SHARE PURCHASE AGREEMENT BETWEEN DOMTAR INDUSTRIES INC., DOMTAR GYPSUM INC., DOMTAR INC. AND GEORGIA-PACIFIC CORPORATION

EXHIBIT 2.2

DOMTAR U.S. GYPSUM PRODUCTS BUSINESS

SHARE PURCHASE AGREEMENT
BETWEEN
DOMTAR INDUSTRIES INC.,
DOMTAR GYPSUM INC.,
DOMTAR INC.
AND
GEORGIA-PACIFIC CORPORATION

DATED NOVEMBER 8, 1995
2

TABLE OF CONTENTS

PAGE
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ARTICLE 1. DEFINITIONS AND PRINCIPLES OF INTERPRETATION . . . . . . . . . . . . . 2

1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Number and Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.4 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.6 Submission to Jurisdiction: Appointment of Agent for Service of Process . . 15
1.7 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.8 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.9 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.10 Table of Contents and List of Schedules . . . . . . . . . . . . . . . . . . 16
1.11 Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.13 Delays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE 2. PURCHASED SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE 3. PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.1 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.2 Adjustment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE VENDOR . . . . . . . . . . . . . 20
4.1 Incorporation and Authorization . . . . . . . . . . . . . . . . . . . . . . 20
4.2 Ownership of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.3 Enforceability of the Agreement . . . . . . . . . . . . . . . . . . . . . . 21
4.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.5 Corporate Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.6 Capital Stock and Records . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.7 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.8 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.9 Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.10 Inventories and Accounts Receivable . . . . . . . . . . . . . . . . . . . . 27
4.11 Absence of Material Changes . . . . . . . . . . . . . . . . . . . . . . . . 28
4.12 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

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4.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.15 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.16 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.17 Employees, Pension and Other Benefit Plans . . . . . . . . . . . . . . . . . 35
4.18 Litigation; Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . 39
4.19 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.20 Finder's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.21 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.22 Consents and Approvals; Permits . . . . . . . . . . . . . . . . . . . . . . 40
4.23 Gypsum Rock Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER . . . . . . . . . . . . 41
5.1 Incorporation and Authorization . . . . . . . . . . . . . . . . . . . . . . 41
5.2 Enforceability of the Agreement . . . . . . . . . . . . . . . . . . . . . . 41
5.3 Investment Representation . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.4 Finder's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

ARTICLE 6. NON-COMPETITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.1 Non-Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.2 Permitted Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.3 Limited Exception for Incidental Acquisitions . . . . . . . . . . . . . . . 43

ARTICLE 7. COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . 44
7.1 Maintenance and Preservation of Business . . . . . . . . . . . . . . . . . . 44
7.2 Notice of Cessation in Ordinary Course . . . . . . . . . . . . . . . . . . . 46
7.3 Access for the Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.4 Maintain Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.5 Corporate Proceedings for Transfer . . . . . . . . . . . . . . . . . . . . . 48
7.6 Adjustment Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.7 Tax Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.8 Hazardous Waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.9 Operation of Business After Second Fixture Date . . . . . . . . . . . . . . 49

ARTICLE 8. ADDITIONAL COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . . 50
8.1 Tax Returns Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.2 Use of Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.3 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.3.1 Vendor Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.3.2 Employees On Medical Leave . . . . . . . . . . . . . . . . . . . . 51
8.3.3 Key Employee Retention Program . . . . . . . . . . . . . . . . . . 52

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8.3.4 Employee Share Purchase and Executive Stock Option Plans . . . . . 52
8.3.5 U.S. 401(k) Plan . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.4 Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.5 Affidavits for Title Insurance . . . . . . . . . . . . . . . . . . . . . . . 56
8.6 No Interference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.7 Guarantees, Letters of Credit, Etc. . . . . . . . . . . . . . . . . . . . . 57

ARTICLE 9. ANTITRUST AND COMPETITION REGULATORY APPROVALS . . . . . . . . . . . . 57
9.1 Obtaining Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.2 Dealings With Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 59

ARTICLE 10. CONDITIONS OF CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.1 Purchaser's Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.1.1 Representations and Warranties Remain Correct . . . . . . . . . . . 59
10.1.2 Performance of Obligations . . . . . . . . . . . . . . . . . . . . 61
10.1.3 Permits, Consents and Approvals . . . . . . . . . . . . . . . . . . 61
10.1.4 Corporate and Other Proceedings . . . . . . . . . . . . . . . . . . 62
10.1.5 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 62
10.1.6 Real Property Title Insurance . . . . . . . . . . . . . . . . . . . 62
10.1.7 Resignation and Releases by Directors and Officers . . . . . . . . 62
10.1.8 Opinion of the Vendor's Counsel . . . . . . . . . . . . . . . . . . 62
10.1.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
10.1.10 Domtar Canadian Gypsum Products Business . . . . . . . . . . . . . 63
10.1.11 Rescission . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
10.1.12 Waiver by the Purchaser . . . . . . . . . . . . . . . . . . . . . . 63
10.2 Vendor's Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.2.1 Representations and Warranties Remain Correct . . . . . . . . . . . 64
10.2.2 Performance of Obligations . . . . . . . . . . . . . . . . . . . . 64
10.2.3 Corporate and Other Proceedings . . . . . . . . . . . . . . . . . . 64
10.2.4 Change of Name . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.2.5 Domtar Canadian Gypsum Products
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.2.6 Opinion of the Purchaser's Counsel . . . . . . . . . . . . . . . . 65
10.2.7 Rescission . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.2.8 Waiver by the Vendor . . . . . . . . . . . . . . . . . . . . . . . 66

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ARTICLE 11. SURVIVAL AND RELIANCE ON REPRESENTATIONS AND WARRANTIES AND
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
11.1 Survival and Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
11.2 Survival of Liability for Representations and Warranties . . . . . . . . . . 66
11.3 Indemnification by the Vendor . . . . . . . . . . . . . . . . . . . . . . . 67
11.4 Indemnification by the Purchaser . . . . . . . . . . . . . . . . . . . . . . 68
11.5 Indemnification against Third Party Claims . . . . . . . . . . . . . . . . . 69
11.6 Indemnification after Insurance and Other Recoveries . . . . . . . . . . . . 70
11.7 Vendor's Maximum Liability . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.8 Details of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
11.9 Indemnification Sole Remedy . . . . . . . . . . . . . . . . . . . . . . . . 72

ARTICLE 12. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

ARTICLE 13. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
13.1 Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
13.2 Continuing Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

ARTICLE 14. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
14.2 Public Announcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
14.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
14.4 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
14.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
14.6 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
14.7 No Third Party Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . 76
14.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

SHARE PURCHASE AGREEMENT

THIS AGREEMENT made as of November 8, 1995

BETWEEN: GEORGIA-PACIFIC CORPORATION, a company
incorporated under the laws of Georgia

(the "PURCHASER")

AND: DOMTAR INDUSTRIES INC., a company incorporated
under the laws of Delaware

(the "VENDOR")

DOMTAR GYPSUM INC., a company incorporated under
the laws of Delaware, which is a party to this
Agreement for the purpose of making the
representations set forth in Article 4 and certain
covenants set forth in Articles 7 and 8, and

DOMTAR INC., a company incorporated under the laws
of Canada, which is a party to this Agreement for
the purpose of making the covenants set forth in
Articles 6 and 11 and certain representations set
forth in Article 4.

WHEREAS the Vendor is a wholly-owned subsidiary of Domtar;

WHEREAS the Corporation is a wholly-owned subsidiary of the
Vendor which owns all the United States of America assets relating to the
Business and, indirectly through its wholly-owned subsidiary KMHC, 49% of all
the issued and outstanding shares of the capital stock of COMSA, which owns all
the Mexican assets (Gypsum rock mine) relating to the Business;

WHEREAS the Vendor desires to sell, assign and transfer to the
Purchaser who desires to purchase, the Purchased Shares subject and pursuant to
the provisions hereof;
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NOW, THEREFORE, THIS AGREEMENT WITNESSES that in consideration
of the mutual covenants and agreements herein set out and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties covenant and agree as follows:

ARTICLE 1. DEFINITIONS AND PRINCIPLES OF INTERPRETATION

1.1 DEFINITIONS

For the purposes of this Agreement and any other agreement or
document entered into pursuant hereto or thereto and any
notice, consent, direction or other communication required or
permitted to be given pursuant hereto or thereto, the
following words and phrases shall have the following meanings
ascribed to them respectively, unless the subject matter or
context otherwise requires:

(A) "ADJUSTMENT ARBITRATOR" means the Person, if any,
chosen pursuant to Section 3.2 to make the final
determination of the adjustment to the Purchase
Price.

(B) "ADJUSTMENT BALANCE SHEET" means the balance sheet of
the Corporation as at the Adjustment Date which shall
be prepared in accordance with Section 3.2.4 hereof.

(D) "ADJUSTMENT PAYMENT DATE" means the later of (i) the
fifth (5th) Business Day from and after the final
determination (and, if determined by the Adjustment
Arbitrator, delivery to the Parties) of the
adjustment (if any) to the Purchase Price, as
provided in Section 3.2 hereof and (ii) the Closing
Date.

(E) "AFFILIATE" of any specified Person means any Person
directly or indirectly controlling or controlled by
or under direct or indirect common control with such
Person. For the purposes of this definition,
"CONTROL" when used with respect to any Person means
the power to direct the management and policies of
such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or
otherwise; and the terms "CONTROLLING" and
"CONTROLLED" have meanings correlative to the
foregoing.

(F) "AGREEMENT" means this Agreement entitled "SHARE
PURCHASE AGREEMENT" and all agreements or documents
supplemental hereto or in amendment or confirmation
hereof; "HEREIN", "HEREOF", "HERETO", "HEREUNDER"
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and similar expressions mean and refer to this
Agreement and not to any particular article or
section hereof; "ARTICLE", "SECTION" or other
subdivision of this Agreement means and refers
to the specified article, section or other
subdivision of this Agreement.

(G) "ANTITRUST AUTHORITY" has the meaning ascribed
thereto in Article 9.

(H) "ANTITRUST LAW" has the meaning ascribed thereto in
Article 9.

(I) "ASSET PURCHASE AGREEMENT" means that certain Asset
Purchase Agreement dated as of even date herewith
between Domtar and the Purchaser, as it may be
amended from time to time.

(J) "BUSINESS" means the business presently conducted by
the Corporation at and from its facilities, all of
which are in the United States of America, as set out
in SCHEDULE 1.1(J) and known as Domtar U.S. Gypsum
Products Business, excluding any business conducted
at the Corporation's Vernon, California facility.

(K) "BUSINESS DAY" means a day other than a Saturday,
Sunday or any other day on which the principal banks
located in Montreal, Canada or Atlanta, Georgia are
not open for business during normal banking hours.
Whenever any payment to be made or any action to be
taken pursuant to this Agreement is required to be
made or taken on a day other than a Business Day,
such payment shall be made or such action shall be
taken on the next succeeding Business Day.

(L) "CLAIMS" has the meaning ascribed thereto in Section
11.3.1 hereof.

(M) "CLOSING" means the consummation of the sale by the
Vendor and the purchase by the Purchaser of the
Purchased Shares by the transfer and delivery of
certificates and documents of title thereto and the
payment of the Purchase Price on the Closing Date as
provided herein.

(N) "CLOSING DATE" means the fifth Business Day after the
Purchaser shall have notified the Vendor in writing
(or the Vendor shall have notified the Purchaser in
writing, if earlier) that the provisions of Section
10.1.3 hereof have been met, or such earlier date as
the Parties may agree.
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(O) "CLOSING PLACE" means the offices of the Purchaser's
headquarters, or such other location as the Vendor
may designate upon at least five (5) Business Days'
notice to the Purchaser, subject to the Purchaser's
right to reject such designated location if such
designation would impose an unreasonable burden on
the Purchaser.

(P) "CODE" means the Internal Revenue Code of 1986
(U.S.A.), as amended, and regulations promulgated
thereunder.

(Q) "COMSA" means Compania Occidental Mexicana, S.A. de
C.V., a company incorporated under the laws of
Mexico.

(R) "CONFIDENTIALITY AGREEMENT" means the confidentiality
agreement between the Vendor and the Purchaser dated
August 30, 1995.

(S) "CONTRACTS" means all written or oral outstanding
contracts, agreements, deeds, negotiable instruments,
bid, performance, surety, custom or other bonds,
leases, licenses, commitments, covenants and
warranties to which the Corporation is entitled or
under which it is bound, and all amendments and
modifications thereto.

(T) "CORPORATION" means Domtar Gypsum Inc., a company
incorporated under the laws of Delaware, to be
renamed G-P Gypsum Corporation (or such other name as
may be acceptable to the Vendor) prior to or at the
Closing.

(U) "DOMTAR" means Domtar Inc., a company incorporated
under the laws of Canada.

(V) "EFFECTIVE TIME" means 12:01 a.m. on the Closing Date.

(W) "EMPLOYEE PLANS" means all "employee welfare benefit
plans" and "employee pension benefit plans" as
respectively defined in Sections 3(1) and 3(2) of
ERISA, all employee benefit and pension plans, all
other bonus, deferred compensation, retirement,
savings, excess benefit, stock option or purchase,
retention, termination, severance and incentive
plans, contracts, programs, funds, arrangements or
practices and all other plans, contracts, programs,
funds, arrangements or practices, that provide or may
provide money (other than as current salary or
wages), services, property or other benefits, whether
written or oral and whether funded or unfunded,
including, without limitation, any that have been
frozen or terminated since the Financial Statements
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Date, and any trust, escrow or similar
agreement related thereto, whether written or oral
and whether funded or unfunded, which are established
or maintained by the Corporation with respect to any
of its Employees or Retired Employees, independent
contractors, directors, officers or shareholders or
which are established or maintained by any Person
which together with the Corporation is or would have
been at any date of determination treated as a single
employer under Section 414 of the Code (the "RELATED
PERSONS") or with respect to which the Corporation or
the Related Persons have made or are required to make
payments, transfers or contributions.

(X) "EMPLOYEES" means all the employees who, as at the
date of determination, are employed by the
Corporation whether or not as salaried or unionized
employees and whether or not on short or long-term
disability, accident or sickness, maternity, lay-off
or other authorized leave of absence and including,
without limitation, the Retired Employees.

(Y) "EMPLOYEES ON MEDICAL LEAVE" means those of the
Employees other than the Retired Employees) who, as
at the date of determination, are absent from work
because of disability or are otherwise incapable of
working in their regular duties or who have claimed
that they are so disabled or incapable of working as
at such date.

(Z) "EMPLOYEES ON SHORT-TERM MEDICAL LEAVE" means
Employees on Medical Leave who as at the date of
determination, are receiving or are eligible for
benefits under the Short Term Disability (STD) Salary
Continuation Plan for Non-Union Employees of Domtar
Industries Inc. and the corresponding plans or
agreements for unionized employees maintained by the
Corporation or the Vendor or would be so eligible if
their illnesses or injuries were not covered by
workers' compensation.

(AA) "EMPLOYEES ON LONG-TERM MEDICAL LEAVE" means, as at
the date of determination, all Employees on Medical
Leave other than Employees on Short-Term Medical
Leave.

(BB) "ENVIRONMENT" means soil, land, water and air in
their natural state including, without limitation,
land surface or subsurface strata, surface water,
ground water and ambient air.

(CC) "ENVIRONMENTAL AUTHORITIES" means all federal,
provincial or state ministries or federal, state,
provincial or local governmental bodies
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or regulatory agencies, foreign or domestic, charged
with enforcing any of the Environmental Laws.

(DD) "ENVIRONMENTAL CLAIMS" has the meaning ascribed
thereto in Section 11.7.1 hereof.

(EE) "ENVIRONMENTAL LAW" means all applicable federal,
state, provincial or local codes, laws, statutes,
regulations, decrees, orders and by-laws, in respect
of the protection of the quality of the Environment
and the health and safety of employees including,
without limitation, those relating to the Release of
Hazardous Substances into the Environment or the
manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling
of Hazardous Substances in force, otherwise than as a
result of retroactive application of a subsequent
legislative or regulatory change or enactment adopted
after the Adjustment Date, as at the date with
respect to which such defined term is used.

(FF) "ENVIRONMENTAL NOTICE" means any notice of
investigation, notice of non-compliance or written
order from any of the Environmental Authorities
including any notice of contamination or clean-up
requirements.

(GG) "ENVIRONMENTAL PERMITS" means all permits, licenses,
certificates and authorization of, and registrations
with, any of the Environmental Authorities pursuant
to any of the Environmental Laws, issued or granted
to the Corporation for the purpose of conducting the
Business as presently conducted, set out in SCHEDULE
1.1(GG).

(HH) "ERISA" means the Employee Retirement Income Security
Act of 1974 (U.S.A.), as amended, and regulations
promulgated thereunder.

(II) "EXCLUDED ASSETS" means the following assets of the
Corporation:

(i) all real and personal property located in
Vernon, California or arising out of the sale
of such property;

(ii) the agreements with Public Service Electric &
Gas relating to environmental clean-up at
Camden plant; and
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(iii) any indemnification rights from prior owners
of any of the Corporation's facilities with
respect to the matters set forth on SCHEDULE
11.3.2.

(JJ) "FINANCIAL STATEMENTS" means the income and cash flow
statements of the Corporation for the twelve (12)
months ended December 31, 1994 extracted from the
Corporation's audited financial statements for such
period and the unaudited income and cash flow
statements of the Corporation for the six (6) months
ended June 30, 1995, respectively, and the related
notes thereto set out in SCHEDULE 1.1(JJ).

(KK) "FINANCIAL STATEMENTS DATE" means June 30, 1995.

(LL) "FIRST CORE REPRESENTATIONS" means those (i)
representations and warranties of the Vendor, the
Corporation and Domtar, as the case may be, contained
in Sections 4.1, 4.2, 4.3.1, 4.3.2, 4.4, 4.5, 4.6,
4.7.1, 4.7.3, 4.8.1, 4.8.2, 4.20, 4.21 and 4.22 and
(ii) all other representations and warranties of the
Vendor but with all references to Laws (other than
ERISA and the Code) and Environmental Laws being
limited to those in effect on or before the First
Fixture Date.

(MM) "FIRST FIXTURE DATE" means May 23, 1996.

