Document:

Exhibit 10.3

EXECUTION COPY

DATED as of the 28th day of December, 2006.

- among -

CASCADES INC.

as Purchaser

- and –

DOMTAR INC.

as Vendor

 

SHARE PURCHASE AGREEMENT

 

TABLE OF CONTENTS

	
  ARTICLE 1.
  INTERPRETATION

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
  1.2

  	
   

  	
  Recitals

  	
   

  	
  4

  
	
  1.3

  	
   

  	
  Governing Law; Attornment

  	
   

  	
  4

  
	
  1.4

  	
   

  	
  Entire Agreement; Amendment

  	
   

  	
  4

  
	
  1.5

  	
   

  	
  Calculation of Time

  	
   

  	
  4

  
	
  1.6

  	
   

  	
  Performance on Holidays

  	
   

  	
  4

  
	
  1.7

  	
   

  	
  Waiver of Rights

  	
   

  	
  4

  
	
  1.8

  	
   

  	
  Severability

  	
   

  	
  5

  
	
  1.9

  	
   

  	
  Additional Rules of Interpretation

  	
   

  	
  5

  
	
  1.10

  	
   

  	
  Schedules

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2.
  PURCHASE AND SALE

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Purchase and Sale

  	
   

  	
  5

  
	
  2.2

  	
   

  	
  Amount and Payment of Purchase Price

  	
   

  	
  5

  
	
  2.3

  	
   

  	
  Delivery of Share Certificates

  	
   

  	
  5

  
	
  2.4

  	
   

  	
  Place of Closing

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3.
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Representations and
  Warranties of the Vendor

  	
   

  	
  6

  
	
   

  	
   

  	
  3.1.1    Status
  and Capacity of the Vendor

  	
   

  	
  6

  
	
   

  	
   

  	
  3.1.2    Authorization of
  Purchase by the Vendor

  	
   

  	
  6

  
	
   

  	
   

  	
  3.1.3    Title to Shares

  	
   

  	
  6

  
	
  3.2

  	
   

  	
  Representations and Warranties of the Purchaser

  	
   

  	
  7

  
	
   

  	
   

  	
  3.2.1    Status and Capacity of
  the Purchaser

  	
   

  	
  7

  
	
   

  	
   

  	
  3.2.2    Authorization of
  Purchase by the Purchaser

  	
   

  	
  7

  
	
  3.3

  	
   

  	
  Commission

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4.
  COVENANTS OF THE PARTIES

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Covenant of the Purchaser

  	
   

  	
  7

  
	
   

  	
   

  	
  4.1.1    Prohibition to Sell

  	
   

  	
  7

  
	
  4.2

  	
   

  	
  Mutual Covenants

  	
   

  	
  7

  
	
   

  	
   

  	
  4.2.1    Cooperation

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5.
  CONDITIONS OF CLOSING

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Conditions for the Benefit of the Purchaser

  	
   

  	
  8

  

 

 

 

 

	
   

  	
   

  	
  5.1.1    Representations,
  Warranties and Covenants of the Vendor

  	
   

  	
  8

  
	
  5.2

  	
   

  	
  Conditions for
  the Benefit of the Vendor

  	
   

  	
  8

  
	
   

  	
   

  	
  5.2.1    Representations,
  Warranties and Covenants of the Purchaser

  	
   

  	
  8

  
	
  5.3

  	
   

  	
  Conditions for
  the Benefit of both Parties

  	
   

  	
  9

  
	
   

  	
   

  	
  5.3.1    Competition
  Act Approval

  	
   

  	
  9

  
	
   

  	
   

  	
  5.3.2    Cost
  Sharing Agreement

  	
   

  	
  9

  
	
   

  	
   

  	
  5.3.3    Closing
  Documents

  	
   

  	
  9

  
	
  5.4

  	
   

  	
  Waiver

  	
   

  	
  9

  
	
  5.5

  	
   

  	
  Failure to
  Satisfy Conditions

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6. MISCELLANEOUS

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Further
  Assurances

  	
   

  	
  10

  
	
  6.2

  	
   

  	
  Public
  Announcements

  	
   

  	
  10

  
	
  6.3

  	
   

  	
  Notices

  	
   

  	
  10

  
	
  6.4

  	
   

  	
  Costs and
  Expenses

  	
   

  	
  12

  
	
  6.5

  	
   

  	
  Counterparts

  	
   

  	
  12

  
	
  6.6

  	
   

  	
  Assignment

  	
   

  	
  12

  
	
  6.7

  	
   

  	
  Shareholders’
  Agreement

  	
   

  	
  12

  
	
  6.8

  	
   

  	
  Parties in
  Interest

  	
   

  	
  12

  
	
  6.9

  	
   

  	
  Language

  	
   

  	
  12

  

 

THIS
SHARE PURCHASE AGREEMENT is dated as of the 28th day of December, 2006.

