BACKSTOP LOAN COMMITMENT AGREEMENT by and among TEMBEC INC. AND ITS SUBSIDIARIES SET FORTH HEREIN and Dated as of December 18, 2007

This Backstop Loan Commitment Agreement (this "Agreement"), dated as of December 18, 2007 (the "JPMSI Backstop Date"), is entered into by and among Tembec Inc., a company organized under the laws of Quêbec ("Parent"); Tembec Industries Inc., a company organized under the laws of Canada ("TII"); Tembec Enterprises Inc., a company organized under the laws of Canada ("TEI" and together with Parent and TII, collectively referred to as the "Companies" or "Tembec") and ▇.▇. ▇▇▇▇▇▇ Securities Inc. ("JPMSI").

WHEREAS, Tembec and a committee of holders of Notes of (i) Senior Unsecured 8.625% Notes issued by TII due in 2009 (the "2009 Notes"), (ii) Senior Unsecured 8.5% Notes issued by TII due in 2011 (the "2011 Notes") and (iii) Senior Unsecured 7.75% Notes issued by TII due 2012 (the "2012 Notes") have reached agreement with regard to the principal aspects of a recapitalization (the "Recapitalization") of Tembec and each of the material subsidiaries of Tembec as set forth in the term sheet attached hereto as Exhibit A (the "Term Sheet"). The 2009 Notes, the 2011 Notes and the 2012 notes are collectively referred to as the "Notes" and the holders of the 2009 Notes, 2011 Notes and 2012 Notes are collectively referred to as the "Noteholders";

WHEREAS, the Term Sheet contemplates that, among other things, TII will borrow term loans (collectively, the "New Loan") on the Implementation Date (as defined below) in the aggregate principal amount of not less than US$250 million and not more than US$300 million (the "Maximum New Loan Amount");

WHEREAS, contemporaneously with the execution of this Agreement, certain Noteholders (the "Consenting Noteholders") have entered into those certain Support Agreements (as amended, restated, supplemented or otherwise modified from time to time, the "Support Agreements") with the Companies pursuant to which each of the Consenting Noteholders has agreed to support the Plan and the Recapitalization, upon the terms and conditions set forth in its respective Support Agreement;

WHEREAS, contemporaneously with the execution of this Agreement, Tembec and JPMorgan Chase Bank, N.A. ("JPM") shall have entered into a backstop loan commitment agreement (as it may be amended or modified, the "JPM Backstop Commitment Agreement") on substantially identical terms to those contained herein and pursuant to which JPMSI has agreed to commit to fund or to cause an affiliate to fund on the date of the implementation of the Plan (the "Implementation Date") an aggregate principal amount of the New Loan not to exceed $264,500,000 (the "JPM Commitment Amount");

WHEREAS, contemporaneously with the execution of this Agreement, certain Initial Backstop Parties have entered into a backstop participation agreement (the "Backstop Participation Agreement") with JPM pursuant to which each such Initial Backstop Party commits to fund a portion of the New Loan on the terms and conditions set forth therein;

WHEREAS, in order to facilitate the New Loan, pursuant to this Agreement, and subject to the terms, conditions and limitations set forth herein, JPMSI agrees to commit to fund or cause an affiliate to fund on the Implementation Date an aggregate principal amount of the New Loan not to exceed $35,500,000 (the "JPMSI Commitment Amount"); and

WHEREAS, Capitalized terms used herein but not defined in this Agreement have the meanings assigned thereto in the Term Sheet.

NOW, THEREFORE, in consideration of the foregoing, and the representations, warranties and covenants set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Tembec and JPMSI agree as follows:

1.

Backstop Loan Commitment.

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(c)

Equity Agreement. Tembec, JPM and JPMSI shall have entered into an equity issuance agreement (the "Equity Agreement") in form and substance satisfactory to JPM, JPMSI and Tembec, each acting reasonably, and otherwise consistent in all respects with the Term Sheet.

(d)

Depository Agreement. Tembec, the depositary agent, JPM, JPMSI, and the other depositors thereto, shall have entered into a depository agreement (the "Depository Agreement") in form and substance satisfactory to JPM, JPMSI and Tembec, each acting reasonably, and, consistent in all respects with the Term Sheet.

(e)

Backstop Loan Commitment Notice. JPMSI shall have received a timely notice in form acceptable to JPMSI, acting reasonably, from Tembec certifying the amount of the New Loan to be purchased and funded pursuant to the Backstop Loan Commitment.