(NN) "HAZARDOUS SUBSTANCES" means all contaminants issued
or discharged in the Environment in a greater
quantity or concentration than that provided for in
any of the Environmental Laws or the presence of
which in the Environment is prohibited pursuant to
any of the Environmental Laws. For the purposes of
this definition, "CONTAMINANTS" means all solid,
liquid or gaseous matter, micro-organism, sound,
vibration, ray, heat, water, radiation or a
combination of any of them that adversely alters the
quality of the Environment.

(OO) "HAZARDOUS WASTE" means a waste which meets the
criteria for, or which has been listed or identified
as, a hazardous waste by (a) the U.S. Environmental
Protection Agency under the U.S. Resource
Conservation and Recovery Act, 42 USC Section 6901
et seq. and regulations promulgated by the U.S.
Environmental Protection Agency, 40 C.F.R. Part 261
or (b) the California Department of Toxic Substances
under California Health and Safety Code Section
25110 et seq. and regulations promulgated thereunder.
▇▇

-▇-

(▇▇) "▇▇▇ ▇▇▇" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvement Act of 1976 (U.S.A.), as amended, and
regulations promulgated thereunder.

(QQ) "INDEMNIFIED CLAIMS" means the Purchaser's
Indemnified Claims and the Vendor's Indemnified
Claims.

(RR) "INDEMNITEE" and "INDEMNITOR" have the respective
meanings ascribed thereto in Section 11.5.1 hereof.

(SS) "INITIAL PERIOD" has the meaning ascribed thereto in
Section 8.4.9 hereof.

(TT) "INITIAL 30-DAY PERIOD" has the meaning ascribed
thereto in Section 3.2.4 hereof.

(UU) "INTELLECTUAL PROPERTY" means all patents, copyrights
(including renewal rights thereto), trade-marks,
service marks, trade names, industrial designs
(registered and unregistered and including
applications therefor and distinguishing guise) and
all other confidential information, improvements,
discoveries, data, trade secret information,
inventions, patterns, drawings, technical
information, research and development works,
concepts, methods, processes, procedures, know-how
and other intellectual property (in whatever medium
or support) owned or actively used by the Corporation
with the exception of the trade-▇▇▇▇ "Domcrete".

(VV) "INTERIM BALANCE SHEET" means the unaudited balance
sheet of the Business as at June 30, 1995, and the
related notes thereto, set out in SCHEDULE 1.1(VV).

(WW) "KMHC" means KMHC, Incorporated, a company
incorporated under the laws of California.

(XX) The "KNOWLEDGE" of the Corporation, the Vendor or
Domtar shall mean the knowledge of

(i) the Persons listed in Part 1 of SCHEDULE
1.1(XX) in the case of the Corporation;

(ii) the Persons listed in Part 2 of the SCHEDULE
1.1(XX) in the case of the Vendor or Domtar.

(YY) "LAW" means all applicable federal, state, provincial
or local codes, laws, statutes, regulations, decrees,
orders and by-laws in force, otherwise than as a
14

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result of retroactive application of a
subsequent legislative or regulatory change or
enactment adopted after the Adjustment Date, as at the
date with respect to which such defined term is used,
but excluding Environmental Law.

(ZZ) "LEASED REAL PROPERTIES" means all real and immovable
properties leased by the Corporation, as tenant, as
set out in SCHEDULE 1.1(ZZ).

(AAA) "LIENS" means all liens, prior claims, privileges,
security interests, hypothecs, mortgages, pledges,
charges, encumbrances, easements and servitudes,
leases, licenses, options, claims, rights, ownership
or title retention agreements, conditional sale
agreements, rights of first refusal, leasing, sale
and leaseback agreements and all other agreements
that in substance secure payment or performance of an
obligation.

(BBB) "MATERIAL ADVERSE EFFECT" means, with respect to any
event, act, condition or occurrence of whatever
nature (including any adverse determination of any
litigation, arbitration, or governmental
investigation or proceedings), whether singly or in
conjunction with any other event, act, condition or
occurrence, whether or not related, a material
adverse change in, or a material adverse effect upon,
any of (i) the legality, validity or enforceability
of this Agreement or the ability of the Vendor, the
Corporation or Domtar, as the context may require, to
execute and deliver this Agreement and consummate the
transactions contemplated hereby, or (ii) the
financial condition, results of operations, cash
flows, business or properties of (a), if for purposes
of determining compliance with Section 10.1, the
Corporation and its Subsidiaries and the Business (as
defined in the Asset Purchase Agreement), taken as a
whole, and (b), for all other purposes (including for
purposes of the indemnities of Section 11.3), the
Corporation and its Subsidiaries, taken as a whole.

(CCC) "MATERIAL CONTRACTS" means those of the Contracts
which (a) require (or, in the absence of a default,
may require) an expenditure by or to the Corporation
in excess of $500,000, and (b) are:

(i) not in the ordinary course of the Business;

(ii) title retention, conditional sales, leasing,
sale and leaseback, loan, credit or security
agreements or other agreements that in
15

-10-

substance secure payment or performance of
an obligation;

(iii) guarantees, sureties, promissory notes or
other negotiable instruments;

(iv) related to Intellectual Property or computer
software;

(v) leases for the Leased Real Properties;

(vi) personal and movable property leases and
licenses of the Corporation, as lessee or
licensee thereunder, other than those
referred to in paragraphs (ii) or (iv) of
this Section;

(vii) with Affiliates or Subsidiaries of the
Corporation;

(viii) federal, state or local government or
governmental body contracts, tenders or bids
and bonds therefor;

(ix) non-competition or confidentiality agreements
or other agreements in restriction of trade;

(x) franchise and distribution agreements;

(xi) utility supply agreements; or

(xii) raw material purchase and supply agreements;

including, without limitation, those set out in
SCHEDULE 1.1(CCC), but excluding those being assumed
by the Vendor or Domtar in connection with the
Excluded Assets.

(DDD) "OWNER'S EQUITY" has the meaning ascribed thereto and
is determined pursuant to the formula set out in
SCHEDULE 1.1(DDD).

(EEE) "PARTIES" means the Vendor, the Corporation and
Domtar (on the one hand) and the Purchaser (on the
other hand) collectively and "PARTY" means any one of
them.

(FFF) "PERMITTED ENCUMBRANCES" means

(i) all liens, prior claims, privileges, security
interests, hypothecs, mortgages and charges
for real and immovable property taxes
contested in good faith by appropriate
proceedings for which adequate reserves are
being maintained or which are incurred in the
ordinary course of the Business in connection
16

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with real and immovable property construction
or renovation or with workers or with workers'
compensation, unemployment insurance, social
security, retirement and other similar
legislation;

(ii) all easements and servitudes (including,
without limitation, easements and servitudes
for public utility services);

(iii) all encroachments, restrictive covenants and
licenses;

(iv) all site plan agreements, subdivision
agreements and leases;

(v) all minor irregularities of title; and

(vi) all by-laws, planning acts, building
restrictions and zoning regulations;

which affect the Real Properties and which (i)
individually would cost less than $50,000 to correct,
and (ii) both individually and in the aggregate, are
of a minor nature and do not impair the use of those
of the Real Properties which are so affected for the
purpose of conducting the Business as presently
conducted.

(GGG) "PERSON" means an individual, partnership, joint
venture, association, cooperative, corporation,
public utility, trust or a government or any
department, body or agency thereof or any other
entity with juridical personality.

(HHH) "PROPERTIES" means the Real Properties and all
personal and movable properties purportedly owned by
the Corporation, other than the Excluded Assets.

(III) "PURCHASE PRICE" has the meaning ascribed thereto in
Section 3.1 hereof.

(JJJ) "PURCHASED SHARES" has the meaning ascribed thereto
in Article 2 hereof.

(KKK) "PURCHASER'S COUNSEL" means Purchaser's Senior
Vice-President - Law and General Counsel.

(LLL) "PURCHASER'S INDEMNIFIED CLAIMS" has the meaning
ascribed thereto in Section 11.3.1 hereof.
17

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(MMM) "PURCHASER'S PENSION PLAN" has the meaning ascribed
thereto in Section 8.4.1 hereof.

(NNN) "PURCHASER PROTECTED PERSONS" has the meaning
ascribed thereto in Section 11.3.1 hereof.

(OOO) "REAL PROPERTIES" means all real and immovable
properties owned by the Corporation, together with
all plants, buildings, structures, improvements and
appurtenances thereon or thereto and forming part
thereof and all servitudes, easements and rights of
way in favour thereof, set out in SCHEDULE 1.1(OOO).

(PPP) "RELEASE" means releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing or dumping.

(QQQ) "RETIRED EMPLOYEES" means all former employees of the
Corporation who, as at the date of determination,
have rights under the Employee Plans, provided,
however, that no Employee on Long-Term Medical Leave
shall be deemed to be a Retired Employee.

(RRR) "SECOND CORE REPRESENTATIONS" means those
representations and warranties contained in Section
4.1, 4.2, 4.3.1, 4.3.2.1(a), 4.3.2.3, 4.3.2.4 (as to
the Purchased Shares), 4.4, 4.5, 4.6, and (to the
extent necessary for any Employee Plans to be in
compliance with ERISA and the Code) 4.17.

(SSS) "SECOND FIXTURE DATE" means September 30, 1996,
provided, however, that the Second Fixture Date shall
be postponed by the number of days, if any, by which
the date described in (ii) below follows the date
described in (i) below: (i) the later of the date on
which the Purchaser files a complete response to a
Second Request or the date which is sixty (60) days
after the date of such Second Request and (ii) the
date the Vendor, the Corporation or Domtar (as the
case may be) files its complete response to such
Second Request.

(TTT) "SECOND REQUEST" shall mean a request for additional
information and documentary material under the HSR
Act relating to the transactions contemplated by this
Agreement.

(UUU) "SECURITIES ACT" means the Securities Act of 1933
(U.S.A.), as amended.
18

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(VVV) "SELLING PARTIES" means the Vendor, the Corporation
and Domtar, individually and collectively.

(WWW) "SUBSIDIARY" of any Person means any corporation more
than 50% of whose shares of stock having general
voting power under ordinary circumstances to elect a
majority of the board of directors of such
corporation, irrespective of whether or not at the
time stock of any other class or classes shall have
or might have voting power by reason of the happening
of any contingency, is owned or controlled directly
or indirectly by such Person or by any other
Subsidiary of such Person.

(XXX) "TAXES" means all taxes, assessments, reassessments,
charges, levies and all other imposts, together with
all interest, penalties and fines thereon or
additions thereto, of whatever kind or nature,
including, without limitation, gross or net income,
ad valorem, alternative or add-on minimum tax,
capital stock, documentary, employment (including,
without limitation, social security and
unemployment), environmental, excise, franchise,
gains, goods and services, gross receipts, import,
intangible, license, mining, net worth, occupation,
payroll, privilege, production, profits, property,
registration, sales, services, severance, stamp,
surplus, transfer, use, wage, withholding, workers
compensation, value added taxes, charges, fees and
customs duties, imposed, levied or assessed by any
federal, state, provincial or local government or
taxing authority.

(YYY) "TAX RETURNS" means all federal, state or local tax
reports, returns, declarations of estimated tax or
other information required to be filed with respect
to the Corporation, its income, the Properties or the
Business.

(ZZZ) "TERMINATION DATE" has the meaning ascribed thereto
in Article 13 hereof.

(AAAA) "THIRD PARTY CLAIM" means any demand or statement or
any notice or overt threat thereof which has been
made on or communicated to a Party by or on behalf of
any other Person and which, if maintained or
enforced, will or might result in a Claim of the
nature described in either Section 11.3 or 11.4
hereof.

(BBBB) "TRANSITIONAL PERIOD" has the meaning ascribed
thereto in Section 8.4.7.

(CCCC) "U.S. GAAP" means generally accepted accounting
principles as of December 31, 1994, set forth in the
opinions and pronouncements of the Accounting

-14-

Principles Board and the American Institute of
Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of
comparable stature and authority within the
accounting profession) or in such other statements
by such other entity as may be in general use by
significant segments of the accounting profession.

(DDDD) "U.S. 401(K) PLAN" means the 401(k) Retirement
Savings Plan for Non-Negotiated Employees of the
Vendor.

(EEEE) "U.S. PLAN" means the Pension Plan for Non-Negotiated
Employees of the Vendor.

(FFFF) "VENDOR PLANS" has the meaning ascribed thereto in
Section 8.3.1.

(GGGG) "VENDOR PROTECTED PERSON" has the meaning ascribed
thereto in Section 11.4.

(HHHH) "VENDOR'S COUNSEL" means ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇.

(IIII) "VENDOR'S INDEMNIFIED CLAIMS" has the meaning
ascribed thereto in Section 11.4.

1.2 NUMBER AND GENDER

Words (including, without limitation, words and phrases
defined herein) importing the singular include the plural and
vice versa; and words (including, without limitation, words
and phrases defined herein) importing gender include all
genders.

1.3 ENTIRE AGREEMENT

This Agreement, together with the agreements entered into, and
other documents delivered, pursuant hereto or concurrently
herewith constitute the entire agreement between the Parties
on the subject matter hereof and supersede all prior
agreements, understandings, negotiations and discussions,
whether written or oral, of the Parties on the subject matter
hereof, other than the Confidentiality Agreement, and there
are no warranties, representations, undertakings, obligations,
covenants, conditions or other agreements between the Parties
in connection with the subject matter hereof except as
specifically provided herein or therein.
20

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1.4 SCHEDULES

The Schedules referred to herein and attached hereto form an
integral part of this Agreement. Nothing set out in the
Schedules shall be deemed to establish a standard of
materiality.

1.5 GOVERNING LAW

This Agreement shall be deemed to be made in and in all
respects shall be interpreted, construed and governed by and
in accordance with the laws of the State of Delaware without
reference to the choice of law principles thereof. The
Parties irrevocably agree that any legal action or proceeding
arising out of or in connection with this Agreement shall be
brought in the Chancery or Superior Court of the State of
Delaware, or the United States District Court for the State of
Delaware.

1.6 SUBMISSION TO JURISDICTION: APPOINTMENT OF AGENT FOR SERVICE
OF PROCESS

Each of the Parties to this Agreement hereby irrevocably and
unconditionally agrees (i) to be subject to the jurisdiction
of the courts of the State of Delaware and of the federal
courts sitting in the State of Delaware, and (ii) to the
extent such Party is not otherwise subject to service of
process in the State of Delaware, to appoint and maintain an
agent in the State of Delaware as such Party's agent for
acceptance of legal process, and that service made pursuant to
(ii) above shall have the same legal force and effect as if
served upon such Party personally within the State of
Delaware. For purposes of implementing the Parties' agreement
to appoint and maintain an agent for service of process in the
State of Delaware, each such Party that has not as of the date
hereof already duly appointed such an agent does hereby
appoint RL&F Service Corp., ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as such agent.

1.7 AMENDMENT

No supplement or amendment of this Agreement shall be binding
upon the Parties unless expressly provided in a document duly
executed by the Parties.

1.8 WAIVER

The failure by either Party, at any time or for any period of
time, to require performance by the other Party of any of the
latter's respective obligations under this Agreement shall not
affect the former's rights thereafter to require such
performance. No waiver of any of the provisions of this
21

-16-

Agreement shall constitute or be deemed to constitute a
waiver of any other provision hereof (whether or
not similar) nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided in a document duly
executed by the Parties.

1.9 HEADINGS

The Article, Section and other subdivision headings contained
herein are included for convenience of reference only, are not
intended to be full or accurate descriptions of the content
thereof and shall not affect or be utilized in the
construction or interpretation of this Agreement.

1.10 TABLE OF CONTENTS AND LIST OF SCHEDULES

The table of contents and list of Schedules preceding this
Agreement are included for convenience of reference only and
shall not affect or be utilized in the construction or
interpretation of this Agreement.

1.11 CURRENCY

Unless otherwise indicated herein, all dollar amounts referred
to in this Agreement are in legal currency of the United
States of America and all dollar signs ($) used herein refer
to such currency. If for the purposes of any payment required
to be made in order to give effect to the provisions hereof it
is necessary to convert a sum of money in United States of
America currency into Canadian currency or vice versa, the
applicable rate of exchange shall be the spot buying rate of
exchange of the Mellon Bank at 12 noon on the date such
payment is due.

1.12 SEVERABILITY

If any provision of this Agreement shall be held illegal,
invalid or unenforceable by any competent court or tribunal in
any relevant jurisdiction, such illegality, invalidity or
unenforceability shall attach only to such provision in such
jurisdiction and such provision shall be severed herefrom and
be ineffective to the extent of such illegality, invalidity or
unenforceability and shall not affect or impair or render
illegal, invalid or unenforceable such provision in any other
jurisdiction or any other provision of this Agreement in any
jurisdiction.
22

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1.13 DELAYS

In calculating the delay or period of time within or following
which any act is to be done or step taken pursuant to this
Agreement, the day which marks the start of such delay or
period shall be excluded from such calculation.

ARTICLE 2. PURCHASED SHARES

Upon the terms and subject to the conditions of this Agreement, the
Vendor covenants and agrees to sell, assign, transfer and deliver to
the Purchaser and the Purchaser agrees to purchase from the Vendor on
the Closing Date, as at the Effective Time, all of the issued and
outstanding shares of the capital stock of the Corporation, being 312
shares (the "PURCHASED SHARES"), for the Purchase Price and upon the
terms and conditions herein provided.

ARTICLE 3. PURCHASE PRICE

3.1 PAYMENT OF PURCHASE PRICE

The price payable by the Purchaser to the Vendor for the
Purchased Shares shall be, subject to the adjustments, if any,
pursuant to the provisions of Section 3.2 hereof, the amount
of Two Hundred Eighty Million Dollars ($280,000,000) (plus, if
the Closing occurs after the Second Fixture Date, interest on
such amount at the prime rate of Mellon Bank (as defined in
Section 3.2.3) calculated from the Second Fixture Date until
paid in full) (the "PURCHASE PRICE"), which shall be paid at
the Closing Place by wire transfer or certified cheque payable
to the Vendor or as directed by the Vendor.

3.2 ADJUSTMENT OF PURCHASE PRICE

3.2.1 An adjustment, if any, based on U.S. GAAP with
respect to the Purchase Price shall be made as of the
Adjustment Date as follows:

3.2.1.1 if the value of the Owner's Equity as
determined by the Adjustment Balance
Sheet exceeds the value of the Owner's
Equity as determined by the Interim
Balance Sheet, the Purchaser shall pay to
the Vendor, as an adjustment to the
Purchase Price, the amount of such
excess; and
23

-18-

3.2.1.2 if the value of the Owner's Equity as
determined by the Interim Balance Sheet
exceeds the value of the Owner's Equity
as determined by the Adjustment Balance
Sheet, the Vendor shall pay to the
Purchaser, as an adjustment to the
Purchase Price, the amount of such
excess.

