Directors.

Special meetings
of shareholders shall be held at the head office of the Company or at such other
place, within or outside Québec, as may be determined by the Board of Directors.
However, if directors are to be elected at a special meeting of shareholders,
such meeting shall be held within the Province of Québec.

7.5      Adjournment of
meetingsThe chairman
of the meeting may, with the consent of the meeting, adjourn any meeting of
shareholders from time to time to a fixed time and place. If a meeting of
shareholders is adjourned for less than thirty (30) days, it is not necessary to
give notice of the adjourned meeting other than by announcement at the earliest
meeting that is adjourned. If a meeting of shareholders is adjourned by one or
more adjournments for an aggregate of thirty (30) days or more, notice of the
adjourned meeting shall be given as for an original meeting.

Any adjourned
meeting shall be duly constituted if held in accordance with the terms of the
adjournment and a quorum is present thereat. The persons who formed a quorum at
the original meeting are not required to be those who form a quorum at the
adjourned meeting. If there is no quorum present at the adjourned meeting, the
original meeting shall be deemed to have terminated forthwith after its
adjournment. Any business may be brought before or dealt with at any adjourned
meeting which might have been brought before or dealt with at the original
meeting in accordance with the notice calling same.

7.6      Notices of
meetingsWithin the
delays prescribed in the Act, a notice in writing of the date, time and place of
any meeting of shareholders shall be given to each shareholder entitled to vote
at such meeting by the Secretary of the Company by mailing such notice by
registered or certified mail. The notice of any meeting shall state generally
the nature of the business to be transacted thereat and no business shall be
transacted at such meeting unless the same shall have been referred to in the
said notice. No public advertisement or notice of shareholders meetings, annual
or special, shall be required.

The failure or
omission to give such notice of any meeting to any shareholder shall not
invalidate any resolution passed or business transacted at such
meeting.

Meetings of
shareholders may be held without previous notice if all shareholders be present
in person or by proxy or if those shareholders who are absent, sign a written
waiver of notice of the time, place and purpose of such meeting.

7.7      Persons entitled to be
presentThe only
persons entitled to attend a meeting of shareholders shall be those entitled to
vote thereat, the directors, the auditors and those who, although not entitled
to vote, are entitled under any provision of the Act or in virtue of the
articles or by-laws of the Company, to be present at the meeting. Any other
person may be admitted only on the invitation of the chairman of the meeting or
with the consent of the meeting.





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**7.8**     **Chairman of
the meetings**In the absence
of the Chairman of the Board for thirty (30) minutes after the time appointed
for holding the meeting, any other director or any other person designated by
the Board or by the directors present at the meeting of shareholders shall act
as chairman of such meeting. The chairman of the meeting shall conduct the
meeting and determine its procedure in all respects.

**7.9**    **Secretary
of the meetings**At any meeting
of the shareholders, the Secretary or, in his or her absence, an
Assistant-Secretary, or in the absence of an Assistant-Secretary, any person
appointed by the chairman of the meeting shall act as secretary of the
meeting.

**7.10**  **Scrutineer**The chairman
at any meeting of shareholders may appoint one or more persons, who may but need
not be shareholders, directors, officers or employees of the Company, to act as
scrutineers at such meeting. If desired, one or more scrutineers, who need not
be shareholders, may be appointed by a resolution or by the chairman of the
meeting with the consent of the meeting.

**7.11**  **Show of hands and
ballots**Voting at any
meeting of shareholders shall be by a show of hands except where, either before
or after a show of hands, a ballot is required by the chairman of the meeting or
is requested by any person present and entitled to vote at the meeting. On a
show of hands, each person present and entitled to vote at the meeting shall
have one vote and a declaration by the chairman of the meeting of the result of
the vote shall be conclusive evidence of the fact. On a ballot, each shareholder
present in person or represented by a proxy at the meeting and entitled to vote
thereat shall, subject to the articles, have one vote for each share in respect
of which he or she is entitled to vote at the meeting. Any ballot shall be taken
in such manner as the chairman of the meeting directs.

**7.12**  **Quorum**A quorum for
the transaction of business at any meeting of shareholders shall be two (2)
persons present in person, each being a shareholder entitled to vote thereat or
a duly appointed proxy for an absent shareholder so entitled, and collectively
holding or representing not less than twenty percent (20%) of the total number
of issued and outstanding shares of the Company having voting rights at such
meeting.

Should there be a
quorum at the commencement of a meeting, the shareholders present or represented
may proceed with the business for which it was originally called, whether or not
the quorum is maintained for the duration of the meeting.

In the event there
is no quorum at the commencement of a meeting, the shareholders present or
represented may, by a majority vote to that effect, adjourn the meeting to
another time and place, though they may not proceed with any other
business.

At a meeting so
adjourned, the shareholders present and represented constitute a quorum and said
meeting may proceed. If the Company has only one shareholder, or only one holder
of the shares of a given class or series, such shareholder or holder, present in
person or represented by proxy, shall form a quorum and constitute the
meeting.





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7.13    ProxiesThe Board of
Directors may specify in a notice calling a meeting, a date and time limit when
instruments of proxy to be used at a meeting must be deposited with the Company
or its mandatary; such date and time limit shall not precede the meeting by more
than forty-eight (48) hours, excluding Saturdays, Sundays and statutory holidays
in the province of Québec, or such other time limit as may be decided by the
Board of Directors by resolution, subject to applicable law.

The Board of
Directors may also permit details of proxies, to be used at or in connection
with a meeting and deposited with the Company or its mandatary at a location
other than that at which such meeting shall be held, to be sent electronically
to the Secretary of the Company prior to the meeting. In such a case, such
proxies, if they are otherwise regular, shall be valid and the votes given under
their authority shall be counted.

