Document:

Exhibit 10.18

 Exhibit 10.18 
 EXECUTION COPY 
 SPECIAL WARRANT AGREEMENT 

between 

FIBREK INC. 
 - and - 
 MERCER INTERNATIONAL INC. 

February 9, 2012 

 TABLE OF CONTENTS 

 

							
	 ARTICLE 1
	  	 	1	  
			
	 1.1
	  	 Definitions
	  	 	1	  
			
	 1.2
	  	 Schedules
	  	 	7	  
			
	 1.3
	  	 Headings
	  	 	7	  
			
	 1.4
	  	 Section References
	  	 	7	  
			
	 1.5
	  	 Gender, Plural
	  	 	8	  
			
	 1.6
	  	 Date for Actions
	  	 	8	  
			
	 1.7
	  	 Statutes
	  	 	8	  
			
	 1.8
	  	 Currency
	  	 	8	  
		
	 ARTICLE 2
	  	 	8	  
			
	 2.1
	  	 Creation of Special Warrants
	  	 	8	  
			
	 2.2
	  	 Subscription for Special Warrants
	  	 	8	  
			
	 2.3
	  	 Closing
	  	 	8	  
			
	 2.4
	  	 Purchase Price to be Held in Trust
	  	 	8	  
		
	 ARTICLE 3
	  	 	9	  
			
	 3.1
	  	 Conversion
	  	 	9	  
			
	 3.2
	  	 No Fractional Shares
	  	 	10	  
			
	 3.3
	  	 Redemption
	  	 	10	  
		
	 ARTICLE 4
	  	 	11	  
			
	 4.1
	  	 Adjustment to Number of Common Shares
	  	 	11	  
			
	 4.2
	  	 No Adjustment for Stock Options, etc.
	  	 	14	  
			
	 4.3
	  	 Determination by Corporation’s Auditors
	  	 	14	  
			
	 4.4
	  	 Proceedings Prior to Any Action Requiring Adjustment
	  	 	14	  
			
	 4.5
	  	 Action Requiring Adjustment
	  	 	14	  
			
	 4.6
	  	 Certificate of Adjustment
	  	 	15	  
			
	 4.7
	  	 Notice of Special Matters
	  	 	15	  
		
	 ARTICLE 5
	  	 	15	  
			
	 5.1
	  	 Representations and Warranties of the Corporation
	  	 	15	  
			
	 5.2
	  	 Representations and Warranties of Mercer
	  	 	15	  
		
	 ARTICLE 6
	  	 	15	  
			
	 6.1
	  	 Covenants of the Corporation
	  	 	15	  
			
	 6.2
	  	 Covenants of Mercer
	  	 	16	  
		
	 ARTICLE 7
	  	 	17	  
			
	 7.1
	  	 Mutual Conditions
	  	 	17	  
			
	 7.2
	  	 Conditions in favour of Mercer
	  	 	18	  
			
	 7.3
	  	 Conditions in favour of the Corporation
	  	 	19	  

							
	 ARTICLE 8
	  	 	19	  
			
	 8.1
	  	 Notice
	  	 	19	  
		
	 ARTICLE 9
	  	 	20	  
			
	 9.1
	  	 Future Disclosure
	  	 	20	  
		
	 ARTICLE 10
	  	 	21	  
			
	 10.1
	  	 Entire Agreement
	  	 	21	  
			
	 10.2
	  	 Survival of Representations and Warranties
	  	 	21	  
			
	 10.3
	  	 Assignment
	  	 	21	  
			
	 10.4
	  	 Further Assurances
	  	 	21	  
			
	 10.5
	  	 Expenses
	  	 	21	  
			
	 10.6
	  	 Change in Common Shares
	  	 	21	  
			
	 10.7
	  	 Time of the Essence
	  	 	21	  
			
	 10.8
	  	 Amendments
	  	 	22	  
			
	 10.9
	  	 Governing Law
	  	 	22	  
			
	 10.10
	  	 Attornment
	  	 	22	  
			
	 10.11
	  	 Severability
	  	 	22	  
			
	 10.12
	  	 Execution and Delivery
	  	 	22	  
			
	 10.13
	  	 Waiver
	  	 	22	  
			
	 10.14
	  	 Enurement
	  	 	22	  
			
	 10.15
	  	 Reliance
	  	 	22	  

 SCHEDULES 
 Schedule “A” - Conversion Notice 
 Schedule “B” - Representations of the
Corporation 
 Schedule “C” - Representations of Mercer 
 Schedule “D” - Fibrek Officers’ Certificate 
 Schedule “E” - Form of
Certificate representing Special Warrants 

  
 ii 

 SPECIAL WARRANT AGREEMENT 
 THIS AGREEMENT made as of the 9th day of February, 2012. 
 BETWEEN: 

FIBREK INC., a corporation existing under the laws of Canada (“Fibrek” or the
“Corporation”) 
 - and - 

MERCER INTERNATIONAL INC., a corporation existing under the laws of the State of Washington
(“Mercer”) 
 WHEREAS Mercer has agreed to subscribe for and purchase from the Corporation, and the Corporation has
agreed to issue and sell to Mercer, upon and subject to the terms and conditions of this Agreement, 32,320,000 Special Warrants (as hereinafter defined) of the Corporation created hereunder and having the rights, privileges and other terms provided
herein at a price of $1.00 per special warrant; 
 NOW THEREFORE in consideration of the covenants and agreements contained herein and
for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties (as defined herein) do hereby covenant and agree as follows: 
 ARTICLE 1 
 INTERPRETATION 

 

	1.1	Definitions 

 In this Agreement, unless
the context otherwise requires: 
 “Affiliate” has the meaning ascribed to it in the Securities Act; 

“Agreement” means this Special Warrant Agreement, including all Schedules hereto and any amendments hereto or restatements hereof, and
references to “Article” or “Section” mean the specified Article or Section of this Agreement; 

“Applicable Securities Laws” means all applicable securities and corporate laws, regulations, orders, notices, instruments, blanket
orders and policies in the applicable jurisdiction; 
 “Business Day” means any day which is not a Saturday, Sunday or
statutory holiday in the Provinces of Quebec or British Columbia on which the principal commercial banks in downtown Montreal and Vancouver are generally open for the transaction of commercial banking business during regular business hours;

 “Canadian Securities Regulatory Authorities” means the applicable Canadian provincial and territorial securities commissions
and regulatory authorities; 
 “Closing” means the completion of the purchase and sale of the Special Warrants as contemplated
herein; 
 “Closing Date” means the fifth Business Day following the later of: (i) the date on which the TSX shall have
conditionally accepted or approved, in writing, the issuance and sale of the Special Warrants as provided herein and the listing of the Common Shares issuable on conversion of the Special Warrants; and (ii) the date on which Fibrek delivers to
Mercer the Disclosure Letter in accordance with Section 6.1(j), or such other date as may be agreed upon by the Parties in writing and provided that such Closing Date shall be not later than the Latest Mailing Time; 

“Closing Time” means 9:00 a.m. (Montreal time), or such other time on the Closing Date as may be agreed upon by the Corporation and
Mercer in writing; 

 “Common Shares” means the common shares in the capital of the Corporation as constituted on
the date hereof; 
 “Compulsory Acquisition” means an acquisition pursuant to Part XVII of the Canada Business Corporations
Act R.S.C., 1985, c.
 C-44, as amended; 
 “Conversion Date” means either (i) the date upon which Mercer directs
the exercise of the Conversion Right to occur, as specified in the Conversion Notice (or if no such date is specified therein the date on which the Corporation receives the Conversion Notice); or (ii) the date of a Deemed Conversion Event;

 “Conversion Notice” means a notice executed by Mercer and delivered to the Corporation confirming its election to exercise
its Conversion Right in respect of a specified number of Special Warrants, in substantially the form attached as Schedule “A”; 

“Conversion Rate” means the number of Common Shares issuable upon exercise of the Conversion Right, which, subject to adjustment
pursuant to the provisions herein, is one (1) Common Share for each Special Warrant; 
 “Conversion Right” means the right
of Mercer to convert the Special Warrants into and receive, without payment of any additional consideration, Common Shares according to the Conversion Rate; 
 “Corporation” or “Fibrek” means Fibrek Inc., a corporation incorporated under the Canada Business Corporations Act; 

“Corporation’s Counsel” means, at the date hereof, Stikeman Elliott LLP; 
 “Current Market Price” means at any date the weighted average trading price per Common Share for 20 consecutive Trading Days, ending immediately before such date, on the TSX, or, if the
Common Shares are not then listed thereon, on such stock exchange on which the Common shares are then listed as may be selected for such purpose by the directors of the Corporation or, if the Common Shares are not listed on any stock exchange, on
the over-the-counter market (where, for this purpose, the weighted average trading price per Common Share is determined by dividing (i) the aggregate sale price of all of the Common Shares sold on such exchange or market, as the case may be,
during such 20 consecutive Trading Days by (ii) the total number of Common Shares sold on such exchange or market, as the case may be, during such 20 consecutive Trading Days); 
 “DataSite” means the information made available to and accessible by Mercer through Fibrek’s on-line data room on Merrill DataSite; 

“Deemed Conversion Event” means: 
  

	(a)	the close of business on the 3rd Business Day following the date on which the Expiry Time occurs if at the Expiry Time the Minimum Tender Condition has not been
satisfied, provided a Redemption Event has not occurred and Fibrek is otherwise in compliance with all of the terms and conditions of this Agreement and the Support Agreement; 

 

	(b)	the termination of the Support Agreement pursuant to Section 8.1(c) of the Support Agreement; 

 

	(c)	the termination of the Support Agreement pursuant to Section 8.1(f) of the Support Agreement provided that the event triggering the termination does not also
trigger a Redemption Event; and 

  

	(d)	the termination of the Support Agreement pursuant to Section 8.1(h) of the Support Agreement, provided that the enjoinment or prohibition of any of the
transactions contemplated by the Support Agreement: 

  

	 	(i)	has not been occasioned by an act of Fibrek, other than an act contemplated by this Agreement or the Support Agreement, and 

 

	 	(ii)	the termination event does not also trigger a Redemption Event; 

  
 2 

 “Disclosure Letter” means the written disclosure letter of Fibrek addressed to Mercer to be
completed after the date of this Agreement and to be delivered to Mercer pursuant to the terms of this Agreement; 
 “Earned
Interest” means the interest or other income actually earned on the investment of the proceeds from the sale of the Special Warrants while such proceeds are held in trust as contemplated herein; 

“Employee Obligations” means any obligations or liabilities of Fibrek to pay any amount to or on behalf of its officers, directors,
consultants or employees, other than for salary or bonuses under their existing written salary or bonus arrangements, vacation pay and directors’ fees in the ordinary course, in each case in amounts consistent with historic practices, and,
without limiting the generality of the foregoing, “Employee Obligations” shall include the obligations of Fibrek to directors, officers or employees: (i) for severance or termination payments on the change of control of Fibrek
pursuant to any written executive severance and termination agreements in the case of officers and pursuant to Fibrek’s severance policy in the case of employees; (ii) for retention bonus payments pursuant to any written retention bonus
program or executive employment agreement; and (iii) for payments with respect to any share appreciation rights, participating performance units or similar plans, if any; 
 “Encumbrances” means hypothecs, pledges, liens (statutory or otherwise), charges, security interests, leases, title retention agreements, prior claims, mortgages, restrictions,
developments or similar agreements, easements, rights-of-way, servitudes, title defects, options, rights of first offer or rights of first refusal, resolutory rights, areas of mutual interest, adverse claims or encumbrances of any kind or character
whatsoever; 
 “Environmental Laws” has the meaning set forth in Section 15(a) of Schedule “B”; 

“Existing Unsolicited Offer” shall have the meaning ascribed to such term in the Support Agreement; 

“Existing Unsolicited Offer Lock-Up Agreements” shall have the meaning ascribed to such term in the Support Agreement; 

“Existing Unsolicited Offeror” means collectively AbitibiBowater Inc. (doing business as Resolute Forest Products) and RFP Acquisition
Inc.; 
 “Expiry Time” shall have the meaning ascribed to such term in Support Agreement; 

“Fibrek Stock Option Plan” means the stock option plan of Fibrek dated March 25, 2010; 

“Financial Statements” means the audited financial statements of Fibrek as at and for the year ended December 31, 2010, including
the notes to such statements and the auditor’s report thereon, and the unaudited financial statements of Fibrek as at and for the three- and nine-months ended September 30, 2011, including the notes thereto; 

“Financing Expenses” means financing expenses referred to in Section 10(1)(e) of the Tax Act; 

“GAAP” means (i) for the period up to January 1, 2011, generally accepted accounting principles as set out in the Canadian
Institute of Chartered Accountants Handbook – Accounting, and (ii) as of January 1, 2011, International Financial Reporting Standards, in each case, as applicable, at the relevant time, applied on a consistent basis; 

“Governmental Authority” means any: 
  

	(a)	multinational, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral
body, commission, board, bureau or agency, domestic or foreign; 

  

	(b)	Canadian Securities Regulatory Authority, self-regulatory organization or stock exchange; 

 

	(c)	subdivision, agent, commission, board, or authority of any of the foregoing; or 

  
 3 

	(d)	quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing;

 “Latest Mailing Time” has the meaning ascribed thereto in the Support Agreement; 

“Laws” means applicable laws, statutes, by-laws, published rules, regulations, published directives, instructions, orders, ordinances,
protocols, codes, guidelines, treaties, policies, notices, directions, decrees, judgments, awards or requirements, in each case of any Governmental Authority and having the force of law; 
 “Liabilities” means all liabilities and obligations, whether under Laws, under contract or otherwise, whether tortious, contractual, statutory or otherwise, whether absolute or contingent
and whether based on fault, strict liability or otherwise; 
 “Material Adverse Change” means any change, effect, event,
occurrence or state of facts that is, or could reasonably be expected to be (individually or in the aggregate), material and adverse to the condition (financial or otherwise), properties, assets, liabilities (contingent or otherwise), obligations
(whether absolute, accrued, conditional or otherwise), businesses, operations or results of operations of Fibrek on a consolidated basis, but “Material Adverse Effect” shall not include a change resulting or arising from: (i) a matter
that has prior to the date hereof been publicly disclosed or otherwise disclosed in writing to Mercer; (ii) conditions affecting the pulp industry generally; (iii) general economic, financial, currency exchange, securities or commodity
market conditions in North America including, without limitation, changes in currency exchange rates or in interest rates; (iv) changes in the market price of pulp, and where, in the case of (ii), (iii) and (iv), such change, effect,
event, occurrence or state of facts does not have a disproportionate material adverse change or effect on the condition (financial or otherwise), properties, assets, liabilities (contingent or otherwise), obligations (whether absolute, accrued,
conditional or otherwise), businesses, operations or results of operations of Fibrek, on a consolidated basis, as compared to the corresponding effect on corporations and other entities engaged in the pulp industry generally; 