3.2.2 The amount of any adjustment payable in accordance
with the provisions of this Section 3.2 shall bear
interest at the prime rate of Mellon Bank calculated
from the Adjustment Date until paid in full, and the
amount of any such adjustment and interest accrued
thereon shall be paid, subject to Section 3.2.4, on
the Adjustment Payment Date by wire transfer or
certified cheque payable to or as directed by the
Party entitled thereto pursuant to the provisions of
this Section 3.2. If the Adjustment Payment Date is
the Closing Date, the adjustment may be added to or
netted against the Purchase Price , as the case may
be.

3.2.3 For the purposes hereof, the "prime rate of Mellon
Bank" means the prime rate of Mellon Bank announced
by said Bank from time to time in Pittsburgh,
Pennsylvania, as its reference rate of interest
(commonly known as its prime rate) for commercial
loans made by said Bank in United States of America
in United States of America dollars.

3.2.4 Within sixty (60) days after the Adjustment Date, the
Vendor shall (i) prepare the Adjustment Balance
Sheet, a calculation of Owner's Equity pursuant
thereto, and a calculation, in accordance with this
Section 3.2, of the Purchase Price adjustment (if
any) and (ii) deliver to the Purchaser a copy of such
Adjustment Balance Sheet and calculations. If the
Purchaser is satisfied that the Purchase Price
adjustment as calculated and submitted by the Vendor
has been properly calculated, the Purchaser shall so
notify the Vendor. If the Purchaser disagrees with
such calculation of the Purchase Price adjustment
(whether such objection relates to the mathematical
calculation thereof or of Owner's Equity, to the
Adjustment Balance Sheet or its preparation, or any
combination thereof) calculated by the Vendor, then
the Purchaser shall deliver to the Vendor, within
thirty (30) days after delivery to the Purchaser of
the Vendor's calculation of the Purchase Price
adjustment (the "INITIAL 30-DAY PERIOD"), a written
description of any adjustment proposed by the
Purchaser to such calculation, and the Vendor and the
Purchaser shall negotiate in good faith to
24

-19-

resolve any disagreement with respect thereto. If
the Purchaser fails to give the Vendor notification
within the Initial 30-Day Period of any objection to
such calculation of the Purchase Price adjustment (or
gives objections only to portions thereof), then such
calculation (or the part not objected to) shall be
binding upon the Parties. Any undisputed amount
shall be paid promptly on or before the later of (i)
the Closing Date or (ii) the fifth (5th) Business Day
after the Initial 30-Day Period. If the Vendor and
the Purchaser have not resolved any such disagreement
(or portion thereof) within fifty (50) days following
the date on which the Purchaser receives the Vendor's
proposed adjustment to the Purchase Price, then such
disagreement shall be submitted to the Adjustment
Arbitrator for a final and binding resolution of the
disagreement and calculation of the final Purchase
Price adjustment. The costs and expenses for the
services of the Adjustment Arbitrator shall be borne
by the Party whose position in the dispute submitted
to the Adjustment Arbitrator has the greatest dollar
discrepancy from the calculation determined by the
Adjustment Arbitrator.

The Adjustment Arbitrator shall be chosen as follow:

(i) if the amount of the dispute is less than or
equal to $1,000,000, the Adjustment
Arbitrator shall be the Chicago office of
KPMG Peat Marwick; or

(ii) if the amount of the dispute is in excess of
$1,000,000, then three arbitrators shall be
chosen from a list of 10 disinterested
accountants in Chicago or its vicinity
compiled by the American Arbitration
Association, with the Vendor and the
Purchaser alternatively striking a name from
such list until only three names remain. The
Vendor shall have the right to strike the
first name, and such right shall be exercised
within five (5) Business Days after the list
is presented to both the Vendor and the
Purchaser. Thereafter in turn, the Purchaser
and the Vendor shall have two (2) Business
Days after notification to it of the last
name stricken by the other Party, to strike a
name from the list until only three names are
left. The arbitrators shall be those three
Persons whose names remain after the above
process. If any such Person cannot or does
not serve as an arbitrator, then such Person
shall be replaced by the Person whose name
was last stricken who is available. If any
Party fails to strike a name from the list
within the allotted time, then the other
25

-20-

Party shall have a right to name the three
arbitrators.

Each of the Parties represents and warrants to the
other Parties that it has disclosed to the other
Parties all significant business and other
relationships that it has had with KPMG Peat Marwick
on or after January 1, 1993.

The Adjustment Balance Sheet shall present fairly the
consolidated financial position of the Corporation
and its Subsidiaries, and shall be based on the books
and records of the Corporation which will be kept,
and such Adjustment Balance Sheet shall be
calculated, in accordance with U.S. GAAP applied on a
basis consistent with the period covered by the
Financial Statements and the Interim Balance Sheet.
All liabilities, contingent or otherwise, of the
Corporation which are required to be reflected or
reserved against in the Adjustment Balance Sheet
shall be reflected therein.

3.3 TRANSFER TAXES

All stock and other transfer taxes including sales taxes and
document recording fees, if any, imposed in connection with
the transfer of the Purchased Shares to the Purchaser shall be
paid by the Vendor, and all applicable stock transfer tax
stamps shall be provided by the Vendor at the Closing.

ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE VENDOR

The Vendor and the Corporation each represent and warrant to the
Purchaser as follows and Domtar represents and warrants to the
Purchaser the matters in Sections 4.1.2 and 4.3:

4.1 INCORPORATION AND AUTHORIZATION

4.1.1 The Vendor is a corporation duly incorporated,
organized, validly existing and in good standing
under the laws of Delaware and has full capacity,
power and authority, corporate and otherwise, to
execute, deliver and perform this Agreement and
consummate the transactions contemplated hereby, and
has been duly authorized to execute and become a
party to this Agreement and to consummate the
transactions provided herein or pursuant hereto.
26

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4.1.2 Domtar is a corporation duly incorporated, organized,
validly existing and in good standing under the laws
of Canada and has full capacity, power and authority,
corporate and otherwise, to execute, deliver and
perform this Agreement and consummate the
transactions contemplated hereby, and has been duly
authorized to execute and become a party to this
Agreement and to consummate the transactions provided
herein or pursuant hereto.

4.2 OWNERSHIP OF STOCK

The Vendor is the sole and absolute owner of the Purchased
Shares with good and marketable record and beneficial title
thereto free and clear of all Liens and upon the consummation
of the sale of the Purchased Shares to the Purchaser pursuant
to this Agreement, the Vendor shall assign, transfer and
deliver the Purchased Shares to the Purchaser with good and
marketable title, free and clear of all Liens. The Vendor has
the sole and exclusive right, power and authority to vote the
Purchased Shares.

4.3 ENFORCEABILITY OF THE AGREEMENT

4.3.1 This Agreement constitutes a legal, valid and
binding obligation of each of the Vendor, the
Corporation and Domtar, enforceable against them
in accordance with its terms, except to the
extent that the enforcement hereof may be limited
by bankruptcy, insolvency, arrangement,
reorganization, moratorium or other similar laws
relating to creditors' rights generally and
general principles of equity (regardless of
whether enforceability is considered in a
proceeding in equity or at law).

4.3.2 Neither the entering into of this Agreement nor
the consummation by any of the Vendor, the
Corporation and Domtar of any of the transactions
contemplated hereby shall:

4.3.2.1 with or without the giving of notice
or the lapse of time, or both,
violate, conflict with, or result in
a breach or default under, or cause
the termination of (a) any of the
provisions of the articles of
incorporation, articles of
amendment, certificates in respect
thereto, by-laws or other charter
document of any of the Vendor,
Domtar and the Corporation or of any
written shareholders agreement or
shareholders, stock or voting trust
to which any of the Vendor, Domtar
and the Corporation is a party
27

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or (b) any Law or any Environmental
Law to which any of the Vendor,
Domtar and the Corporation is
subject;

4.3.2.2 subject any of the Vendor and the
Corporation to any penalty or
liability;

4.3.2.3 with or without the giving of notice
or the lapse of time, or both,
violate, conflict with, or result in
a breach or default under, or cause
the termination of, any contract,
agreement or undertaking applicable
to any of the Vendor, Domtar and the
Corporation, except for such
violations, conflicts, breaches,
defaults, or terminations which are
not likely to have a Material
Adverse Effect; or

4.3.2.4. result in the creation or imposition
of any Lien upon the Purchased
Shares or any of the Properties.

4.3.3 There are no judicial, quasi-judicial,
administrative, quasi-administrative or
arbitration proceedings pending against any of
the Vendor, Domtar and the Corporation which, if
adversely determined, may interfere with the
sale, assignment, transfer or delivery of the
Purchased Shares or the consummation of any of
the transactions herein provided.

4.4 SUBSIDIARIES

Except as set out in SCHEDULE 4.4, the Corporation does not
have any Subsidiary other than KMHC.

4.5 CORPORATE STATUS

4.5.1 The Corporation

4.5.1.1 is duly incorporated, organized,
validly existing and in good
standing under the laws of the State
of Delaware; and

4.5.1.2 has the all requisite capacity,
authority and power, corporate and
otherwise, to own, operate and use
the Properties, to lease the Leased
Real Properties and all personal and
movable properties leased thereby
and to conduct the Business, as
presently owned, operated, used,
28

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leased and conducted, respectively.

4.5.2 KMHC is duly incorporated, organized, validly
existing and in good standing under the laws of
the State of California, and has all requisite
capacity, authority and power, corporate and
otherwise, to hold the 49% interest in COMSA, as
presently held.

4.6 CAPITAL STOCK AND RECORDS

4.6.1 The authorized capital stock of the Corporation
consists of 1,000 shares of which only 312
shares, being the Purchased Shares, are issued
and outstanding and each of such outstanding
shares has been duly authorized and issued and is
fully paid and non-assessable, and the paid-up
capital of the class of such shares has not been
changed since December 31, 1994. The Vendor is
the sole registered holder and beneficial owner
of each of such outstanding shares.

4.6.2 The authorized capital stock of KMHC consists of
2,500 shares of which only 50 shares are issued
and outstanding and each of such outstanding
shares has been duly authorized and issued and is
fully paid and non-assessable, and the paid-up
capital of the class of such shares shall be as
shown in the Adjustment Balance Sheet, and the
Corporation is the sole registered holder and
beneficial owner of each of such KMHC outstanding
shares.

4.6.3 No Person has any agreement, option or right
capable of becoming an agreement or option

4.6.3.1 to acquire any of the Purchased
Shares or any of the issued shares
of KMHC; or

4.6.3.2 to subscribe for or otherwise
acquire any of the unissued shares
of the capital stock of any of the
Corporation or KMHC.

4.6.4 The copies of the charter documents and by-laws
of the Corporation, KMHC and COMSA that have been
previously delivered to the Purchaser are the
complete, true and correct charter documents and
by-laws of the Corporation, KMHC and COMSA in
effect as of the date hereof. The minutes of
directors' and shareholders' meetings and the
stock books of each of the Corporation and KMHC
that have previously been delivered to the
29

-24-

Purchaser are the complete, true and correct
records of directors' and shareholders' meetings
and capital stock issuances and transfers through
and including the date hereof and reflect all
transactions required to be contained in such
records, as well as those matters customarily
contained in records of such type. The
corporate records of each of the Corporation and
KMHC have been maintained in accordance with
sound corporate and business practices and
present fairly, in all material respects, the
matters referred to therein.

4.6.5 Except as set out in SCHEDULE 4.6.5, neither the
Corporation nor KMHC exists as a result or
incident of any merger or amalgamation between
any of the Vendor, the Corporation and KMHC and
any other Person or between other Persons
pursuant to which the Properties, the 49%
interest in COMSA, the Purchased Shares, as the
case may be, currently remain subject to the
rights of the creditors of the Vendor or such
previously existing Person or Persons except as
such obligations are reflected in the Interim
Balance Sheet.

4.7 BUSINESS

4.7.1 The locations or jurisdictions where the
Corporation presently has places of business and
where the Corporation had places of business
during the preceding three (3) years are set out
in SCHEDULE 4.7.1 and, except as therein set out,
the Corporation does not have and has not had
during such three year period any place of
business in any other location or jurisdiction.

4.7.2 Except as set out in SCHEDULE 4.7.2, the
Corporation is conducting the Business in
compliance with all Laws of each jurisdiction in
which it presently conducts the Business and is
duly qualified, licensed or registered in each
jurisdiction in which the nature of the Business
makes such qualification, licensing or
registration necessary, except where the failure
to so comply or to be so qualified, registered or
licensed is not likely to have a Material Adverse
Effect.

4.7.3 The sole present corporate purpose of KMHC is
holding the 49% interest in COMSA and, except as
to the holding of said interest, it is not
conducting nor has it conducted since April 3,
1978 any other business or activity nor does it
have any employees or is it party to any

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collective bargaining agreement.

4.8 FINANCIAL STATEMENTS

4.8.1 The Financial Statements present fairly in all
material respects the consolidated results of
operations and cash flows of the Business, for
the periods covered by the relevant statements
forming part of the Financial Statements.

4.8.2 The Interim Balance Sheet presents fairly in all
material respects the consolidated financial
position of the Business as at the date thereof.

4.8.3 The Financial Statements and the Interim Balance
Sheet are based on the books and records of the
Corporation which have been kept, and such
Financial Statements and Interim Balance Sheet
have been calculated, in accordance with U.S.
GAAP applied on a consistent basis throughout the
periods involved.

4.8.4 There are no liabilities, contingent or
otherwise, of the Corporation and its
Subsidiaries not reflected in the Financial
Statements or Interim Balance Sheet or in the
notes thereto which are required under U.S. GAAP
to be disclosed therein. Except as and to the
extent reflected and adequately reserved against
in the Interim Balance Sheet, or as disclosed in
SCHEDULE 4.8.4, as of the Financial Statements
Date, the Corporation and its Subsidiaries did
not have any liability or obligation whatsoever,
whether accrued, absolute, contingent or
otherwise.

4.9 ASSETS AND LIABILITIES

4.9.1 All the Properties purported to be owned by the
Corporation as at the Adjustment Date shall be
reflected in the Adjustment Balance Sheet and,
except for Permitted Encumbrances and as set out
in SCHEDULE 4.9.1, the Corporation owns the
Properties reflected in the Interim Balance Sheet
and Adjustment Balance Sheet, together with the
Intellectual Property, with good and marketable
title thereto free and clear of all Liens and
also with registered or recorded title to the
Real Properties. Except as set out in SCHEDULE
4.9.1, the Properties are in the possession and
control of the Corporation, and no other Person
is entitled to possession of any such Properties
of the Corporation.
31

-26-

4.9.2 The Corporation does not lease any real and
immovable property other than the Leased Real
Properties.

4.9.3 Except as set out in SCHEDULE 4.9.3, the
Corporation does not hold any loan or advance due
by, or any stock, obligation or securities of, or
any other interest in, any other Person.

4.9.4 Subject to the Permitted Encumbrances, the Real
Properties and the use of the Leased Real
Properties do not violate, contravene or breach
and are used in compliance with the Laws, except
for such violations, contraventions, breaches and
non-compliances which, individually or in the
aggregate, are not likely to have a Material
Adverse Effect. Except as set out in SCHEDULE
4.9.4 or except for Permitted Encumbrances, there
does not exist (i) any encroachment by any
building or other property not owned by the
Corporation on the Real Properties or (ii) any
condemnation proceedings or, to the best
knowledge of the Vendor and the Corporation, any
threat thereof relating to the Real Properties,
or (iii) any encroachment by any of the buildings
and structures constituting part of or located on
the Real Properties and the Leased Properties on
any real property not included in the Real
Properties or the Leased Real Properties.

4.9.5 All personal property taxes, ad valorem taxes,
real and immovable property taxes, surtaxes,
charges, levies, rates, duties and assessments,
whether general or special, and real and
immovable property mutation taxes due and payable
pursuant to the Laws with respect to the Real
Properties before the Adjustment Date and any
interest and penalties thereon or adjustments
thereto, have been paid by the Corporation or
such taxes, surtaxes, charges, levies, rates,
duties and assessments shall be reflected and
reserved against in the Adjustment Balance Sheet.

4.9.6 All the Real Properties are legally described in
SCHEDULE 4.9.6, and the Vendor has provided the
Purchaser with access to true and complete copies
of surveys for all the plants forming part of the
Real Properties.

4.9.7 All the equipment, machinery, rolling stock and
communications, computer (other than personal
computers) and information systems, and all
buildings, plants and structures, whether owned
or leased by the Corporation, are in good
condition and repair and are adequate for the
32

-27-

conduct of the Business as conducted by the
Corporation since December 31, 1994, except for
normal wear and tear and normal usage. Except as
set out in SCHEDULE 4.9.7, the buildings, plants
and structures and the tangible assets presently
owned, leased or licensed by the Corporation
include all buildings, plants, structures and
other tangible assets necessary to permit the
Corporation to conduct the Business in the same
manner as such Business has been conducted since
December 31, 1994, without any need for
replacement, refurbishment or repair otherwise
than in the ordinary course and in a manner
consistent with the past practices for the
Business.

4.9.8 The Corporation does not own the real property
located in New Hampshire described on SCHEDULE
4.9.8.

4.10 INVENTORIES AND ACCOUNTS RECEIVABLE

4.10.1 The inventories of raw materials, work in
process, finished goods and supplies of the
Corporation reflected in the Interim Balance
Sheet or subsequently acquired and properly
included in the Adjustment Balance Sheet are
reflected therein at the lower of cost or market
value in accordance with U.S. GAAP and are in all
material respects, of good and marketable quality
and in sufficient quantity for the conduct of the
Business as presently conducted, and the reserves
for obsolete or surplus inventories reflected on
the Interim Balance Sheet and Adjustment Balance
Sheet are and shall be adequate as at the
respective dates thereof in accordance with U.S.
GAAP consistently applied.