	
  BETWEEN:

  	
   

  	
  CASCADES
  INC., a company duly incorporated and existing under the
  laws of the Province of Quebec, having its head office at 404 Marie-Victorin
  Street, in the Town of Kingsey Falls, Province of Quebec, J0A 1B0;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (the “Purchaser”)

  
	
   

  	
   

  	
   

  
	
  AND:
  

  	
   

  	
  DOMTAR
  INC., a company duly incorporated and existing under the
  laws of Canada, having its head office at 395 de Maisonneuve West, in the
  City of Montreal, Province of Quebec, H3A 1L6;

  

 

(the “Vendor”)

RECITALS:

1.                                      The Vendor owns 10,000,100 Class B Common
shares in the capital of Norampac Inc. (the “Corporation”);

2.                                      The
Vendor has agreed to sell and the Purchaser has agreed to purchase all of the
issued and oustanding shares in the capital of the Corporation held by the Vendor, on the Closing Date, upon and
subject to the terms and conditions contained in this Agreement;

3.                                      The
Corporation carries on the business of the manufacture, distribution and sale
of corrugating medium and linear board and corrugated boxes and related
activities (the “Business”);

NOW THEREFORE in consideration of the premises and mutual agreements
hereinafter set out and of other good and valuable consideration (the receipt
and sufficiency of which are acknowledged by each Party), the Parties agree as
follows:

Article
1.

INTERPRETATION

1.1                                                                          Definitions

In this Agreement:

“Affiliate”
means, with respect to any person, any other person that directly or indirectly
controls, is controlled by, or is under common control with that other
person.  For purposes of this definition,
a person “controls” another person if that person directly or indirectly
possesses the power to direct or cause the direction of the management and
policies of that other person, whether through ownership or voting of
securities, by contract or otherwise and “controlled by” and “under common
control with” have similar meanings;

“Agreement” means this share
purchase agreement and all Schedules and Exhibits attached hereto;

“Applicable Law” means, in respect
of any person, property, transaction or event, any domestic or foreign statute,
ordinance, rule, regulation, treaty, restriction, regulatory policy, standard,
code, by-law (zoning or otherwise) or Order that applies in whole or in part to
such person, property, transaction or event and that has force of law where
such person or property is located or the transaction or event occurs;

“Business” has the meaning ascribed
to that term in the third recital;

“Business Day” means a day other
than a Saturday, Sunday or any other day on which the principal chartered banks
located in the City of Montreal, Quebec are not open for the transaction of
domestic business during normal banking hours;

“Closing” means the completion of
the sale by the Vendor to and purchase by the Purchaser of, the Purchased
Shares and the completion of all other transactions contemplated by this
Agreement that are to occur contemporaneously therewith;

“Closing Date” means December 29, 2006 or such earlier or
later date as may be agreed upon in writing by the Parties but, in any event,
not later than on the Outside Date;

“Closing Document” means any
document or instrument delivered at or subsequent to the Closing as provided in
or pursuant to this Agreement;

“Closing Time” means 5:00 o’clock p.m. Montreal time on the
Closing Date or such other time on the Closing Date as the Parties agree in writing  that
the Closing shall take place;

“Commissioner” means the
Commissioner of Competition appointed under the Competition
Act (Canada);

“Competition Act Approval” means
either:

(a)                                  the applicable
waiting period under section 123 of the Competition
Act (Canada) shall have expired and the Purchaser shall have been
advised in writing by the Commissioner in terms satisfactory to the Purchaser
in its sole discretion that she has determined not to make an application for
an Order under the Competition Act
(Canada), in respect of the transactions contemplated by this Agreement;

(b)                                 the Commissioner shall
have issued a waiver under Subsection 113(c) of the Competition
Act (Canada) and the Purchaser shall have been advised in writing by
the Commissioner in terms satisfactory to the Purchaser in its sole discretion,
that she has determined not to make an application for an Order under the Competition Act (Canada) in respect of the transactions
contemplated by this Agreement; or

 2
 

(c)                                  an advance ruling
certificate shall have been issued under section 102 of such Act in respect of
the transactions contemplated by this Agreement;

“Corporation”
has the meaning ascribed to that term in the first recital;

“Disclosure
Schedule” means Schedule 1.1A;

“Encumbrance”
means any mortgage, charge, hypothec, prior claim, encroachment, lien,
encumbrance, adverse claim, restrictive covenant, assignment by way of
security, security interest of any nature, pledge or privilege or any agreement
to create any of the foregoing;

“Governmental
Authority” means any domestic or foreign government, whether
federal, provincial, state, territorial or municipal; and any governmental
agency, ministry, department, Tribunal, commission, bureau, board or other
instrumentality exercising or purporting to exercise legislative, judicial,
regulatory or administrative functions of, or pertaining to, government, in
each case having jurisdiction over the Vendor or the Corporation;

“Legal
Proceeding” means any litigation, action, suit,
investigation, hearing, claim, complaint, grievance, arbitration proceeding or
other proceeding and includes any appeal or review and any application for
same;

“Licence”
means any licence, permit, approval, authorization, certificate, directive,
order, variance, registration, right, privilege, concession or franchise
issued, granted, conferred or otherwise created by any Governmental Authority;

“Order”
means any order, directive, judgment, decree, award or writ of any Tribunal;