“Material Adverse Effect” means any effect resulting from a Material Adverse Change; 

“Mercer” means Mercer International Inc., a corporation organized pursuant to the laws of the State of Washington, or its nominee
Affiliate, as the context requires; 
 “Mercer Material Adverse Change” means any change, effect, event, occurrence or state of
facts that is, or could reasonably be expected to be (individually or in the aggregate), material and adverse to the condition (financial or otherwise), properties, assets, liabilities (contingent or otherwise), obligations (whether absolute,
accrued, conditional or otherwise), businesses, operations or results of operations of Mercer on a consolidated basis, but “Mercer Material Adverse Effect” shall not include a change resulting or arising from: (i) a matter that has
prior to the date hereof been publicly disclosed or otherwise disclosed in writing to Fibrek; (ii) conditions affecting the pulp industry generally; (iii) general economic, financial, currency exchange, securities or commodity market
conditions in North America including, without limitation, changes in currency exchange rates or in interest rates; (iv) changes in the market price of pulp, and where, in the case of (ii), (iii) and (iv), such change, effect, event,
occurrence or state of facts does not have a disproportionate material adverse change or effect on the condition (financial or otherwise), properties, assets, liabilities (contingent or otherwise), obligations (whether absolute, accrued, conditional
or otherwise), businesses, operations or results of operations of Mercer, on a consolidated basis, as compared to the corresponding effect on corporations and other entities engaged in the pulp industry generally; 

“Mercer Material Adverse Effect” means any effect result from a Mercer Material Adverse Change; 

“Mercer’s Counsel” means, as at the date hereof, Sangra Moller LLP; 
 “Minimum Tender Condition” means there shall have been deposited under the Offer and not withdrawn at least that number of the Common Shares which, together with the Common Shares and
Special Warrants held by Mercer and its Affiliates, represent at least 50.1% of the Common Shares outstanding on a fully-diluted basis; 

“Notice” has the meaning ascribed thereto in Section 8.1; 

  
 4 

 “Offer” means an offer made by Mercer or a direct or indirect wholly-owned subsidiary of
Mercer by way of take-over bid to acquire all of the outstanding Common Shares and includes any amendments to, or extensions of, the Offer made in accordance with the terms of the Support Agreement; 

“Outside Date” shall mean the earlier of: (i) the Conversion Date; and (ii) the date on which Mercer shall have exercised its
Redemption Right; 
 “Options” means stock options granted pursuant to the Fibrek Stock Option Plan; 

“Parties” means, collectively, Mercer and Fibrek and “Party” means any one of them; 

“Person” includes any individual, sole proprietorship, partnership, firm, entity, limited partnership, limited liability company,
unlimited liability company, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body, corporation, cooperative or Governmental Authority and any group comprised of more than one Person, and where the context
requires, any of the foregoing when they are acting as trustee, executor, administrator or legal representative; 
 “Redemption
Event” means: 
  

	(a)	Mercer’s determination in its discretion, acting reasonably, that an act, action, suit or proceeding has been threatened or taken before or by any Governmental
Authority, whether or not having the force of Law, or a Law has been proposed, enacted, promulgated or applied, in either case: 

  

	 	(i)	to cease trade, enjoin, prohibit or impose material limitations, damages or conditions on the purchase by or the sale to Mercer of Common Shares, whether upon
conversion of the Special Warrants or otherwise (other than any prohibition or material limitation concerning the acquisition of Common Shares that applies to Mercer pursuant to Applicable Securities Laws of general application in effect as at the
date hereof), or the right of Mercer to own or exercise full rights of ownership of Common Shares; 

  

	 	(ii)	which, if the issuance of the Common Shares on conversion of the Special Warrants was consummated, would reasonably be expected to have a Material Adverse Effect or a
Mercer Material Adverse Effect; or 

  

	 	(iii)	which would materially and adversely affect the ability of Mercer to be issued the Common Shares on conversion of the Special Warrants or to otherwise acquire Common
Shares; 

  

	(b)	the existence of any prohibition at Law against Mercer acquiring Common Shares, whether upon conversion of the Special Warrants or otherwise; 

 

	(c)	the existence or occurrence, in the judgment of Mercer, acting reasonably, of a Material Adverse Change in respect of Fibrek; 

 

	(d)	any representation and warranty of Fibrek in this Agreement that is qualified by reference to a Material Adverse Effect being not true and correct in all respects at
the Expiry Time; 

  

	(e)	any representation and warranty of Fibrek in this Agreement that is not qualified by reference to a Material Adverse Effect excluding those with respect to outstanding
share capital (on an undiluted and fully diluted basis) being not true and correct in all respects at the Expiry Time, unless the failure to be true or correct has not had or would not reasonably be expected to have a Material Adverse Effect or a
Mercer Material Adverse Effect; 

  

	(f)	any representation and warranty of Fibrek in this Agreement with respect to outstanding share capital (on an undiluted and fully diluted basis) being not true and
correct in all respects (except for changes thereto resulting from the issuance of Common Shares under the terms of the Options) at the Expiry Time; 

  
 5 

	(g)	Fibrek not having observed and performed its covenants in this Agreement and in the Support Agreement at the Expiry Time of the Offer in all material respects to the
extent that such covenants were to have been observed or performed by Fibrek at or prior to the Expiry Time; 

  

	(h)	Mercer has taken-up under the Offer such number of Common Shares as is at least equal to the Minimum Tender Condition; 

 

	(i)	the termination of the Support Agreement pursuant to Sections 8.1(b), (d), (e), (h) or (i); 

 

	(j)	the Termination Fee becomes payable in accordance with the Support Agreement; or 

 

	(k)	any Common Shares are taken-up under the Existing Unsolicited Offer (as amended from time to time) or the Existing Unsolicited Offeror, or any of their respective
Affiliates, take-up or acquire legal or beneficial ownership or control of any Common Shares subject to the Existing Unsolicited Offer Lock-Up Agreements. 

 “Redemption Notice” means a notice executed by Mercer and delivered to the Corporation confirming its election to exercise its Redemption Right in respect of a specified number of Special
Warrants, in substantially the form included in Schedule “E”; 
 “Redemption Right” means the right of Mercer to
require the Corporation to redeem and repurchase the Special Warrants; 
 “Regulatory Approvals” means those sanctions,
rulings, waivers, consents, orders, exemptions, permits, licences, authorizations and other approvals (including the lapse, without objection, of a prescribed time or waiting period under a statute or regulation that states that a transaction may
only be implemented if a prescribed time lapses following the giving of notice without an objection or an opposition being filed, made or initiated) of any Governmental Authority; 
 “Rights Plan” means the Shareholder Rights Plan Agreement dated December 19, 2011, between Fibrek and Computershare Investor Services Inc.; 

“Securities Act” means the Securities Act (Québec), RSQ, c V-1.1, as amended; 

“Special Warrants” means special warrants to acquire Common Shares, having the terms set out in this Agreement; 

“subsidiary” means, with respect to any Person, any body corporate of which more than 50% of the outstanding Common Shares ordinarily
entitled to elect a majority of the board of directors thereof (whether or not Common Shares of any other class or classes shall or might be entitled to vote upon the happening of a certain event or contingency) are at the time owned directly or
indirectly by such Person, and shall include any body corporate, partnership, joint venture or other entity over which it exercises direction or control or which is in a like relation to a subsidiary; 

“Superior Proposal” shall have the meaning ascribed to such term in Support Agreement; 

“Superior Proposal Event” means the termination of the Support Agreement pursuant to Section 8.1(e) of the Support Agreement;

 “Support Agreement” means the support agreement dated as of the date hereof between Mercer and the Corporation; 

“Swaps” means any transaction which is a rate swap transaction, basis swap, forward rate transaction, commodity swap, hedge, commodity
option, equity or equity index swap, equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction,
currency option, forward sale, exchange traded futures contract or any other similar transaction (including any option with respect to any of these transactions or any combination of these transactions); 

  
 6 

 “Tax Act” means the Income Tax Act, R.S.C. 1985, c.1 (5th Supp.), as amended;

 “Taxes” means, with respect to any entity, all income taxes (including any tax on or based upon net income, gross income,
income as specially defined, earnings, profits or selected items of income, earnings or profits) and all capital taxes, gross receipts taxes, environmental taxes, sales taxes, use taxes, ad valorem taxes, value added taxes, transfer taxes,
franchise taxes, licence taxes, withholding taxes or other withholding obligations, payroll taxes, employment taxes, Canada or Quebec Pension Plan premiums, excise, severance, social security premiums, workers’ compensation premiums, employment
insurance or compensation premiums, stamp taxes, occupation taxes, premium taxes, property taxes, provincial Crown royalties, windfall profits taxes, alternative or add-on minimum taxes, goods and services tax, customs duties or other taxes of any
kind whatsoever, together with any interest and any penalties or additional amounts imposed by any taxing authority (domestic or foreign) on such entity or for which such entity is responsible, and any interest, penalties, additional taxes,
additions to tax or other amounts imposed with respect to the foregoing; 
 “Tax Returns” includes all returns, reports,
declarations, elections, notices, filings, forms, statements and other documents (whether intangible, electronic or other form) and including any amendments, schedules, attachments, supplements, appendices and exhibits thereto, made, prepared, filed
or required to be made, prepared or filed by Law in respect of Taxes; 
 “Termination Fee” has the meaning ascribed thereto in
the Support Agreement; 
 “Trading Day” means a day on which the TSX is open for the transaction of business; 

“Trust Account Agreement” means the agreement contemplated by Section 7.1(f); 

“Trust Fund” means the proceeds of the sale of the Special Warrants as provided in ARTICLE 2 and any investments acquired from time to
time with such funds together with any Earned Interest thereon, subject to reduction from time to time as amounts are released and paid to Fibrek or Mercer, as applicable, on the exercise or deemed exercise of the Conversion Right or the exercise of
the Redemption Right; 
 “Trustee” means Computershare Trust Company of Canada or such other person as is mutually acceptable
to the Parties as is designated as trustee under the Trust Account Agreement; and 
 “TSX” means the Toronto Stock Exchange or
any successor thereto. 
  

	1.2	Schedules 

 The following Schedules are
attached to and incorporated in this Agreement and form part hereof: 
 Schedule “A” - Conversion Notice 

Schedule “B” - Representations of the Corporation 
 Schedule “C” - Representations of Mercer 
 Schedule “D” - Fibrek Officer’s
Certificate 
 Schedule “E” - Form of Special Warrant Certificate 

 

	1.3	Headings 

 The division of this Agreement
into articles, sections and paragraphs and the insertion of headings are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. 

 

	1.4	Section References 

 Unless the context
otherwise requires, references in this Agreement to an article, section, paragraph, clause, subclause or schedule by number, letter or otherwise refer to the article, section, subsection, paragraph, clause, subclause or schedule, respectively,
bearing that designation in this Agreement. 

  
 7 

	1.5	Gender, Plural 

 In this Agreement, unless
the contrary intention appears, words importing the singular include the plural and vice versa; words importing gender shall include all genders. 
  

	1.6	Date for Actions 

 In the event that the
date on which any action is required to be taken hereunder by any of the parties is not a Business Day in the place where the action is required to be taken, such action shall be required to be taken on the next succeeding day which is a Business
Day in such place. 
  

	1.7	Statutes 

 References in this Agreement to
any statute or sections thereof shall include such statute as amended or substituted and any regulations promulgated thereunder from time to time in effect. 
  

	1.8	Currency 

 Unless otherwise stated, all
references in this Agreement to sums of money are expressed in lawful money of Canada. 
 ARTICLE 2 

CREATION, ISSUE AND SALE OF SPECIAL WARRANTS 

 

	2.1	Creation of Special Warrants 

 The Special
Warrants shall be evidenced by a certificate in the form attached as Schedule “E”. Each Special Warrant purchased and sold hereunder shall entitle Mercer to receive, on the conversion thereof, without payment of any additional
consideration by Mercer, one (1) Common Share, subject to adjustment in accordance with ARTICLE 4 and otherwise upon and subject to the terms and conditions of this Agreement, including without limitation redemption in the circumstances
provided herein. 
  

	2.2	Subscription for Special Warrants 

Mercer hereby subscribes for and agrees to purchase from the Corporation, and the Corporation hereby accepts the subscription and agrees to issue
and sell to Mercer (or its Affiliate), at the Closing Time, upon and subject to the terms and conditions hereof, 32,320,000 Special Warrants at a price of $1.00 per Special Warrant for a total purchase price of Cdn. $32,320,000 (the
“Purchase Price”). 
  

	2.3	Closing 

 Closing of the purchase and sale
of the Special Warrants shall take place at the Closing Time at the offices of the Corporation’s Counsel, or at such other times and places as shall be mutually agreed to by the Corporation and Mercer. 

 

	2.4	Purchase Price to be Held in Trust 

 At
Closing, the Purchase Price shall be paid by way of delivery by Mercer, on or before the Closing Time, of a certified cheque, bank draft or wire transfer payable to the Trustee for the amount of the full Purchase Price, or payment of the same amount
in such other manner as is acceptable to the Corporation, to be held in trust by the Trustee pursuant to and in accordance with the terms and conditions of the Trust Account Agreement, against delivery by the Corporation to Mercer of a
certificate(s) representing the Special Warrants in the form attached as Schedule “E”. 

  
 8 

 ARTICLE 3 
 CONVERSION AND REDEMPTION RIGHTS 
  

	3.1	Conversion 

  

	 	(a)	Provided a Deemed Conversion Event has not occurred, Mercer shall be entitled, at any time and from time to time, immediately upon the earlier of: (i) the later of
(a) seven (7) Business Days after the date the Offer is made, or (b) 21 days after the date hereof; or (ii) the date on which the Existing Unsolicited Offeror, or any of their respective Affiliates, take up or acquire legal or
beneficial ownership or control of any of the Common Shares subject to the Existing Unsolicited Offer Lock-Up Agreements, at its option, to exercise its Conversion Right with respect to all or any part of the Special Warrants then outstanding, and
thereby convert all or any portion of its Special Warrants into Common Shares, without payment of any additional consideration, by delivering to the Corporation a Conversion Notice specifying the number of Special Warrants in respect of which it is
exercising the Conversion Right. Upon the receipt by the Corporation of a Conversion Notice and surrender of the certificate representing the Special Warrants in respect of which the Conversion Right is exercised, Mercer shall be entitled, effective
as of the Conversion Date, to receive one or more certificates representing the Common Shares issued in respect of the Special Warrants so converted in accordance with Section 3.1(c) and a certificate representing any Special Warrants not
converted, if applicable. For the purposes of this Agreement, no Special Warrant will be considered converted pursuant to the Conversion Right until the Conversion Date. 