4.10.2 The accounts receivable of the Corporation
reflected in the Interim Balance Sheet are, and
the accounts receivable that will be reflected on
the Adjustment Balance Sheet will be, reflected
therein in accordance with U.S. GAAP and are and
will be bona fide, have been and will be properly
recorded in the ordinary course of the Business
and represent amounts due for goods or services
sold or rendered in the ordinary course of the
Business. The reserves for doubtful accounts
reflected on the Interim Balance Sheet and
Adjustment Balance Sheet are and shall be
adequate as at the respective dates thereof in
accordance with U.S. GAAP consistently applied.
33

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4.11 ABSENCE OF MATERIAL CHANGES

Except as set out in SCHEDULE 4.11, the Business has been
conducted since the Financial Statements Date in the ordinary
course and in a manner consistent with the practices applied
during the periods specified in the Financial Statements, and
since the Financial Statements Date, except as set out in
SCHEDULE 4.11 neither the Corporation nor KMHC has:

4.11.1 purchased or redeemed directly or indirectly any
shares of its capital stock;

4.11.2 issued or sold or agreed to issue or sell any
shares of its capital stock or any option,
warrant, conversion or other right to acquire any
such share or any securities convertible into or
exchangeable for such shares;

4.11.3 been a party to any corporate reorganization,
restructuring or merger or amalgamation or
amended its articles of incorporation, articles
of amendment or certificates in connection
therewith or by-laws;

4.11.4 declared or paid any dividend or declared or made
any other distribution (whether in cash, stock or
property) on any of the shares of its capital
stock;

4.11.5 incurred or discharged any obligation or
liability (whether accrued, absolute or
contingent) other than in the ordinary course of
and in a manner consistent with past practices
for the Business;

4.11.6 entered into any transaction, contract,
agreement, indenture, instrument or commitment
other than in the ordinary course of and in a
manner consistent with past practices for the
Business;

4.11.7 suffered or incurred any damage, destruction,
loss or liability (whether or not covered by any
insurance), any strike, lock-out or other labour
trouble such as slow down or work stoppage, or
any loss of any of its employees, customers,
suppliers or distributors which, individually or
in the aggregate, has had a Material Adverse
Effect;

4.11.8 suffered any shortage or cessation or
interruption of raw materials, supplies or
utilities which, individually or in the
aggregate, has had a Material Adverse Effect;
34

-29-

4.11.9 made any change in its accounting principles,
policies and practices as utilized in the
preparation of the Financial Statements;

4.11.10 made any loan or advance, or assumed, guaranteed,
endorsed or otherwise become liable with respect
to the liabilities or obligations of any other
Person, or permitted any of its assets to be
subjected to any Lien;

4.11.11 granted to any customer any allowance or discount
or changed its pricing, credit or payment
policies other than in the ordinary course of and
in a manner consistent with past practices for
the Business;

4.11.12 incurred any indebtedness, liability or
obligation (absolute, accrued, contingent or
otherwise) other than in the ordinary course of
and in a manner consistent with past practices
for the Business;

4.11.13 sold, leased or otherwise disposed of any of the
Properties or Intellectual Property or any right,
title or interest therein other than in the
ordinary course of and in a manner consistent
with past practices for the Business;

4.11.14 made any payment to, or for the benefit of, any
present or former employee, director, officer or
shareholder otherwise than at the regular rates
payable to them, by way of salary, pension, bonus
or other remuneration consistent with past
practices for the Business;

4.11.15 taken any action which has had a Material Adverse
Effect;

4.11.16 committed to any capital expenditure project or
made any investment, in either case in excess of
$1,000,000 not disclosed to the Purchaser prior
to the date of this Agreement or consented to by
the Purchaser; or

4.11.17 authorized or agreed to do any of the foregoing
matters referred to in this Section 4.11.

4.12 CONTRACTS

4.12.1 Except as set out in SCHEDULE 1.1(CCC) OR 4.12.1,
the Material Contracts have been entered into in
the ordinary course of the Business and are in
full force and effect. No material default,
violation or breach on the part of the
35

-30-

Corporation exists in respect of the Material
Contracts and, to the best of the Vendor's
knowledge, no event exists which, in the case of
any such default, violation or breach but for the
lapse of time, the giving of notice, or both,
would entitle the other contracting Person to
terminate any of the Material Contracts or would
have a Material Adverse Effect.

4.12.2 To the best of the Vendor's knowledge, there is
no default, violation or breach under any of the
Material Contracts on the part of the other
contracting Person.

4.12.3 True, correct and complete copies of all Material
Contracts, including any amendments thereto, have
been made available to the Purchaser, along with
a detailed description and explanation of all
oral Material Contracts.

4.13 INSURANCE

4.13.1 The Corporation and the Business and Properties
are insured with financially sound and reputable
insurers against claims, losses and damages from
all reasonably foreseeable liabilities, hazards
and risks, to such extent and in such amounts and
with such deductible amounts therefrom as is
customary for reasonably prudent Persons
operating like businesses and owning like
properties, all as provided for in and by the
policies and contracts of insurance set out in
SCHEDULE 4.13.

4.13.2 All such policies and contracts of insurance are
in full force and effect, and the Corporation is
in good standing and compliance with respect to
each such policy or contract to which it is a
party. Neither the Corporation, the Vendor nor
Domtar has received notice of any pending or
threatened cancellation of any such insurance or
of any premium increase. Except as set out in
SCHEDULE 4.13, there are no pending claims with
respect to the Corporation against such insurance
as to which insurers have asserted a reservation
of rights or have denied liability, and there
exists no claim under such insurance that has not
been properly filed with such insurers by the
Corporation or, where necessary, the Vendor or
Domtar.

4.14 TAXES

4.14.1 The goods and services tax and sales tax returns
of the Corporation have been filed monthly with
federal and state tax authorities, as the case

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may be, for all fiscal periods through the
Financial Statements Date and thereafter through
the Adjustment Date, and all deficiencies,
including interest, penalties and fines thereon
and adjustments thereto as a result of such
filings have been paid or shall be reflected and
reserved against in the Adjustment Balance Sheet.
No extensions of the applicable statute of
limitations period for examination of such
returns have been requested or granted.

4.14.2 The Corporation has duly and timely filed all Tax
Returns required to be filed by it and has paid
all Taxes due and payable by it on or prior to
the Adjustment Date or such Taxes shall be
reflected and reserved against in the Adjustment
Balance Sheet; such Tax Returns correctly
reflected the facts regarding the income,
business, assets, operations, activities, status
or other matters of the Corporation or any other
information required to be shown thereon. In
particular, but without limitation, none of the
Tax Returns contains any position which is or
would be subject to penalties under Section 6661
or Section 6662 of the Code (or any corresponding
provision of any state, local or foreign Tax
law). Adequate provision shall be made in the
Adjustment Balance Sheet for all such Taxes
payable for the current year for which Tax
Returns are not yet required to be filed.
The unpaid Taxes of the Corporation do not
exceed the reserve for Tax liability set forth or
included in the Financial Statements or the
Interim Balance Sheet. There are no agreements,
waivers or other arrangements providing for an
extension of time with respect to the filing of
any of the Tax Returns or payment of any of the
Taxes by the Corporation; except as set out in
SCHEDULE 4.14.2 or 4.18, there are no
investigations, examinations, reassessments,
claims, actions, suits or proceedings threatened
or pending against the Corporation in respect of
any of the Taxes, nor are there any matters under
discussion with any federal, provincial, state or
local government or taxing authority, relating to
any of the Taxes imposed, levied or assessed by
any such government or authority.

4.14.3 The Corporation has withheld from each payment
made to any of its former or present employees,
directors, officers or shareholders all amounts
which it is required by the Laws to which it is
subject to withhold or deduct and has duly
remitted all amounts so withheld or deducted to
the proper recipients thereof within the time

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limits and in the manner required by such Laws.

4.14.4 All tax-sharing agreements or similar
arrangements with respect to or involving the
Corporation shall be terminated as of the Closing
Date, and after the Closing Date the Corporation
shall not be bound thereby or have any liability
thereunder for amounts due in respect of periods
prior to the Closing Date.

4.14.5 Except for the group of which the Corporation is
currently a member and except as set out in
SCHEDULE 4.14.5, the Corporation has never been a
member of an affiliated group of corporations,
within the meaning of Section 1504 of the Code,
and any Subsidiary of the Corporation has never
been a member of any other affiliated group of
corporations.

4.14.6 All material elections with respect to Taxes
affecting the Corporation as of the date hereof
are set forth in SCHEDULE 4.14.6. After the date
hereof, no election with respect to Taxes (other
than the elections made by the Selling Parties
with respect to net operating losses described on
SCHEDULE 4.14.6) will be made without the written
consent of the Purchaser.

4.14.7 Except as set out in SCHEDULE 4.14.7, none of the
assets of the Corporation is property which the
Corporation is required to treat as being owned
by any other person pursuant to the "safe harbor
lease" provisions of former Section 168(f)(8) of
the Code, or any similar provision of any Tax
law.

4.14.8 None of the assets of the Corporation directly or
indirectly secures any debt, the interest on
which is tax-exempt under Section 103(a) of the
Code.

4.14.9 None of the assets of the Corporation is
"tax-exempt use property" within the meaning of
Section 168(h) of the Code.

4.14.10 The Corporation is not a party to any agreement,
contract, arrangement or plan that has resulted
or would result in the payment of any "excess
parachute payments" within the meaning of Section
280G of the Code.

4.14.11 The Corporation is not a party to any joint
venture, partnership, limited liability company,
or other arrangement or contract which could be
38

-33-

treated as a partnership for federal income tax
purposes.

4.14.12 The Corporation is authorized to conduct business
in every state in which it is conducting
business, and is filing all necessary Tax Returns
in all states in which it is conducting business
except in either case where a failure to be so
authorized or to so file would not have a
Material Adverse Effect.

4.14.13 The Vendor will indemnify the Purchaser against
and hold it harmless from any liability of the
Corporation or any Subsidiary of the Corporation
for Taxes of any person other than the
Corporation or any Subsidiary of the Corporation
under Treasury Regulation 1.1502-6 (or any
similar provision of state, local or foreign
law), for any period ending prior to the Closing
Date and for any costs, expenses, attorneys' fees
or similar costs incurred by the Purchaser or the
Corporation as a result of the assertion of such
liability by any Taxing Authority.

4.15 INTELLECTUAL PROPERTY

4.15.1 SCHEDULE 4.15 sets out a true and complete list
of all registered patents and copyrights and all
registered or unregistered trade-marks, service
marks, trade-names and industrial designs
(including, in each case any registrations or
applications therefor) owned or actively used by
the Corporation, with the exception of the
trade-▇▇▇▇ "Domcrete". With respect to any
patent, copyright, trademark, service ▇▇▇▇, trade
name or industrial design listed on SCHEDULE 4.15
which is not owned in its entirety by the
Corporation and included within the Intellectual
Property to be transferred pursuant hereto, the
Vendor has (i) identified on SCHEDULE 4.15 the
owner of the subject patent, copyright, trademark
service ▇▇▇▇, trade name or industrial design and
(ii) delivered to the Purchaser true and correct
copies of the license or other agreement
authorizing the Corporation's use thereof.
Except as specifically disclosed on SCHEDULE
4.15, no rights under any such licences or
agreements will be terminated, limited or
otherwise adversely affected as a result of the
transactions contemplated hereunder.
39

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4.15.2 Except as set out in SCHEDULE 4.15, there is not
any claim existing or, to the best of the
Vendor's knowledge, threatened of adverse
ownership, invalidity or other opposition to or
conflict with any of the patents, copyrights,
trade-marks, service marks, trade-names and
industrial designs (including, in each case, any
registrations or applications therefor) listed on
SCHEDULE 4.15 pursuant to Section 4.15.1 hereof,
nor does the conduct of the Business by the
Corporation breach any registered (or, to the
knowledge of the Vendor, unregistered) patent,
copyright, trade-▇▇▇▇, service ▇▇▇▇, trade-name,
industrial design or any other intellectual
property right owned by any other Person.

4.16 ENVIRONMENTAL MATTERS

Except as set out in SCHEDULE 4.16:

4.16.1 The Environmental Permits are all the permits,
licenses, certificates and authorizations of, and
registrations with, any of the Environmental
Authorities pursuant to the Environmental Laws
necessary to conduct the Business substantially
as presently conducted. The Environmental
Permits are in full force and effect and the
Corporation is in substantial compliance in all
respects thereunder. The Corporation is in
compliance with the Environmental Laws applicable
to the conduct of the Business, except to the
extent such noncompliance would not constitute a
Material Adverse Effect.

4.16.2 There is no claim, suit, action or other
proceeding, including appeals and applications
for review, outstanding or pending or, to the
best of the Vendor's and the Corporation's
knowledge, threatened against the Corporation
pursuant to any of the Environmental Laws.

To the best of the Vendor's and the Corporation's
knowledge, no facts or circumstances exist which
are reasonably likely to give rise to such a
claim, suit, action or other proceeding which
would have a Material Adverse Effect.

4.16.3 The Corporation has not caused the Release of any
Hazardous Substances on or from the Real
Properties or the Leased Real Properties, except
in such a manner or quantity as would not
constitute a violation of any of the
Environmental Laws or Environmental Permits or
would not reasonably be expected to result in a
40

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Material Adverse Effect.

4.16.4 The Corporation has maintained in respect of the
Business records substantially in the manner and
for the time periods required by the
Environmental Laws and Environmental Permits.

4.16.5 The Vendor and the Corporation have no knowledge
of any fact or circumstance that is likely to
prohibit or prevent the issuance to the Purchaser
of any of the permits, licenses, certificates and
authorizations of, and registrations with, any of
the Environmental Authorities pursuant to any of
the Environmental Laws, which are necessary for
the Purchaser to conduct the Business
substantially as presently conducted.

4.16.6 The Corporation has not received any
Environmental Notice pursuant to any of the
Environmental Laws and, to the best of the
Corporation's and the Vendor's knowledge, there
are no facts or circumstances that would result
in the issuance of an Environmental Notice (i)
which would require that capital expenditures in
excess of $1,000,000 in the aggregate be made in
respect of the Business as a condition of
compliance with all of the Environmental Laws or
Environmental Permits, or (ii) to the effect that
any of the Environmental Permits is about to be
made subject to limitations or conditions or
revoked.

4.16.7 The Vendor has delivered to the Purchaser true,
correct and complete copies of all material
environmental audit reports which have been
prepared in respect of the Business in the five
(5) year period ending on the date of this
Agreement by or for any of the Selling Parties
and which are in the possession of any of the
Selling Parties.

4.17 EMPLOYEES, PENSION AND OTHER BENEFIT PLANS

4.17.1 SCHEDULE 4.17.1 lists (i) all the Employees
together with their respective positions, years
of employment and rates of remuneration, as at
the date of this Agreement and (ii) all the
Employees on Medical Leave who are receiving
benefits under the Law or the Employee Plans,
together with their respective entitlement under
the Employee Plans, as at the date of this
Agreement. All Employees who are Employees on
Medical Leave (and Employees on Short-Term
Medical Leave) are included (without limitation)

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and specifically so designated on SCHEDULE 4.17.1.

4.17.2 Except as set out in SCHEDULE 4.17.2, the
Corporation is not a party to or bound by any
collective bargaining agreement or any other
agreement with, or commitment to, any union of
employees or any contract of employment, written
or oral, with any of its Employees.

4.17.3 The only Employee Plans are those set out in
SCHEDULE 4.17.3 and except as set out in SCHEDULE
4.17.3 the Corporation is not a party to and it
does not operate any other "employee welfare
benefit plan" or "employee pension benefit plan"
as respectively defined in Sections 3(1) and 3(2)
of ERISA or any other employee benefit or pension
plan, bonus, deferred compensation, retirement,
savings, excess benefit, stock option or
purchase, retention, termination, severance or
incentive plan, contract, program, fund,
arrangement or practice or any other trust,
escrow or similar agreement related thereto with
respect to any of its Employees, Retired
Employees, directors, officers or shareholders or
which are established or maintained by any
Related Person or with respect to which the
Corporation has made or is required to make
payments, transfers or contributions. The
Employee Plans are duly registered where required
by, and are in good standing under, the Laws, and
each of the pension plans thereunder is in the
funding status as set out in SCHEDULE 4.17.3.

4.17.4 The Vendor has delivered to the Purchaser true,
complete and up-to-date copies of all documents
embodying or summarizing the Employee Plans
including, without limitation, all amendments
thereto, all funding agreements thereunder, all
summaries of such Employee Plans provided by the
Corporation to any of its Employees, Retired
Employees, directors, officers or shareholders
and all material communications received from or
sent to the regulatory authorities as well as the
most recent actuarial valuation filed with the
regulatory authorities for each of the Employee
Plans for which valuations are required.

4.17.5 No promise or commitment has been made by the
Corporation (i) to amend any of the Employee
Plans or to provide increased benefits thereunder
to any of its Employees, Retired Employees,
directors, officers or shareholders except
pursuant

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to the requirements, if any, of the Employee
Plans or collective bargaining agreements, nor
(ii) to establish any new "employee welfare
benefit plan" or "employee pension benefit plan"
as respectively defined in Sections 3(1) and 3(2)
of ERISA or any new employee benefit or pension
plan or bonus, deferred compensation, retirement,
savings, excess benefit, stock option or purchase,
retention, termination, severance or incentive
plan, contract, program, fund, arrangement or
practice or any new trust, escrow or similar
agreement related thereto with respect to any of
its Employees, Retired Employees, directors,
officers or shareholders. Except as set out in
SCHEDULE 4.17.5, no actual amendment to any plan,
policy or arrangement referenced in this Section
4.17.5 has been adopted by the Vendor since the
Financial Statements Date.

4.17.6 Each Employee Plan has been maintained, operated
and administered in material compliance with its
terms and all related documents or agreements and
in compliance with the Laws.

4.17.7 All required employer contributions, premium
payments and source-deducted employee
contributions under the Employee Plans have been
made and remitted to the funding agents
thereunder including, without limitation, all
current service costs and special payments within
the time prescribed by any such Employee Plan and
the Laws.

4.17.8 All insurance premiums required with respect to
any Employee Plan, including any premiums payable
to U.S. Pension Benefit Guarantee Corporation,
have been paid, made, accrued or booked within
the time prescribed by any such Employee Plan and
the Laws.

4.17.9 All benefits, expenses and other amounts due and
payable to or under any Employee Plan, and all
contributions, transfers or payments required to
be made to any Employee Plan, have been paid,
made, accrued or booked within the time
prescribed by any such Employee Plan and the
Laws.