(f)

Information. All public information in connection with the Term Sheet, this Agreement or information provided by Tembec to JPMSI relating to the execution of the Term Sheet (other than projections) shall have been, when furnished, true, complete and correct in all material respects and shall not have contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made and all projections shall have been prepared in good faith based on reasonable assumptions.

4.

Indemnification.

(a)

Indemnification Generally. Whether or not the New Loan is consummated or this Agreement or the Backstop Loan Commitment is terminated, Tembec (in such capacity, the "Indemnifying Party") shall indemnify and hold harmless JPMSI and the Initial Backstop Parties, their respective affiliates and their respective officers, directors, employees, agents, advisors and controlling persons (each an "Indemnified Person") from and against any and all losses, claims, damages, liabilities joint or several, to which any such Indemnified Person may become subject arising out of, relating to, or in connection with any claim, challenge, litigation, investigation or proceeding with respect to the Backstop Loan Commitment, this Agreement, the Backstop Participation Agreement, the Plan or the transactions contemplated hereby or thereby, including without limitation, payment of the Backstop Fees, the Transaction Expenses or the Termination Fee (as defined below) or any breach of Tembec of this Agreement, regardless of whether any of such Indemnified Persons is a party thereto, and to reimburse such Indemnified Persons for any legal or other reasonable out-of-pocket expenses as they are incurred and on demand in connection with investigating, responding to or defending any of the foregoing, provided that the foregoing indemnification will not, as to any Indemnified Person, apply to losses, claims, damages, liabilities or expenses to the extent that they are determined pursuant to a final, non-appealable order issued by a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct on the part of such Indemnified Person. If for any reason the foregoing indemnification is unavailable to any Indemnified Person or insufficient to hold it harmless, then the Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Person as a result of such loss, claim, damage, liability or expense in such proportion as is appropriate to reflect not only the relative benefits received by the Indemnifying Party on the one hand and such Indemnified Person on the other hand but also the relative fault of the Indemnifying Party, on the one hand, and such Indemnified Person, on the other hand, as well as any relevant equitable considerations.

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The Indemnifying Party also agrees that no Indemnified Person shall have any liability based on their exclusive or contributory negligence or otherwise to the Indemnifying Party, any person asserting claims on behalf of or in right of any of the Indemnifying Party, or any other person in connection with or as a result of the Backstop Loan Commitment, this Agreement, the Backstop Participation Agreement or the transactions contemplated hereby or thereby, except as to any Indemnified Person to the extent that any losses, claims, damages, liability or expenses incurred by Tembec are determined pursuant to a final, non-appealable order issued by a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct of such Indemnified Person in performing the services that are the subject of this Agreement or the Backstop Participation Agreement; provided, however, that in no event shall an Indemnified Person or such other parties have any liability for any indirect, consequential or punitive damages in connection with or as a result of any of their activities related to the foregoing. No Indemnified Person shall be liable for any damages arising from the use by others of information or other materials obtained through electronic, telecommunications or other information transmission systems. The indemnity, reimbursement and contribution obligations of the Indemnifying Party under this Section 4 shall be in addition to any liability that the Indemnifying Party may otherwise have to an Indemnified Person and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Indemnifying Party and any Indemnified Person.

5.

Termination.

(a)

Termination by JPMSI. In addition to the termination rights set out in Section 39 of the Term Sheet, JPMSI may terminate this Agreement upon (i) any material breach by Tembec of any of its representations, warranties, covenants or agreements contained in this Agreement, the Funding Agreement or the Equity Agreement, or (ii) the failure of any of the conditions set forth in this Agreement, in the case of (i) or (ii), that is not curable or, if curable, is not cured within 15 days after written notice of such breach or failure is given to Tembec by JPMSI.

(b)

Termination Fee. If applicable, Tembec shall pay the non-refundable Termination Fee as provided in Section 37 of the Term Sheet, on the terms set out in Section 37 of the Term Sheet.

6.

Clear Market.

From February 1, ▇▇▇▇, ▇▇▇▇▇▇ will not, and will not permit any of the subsidiaries of Tembec to, syndicate or issue, attempt to syndicate or issue, announce or authorize the announcement of the syndication or issuance of, or engage in discussions concerning the syndication or issuance of, any debt securities or commercial bank or other credit facilities, without the prior written consent of JPMSI; provided, however, that this Section 6 shall not apply to (i) any activities relating to the CIT or Senior Facility, (ii) any rights to explore Alternative Transactions pursuant to Section 8 of the Support Agreement should the Recapitalization fail or (iii) the ability of Tembec to seek out Replacement Backstop Providers as contemplated by Section 39 of the Term Sheet.