“Outside
Date” means February 28, 2007;

“Parties”
means the Vendor and the Purchaser and “Party”
means either one of them;

“Purchased
Shares” has the meaning ascribed to that term in Section 2.1;

“Purchase
Price” means the price payable by the Purchaser to the Vendor
for the Purchased Shares provided for in Section 2.2;

“Regulatory
Approval” means any approval, consent, ruling, authorization,
notice, permit or acknowledgement that may be required from any person by
Applicable Law, the terms of any Licence or the conditions of any Order or
otherwise which is required in connection with the sale of the Purchased Shares
to the Purchaser and the completion of the other transactions contemplated
herein or which is otherwise necessary to permit the Parties to perform their
obligations or is otherwise required to permit the consummation of the
transactions as contemplated herein,
including, without limitation, Competition Act Approval; and

“Representative”
means, in respect of a Party, each director, officer, employee, agent, legal
counsel, accountant, professional advisor and other representative of that
Party;

 3
 

“Tribunal” means any court
(including a court of equity), arbitrator or arbitration panel and any other
Governmental Authority, stock exchange, or association or other body exercising
adjudicative, regulatory, judicial or quasi-judicial powers.

1.2                                                                        Recitals

The recitals in this Agreement shall form an integral part hereof.

1.3                                                                        Governing
Law; Attornment

This Agreement shall be construed, interpreted and enforced in
accordance with, and the rights of the Parties shall be governed by, the laws
of the Province of Quebec and the federal laws of Canada applicable therein
(excluding any conflict of law rule or principle of such laws that might refer
such interpretation or enforcement to the laws of another jurisdiction).  Each Party irrevocably submits to the
exclusive jurisdiction of the courts of the Province of Quebec (district of
Montréal) with respect to any matter arising hereunder or relating hereto.

1.4                                                                        Entire
Agreement; Amendment

This Agreement constitutes the entire agreement between the Parties
with respect to the transactions herein contemplated and cancels and supersedes
any prior understandings, agreements, negotiations and discussions, written or
oral, between the Parties with respect thereto. 
There are no representations, warranties, terms, conditions,
undertakings or collateral agreements or understandings, express or implied,
between the Parties other than those expressly set forth in this Agreement or
in any Closing Document.  This Agreement
shall not be amended, supplemented or otherwise modified in any respect except
by written instrument executed by each of the Parties.

1.5                                                                        Calculation
of Time

In this Agreement, a period of days shall be deemed to begin on the
first day after the event which began the period and to end at 5:00 p.m.
(Montreal  time) on the last day of
the period.  If any period of time is to
expire hereunder on any day that is not a Business Day, the period shall be
deemed to expire at 5:00 p.m. (Montreal  time)
on the next succeeding Business Day.

1.6                                                                        Performance
on Holidays

If any act (including the giving of notice) is otherwise required by
the terms hereof to be performed on a day which is not a Business Day, such act
shall be valid if performed on the next succeeding Business Day.

1.7                                                                        Waiver
of Rights

Any waiver of, or consent to depart from, the requirements of any
provision of this Agreement shall be effective only if it is in writing and
signed by the Party giving it, and only in the specific instance and for the
specific purpose for which it has been given. 
No failure on the part of any Party to exercise, and no delay in
exercising, any right under this Agreement

 4
 

shall operate as a waiver of such right.  No single or partial exercise of any such
right shall preclude any other or further exercise of such right or the
exercise of any other right.

1.8                                                                        Severability

Any provision in this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.

1.9                                                                        Additional Rules of Interpretation

(a)                                  wherever the words
“include”, “includes” or “including” are used in this Agreement or in any
Closing Document, they shall be deemed to be followed by the words “without
limitation”;

(b)                                 all references herein
to any agreement (including this Agreement), document or instrument mean such
agreement, document or instrument as amended, supplemented, modified, varied,
restated or replaced from time to time in accordance with the terms thereof
and, unless otherwise specified therein, includes all schedules and exhibits
attached thereto.

1.10                                                                        Schedules

The following is the Schedule attached to and incorporated in this
Agreement by reference and deemed to be a part hereof:

Schedule 1.1A                               Disclosure
Schedule

Section 5.3.2 - Form of
Cost Sharing Agreement

Article
2.

PURCHASE AND SALE

2.1                                                                        Purchase
and Sale

Subject to the terms, conditions and covenants contained herein, the
Vendor hereby agrees to sell, assign and transfer to the Purchaser and the
Purchaser hereby agrees to purchase from the Vendor, on the Closing Date, all
of the shares held by the Vendor in the capital of the Corporation (the “Purchased Shares”), being 10,000,100 Class
B Common shares.

2.2                                                                        Amount
and Payment of Purchase Price

The aggregate price payable by the Purchaser to the Vendor for the
Purchased Shares (the “Purchase Price”)
is the sum of CDN$560,000,000, subject to adjustment, as the case may be,
pursuant to Section 4.1 of the Cost Sharing Agreement dated the date
hereof between the Purchaser and the Vendor, payable to the Vendor at the
Closing Time by wire transfer of immediately available funds to an account
specified by the Vendor.