A proxy shall be
acted upon only if, prior to the time specified in the notice calling the
meeting, it shall have been deposited with the Company or its mandatary thereof
specified in such notice or, if no such time is specified in such notice, unless
it has been received by the Secretary or the Company or by the chairman of the
meeting or any adjournment thereof prior to the time of voting.

7.14   
VotingAt each
meeting of shareholders, every shareholder shall be entitled to vote who is at
the proper time entered in the books of the Company as the holder of one (1) or
more shares carrying the right to vote at such meeting and who is not in arrears
in respect of any call. Except as provided in the Act, all questions at meetings
of shareholders shall be decided by a majority in number of the votes cast by
the shareholders present either in person or by proxy and entitled to vote at
such meeting. In case of an equality of votes at any annual or special meeting
either upon a show of hands or upon a ballot, the chairman of the meeting shall
be entitled to a second or casting vote. A declaration by the chairman of the
meeting of shareholders to the effect that a resolution has been carried or lost
and an entry to that effect in the minutes of the Company shall be conclusive
evidence thereof.

7.15   
Participation by communication facilitiesThe Company
may, at its entire discretion, determine that it would be appropriate for a
shareholder or any person entitled to attend a meeting of shareholders to
participate, subject to the provisions of the Act, if any, by means of
telephonic, electronic or any other communications facility that permits all
participants to communicate adequately with each other during the meeting. A
person participating in a meeting by such means is deemed to be present at that
meeting. A meeting of shareholders may be held entirely by telephonic,
electronic or other communications facility if the requirements listed above are
met.

7.16    Joint
shareholdersIf shares are
held jointly by two (2) or more persons, any one of them present at a meeting
may, in the absence of the other or others, vote thereon, but if more than one
(1) of them are present, or represented by proxy, they shall vote together on
the shares jointly held.

7.17   
Resolutions in writingA resolution
in writing, signed by all the shareholders entitled to vote on that resolution
at a meeting of the shareholders, is as valid as if it had been adopted at a
meeting of the shareholders. A copy of such resolution is kept with the minutes
of the proceedings of the shareholders.



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|8.  | AUDITORS
|--- | --------
|   
|8.1 | Auditors
|   

The shareholders
appoint the auditors at each annual meeting of the shareholders. The
remuneration of the auditors is fixed by the directors. Directors, officers or
representatives of the Company are not permitted to be auditors of the Company.
Should the auditors cease for any reason to perform their duties prior to the
expiration of their term, the directors may appoint successor auditors who shall
hold office for the unexpired portion of their predecessors term. The
shareholders of the Company may appoint multiple auditors and may demand
periodic audits.

|9.  | CAPITAL
  STOCK       
|--- | ----------------------
|   
|9.1 | Share
    certificates
|   

Shareholders shall
be entitled to receive, without charge, certificates representing all or some of
the shares then registered in their name, provided that in the case of shares
held jointly by several persons, the Company shall not be bound to issue more
certificates than if such shares were held individually. The form of the
certificates and the terms and conditions of authentication and signature shall
be approved by the Board of Directors.

The Company seal
or a facsimile thereof may appear on each certificate issued by the Company, as
well as the handwritten signatures or a facsimile of the signatures of two (2)
of the following officers, namely: the President or any Executive
Vice-President, and the Secretary or an Assistant-Secretary of the Company or
such other officers as the Board of Directors may from time to time by
resolution determine. In the case of certificates representing shares for which
a transfer agent or registrar was appointed, such certificates shall only be
valid if they are countersigned by or on behalf of such transfer agent and/or
registrar. The signature of one of the officers authorized to sign or, in the
case of share certificates that are only valid if countersigned by or on behalf
of a transfer agent or registrar, the signatures of two (2) signing officers,
may be printed, engraved or otherwise reproduced on the share certificates, and
any such signature shall for all purposes be deemed to be the signature of the
officer whose signature is reproduced and shall bind the Company. Share
certificates signed as aforesaid shall be valid notwithstanding that one or more
of the officers whose signature appears thereon is no longer in office on the
date the certificate is issued.

9.2      Transfer agents or
registrars

The Board may from
time to time appoint one or more agents to maintain, in respect of each class of
securities of the Company issued by it in registered form, a central securities
register and one or more branch securities registers. Such a person may be
designated as transfer agent or registrar according to his or her functions and
one person may be designated both registrar and transfer agent. The Board may at
any time terminate such appointment.

9.3      Transfers of shares

Shares of the
share capital of the Company shall be transferable on the books of the Company
by the registered holder thereof in person or by his or her duly authorized
attorney upon surrender for cancellation of a certificate or certificates for
the same number of shares with an assignment or power of transfer endorsed
thereon or attached thereto, duly executed, and with such proof of the
authenticity of the signature thereon as the Company or its agent may reasonably
require.

The Board of
Directors may make such other rules and regulations dealing with the transfer of
shares of the share capital of the Company, the surrendering and cancelling of
share certificates, the closing of the transfer books, etc., as to them may
appear expedient and necessary in the interests of the
Company.