4.17.10 Except as set out in SCHEDULE 4.17.10, neither
the Vendor nor the Corporation has taken any
"contribution holiday" with respect to, or has
withdrawn any amount from, the Employee Plans.
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4.17.11 There are no material claims pending or, to the
best of the Vendor's or the Corporation's
knowledge, threatened by or on behalf of any of
the Employee Plans or by any Employee other than
routine claims for benefits.

4.17.12 The only Employee Plans that are subject to Title
IV of ERISA are the U.S. Plan and Pension Plan
for Unionized Employees of Domtar Gypsum Inc.
Except as set out in SCHEDULE 4.17.12, neither
the Corporation nor any Related Person would be
liable for any material amount pursuant to
Section 4062, 4063 or 4064 of ERISA if either of
such plans were to terminate as at the Adjustment
Date.

4.17.13 Neither the Corporation nor any Related Person
has incurred any material liability under or
pursuant to Title I or IV of ERISA or the
penalty, excise tax or joint and several
liability provisions of the Code relating to
employee benefit plans and, to the best of the
Vendor's or the Corporation's knowledge, no event
or condition has occurred or exists which could
result in any material liability to the
Corporation, such Related Person or the Purchaser
under or pursuant to Title I or IV of ERISA or
such penalty, excise tax or joint and several
liability provisions of the Code.

4.17.14 Each of the Employee Plans that is subject to the
minimum funding standards of ERISA or the Code
satisfies such standards under Sections 412 and
302 of the Code and ERISA, respectively, and no
Employee Plan has incurred an "accumulated
funding deficiency" within the meaning of such
sections, whether or not waived.

4.17.15 Each of the Employee Plans intended to be
qualified under Section 401(a) of the Code, and
the trust, if any, forming a part thereof, has
received a favorable determination letter from
the U.S. Internal Revenue Service as to its
qualification under the Code and to the effect
that each such trust is exempt from taxation
under Section 501(a) of the Code, and nothing has
occurred since the date of such determination
letter that adversely affects such qualification
or tax-exempt status.

4.17.16 Except as set out in SCHEDULE 4.17.16, neither
the Vendor nor the Corporation contributes to,
nor do they have any obligation to contribute to,
a multiemployer plan as defined in Section
4001(a)(3) of ERISA with regard to the Employees
44

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or Retired Employees. The Vendor shall be
responsible for and shall indemnify the Purchaser
against all contributions assessed relating to
any such multiemployer plan for the period prior
to the Closing Date and any assessment of
withdrawal liability from any such multiemployer
plan based on events occurring during the period
prior to and including the Closing Date
(including the consummation of the sale of the
Purchased Shares). The Purchaser shall be
responsible for and shall indemnify the Vendor
against all contributions assessed relating to
any such multiemployer plan for the period
subsequent to the Closing Date and any assessment
of withdrawal liability from any such
multiemployer plan based on events occurring at
any time subsequent to the Closing Date. In the
event that an assessment of withdrawal liability
by a multiemployer plan is based on events
occurring both before and subsequent to the
Closing Date, such assessment shall be divided
between the Parties prorata based on the
contribution base units that are lost before and
after the Closing Date. The indemnities in this
Section do not apply to payments made or accrued
by the Corporation.

4.17.17 Except as set out in SCHEDULE 4.17.17, (i) there
is no strike, lockout, or other labour trouble
(including, but not limited to, any work slowdown
or work stoppage) pending or, to the best of the
Vendor's or the Corporation's knowledge,
threatened which, individually or in the
aggregate, could reasonably be expected to have a
Material Adverse Effect; (ii) there is no union
election pending or, to the best of the Vendor's
knowledge, threatened nor, to the best of the
Vendor's knowledge, is any union conducting any
organizing campaign with respect to any of the
Employees; and (iii) there is no outstanding
grievance under any collective bargaining
agreement or unfair labor practice charge pending
or, to the best of the Vendor's knowledge,
threatened which, individually or in the
aggregate, could reasonably be expected to have a
Material Adverse Effect.

4.18 LITIGATION; COMPLIANCE WITH LAWS

Except as set out in SCHEDULE 4.18:

4.18.1 there is not any suit, action, claim or other
proceeding or investigation pending or, to the
best of the Vendor's and the Corporation's
knowledge, threatened against or affecting the
45

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Corporation or to which the Corporation is a
party, in or before or by any judicial,
quasi-judicial, administrative or
quasi-administrative court, tribunal, arbitrator,
agency or other governmental body. Except as
described in SCHEDULE 4.18, none of such matters,
if adversely determined, is likely have a
Material Adverse Effect.

4.18.2 there is not any order, decree, injunction or
judgment of any judicial, quasi-judicial,
administrative or quasi-administrative court,
tribunal, arbitrator, agency or other
governmental body against or affecting the
Corporation.

4.19 BANK ACCOUNTS

SCHEDULE 4.19 sets out the name of

4.19.1 each bank, trust company or other Person with
which the Corporation has an account or
safekeeping arrangement or safety deposit box and
the names of each Person authorized to operate or
who has access to such account, arrangement or
box on behalf thereof; and

4.19.2 each Person holding a general or special power of
attorney from the Corporation with a summary of
the terms thereof.

4.20 FINDER'S FEE

No Person has, or as a result of any of the transactions
contemplated hereby shall have, as a result of any commitment
of the Vendor towards such Person any right, interest or claim
against or upon the Purchaser or the Corporation or any of
their respective properties for any commission, fee or other
compensation as broker or finder or for services in any
similar capacity.

4.21 FULL DISCLOSURE

The Vendor has made or caused to be made due enquiry with
respect to each of the representations and warranties
contained in this Agreement and in any other agreement
delivered by the Vendor to the Purchaser pursuant hereto and
for the purposes hereof and none of the same intentionally
contains any untrue statement of a material fact or
intentionally omits to state a material fact necessary to make
any of the representations or warranties contained herein not
misleading.
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4.22 CONSENTS AND APPROVALS; PERMITS

Except as set forth in SCHEDULE 4.22 and except for filings
required under the HSR Act, no consent, exemption, approval
of, or filing with, any governmental body, agency, authority
or court (whether foreign or domestic) or any other Person is
required for the execution and delivery of this Agreement, the
sale of the Purchased Shares pursuant hereto, or the
consummation of the other transactions contemplated hereby.

4.23 GYPSUM ROCK RESERVES

SCHEDULE 4.23 sets forth a true, complete and correct report,
as of the date thereof, of all reserves of gypsum rock (i)
owned by the Corporation or (ii) owned by Domtar and to be
transferred to the Purchaser pursuant to the Asset Purchase
Agreement.

ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser represents and warrants to the Vendor as follows:

5.1 INCORPORATION AND AUTHORIZATION

The Purchaser is a corporation duly incorporated, organized,
validly existing and in good standing under the laws of
Georgia and has full capacity, power and authority, corporate
and otherwise, to execute, deliver and perform this Agreement
and consummate the transactions contemplated hereby, and has
been duly authorized to execute and become a party to this
Agreement and to consummate the transactions provided herein
or pursuant hereto.

5.2 Enforceability of the Agreement

5.2.1 This Agreement constitutes a legal, valid and
binding obligation of the Purchaser enforceable
against it in accordance with its terms, except
that the enforcement hereof may be limited by
bankruptcy, insolvency, arrangement,
reorganization, moratorium or other similar laws
relating to creditors' rights generally and
general principles of equity (regardless of
whether enforceability is considered in a
proceeding in equity or at law).

5.2.2 Neither the entering into of this Agreement nor
the consummation by the Purchaser of any of the
transactions contemplated hereby shall, with
47

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or without the giving of notice or the
lapse of time, or both, result in the violation
of any of the provisions of the articles of
incorporation, articles of amendment,
certificates in respect thereto, or by-laws of
the Purchaser or of any written shareholders
agreement or shareholders, stock or voting trust
to which the Purchaser is a party or any Law to
which the Purchaser is subject.

5.2.3 There are no judicial, quasi-judicial,
administrative, quasi-administrative or
arbitration proceedings pending against the
Purchaser which, if adversely determined, may
interfere with the purchase of or payment for the
Purchased Shares or the consummation of any of
the transactions herein provided.

5.3 INVESTMENT REPRESENTATION

The Purchased Shares are purchased by the Purchaser for its
own account and not with a view to, or for sale in connection
with, any distribution thereof that would require registration
under the Securities Act, or any other Laws in respect of
securities, nor with any intention of reselling or granting
any participation in all or any part of the Purchased Shares
to any Person in a transaction that would violate the
Securities Act or any other Laws (including, without
limitation, those in respect of securities) or this Agreement.

5.4 FINDER'S FEE

No Person has, or as a result of any of the transactions
contemplated hereby shall have, as a result of any commitment
of the Purchaser towards such Person, any right, interest or
claim against or upon the Vendor or any of its respective
properties for any commission, fee or other compensation as
broker or finder or for services in any similar capacity.

ARTICLE 6. NON-COMPETITION

6.1 NON-COMPETITION

From and after the Closing Date, neither Domtar nor the Vendor
shall, for a period of five (5) years, on its own behalf or on
behalf of any other Person, directly or indirectly, in any
capacity whatsoever including, without limitation, as
employer, principal, mandator, agent, mandatary, joint
venturer, partner, shareholder or other equity holder,
independent contractor, manufacturer, seller, licensor,
licensee, franchisor, franchisee, distributor, consultant,
supplier or trustee or by or through any Person, conduct
48

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or be engaged in or have financial interests in any
gypsum wallboard business in the United States of America or in
Canada. The Parties intend that the covenant contained in the
preceding sentence of this Section 6.1 shall be construed as a
series of separate covenants, one for each county and Province
of the United States of America or Canada, as the case may be,
and except for geographic coverage, each such separate covenant
shall be deemed identical in terms to the covenant contained in
the preceding sentence. In the event that in any judicial
proceeding, a court should refuse to enforce any of the
separate covenants deemed included in this Section 6.1, it is
the intent of the Parties that the breadth of such covenant be
reduced to the maximum legally allowable parameters rather than
such covenant being deemed totally unenforceable or invalid.
If such a reduction is not feasible, it is the intent of
the Parties that the unenforceable covenant be deemed
eliminated from these provisions for the purpose of those
proceedings only to the extent necessary to permit the
remaining separate covenants to be enforced.

6.2 PERMITTED ACTIVITIES

Notwithstanding the provisions of Section 6.1 hereof, the
Vendor shall not be prohibited from owning an interest, as
passive investor, in any gypsum wallboard business provided
that the interest owned, whether directly or indirectly, by
the Vendor in such business, if any, shall not exceed 10% of
all the outstanding equity securities of any Person whose
equity securities are listed on a recognized securities
exchange and with whom the Vendor does not have any connection
whatsoever except for such ownership interest.

6.3 LIMITED EXCEPTION FOR INCIDENTAL ACQUISITIONS

Notwithstanding the provisions of Section 6.1 hereof, neither
the Vendor nor Domtar shall be prohibited from acquiring
assets (or a controlling stock interest) of a Person where the
assets of such Person include gypsum wallboard assets (the
"ACQUIRED GYPSUM ASSETS"), provided that if the gross revenues
generated by Acquired Gypsum Assets during the last full
fiscal year period ("GROSS REVENUES") exceed $35,000,000, the
Vendor or Domtar, as the case may be (the "ACQUIROR"), shall
offer to sell the Acquired Gypsum Assets to the Purchaser.
Such offer to the Purchaser shall be made by the Acquiror
promptly upon the execution by the Acquiror of a binding
agreement to purchase such assets (but in no event less than
30 days prior to closing the acquisition contemplated by such
agreement). If the Purchaser elects to purchase the Acquired
Gypsum Assets, the Acquiror and the Purchaser shall negotiate
in good faith the price to be paid by the Purchaser to the
49

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Acquiror for the Acquired Gypsum Assets. If the
Acquiror and the Purchaser cannot agree upon the terms and
conditions of such sale, then the Acquiror shall use its
commercially reasonable efforts to sell the Acquired Gypsum
Assets to a third party within two years after negotiations
with the Purchaser cease, but no such sale shall be on terms
and conditions in the aggregate more favorable to the third
party than those offered to the Purchaser. If the Gross
Revenues are less than or equal to $35,000,000, then the
Acquiror need not offer the Acquired Gypsum Assets to the
Purchaser, but if the Acquiror determines to sell the Acquired
Gypsum Assets prior to the fifth anniversary of the Closing,
the Acquiror shall first offer the Acquired Gypsum Assets to
the Purchaser following the procedures set out in the
preceding sentences of this Section 6.3.

ARTICLE 7. COVENANTS OF THE PARTIES

The Parties, as specified in this Article 7, covenant and agree as
follows:

7.1 MAINTENANCE AND PRESERVATION OF BUSINESS

From and after the date hereof to the Closing Date or the date
of termination of the Parties' obligation to close under this
Agreement, the Vendor and the Corporation covenant to the
Purchaser that, except as may be specifically approved in
writing by the Purchaser, the Business will be conducted, and
the Corporation and KMHC will operate their respective
businesses, only in the ordinary course and substantially in
the same manner as presently conducted, will not make or
institute any new methods, principles or practices of
manufacture, purchase, sale, lease, management, accounting or
operation except in the ordinary course of business, and will
use their commercially reasonable efforts with due diligence
to (i) maintain their business organizations, and (ii)
maintain their relationships with and the goodwill of their
suppliers, distributors, licensors, customers and others
having business relations with them, so as to maintain the
goodwill and ongoing business of the Corporation. By way of
illustration and not by way of limitation of the foregoing:

(A) The Corporation shall manage its working capital,
including receivables, other current assets,
trade payables and other current liabilities, in
a fashion consistent with past practice,
including by selling inventory and other property
in an orderly and prudent manner and paying
outstanding obligations, trade accounts and other
indebtedness as they come due.
50

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(B) The Corporation shall maintain its assets in good
condition and repair.

(I) dispose of any assets, other than
(x) sales of inventory in the
ordinary course of business and (y)
Excluded Assets;

(II) subject any of its assets to any
Lien, except Permitted Encumbrances;

(III) make any payments to, or for the
benefit of, any present or former
employee, director, officer or
shareholder otherwise than at the
regular rates payable to them, by
way of salary, pension, bonus or
other remuneration consistent with
past practices for the Business;

(IV) amend its articles of incorporation,
articles of amendment, or
certificates in connection therewith
or by-laws;

(V) incur, assume or guarantee any
obligation or liability for borrowed
money, or exchange, refund or renew
any outstanding indebtedness in such
a manner as to reduce the principal
amount of such indebtedness and
increase the rate or balance
outstanding;

(VI) cancel any debts;

(VII) solicit or entertain any offer for,
or sell or agree to sell, or
participate in any business
combination with respect to, any of
the Purchased Shares;

(VIII) do any act or fail to do any act,
where such act of failure to act
will cause a breach of any
representation, warranty or
obligation contained in this
Agreement or any obligation
contained in any Material Contract;

(IX) commit to any capital expenditure
project or make any investment, in
either case in excess of
51

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$1,000,000 not disclosed to the
Purchaser prior to the date of this
Agreement;

(X) organize any Subsidiary, acquire any
capital stock or other equity
securities of any corporation, or
acquire any equity or other
ownership interest in any business;
or

(XI) enter into any transaction,
contract, agreement, indenture,
instrument or commitment other than
in the ordinary course of and in a
manner consistent with past
practices for the Business.

Notwithstanding the foregoing or any other provision of this
Agreement, each of the Corporation and KMHC may give to any of
the present and former directors and/or officers of itself or
any of its predecessor corporations a full release from all
its respective claims against them, whether past, present or
future, actual, contingent or otherwise.

7.2 NOTICE OF CESSATION IN ORDINARY COURSE

The Vendor shall promptly notify the Purchaser of the
occurrence or existence of any event or circumstance on or
prior to the Closing Date by reason of which the Business has
ceased to be conducted as provided for in Section 7.1 or by
reason of which the representations and warranties made by the
Vendor, Domtar or the Corporation herein have ceased to be
true and correct in any material respect.

7.3 ACCESS FOR THE PURCHASER

The Vendor shall cause the Corporation to, and the Corporation
shall, permit the Purchaser by its duly appointed employees,
officers and consultants at any time and from time to time
prior to the Closing Date, during reasonable business hours
and without unreasonably affecting the conduct of the Business
in the ordinary course, to make such investigation of the
Business, Intellectual Properties, Properties and Leased Real
Properties and of its financial and legal condition as the
Purchaser may deem necessary or advisable in order to become
familiar with the Business, Intellectual Properties,
Properties and Leased Real Properties including, without
limitation, full access to all premises at which the Business
is conducted and produce or cause to be produced for
inspection by the Purchaser, its employees, officers and
consultants, all title documents, title deeds, share
certificate books, share registers, articles of incorporation,
articles of amendment and certificates in connection
therewith, by-laws, books and records of
52

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the Corporation, agreements, contracts, leases, licenses,
insurance policies, pension and benefit plans, documents
relating to pending lawsuits and all other information which
in the reasonable opinion of the Purchaser or its said
employees, officers or consultants is required to make an
examination of the Corporation, Business, Intellectual
Properties, Properties and Leased Real Properties and to
verify the accuracy of Vendor's and the Corporation's
representations and warranties contained herein.

7.4 MAINTAIN INSURANCE

7.4.1 The Vendor, Domtar and the Corporation shall take
all actions necessary to continue to maintain in
full force and effect until the Closing Date all
policies of insurance with respect to the
Corporation and the Business in effect on the
Financial Statements Date or duly renew the same
upon substantially the same terms and conditions.
The Vendor, Domtar and the Corporation will
cooperate fully with the Purchaser and take such
actions (including, without limitation, placing
insurance carriers on notice of this Agreement
and/or providing or seeking necessary consents)
as the Purchaser may reasonably request to ensure
that from and after the Effective Time, the
Purchaser will be entitled to make claims (or
receive the proceeds of claims) under all
insurance policies (whether in the name of the
Corporation, Domtar or any other Person) which
insure or have insured the Corporation, the
Business or the Properties and which are in
effect or were in effect at any time prior to the
Effective Time.