 5
 

2.3                                                                        Delivery
of Share Certificates

The Vendor shall transfer and deliver to the Purchaser at the Closing
Time share certificates representing the Purchased Shares duly endorsed in
blank for transfer, or accompanied by irrevocable security transfer powers of
attorney duly executed in blank.

2.4                                                                        Place
of Closing

The Closing shall take place at the Closing Time at the offices of
Fraser Milner Casgrain LLP, 1 Place Ville-Marie, Suite 3900, Montreal,
Quebec.

Article
3.

REPRESENTATIONS AND WARRANTIES

3.1                                                                        Representations
and Warranties of the Vendor

Subject to any limitations contained in this Agreement, the Vendor
hereby represents and warrants to the Purchaser that the representations and
warranties set forth below are true and correct as at the date hereof, unless
expressly specified otherwise.

3.1.1                                                                    Status
and Capacity of the Vendor

The Vendor is a corporation duly incorporated, organized and subsisting
under the laws of Canada and has the corporate power, authority and capacity to
execute and deliver this Agreement, to sell and transfer the Purchased Shares
owned by it to the Purchaser as herein contemplated and to perform its other
obligations hereunder.  No proceedings
have been taken or authorized by the Vendor or by any other person with respect
to the bankruptcy, insolvency, liquidation, dissolution or winding up of the
Vendor nor, to the knowledge of the Vendor, have any such proceedings been
threatened by any other person.

3.1.2                                                                    Authorization
of Purchase by the Vendor

The execution and delivery of this Agreement and the completion of the
transactions herein contemplated have been duly and validly authorized by all
necessary corporate action on behalf of the Vendor and this Agreement has been
duly and validly executed and delivered by the Vendor and is a valid and
binding obligation of the Vendor enforceable against it in accordance with its
terms.  There is no Legal Proceeding in
progress, pending or, to the knowledge of the Vendor, threatened, against or
affecting the Vendor or affecting the title of the Vendor to the Purchased
Shares or which affects or might reasonably be expected to affect the ability
of the Vendor to enter into this Agreement or to perform its obligations
hereunder.

3.1.3                                                                    Title
to Shares

The Vendor legally and beneficially owns the
Purchased Shares free of any Encumbrances.  No person has, or has any right capable of
becoming, any agreement, option, understanding or commitment for the purchase
or other acquisition from the Vendor of any of the Purchased Shares.  Except for the Purchased Shares, the Vendor
does not own or hold any shares in the capital of the Corporation or any
options, calls, warrants or other securities or rights which are convertible
into, exercisable for or relate to any shares or securities convertible into
shares in the capital of the Corporation.

 6
 

3.2                                                                        Representations
and Warranties of the Purchaser

The Purchaser represents and warrants to the Vendor as set out in this
Section 3.2 and acknowledges that the Vendor is relying on such representations
and warranties in connection with the transactions contemplated in this
Agreement.

3.2.1                                                                    Status
and Capacity of the Purchaser

The Purchaser is a company duly incorporated, organized and subsisting
under the laws of the Province of Quebec and has the corporate power, authority
and capacity to enter into this Agreement and is duly qualified to own or lease
its property and to carry on its business as presently conducted.  No proceedings have been taken or authorized
by the Purchaser or by any other person with respect to the bankruptcy,
insolvency, liquidation, dissolution or winding up of the Purchaser or with
respect to any consolidation, arrangement or reorganization of, or relating to,
the Purchaser nor, to the knowledge of the Purchaser, have any such proceedings
been threatened by any other person.

3.2.2                                                                    Authorization
of Purchase by the Purchaser

The execution and delivery of this Agreement and the completion of the
transactions herein contemplated have been duly and validly authorized by all
necessary action on behalf of the Purchaser and this Agreement has been duly
and validly executed and delivered by the Purchaser and is a valid and binding
obligation of the Purchaser enforceable against it in accordance with its
terms.

3.3                                                                        Commission

Each Party represents and warrants to the other Party that such other
Party will not be liable for any brokerage commission, finder’s fee or other
similar payment in connection with the transactions contemplated hereby.

Article
4.

COVENANTS OF THE PARTIES

4.1                                                                        Covenant
of the Purchaser

4.1.1                                                                    Prohibition
to Sell

The Purchaser hereby agrees that it shall not, directly or indirectly,
sell, transfer or assign, in any way, in whole or in part, the Business for a
period of three years following the Closing Date.  Notwithstanding the foregoing, the Purchaser
may transfer the Business or any portion thereof to one or more of its
Affiliates at any time.

4.2                                                                        Mutual
Covenants

Each Party hereby covenants and agrees with the other Party as follows:

 7
 

4.2.1                                                                    Cooperation

The Parties shall cooperate fully in good faith with each other and
their respective Representatives in connection with any steps required to be
taken as part of their respective obligations under this Agreement.

Article
5.