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9.4      Lost, defaced or destroyed
certificatesIn the event
of the loss, defacement or destruction of a share certificate held by a
shareholder, the fact of such loss, defacement or destruction shall be reported
by such shareholder to the Company or the transfer agent (if any) by such
shareholder with such evidence in the form of his or her statement verified by
oath or statutory declaration by such shareholder or other evidence as the
directors may require as to the loss, defacement or destruction and the
circumstances attending the same accompanied by the shareholders request for
the issuance of a new certificate to replace the one so lost, defaced or
destroyed. Upon the reception by the Company (or if there be one or more
transfer agents and registrars then to the Company and such transfer agents and
registrars) of such security (if any) as may be required by the Board of
Directors (or by the transfer agents and registrars, if any) in such form as is
approved by the solicitors of the Company, indemnifying the Company (and its
transfer agents and registrars, if any) against all loss, damage or expense to
which the Company and/or the transfer agents and registrars, if any, may be put
by reason of the issuing of a new certificate to the said shareholder, a new
certificate may be issued to take the place of the one lost, defaced or
destroyed, if such issuance is ordered by the President, or an Executive
Vice-President, or Secretary, or Treasurer of the Company for the time being or
by the Board of Directors.

|10.  | RIGHT OF INSPECTION OF
      THE BOOKS AND RECORDS
|---- | --------------------------------------------------
|    
|10.1 | Right of inspection of
      the books and records
|    

The directors may
from time to time determine whether and to what extent and at what time and
place and under what conditions the accounts and books of the Company or any of
them shall be open to the inspection of shareholders, and no shareholder shall
have any right to inspect any account or book or document of the Company except
as conferred by statute or authorised by the Board of Directors.

|11.  | EXECUTION OF CONTRACTS
      AND OTHER DOCUMENTS
|---- | ------------------------------------------------
|    
|11.1 | Execution of contracts
      and other documents
|    

The President or
an Executive Vice-President, or any director, together with the Secretary or
Treasurer or any other director or officer, shall have authority to sign in the
name and on behalf of the Company all instruments in writing and any instruments
in writing so signed shall be binding upon the Company without any further
authorization or formality. The Board of Directors shall have power from time to
time by resolution to appoint any other officer or officers or any person or
persons on behalf of the Company either to sign instruments in writing generally
or to sign specific instruments in writing.

The term
instruments in writing as used herein shall, without limiting the generality
thereof, include contracts, documents, deeds, mortgages, hypothecs, charges,
conveyances, transfers and assignments or property (real or personal,
immovable), payment of money or other obligations, conveyances, transfers, and
assignments of shares, stocks, bonds, debentures or other securities and all
paper writing.

All documents
executed in the ordinary course of the business of the Company may be signed by
any officer or employee on behalf of the Company or by any other person as may
be determined by resolution of the Board of Directors or in compliance with the
Companys policies in force from time to time.

|12.  | BANKING
      ARRANGEMENTS
|---- | --------------------------
|    
|12.1 | Banking
      arrangements
|    

The banking
business of the Company shall be transacted with such banks, trust companies or
other financial institutions as the Board of Directors may authorize and all
such banking business shall be transacted on the Company's behalf by such
officers or other persons as the Board of Directors or their delegates may
designate and to the extent authorized.





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13.      **NOTICES**

**13.1    Service**

When notice
is required to be given further to any statute, the articles or the by-laws of
the Company, it can be given by prepaid mail, facsimile or by any electronic or
other communication facilities addressed to the person entitled thereto at his
or her last known address as recorded in the registers of the Company. Such
notice when so given shall be sufficient and shall be deemed to have been given
on the day it has been sent.

Any
director, officer or shareholder may at any time waive any notice required to be
given under these by-laws.

13.2    Joint
shareholdersAll notices or
other documents with respect to any shares registered in more than one (1) name
shall be given to whichever of such persons is named first in the books of the
Company in respect of such joint holding and notice so given shall be sufficient
notice to all the holders of such shares.

13.3    Persons
becoming entitled by operation of lawEvery person
who by operation of law, transfer, or by any other means whatsoever shall become
entitled to any share or shares, shall be bound by every notice or other
document in respect of such share or shares which, prior to his or her name and
address being entered on the books of the Company, shall be duly given to the
person whom he derives his or her title to such share or shares.

13.4    Deceased
shareholdersAny notice or
other document delivered or sent or left at the address of any shareholder as
the same appears in the registers of the Company shall, notwithstanding that
shareholder be then deceased and whether or not the Company has notice of his or
her death, be deemed to have been duly served in respect of the shares, whether
held solely or with other persons by such shareholder, until some other person
be entered in his or her stead in the books of the Company as the holder or one
(1) of the holders thereof, and such service shall for all purposes be deemed
sufficient service of such notice or document on his or her heirs, executors or
administrators, and on all persons, if any, interested with him or her in such
shares.

13.5   
Signature to notice

The signature to
any notice to be given by the Company may be written, stamped, typewritten
otherwise mechanically reproduced or partly written, stamped, typewritten or
otherwise mechanically reproduced.

13.6   
Computation of time

Where a given
number of days notice or notice extending over any period is required to be
given, the day of service or posting or otherwise sending the notice shall be
excluded unless it is otherwise provided, and the day for which notice is given
shall be included in such number of days or other period.

13.7    Proof of
serviceA certificate
of the Secretary or other duly authorised officer of the Company in office at
the time of the making of the certificate, or of any agent of the Company as to
facts in relation to the mailing or delivery or sending of any notice to any
shareholder, director or officer or publication of any notice shall be
conclusive evidence thereof and shall be binding on every shareholder, director
or officer of the Company, as the case may be.

* * * * * *
* * * *





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SCHEDULE BRESOLUTION REGARDING AMENDMENTS TO THE FORMER
LTIP

**Resolution regarding
amendments to the Former LTIP**

**WHEREAS** on June
6, 2006, the TSX published a Staff Notice respecting security based compensation
arrangements, such as the Companys former Long-Term Incentive Plan (the Former
LTIP), relating to the
amendment procedures and the extension of option expiry dates which fall within
or soon after a blackout period; and

**WHEREAS** the Board
of Directors considers that the flexibility afforded by the proposed changes
will enable the Former LTIP to better achieve its purpose by enabling amendments
to the Former LTIP and options granted thereunder to be made on an expeditious
basis in order to efficiently address future regulatory and commercial
requirements.