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7.

Notices.

All notices and other communications in connection with this Agreement will be in writing and will be deemed given (and will be deemed to have been duly given upon receipt) if delivered personally, sent via electronic facsimile (with confirmation), mailed by registered or certified mail (return receipt requested) or delivered by an express courier (with confirmation) to the parties at the following addresses (or at such other address for a party as will be specified by like notice):

(a)

If to JPMSI, to:

▇.▇. ▇▇▇▇▇▇ Securities Inc.
c/o JPMorgan Chase Bank, N.A.
▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: NeelimaVeluvolu
Fax: (▇▇▇) ▇▇▇-▇▇▇▇

with copies to:

Stroock & Stroock & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇

(b)

If to Tembec, to:

Tembec Industries Inc.
▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇

with a copy to:

Tembec Industries Inc.
▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Vice President, General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇

and to:

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8.

Assignment; Third Party Beneficiaries.

Neither this Agreement nor any of the rights, interests or obligations under this Agreement will be assigned by any of the parties (whether by operation of law or otherwise) without the prior written consent of the other parties hereto. Notwithstanding the previous sentence, this Agreement or JPMSI’s rights and obligations hereunder may be assigned, delegated or transferred, in whole or in part, by JPMSI to any affiliate of JPMSI. Except as provided in Section 2(b) with respect to Transaction Expenses and Section 4 with respect to the Indemnified Parties, this Agreement (including the documents and instruments referred to in this Agreement) is not intended to and does not confer upon any person other than the parties hereto any rights or remedies under this Agreement.

9.

Prior Negotiations; Entire Agreement.

This Agreement and the Term Sheet constitute the entire agreement of the parties and supersedes all prior agreements, arrangements or understandings, whether written or oral, between the parties with respect to the subject matter of this Agreement, except that the parties hereto acknowledge that any confidentiality agreements heretofore executed among the parties will continue in full force and effect.

10.

GOVERNING LAW; VENUE.

(a)

GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

(b)

VENUE. ANY DISPUTES OR CLAIMS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED OR DOCUMENTS REQUIRED HEREBY SHALL BE SUBMITTED TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE STATE OF NEW YORK, COUNTY OF NEW YORK, AND APPROPRIATE APPELLATE COURTS THEREFROM. THE PARTIES HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY BROUGHT IN SUCH COURT OR ANY DEFENSE OF INCONVENIENT FORUM FOR THE MAINTENANCE OF SUCH DISPUTE. EACH OF THE PARTIES HERETO AGREES THAT A JUDGMENT IN ANY SUCH DISPUTE MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.

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THIS CONSENT TO JURISDICTION IS BEING GIVEN SOLELY FOR PURPOSES OF THIS AGREEMENT AND IS NOT INTENDED TO, AND SHALL NOT, CONFER CONSENT TO JURISDICTION WITH RESPECT TO ANY OTHER DISPUTE IN WHICH A PARTY TO THIS AGREEMENT MAY BECOME INVOLVED. EACH OF THE PARTIES HERETO HEREBY CONSENTS TO PROCESS BEING SERVED BY ANY PARTY TO THIS AGREEMENT IN ANY SUIT, ACTION, OR PROCEEDING OF THE NATURE SPECIFIED IN THIS SECTION 10 BY THE MAILING OF A COPY THEREOF IN THE MANNER SPECIFIED BY THE PROVISIONS OF SECTION 10.

(c)

WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE JPM BACKSTOP COMMITMENT AGREEMENT, THE TERM SHEET, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).

11.

Counterparts.

This Agreement may be executed in any number of counterparts, all of which will be considered one and the same agreement and will become effective when counterparts have been signed by each of the parties and delivered to the other party (including via facsimile or other electronic transmission), it being understood that each party need not sign the same counterpart.

12.

Waivers and Amendments.