CONDITIONS OF CLOSING

5.1                                                                        Conditions
for the Benefit of the Purchaser

The transactions herein contemplated, including the
sale and purchase of the Purchased Shares in accordance with the terms of this
Agreement, are subject to the conditions precedent set out in this Section 5.1,
each of which is hereby declared to be for the exclusive benefit of the
Purchaser.  Each of such conditions is to
be satisfied in full at or prior to the Closing and, in any event, not later
than on the Outside Date.  The Vendor
covenants and agrees to use its best efforts to cause each of such conditions
to be fulfilled at or prior to the Closing Time.

5.1.1                                                                    Representations,
Warranties and Covenants of the Vendor

(a)                                  All representations
and warranties of the Vendor made in or pursuant to this Agreement are true and
correct and shall be true and correct at the Closing Time as if such
representations and warranties had been made at and as of the Closing Time.

(b)                                 The Vendor shall have
performed or complied with all obligations, covenants and agreements contained
in this Agreement to be performed by it at or prior to the Closing Time.

5.2                                                                        Conditions
for the Benefit of the Vendor

The transactions herein contemplated, including the
sale and purchase of the Purchased Shares in accordance with the terms of this
Agreement, are subject to the conditions precedent set out in this Section 5.2,
each of which is hereby declared to be for the exclusive benefit of the
Vendor.  Each of such conditions is to be
satisfied in full at or prior to the Closing and, in any event, not later than
on the Outside Date.  The Purchaser
covenants and agrees to use its best efforts to cause each of such conditions
to be fulfilled prior to the Closing Time.

 

5.2.1                                                                    Representations,
Warranties and Covenants of the Purchaser

(a)                                  The representations
and warranties of the Purchaser made in or pursuant to this Agreement are true
and correct and shall be true and correct at the Closing Time as if such
representations and warranties had been made at and as of the Closing Time.

(b)                                 The Purchaser shall
have performed or complied with all obligations, covenants and agreements
contained in this Agreement to be performed by it at or prior to the Closing
Time.

 8
 

5.3                                                                        Conditions
for the Benefit of both Parties

The transactions herein contemplated, including the
sale and purchase of the Purchased Shares in accordance with the terms of this
Agreement, are subject to the conditions precedent set out in this Section 5.3,
each of which is hereby declared to be for the benefit of both of the Parties
hereto.  Each of such conditions is to be
satisfied in full at or prior to the Closing and, in any event, not later than
on the Outside Date.  Each of the Parties
covenants and agrees to use its best efforts to cause each of such conditions to
be fulfilled prior to the Closing Time.

 

5.3.1                                                                    Competition
Act Approval

The Competition Act Approval shall have been granted, obtained and
received.

5.3.2                                                                    Cost
Sharing Agreement

The Parties shall have
entered into a cost sharing agreement in respect of the environmental costs and
liabilities which may arise in the event that the Corporation decides to
permanently shutdown the containerboard mill located in Red Rock, Ontario,
substantially in the form attached hereto as Section 5.3.2 of the Disclosure
Schedule.

 

5.3.3                                                                    Closing
Documents

The Parties shall have
received such other agreements, certificates, affidavits, statutory
declarations, instruments of transfer and other documentation reasonably
required by each to implement the transactions herein contemplated, all of
which shall be satisfactory in form and substance to its respective counsel,
acting reasonably.

5.4                                                                        Waiver

Either Party may waive,
by notice to the other Party, any condition set forth in this Article 5 which
is for its benefit.  No waiver by a Party
of any condition, in whole or in part, shall operate as a waiver of any other
condition.

 

5.5                                                                        Failure
to Satisfy Conditions

If any condition set
forth in Sections 5.1, 5.2 or 5.3 is not satisfied or waived by the Outside
Date, or if it becomes apparent that any such condition cannot be satisfied at
the Closing Time, the Party entitled to the benefit of such condition (the “First Party”) may terminate this Agreement,
acting reasonably, by notice in writing to the other Party and in such event:

 

(a)                                  unless the other
Party can show that the condition or conditions which have not been satisfied
and for which the First Party has terminated this Agreement are reasonably
capable of being performed or caused to be performed by the First Party or have
not been satisfied by reason of a default by the First Party hereunder, the
First Party shall be released from all obligations hereunder; and

 9
 

(b)                                 unless the First Party
can show that the condition or conditions which have not been satisfied and for
which the First Party has terminated this Agreement are reasonably capable of
being performed or caused to be performed by the other Party or have not been
satisfied by reason of a default by the other Party hereunder, then the other
Party shall also be released from all obligations hereunder;

provided however that no release of obligations under this Section 5.5
shall release either Party from any obligation under Section 6.2 or Section
6.4.

 

Article
6.

MISCELLANEOUS

6.1                                                                        Further
Assurances

Each Party shall from time to time execute and deliver or cause to be
executed and delivered all such further documents and instruments and do or
cause to be done all further acts and things as the other Party may, before or
after the Closing Time, reasonably require as being necessary or desirable in
order to effectively carry out or better evidence or perfect the full intent
and meaning of this Agreement or any provision hereof.