**BE IT
RESOLVED:**

**THAT** the
amendments to the Former LTIP to reflect the changes as described in the
Companys Management Information Circular under Amendments to the Former
Long-Term Incentive Plan at page 5 and proposed at the Meeting, are hereby
approved.

**THAT** any Director
or Officer of the Corporation be and is hereby authorized to sign and deliver,
for and on behalf of the Corporation, all such notices, documents and
instruments, including the amendments to the Former LTIP, and to do such other
acts and things as may be considered necessary or desirable to give effect to
this resolution.







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SCHEDULE C
CORPORATE GOVERNANCE
PRACTICES

The board
of directors and management of the Company consider good corporate governance to
be central to the effective operation and success of the Company. In order to
ensure proper and current corporate governance practices, the board of directors
and management regularly compare the Companys practices and procedures with the
guidelines set out in National Instrument 58-201  Corporate Governance Guidelines, the proposals of various
other regulatory authorities, as well as the practices adopted by its
peers.

Board of
DirectorsThe board of
directors is responsible for the overall stewardship of the Company and has full
power and authority to manage and control the affairs and business of the
Company. It establishes the overall policies and standards for the Company.
While delegating certain of its authority and responsibilities to its committees
and management of the Company, it retains full effective control over the
Company and monitors senior management. The directors are kept informed of the
Company's operations at meetings of the board of directors, of its committees
and through reports, analyses and discussions with management.

The board of
directors currently consists of 12 members and 11 nominees are proposed for
election as directors for the ensuing year. The board of directors believes that
such number of directors is large enough to allow the directors to benefit from
a wide variety of ideas and viewpoints without compromising communication among
the directors, and between the directors and management.

The Company
considers that a majority of the directors of the Company and persons proposed
to be nominated for election as directors are independent directors as defined
in National Instrument 58-101. André Bérard, Norman M. Betts, James E. Brumm,
Gilles Chevalier, Guy G. Dufresne, Peter S. Janson, Gordon S. Lackenbauer, Mary
Theresa McLeod, and Emanuele (Lino) Saputo are directors who are considered
independent. James M. Lopez, President and Chief Executive Officer of the
Company and Luc Rossignol, President, Local 233, Communications, Energy and
Paperworkers Union, is an employee and therefore are not considered independent
directors of the Company. The term "independent" means having no direct or
indirect material relationship with the issuer, a material relationship
being a relationship which could, in the view of the issuers board of
directors, be reasonably expected to interfere with the exercise of a directors
independent judgement. In determining whether directors are independent, the
board has considered and discussed the nature and materiality of all relevant
relationships between a director and the Company including, without limitation,
customer, supplier and service provider relationships. The board, through the
Corporate Governance and Human Resources Committee, will consider the continued
appropriateness of board membership of individual directors who retire, change
employment, or change the responsibility that they held when they were elected
to the board.

The following
current directors and other persons proposed to be nominated for election as
directors of the Company also serve as directors of the reporting issuers (or
equivalent) indicated beside their name:

- André Bérard: BCE
  Inc., Bell Aliant Regional Communications Income Fund, Bell Canada, BMTC Group Inc., Bombardier Inc., Telestat Canada Saputo
  Inc. and TransForce Income Fund.
- Norman M. Betts:
  Starfield Resources Inc., Tanzanian Royalty Exploration Corporation, Rtica
  Corporation and New Brunswick Power
  Corporation
- Guy G. Dufresne:
  IAMGold Corporation and Royal & Sun Alliance Company of
  Canada
- Peter S. Janson: ATS
  Automation Tooling Systems Inc., Terra Industries Inc. and Teekay Shipping
  Corporation.
- Gordon S.
  Lackenbauer: TransAlta Corporation, NAL Energy Inc. and Bell Globemedia
  Inc.
- Mary Theresa McLeod:
  Wescast Industries Inc.
- Emanuele (Lino)
  Saputo: Saputo Inc.

The board of
directors has adopted a formal written mandate which describes its principal
functions, copy of which can be found on the Companys website at www.tembec.com
and is annexed hereto as Schedule D. The mandate provides that the board will
consider recommendations made by the officers of the Company who are responsible
for the





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general
day-to-day management of the Company. The board of directors is also responsible
for overseeing the formulation by management of long-term strategic, financial
and organizational and related objectives. The mandate of the board of directors
also establishes a requirement that it implement structures and procedures to
ensure that it functions independently of management, such as the board of
directors practice of conducting in-camera sessions as part of each regularly
scheduled meeting.

In accordance with
its mandate, the board ensures that it excludes management from its meetings,
from time to time, as appropriate. Although the board of directors did not, in
the past fiscal year, schedule separate meetings to be held without certain
members of management being present, it did conduct in camera sessions as part
of each regularly scheduled meeting and regularly excluded management from parts
of the in camera sessions. In addition to the President and Chief Executive
Officer, the Vice President, General Counsel and Secretary and the Executive
Vice President, Finance and Chief Financial Officer of the Company were also
present at all regularly scheduled meetings of the board of directors. At the
invitation of the board, other members of senior management attended board
meetings and provided reports to the board on the financial and operating
performance of the various business groups of the Company.