 

	 	(b)	Subject to Subsection 3.1(i), notwithstanding Section 3.1(a) hereof, the Conversion Right shall be deemed to have been exercised, and all outstanding Special
Warrants shall be deemed to have been converted, on the occurrence of a Deemed Conversion Event and Mercer shall be entitled, without payment of any additional consideration or undertaking any further action, to receive certificates representing the
Common Shares issued in respect of the Special Warrants so converted in accordance with Section 3.1(c). 

  

	 	(c)	As soon as possible after the Conversion Date, the Corporation shall (or shall cause the Corporation’s transfer agent to) deliver to the person or persons in whose
name or names the Common Shares are to be registered as specified in the relevant Conversion Notice, provided that such Person shall be Mercer or an Affiliate of Mercer, at the address or addresses specified therein, or to such other person as
Mercer may otherwise direct in writing, provided that such Person shall be Mercer or an Affiliate of Mercer, or if no such Conversion Notice has been delivered, to Mercer or to such other person as Mercer may otherwise direct in writing, provided
that such Person shall be Mercer or an Affiliate of Mercer, a certificate representing the Common Shares issued in respect of the Special Warrants so converted and a certificate representing any Special Warrants not converted, if applicable.

  

	 	(d)	If any of the Common Shares issuable as contemplated in Section 3.1(a), 3.1(b) or 3.1(c), as applicable, are to be issued to a person or persons other than Mercer,
Mercer shall comply with such reasonable requirements as the Corporation’s transfer agent may prescribe, and pay to the Corporation’s transfer agent all applicable transfer or similar taxes or fees, and the Corporation shall not be
required to cause the issuance or delivery of certificates representing such Common Shares unless Mercer has paid the amount of such tax or fee or has established to the satisfaction of the Corporation, acting reasonably, that such fee or tax has
been paid or that no such fee or tax is payable and that all Applicable Securities Laws with respect to such transfer have been complied with. 

  

	 	(e)	Upon the exercise (including deemed exercise) of the Conversion Right in accordance with this Section 3.1, notwithstanding that certificates representing the
Common Shares may not have been issued or delivered (whether pursuant to Section 3.1(d) or otherwise), the Common Shares issuable on the conversion shall be deemed to have been issued, and the person or persons to whom such Common Shares are to
be issued shall be deemed to have become the holder or holders of record of such Common Shares, on the Conversion Date or, if the transfer register for the Common Shares is closed on the Conversion Date, on the first date on which the transfer
register is reopened. 

  
 9 

	 	(f)	Effective after the exercise or deemed exercise of the Conversion Right and the issuance of Common Shares relating thereto as contemplated in Section 3.1(e), and
delivery of the certificate(s) representing the Common Shares so issued as provided in Section 3.1(c), the Special Warrants in respect of which the Conversion Right has been so exercised shall be void and of no further effect.

  

	 	(g)	The certificates representing Common Shares issued upon exercise or deemed exercise of the Conversion Right will, unless issued at least four months after the Closing
Date, bear the following legend: 

 “UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS
SECURITY MUST NOT TRADE THE SECURITY BEFORE • {insert date that is four months and one day from the Closing Date}”. 
  

	 	(h)	Following each exercise or deemed exercise of the Conversion Right in accordance with Section 3.1(a) or 3.1(b) and upon issuance of the Common Shares issuable upon
such exercise or deemed exercise, the Corporation shall be entitled to receive a pro rata portion of the Trust Fund corresponding to the number of Special Warrants in respect of which the Conversion Right is exercised or deemed to have been
exercised, which shall be paid to the Corporation in accordance with the Trust Account Agreement. 

  

	 	(i)	Notwithstanding any other provision included herein, in the event of a Deemed Conversion Event or a Superior Proposal Event, Fibrek shall have the option exercisable
within two Business Days of the occurrence of a Deemed Conversion Event or a Superior Proposal Event, at its sole discretion, to redeem all of the Special Warrants then outstanding instead of issuing Common Shares on conversion of the Special
Warrants in which case the Special Warrants to be redeemed will be redeemed in accordance with Section 3.3 (disregarding Subsection 3.3(c)) as if Mercer had delivered a Redemption Notice with respect to such Special Warrants and Mercer shall be
entitled to receive the Trust Fund, which shall be paid to Mercer in accordance with the Trust Account Agreement. 

  

	3.2	No Fractional Shares 

 The Corporation
shall not be required, upon the exercise or deemed exercise of a Conversion Right, or upon any adjustment in accordance with ARTICLE 4, to issue fractions of Common Shares to any person or to issue certificates which evidence a fractional Common
Share. To the extent that Mercer or such other person would otherwise have been entitled to receive a fraction or fractions of a Common Share on the conversion or partial conversion of its Special Warrants, or upon any adjustment in accordance with
ARTICLE 4, Mercer or such other person shall only be entitled to receive, and the Corporation shall only be required to issue, the next lowest whole number of Common Shares. The Corporation shall not pay any amounts to the holder in satisfaction of
the right to otherwise have received a fraction of a Common Share. 
  

	3.3	Redemption 

  

	 	(a)	In the event of a Redemption Event or the occurrence of any event or circumstance that may reasonably be expected to constitute a Redemption Event, the Corporation
shall forthwith notify Mercer thereof, provided that if Fibrek is uncertain as to whether a Redemption Event has occurred, Fibrek shall promptly inform Mercer in writing of the full particulars of the occurrence giving rise to the uncertainty and
shall consult with Mercer as to whether the occurrence is of such nature as may constitute a Redemption Event. 

  
 10 

	 	(b)	In the event of a Redemption Event: 

  

	 	(i)	Mercer shall be entitled, at any time after the occurrence of the Redemption Event, at its option, to exercise its Redemption Right with respect to all or any part of
the Special Warrants then outstanding by delivering to the Corporation a Redemption Notice specifying the number of Special Warrants in respect of which it is exercising the Redemption Right and indicating the Redemption Event giving rise to the
Redemption Right. Notwithstanding the foregoing, in the event of the occurrence of a Superior Proposal Event, Mercer shall not deliver a Redemption Notice to the Corporation prior to the expiration of the two Business Day period provided under
Section 3.1(i), provided that Fibrek has paid to Mercer the Termination Fee in accordance with Section 5.3(b)(ii) of the Support Agreement; and 

  

	 	(ii)	following the delivery of such Redemption Notice, unless the Redemption Event in respect of which the notice is given shall have been cured to the satisfaction of
Mercer, acting reasonably, and Mercer shall have delivered a notice to that effect to the Corporation and the Trustee within three (3) Business Days of the delivery of the Redemption Notice, Mercer shall be entitled to receive a pro rata
portion of the Trust Fund corresponding to the number of Special Warrants in respect of which the Redemption Right is exercised, which shall be paid to Mercer in accordance with the Trust Account Agreement. 

 

	 	(c)	For greater certainty, and notwithstanding Section 3.3(b), but subject to Section 3.1(i), in the event of a Redemption Event, Mercer shall have the option, at
its sole discretion, to exercise its Conversion Right in respect of any Special Warrants then outstanding, instead of its Redemption Right in respect thereof. 

 

	 	(d)	Effective after the exercise of the Redemption Right and payment of the pro rata portion of the Trust Fund as contemplated in Section 3.3(b), the Special
Warrants in respect of which the Redemption Right has been so exercised shall be void and of no further value or effect. 

  

	 	(e)	Notwithstanding any other provision of this Agreement or the Trust Account Agreement, nothing herein or therein shall restrict or limit the ability of the Parties to
mutually agree at any time and from time to time that all or any part of the Special Warrants shall be redeemed and repurchased by the Corporation on such terms and conditions as the Parties may agree. 

ARTICLE 4 

ADJUSTMENTS 
  

	4.1	Adjustment to Number of Common Shares 

The Conversion Rate shall be subject to adjustment from time to time in the following circumstances and manner: 

 

	 	(a)	Subject to Section 4.2, if and whenever at any time from the Closing Date to the Outside Date, the Corporation shall: 

 

	 	(i)	subdivide, redivide or change its outstanding Common Shares into a greater number of shares; 

 

	 	(ii)	reduce, combine or consolidate its outstanding Common Shares into a smaller number of shares; or 

 

	 	(iii)	issue Common Shares or securities convertible into or exchangeable for Common Shares to the holders of all or substantially all of the outstanding Common Shares by way
of a stock dividend or make a distribution to all or substantially all of the holders of Common Shares on its outstanding Common Shares payable in Common Shares or securities convertible into or exchangeable for Common Shares;

  
 11 

 then, in each such event, the Conversion Rate shall be adjusted immediately after the
effective date of such subdivision, redivision, change, reduction, combination or consolidation, or the record date for such issue of Common Shares by way of a stock dividend or distribution, as the case may be, by multiplying the Conversion Rate in
effect on such effective date or record date by a fraction: 
  

	 	(A)	the numerator of which shall be the total number of Common Shares outstanding immediately after such date; and 

 

	 	(B)	the denominator of which shall be the total number of Common Shares outstanding immediately prior to such date. 

Such adjustment shall be made successively whenever any event referred to in this Section 4.1(a) shall occur. Any such issue or
distribution of Common Shares or securities convertible into or exchangeable for Common Shares shall be deemed to have been made on the record date for such issue or distribution for the purpose of calculating the number of outstanding Common Shares
under Section 4.1(b) and Section 4.1(c). 
  

	 	(b)	Subject to Section 4.2, if and whenever at any time from the Closing and prior to the Outside Date, the Corporation shall fix a record date for the making of a
distribution to all or substantially all the holders of its outstanding Common Shares of: 

  

	 	(i)	shares of the Corporation of any class other than Common Shares or other securities of the Corporation; 

 

	 	(ii)	rights, options or warrants to acquire Common Shares (or securities convertible into or exchangeable for Common Shares) or other securities of the Corporation;

  

	 	(iii)	evidences of its indebtedness; or 

  

	 	(iv)	any property or other assets; 

(excluding, in each case, any distribution referred to in Section 4.1(a)) then, in each such case, the Conversion Rate shall be
adjusted immediately after such record date so that it shall equal the rate determined by multiplying the Conversion Rate in effect on such record date by a fraction: 
  

	 	(i)	the numerator of which will be the product of the number of Common Shares outstanding on such record date and the Current Market Price on such record date; and

  

	 	(ii)	the denominator of which will be: 

  

	 	(A)	the product of the number of Common Shares outstanding on such record date and the Current Market Price on such record date; less 

 

	 	(B)	the aggregate fair market value, as determined by the directors of the Corporation, acting reasonably (whose determination will be conclusive), to the holders of Common
Shares, of such shares, other securities, rights, options, warrants, evidences of indebtedness or other assets so distributed. 

 Any Common Shares owned by or held for the account of the Corporation or any subsidiary shall be deemed not to be outstanding for the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed. To the extent that such distribution is not so made, the Conversion Rate shall be readjusted to the Conversion Rate which would then be 

  
 12 

 
in effect if such record date had not been fixed or to the Conversion Rate which would then be in effect based upon such shares, other securities, rights, options, warrants, evidences of
indebtedness or other assets actually distributed, as the case may be. 
  

	 	(c)	Subject to Section 4.2, if and whenever at any time from the Closing Date and prior to the Outside Date, there is a reclassification of the Common Shares or a
capital reorganization of the Corporation (other than as described in Section 4.1(a) or Section 4.1(b)) or an amalgamation, arrangement or merger of the Corporation with or into any other body corporate, trust, partnership or other entity,
or a sale or conveyance of the property and assets of the Corporation as an entirety or substantially as an entirety to any other body corporate, trust, partnership or other entity, Mercer shall, upon exercise or deemed exercise of such Conversion
Right, be entitled to receive and shall accept, in lieu of the number of Common Shares to which Mercer was prior thereto entitled upon any such exercise or deemed exercise, the number of shares or other securities or property of the Corporation or
of the body corporate, trust, partnership or other entity resulting from such amalgamation, arrangement or merger or to which such sale or conveyance may be made, as the case may be, that Mercer would have been entitled to receive on such
reclassification, capital reorganization, amalgamation, arrangement, merger, sale or conveyance, if on the record date or the effective date thereof, as the case may be, Mercer had been the registered holder of the number of Common Shares to which
immediately before the transaction he was entitled upon exercise or deemed exercise of the Conversion Right. To give effect to or to evidence the provisions of this Section 4.1(c), the Corporation, its successor, or such purchasing body
corporate, partnership, trust or other entity, as the case may be, shall, prior to or contemporaneously with any such reclassification, capital reorganization, amalgamation, arrangement, merger, sale or conveyance, enter into an agreement which
shall provide, to the extent possible, for the application of the provisions set out in this Agreement with respect to the rights and interests thereafter of Mercer to the effect that the provisions set out in this Agreement shall thereafter
correspondingly be made applicable, as nearly as may reasonably be possible, with respect to any shares, other securities or property to which Mercer is entitled on the exercise or deemed exercise of the Conversion Right thereafter. Any agreement
entered into between the Corporation, any successor to the Corporation or such purchasing body corporate, partnership, trust or other entity and the Corporation shall provide for adjustments which shall be as nearly equivalent as may be practicable
to the adjustments provided in this Section 4.1 and which shall apply to successive reclassifications, capital reorganizations, amalgamations, arrangements, mergers, sales or conveyances. 

 

	 	(d)	In any case in which this Section 4.1 shall require that an adjustment shall become effective immediately after a record date for an event referred to herein, the
Corporation may defer, until the occurrence of such event, issuing to Mercer, the additional Common Shares or other securities or property issuable upon such exercise or deemed exercise as the case may be, by reason of the adjustment required by
such event before giving effect to such adjustment; provided, however, that the Corporation shall deliver to Mercer, as soon as reasonably practicable after such record date, an appropriate instrument evidencing Mercer’s right to receive such
additional Common Shares or other securities or property upon the occurrence of the event requiring such adjustment and the right to receive any distributions made on such additional Common Shares or other securities or property declared in favour
of holders of record of Common Shares or securities or property on and after the relevant date of exercise or deemed exercise, as the case may be, or such later date as Mercer would, but for the provisions of this Section 4.1(d), have become
the holder of record of such additional Common Shares or other securities or property pursuant to this Section 4.1. 