In furtherance of the foregoing, the Vendor,
Domtar and the Corporation

(a) will take all reasonable measures to
identify and make copies available to the
Purchaser of all historical policies of
insurance with respect to the Corporation
and Business and, at the Purchaser's
expense, all predecessor corporations and
businesses which were owned by the
Corporation and Business;

(b) agree to make all reasonable and
necessary attempts to purchase, at the
Purchaser's expense, extended reporting
coverages or the equivalent thereof for
five (5) years from the Closing Date for
all current claims made or modified
claims made coverages of the
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Corporation and Business including
without limitation all casualty,
liability and directors and officers
coverages and shall give periodic status
reports to the Purchaser concerning such
attempts; and

(c) agree not to release any insurance
policies which provide or have provided
coverage applicable to the Corporation or
the Business without the prior written
consent of the Purchaser.

7.4.2 The Vendor and the Purchaser acknowledge that the
policies of insurance applicable to the
Corporation are not necessarily exclusive to the
Corporation and that certain coverages and limits
may be impaired by claims arising from other
companies currently or previously owned by
Domtar; however, the Vendor will notify the
Purchaser of all such claims and impairment as
soon as reasonably practicable. The Vendor and
Domtar make no representations or warranties in
respect of any policy of insurance and shall not
be responsible for any allocations,
determinations as to coverage or lack thereof or
any decision or interpretation made by insurers
or their agents with respect thereto. The
Purchaser and the Corporation shall be
responsible for any retrospective premiums and
associated third party administrator and insurer
management and administration costs allocable to
the claims experience of the Corporation. The
Purchaser recognizes and accepts that the Vendor
has in the past and may in the future compromise
rights and claims in good faith which may have an
effect on the consumption of aggregate insurance
limits and the allocation of retrospective
premiums.

7.4.3 As soon as practicable after the Closing Date,
but no later than thirty (30) Business Days after
the Closing Date, the Vendor and the Purchaser
shall enter into an agreement setting forth the
procedures for implementation and administration
of the entitlements and responsibilities provided
for by this Section 7.4.

7.5 CORPORATE PROCEEDINGS FOR TRANSFER

The Vendor shall cause the Corporation to take all necessary
steps and proceedings as may be reasonably considered
appropriate by the Purchaser's Counsel in order that the
Purchased Shares be duly and regularly transferred to the
Purchaser as at the Effective Time.
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7.6 ADJUSTMENT BALANCE SHEET

The Vendor shall deliver to the Purchaser the Adjustment
Balance Sheet as provided for in Section 3.2.4.

7.7 TAX ASSISTANCE

After the Closing Date, the Vendor shall furnish or cause to
be furnished to the Purchaser, upon request, such information
with respect to the Corporation as is reasonably necessary for
the Purchaser for the preparation and filing of any Tax
Return, for the preparation for any tax audit or for the
prosecution or defence of any proceeding or proposed
adjustment with respect to taxes of the Corporation or the
Purchaser.

7.8 HAZARDOUS WASTE

Prior to the Closing, the Vendor and the Corporation shall
properly remove and dispose of all Hazardous Waste which may
be located at the Corporation's facility at Long Beach,
California.

7.9 OPERATION OF BUSINESS AFTER SECOND FIXTURE DATE

If the Closing does not occur on or before the Second Fixture
Date, the adjustment to the Purchase Price shall be determined
on the Second Fixture Date pursuant to Section 3.2 hereof. In
such event, from and after the Second Fixture Date,

(i) the Vendor and the Corporation covenant to the
Purchaser that, except as otherwise specifically
approved in writing by the Purchaser, the business
will be conducted, and the Corporation and ▇▇▇▇ will
operate their respective businesses, as provided in
Sections 7.1, 7.2, 7.3 and 7.4;

(ii) the Vendor and the Corporation will hold in trust,
for the account of the Purchaser, all of the earnings
and profits of the Business, and shall deposit such
earnings and profits in one or more interest-bearing
bank accounts as the Purchaser may direct;

(iii) the Corporation may expend funds included in such
earnings and profits to permit the Corporation and
▇▇▇▇ to carry out their obligations under Sections
7.1(a) and (b); and

(iv) in the event that the Corporation determines that is
necessary to make any capital expenditures with
respect to the Business, (whether above or below
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the threshold amount specified in Section 7.1),
it shall promptly give notice of such expenditure to
the Purchaser, and if the amount of such expenditure
exceeds said threshold amount, shall request the
Purchaser's approval of such capital expenditure.

In the event the Closing Date occurs after the Second Fixture
Date, then the provisions of Section 10.1.1.3, and all of the
provisions of Sections 10.1.2 - 10.1.10 and Sections 10.2.1 -
10.2.6 shall be satisfied as provided therein, and the Closing
shall occur as provided in Article 12 hereof.

ARTICLE 8. ADDITIONAL COVENANTS OF THE PARTIES

The Parties, as specified in this Article 8, further covenant and
agree as follows:

8.1 TAX RETURNS ASSISTANCE

After the Closing Date the Purchaser shall furnish or cause to
be furnished to the Vendor, upon request, such information
with respect to the Corporation as is reasonably necessary for
the Vendor for the preparation and filing of any Tax Return,
for the preparation for any tax audit or for the prosecution
or defence of any proceeding or proposed adjustment with
respect to taxes of the Vendor. Without limiting the
generality of the foregoing provisions of this Section 8.1,
the Purchaser shall furnish or cause to be furnished to the
Vendor, upon request, tax packages with respect to the
Corporation on schedules to be provided by the Vendor for the
periods from January 1, 1995 through December 31, 1995 and
from January 1, 1996 through the Closing Date. Each such tax
package shall be completed and delivered by the Purchaser to
the Vendor within sixty (60) days after receipt thereof by the
Purchaser. The Purchaser shall cooperate with the Selling
Parties with regard to the elections to be made by the Selling
Parties described on SCHEDULE 4.14.6.

The Purchaser's obligations under this Section 8.1 are
conditional on the Purchaser's prior receipt of copies of all
Tax Returns for periods ending prior to the Closing Date.

8.2 USE OF NAME

The Purchaser shall not use nor allow any of its Affiliates or
Subsidiaries including, without limitation, the Corporation to
use, directly or indirectly, the name "Domtar" or the prefix
"Dom" as a trade-▇▇▇▇, service ▇▇▇▇ or trade-name in
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connection with any product or service offered by the
Business from and after the Closing Date except as permitted
by the Trademarks Agreement between Domtar and the Purchaser
executed pursuant to the Asset Purchase Agreement.

EMPLOYEES

8.3.1 VENDOR PLANS

The Parties acknowledge that some of the Employee
Plans covering Employees or Retired Employees of
the Corporation prior to the Effective Time are
maintained by the Vendor for the benefit of its
employees as well as those of the Corporation
("VENDOR PLANS") (SCHEDULE 4.17.3 shall designate
which Employee Plans are the Vendor Plans). In
general, with respect to benefits provided by
such plans (except as may be otherwise
specifically provided in this Section 8.3), the
Vendor agrees to retain all benefits obligations
under the Vendor Plans with respect to the
Employees and Retired Employees accruing prior to
the Effective Time. In particular, but without
limitation, the Vendor Plans which are employee
welfare plans shall be responsible for the
following benefits payments, subject to the terms
and conditions of particular plan: (i) claims
for health care benefits with respect to expenses
incurred by, services performed for or supplies
or pharmaceuticals provided to Employees and
Retired Employees and their covered dependants
prior to the Effective Time; and (ii) claims for
life insurance, accidental death and
dismemberment and short- and long-term disability
benefits with respect to death, disability or
injury arising or occurring prior to Effective
Time. In all cases, the amount and types of
benefits payable shall be determined in
accordance with the terms of the affected Vendor
Plan, and benefits payable for Employees shall be
for the account of the Corporation.

8.3.2 EMPLOYEES ON MEDICAL LEAVE

The Vendor will indemnify and hold the
Corporation and the Purchaser harmless against
the costs of all benefits payable under Employee
Plans (i) to Employees on Long-Term Medical Leave
as at the Effective Time and (ii) Employees on
Short-Term Medical Leave as at the Effective Date
who thereafter go directly to the status of
Employees on Long-Term Medical Leave (in each
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case other than benefits payable with Employee
Plan assets specifically transferred to the
Purchaser for this purpose).

8.3.3 KEY EMPLOYEE RETENTION PROGRAM

All bonuses, if any, payable pursuant to the
Vendor's "Key Employee Retention Program" set out
in SCHEDULE 8.3.3 (including any special bonus
noted on that Schedule), which shall not be
accrued in the Adjustment Balance Sheet except to
the extent that such bonuses required to be paid
under such Program in the aggregate exceed the
Total Cost set out on SCHEDULE 8.3.3, shall be
paid by the Purchaser to said Employees within a
period of thirty (30) days from and after the
date of their entitlement thereto pursuant to
said Program.

8.3.4 EMPLOYEE SHARE PURCHASE AND EXECUTIVE STOCK
OPTION PLANS

The Vendor shall indemnify and hold the
Corporation and the Purchaser harmless against
any and all claims, obligations and liabilities
of Employees and Retired Employees under the
Employee Share Purchase and Executive Stock
Option Plans covering Employees and Retired
Employees prior to the Effective Time and
acknowledges that the Purchaser is not
responsible for any compensation or benefits
under such plan.

8.3.5 U.S. 401(K) PLAN

Effective as of the Effective Time, the Purchaser
shall designate a defined contribution plan or
plans (the "PURCHASER'S SAVINGS PLANS") to cover
those Employees who participated in the U.S.
401(k) Plan as at the Effective Time (other than
Employees on Long-Term Medical Leave). The
Purchaser's Savings Plans shall meet the
requirements of Sections 401(a) and 401(k) of the
Code and shall recognize the service of the
affected Employees with the Corporation prior to
the Effective Time for all purposes under such
plans, to the extent credited under the terms of
the U.S. 401(k) Plan (as in effect on the
Effective Time). As soon as practicable after
the Effective Time and when all applicable
requirements under the Laws have been met (but no
later than 150 days thereafter), the Vendor shall
transfer, or cause to be transferred, to the
Purchaser's Savings Plans an amount (the
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"AGGREGATE ACCOUNT BALANCES"), calculated as of
the Effective Time and adjusted as provided below
in this Section 8.3.5, in cash (and the notes
representing loans to the affected Employees),
equal to the total of the individual account
balances (the "ACCOUNT BALANCES") of the affected
Employees under the U.S. 401(k) Plan, reduced by
the amount of any distributions to the affected
Employees made in accordance with the terms of
the U.S. 401(k) Plan between the Effective Time
and the date of the transfer of such Employees'
Account Balances. The Aggregate Account Balances
shall be increased or decreased by the amount of
any actual earnings or losses on each individual
account of the affected Employees included
therein from the Effective Time to the date of
the transfer of the Aggregate Account Balances,
which earnings or losses shall be credited or
debited to the appropriate accounts. The affected
Employees who have loans outstanding under the
U.S. 401(k) Plan at the Effective Time shall have
the right to periodically repay such loans in
accordance with their terms while such persons
are employed by the Purchaser. Effective upon
the transfer of the Aggregate Account Balances to
the Purchaser's Savings Plans, the Purchaser and
such Purchaser's Savings Plans shall assume all
liabilities of the U.S. 401(k) Plan with respect
to such Aggregate Account Balances. Prior to
such transfer, the Vendor shall be responsible
for the administration of the U.S. 401(k) Plan
accounts of participants whose accounts will be
transferred to the Purchaser's Savings Plans in
accordance with this Section 8.3.5 and shall
retain all fiduciary responsibility under ERISA
with respect to such funds. The Purchaser and
the Vendor agree to cooperate in developing
procedures to facilitate the administration of
loans during the period between the Effective
Time and the date of the actual transfers and in
implementing the transfer of the Aggregate
Account Balances as contemplated in this section.

8.4 PENSION PLANS

8.4.1 Subject to the completion of the transfers
contemplated in Section 8.4.2 hereof, the
Purchaser shall designate an employee pension
benefits plan ("Purchaser's Pension Plan") to
assume all responsibility for all pension
benefits accrued by the Employees (excluding,
however, any Employee on Long-Term Medical Leave
at the Effective Time) and Retired Employees
under the U.S. Plan.
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8.4.2 Subject to the qualification of the Purchaser's
Pension Plan and all necessary approvals and
further subject to the provisions of this Section
8.4, the Vendor shall transfer or cause to be
transferred to the Purchaser's Pension Plans from
the U.S. Plan, the amounts determined in
accordance with this Section 8.4 with respect to
all the benefits accrued by the Employees
(excluding, however, any Employee on Long-Term
Medical Leave) and Retired Employees under the
U.S. Plan up to the Effective Time, such transfer
to occur no later than ninety (90) Business Days
after the actuarial matters have been settled and
all regulatory requirements have been met.

8.4.3 The Parties confirm that upon the completion of
the transfer contemplated in Section 8.4.2
hereof, the Vendor and the U.S. Plan shall be
completely discharged of all of their respective
obligations with respect to the pension benefits
accrued by the Employees and Retired Employees
with respect to whom transfers are made under the
said plans up to the Effective Time. Prior to
the completion of such transfers, the Vendor and
U.S. Plan shall remain responsible for the
administration of, and liable for all fiduciary
and other obligations with respect to, the
benefits due to Employees and Retired Employees.

8.4.4 As soon as practicable after the Closing Date,
but no later than sixty (60) Business Days after
the Closing Date, the Vendor shall initiate the
procedure leading to the division of the U.S.
Plan in order to allow for the transfer, in
compliance with the requirements of the Code, of
the amounts contemplated in Section 8.4.2 hereof
(the "AMOUNTS").

8.4.5 The Vendor shall be responsible for the division
of the U.S. Plan in accordance with the Law,
including the preparation of the relevant
actuarial reports. These reports shall be
completed within a period of five (5) months from
and after the Effective Time and a copy of these
reports shall be delivered to the Purchaser for
review and approval by the Purchaser's actuary
prior to their filing with the relevant
regulatory authorities. The Purchaser's actuary
shall have sixty (60) Business Days from receipt
of such actuarial reports to complete its review
pursuant to the standards set forth in Section
8.4.8 and to report its findings to the Purchaser
and the Vendor. No filing with any regulatory
body of any kind (including for greater
certainty, but without limitation, actuarial
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reports) regarding the division of the Vendor
Pension Plans may be made without prior review
and approval of the entire filing by the
Purchaser.

8.4.6 Until the transfer of the Amounts is completed
pursuant to Section 8.4.2 hereof, the Vendor
shall administer all benefits accrued to the
Employees and Retired Employees, and shall make
all benefits payments, under the U.S. Plan and
the Amounts shall be adjusted accordingly as at
the date of the actual transfer.

8.4.7 The Vendor shall not make, without the prior
written consent of the Purchaser, any
modification to the U.S. Plan between the
Effective Time and the date of the actual
transfer of the Amounts (the "TRANSITIONAL
PERIOD"), if such modifications would change in
any way the terms and conditions affecting the
accrued benefits to be transferred to the
Purchaser's Employee Plans (including for greater
certainty, but without limitation the benefits of
the affected Employees and Retired Employees or
the contributions with respect to such benefits)
or would otherwise affect the calculation of the
Amounts. Notwithstanding anything in this
Section 8.4.7 to the contrary, if a change
proposed by the Vendor is mandated by the Law,
the Vendor need not obtain the Purchaser's prior
approval (but prior notice is still required)
unless the latest effective date of the change
permitted by Law (as applied to the Vendor
Pension Plan in question) falls more than sixty
(60) days after the date on which the requirement
of the Law was first published or the requirement
of the Law may be satisfied in more than one way.

8.4.8 For the purpose of Section 8.4.2 hereof, the
Amounts shall equal the projected benefit
obligation in respect of the accrued benefits as
of the Effective Time of the affected Employees
and Retired Employees. The Amounts shall be
determined as at the Effective Time using the
same funding actuarial methods and assumptions
used in the actuarial valuations of the U.S. Plan
as at January 1, 1995.

Initial calculations shall be performed by the
Vendor's actuary using the actuarial assumptions
and the methods referred to in this Section 8.4.8
within six (6) months after the Effective Time
and shall be submitted for review and approval to
the Purchaser's actuary. The Purchaser's
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actuary shall have sixty (60) days to review the
calculations and report back to the Parties. If
the Purchaser's actuary contests the Vendor's
actuary's calculations, a final determination
shall be made by an independent third party
actuary acceptable to the Parties, and each Party
shall be responsible for one half of the cost of
such final determination by such independent
third party actuary.

8.4.9 During the Transitional Period, the Amounts and
all adjustments thereof shall be adjusted as
follows:

(i) for the period ending on the date of
determination of the last known rate
of return of the pension fund of the
relevant Vendor's Pension Plan (the
"INITIAL PERIOD"), the rates of
return of the pension fund of said
relevant Vendor's Pension Plan; and

(ii) from the end of the Initial Period
to the date of the actual transfer
of the Amounts, at the investment
return rate used in the actuarial
assumptions referred to in Section
8.4.8.

The transfer of the Amounts and the adjustments
shall be made in kind and in cash as determined
in SCHEDULE 8.4.9. If any portion of the Amounts
is transferred in kind, the assets shall be
valued for purposes of the transfer at the market
value as of the close of business on the market
day immediately preceding the transfer.

8.4.10 The Vendor shall indemnify and hold the Purchaser
and the Purchaser's Employee Plans against any
claims, liabilities and expenses (including, for
greater certainty and without limitation,
attorney's fees) arising from the failure of the
U.S. Plan or the U.S. 401(k) Plan to be in
compliance with applicable Law (including,
without limitation, those pertaining to
qualification standards and favorable tax
treatment of qualified plans) at the time of the
assets transfers contemplated in Sections 8.3.5
and 8.4.

8.5 AFFIDAVITS FOR TITLE INSURANCE

The Corporation will cooperate with the Purchaser with respect
to obtaining real property title insurance in accordance with
Section 10.1.6, including providing owner's affidavits and
taking other actions as may reasonably be requested by the
Purchaser.
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8.6 NO INTERFERENCE

The Purchaser shall not take any action prior to the Closing
which would negatively impact the ability of the Vendor and
the Corporation to operate the Business or to comply with
their obligations under Section 7.1 or other provisions of
this Agreement. After the Closing, the Parties shall
cooperate and not interfere with one another in the efforts of
Domtar, the Vendor and Public Service Electric & Gas to
clean-up the Camden facility under the Administrative Consent
Order issued under the New Jersey Environmental Clean-up
Responsibility Act, as amended, and related statutes, with due
allowance for the operation of the facility.