The Chairman of
the board of directors is appointed by the full board and may not be a member of
management. The Chairman of the board, Gordon S. Lackenbauer(1), was
chosen by the full board, is an independent director and serves as board leader.
The board has developed a written position description for the Chairman of the
board. The Chairmans role is to be primarily responsible for the proper
functioning of the board, for its balance of membership subject to shareholders
approval, for ensuring that all relevant issues are on the agenda, and for
ensuring that all directors are enabled and encouraged to play their full part
in its activities. The Chairman must make certain that the directors receive
timely, relevant information tailored to their needs, and that they make an
effective contribution as board members in practice. The Chairman is responsible
for ensuring that the board evaluates the performance of management objectively
and that the board understands the boundaries between board and management
responsibilities. The Chairman also ensures that the board is in full control of
the Company's affairs and alert to its obligations to the shareholders.

The functions of
the board include the review and approval of (a) the audited annual financial
statements and the managements discussion and analysis contained therein
following review by the Audit Committee; (b) the interim unaudited financial
statements and the managements discussion and analysis contained therein
following review by the Audit Committee, (c) transactions out of the ordinary
course of business, and (d) any capital expenditures or other financial
commitments in excess of $2,500,000. The board also considers and reviews the
means by which shareholders can communicate with the Company, including the
opportunity to do so at the annual meeting, through the Company's website and
the adequacy of resources available within the Company to respond to
shareholders through the office of the Secretary or otherwise.

Committees of the Board of
Directors

The board of
directors has established three standing committees, each of which is
constituted by its own charter, to which the board of directors has delegated
certain of its authority and responsibilities, as well as certain advisory
functions and power to make recommendations and report to the board. All
committees of the board of directors are composed of a majority of independent
directors, except for the Environment, Health and Safety Committee which is
composed of an even number of independent and non-independent
directors.

The Company's
Corporate Governance Policy includes a position description for each director
and a short description of the roles and responsibilities of the Chairman of the
Board. The Company has adopted position descriptions for the Chair of each
committee. Each Chair must be an independent director and is primarily
responsible for the proper functioning of his/her respective committee, for
ensuring that all relevant issues are on the agenda, and for ensuring that all
members are enabled and encouraged to play their full part in its activities.
The Chair must make certain that the directors receive timely, relevant
information tailored to their needs.



|
|





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Corporate Governance and Human
Resources Committee

The Corporate
Governance and Human Resources Committee is responsible for developing the
Company's approach to board and corporate governance issues. The Corporate
Governance and Human Resources Committee reviews and reports to the board
annually on what ought to be the size, composition, profile and compensation of
the board of directors. It also recommends candidates to be nominated for
election or appointment as directors and evaluates the boards performance. The
Committee also evaluates the performance of the boards committees and the
contribution of members of the board and its committees. The Corporate
Governance and Human Resources Committee also reviews, on an annual basis, the
board/management relationship and recommends to the board structures and
procedures to ensure that the board functions independently of management. The
Companys Corporate Governance and Human Resources Committee charter may be
found on the Companys website at www.tembec.com.

The Corporate
Governance and Human Resources Committee met six times during the last financial
year. The Corporate Governance and Human Resources Committee is composed of
Messrs. James E. Brumm (Chairman), André Bérard, Peter S. Janson and Gordon S.
Lackenbauer.

Audit
CommitteeThe Audit
Committee meets on a regular basis with the financial officers of the Company
and the independent auditors to, among other things, review and inquire into:
(a) matters affecting financial reporting; (b) the adequacy of internal controls
and procedures for financial reporting and accounting; (c) the audit procedures
and audit plans; and (d) the financial and business risks or exposures of the
Company and the steps that management has taken to control such risks. It also
recommends, to the board of directors, the external auditors to be appointed and
their remuneration. The Audit Committee annually reviews the independence of the
external auditors.

The Audit
Committee reviews and recommends to the board, for its approval: (a) the interim
unaudited financial statements and the managements discussion and analysis
contained therein; (b) the audited annual financial statements and the
managements discussion and analysis contained therein; (c) prospectuses and
other offering memoranda; and (d) the annual and interim earnings press release
and other public disclosure documents containing audited or unaudited financial
information required by regulatory authorities. The responsibilities of the
Audit Committee, including those responsibilities described above, are reviewed
by the board of directors annually. The Audit Committee charter may be found on
the Companys website at www.tembec.com.

The Audit
Committee met five times during the last financial year. This committee is
composed of Messrs. Gilles Chevalier (Chairman), Norman M. Betts, Guy G.
Dufresne and Ms. Mary Theresa McLeod, all of whom are independent and
financially literate and all of whom have accounting or related financial
expertise, with Messrs. Betts and Chevalier possessing the professional
designation of Chartered Accountant.

Environment, Health and Safety
CommitteeThe
Environment, Health and Safety Committee is responsible for reviewing and making
recommendations and reports to the board of directors relating to the policies,
standards, practices and programs of the Company on matters pertaining to both
the environment and occupational health and safety. The Committee monitors the
Companys performance in relation to its own policies, as well as in relation to
applicable legislation pertaining to both the environment and occupational
health and safety. It also reviews and reports to the board of directors on the
Companys state of readiness to respond to crisis situations. The Environment,
Health and Safety Committee charter may be found on the Companys website at
www.tembec.com.

This committee met
four times during the last financial year. This committee is composed of Messrs.
Peter S. Janson (Chairman), François Bujon de lEstang, James M. Lopez and Luc
Rossignol.





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Summary of Attendance of
DirectorsThe board of
directors met 10 times during the last financial year, with three meetings being
held outside of the normal course of business.

The overall
average attendance was approximately 93.13% at board meetings and 91.10% at
committee meetings for the year.