6.2                                                                        Public
Announcements

Except to the extent required by Applicable Law, each Party agrees that
no disclosure or public announcement regarding this Agreement or the
transactions contemplated hereby shall be made by either Party without the
prior written consent of the other Party.

6.3                                                                        Notices

(a)                                  Any notice, direction
or other communication (in this Section, a “notice”) required or permitted to
be given to a Party shall be in writing and shall be sufficiently given if
delivered personally, mailed or transmitted by facsimile as follows:

(i)                                     in the case of the
Purchaser, at:

Cascades Inc.

404 Marie-Victorin
Street

Kingsey Falls, QC 
J0A 1B0

Attention: 
President

Fax No.:  (819) 363-5155

 10
 

with a copy to (which shall not constitute notice):

Fraser Milner Casgrain LLP

1 Place Ville-Marie

Suite 3900

Montreal, QC  H3B 4M7

Attention:                             Charles R. Spector

Fax No.:  (514)
866-2241

(ii)                                  in the case of the
Vendor, at:

Domtar Inc.

395 de Maisonneuve
West

Montreal, QC 
H3A 1L6

Attention: 
Secretary

Fax No.:  (514) 848-6850

with a copy to (which shall not constitute notice):

Ogilvy Renault LLP

Suite 1100

1981 McGill College
Avenue

Montreal, QC 
H3A 3C1

Attention:                                         Norman M. Steinberg

Fax No.:  (514) 286-5474

(b)                                 Any notice delivered
personally, shall be deemed to have been given and received on the day on which
it was delivered, if delivered prior to 5:00 p.m. (recipient’s time) on a
Business Day; otherwise on the first Business Day thereafter.  Any notice mailed shall be deemed to have
been given and received on the third Business Day after it was mailed, provided
that if the Party giving the notice knows or ought reasonably to know of
disruptions in the postal system that might affect the delivery of mail, such
notice shall not be mailed but shall be given by personal delivery or facsimile
transmission.  Any notice transmitted by
facsimile shall be deemed to have been given and received on the day of its
transmission if the machine from which it was sent receives the answerback code
of the Party to whom it was sent prior to 5:00 p.m. (recipient’s time) on
such day; otherwise on the first Business Day thereafter.

 11
 

(c)                                  Either Party may
change its address for service from time to time by notice given to each of the
other Party in accordance with the foregoing provisions.

6.4                                                                        Costs
and Expenses

Each Party shall be responsible for all costs and expenses (including
the fees and disbursements of legal counsel, bankers, investment bankers,
accountants, brokers and other advisors) incurred by it in connection with this
Agreement and the transactions contemplated herein.  The Parties shall be equally responsible for
all filing fees required to be paid in connection with obtaining any Regulatory
Approval for the transactions contemplated herein.

6.5                                                                        Counterparts

This Agreement may be executed in counterparts, each of which shall be
deemed to be an original and both of which together shall constitute one and
the same instrument.  To evidence its
execution of an original counterpart of this Agreement, a Party may send a copy
of its original signature on the execution page hereof to the other Party by
facsimile transmission and such transmission shall constitute delivery of an
executed copy of this Agreement to the receiving Party.

6.6                                                                        Assignment

This Agreement shall not be assigned by either Party without the prior
written consent of the other Party.

6.7                                                                        Shareholders’
Agreement

The Parties hereby acknowledge that the Shareholders’ Agreement dated
December 30, 1997 between the Purchaser and the Vendor is terminated.

6.8                                                                        Parties
in Interest

This Agreement shall enure to the benefit of and be binding upon the
Parties and their respective successors, including any successor by reason of
the amalgamation or merger of a Party, and permitted assigns.

6.9                                                                        Language

The Parties hereby acknowledge that they have requested that this
Agreement and all related documents be drawn up in the English language.  Les parties aux présentes reconnaissent qu’elles ont exigé que la
présente convention et tout document qui s’y rattachent soient rédigés en
anglais.

[Balance
of page left intentionally blank]

 12
 

IN WITNESS WHEREOF this Agreement has been executed by
the parties hereto.

 

	
  

  	
   

  	
  CASCADES INC.  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   Signed “Alain Lemaire”

  
	
   

  	
   

  	
   Alain Lemaire, President and Chief Executive 

  
	
   

  	
   

  	
   Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   Signed “Robert F. Hall”

  
	
   

  	
   

  	
   Robert F. Hall, Vice-President, Legal Affairs 

  
	
   

  	
   

  	
   and Corporate Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DOMTAR INC.  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   Signed “Gilles Pharand”

  
	
   

  	
   

  	
   Per: Gilles Pharand 

  
	
   

  	
   

  	
   Title: Senior Vice-President, Corporate 

  
	
   

  	
   

  	
   Affairs and General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   Signed “Daniel Buron”

  
	
   

  	
   

  	
   Per: Daniel Buron 

  
	
   

  	
   

  	
   Title: Senior Vice-President and Chief 

  
	
   

  	
   

  	
   Financial Officer

  

 

 13Exhibit
10.4

EXECUTION
COPY

 

DATED as of the 28th day
of December, 2006.

- among -

CASCADES INC.