  

	 	(e)	In any case in which Section 4.1(b) requires that an adjustment be made to the Conversion Rate, no such adjustment shall be made if Mercer receives the shares,
evidences of indebtedness or other assets or property referred to in Section 4.1(b), in such kind and number as Mercer would have received if it had been a holder of Common Shares on the applicable record date or effective date, as the case may
be, by virtue of their Special Warrants having then been converted, to acquire Common Shares at the Conversion Rate in effect on the applicable record date or effective dates as the case may be. 

  
 13 

	 	(f)	The adjustments provided for in this Section 4.1 are cumulative and shall apply to successive subdivisions, redivisions, reductions, combinations, consolidations,
distributions, issues or other events resulting in any adjustment under the provisions of this Section 4.1, provided that, notwithstanding any other provision of this Section 4.1, no adjustment of the Conversion Rate shall be required
unless such adjustment would require an increase or decrease of at least one percent in the Conversion Rate then in effect, provided, however, that any adjustments which by reason of this Section 4.1(f) are required to be made shall be carried
forward and taken into account in any subsequent adjustment. 

  

	 	(g)	If the Corporation sets a record date to determine the holders of Common Shares for the purpose of entitling them to receive any dividend or distribution or sets a
record date to take any other action and, thereafter and before the distribution to such shareholders of any such dividend or distribution or the taking of any other action, legally abandons its plan to pay or deliver such dividend or distribution
or take such other action, then no adjustment shall be made to the Conversion Rate. 

  

	 	(h)	After any adjustment pursuant to this Section 4.1, the term “Common Shares” where used in this Agreement shall be interpreted to mean securities of any
class or classes which as a result of such adjustment and all prior adjustments pursuant to this Section 4.1, Mercer is entitled to receive upon the exercise or deemed exercise of the Conversion Right and the number of Common Shares to be
issued upon any exercise or deemed exercise of an Conversion Right, shall be interpreted to mean the number of Common Shares or other property or securities Mercer is entitled to receive, as a result of such adjustment and all prior adjustments
pursuant to this Section 4.1, upon the full exercise of an Conversion Right comprising part of a Special Warrant, as the case may be. 

  

	4.2	No Adjustment for Stock Options, etc. 

Notwithstanding anything to the contrary in this ARTICLE 4, no adjustment shall be made pursuant to this Agreement upon or in respect of the issue of
Common Shares pursuant to any stock option or stock purchase plan in force from time to time for officers, directors or employees of the Corporation or pursuant to any Option granted or other convertible security issued by the Corporation prior to
the date of this Agreement. 
  

	4.3	Determination by Corporation’s Auditors 

 In the event of any question arising with respect to the adjustments provided for in this ARTICLE 4, such question shall be conclusively determined by the Corporation’s auditors, who shall have
access to all necessary records of the Corporation, and such determination shall be binding upon the Corporation, Mercer and all other persons interested therein. 
  

	4.4	Proceedings Prior to Any Action Requiring Adjustment 

 As a condition precedent to the taking of any action which would require an adjustment in the Conversion Right, including the Conversion Rate, the Corporation shall take any corporate action which may, in
the opinion of Corporation’s Counsel, be necessary to ensure that the Corporation has sufficient authorized capital and that the Corporation may validly and legally issue, as fully paid and non-assessable shares, all of the Common Shares which
Mercer is entitled to receive on the exercise or deemed exercise of the Conversion Right, in accordance with the provisions of this Agreement. 
  

	4.5	Action Requiring Adjustment 

 In case the
Corporation, after the date hereof, shall take any action affecting the Common Shares other than the actions described in this ARTICLE 4 which, in the opinion of the directors of the Corporation would materially affect the rights of Mercer and/or
the Conversion Right attached to the Special Warrants, then the number of Common Shares which are to be received upon the exercise or deemed exercise of Conversion Right comprising part of the Special Warrants shall be adjusted in such manner, if
any, and at such time as the directors of the Corporation may, in their discretion, reasonably determine to be equitable to Mercer in such circumstances. 

  
 14 

	4.6	Certificate of Adjustment 

 The
Corporation shall, immediately after the occurrence of any event which requires an adjustment or readjustment as provided in this ARTICLE 4, deliver a certificate of the Corporation to Mercer specifying the nature of the event requiring such
adjustment or readjustment and the amount of the adjustment or readjustment necessitated thereby and setting out in reasonable detail the method of calculation and the facts upon which such calculation is based, which certificate shall be supported
by a certificate of the Corporation’s auditors verifying such calculation. 
  

	4.7	Notice of Special Matters 

 The
Corporation covenants with Mercer that, so long as any Special Warrants remain outstanding, it will give notice to Mercer of its intention to fix the record date for any event referred to in Section 4.1(a) and Section 4.1(b) which may give
rise to an adjustment in the Conversion Rate. Such notice shall specify the particulars of such event and the record date for such event, provided that the Corporation shall only be required to specify in the notice such particulars of the event as
shall have been fixed and determined on the date on which the notice is given. The notice shall be given in each case not less than 14 days prior to such applicable record date. 

ARTICLE 5 

REPRESENTATIONS AND WARRANTIES 
  

	5.1	Representations and Warranties of the Corporation 

 Fibrek represents and warrants to Mercer, other than as may be set forth in the Disclosure Letter, the matters set out on Schedule “B” and acknowledges that Mercer is relying upon these
representations and warranties in connection with the entering into of this Agreement and agreeing to purchase the Special Warrants. 
  

	5.2	Representations and Warranties of Mercer 

Mercer hereby represents and warrants to Fibrek the matters set out on Schedule “C” and acknowledges that Fibrek is relying upon these
representations and warranties in connection with the entering into of this Agreement. 
 ARTICLE 6 

COVENANTS 
  

	6.1	Covenants of the Corporation 

 The
Corporation covenants and agrees as follows: 
  

	 	(a)	the Special Warrants shall be duly and validly authorized and created and upon the Conversion Date the Common Shares issuable upon conversion of the Special Warrants
shall be issued as fully paid and non-assessable Common Shares; 

  

	 	(b)	to duly, punctually and faithfully perform all the obligations to be performed by it under this Agreement; 

 

	 	(c)	to file all documents or information required to be filed by Fibrek under applicable Laws with respect to the issuance and sale of the Special Warrants or the Common
Shares issuable upon the conversion thereof in accordance with timelines prescribed under applicable Laws, and all such documents or information, when filed, shall comply as to form and substance in all material respects with the requirements of
applicable Laws; 

  
 15 

	 	(d)	until the earlier of the issuance of the Common Shares upon the exercise or deemed exercise of the Conversion Right and the redemption of the Special Warrants in
accordance with the terms hereof, to not take any action that would render, or may reasonably be expected to render, any representation or warranty made by it in this Agreement (i) that is qualified by a reference to a Material Adverse Effect
misleading or untrue in any respect, or (ii) that is not qualified by a reference to a Material Adverse Effect untrue or incorrect in any respect unless the failure to be true or correct has not had or would not reasonably be expected to have,
a Material Adverse Effect on Fibrek; 

  

	 	(e)	to promptly notify Mercer in writing of any Material Adverse Change and of any change in any representation or warranty provided by Fibrek in this Agreement which
change is or may be of such a nature to render any representation or warranty misleading or untrue in any material respect, and Fibrek shall in good faith discuss with Mercer any change in circumstances (actual, anticipated, contemplated, or to the
knowledge of Fibrek, threatened) which is of such a nature that there may be a reasonable question as to whether notice need to be given to Mercer pursuant to this provision; 

 

	 	(f)	to use all reasonable commercial efforts to continue to be a “reporting issuer” (or the equivalent thereof) in each of the provinces and territories of Canada
and in material compliance with all Applicable Securities Laws in such provinces and territories, and the Common Shares shall continue to be listed on the TSX; 

 

	 	(g)	to use all reasonable commercial efforts to obtain the acceptance of the TSX of the issuance and sale of the Special Warrants as provided herein and the approval of the
TSX for the listing of the Common Shares issuable on conversion of the Special Warrants, and to satisfy any conditions imposed by the TSX in respect of such acceptance and approval; 

 

	 	(h)	upon the exercise or deemed exercise (on the occurrence of a Deemed Conversion Event) of the Conversion Right in accordance with the terms of this Agreement, Fibrek
shall forthwith appoint such persons designated by Mercer to the Fibrek board of directors as shall be equal to the greater of: (i) two; or (ii) the number that is then equal to Mercer’s proportionate ownership of the then outstanding
Common Shares; 

  

	 	(i)	to preserve and maintain in full force and effect its existence and good standing under the laws of Canada; and 

 

	 	(j)	to diligently and in good faith complete the Disclosure Letter and no later than five (5) Business Days after the date hereof deliver to Mercer the completed
Disclosure Letter, which shall be subject to approval by Mercer at its entire satisfaction prior to the Closing Date. 

  

	6.2	Covenants of Mercer 

  

	 	(a)	Mercer covenants and agrees to duly, punctually and faithfully perform all the obligations to be performed by it under this Agreement. Mercer further covenants and
agrees that if required by any Applicable Securities Laws or the regulations, rules, policies of any stock exchange or other regulatory authority, Mercer will assist the Corporation in filing a report of exempt distribution in prescribed form(s)
with respect to the issuance of the Special Warrants. 

  

	 	(b)	If at any time the Special Warrants are converted into Common Shares and Fibrek receives a Superior Proposal (prior to or after the Conversion Right is exercised by
Mercer) that results in the Termination Fee becoming payable pursuant to the Support Agreement, Mercer covenants and agrees to tender or vote (or to cause any person holding the Common Shares received on the conversion of the Special Warrants to
tender or vote) the Common Shares received on the conversion of the Special Warrants to or in favour of the Superior Proposal that triggered the payment of the Termination Fee provided that the Termination Fee has been paid, and:

  

	 	(i)	greater than 50.1% of the outstanding Common Shares on a fully-diluted basis (excluding any Common Shares held by Mercer or any of its Affiliates) have been tendered to
such Superior Proposal; or 

  
 16 

	 	(ii)	greater than 50.1% of the votes cast by holders of Common Shares (excluding any Common Shares held by Mercer or any of its Affiliates) who vote in person or by proxy on
any resolution to approve such Superior Proposal have been voted in favour of such Superior Proposal, 

 as the
case may be. Notwithstanding any other provision set out in this Agreement, the covenant set out in this Subsection 6.2(b) shall survive the termination of this Agreement, the issuance of the Special Warrants and the issuance of the Common Shares on
conversion of the Special Warrants. 
  

	 	(c)	If at any time, the Special Warrants are converted into Common Shares and a Termination Fee Event, as defined under the Support Agreement, has occurred that results in
the Termination Fee being paid pursuant to the terms and conditions of the Support Agreement, Mercer covenants and agrees to pay to Fibrek an amount in cash equal to either (x) the Termination Fee paid to Mercer pursuant to the terms and
conditions of the Support Agreement in the event that the Special Warrant Profit actually received by Mercer is equal to or exceeds such Termination Fee or (y) the Special Warrant Profit actually received by Mercer in the event that the Special
Warrant Profit actually received by Mercer is less than such Termination Fee. Such payment shall be made within three (3) Business Days of receipt of the Consideration. For the purpose of this Agreement, “Special Warrant
Profit” means the amount by which the “Consideration” exceeds $1.00 multiplied by the total number of Special Warrants issued herein. For the purposes of this definition, Consideration means the aggregate value of all
consideration, in whatever form, including cash, securities, options or rights, property and the net present value of future receipt or benefits received by Mercer or its Affiliates for the Special Warrants or the Common Shares issued on conversion
of the Special Warrants. Any non-cash Consideration shall be assessed at its estimated fair market value at the time of payment of the applicable Termination Fee pursuant to the terms of the Support Agreement as determined by a nationally recognized
firm of independent public chartered accountants or a nationally recognized investment banking firm not engaged by, and independent of, Fibrek and Mercer, using methodologies consistent with industry practice and determined by such firm of
independent public chartered accountants or investment banking firm, to be the most appropriate in the circumstances. Notwithstanding any other provision set out in this Agreement, the covenant set out in this Subsection 6.2(c) shall survive the
termination of this Agreement, the issuance of the Special Warrants and the issuance of the Common Shares on conversion of the Special Warrants for a period of twelve (12) months. 

ARTICLE 7 

CONDITIONS 
  

	7.1	Mutual Conditions 

 The respective
obligations of each Party hereto to complete the issuance and sale of the Special Warrants is subject to the satisfaction (or waiver by the respective Party), at or before the Closing, of the following conditions: 

 

	 	(a)	no act, action, suit or proceeding shall have been threatened or taken before or by any Governmental Authority, whether or not having the force of Law, and no Law shall
have been proposed, enacted, promulgated or applied, in either case: 

  

	 	(i)	to cease trade, enjoin, prohibit or impose material limitations, damages or conditions on the purchase by or the sale to Mercer of the Special Warrants or of Common
Shares, whether upon conversion of the Special Warrants or otherwise (other than any prohibition or material limitation concerning the acquisition of Common Shares that applies to Mercer pursuant to Applicable Securities Laws of general application
in effect as at the date hereof), or the right of Mercer to own or exercise full rights of ownership of Special Warrants or Common Shares; 

  
 17 

	 	(ii)	which, if the issuance and sale of the Special Warrants or the Common Shares issuable on the conversion thereof was consummated, would reasonably be expected to have a
Material Adverse Effect on Fibrek; or 

  

	 	(iii)	which would materially and adversely affect the ability of Mercer to be issued the Common Shares on conversion of the Special Warrants or to otherwise acquire Common
Shares; 

  

	 	(b)	there shall not exist any prohibition at Law against Mercer acquiring the Special Warrants or any Common Shares, whether upon conversion of the Special Warrants or
otherwise; 

  

	 	(c)	the TSX shall have conditionally accepted and approved, in writing, the issuance and sale of the Special Warrants as provided herein and the listing of the Common
Shares issuable on conversion of the Special Warrants; 

  

	 	(d)	the Corporation shall have obtained all necessary approvals in connection with the issuance of the Special Warrants as required by applicable Laws;

  

	 	(e)	the Corporation shall have received all required consents, approvals, authorizations, permits and waivers of third parties necessary for the Corporation to consummate
the sale of the Special Warrants to Mercer (other than as contemplated in Section 7.1(c); and 

  

	 	(f)	the Parties shall have entered into an agreement with the Trustee with respect to administration of the Trust Fund, including the receipt, investment and release
thereof (the “Trust Account Agreement”), on terms and conditions satisfactory to each of the Parties, acting reasonably. 