This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms and conditions of this Agreement may be waived, only by a written instrument signed by each of the parties hereto or, in the case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising any right, power or privilege pursuant to this Agreement will operate as a waiver thereof, nor will any waiver on the part of any party of any right, power or privilege pursuant to this Agreement, nor will any single or partial exercise of any right, power or privilege pursuant to this Agreement, preclude any other or further exercise thereof or the exercise of any other right, power or privilege pursuant to this Agreement. The rights and remedies provided pursuant to this Agreement are cumulative and are not exclusive of any rights or remedies which any party otherwise may have at Law or in equity.

13.

Headings.

The headings in this Agreement are for reference purposes only and will not in any way affect the meaning or interpretation of this Agreement.

14.

Currency.

Unless otherwise specified in this Agreement, all references to currency, monetary values and dollars set forth herein shall mean United States (U.S.) dollars and all cash payments hereunder shall be made in United States dollars.

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15.

Survival.

Sections 2, 4, 5 and 6 shall remain in full force and effect whether or not definitive New Loan Documentation shall be executed and delivered and notwithstanding the termination of this Agreement or the Backstop Loan Commitment.

16.

Public Announcements.

Without the prior written consent of Tembec, not to be unreasonably withheld, JPMSI shall not issue any press releases or otherwise make any public announcement with respect to this Agreement, the Term Sheet and the transactions contemplated hereby and thereby, and any such press release or public announcement shall be in form acceptable to Tembec, acting reasonably. Prior to issuing any press release or otherwise making any public announcement with respect to this Agreement, the Term Sheet and the transactions contemplated hereby and thereby, Tembec shall provide JPMSI with a copy of such draft press release or public announcement for JPMSI’s review and shall not issue any press release or any public announcement that mentions JPMSI by name, without JPMSI’s prior written consent (with respect to the portion of the press release that mentions JPMSI); provided, however, that the foregoing shall be subject to Tembec’s overriding obligation to make any disclosure under any applicable securities law, and in such circumstances Tembec shall use its reasonable best efforts to give prior oral or written notice to JPMSI and reasonable opportunity for JPMSI to review or comment on the disclosure, and if any such prior notice is not possible, to give such notice immediately following the making of any such disclosure.

17.

No Advice.

Tembec acknowledges and agrees that JPMSI is not advising Tembec as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction. Tembec shall consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby or in the Term Sheet, and JPMSI shall have no responsibility or liability to Tembec with respect thereto. Any review by JPMSI of transactions contemplated hereby or in the Term Sheet or other matters relating to such transactions will be performed solely for the benefit of JPMSI and shall not be on behalf of Tembec.

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

[Signature Page of Backstop Loan Commitment Agreement]

Exhibit A

RE: Tembec Inc.; Tembec Industries Inc. ("TII"); Tembec Enterprises Inc. ("TEI") (Tembec Inc., TII, TEI and all other material wholly-owned subsidiaries of Tembec Inc. are collectively referred to as "Tembec"); Senior Unsecured 8.625% Notes issued by TII due in 2009 (the "2009 Notes"); Senior Unsecured 8.5% Notes issued by TII due in 2011 (the "2011 Notes"); Senior Unsecured 7.75% Notes issued by TII due 2012 (the "2012 Notes") (the 2009 Notes, the 2011 Notes and the 2012 Notes are collectively referred to as the "Notes"); the holders of the 2009 Notes, 2011 Notes and 2012 Notes (the "2009 Noteholders", the "2011 Noteholders" and the "2012 Noteholders", respectively and collectively the "Noteholders"); existing common shareholders of Tembec Inc. (the "Shareholders"); the trust indentures under which the Notes were issued by TII, as amended, modified or supplemented prior to the date hereof (collectively the "Indentures").

The Noteholder Released Parties (as defined in the Support Agreements) shall be indemnified as more particularly described in the Support Agreements.

The funds borrowed under the New Loan may be used by Tembec for the repayment of working capital facilities, capital expenditures and general corporate purposes.

The New Loan will mature on the date that is 4 years from the Implementation Date with no principal repayments prior to maturity except as noted in Section 27(i) below and except for customary provisions relating to casualty and insurance proceeds and 35% of equity issuance proceeds. A prepayment premium shall not apply to any of the foregoing repayments.

For LIBOR loans, payable in cash in arrears at the end of one, two or three months after the beginning of the relevant interest period (as designated in writing by the Borrower to the Administrative Agent prior to the beginning of a new interest period) at the rate equal to the relevant LIBOR plus 7.0%.