Selection of Candidates to the
Board of Directors, Orientation and Continuing Education

Pursuant to its
mandate, the board of directors has developed a profile to define the skills and
competence required from the members of the board. The profile is used to
determine annually which additional skills and competence will be helpful to the
board as well as to evaluate specific candidates submitted for consideration for
board membership. The identification of candidates is the responsibility of the
Corporate Governance and Human Resources Committee, which is guided by the
profile developed by the board of directors. When recommending suitable
candidates for nominees for election, the Corporate Governance and Human
Resources Committee specifies which of the criteria established by the board
form the basis of each recommendation. At least three directors must be or have
been directly or indirectly involved in the development, operation or management
of a forest products company. The majority of the board must be independent
within the meaning of Multilateral Instrument 52-110
 Audit Committees and National
Instrument 58-101. The mandate of the board of directors has been
amended to reflect the requirements of National
Instrument 58-101.

The board, through
its Corporate Governance and Human Resources Committee, is also responsible for
providing prospective directors with sufficient information to permit them to
fully understand the role of the board, the role of its committees, and the
contribution that individual directors are expected to make, including the
commitment of time and energy that the Company expects from directors, as well
as the nature and operations of the Companys business. In this respect, the
Corporate Governance and Human Resources Committee approves and implements an
appropriate orientation and education program for new members of the board and a
continuing education program for all board members. The Corporate Governance and
Human Resources Committee has produced a directors manual which is used in the
orientation program for new Directors. As part of the continuing education
program, the Committee arranges presentations by experts on relevant topics,
where appropriate. The board of directors also holds budget and strategy
meetings at which directors familiarize themselves with the Companys operations
and meet a larger number of management individuals.

Selection of
ManagementThe board,
acting upon the advice of the Corporate Governance and Human Resources
Committee, has the responsibility for approving the appointment of all officers
and senior executives of the Company, including responsibility for the
appointment of a Chief Executive Officer, for the development of the Chief
Executive Officer's position description and objectives, for monitoring and
assessing the Chief Executive Officer's performance against these objectives,
determining the Chief Executive Officer's compensation and providing advice and
counsel in the execution of the Chief Executive Officer's duties. The Corporate
Governance and Human Resources Committee has recently reviewed the position
description of the Chief Executive Officer as well as his
performance.

Ethical Business
ConductThe Company
has adopted a written Code of Ethics and Business Conduct which provides
guidelines to ensure that all directors, officers and employees of the Company
and its subsidiaries and all consultants, suppliers and other persons working on
behalf of the Company respect its commitment to conduct business relationships
with respect, openness and integrity. The Company believes that its success is
possible because of its values, which include integrity, accountability, trust,
transparency, and teamwork. The Company is committed to conducting its business
in compliance with applicable laws, statutes and regulations and expects its
employees, directors, consultants, suppliers and other individuals working with
or on behalf of the Company to do likewise. In addition, business dealings among
employees and by employees with shareholders, customers, suppliers, community
organizations and governmental and regulatory authorities must be based on the
highest ethical standards.





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The board monitors
compliance with the Companys Code of Ethics and Business Conduct and is
responsible for granting any waivers from compliance. Compliance with the
Companys Code of Ethics and Business Conduct is also reviewed by the Audit
Committee as part of the Companys internal audit process. Management and
mid-management employees of the Company are requested to provide a written
acknowledgement confirming that they have received a copy of the Code of Ethics
and Business Conduct and that they will comply with it. In addition, the Code of
Ethics and Business Conduct provides a procedure for individuals working with
the Company to confidentially communicate concerns or complaints to the Company,
including to the Chairman of the Audit Committee, where appropriate. The Company
has not filed any material change report that pertains to a conduct of a
director or officer that constitutes a departure from the Code of Ethics and
Business Conduct since the beginning of its most recently completed financial
year. The Companys written Code of Ethics and Business Conduct is available on
the Companys website at www.tembec.com and was filed on www.sedar.com on
November 29, 2005.

Compensation

The Corporate
Governance and Human Resources Committee annually reviews the remuneration of
the senior executives, namely the Chief Executive Officer, Executive
Vice-Presidents, Chief Financial Officer and other designated Vice-Presidents
having regard for competitive position, internal equity and individual
performance. In establishing senior executive compensation, the Committee refers
to the average compensation levels from Hay Group Limiteds All Industrial
market. Further to this review, the Human Resources and Corporate Governance
Committee makes recommendations to the board of directors regarding the
remuneration of the senior executives and approves the remuneration of officers
other than the senior executives. The board determines the compensation of the
senior executives upon the recommendation of the Corporate Governance and Human
Resources Committee.

The Corporate
Governance and Human Resources Committee annually conducts a review of
directors compensation for board and committee service and recommends changes
to the board where appropriate. The board considers and approves the adequacy
and form of the compensation of directors upon recommendation of the Corporate
Governance and Human Resources Committee and ensures the compensation
realistically reflects the responsibilities and time involved in being an
effective director.

For the purpose of
conducting its annual review of directors compensation, the Corporate
Governance and Human Resources Committee refers to a report provided by Towers
Perrin and other information regarding compensation practices in the forest
products industry. Towers Perrin also provides reports to the Corporate
Governance and Human Resources Committee on pension-related
matters.

Assessments

Every year, a
detailed questionnaire is addressed to each director, in his or her capacity as
director and, as the case may be, as a member of one or more of the committees
of the board of directors, aimed at obtaining their views on the effectiveness
of the board or of a committee of the board and contribution of its members. The
results of the questionnaires are compiled by the Secretary and sent to the
Chairman of the Corporate Governance and Human Resources Committee and those
that are relevant to a particular committee are sent to its Chairman and to the
Chairman of the board of directors. The committee Chairmen and the Chairman of
the board, at the meeting following the receipt of the results, share these with
the members of the committee and of the board where any and all issues are
discussed.