  

	7.2	Conditions in favour of Mercer 

 The
obligation of Mercer to consummate the transactions described in this Agreement is subject to the satisfaction (or waiver by Mercer in its sole discretion), at or before the Closing Date, of the following conditions: 

 

	 	(a)	Representations and Warranties Correct. All representations and warranties of Fibrek in the Agreement: 

 

	 	(i)	that are qualified by a reference to a Material Adverse Effect shall be true and correct in all respects at the Closing Time with the same effect as though made as of
the Closing Time, except that the accuracy of representations and warranties that by their terms speak as of a specified date will be determined as of such date; and 

 

	 	(ii)	that are not qualified by a reference to a Material Adverse Effect (other than with respect to outstanding share capital (on an undiluted and fully diluted basis) which
shall be true and correct in all respects at the Closing Time with the same effect as though made as of the Closing Time, except for changes thereto resulting from the issuance of Common Shares under the terms of the Options) shall be true and
correct in all respects at the Closing Time with the same effect as though made as of the Closing Time, except that the accuracy of representations and warranties that by their terms speak as of a specified date will be determined as of such date,
unless the failure to be true or correct has not had or would not reasonably be expected to have a Material Adverse Effect. 

  

	 	(b)	Covenants. Fibrek shall have observed and performed its covenants in the Agreement and the Support Agreement in all material respects to the extent that such
covenants were to have been observed or performed by Fibrek at or prior to the Closing Time. 

  
 18 

	 	(c)	Officer’s Certificate. The Corporation shall have delivered to Mercer a certificate, executed by two duly authorized officers of the Corporation dated as of
the Closing Date and in the form attached hereto as Schedule “D”. 

  

	 	(d)	Opinion of Corporation’s Counsel. Mercer shall have received a legal opinion of the Corporation’s Counsel in form and substance satisfactory to Mercer
and Mercer’s Counsel, acting reasonably, and customary for transactions of this nature. 

  

	 	(e)	Material Adverse Change. There shall not exist or have occurred, in the judgment of Mercer, acting reasonably, a Material Adverse Change in respect of Fibrek.

  

	 	(f)	Other Documents and Undertakings. Mercer shall have received from the Corporation such other documents as it may reasonably request. 

 

	 	(g)	Disclosure Letter. The Corporation shall have delivered to Mercer the Disclosure Letter in accordance with Section 6.1(j) and Mercer shall be satisfied with
the same in its sole discretion. 

  

	7.3	Conditions in favour of the Corporation 

The obligation of the Corporation to consummate the transactions described in this Agreement is subject to the satisfaction (or waiver by the
Corporation), at or before the Closing Date, of the following conditions: 
  

	 	(a)	Representations and Warranties Correct. The representations and warranties of Mercer set forth in this Agreement shall be true and correct as of the Closing Time
with the same effect as though made as of the Closing Time, except that the accuracy of representations and warranties that by their terms speak as of a specified date will be determined as of such date. 

 

	 	(b)	Performance of Obligations. Mercer shall have performed or complied in all material respects with all agreements and covenants required to be performed or
complied with by it under this Agreement at or prior to the Closing Date. 

  

	 	(c)	Payment. Mercer shall have provided payment for the Special Warrants in accordance with Section 2.4. 

ARTICLE 8 

NOTICES 
  

	8.1	Notice 

 Any notice, consent or approval
required or permitted to be given in connection with this Agreement (referred to in this Section as a “Notice”) shall be in writing and shall be sufficiently given if delivered (whether in person, by courier service or other
personal method of delivery), or if transmitted by facsimile or e-mail. 
  

	 	(a)	if to Mercer: 

 Mercer
International Inc. 
 Suite 1120 
 700 West Pender Street 
 Vancouver, British Columbia V6C 1GH 

 

			
	 Attention:
	  	David Gandossi
	 Facsimile:
	  	(604) 684-1094
	 Email:
	  	dgandossi@mercerint.com

  
 19 

 with a copy to: 
 Sangra Moller LLP 
 1000 Cathedral Place 

925 West Georgia Street 
 Vancouver, British Columbia V6C 3L2 
  

			
	 Attention:
	  	Harjit S. Sangra
	 Facsimile:
	  	(604) 699-8803
	 Email:
	  	hsangra@sangramoller.com

  

	 	(b)	if to Fibrek: 

 Fibrek Inc.

 625 René Lévesque O. 
 Bureau 700 
 Montréal, Québec H3B 1R2 

 

			
	 Attention:
	  	Chief Financial Officer
	 Facsimile:
	  	(514) 871-0551
	 Email:
	  	patsieducharme@fibrek.com

 with a copy to: 
 Stikeman Elliott LLP 
 1155 René-Lévesque Blvd. West 

Suite 4000 

Montreal, Québec H3B 3V2 
  

			
	 Attention:
	  	Steeve Robitaille and Pierre-Yves Leduc
	 Facsimile:
	  	(514) 397-3222
	 Email:
	  	pyleduc@stikeman.com

 Any Notice delivered or transmitted to a Party as provided above shall be deemed to have been given and received on the
day it is delivered or transmitted, provided that it is delivered or transmitted on a Business Day prior to 5:00 p.m. local time in the place of delivery or receipt. However, if the Notice is delivered or transmitted after 5:00 p.m. local time or if
such day is not a Business Day then the Notice shall be deemed to have been given and received on the next Business Day. 
 Any Party may, from
time to time, change its address by giving Notice to the other Parties in accordance with the provisions of this Section. 

ARTICLE 9 

DISCLOSURE 
  

	9.1	Future Disclosure 

 The Corporation shall
not make any public disclosure, by press release or otherwise, of the name of Mercer or any of its Affiliates, their affairs or the nature of this Agreement, without the prior written consent of Mercer. Notwithstanding the foregoing, Mercer
acknowledges that the Corporation may be required by law, securities regulation or policies of a stock exchange to make certain disclosures and the Corporation shall be permitted to do so, provided that the Corporation shall first provide a copy of
such disclosure to Mercer for review and any timely comments and shall act reasonably in incorporating any comments reasonably requested by Mercer with respect thereto (subject to the Corporation’s obligations under Applicable Securities Laws
to make timely disclosure of material information). Notwithstanding the foregoing, at the request of the Corporation, Mercer may pre-approve certain disclosures in respect of Mercer and, once pre-approved, such disclosure may be made by the
Corporation without review or approval of Mercer, until Mercer advises the Corporation otherwise. 

  
 20 

 ARTICLE 10 
 MISCELLANEOUS 
  

	10.1	Entire Agreement 

 This Agreement,
including all Schedules hereto, together with documents to be delivered pursuant hereto, constitutes the entire agreement between the parties hereto, and cancels and supersedes all prior agreements and understandings between the parties hereto, with
respect to the subject matter hereof. 
  

	10.2	Survival of Representations and Warranties 

The representations, warranties and covenants set out in this Agreement or confirmed in any certificate or other document delivered pursuant hereto will
survive the termination of this Agreement and completion of the transactions contemplated hereby and shall continue in full force and effect for the benefit of the Corporation and Mercer, as the case may be, for a period of three (3) years from
the date hereof. 
  

	10.3	Assignment 

 Neither this Agreement nor
any rights or obligations under this Agreement shall be assignable by operation of law, amalgamation or otherwise by any Party without the prior written consent of the other Party, except that Mercer may assign, without being required to obtain the
Corporation’s consent, all or part of its rights or obligations hereunder to one or more of its direct or indirect wholly-owned subsidiaries, but no such assignment shall relieve Mercer of its obligations hereunder. Subject thereto, this
Agreement shall enure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. No third party shall have any rights hereunder unless expressly stated to the contrary. 

 

	10.4	Further Assurances 

 The Parties shall
with reasonable diligence do all such things and provide all such reasonable assurances as may be required to consummate the transaction contemplated by this Agreement, and each Party shall provide such further documents or instruments required by
any other Party as may be reasonably necessary or desirable to effect the purpose of this Agreement and carry out its provisions. 
  

	10.5	Expenses 

 The Parties agree that all
costs and expenses of the Parties relating to the Agreement and the transactions contemplated hereby, including legal fees, accounting fees, financial advisory fees, regulatory filing fees, stock exchange fees, all disbursements of advisors and
printing and mailing costs, shall be paid by the Party incurring such expenses. 
  

	10.6	Change in Common Shares 

 The provisions
of this Agreement relating to Common Shares or other securities of the Corporation shall apply mutatis mutandis to any Common Shares or securities into which the Common Shares may be converted, changed, reclassified, re-divided,
re-designated, redeemed, subdivided or consolidated and any Common Shares or securities of the Corporation or of any successor or continuing company or corporation to the Corporation that may be received by shareholders of the Corporation pursuant
to a reorganization, amalgamation, arrangement, consolidation or merger, statutory or otherwise. 
  

	10.7	Time of the Essence 

 Time shall be of the
essence in this Agreement. 

  
 21 

	10.8	Amendments 

 This Agreement may only be
amended by a written instrument signed by the parties hereto. 
  

	10.9	Governing Law 

 This Agreement shall be
governed by, and be construed in accordance with, the laws of the Province of Québec and the federal laws of Canada applicable therein but the reference to such laws shall not, by conflict of laws rules or otherwise, require the application
of the law of any jurisdiction other than the Province of Québec . 
  

	10.10	  Attornment 

 Each party hereto
hereby irrevocable attorns to the exclusive jurisdiction of the Courts of the Province of Québec in respect of all matters arising under this Agreement. 
  

	10.11	  Severability 

 If any one or
more of the provisions or parts thereof contained in this Agreement should be or become invalid, illegal or unenforceable in any respect in any jurisdiction, the remaining provisions or parts thereof contained herein shall be and shall be
conclusively deemed to be, as to such jurisdiction, severable therefrom and: 
  

	 	(a)	the validity, legality or enforceability of such remaining provisions or parts thereof shall not in any way be affected or impaired by the severance of the provisions
or parts thereof severed; and 

  

	 	(b)	the invalidity, illegality or unenforceability of any provision or party thereof contained in this Agreement in any jurisdiction shall not affect or impair such
provision or part thereof or any other provisions of this Agreement in any other jurisdiction. 

  

	10.12	  Execution and Delivery 

 This
Agreement may be executed by the Parties in counterparts and may be executed and delivered by facsimile or email transmission and all such counterparts and facsimiles or electronically-transmitted documents shall together constitute one and the same
agreement. 
  

	10.13	  Waiver 

 No waiver by any
party hereto shall be effective unless in writing and any waiver shall affect only the matter, and the occurrence thereof, specifically identified and shall not extend to any other matter or occurrence. 

 

	10.14	  Enurement 

 This Agreement
shall enure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. 
  

	10.15	  Reliance 

 The parties hereto
acknowledge and agree that they have entered into this Agreement in reliance upon each of the representations, warranties, covenants and agreements herein of the other party hereto. 

[Remainder of page intentionally left blank.] 

  
 22 

 IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first above
written. 
  

			
	MERCER INTERNATIONAL INC.
		
	By:	 	 
	Name:	 	
	Title:	 	

  

			
	FIBREK INC.
		
	By:	 	 
	Name:	 	
	Title:	 	

  
 23 

 SCHEDULE “A” 

CONVERSION NOTICE 
  

			
	TO:	  	Fibrek Inc. (the “Corporation”)
		  	625 René Lévesque O.
		  	Bureau 700
		  	Montréal, Québec H3B 1R2
		
	 AND TO:
	  	Computershare Trust Company of Canada

  

	(1)	The undersigned holder of Special Warrants of the Corporation hereby exercises its Conversion Right in respect of _________Special Warrants as of and effective
______________, _______ and on the terms specified in the Special Warrant Agreement dated as of February 9, 2012 between the Corporation and Mercer International Inc. (the “Agreement”), as such number of Special Warrants and
any Common Shares issuable on conversion thereof may be adjusted in accordance with the terms of said agreement. 

  

	(2)	The undersigned hereby irrevocably directs that the Common Shares issuable on conversion of the Special Warrants be issued and delivered as follows:

  

									
	 Name(s) in Full
	 	 	  	 Address(es)

(Include Postal or Zip Code)
	  	 	  	 Number(s) of Special

Warrants Converted

	  	 	 	  	  	  	 	  	  
	  	 	 	  	  	  	 	  	  
	  	 	 	  	  	  	 	  	  

 (Please print full name in which the
Common Share certificates are to be issued) 
 Terms not defined herein shall have the same meanings ascribed to them in the Agreement.

 DATED this ___________of ________________________, ________. 

 

	
	Signature of Subscriber
	  
	Name of Subscriber
	
	 
	
	
	
	 
	Address of Subscriber (include postal or zip code)

  

	 ̈	Please check box if the certificates are to be held for pick up, failing which the certificates will be mailed to the address set forth above. 

 SCHEDULE “B” 

REPRESENTATIONS AND WARRANTIES OF FIBREK 
  

	1.	Organization and Qualification 

 Fibrek
and each of its subsidiaries is a corporation or partnership, as the case may be, duly incorporated, amalgamated, continued, created or formed, as the case may be, and validly existing under the Laws of its jurisdiction of incorporation,
amalgamation, continuance, creation or formation, as the case may be, and has the requisite corporate or legal power and authority to own its properties and conduct its business as now owned and conducted. Fibrek and each of its subsidiaries is duly
registered, licensed or otherwise authorized and qualified to do business and each is in good standing in each jurisdiction in which the character of its properties, owned, leased, licensed or otherwise held, or the nature of its activities make
such registration or authorization and qualification necessary, except where the failure to be so registered, authorized or in good standing would not reasonably be expected to have a Material Adverse Effect on Fibrek. 

 

	2.	Authority Relative to this Agreement 

Fibrek has the requisite corporate authority to enter into this Agreement and the Support Agreement and to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement and of the Support Agreement and the consummation of the transactions contemplated hereby and thereby have been duly authorized by the board of directors of the Corporation, and no other
corporate proceedings on the part of Fibrek are necessary to authorize this Agreement or the Support Agreement and the transactions contemplated hereby (including the issuance of the Special Warrants and the Common Shares issuable on the conversion
thereof) and thereby. This Agreement and the Support Agreement have been duly executed and delivered by Fibrek, and each constitutes a legal, valid and binding obligation of Fibrek enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other Laws relating to or affecting creditors’ rights generally, and to general principles of equity. 