8.7 GUARANTEES, LETTERS OF CREDIT, ETC.

(a) The Vendor and Domtar will use their reasonable
efforts to replace, renew or extend any surety bonds,
letters of credit or corporate guarantees previously
provided by the Vendor or Domtar which are required
to operate the Business in the ordinary and usual
course and to preserve in all material respects the
Business intact (the "SUPPORT INSTRUMENTS"). The
Vendor and Domtar shall continue any such
arrangements with respect to the Business until the
Purchaser obtains such surety and letter of credit
arrangements with existing or replacement surety
companies or financial institutions or provides
substitute guarantees (but in any event such
obligation shall not continue for a period exceeding
6 months from Closing).

(b) The Purchaser shall (i) reimburse the Vendor for the
cost of the Support Instruments continued after the
Closing Date, (ii) indemnify and hold harmless the
Vendor with respect to all Support Instruments in
existence at the Closing Date or thereafter with
respect to the Business, and (iii) promptly undertake
to have the Vendor and Domtar released from all such
Support Instruments, in each case to the extent they
relate to the Business.

ARTICLE 9. ANTITRUST AND COMPETITION REGULATORY APPROVALS

9.1 OBTAINING APPROVALS

The Purchaser and the Vendor shall prepare and file promptly,
with all reasonable diligence, all notifications, forms,
reports and other documents, and shall take and complete
promptly, with all reasonable diligence, all steps, measures
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and procedures, as may be required by any federal,
state, provincial or local governmental authority, as the case
may be (the "ANTITRUST AUTHORITY"), for the purpose of
obtaining all permits, consents, orders or approvals required
under the applicable federal, state, provincial or local
antitrust and competition laws (the "ANTITRUST LAWS")
including, without limitation, the HSR Act, for the purpose of
the consummation of the transaction contemplated hereby;
provided that the Vendor shall not be obligated to modify the
scope or terms of the transaction or to undertake any
obligations with respect to the Corporation or any Subsidiary
thereof or the assets of any thereof beyond those already
required by other sections of this Agreement. Without
limiting the generality of the foregoing provisions of this
Section, the Purchaser shall:

9.1.1 take promptly, with all reasonable diligence, any
and all of the following actions to the extent
reasonably required to eliminate any objections
on the part of any Antitrust Authority regarding
the legality under any Antitrust Law of the
Purchaser's acquisition of the Purchased Shares
in accordance with the terms of this Agreement,
namely, making proposals, executing and carrying
out agreements and submitting to judicial or
administrative orders, providing for the sale or
other disposition, or the holding separate
(though the establishment of a trust or
otherwise) of particular assets or categories of
assets or businesses of any of the Purchaser and
the Corporation or any Subsidiary thereof, as the
case may be, or, pending completing of any of the
foregoing actions, the holding separate (through
the establishment of a trust or otherwise) of the
voting securities of the Corporation or any
Subsidiary thereof, as the case may be;

9.1.2 use all reasonable efforts to prevent the entry
in a judicial or administrative proceeding
brought under any Antitrust Law by any Antitrust
Authority of any permanent or preliminary
injunction or other order that would make the
consummation of the acquisition of the Purchased
Shares in accordance with the terms of this
Agreement unlawful or would prevent or
unreasonably delay it, including, without
limitation, taking the steps contemplated in
Section 9.1.1;

9.1.3 take promptly, with all reasonable diligence, in
the event that such an injunction or order has
been issued in such a proceeding, any and all
steps, including, without limitation, appeal
thereof, the posting of a bond or the steps
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contemplated in Section 9.1.1, necessary to
vacate, modify or suspend such injunction or
order so as to permit the consummation of the
acquisition of the Purchased Shares in accordance
with the terms of this Agreement as nearly as
possible on the timetable contemplated by this
Agreement; and

9.1.4 take promptly, with all reasonable diligence, all
other actions and do all other things reasonably
necessary and proper to avoid or eliminate each
and every impediment under any Antitrust Law
which may be asserted by any Antitrust Authority,
to the consummation of the acquisition of the
Purchased Shares in accordance with the terms of
this Agreement.

9.2 DEALINGS WITH AUTHORITY

Nothing in this Agreement shall be deemed to limit the ability
of the Purchaser to contest, in any appropriate administrative
or judicial forum, any effort of any Antitrust Authority to
require the divestiture by the Purchaser of particular assets
or categories of assets or businesses of any of the Purchaser
and the Corporation or any Subsidiary thereof, or the holding
separate (through establishment of a trust or otherwise) of
the voting securities of the Corporation or any Subsidiary
thereof; provided, however, that the Purchaser shall take such
steps to hold separate the acquired businesses as may be
reasonably necessary (and after the entry of an injunction or
other order described in Section 9.1.2, as may be necessary)
to permit the completion of the transactions contemplated by
this Agreement.

The Purchaser shall not agree with the Antitrust Authority to
postpone the consummation of the transaction without the prior
written consent of the Vendor, which consent shall not be
unreasonably withheld.

ARTICLE 10. CONDITIONS OF CLOSING

10.1 PURCHASER'S CONDITIONS

The purchase and sale of the Purchased Shares is subject to
the following terms and conditions for the exclusive benefit
of the Purchaser to be fulfilled and performed on or prior to
the Closing Date:

10.1.1 REPRESENTATIONS AND WARRANTIES REMAIN CORRECT
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10.1.1.1 If the Closing Date occurs on or
before the First Fixture Date, each
of the representations and
warranties of the Selling Parties
contained in this Agreement shall be
true and correct in all material
respects on and as at the Closing
Date (except as such representations
and warranties may have been
affected by the occurrence of events
or circumstances occurring in
contemplation of the consummation of
the transactions provided for
hereunder) with the same force and
effect as though such
representations and warranties had
been made on and as at such date and
the Purchaser shall have received on
the Closing Date a certificate dated
the Closing Date, in form
satisfactory to the Purchaser's
Counsel, signed by the President of
the Vendor, to the effect that such
representations and warranties are
true and correct on and as at the
Closing Date with the same force and
effect as though made on and as at
such date.

10.1.1.2 If the Closing Date occurs after the
First Fixture Date but on or before
the Second Fixture Date, each of the
representations and warranties of
the Selling Parties contained in
this Agreement shall be true and
correct in all material respects on
and as at the First Fixture Date and
each of the First Core
Representations shall be true and
correct in all material respects on
and as at the Closing Date (in each
case except as such representations
and warranties may have been
affected by the occurrence of events
or circumstances occurring in
contemplation of the consummation of
the transactions provided for
hereunder) with the same force and
effect as though such
representations and warranties had
been made on and as at the First
Fixture Date or the Closing Date, as
the case may be, and the Purchaser
shall have received on the Closing
Date a certificate dated the Closing
Date, in form satisfactory to the
Purchaser's Counsel, signed by the
President of the Vendor, to the
effect that such representations and
warranties are true and correct on
and as at the First Fixture Date or
the Closing Date, as the case may
be, with the same force and effect
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as though made on and as at such
dates.

10.1.1.3 If the Closing Date occurs after the
Second Fixture Date, each of the
representations and warranties of
the Selling Parties contained in
this Agreement shall be true and
correct in all material respects on
and as at the First Fixture Date,
each of the First Core
Representations shall be true and
correct in all material respects on
and as at the Second Fixture Date,
and each of the Second Core
Representations shall be true and
correct in all material respect on
and as at the Closing Date (in each
case except as such representations
and warranties may have been
affected by the occurrence of events
or circumstances occurring in
contemplation of the consummation of
the transactions provided for
hereunder) with the same force and
effect as though such
representations and warranties had
been made on and as at the First
Fixture Date, the Second Fixture
Date or the Closing Date, as the
case may be, and the Purchaser shall
have received on the Closing Date a
certificate dated the Closing Date,
in form satisfactory to the
Purchaser's Counsel, signed by the
President of the Vendor, to the
effect that such representations and
warranties are true and correct on
and as at the First Fixture Date,
the Second Fixture Date or the
Closing Date, as the case may be,
with the same force and effect as
though made on and as at such dates.

10.1.2 PERFORMANCE OF OBLIGATIONS

The Vendor shall have performed or complied in
all material respects with all of its agreements,
covenants, obligations and conditions herein
agreed to be performed or complied with by the
Vendor on or prior to the Closing Date.

10.1.3 PERMITS, CONSENTS AND APPROVALS

All permits, consents, orders and approvals
required by any federal, provincial, state or
local governmental authority, as the case may be,
including, without limitation, all consents and
approvals required under the Antitrust Laws
including the HSR Act for the purposes
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of the consummation of the transactions
contemplated hereby shall have been obtained by
the Vendor and the Purchaser and all statutory
periods in connection with notification
procedures required under such Antitrust Laws,
for the purposes of the consummation of the
transactions contemplated hereby shall have
lapsed prior to the Closing Date.

10.1.4 CORPORATE AND OTHER PROCEEDINGS

All corporate and other proceedings of the Vendor
in connection with the transactions contemplated
hereby, and all documents evidencing same or
incidental thereto, shall have been duly
authorized and executed, shall be in form and
substance to the reasonable satisfaction of the
Purchaser and the Purchaser's Counsel, and the
Purchaser and the Purchaser's Counsel shall have
received all such proceedings and documents, or
duly certified copies thereof, as may be
reasonably requested.

10.1.5 EXCLUDED ASSETS

The transfer of the Excluded Assets by the
Corporation shall have been completed.

10.1.6 REAL PROPERTY TITLE INSURANCE

The Purchaser shall have obtained at its option
and expense a title insurance policy insuring the
Purchaser that the Corporation has good and
marketable title in fee simple absolute to all
the Real Properties free and clear of all title
defects or Liens of any nature whatsoever, except
as described in such policies and which are
reasonably acceptable to the Purchaser, and
except for Permitted Encumbrances.

10.1.7 RESIGNATION AND RELEASES BY DIRECTORS AND OFFICERS

Each of the directors and officers of the
Corporation and KMHC shall have signed in favour
of and delivered to the Corporation and KMHC a
resignation as a director and/or officer thereof,
as the case may be, and a release from all their
respective claims against the Corporation and
KMHC as a director and/or officer thereof, as the
case may be.

10.1.8 OPINION OF THE VENDOR'S COUNSEL
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The Purchaser shall have received from the
Vendor's Counsel a favorable opinion addressed to
the Purchaser, dated the Closing Date, in form
and substance reasonably satisfactory to the
Purchaser, as to the matters contained in
Sections 4.1, 4.3 and 4.5, and such other matters
as may be reasonably requested by the Purchaser.
The Vendor's Counsel may rely, as to facts
material to said opinion which are not
independently established by the Vendor's
Counsel, on certificates of public officials or
of officers of the Vendor and, as to matters of
law in other jurisdictions, on opinions of
counsel in such jurisdictions.

10.1.9 LITIGATION

No suit, action or proceeding shall be pending
against the Purchaser, the Selling Parties or
KMHC before any court or governmental agency
which could result in (i) the restraint or
prohibition of the consummation of the
transactions contemplated hereby or (ii) an order
restricting the Corporation or KMHC in conducting
their respective businesses in such a manner so
as to have a Material Adverse Effect.

10.1.10 DOMTAR CANADIAN GYPSUM PRODUCTS BUSINESS

The consummation of the purchase and sale of the
Purchased Shares pursuant hereto shall take place
concurrently with the consummation of the Asset
Purchase Agreement.

10.1.11 RESCISSION

In case any of the foregoing conditions provided
for in this Section 10.1 shall not be fulfilled
and performed on or prior to the Closing Date to
the reasonable satisfaction of the Purchaser and
the Purchaser's Counsel, the Purchaser may
rescind this Agreement by notice to the Vendor
and in such event, the Parties shall be released
from all obligations whatsoever to whomsoever
including, without limitation, all obligations of
the Purchaser to the Vendor, its Affiliates and
Subsidiaries and their respective shareholders,
directors, officers and employees, pursuant to
this Agreement and all other agreements entered
into pursuant hereto, other than the obligations
of confidentiality of the Purchaser pursuant to
the Confidentiality Agreement.
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10.1.12 WAIVER BY THE PURCHASER

The conditions set out in this Section 10.1 may
be waived by the Purchaser in whole or in part by
a written document to such effect duly signed
thereby.

10.2 VENDOR'S CONDITIONS

The purchase and sale of the Purchased Shares is subject to
the following terms and conditions for the exclusive benefit
of the Vendor to be fulfilled and performed on or prior to the
Closing Date:

10.2.1 REPRESENTATIONS AND WARRANTIES REMAIN CORRECT

Each of the representations and warranties of the
Purchaser contained in this Agreement shall be
true and correct in all material respects on and
as at the Closing Date (except as such
representations and warranties may have been
affected by the occurrence of events or
circumstances occurring in contemplation of the
consummation of the transactions provided for
hereunder) with the same force and effect as
though such representations and warranties had
been made on and as at such date and the Vendor
shall have received on the Closing Date a
certificate dated the Closing Date, in form
satisfactory to the Vendor's Counsel, signed by
the President or a Vice-President of the
Purchaser, to the effect that such
representations and warranties are true and
correct in all material respects on and as at the
Closing Date with the same force and effect as
though made on and as at such date.

10.2.2 PERFORMANCE OF OBLIGATIONS

The Purchaser shall have performed or complied in
all material respects with all of its agreements,
covenants, obligations and conditions herein
agreed to be performed or complied with by the
Purchaser on or prior to the Closing Date.

10.2.3 CORPORATE AND OTHER PROCEEDINGS

All corporate and other proceedings of the
Purchaser in connection with the transactions
contemplated hereby, and all documents evidencing
same or incidental thereto, shall have been
authorized and executed, shall be in form and
substance to the reasonable satisfaction of the
Vendor and the Vendor's Counsel, and the Vendor
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and the Vendor's Counsel shall have received
all such proceedings and documents or duly
certified copies thereof, as may be reasonably
requested.

10.2.4 CHANGE OF NAME

The Corporation shall have changed its name to
one which does not include the name "Domtar" or
the prefix "Dom".

10.2.5 DOMTAR CANADIAN GYPSUM PRODUCTS BUSINESS

The consummation of the purchase and sale of the
Purchased Shares pursuant hereto shall take place
concurrently with the consummation of the Asset
Purchase Agreement.

10.2.6 OPINION OF THE PURCHASER'S COUNSEL

The Vendor shall have received from the
Purchaser's Counsel a favorable opinion addressed
to the Vendor, dated the Closing Date, in form
and substance reasonably satisfactory to the
Vendor, as to the matters contained in Sections
5.1 and 5.2, and such other matters as may be
reasonably requested by the Vendor, with such
qualifications as may be consistent with opinion
practice on such issues. The Purchaser's Counsel
may rely, as to facts material to said opinion
which are not independently established by the
Purchaser's Counsel, rely on certificates of
public officials or of officers of the Purchaser
and, as to matters of law in other jurisdictions,
on opinions of counsel in such jurisdictions.

10.2.7 RESCISSION

In case any of the foregoing conditions provided
for in this Section 10.2 shall not be fulfilled
and performed on or prior to the Closing Date to
the reasonable satisfaction of the Vendor and the
Vendor's Counsel, the Vendor may rescind this
Agreement by notice to the Purchaser and in such
event, the Parties shall be released from all
obligations whatsoever to whomsoever including,
without limitation, all obligations of the Vendor
to the Purchaser, its Affiliates and Subsidiaries
and their respective shareholders, directors,
officers and employees, pursuant to this
Agreement and all other agreements entered into
pursuant hereto, other than the obligations of
confidentiality of the Purchaser pursuant to the
Confidentiality Agreement.
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10.2.8 WAIVER BY THE VENDOR

The conditions set out in this Section 10.2 may
be waived by the Vendor in whole or in part by a
written document to such effect duly signed
thereby.

ARTICLE 11. SURVIVAL AND RELIANCE ON REPRESENTATIONS AND WARRANTIES AND
INDEMNIFICATION

11.1 SURVIVAL AND RELIANCE

The Parties shall be entitled to rely upon the representations
and warranties contained herein and the obligations of the
Parties with respect thereto shall survive the dates and shall
continue in full force and effect as provided in Section 11.2
hereof.

11.2 SURVIVAL OF LIABILITY FOR REPRESENTATIONS AND WARRANTIES

11.2.1 The Second Core Representations of the Vendor
shall survive the Closing Date for a period of
one (1) year, the First Core Representations of
the Vendor shall survive the Adjustment Date and
the Closing Date for a period of one (1) year,
and all other representations and warranties of
the Vendor and the Corporation contained herein
shall survive the earlier of the First Fixture
Date and the Closing Date for a period of one (1)
year, except for

11.2.1.1 the representations and warranties
contained in Sections 4.9.5 and 4.14
hereof (Taxes) and 4.17 (Employees,
Pensions and Other Benefit Plans)
which shall survive the Closing Date
until the expiry of the limitation
or prescription period under the
relevant Laws, and the Purchaser
covenants that, from and after the
Closing Date, it shall not enter
into, without the prior written
consent of the Vendor, any
agreement, waiver or other
arrangement which provides for an
extension of time with respect to
the filing of any Tax Return or the
payment or assessment of any Taxes
dealt with by any such
representation or warranty;

11.2.1.2 the representations and warranties
contained in Section 4.16 hereof
(Environmental Matters) which shall
survive the earlier of (i) the First
or Second Fixture Date (as
determined by the date on which
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representations and warranties were
last deemed made) and (ii) the
Closing Date for a period of three
(3) years; and

11.2.1.3 the representations and warranties
contained in Sections 4.1, 4.2 and
4.3 which shall survive without
limitation as to time except as may
be limited by law.

except in each case to the extent that during
such period the Purchaser shall have given notice
to the Vendor or Domtar of a claim in respect of
any such representation or warranty, in which
case such representation or warranty with respect
to such claim (but not as to other claims) shall
continue in full force and effect until the final
determination of such claim. After the end of
the applicable survival period described above,
the Vendor shall have no liability with respect
to the representations and warranties contained
herein except as to claims made prior to the
expiry of the relevant period of survival
pursuant to this Section 11.2.1.

11.2.2 All the representations and warranties of the
Purchaser contained herein shall survive the
Closing Date for a period of one (1) year, except
to the extent that during such period the Vendor
shall have given notice to the Purchaser of a
claim in respect of any such representation or
warranty, in which case such representation or
warranty with respect to such claim (but not as
to other claims) shall continue in full force and
effect until the final determination of such
claim. After the end of such survival period,
the Purchaser shall have no liability with
respect to any of its representations and
warranties contained herein except as to claims
made prior to the expiry of the period of
survival pursuant to this Section 11.2.2.