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(ii)

A debt incurrence covenant such that the Credit Parties may not incur debt other than: (a) debt obligations in respect of Permitted Hedging Agreements; (b) debt under the Senior Bank Facility in an amount not to exceed the amount available from time to time under the Senior Bank Facility based on the borrowing base formula set out in the Senior Bank Facility as at the JPM Backstop Date; (c) capital lease obligations, purchase money debt (including for permitted acquisitions or investments) and mortgage financings in an aggregate amount not to exceed CDN$25,000,000; (d) debt incurred in respect of or in connection with any government incentive programs not to exceed an amount outstanding at any one time during the term of the New Loan of CDN$20,000,000; (e) debt existing as at September 30, 2007 identified on a Schedule provided to the Committee Advisors prior to the JPM Backstop Date; (f) debt assumed in connection with an acquisition of assets or of a business; (g) replacement or refinancing of existing debt and debt permitted to be incurred pursuant to this paragraph in an amount not to exceed the amount of such debt and with no earlier maturity date; (h) debt incurred in the ordinary course of business as agreed to by the Borrower and JPM; (i) a general basket of CDN$50,000,000 outstanding at any one time for the term of the New Loan; and (j) any other permitted debt as agreed to by the Borrower and JPM;

(iii)

A customary restricted payments covenant with carve-outs to include, among other things, a general basket to be agreed upon by the Borrower and JPM and permitted investments to be agreed upon by the Borrower and JPM, including, without limitation, a basket of CDN$20,000,000 in the aggregate for investments in joint ventures and a general basket to be agreed upon by the Borrower and JPM;

(iv)

A limitation on liens covenant such that the Credit Parties may not create or incur any lien upon their property except: (a) customary permitted liens; (b) liens securing Permitted Hedging Agreements; (c) liens in respect of the Senior Bank Facility, permitted capital lease obligations, purchase money debt and mortgage financings; (d) subordinated liens in respect of debt permitted under subparagraph (ii)(i) above, subject to an intercreditor agreement acceptable to the Administrative Agent; and (e) other liens agreed upon by the Borrower and JPM;

(v)

A subsidiary distributions covenant such that the Credit Parties may not restrict the ability of any material subsidiary of the Credit Parties to make payments or transfer assets to the Credit Parties, except for customary carve-outs, including, without limitation, restrictions entered into pursuant to the Recapitalization and the New Loan, restrictions imposed pursuant to an agreement to sell a subsidiary of the Credit Parties (or all or substantially all of its assets), and any restrictions on transfers of assets pursuant to permitted liens;

In the event that the terms of (including any defined terms referenced in) the financial maintenance covenant currently set out in Section 7.4(b) of the CIT Facility or any event of default relating to such financial maintenance covenant are amended, waived or modified in any way, the comparable Maintenance Covenant or event of default relating to such Maintenance Covenant set out in the Definitive New Loan Documentation shall be automatically and correspondingly amended, waived or modified (taking into account any differences between defined terms in the Senior Bank Facility and defined terms in the Definitive New Loan Documentation) without the consent of the Administrative Agent or any of the New Lenders.

Notwithstanding the foregoing, if any amendment, restatement, modification, or replacement of the Senior Credit Facility has the effect of removing or eliminating such financial maintenance covenant or any additional financial maintenance covenant or related event of default, then: (a) the Definitive New Loan Documentation shall continue to contain such financial maintenance covenant or any additional financial maintenance covenant as in effect immediately prior to such amendment, restatement, modification, or replacement; and (b) no consent fee or waiver fee (or other inducement) provided under the Senior Bank Facility with respect to such amendment, restatement, modification or replacement shall be payable to the Administrative Agent.

Other than as set out above, no amendments, waivers or modifications to the Senior Bank Facility shall affect or alter in any way the Definitive New Loan Documentation.

Other than as set out in Section 27 or as contemplated in this Section 28, the Definitive New Loan Documentation shall not contain any financial covenants or financial maintenance covenants.

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The New Loan shall be subject to conditions mutually agreed upon by Tembec and JPM, including the following:

(i)

customary individual background checks on senior management and compliance with the Patriot Act, the results of which are satisfactory to JPM, acting reasonably;

(ii)

all definitive legal documentation, including a credit agreement, security agreements, pledge agreements, intercreditor agreements, subordination agreements and legal opinions satisfactory to JPM, acting reasonably;

(iii)

compliance with US and Canadian banking rules and regulations (e.g. anti-money laundering, "know your customer", Patriot Act etc.);

(iv)

no default or event of default shall have occurred and be continuing, both immediately prior to and after giving effect to the transactions on the Implementation Date, pursuant to the terms of the Definitive New Loan Documentation; and

(v)

satisfaction of the Conditions to Recapitalization in Section A.14.