- and —

DOMTAR INC.

COST SHARING AGREEMENT

RED ROCK PROPERTY

THIS
COST SHARING AGREEMENT is dated as of the 28th day of
December, 2006.

	
  BETWEEN:

  	
  CASCADES INC., a company duly
  incorporated and existing under the laws of the Province of Quebec, having
  its head office at 404 Marie-Victorin Street, in the Town of Kingsey Falls,
  Province of Quebec, J0A 1B0;

  
	
   

  	
   

  
	
   

  	
  (“Cascades”)

  
	
   

  	
   

  
	
  AND:

  	
  DOMTAR INC., a company duly
  incorporated and existing under the laws of Canada, having its head office at
  395 de Maisonneuve West, in the City of Montreal, Province of Quebec,
  H3A 1L6;

  
	
   

  	
   

  
	
   

  	
  (“Domtar”)

  

 

RECITALS:

1.             Cascades and Domtar entered into a letter of
intent dated December 4, 2006 and accepted by Domtar on December 5, 2006 (the “LOI”) pursuant to which Domtar agreed to
sell the Purchased Shares on the Closing Date (the “Transaction”),
subject to the terms and conditions set forth therein;

2.             Subsequently, Cascades and Domtar entered
into a share purchase agreement dated as of December 28, 2006 (the “Purchase Agreement”) pursuant to which the
Parties formalized the terms and conditions relating to the Transaction;

3.             Immediately after Closing, Cascades will own
all of the issued and outstanding
shares in the capital of Norampac Inc. (“Norampac”);

4.             The underlying assets of Norampac include the
assets related to a containerboard mill operation (the “Mill”) located in Red Rock, Province of
Ontario (the “Property”);

5.             Norampac has announced the temporary shut
down the Mill;

6.             The Parties anticipate that in the event that
Cascades decides to permanently shut down the Mill, it will result in
Environmental Remediation Costs;

7.             As
part of the Transaction, Domtar has
agreed to be responsible for a portion of the Net Environmental Remediation
Costs in the event that Cascades decides to permanently shut down the Mill, the
whole in accordance with the provisions hereof.

8.             It is a condition precedent to the Closing
that Cascades and Domtar enter into this Cost Sharing Agreement.

NOW THEREFORE for good
and valuable consideration (the receipt and sufficiency of which are acknowledged
by each Party), Cascades and Domtar hereby covenant and agree as follows:

1.                                                                                      Definitions

1.1                                                                                 All
capitalized words or terms used herein and not otherwise defined shall have the
meaning given thereto in the Purchase Agreement.

1.2                                                                                 In
this Agreement:

“Environmental
Remediation Costs” means any third party(ies) environmental and
remedial invoices of any kind or nature that are incurred or arise directly
from or in connection with the preparation and implementation of the remedial
works set out in the Remediation Plan, as same may be amended from time to time
in accordance with the terms of this Agreement;

“Hazardous Substance” means any solid,
liquid, gas, odour, heat, sound, vibration, radiation or combination of them
that may impair the natural environment, injure or damage property or plant or
animal life or harm or impair the health of any individual;

“Mill”
has the meaning ascribed to that term in the fourth recital;

“Net
Environmental Remediation Costs” means any Environmental Remediation
Costs, but specifically excluding Cascades’ internal costs relating
thereto.  Additionally, for the purposes
of calculating Net Environmental Remediation Costs, any proceeds of insurance
and revenues generated by the demolition and/or sale of all or any portion of
the Mill shall be deducted;

“Property”
has the meaning ascribed to that term in the fourth recital;

“Purchase
Agreement” has the meaning ascribed to that term in the first
recital;

“Remediation
Plan” has the meaning ascribed to that term in Section 3.1;

“Requirements
of Environmental Law” means duties under any Requirements of Law to
the extent that such are intended in any way to prevent, limit, control or
otherwise regulate any adverse effects or risks to human health, the
environment or property, including such Requirements of Law relating to: (a)
the use, storage, presence, generation, discharge, emission, release, disposal,
arrangement for disposal, remediation, or removal of any Hazardous Substance;
or (b) the placement, construction, modification, maintenance, use, or removal
of any structure; or (c) the modification, maintenance, use, or removal of any
land, wetland or waterway (including anything beneath the surfaces thereof);
and any amendments to or regulations promulgated thereunder;

“Requirements
of Law” means any laws, treaties, regulations, judgments or orders
applicable in the Province of Ontario, in each case, applicable to and binding
upon such Person or any of its property or to which such Person is subject as a
legally enforceable requirement; and

 2
 

“Transaction “
has the meaning ascribed to that term in the first recital.

2.                             Applicability

2.1                           The
terms of this Agreement shall only apply in the event that Cascades announces
the permanent shutdown of the Mill on or prior to the second anniversary of the
date of the LOI.  Additionally, this
Agreement shall not apply in the event that Cascades, directly or indirectly,
sells, transfers or assigns, in any way, in whole or in part, Norampac or the
Mill within a period of three years following the Closing Date, other than a
sale, transfer or assignment to one or more of its Affiliates.