 

	3.	No Violations 

  

	 	(a)	None of the execution and delivery of this Agreement or the Support Agreement by Fibrek, the consummation of the transactions contemplated hereby or thereby or the
compliance by Fibrek with any of the provisions hereof or thereof will: (i) violate, conflict with, or result in breach of any provision of, require any consent, approval or notice under, or constitute a default (or an event which, with notice
or lapse of time or both, would constitute a default) or result in a right of termination or acceleration under, or result in a creation of any Encumbrance upon any of the properties or assets of Fibrek under, any of the terms, conditions or
provisions of (x) the certificate and articles of incorporation and by-laws of Fibrek, as amended; or (y) any note, bond, mortgage, indenture, loan agreement, deed of trust, agreement, lien, contract or other material instrument or
obligation to which Fibrek is a party or to which it, or any of its properties or assets, may be subject or by which Fibrek is bound; (ii) subject to compliance with the statutes and regulations referred to in Section 3(b) of this Schedule
“B”, violate any judgment, ruling, order, writ, injunction, determination, award, decree, statute, ordinance, rule or regulation applicable to Fibrek; or (iii) cause the suspension or revocation of any authorization, consent, approval
or licence currently in effect (except, in the case of each of clauses (i), (ii) and (iii) for such violations, conflicts, breaches, defaults, terminations, suspensions or revocations which, or any consents, approvals or notices which if
not given or received, would not have a Material Adverse Effect on Fibrek or have a material adverse effect on the ability of Fibrek to consummate the transactions contemplated hereby or thereby). 

 

	 	(b)	Other than in connection with or in compliance with the provisions of Applicable Securities Laws or the rules of the TSX: (i) there is no legal impediment to
Fibrek’s consummation of the transactions contemplated by this Agreement; and (ii) no filing or registration with, or authorization, consent or approval of, any domestic or foreign public body or authority is necessary by Fibrek in
connection with the issuance of the Special Warrants, except for such filings or registrations which, if not made, or for such authorizations, consents or approvals, which, if not received, would not have a Material Adverse Effect on Fibrek or
materially affect the ability of Fibrek to consummate the transactions contemplated hereby. 

	 	(c)	The execution, delivery and performance of this Agreement does not and will not result in the restriction of Fibrek from engaging in its business or from competing with
any Person or in any geographical area and do not and will not result in a Material Adverse Effect on Fibrek or trigger or cause to arise any rights of any Person under any contract or arrangement to restrict any of the foregoing from engaging in
the business currently carried on by Fibrek. 

  

	4.	Capitalization 

 As at the date hereof,
the authorized share capital of Fibrek consists of an unlimited number of Common Shares, of which, as at the date hereof, 130,075,556 Common Shares are issued and outstanding. As of the date hereof, 3,161,092 Common Shares are issuable pursuant to
the exercise of outstanding Options. The terms of the Options (including the exercise price thereof) are disclosed in Section 4 of the Disclosure Letter. Except as set forth in the immediately preceding sentences and with respect to the Rights
Plan, there are no options, puts, calls, warrants or other rights, agreements or commitments of any character whatsoever requiring the issuance, sale or transfer by Fibrek of any shares of Fibrek (including Common Shares) or any securities
convertible into, or exchangeable or exercisable for, or otherwise evidencing a right to acquire, any shares of Fibrek (including Common Shares), nor are there any outstanding stock appreciation rights, phantom equity or similar rights, agreements,
arrangements or commitments based upon the book value, income or other attribute of Fibrek. All outstanding Common Shares have been duly authorized and validly issued, are fully paid and nonassessable and are not subject to, nor were they issued in
violation of, any pre-emptive rights, and all Common Shares issuable upon conversion of the Special Warrants, or the exercise of outstanding Options in accordance with their terms, will be duly authorized and validly issued, fully paid and
non-assessable and will not be subject to any pre-emptive rights. 
  

	5.	No Material Adverse Change 

 Since
September 30, 2011, there has not been any Material Adverse Change in respect of Fibrek. 
  

	6.	Information 

 All material data and
information provided by Fibrek to Mercer and its agents and representatives is complete and true and correct in all material respects and does not omit any data or information necessary to make the data and information provided, taken as a whole,
not misleading in any material respect. 
  

	7.	No Undisclosed Material Liabilities 

Except (a) as disclosed or reflected in the audited financial statements of Fibrek as at and for the year ended December 31, 2010 and the
unaudited financial statements of Fibrek as at and for the three and nine months ended September 30, 2011; and (b) for liabilities and obligations (i) incurred in the ordinary course of business and consistent with past practice, or
(ii) pursuant to the terms of this Agreement, Fibrek has not incurred any material Liabilities of any nature, whether accrued, contingent or otherwise or which would be required by GAAP to be reflected on a consolidated balance sheet of Fibrek
as of the date hereof. 
  

	8.	Employee Obligations 

 There are no
Employee Obligations other than those existing as of the date hereof as described in Section 8 of the Disclosure Letter and such Employee Obligations do not exceed the amount set forth in the Disclosure Letter. 

 

	9.	Brokerage Fees 

 Fibrek has not retained
nor will it retain any financial advisor, broker, agent or finder or paid or agreed to pay any financial advisor, broker, agent or finder on account of this Agreement, any transaction contemplated hereby or any transaction presently ongoing or
contemplated, except that TD Securities Inc. and Canaccord Genuity Corp. have 

  
 B-2

 
been retained by Fibrek in connection with certain matters, including the Offer and the transactions contemplated by the Support Agreement and this Agreement. Fibrek has delivered to Mercer a
true and complete copy of its agreements with TD Securities Inc. and Canaccord Genuity Corp. and Fibrek hereby agrees not to amend such agreements without Mercer’s consent. 

 

	10.	Conduct of Business 

 Since
September 30, 2011, and except as contemplated herein, Fibrek has conducted and is conducting its business substantially in accordance with sound industry and environmental practices and in compliance in all material respects with all
applicable Laws, rules and regulations and, in particular, with all applicable licensing, Regulatory Approvals and environmental legislation, regulations or by-laws or other requirements of any governmental or regulatory bodies applicable to Fibrek
in each jurisdiction in which it carries on business, and hold licences, Regulatory Approvals, registrations and qualifications material to its business and assets in all jurisdictions in which it carries on business, which are necessary or
desirable to carry on the business of Fibrek, as now conducted, and where the failure to so conduct business or be in such compliance would have a Material Adverse Effect on Fibrek and none of such licences, registrations or qualifications contains
any burdensome term, provision, condition or limitation which has or is likely to have any Material Adverse Effect on Fibrek. 
  

	11.	Reports 

  

	 	(a)	Fibrek has made available or delivered to Mercer true and complete copies of: (i) Fibrek’s management information circular dated March 23, 2011 relating
to its annual meeting of shareholders held on May 19, 2011; (ii) Fibrek’s Annual Information Form for the year ended December 31, 2010 dated March 23, 2011; (iii) the audited financial statements of Fibrek as at and for
the year ended December 31, 2010; and (iv) all press releases and material change reports of Fibrek since September 30, 2011. As of their respective dates, such documents (including all exhibits and schedules thereto) (i) did not
contain a “misrepresentation” (as defined in the Securities Act); and (ii) complied in all material respects with all applicable requirements of Law including Applicable Securities Laws. The audited financial statements of Fibrek as
at and for the year ended December 31, 2010 were prepared in accordance with GAAP (except as otherwise indicated in such financial statements and the notes thereto or in the related report of Fibrek’s auditors) and fairly present in all
material respects the financial position, results of operations and changes in financial position of Fibrek as of the dates thereof and for the periods indicated therein (subject, in the case of any unaudited interim financial statements, to normal
year-end audit adjustments). 

  

	 	(b)	Fibrek will during the term of this Agreement deliver to Mercer as soon as they become available true and complete copies of any report or statement filed by it with
the Canadian Securities Regulatory Authorities or to be delivered to shareholders of Fibrek subsequent to the date hereof. As of their respective dates, such reports and statements (excluding any information therein provided by Mercer, as to which
Fibrek makes no representation) (i) will not contain any “misrepresentation” (as defined in the Securities Act); and (ii) will comply in all material respects with all applicable requirements of law including securities laws. The
financial statements of Fibrek issued by Fibrek or to be included in such reports and statements (excluding any information therein provided by Mercer, as to which Fibrek makes no representation) will be prepared in accordance with GAAP (except
(i) as otherwise indicated in such financial statements and the notes thereto or, in the case of audited statements, in the related report of Fibrek’s auditors; or (ii) in the case of unaudited interim financial statements, to the
extent they may not include footnotes or may be condensed or summary statements) and will present fairly in all material respects the consolidated financial position, results of operations and changes in financial position of Fibrek as of the dates
thereof and for the periods indicated therein (subject, in the case of any unaudited interim financial statements, to normal year-end audit adjustments). 

  

	12.	Subsidiaries 

 Section 12 of the
Disclosure Letter sets forth all of Fibrek’s material subsidiaries. 

  
 B-3

	13.	Books and Records 

 The corporate records
and minute books of Fibrek have been maintained in accordance with all applicable Laws and are complete and accurate in all material respects. 
  

	14.	Litigation, etc. 

 Except as has been
publicly disclosed prior to the date hereof, there is no material claim, action, proceeding, inquiry or investigation pending or, to the knowledge of Fibrek, threatened against or relating to Fibrek or affecting any of its properties or assets
before any court or Governmental Authority or body nor is Fibrek aware of any basis for any such claim, action, proceeding or investigation. Fibrek is not subject to any outstanding order, writ, injunction or decree that has had or is reasonably
likely to have a Material Adverse Effect on Fibrek or prevent or materially delay consummation of the transactions contemplated by this Agreement. 
  

	15.	Environmental 

 To the knowledge of
Fibrek: 
  

	 	(a)	Fibrek is not in material violation of any applicable federal, provincial, municipal or local Laws, regulations, orders, government decrees, ordinances or regulatory
approvals with respect to environmental, health or safety matters (collectively, Environmental Laws”); 

  

	 	(b)	Fibrek has operated its business at all times and has generated, received, handled, used, stored, treated, shipped, recycled and disposed of all contaminants in
material compliance with Environmental Laws; 

  

	 	(c)	there have been no material spills, releases, deposits or discharges of hazardous or toxic substances, contaminants or wastes within Fibrek’s ownership, possession
or control, other than those which have been or are in the process of being rectified, on any of the real property owned or leased by Fibrek or on any other real property; 

 

	 	(d)	there have been no material releases, deposits or discharges, in violation of Environmental Laws, of any hazardous or toxic substances, contaminants or wastes, within
Fibrek’s ownership, possession or control, into the earth, air or into any body of water or any municipal or other sewer or drain water systems by Fibrek; 

 

	 	(e)	no material orders, directions or notices have been threatened or have been issued and remain outstanding pursuant to any Environmental Laws relating to the business or
assets of Fibrek other than abandonment and reclamation orders, directions or notices issued in connection with the normal course of business; 

  

	 	(f)	no event, matter, occurrence or circumstance with respect to environmental matters exists which could reasonably be expected to interfere with Fibrek obtaining any
required Regulatory Approvals in respect of its projects or that could have a Material Adverse Effect on Fibrek; and 

  

	 	(g)	Fibrek, as of the date hereof, holds all material licences, permits and regulatory approvals required under any Environmental Laws in connection with the operation of
its business and the ownership and use of its assets and all such licences, permits and regulatory approvals are in full force and effect. 

  

	16.	Notice of Environmental Policies or Laws 

Fibrek has not received notice of any proposed Environmental Laws or policies which Fibrek reasonably believes would have a Material Adverse Effect on
Fibrek, other than those that apply to the industry generally. 

  
 B-4

	17.	Insurance 

 Policies of insurance in force
as of the date hereof naming Fibrek and its directors and officers as insureds adequately cover all risks reasonably and prudently foreseeable in the operation and conduct of the business of Fibrek as would be customary in respect of the businesses
carried on by Fibrek. All such policies of insurance shall remain in force and effect and shall not be cancelled or otherwise terminated as a result of the transactions contemplated hereby or by the Offer. 

 

	18.	Tax Matters 

  

	 	(a)	Returns Filed and Taxes Paid. All Tax Returns required to be filed by or on behalf of Fibrek have been duly filed on a timely basis and such Tax Returns are
true, complete and correct in all material respects. All Taxes shown to be payable on the Tax Returns or on subsequent assessments with respect thereto have been paid in full on a timely basis or have been accrued for on Fibrek’s financial
statements, and no other Taxes are payable by Fibrek with respect to items or periods covered by such Tax Returns. 

  

	 	(b)	Tax Reserves. For the year ended December 31, 2010, Fibrek has paid all applicable Taxes or Fibrek has provided adequate accruals in its audited financial
statements for the year ended December 31, 2010 for all such unpaid Taxes. The audited financial statements for the year ended December 31, 2010 disclose all future income taxes in conformity with GAAP. 

 

	 	(c)	Tax Returns Furnished. For all periods ending on and after December 31, 2008, Mercer has been furnished by Fibrek with true and complete copies of
(i) relevant portions of income tax audit reports, statements of deficiencies, or agreements relating to Taxes, and (ii) all separate federal, provincial, state, local or foreign income or franchise Tax Returns for Fibrek.

  

	 	(d)	Tax Deficiencies, Audits, Statutes of Limitations. No material deficiencies exist or have been asserted with respect to Taxes of Fibrek. Fibrek is not party to
any action or proceeding for assessment or collection of Taxes, nor has such event been asserted or threatened against Fibrek or any of its assets. No waiver or extension of any statute of limitations is in effect with respect to Taxes or Tax
Returns of Fibrek. The Tax Returns of Fibrek have never been audited by a government or taxing authority, nor is any such audit in process, pending or threatened. 

 

	19.	Compliance with Law 

 Fibrek has complied
with and is in compliance with all Laws applicable to the operation of its business, except where such non-compliance would not, considered individually or in the aggregate, have a Material Adverse Effect on Fibrek or materially affect the ability
of Fibrek to consummate the transactions contemplated hereby. 
  

	20.	Restrictions on Business Activities 

There is no agreement, judgment, injunction, order, decree, understanding or other restriction with any Person binding upon Fibrek which has or could have
the effect of materially restricting, prohibiting or impairing: 
  

	 	(a)	any current or currently proposed business practice of Fibrek; 

  

	 	(b)	Fibrek from carrying on its business with any customer or within any geographic region; 

 

	 	(c)	any acquisition or disposition of property by Fibrek; or 

  

	 	(d)	the conduct of business by Fibrek as currently conducted or as currently proposed to be conducted by Fibrek. 