Tembec and JPM shall enter into an agreement pursuant to which JPM shall backstop the funding of the entire Maximum New Loan Amount (the "JPM Backstop", the date of such agreement, the "JPM Backstop Date"), subject to Section 39. The JPM Backstop shall be provided on terms to be mutually agreed between Tembec and JPM, which shall include: (i) that Tembec shall forthwith pay JPM’s reasonable professional fees and expenses through to the JPM Backstop Date; and (ii) that Tembec shall, on a monthly basis thereafter, pay JPM’s reasonable professional fees and expenses incurred from the JPM Backstop Date through to the earlier of: (i) 30 days following the Implementation Date or (ii) the JPM Backstop Termination Date.

Nothing herein shall limit or restrict JPM from acting in any capacity in addition to acting as the JPM Backstop provider.

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"Additional Backstop" means the backstop provided by the Additional Backstop Parties for the Additional Backstop Amount.

"Additional Backstop Amount" means the backstop amount agreed to be provided by the Additional Backstop Parties, up to a maximum aggregate amount of US$201,500,000.

"Additional Backstop Parties" means those Noteholders (or their affiliates) (i) who are designated by Tembec no later than January 31, 2008 (the "Additional Backstop Date") and (ii) who enter into support agreements with Tembec substantially similar to the Support Agreements.

"Backstop Parties" means, collectively, the Initial Backstop Parties and the Additional Backstop Parties.

"Initial Backstop" means the backstop provided by the Initial Backstop Parties for the Initial Backstop Amount.

"Initial Backstop Amount" means US$300,000,000 minus the Additional Backstop Amount.

"Initial Backstop Parties" means those Noteholders (or their affiliates) who (i) are not disqualified by JPM’s customary policies and requirements for lending syndicate members, consistently applied and (ii) have, on or before the JPM Backstop Date, executed backstop loan commitment agreements with JPM as identified to Tembec.

"Participation Shortfall" means the difference between the New Loan Amount and the Participated Amount.

"Standby Backstop" means the backstop provided by the Initial Backstop Parties in the amount of US$300,000,000 minus the Initial Backstop Amount (which difference is equal to the Additional Backstop Amount).

On or before the Additional Backstop Date, each Additional Backstop Party shall enter into a backstop loan commitment agreement with Tembec: (a) committing, subject to Section 39, to provide a loan to Tembec in an amount equal to such Additional Backstop Party’s relevant backstop amount required in order to fully fund the Additional Backstop Amount; (b) outlining the terms of its backstop arrangements with Tembec; and (c) providing that (i) Tembec may, if so requested by JPM, assign such backstop loan commitment agreement to JPM without the consent of such Additional Backstop Party and (ii) in the event such Additional Backstop Party defaults on its obligations under its backstop loan commitment agreement with Tembec and JPM funds such default in accordance with Section 38, Tembec shall assign such backstop loan commitment agreement to JPM. The backstop agreements with the Additional Backstop Parties shall not be on terms more favourable to the Additional Backstop Parties than contained in the backstop agreements with the Initial Backstop Parties.

The Participation Shortfall (if any) shall be funded pro rata by the Initial Backstop Parties and the Additional Backstop Parties based on the Initial Backstop Parties' and the Additional Backstop Parties' respective proportions of the sum of the Initial Backstop Amount and the Additional Backstop Amount.

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Subject to Section 39, in the event any Initial Backstop Party defaults on its obligation to fund its relevant portion of the Initial Backstop Amount (the "Initial Backstop Default Amount") or the Additional Backstop Default Amount (the "Standby Backstop Default Amount"), JPM (pursuant to the JPM Backstop) shall fund (or arrange to be funded) each Initial Backstop Default Amount or Standby Backstop Default Amount, as the case may be, and the applicable backstop fees relating to the Initial Backstop Default Amount or the Standby Backstop Default Amount, as the case may be, shall be adjusted and paid to JPM on the same basis as they would have been paid to the defaulting Initial Backstop Party.