The Corporate
Governance and Human Resources Committee reports to the board on the performance
of the board and its committees and the contribution of members of the board and
its committees. The board of directors reviews annually the assessment of the
boards and committees performance and recommendations provided by the
Corporate Governance and Human Resources Committee and evaluates its own
effectiveness, the whole in accordance with the Companys corporate governance
policy. The board of directors takes appropriate action based upon the results
of the review process.

Outside
Advisors

The Corporate
Governance and Human Resources Committee, through its Chairman, will evaluate
and, if appropriate, approve any requested engagement by individual directors of
outside advisors at the Company's expense.





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SCHEDULE D
MANDATE OF THE BOARD
TEMBEC INC./TEMBEC INDUSTRIES
INC.MANDATE OF THE BOARD OF
DIRECTORS

|I.   | OVERALL PURPOSE /
      OBJECTIVES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     | The Board
      of Directors (the Board) of
      Tembec Inc. and Tembec Industries Inc. (collectively, the Company) is responsible for the
      overall stewardship of the Company and has full power and authority to
      manage and control the affairs and business of the Company. It establishes
      the overall policies and standards for the Company. While delegating
      certain of its authority and responsibilities to committees and to the
      management of the Company, it retains full effective control over the
      Company and monitors senior management.                                                                      
|    
|II.  | COMPOSITION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    
|     | The Board
      should be constituted of a majority of Independent Directors, as defined
      under applicable securities legislation. The Company expects and requires
      directors to be and remain free of conflictual interests or relationships
      and to refrain from acting in ways which are actually or potentially
      harmful, conflictual or detrimental to the Companys best
      interests.                                                                                                                                                                                                                                                 
|    
|     | The Board
      is responsible for evaluating its size and determining the appropriate
      number of directors for the Board.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    
|     | The
      membership of the Board shall consist of at least three directors that are
      or have been directly or indirectly involved in the development, operation
      or management of a forest products company. The membership of the Board
      will also include (i) at least one Audit Committee financial expert, as
      required in applicable U.S. securities laws, and (ii) a sufficient number
      of individuals who are Financially Literate and Independent, as defined in
      applicable securities legislation, to ensure that the members of the Audit
      Committee fulfill the requirements described at section111(9)
      hereof.
|    
|     | Normal
      retirement age for directors is 70 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    
|III. | MEETINGS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    
|     | The Board
      will meet at least five times per year. It will ensure that it excludes
      management from its meetings, from time to time, as appropriate. The Board
      will implement structures and procedures to ensure that it functions
      independently of management. Minutes of all meetings of the Board shall be
      maintained.                                                                                                                                                                                                                                                                                                               
|    
|IV.  | RESPONSIBILITIES AND
      DUTIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    
|     | The Principal Functions
      of the Board are as Follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    
|     | Selection of
      Directors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    
|     | (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    
|     | (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    





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|    | Board will convey its
      findings to the Corporate Governance and Human Resources Committee to be
      used to identify specific candidates.                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(3) | The Board will ensure that
      there is an appropriate orientation and education program for new members
      of the Board and continuing education program for all Board members. It
      shall ensure that prospective candidates for Board membership have
      received the appropriate information to permit them to fully understand
      the role of the Board and its committees, the contributions expected from
      individual directors, as well as a general understanding of the nature and
      operations of the Companys business.
|   
|(4) | The Board will annually
      review the assessment of the Board's performance and recommendations
      provided by the Corporate Governance and Human Resources Committee and
      evaluate its own effectiveness, the whole in accordance with the Companys
      corporate governance policy. The Board will take appropriate action based
      upon the results of the review process.                                                                                                                                                              
|   

Remuneration of the
Directors

|(5) | The Board of Directors will
      consider and approve the adequacy and form of the compensation of
      directors, upon recommendation of the Corporate Governance and Human
      Resources Committee, and ensure the compensation realistically reflects
      the responsibilities and time involved in being an effective
      director.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   

Committees

|(6)  | The Board shall appoint
      committees to assist it in performing its duties and processing the
      quantity of information it receives.                                                                                                                                                                                                                                            
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(7)  | The Board shall name
      members of committees after considering the recommendations of the
      Corporate Governance and Human Resources Committee as well as the skills,
      preferences and availability of individual Board members, all in
      accordance with the mandates of such committees approved by the
      Board.                                                 
|    
|(8)  | The Corporate Governance
      and Human Resources Committee will be composed only of Independent
      Directors.                                                                                                                                                                                                                                                                      
|    
|(9)  | The Audit Committee will be
      composed only of independent directors, as defined in applicable
      securities legislation. All members of the Audit Committee will be
      Financially Literate, as defined in applicable securities legislation and
      at least one member shall be an audit committee financial expert, as
      defined in applicable U.S. securities laws.
|    
|(10) | The Environment, Health and
      Safety Committee shall consist of not fewer than four directors, all of
      whom will be environmentally knowledgeable and at least one will have an
      engineering or scientific background.                                                                                                                                                    
|    
|(11) | The Board will receive
      reports from each committee as to the work undertaken by the committee
      and, in each case, the committees recommendations, if any, for change
      with respect to its responsibilities. The Board will evaluate and approve,
      if appropriate, such recommendations. The Board will also receive minutes
      of all Committee meetings.      
|    
|(12) | The Board will annually
      evaluate the performance and review the work of its committees, including
      their respective mandates and the sufficiency of such
      mandates.                                                                                                                                                                                                     
|    
|(13) | The Board will annually
      appoint a member of each of its committees to act as chairman of the
      committee.                                                                                                                                                                                                                                                                     
|    