3.                             Remediation
Plan

3.1                           Subject
to Section 2, Cascades shall develop a preliminary plan relating to the
remediation of the Property and the Mill in order to render the Property and
the Mill available for industrial use and in compliance with Requirements of
Environmental Law applicable to industrial use, as well as obtain a Record of
Site Condition for the Property accepted by the Ontario Governmental
Authorities within five (5) years of the permanent closure of the Mill (the “Remediation Plan”). 
The Remediation Plan and any material modifications thereto shall be
subject to the approval of both Cascades and Domtar.  Additionally, the prior written approval of
Domtar shall be required with respect to any contract entered into in the
context of the Remediation Plan which provides for total payments equal to or
greater than $500,000.  Furthermore,
Domtar shall have the right to access and verify any information relating to
the Remediation Plan and its implementation which is in Norampac and Cascades
possession or control.

4.                             Cost
Sharing

4.1                           Cascades
shall be solely responsible for the first CDN$10,000,000 of the Net
Environmental Remediation Costs incurred. 
Domtar and Cascades shall be equally responsible for any Net
Environmental Remediation Costs in excess of CDN$10,000,000 but not greater
than CDN$40,000,000 and Domtar shall reimburse Cascades, within 30 days and
from time to time, an amount equal to 50% of such Net Environmental Remediation
Costs.  Any amounts in excess of
CDN$40,000,000 shall be the sole responsibility of Cascades.  Domtar’s obligation to assume Net
Environmental Remediation Costs shall only apply to Net Environmental
Remediation Costs invoiced by third parties 
prior to the fifth anniversary of the date on which it has been
announced that the Mill will be permanently shutdown.  Any payment made by Domtar pursuant to this
Section 4.1 shall be deemed to be an adjustment to the Purchase Price under the
Purchase Agreement.

5.                             General
Provisions

5.1                           Further Assurances.  Each Party shall from time to time execute
and deliver or cause to be executed and delivered all such further documents
and instruments

 3
 

and do or cause to be done all further acts
and things as the other Party may, before or after the date hereof, reasonably
require as being necessary or desirable in order to effectively carry out or
better evidence or perfect the full intent and meaning of this Agreement or any
provision hereof.

5.2                           Notices. 
Any notice, direction or other communication required or permitted to be
given to a Party shall be in writing and shall be given in accordance with the
Purchase Agreement.

5.3                           Costs and Expenses.  Each Party shall be responsible for all costs
and expenses (including the fees and disbursements of legal counsel, bankers,
investment bankers, accountants, brokers and other advisors) incurred by it in
connection with this Agreement and the transactions contemplated herein.

5.4                           Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and both of which
together shall constitute one and the same instrument.  To evidence its execution of an original
counterpart of this Agreement, a Party may send a copy of its original
signature on the execution page hereof to the other Party by facsimile
transmission and such transmission shall constitute delivery of an executed
copy of this Agreement to the receiving Party.

5.5                           Assignment. 
This Agreement shall not be assigned by either Party.

5.6                           Parties in Interest.  This Agreement shall enure to the benefit of
and be binding upon the Parties and their respective successors, including any
successor by reason of the amalgamation or merger of a Party, and permitted
assigns.

5.7                           Governing Law; Attornment.  This Agreement shall be construed,
interpreted and enforced in accordance with, and the rights of the Parties
shall be governed by, the laws of the Province of Quebec and the federal laws
of Canada applicable therein (excluding any conflict of law rule or principle
of such laws that might refer such interpretation or enforcement to the laws of
another jurisdiction).  Each Party
irrevocably submits to the exclusive jurisdiction of the courts of the Province
of Quebec (district of Montréal) with respect to any matter arising hereunder
or relating hereto.

5.8                           Language. 
The Parties hereby acknowledge that they have requested that this
Agreement and all related documents be drawn up in the English language.  Les
parties aux présentes reconnaissent qu’elles ont exigé que la présente
convention et tout document qui s’y rattachent soient rédigés en anglais.

[Balance
of page left intentionally blank]

 4
 

IN WITNESS WHEREOF this Agreement has been executed by
the parties hereto.

	
  

  	
  CASCADES
  INC.

  
	
   

  	
   

  
	
   

  	
  /s/  Alain Lemaire

  
	
   

  	
  Alain Lemaire,
  President and Chief Executive

  
	
   

  	
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/  Robert F. Hall

  
	
   

  	
  Robert F. Hall,
  Vice-President, Legal Affairs

  
	
   

  	
  and Corporate
  Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DOMTAR
  INC.

  
	
   

  	
   

  
	
   

  	
  /s/  Gilles Pharand

  
	
   

  	
  Per: Gilles
  Pharand

  
	
   

  	
  Title:

  	
  Senior Vice-President Corporate Affairs

  
	
   

  	
   

  	
  and General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/  Daniel Buron

  
	
   

  	
  Per: Daniel
  Buron

  
	
   

  	
  Title:

  	
  Senior Vice-President and

  
	
   

  	
   

  	
  Chief Financial Officer

  
				

 

 5

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