(i)

Subject to the remainder of this Section 39, and other customary closing conditions, the JPM Backstop and JPM’s agreement to perform the services relating to the JPM Backstop described herein are subject to: (a) there not occurring or becoming known to JPM any material adverse condition or material adverse change in or affecting the business, operations, property, condition (financial or otherwise) or prospects of the Borrower and its subsidiaries, taken as a whole, other than solely as a result of: (1) changes in exchange rates between the Canadian Dollar and United States Dollar; (2) changes in commodity prices; (3) the execution, announcement, or performance of a Support Agreement, this Term Sheet, the Plan or any other related agreement and the consummation of the transactions contemplated thereby; or (4) any action taken by Tembec which is contemplated in this Term Sheet; (b) JPM not becoming aware after the date hereof of any information or other matter affecting the Borrower or the transactions contemplated hereby which is inconsistent in a material and adverse manner with any such information or other matter disclosed to JPM prior to the date hereof; (c) there not having occurred a material disruption of or material adverse change in financial, banking or capital market conditions that could reasonably be expected to materially impair the JPM Backstop; and (d) the New Loan Amount is not funded on or before the Expiry Date. For the purposes of this Section 39: (1) "Expiry Date" means the later of (x) 14 days following the delivery by JPM to Tembec of written notice of expiry pursuant to clause (d) above and (y) March 31, 2008; and (2) "JPM Backstop Termination Date" means, if termination is pursuant to the foregoing clause (d), the Expiry Date, and if termination is pursuant to the foregoing clauses (a), (b) or (c) above, the date on which written notice is provided by JPM to Tembec of such termination.

(ii)

Upon the occurrence of the JPM Backstop Termination Date and subject to paragraph (iii) below, JPM shall assign to Tembec all of JPM’s rights and interests in and to the backstop agreements entered into by each Initial Backstop Party that elects to become a Continuing Backstop Party (defined below).

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(iii)

On or before the fifth business day following the JPM Backstop Termination Date (such fifth business day being the "Noteholder Backstop Termination Date"), each of the Initial Backstop Parties and each of the Additional Backstop Parties shall have the right in its sole discretion to terminate the Initial Backstop, the Standby Backstop or the Additional Backstop, as the case may be, and its agreement to perform the services relating to the Initial Backstop, the Standby Backstop or the Additional Backstop, as the case may be, upon providing written notice to Tembec (a Backstop Party that elects to provide such a termination notice is referred to as a "Terminating Backstop Party" and a Backstop Party that does not elect to provide such a termination notice is referred to as a "Continuing Backstop Party").

(iv)

Tembec Inc. shall issue 11,111,111 warrants to the Shareholders as additional consideration for their Existing Equity, which may be exercised without any payment or consideration pursuant to the terms of this Part D.

Each Warrant shall be convertible into one New Common Share, subject to adjustment, as described in Section 44.

The Warrants shall expire 4 years after the Implementation Date if not exercised.

The Warrants shall carry standard terms customary to such warrant offerings, including anti-dilution protection and adjustments for dividends.

The Noteholders’ Representatives and Tembec Representatives may agree on a professional search firm to assist in the selection process.

If the Noteholders’ Representatives and Tembec Representatives are unable to agree on the selection of the remaining seven directors, the Noteholders’ Representatives shall have selection rights in respect of five directors and the Tembec Representatives shall have selection rights in respect of two directors.

Notwithstanding the foregoing, any single Noteholder holding 20% or more of the Notes shall be entitled to nominate one director to the New Board, provided that the total number of directors nominated by any such Noteholder and the Noteholders’ Representatives shall not exceed five.

The Chair of the New Board shall be selected by mutual agreement of the Noteholders’ Representatives and Tembec Representatives, or, failing such agreement, shall be selected by the New Board.

Tembec and the Noteholders’ Representatives will select a nationally recognized firm of compensation consultants to work with (i) the current Board of Tembec Inc. to review and address, on or prior to the Implementation Date, all employee loan obligations under Tembec’s existing employee equity program in an appropriate manner based on similar transactions of this nature, (ii) the current Board of Tembec Inc. to implement, on or prior to the Implementation Date, an appropriate compensation plan for senior management in the context of the completed Recapitalization based on similar transactions of this nature, and (iii) the New Board to design and implement an appropriate compensation program including a compensation plan and incentive plan for senior management based on an appreciation of the Recapitalized Equity.

The Head Office and Corporate Office of Tembec shall remain in the Province of Quebec.