  
 B-5

	21.	Employee Benefit Plans 

 Other than as set
forth in Section 21 of the Disclosure Letter, Fibrek: 
  

	 	(a)	has no retirement savings plans (either registered or unregistered) or other employee benefit plans, and has not made any promises with respect to increased benefits
under such plans; 

  

	 	(b)	has provided adequate accruals in its audited financial statements for the year ended December 31, 2010 (or such amounts are fully funded) for all pension or other
employee benefit obligations of Fibrek arising under or relating to each of the pension or retirement income plans or other employee benefit plans or agreements or policies maintained by or binding on Fibrek as well as for any other payment required
to be made by Fibrek in connection with the termination of employment or retirement of any employee of Fibrek in respect of the fiscal period ended December 31, 2010; and 

 

	 	(c)	has no stock option plans or arrangements other than the Fibrek Stock Option Plan, other than the Rights Plan, is not otherwise a party to any agreement to provide any
Common Shares or other Fibrek securities (including any securities convertible into or exchangeable or exercisable for, or otherwise evidencing a right to acquire Common Shares) or to provide any options to acquire Common Shares or any other Fibrek
securities convertible into or exchangeable or exercisable for, or otherwise evidencing a right to acquire, Fibrek Common Shares to any person other than pursuant to the Fibrek Stock Option Plan. 

 

	22.	Employment Agreements 

  

	 	(a)	Except for contracts or arrangements set forth in Section 22 of the Disclosure Letter, Fibrek is not a party to any employment agreement or to any written or oral
policy, agreement, obligation or understanding or any amendment thereto which contains any specific agreement as to notice of termination or severance pay in lieu thereof or which cannot be terminated without cause on giving reasonable notice as may
be implied by Law and the Disclosure Letter sets out all amounts required to be paid upon such termination. 

  

	 	(b)	Other than as set forth in Section 22(b) of the Disclosure Letter, Fibrek is not a party to any change of control, retention, supplemental executive retirement
plan (registered or unregistered) or any other agreement pertaining to compensation, other than a contemplated Employee Obligation, with executives or other employees, including former employees, of Fibrek, nor are any such agreements contemplated,
being negotiated or otherwise have been executed as of the date hereof. 

  

	23.	Shareholder Rights Plan 

 Other than the
Rights Plan, Fibrek has no shareholder rights plan or any other form of plan, agreement, contract or instrument that will trigger any rights to acquire Common Shares or other securities of Fibrek or rights, entitlements or privileges in favour of
any person upon the entering into of this Agreement or issuance of the Special Warrants. 
  

	24.	Confidentiality Agreements 

 Fibrek has
not waived or released the applicability of any “standstill” or other provisions of any confidentiality agreements entered into by Fibrek. 
  

	25.	Internal Controls 

  

	 	(a)	 The management of Fibrek has established and maintained a system of disclosure controls and procedures designed to provide reasonable assurance that
information required to be disclosed by Fibrek in its annual filings, interim filings or other reports filed or submitted by it under the applicable Laws imposed by Governmental Authority is recorded, processed, summarized and reported within the
time periods specified in such Laws imposed by such Governmental Authority. 

  
 B-6

	 	
Such disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by Fibrek in its annual filings, interim filings or other
reports filed or submitted under the applicable Laws imposed by Governmental Authority is accumulated and communicated to Fibrek’s management, including its chief executive officer and chief financial officer (or persons performing similar
functions), as appropriate to allow timely decisions regarding required disclosure. 

  

	 	(b)	Fibrek maintains internal control over financial reporting. Such internal control over financial reporting is effective in providing reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes policies and procedures that: (A) pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the assets of Fibrek and its subsidiaries; (B) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with GAAP, and that receipts and expenditures of Fibrek and its subsidiaries are being made only with authorizations of management and directors of Fibrek and its subsidiaries; and (C) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of the assets of Fibrek or its subsidiaries that could have a material effect on its financial statements. To the knowledge of Fibrek, prior to the date of this
Agreement: (1) there are no significant deficiencies in the design or operation of, or material weaknesses in, the internal controls over financial reporting of Fibrek that are reasonably likely to adversely affect the ability of Fibrek to
record, process, summarize and report financial information; and (2) there is no fraud, whether or not material, that involves management or other employees who have a significant role in the internal control over financial reporting of Fibrek.

  

	 	(c)	To Fibrek’s knowledge, there is no effect, event, occurrence or state of facts that would, or would be reasonably expected to prevent the chief executive officer
and/or the chief financial officer of Fibrek from properly providing the certifications required under Regulation 52-109 – respecting Certification of Disclosure in Issuers’ Annual and Interim Filings under Form 52-109F1 –
Certification of Annual Filings with respect to Fibrek’s annual filings for its fiscal year ended December 31, 2011, without taking into account any transactions contemplated by this Agreement. 

 

	26.	Interested Party Transactions 

 Other than
as may be set forth in the management information circular of Fibrek dated march 23, 2011 and filed on SEDAR, Fibrek is not indebted to or otherwise obligated to, or party to an agreement with any director, executive officer, employee of, or any
Person not dealing at Arm’s Length with Fibrek or any Subsidiary or entity controlled by them. No director, officer, employee or agent of, or any other Person not dealing at arm’s length with Fibrek has any indebtedness, Liabilities or
obligation to Fibrek or is a party to any contract, arrangement or understanding or other transactions required to be disclosed pursuant to applicable Laws. 
  

	27.	Material Agreements 

 All agreements,
permits, licences, regulatory approvals, plans, certificates and other rights and authorizations material to the conduct of the business of Fibrek are disclosed in the Sections of the DataSite indicated in Section 27 of the Disclosure Letter,
as the DataSite existed on the date immediately prior to the date of this Agreement, and are valid and subsisting and Fibrek is not in material default under any such agreements, permits, licences, Regulatory Approvals, plans, certificates and other
rights and authorizations. For the purposes of this Section 27, any contract or agreement pursuant to which Fibrek will, or may reasonably be expected to, expend more than an aggregate of $1,000,000 or receive or be entitled to receive revenue
of more than $1,000,000, or is out of the ordinary course of business of Fibrek, shall be considered to be material. 
  

	28.	Disclosure 

 To the knowledge of Fibrek,
Fibrek has not withheld from Mercer any material information or documents concerning Fibrek or its assets or Liabilities during the course of Mercer’s review of Fibrek and its assets. 

  
 B-7

	29.	Listings 

 The Common Shares are listed on
the TSX. 
  

	30.	Reporting Issuer Status 

 Fibrek is a
“reporting issuer” or the equivalent thereof not in default under the securities legislation of each of the provinces and territories of Canada. 
  

	31.	Lending Agreements 

 No event of default
or breach of any covenant has occurred under Fibrek’s existing banking and lending agreements. Fibrek has provided Mercer with true and complete copies of any documentation respecting all of Fibrek’s existing banking and lending
agreements. 

  
 B-8

 SCHEDULE “C” 

REPRESENTATIONS AND WARRANTIES OF MERCER 
  

	1.	Organization and Qualification 

 Mercer
has been duly created and is a valid and subsisting corporation under the Laws of the State of Washington and has the requisite corporate authority and power to carry on its business as it is now being conducted. Mercer is duly registered to do
business and is in good standing in each jurisdiction in which the character of its properties, owned or leased, or the nature of its activities make such registration necessary, except where failure to be so registered or in good standing would not
have a Mercer Material Adverse Effect. 
  

	2.	Authority Relative to this Agreement 

Mercer has the requisite corporate authority to enter into this Agreement and to carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been duly authorized by the board of directors of the Mercer, and no other corporate proceedings on the part of Mercer is necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement has been duly executed and delivered for and on behalf of Mercer and constitutes the legal, valid and binding obligation of Mercer enforceable against Mercer in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other Laws relating to or affecting creditors’ rights generally, and to general principles of equity. 

 

	3.	No Violations 

  

	 	(a)	None of the execution and delivery of this Agreement by Mercer, the consummation of the transactions contemplated hereby or compliance by Mercer with any of the
provisions hereof will: (i) violate, conflict with, or result in breach of any provision of, require any consent, approval or notice under, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a
default) or result in a right of termination or acceleration under, or result in a creation of any Encumbrance upon any of the properties or assets of Mercer, or any of its respective subsidiaries, under any of the terms, conditions or provisions of
(x) its constating documents or (y) any note, bond, mortgage, indenture, loan agreement, deed of trust, agreement, lien, contract or other material instrument or obligation to which Mercer, or any of its subsidiaries is a party or to which
any of it, or its properties or assets, may be subject or by which Mercer, or any of its subsidiaries is bound; (ii) violate any judgment, ruling, order, writ, injunction, determination, award, decree, statute, ordinance, rule or regulation
applicable to Mercer, or any its subsidiaries; or (iii) cause the suspension or revocation of any authorization, consent, approval or licence currently in effect (except, in the case of each of clauses (i), (ii) and (iii) for such
violations, conflicts, breaches, defaults, terminations, suspensions or revocations which, or any consents, approvals or notices which if not given or received, would not have a Material Adverse Effect on Mercer or have a material adverse effect on
the ability of Mercer to consummate the transactions contemplated hereby). 

  

	 	(b)	Other than as disclosed to Fibrek: (i) there is no legal impediment to Mercer’s consummation of the transactions contemplated by this Agreement; and
(ii) no filing or registration with, or authorization, consent or approval of, any domestic or foreign public body or authority is necessary by Mercer in connection with the making or the consummation of the Offer, except for such filings or
registrations which, if not made, or for such authorizations, consents or approvals, which, if not received, would not have a material adverse effect on the ability of Mercer to consummate the transactions contemplated hereby.

	4.	Litigation, etc. 

 There is no claim,
action, proceeding, inquiry or investigation pending or, to the knowledge of Mercer, threatened against or relating to Mercer, or affecting any of its properties or assets before any court or Governmental Authority or body that, if adversely
determined, is likely to prevent or materially delay consummation of the transactions contemplated by this Agreement nor is Mercer aware of any basis for any such claim, action, proceeding or investigation. Mercer is not subject to any outstanding
order, writ, injunction or decree that has had or is reasonably likely to prevent or materially delay consummation of the transactions contemplated by this Agreement. 
  

	5.	Compliance with Law 

 Mercer has complied
with and is in compliance with all Laws applicable to the operation of their business, except where such non-compliance would not materially affect the ability of Mercer to consummate the transactions contemplated hereby. 

  
 C-2

 SCHEDULE “D” 

FIBREK OFFICERS’ CERTIFICATE 
 TO: MERCER INTERNATIONAL INC. 
 RE: Special Warrant Agreement dated as of February 9,
2012 (the “Agreement”) between Mercer International Inc. (“Mercer”) and Fibrek Inc. (the “Corporation”) 
 The undersigned, in their respective capacities as the • and the • of the Corporation, hereby certify, for and on behalf of the Corporation and not in their personal capacities, that:

  

	 	(a)	all representations and warranties of the Corporation in the Agreement: 

  

	 	(i)	that are qualified by a reference to a Material Adverse Effect shall be true and correct in all respects; and 

 

	 	(ii)	that are not qualified by a reference to a Material Adverse Effect (other than with respect to outstanding share capital (on an undiluted and fully diluted basis) which
shall be true and correct in all respects except for changes thereto resulting from the issuance of Common Shares under the terms of the Options) shall be true and correct in all respects unless the failure to be true or correct has not had or would
not reasonably be expected to have a Material Adverse Effect; 

  

	 	(b)	the Corporation has observed and performed its covenants in the Agreement and in the Support Agreement in all material respects to the extent that such covenants were
to have been observed or performed by Fibrek at or prior to the Closing Time; 

  

	 	(c)	the Corporation has made and/or obtained, on or prior to the Closing Time on the Closing Date, all necessary filings, approvals, consents and acceptances of applicable
regulatory authorities and under any applicable agreement or document to which the Corporation is a party or by which it is bound in respect of the issuance of the Special Warrants to Mercer and the consummation of the other transactions
contemplated by the Agreement that are required to be made prior to the Closing Time; and 

  

	 	(d)	no event of a nature referred to in Section 7.2(e) of the Agreement has occurred since the date of the Agreement or to our knowledge is pending, contemplated or
threatened. 

 This certificate is given pursuant to Section 7.2(c) of the Agreement. Capitalized terms not otherwise defined
herein and contained in this certificate have the same meanings given to such terms in the Agreement. 
 DATED this • day of February,
2012. 
  

					
	Per:	 	 
		 	Name:	 	
		 	Title:	 	

  

					
	Per:	 	 
		 	Name:	 	
		 	Title:	 	

 SCHEDULE “E” 

FORM OF CERTIFICATE REPRESENTING SPECIAL WARRANTS 
 ********** 
 SPECIAL WARRANT CERTIFICATE 

 

					
	CERTIFICATE NO.	 		 	NO. OF SPECIAL WARRANTS
		 		 	
	SW-1	 		 	•

 FIBREK INC. 
 (a corporation existing under the laws of Canada) 
 THIS IS TO CERTIFY THAT 

MERCER INTERNATIONAL INC. 

(the “Holder”) is the registered holder of • fully paid Special Warrants issued by FIBREK INC. (the
“Corporation”) entitling the Holder to acquire, subject to adjustment, upon conversion (including automatic conversion) of each Special Warrant represented hereby and without payment of any additional consideration, one
(1) fully paid and non-assessable common share (a “Common Share”) of the Corporation, subject to adjustment in accordance with the Special Warrant Agreement dated February 9, 2012 between the Corporation and the
Holder (the “Special Warrant Agreement”). 
 The Special Warrants represented by this Special Warrant Certificate are
issued under and pursuant to the terms and conditions of the Special Warrant Agreement. Reference is made to the Special Warrant Agreement and any instruments supplemental thereto for a full description of the rights of the Holder of the Special
Warrants and the terms and conditions upon which the Special Warrants are, or are to be, issued, converted, adjusted, redeemed and held, with the same effect as if the provisions of the Special Warrant Agreement and all instruments supplemental
thereto were herein set forth. In the event of any conflict between the provisions of this Special Warrant Certificate and the provisions of the Special Warrant Agreement, the provisions of the Special Warrant Agreement will govern. 

IN WITNESS WHEREOF the Corporation has caused this Special Warrant Certificate to be signed by its duly authorized officer as of
____________________________. 
  

			
	FIBREK INC.
		
	By:	 	 
		 	Authorized Officer

 EXERCISE OF REDEMPTION RIGHT 
 A Notice requiring the Corporation to redeem Special Warrants shall be given during business hours on any Business Day to the Corporation at its principal office in the City of Montreal by delivery to the
Corporation of the Special Warrant Certificate that represents the Special Warrants to be redeemed by the Corporation together with the Notice requesting redemption which appears below duly completed and properly executed. No such form of
endorsement or manner of execution shall be sufficient unless the same is in all respects satisfactory to the Corporation, acting reasonably, and is accompanied by any further evidence that the Corporation may reasonably require with respect to the
identity, capability and authority of a person giving such Notice. 