11.3 INDEMNIFICATION BY THE VENDOR

11.3.1 Each of Domtar and the Vendor, jointly and
severally, shall defend, indemnify and hold
harmless the Purchaser and (after the Effective
Time) the Corporation and each Affiliate thereof
and any present or future officer, director,
agent or employee of Purchaser (all of which are
herein collectively referred to as "PURCHASER
PROTECTED PERSONS") against any and all claims,
proceedings, judgments, penalties, fines, claims,
damages (other than indirect, incidental or
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consequential), losses (other than loss of
profits), liabilities, fees (including, without
limitation, reasonable fees and expense of
counsel), costs or expenses (the "CLAIMS")
incurred or required to be paid by any Purchaser
Protected Person arising out of the breach or
non-fulfillment of any representation, warranty,
agreement, covenant, condition or any other
obligation of the Vendor, Domtar or the
Corporation contained in this Agreement. All
such Claims are referred to herein as
"PURCHASER'S INDEMNIFIED CLAIMS".

11.3.2 Without limiting the generality of the provisions
of Section 11.3.1 hereof and notwithstanding the
provisions of Section 11.7 hereof, the Vendor
and Domtar shall jointly and severally defend,
indemnify and hold harmless the Purchaser
Protected Persons against all Claims with respect
to or in any way relating to the matters set out
in SCHEDULE 11.3.2 or in Sections 8.3.2, 8.3.4
and 8.4.10, and the obligation of the Vendor and
Domtar to indemnify the Purchaser Protected
Persons pursuant to this Section 11.3.2 with
respect to such Claims shall not be subject to
the deductible and limiting amounts referred to
in Section 11.7 hereof and the amount for which
the Purchaser Protected Persons shall be
indemnified for such Claims shall be the entire
amount thereof. Claims for indemnification under
this Section 11.3.2 shall not be subject to any
limitations on survival of warranties contained
in this Article 11, and the Purchaser Protected
Persons may seek indemnification hereunder at any
time after the Effective Time, except as
otherwise expressly provided for in SCHEDULE
11.3.2.

11.3.3 Notwithstanding any other provision of this
Article 11, the Vendor and Domtar shall have no
liability whatsoever to indemnify the Purchaser
Protected Persons against any Claims with respect
to the ongoing operational environmental matters
set out in SCHEDULE 11.3.3.

11.4 INDEMNIFICATION BY THE PURCHASER

The Purchaser shall defend, indemnify and hold harmless the
Vendor and each Affiliate thereof and any present, former or
future officer, director, agent or employee of the Vendor (all
of which are herein collectively referred to as "VENDOR
PROTECTED PERSONS") against any and all Claims incurred by the
Vendor Protected Persons
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11.4.1 arising out of the breach or non-fulfillment of
any representation, warranty, agreement,
covenant, condition or any other obligation of
the Purchaser contained in this Agreement;
provided that any Claim for the breach or
nonfulfillment by the Purchaser of its
obligations under Article 9 shall not be subject
to indemnification under this Section 11.4 but
shall be subject to the provisions of Section
13.2; or

11.4.2 with respect to the environmental matters set out
in SCHEDULE 11.3.3.

All such claims are referred to herein as
"VENDOR'S INDEMNIFIED CLAIMS".

11.5 INDEMNIFICATION AGAINST THIRD PARTY CLAIMS

11.5.1 Promptly upon receipt by either Party (the
"INDEMNITEE") of a notice of any Third Party
Claim in respect of which Indemnitee proposes to
demand indemnification from the other Party (the
"INDEMNITOR"), the Indemnitee shall give notice
to that effect to the Indemnitor with reasonable
promptness.

11.5.2 Without prejudice to the Indemnitee's right to
participate in the defense, compromise or
settlement of the Third Party Claim, the
Indemnitor shall have the right by notice to the
Indemnitee not later than ten (10) days after
receipt of the notice described in Section 11.5.1
hereof to assume (and in the case of asbestos
claims, shall assume) the control of the defence,
compromise or settlement of the Third Party
Claim, provided that such assumption shall, by
its terms, be without cost or liability to the
Indemnitee and provided that the Indemnitor shall
have first delivered to Indemnitee a written
acknowledgement by Indemnitor that the relevant
Claim is an Indemnified Claim and that the
Indemnitor, in its good faith judgment, will be
able to pay any award of money damages against
the Indemnitee in connection with such action.
If the Indemnitor assumes the defense of an
action, (i) the Indemnitee shall be entitled to
meaningfully participate therein; (ii) no
settlement or compromise thereof may be effected
(x) by the Indemnitor without the consent of the
Indemnitee (which consent shall not be
unreasonably withheld or delayed) unless (A)
there is no finding or admission of any violation
of law or any violation of the rights of any
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person by Indemnitee and no adverse effect on any
other claims that may be made against any
Indemnitee and (B) all relief provided is paid or
satisfied in full by the Indemnitor or (y) by the
Indemnitee without the consent of the Indemnitor;
and (iii) the Indemnitee may subsequently assume
the defense of such action if a court of
competent jurisdiction determines the Indemnitor
is not vigorously defending such action.

11.5.3 Upon the assumption of control by the Indemnitor
pursuant to the provisions of Section 11.5.2
hereof, the Indemnitor shall, at its expense,
diligently proceed with the defence, compromise
or settlement of the Third Party Claim at
Indemnitor's sole expense, including employment
of counsel reasonably satisfactory to the
Indemnitee and, in connection therewith, the
Indemnitee shall cooperate fully, but at the
expense of the Indemnitor, to make available to
the Indemnitor all pertinent information and
witnesses under the Indemnitee's control, make
such assignments and take such other steps as in
the opinion of counsel for the Indemnitor are
necessary to enable the Indemnitor to conduct
such defence.

11.5.4 The final determination of any such Third Party
Claim, including all related costs and expenses,
shall be binding and conclusive upon the Parties
as to the validity or invalidity, as the case may
be, of such Third Party Claim against the
Indemnitor.

11.5.5 Should the Indemnitor fail to defend the
Indemnitee as provided in Section 11.5.2 hereof,
the Indemnitee shall be entitled to make such
settlement of the Third Party Claim as in its
sole discretion may appear advisable, and such
settlement or any other final determination of
the Third Party Claim shall be binding upon the
Indemnitor.

11.6 INDEMNIFICATION AFTER INSURANCE AND OTHER RECOVERIES

11.6.1 INSURANCE

The amount of the indemnification for any and all
Claims which either the Purchaser Protected Persons
or the Vendor Protected Persons shall be entitled
to receive pursuant to this Article 11 shall be
determined after giving effect to any and all
insurance proceeds received by the Indemnitee from
its insurers and any and all recoveries from any
other Persons against which there may be
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indemnity rights pursuant to the Contracts.
The Indemnitee shall use all reasonable efforts to
collect such insurance proceeds or, if the
Indemnitee is the Purchaser, claims with respect to
such indemnity rights against any other Persons
under any of the Contracts; provided that nothing
in this Section 11.6 shall require any Indemnitee
to make or prosecute a claim for insurance proceeds
if such a claim would adversely affect the
Indemnitee with respect to matters other
than the Claim.

11.6.2 NET OPERATING LOSSES

The amount of the indemnification for any Claim by
the Purchaser or the Corporation with respect to
income taxation matters pertaining to the
Corporation shall be determined after having
deducted from the amount so claimed pursuant to
this Article 11 the amount of the respective
federal or specific state net operating losses
retained by the Corporation after the Closing Date,
as determined as of the Closing Date after the
elections made by the Selling Parties under U.S.
Treasury Regulation Section 1.1502 and similar
state law elections.

11.6.3 COOPERATION.

If an Indemnitee seeks indemnity from an Indemnitor
with respect to any matters relating to
environmental or asbestos related matters, the
Indemnitee shall cooperate with the Indemnitor, at
the Indemnitor's expense, in assisting the
Indemnitor to obtain indemnity under agreements
with third parties or insurance proceeds under any
insurance policies maintained by the Indemnitor
covering the claims in question.

11.7 VENDOR'S MAXIMUM LIABILITY

11.7.1 The obligation of the Vendor and Domtar to
indemnify the Purchaser Protected Persons
pursuant to this Article 11, excluding the
obligation to indemnify for all Claims with
respect to the representations and warranties
contained in Section 4.16 hereof (Environmental
Matters) (the "ENVIRONMENTAL CLAIMS") and further
excluding the obligation to provide unlimited
indemnification pursuant to Section 11.3.2 shall
be limited, in the aggregate, to 10% of the
Purchase Price; provided, however, that the
Purchaser shall not exercise its right of
indemnification in relation thereto pursuant to
this Article 11 unless and until the
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aggregate amount of the Claims asserted against
the Vendor and Domtar, excluding Environmental
Claims and Section 11.3.2 claims, is in excess of
the aggregate amount of 1% of the Purchase Price,
and the amount then claimable shall be only the
amount of such Claims which exceeds 1% of the
Purchase Price.

11.7.2 Subject to the provisions of Sections 11.3.2,
11.3.3 and 11.4.2 hereof, the obligation of the
Vendor and Domtar to indemnify the Purchaser
pursuant to this Article 11 with respect to
Environmental Claims shall be limited, in the
aggregate, to the sum obtained by adding to 15%
of the Purchase Price an amount equal to the
difference between 10% of the Purchase Price and
the aggregate of the Claims indemnified against
or outstanding pursuant to the provisions of
Section 11.7.1 hereof, if any; provided however,
that the Purchaser shall not exercise its right
of indemnification in relation thereto pursuant
to this Article 11 unless and until the aggregate
amount of the Environmental Claims asserted
against the Vendor is in excess of the aggregate
amount of 1% of the Purchase Price, and the
amount then claimable shall be only the amount of
such Environmental Claims which exceeds 1% of the
Purchase Price; and provided further that the
combined amount recoverable under Section 11.7.1
and 11.7.2 shall not exceed in the aggregate 25%
of the Purchase Price.

11.8 DETAILS OF CLAIMS

With respect to any Claim pursuant to Section 11.3 or 11.4
hereof, no indemnity hereunder shall be sought unless written
notice providing reasonable details of the reasons for which
the indemnity is sought is provided to the Vendor (or Domtar)
or the Purchaser, as the case may be. Such notice shall be
given promptly on the occurrence of the circumstances giving
rise to the Claim coming to the attention of the Indemnitee
hereunder; provided that failure to so notify the Indemnitor
shall not relieve the Indemnitor from any liabilities which it
may have to the Indemnitee (i) hereunder, except to the extent
that is actually prejudiced thereby, or (ii) otherwise than
under this Article 11.

11.9 INDEMNIFICATION SOLE REMEDY

The provisions of this Agreement shall constitute the sole
indemnification remedy to either Party against the other with
respect to any breach or non-fulfillment of any
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representation, warranty, agreement, covenant,
condition or any other obligation contained in
this Agreement.

ARTICLE 12. CLOSING

The sale and purchase of the Purchased Shares herein provided for
shall be consummated on the Closing Date at the Closing Place.

12.1 At the Closing, the Vendor shall deliver or cause to be
delivered to the Purchaser free and clear of all Liens:

12.1.1 certificate or certificates for the Purchased
Shares, duly endorsed for transfer or with duly
executed stock powers for transfer thereof; and

12.1.2 all such other agreements, certificates,
consents, approvals, opinions and other documents
herein required to be delivered by the Vendor or
Domtar at or prior to the Closing Date and not
therefore received by the Purchaser.

12.2 The Purchaser shall deliver or cause to be delivered to or to
the order of the Vendor:

12.2.1 the Purchase Price herein required to be paid by
the Purchaser pursuant to Section 3.1 hereof; and

12.2.2 all such other agreements, certificates,
consents, approvals, opinions and other documents
herein required to be delivered by the Purchaser
at or prior to the Closing Date and not
theretofore received by the Vendor.

ARTICLE 13. TERMINATION

13.1 ELECTION

The Parties shall exercise all reasonable efforts and
cooperate, with reasonable diligence, in order for the
consummation of the transactions contemplated hereunder to
take place at the earliest possible date. Subject to the
provisions of Section 10.1.12 or 10.2.8 hereof, as the case
may be, in the event that the sale and purchase of the
Purchased Shares herein provided for is not consummated within
five (5) months from the date of this Agreement (the
"FIVE-MONTH ANNIVERSARY") as a result of the failure of either
Party to fulfill any of the conditions provided for in Section
10.1 (other than those contained in Section 10.1.3 to the
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extent covered by Article 9) or 10.2, as the case may be, for
the benefit of the other Party on or before the Five-Month
Anniversary and the Party who has the benefit of such
condition (the "ELECTING PARTY") refuses to waive it, the
Electing Party shall have the right, exercisable at any time
after the Five-Month Anniversary, to terminate this Agreement
by giving at least forty-five (45) days written notice to the
other Party (the "NON-ELECTING PARTY"). For purposes of this
Article 13, Domtar and the Corporation shall be deemed the
same Party as the Vendor. If the Non-Electing Party does not
cure its failure to fulfil the conditions of Sections 10.1 or
10.2, as the case may be, by the date for termination (the
"TERMINATION DATE") specified in the termination notice given
by the Electing Party, then this Agreement shall terminate on
the Termination Date, and, except as set forth in Section
13.2, each Party shall be released from

13.1.1 all obligations whatsoever to whomsoever
including, without limitation, all obligations to
the other Party, its Affiliates and Subsidiaries
and their respective shareholders, directors,
officers and employees, pursuant to this
Agreement and all other agreements entered into
pursuant hereto; and

13.1.2 all Claims arising out of, directly or
indirectly, the failure to consummate the sale
and purchase of the Purchased Shares as herein
provided for.

13.2 CONTINUING LIABILITY

For purposes of Section 13.1, the responsibility for obtaining
any permits, consents, orders or approvals referred to in
Article 9 shall be that solely of the Purchaser. If this
Agreement is terminated by Vendor under Section 13.1 effective
as of a date after the Second Fixture Date because of the
breach by the Purchaser of its obligations under Article 9,
then the Purchaser shall remain liable to the Vendor for the
failure to consummate the sale and purchase of the Purchased
Shares as herein provided.

ARTICLE 14. MISCELLANEOUS

14.1 NOTICES

Any notice or communication provided for under this Agreement
shall be in writing and be sufficiently given to the Party to
whom it is addressed if it is delivered or sent by prepaid
first-class mail or transmitted by telecopier to or for such
Party at the address or telecopier number of such Party as set
out hereinafter or at such other address or telecopier
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number as such Party shall have hereafter notified to
the other Party in the manner provided for in this Section.

If to the Vendor, the Corporation (before Closing), or Domtar:
Domtar Industries Inc., Domtar Gypsum Inc., or Domtar (as
applicable)
c/o Domtar Inc.
▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Secretary

If to the Purchaser or the Corporation (after Closing):
Georgia-Pacific Corporation or G-P Gypsum Corporation (as
applicable)
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(30348-05605 for notice by mail)
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Secretary

Any notice or communication addressed and delivered, mailed or
telecopied, as the case may be, as aforesaid shall be deemed
to have been sufficiently given and received on the date on
which it was so delivered or, if such date is not on a
Business Day, on the Business Day next following such date, or
on the 7th Business Day next following the date of its mailing
or on the 1st Business Day next following the date of its
transmission by telecopier, as the case may be.

14.2 PUBLIC ANNOUNCEMENT

All public announcements concerning the transactions
contemplated hereby shall be jointly planned and coordinated
by the Parties and no Party shall act unilaterally in this
regard without the prior approval of the other, except where
required to do so by the Laws or by the applicable regulations
or policies of any stock exchange, in which case, the Party
obliged to make public disclosure shall promptly inform
thereof the other Party and discuss with such other Party the
extent and timing of such disclosure.

14.3 EXPENSES

All costs and expenses (including, without limitation,
the fees and disbursement of legal counsel) incurred in
connection with the negotiation and the preparation of this
Agreement and the consummation of the transactions
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provided for hereunder shall be paid by the Party
incurring such expenses.

14.4 SUCCESSORS AND ASSIGNS

This Agreement shall enure to the benefit of and be binding
upon the Parties and their respective successors and assigns,
provided that neither this Agreement nor any right or
obligation hereunder shall be assigned by either Party without
the prior written consent of the other Party, except that the
Purchaser may assign this Agreement and its rights hereunder
to any Affiliate thereof without such consent provided that,
notwithstanding any such assignment, the Purchaser shall
remain liable to the Vendor, jointly and severally with such
assignee, for the performance of all the obligations
pertaining to the Purchaser pursuant to this Agreement.

14.5 FURTHER ASSURANCES

The Parties shall do with reasonable diligence, all
such things and provide all such reasonable assurances as may
be required to consummate the transactions provided for
hereunder, and each Party shall provide such further documents
required by the other Party as may be reasonably necessary or
desirable to effect the purpose of this Agreement and carry
out its provisions, whether before or after the Closing,
including, without limitation, the execution of agreements
concerning transitional services as may be mutually agreed by
the Parties.

14.6 DISPUTE RESOLUTION

In the event of any and all disputes between the Parties
resulting out of or relating to this Agreement or its breach,
the Parties shall attempt, in good faith, to settle amicably
such disputes (including referral of the dispute to a neutral,
third-party mediator) prior to submitting same to the court of
competent jurisdiction.

14.7 NO THIRD PARTY BENEFICIARY

Nothing contained in this Agreement or any other agreement
entered into pursuant hereto is intended, or should be
interpreted as having been intended, to create any right or
assume any obligation in favour of, or grant any waiver or
release from any obligation to, or otherwise constitute a
stipulation in favour of any Person other than the Parties,
the Purchaser Protected Persons and the Vendor Protected
Persons.
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14.8 COUNTERPARTS

This Agreement may be executed by the Parties in several
counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall
constitute but one and the same document.

IN WITNESS WHEREOF the Parties have executed this Agreement as
of the date first hereinbefore written.

GEORGIA-PACIFIC CORPORATION

per: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------

DOMTAR INDUSTRIES INC.

per: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------------

per: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------

DOMTAR INC.

per: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------

per: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------------

DOMTAR GYPSUM INC.

per: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------------

per: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------

SHARE PURCHASE AGREEMENT BETWEEN DOMTAR INDUSTRIES INC., DOMTAR GYPSUM INC., DOMTAR INC. AND GEORGIA-PACIFIC CORPORATION

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