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Senior
Management

|(14) | The Board will oversee
      management through an ongoing review process.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(15) | The Board will appoint and
      determine the remuneration of the Chief Executive Officer (the
      CEO) and other Senior
      Executives of the Company, upon recommendation of the Corporate Governance
      and Human Resources Committee.                                                                                                                                                                                                                                                                                                   
|    
|(16) | The Board will, together
      with the CEO, and with the assistance of the Corporate Governance and
      Human Resources Committee, develop a position description for the CEO, for
      the chair of the Board and for the chair of each committee of the Board.
      The Board will review and approve the objectives developed for the CEO by
      the Human Resources Committee and review the assessment of the CEOs
      performance in relation to such objectives made by the Corporate
      Governance and Human Resources Committee.
|    
|(17) | The Board will, to the
      extent feasible, satisfy itself as to the integrity of the CEO and other
      executive officers and that the CEO and other executive officers create a
      culture of integrity throughout the Company.                                                                                                                                                                                                                                                                                                              
|    
|(18) | The Board will annually
      receive and consider a report from its Corporate Governance and Human
      Resources Committee on succession planning, including appointing, training
      and monitoring of senior management and the CEO.                                                                                                                                                                                                                                                                                                           
|    

General Responsibilities of the
Board of Directors

|(19) | The Board will oversee the
      management of the Company. In doing so, the Board will establish an
      effective working relationship with the CEO and other members of senior
      management.                                                                                                                                                                                     
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(20) | The Board will oversee the
      formulation of long-term strategic, financial and organizational goals for
      the Company on a regular basis, taking into account, among other things,
      the opportunities and risks of the business.                                                                                                                                            
|    
|(21) | As part of the
      responsibility of the Board to oversee management of the Company, the
      Board will engage in active monitoring of the Company and its affairs in
      its stewardship capacity.                                                                                                                                                                                
|    
|(22) | The Board will, through its
      Audit Committee, review the integrity of the Companys internal control
      and management information systems.                                                                                                                                                                                                                                      
|    
|(23) | The Board will engage in a
      review of short and long-term performance of the Company in accordance
      with approved plans.                                                                                                                                                                                                                                                       
|    
|(24) | The officers of the
      Company, headed by the CEO, shall be responsible for general day to day
      management of the Company and for making recommendations to the Board with
      respect to long term strategic, financial, organization and related
      objectives.                                                                                                           
|    
|(25) | The Board will annually
      review the significant risks and opportunities affecting the Company and
      its businesses and the systems and controls in place to manage and monitor
      risks and opportunities. The Board may impose such limits as may be in the
      interests of the Company and its shareholders.                                                            
|    
|(26) | The Board will oversee an
      annual strategic planning process within the Company and will approve the
      Companys strategic plan. This plan will take into account the opportunity
      and risks of the Companys business. The Board will also, from time to
      time, approve annual business plans and multi-year business plans for the
      Company and its businesses.
|    
|(27) | The Board will approve
      capital expenditures or other financial commitments in excess of
      $2,500,000.                                                                                                                                                                                                                                                                          
|    





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|(28) | The
      Board will adopt prudent financial standards with respect to the
      businesses of the Company and prudent levels of debt in relation to the
      Company's consolidated capitalization.                                                                                                                                                                                                                                                  
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(29) | The
      Board will monitor compliance with the ethics policies or codes of the
      Company and will be responsible for granting any waivers from compliance
      with such policies or codes for directors and
officers.                                                                                                                                                                                                                          
|    
|(30) | The
      Board will also consider and approve:                                                                                                                                                                                                                                                                                                                                                                                                        
|    
|     | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    
|     | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    
|     | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    
|     | (iv)                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    
|     | (v)                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    
|(31) | The
      Board will also receive reports and consider:                                                                                                                                                                                                                                                                                                                                                                                                
|    
|     | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    
|     | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    
|     | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    
|     | (iv)                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    
|(32) | The
      Board will oversee how the Company communicates its goals and objectives
      to its shareholders and other relevant constituencies, including the
      approval of policies relating to: (i) how the Company interacts with
      analysts, investors, other key stakeholders and the public; and (ii)
      continuous disclosure obligations and selective disclosure. Such policies
      shall be reviewed annually or when necessary.
|    
|(33) | The
      Board will review and approve the Company's management proxy circular and
      annual information form following review by its Corporate Governance and
      Human Resources Committee and its Audit Committee.                                                                                                                                                                                                                            
|    
|(34) | The
      Board will review and approve annual audited financial statements,
      quarterly financial statements and related management discussion and
      analysis disclosure following review by the Audit
    Committee.                                                                                                                                                                                                                         
|    
|(35) | The
      Board will consider and review the means by which stakeholders can
      communicate with the Company and the Board including the opportunity to do
      so at the annual meeting, communications interfaces through the Company's
      website and the adequacy of resources available within the Company to
      respond to shareholders through the office of the Secretary and
      otherwise.                                       
|    
|(36) | The
      Board shall, through its Audit Committee, ensure that the Company adopt
      suitable policies regulating disclosure to and communication with
      shareholders, the investment community, members of the media, governments
      and organizations, employees and the greater public.                                                                                                                                                   
|    





|******************Management
      Information
      Circular************ | **51** | ***Tembec
      Inc.***
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|(37) | The Board has the responsibility
      for monitoring compliance by the Company with the corporate governance
      requirements of applicable securities regulators and stock exchanges. The
      Board will approve the disclosure of (i) the Companys system of
      governance and (ii) the operation of its system of governance prepared by
      the Corporate Governance and Human Resources
Committee.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(38) | The Board will consider and
      approve such other matters as the Board may, from time to time,
      determine.                                                                                                                                                                                                                                                                                                
|    







|******************Management
      Information
      Circular************ | **52** | ***Tembec
      Inc.***
|------------------------------------------------------------------------- | ------ | -----------------------

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