 Upon receipt of a Notice to redeem Special Warrants, the holder shall thereafter cease to have any rights
with respect to the Special Warrants tendered for redemption (other than to receive the redemption payment therefor). 
  

	
	 NOTICE OF REDEMPTION
  

TO: FIBREK INC.
  
 The undersigned registered holder of the within Special Warrant Certificate hereby tenders the Special Warrants represented by the within Special Warrant Certificate to the Corporation for redemption,
subject to the terms and conditions set out in the Special Warrant Agreement.
  
 If less than the full number of the within Special Warrants is to be redeemed, indicate in the space provided the number to be redeemed.

 
 __________________________________________________________ Special Warrants
Only.
  

			
		
	Dated:	 	 

			
		
	Signature:	 	 

  
 E-2exhibit_10-1.htm

EXHIBIT 10.1

 

CONSULTING AGREEMENT

This Consulting Agreement ("Agreement") is made and entered into effective as of January 1st, 2012 by INTERNATIONAL GOLD CORP., a Nevada corporation ("Corporation"), having a mailing address at 1111 West Georgia Street, Suite 1720, Vancouver, BC, Canada V6E 4M8  and WOODBURN HOLDINGS LTD. (the “Consultant”) of 885 Pyrford Road, West Vancouver, BC, Canada V7S 2A2

WHEREAS, the Corporation desires to retain the services of a corporate consultant and the services of its designated representative and the Consultant has agreed to accept such appointment on the terms and conditions herein contained:

NOW THEREFORE, IT IS AGREED AS FOLLOWS:

Section 1-Duties.

The Consultant agrees to the appointment hereunder and during the term of this Agreement, the Consultant agrees to appoint its sole shareholder, Robert Baker, to serve the Corporation as its President, CEO, COO, CFO and Corporate Secretary.  The Consultant’s designated representative shall provide such managerial, administrative and other services as are customarily associated with or incidental to the position’s and the representative shall perform such other duties and responsibilities for the Corporation as the Corporation may reasonably require, consistent with such position.  The services to be provided by the Consultant and its designated representative shall be provided from the consultant’s office or chief place of business at 885 Pyrford Road, West Vancouver, Province of British Columbia.  The Consultant shall ensure that a substantial amount of time is devoted to the business and affairs of the Corporation.

Section 2-Term of Appointment and Termination

2.1   Definitions.  For the purposes of this Agreement the following terms shall have the following meanings:

2.1.1  "Termination For Cause" shall mean termination by the Corporation of the Consultant’s engagement by reason of any representative or designated appointee of the Consultant engaging in acts of willful dishonesty towards, fraud upon, or deliberate injury or attempted injury to the Corporation.

2.1.2  "Termination Other Than For Cause" shall mean termination by the Corporation of the Consultant’s engagement by the Corporation (other than in a Termination for Cause) and shall include constructive termination by reason of a material breach of this Agreement by the Corporation, such constructive termination to be effective upon notice from the Consultant to the Corporation of such constructive termination.

2.1.3  "Voluntary Termination" shall mean termination by the Consultant of its engagement other than (i) constructive termination as described herein, (ii) "Termination Upon a Change in Control," and (iii) termination by reason of the death or disability of the Consultant’s representative as described herein.

  

Page 1

  

2.1.4  "Termination Upon a Change in Control" shall mean a termination by the Consultant of the Consultant’s engagement with the Corporation within 120 days following a "Change in Control."

2.1.5  "Change in Control" shall mean (i) the time that the Corporation first determines that any person and all other persons who constitute a group (within the meaning of § 13(d)(3) of the Securities Exchange Act of 1934 ("Exchange Act")) have acquired direct or indirect beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of twenty percent (20%) or more of the Corporation's outstanding securities, unless a majority of the "Continuing Directors" approve the acquisition not later than ten (10) business days after the Corporation makes that determination, or (ii) the first day on which a majority of the members of the Corporation's board of directors are not "Continuing Directors."

2.1.6  "Continuing Directors" shall mean, as of any date of determination, any member of the Corporation's board of directors who (i) was a member of that board of directors on the date of commencement of this Agreement, or (ii) was nominated for election or elected to the Corporation's board of directors with the affirmative vote of the greater of a majority of the Continuing Directors who were members of the Corporation's board of directors at the time of such nomination or election.

2.2 Initial Term.  The term of engagement of the Consultant by the Corporation shall be for a period of 48 months beginning with the Effective Date ("Initial Term"), unless terminated earlier pursuant to this Agreement.  At any time prior to the expiration of the Initial Term, the Corporation and the Consultant may by mutual written agreement extend the Consultant’s engagement under the terms of this Agreement for such additional period as may be agreed.

2.3 Termination For Cause.  Termination For Cause may be effected by the Corporation at any time during the term of this Agreement and shall be effected by written notification to the Consultant and its representatives.

2.4 Termination Other Than For Cause.  Notwithstanding anything else in this Agreement, the Corporation may effect a Termination Other Than For Cause at any time upon giving written notice to the Consultant of such termination.  Upon any Termination Other Than For Cause, the Consultant and its designated representative shall promptly be paid all accrued salary, bonus compensation to the extent earned, vested deferred compensation (other than pension plan or profit sharing plan benefits which will be paid in accordance with the applicable plan), any benefits under any plans of the Corporation in which the Consultant  or its designated representative is a participant to the full extent of the Consultant’s rights under such plans (including accelerated vesting, if any, of awards granted to the Consultant under the Corporation's stock option plan) and any appropriate business expenses incurred by the Consultant in connection with its duties hereunder, all to the date of termination, and all Severance Compensation provided, but no other compensation or reimbursement of any kind.

2.5 Voluntary Termination.  In the event of a Voluntary Termination, the Corporation shall promptly pay all accrued salary, bonus compensation to the extent earned, vested deferred compensation (other than pension plan or profit sharing plan benefits which will be paid in accordance with the applicable plan), any benefits under any plans of the Corporation in which the Consultant or its designated representative is a participant to the full extent of the Consultant's rights under such plans and any appropriate business expenses incurred by the Consultant or its designated representative in connection with their respective duties hereunder, all to the date of termination, but no other compensation or reimbursement of any kind, including without limitation, Severance Compensation.

 

 

 

  

Page 2

  

 

2.6 Termination Upon a Change in Control.  In the event of a Termination Upon a Change in Control, the Consultant and its designated representative shall immediately be paid all accrued salary, bonus compensation to the extent earned, vested deferred compensation (other than pension plan or profit sharing plan benefits which will be paid in accordance with the applicable plan), any benefits under any plans of the Corporation in which the Consultant is a participant to the full extent of the Consultant's rights under such plans (including accelerated vesting, if any, of any awards granted to the Consultant under the Corporation's Stock Option Plan) and any appropriate business expenses incurred by the Consultant in connection with its duties hereunder, all to the date of termination, and all Severance Compensation, but no other compensation or reimbursement of any kind.

2.7 Notice of Termination.  The Corporation may effect a termination of this Agreement pursuant to the provisions of this Section upon giving thirty (30) days' written notice to the Consultant of such termination.  The Consultant may effect a termination of this Agreement pursuant to the provisions of this Section upon giving thirty (30) days' written notice to the Corporation of such termination.

Section 3-Compensation

3.1 Annual Base.  As payment for the services to be rendered by the Consultant as provided in Section 1 and subject to the terms and conditions of Section 2, the Corporation agrees to pay to the Consultant a "Base Compensation" of US$90,000 per annum payable in equal monthly installments of $7,500 each, in arrears, plus applicable HST.

3.2.  Automobile Allowance.  For the term of this Agreement and any extensions thereof the Corporation will reimburse the Consultant for mileage accumulated upon its motor vehicle while being used for corporate matters and for parking at the Metropolitan Hotel, Vancouver located at 645 Howe Street, Vancouver, BC, V6C2Y9.Monthly cost of parking being $332.02 (including parking and HST tax’s)

3.3  Reimbursement for Expenses.  During the term of this Agreement, the Corporation shall reimburse the Consultant for reasonable and properly documented out-of-pocket business and/or entertainment expenses incurred by the Consultant in connection with its duties under this Agreement.

Section 4 - Severance Compensation.

4.1 Severance Compensation in the Event of a Termination Upon a Change in Control.  In the event the Consultant's employment is terminated in a Termination Upon a Change in Control, the Consultant shall be paid as severance compensation ("Severance Compensation") his Base Salary (at the rate payable at the time of such termination), for a period of twelve (12) months from the date of such termination.  Notwithstanding anything in this Section to the contrary, the Consultant may in the Consultant's sole discretion, by delivery of a notice to the Corporation within thirty (30) days following a Termination Upon a Change in Control, elect to receive from the Corporation a lump sum Severance Compensation payment by bank cashier's check equal to the present value (using a discount factor of 8%) of the flow of cash payments that would otherwise be paid to the Consultant pursuant to this Section.  The Consultant shall also be entitled to an accelerated vesting of any awards granted to the Consultant under the Corporation's Stock Option Plan to the extent provided in the stock option agreement entered into at the time of grant.  The Consultant shall continue to enjoy any benefits under any plans of the Corporation in which the Consultant is a participant to the full extent of the Consultant's rights under such plans, including any perquisites provided under this Agreement, though the remaining term of this Agreement.

 

 

 

  

Page 3

  

 

4.2 Severance Compensation in the Event of a Termination Other Than for Cause.  In the event the Consultant's employment is terminated in a Termination Other Than for Cause, the Consultant shall be paid as Severance Compensation his Base Salary (at the rate payable at the time of such termination), for a period of twelve (12) months from the date of such termination, on the dates specified in Section 3.1.

4.3 Limit on Aggregate Compensation Upon a Change in Control.  Notwithstanding anything else in this Agreement, solely in the event of a Termination Upon a Change in Control, the amount of Severance Compensation paid to the Consultant, but exclusive of any payments to the Consultant in respect of any stock options then held by the Consultant (or any compensation deemed to be received by the Consultant in connection with the exercise of any stock options at any time) or by virtue of the Consultant's exercise of a Limited Right under the Option Plan upon a Change in Control, shall not include any amount that the Corporation is prohibited from deducting for federal income tax purposes by virtue of § 280G of the Internal Revenue Code or any successor provision.

Section 6 - Payment Obligations.

The Corporation's obligation to pay the Consultant the compensation and to make the arrangements provided herein shall be unconditional, and the Consultant shall have no obligation whatsoever to mitigate damages hereunder.  If litigation after a Change in Control shall be brought to enforce or interpret any provision contained herein, the Corporation, to the extent permitted by applicable law and the Corporations' articles of incorporation and bylaws, hereby indemnifies and will pay the Consultant for the Consultant's reasonable attorneys' fees and disbursements incurred in such litigation.

Section 7 - Confidentiality.

The Consultant agrees that all confidential and proprietary information relating to the Corporation's business shall be kept and treated as confidential both during and after the term of this Agreement, except as may be permitted in writing by the Corporation's board of directors or as such information is within the public domain or comes within the public domain without any breach of this Agreement.

Section 8 - Indemnification.

The Corporation shall indemnify the Consultant at all times during and after the term of this Agreement to the maximum extent permitted under Nevada Business Corporation Act or any successor provision thereof and any other applicable state law, and shall pay the Consultant's expenses in defending any civil or criminal action, suit, or proceeding in advance of the final disposition of such action, suit or proceeding, to the maximum extent permitted under such applicable state laws.

  

Page 4

  

Section 9 - Notices.

Notice under this Agreement shall be in writing and shall be effective when actually delivered.  If mailed, notice shall be deemed effective 48 hours after mailing as registered or certified mail, postage prepaid, directed to the other party at the address set forth below or such other address as the party may indicate by written notice to the other:

Section 10 - Time.

Time is of the essence of this Agreement.

Section 11 - No Release.

Both parties agree that the termination of this Agreement or the expiration of the term of this Agreement shall not release either party from any obligations under Sections this Agreement.

Section 12 - Survival.

Any of the terms and covenants contained in this Agreement which require the performance of either party after Termination shall survive such Termination.

Section 13 - Waiver.

 

Failure of either party at any time to require performance of any provision of this Agreement shall not limit the party's right to enforce the provision, nor shall any waiver of any breach of any provision be a waiver of any succeeding breach of any provision or a waiver of the provision itself for any other provision.

Section 14 - Assignment.

Except as otherwise provided within this Agreement, neither party hereto may transfer or assign this Agreement without prior written consent of the other party.

Section 15 - Law Governing.

This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada.

Section 16 - Attorney Fees.

In the event a suit or action is brought by any party under this Agreement to enforce any of its terms, or in any appeal therefrom, it is agreed that the prevailing party shall be entitled to reasonable attorneys fees to be fixed by the trial court and/or appellate court.

Section 17 - Presumption.

This Agreement or any section thereof shall not be construed against any party due to the fact that said Agreement or any section thereof was drafted by said party.

  

Page 5

  

Section 18 - Computation of Time.

In computing any period of time pursuant to this Agreement, the day of the act, event or default from which the designated period of time begins to run shall be included, unless it is a Saturday, Sunday or a legal holiday, in which event the period shall begin to run on the next day which is not a Saturday, Sunday or a legal holiday, in which event the period shall run until the end of the next day thereafter which is not a Saturday, Sunday or legal holiday.

Section 19 - Titles and Captions.

All articles, sections and paragraph titles or captions contained in this Agreement are for convenience only and shall not be deemed part of the context nor affect the interpretation of this Agreement.

Section 20 - Pronouns and Plurals.

All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the Person or Persons may require.

Section 21 - Entire Agreement.

This Agreement contains the entire understanding between and among the parties and supersedes any prior understandings and agreements among them respecting the subject matter of this Agreement.

Section 22 - Prior Agreements.

This document is the entire, final and complete agreement of the parties and supersedes and replaces all prior or existing written and oral agreements.

Section 23 - Agreement Binding.

This Agreement shall be binding upon the heirs, executors, administrators, successors and assigns of the parties hereto.

Section 24 - Savings Clause.

If any provision of this Agreement, or the application of such provision to any person or circumstance, shall be held invalid, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby.

Section 25 - Separate Counsel.

The parties acknowledge that Consultant has not been represented in this transaction by counsel.

  

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IN WITNESS WHEREOF, the parties have executed this Agreement, the 21st day of February, 2012.

 

	 	 
INTERNATIONAL GOLD CORP

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	 	 
	 	Title:	 	 

 

 

	 	 
 
WOODBURN HOLDINGS LTD.

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	 	 
	 	Title:	
President

	 

 

 

 

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