The Offer

Subject to the terms of this Agreement, the Offeror hereby covenants and agrees to make the Offer. The Offer will contain customary conditions for a take-over bid, including, without limitation: 66 ²/3% minimum tender condition (the Minimum Tender Condition); absence of occurrence or existence of any material adverse effect or material adverse change; waiver or termination of all rights under any shareholder rights plan(s) and evidence of termination, cancellation, expiration, surrender, conversion or exercise of all other rights, options, warrants and similar securities; receipt of all regulatory, governmental and third-party approvals, consents, authorizations, rulings and waivers; Fibrek not having implemented or approved any issuance of shares or other securities or any other transaction, capital expenditure or distribution to its shareholders outside the ordinary course of business; absence of default by Fibrek under any material agreement; and absence of material misstatements by Fibrek in its public disclosure documents; (collectively, the Conditions). The terms of the Offer shall include any amendments or variations to, or extensions of, such Offer, including, without limitation, removing or waiving any Condition or extending the date by which the Subject Shares may be deposited. The Offer will be made to the holders of all of the Subject Shares in consideration for a total offer price of C$1.00 per Subject Share, payable at the option of each holder of Subject Shares in one of the following alternative forms:

C$0.55 in cash (payable in Canadian dollars) and 0.0284 of a share of the common stock of the Parent (each, a Parent Common Share) (the Cash and Share Option); or

C$1.00 in cash (payable in Canadian dollars), subject to proration as hereinafter described (the Cash Only Option); or

0.0632 of a Parent Common Share (the Shares Only Option) subject to proration as hereinafter described.

Subject to Subsection 1.1(e) below, the Offeror shall commence the Offer as soon as practicable and in any event no later than 11:59 p.m. (Toronto time) on Friday, December 30, 2011. The Offeror shall announce the Offer no later than the business day immediately following the date hereof.

The Offer will be made in accordance with applicable securities laws and shall expire no earlier than 5:00 p.m. (Toronto time) on the thirty-sixth (36^th) day after the day that the Offer is commenced, subject to the right of the Offeror to extend the period of time during which the Subject Shares may be deposited under the Offer (as it may be extended, the Expiry Time). The Offer will not be subject to any conditions other than the Conditions, unless an amendment to any of the Conditions is required by the United States Securities and Exchange Commission (the SEC) in order to have the S-4 registration statement filed in connection with the issuance of Parent Common Shares under the Offer declared effective by the SEC and provided same would not have an adverse effect on the Seller.

The Seller acknowledges and agrees that the Offeror may, in its sole and absolute discretion, amend, supplement, modify or waive any term or Condition of the Offer in whole or in part, provided that the Seller will be released from its obligations hereunder if the Offeror, without the consent of the Seller: (i) decreases the consideration per Subject Share, as specified in this Section 1.1, (ii) changes the form of consideration payable under the Offer (other than to add additional consideration or the option of Fibrek’s shareholders to choose one or more alternative forms of consideration in addition to the forms of consideration herein specified), or (iii) otherwise amends or varies the terms and Conditions of the Offer in a manner adverse to the Seller (it being understood by the parties, for greater certainty, that an increase to or removal or waiver of the Aggregate Cash Limit and/or the Aggregate Share Consideration Limit by the Offeror shall be deemed to be not adverse to the Seller). If the Offeror increases the consideration payable under the Offer prior to the expiry of the Offer, the Seller shall be entitled to such increased consideration in respect of its Subject Shares that are taken up by the Offeror, as required by applicable securities laws.

The obligation of the Offeror to make the Offer is conditional on the prior satisfaction of the following conditions, all of which conditions are included for the sole benefit of the Offeror and any or all of which may be waived by the Offeror in whole or in part in its sole discretion without prejudice to any other rights it may have under this Agreement or otherwise:

no circumstance, fact, change, event or occurrence shall have occurred that would render it impossible for the Offer to be consummated absent a waiver of or modification to one or more of the Conditions;

no cease trade order, injunction or other prohibition at law shall exist against the Offeror making the Offer or taking up and paying for Subject Shares deposited under the Offer; and

the Offeror shall have determined in its sole discretion that no material adverse change shall have occurred with respect to either the Offeror or Fibrek.

Deposit by Seller

Subject to Subsection 1.2(b) below, the Seller agrees to deposit or cause to be deposited, all of the Seller’s Shares under the Offer no later than the fifth (5^th) business day prior to the Expiry Time, and thereafter except as may be permitted under this Agreement or applicable law, not withdraw or permit the Seller’s Shares to be withdrawn from the Offer. In the event that the Seller subsequently obtains any additional Subject Shares, such Subject Shares shall likewise be deposited under the Offer on or before the fifth (5^th) business day prior to the Expiry Time.

The Seller hereby agrees that neither it nor any person or entity acting on its behalf will withdraw or take any action to withdraw any of the Seller’s Shares deposited under the Offer notwithstanding any statutory rights or other rights under the terms of the Offer or otherwise which it might have, unless this Agreement is terminated in accordance with its terms prior to the take-up and payment of the Seller’s Shares under the Offer.

Representations and Warranties of the Seller

Organization. It is duly incorporated or formed and validly existing under the laws of its jurisdiction of incorporation or formation.

Authorization, etc. It has all necessary power, authority, capacity, consent and right to enter into this Agreement and to carry out each of its obligations under this Agreement. This Agreement has been duly executed and delivered by the Seller and constitutes a legal, valid and binding obligation of the Seller enforceable against it in accordance with its terms; subject, however, to limitations with respect to enforcement imposed by law in connection with bankruptcy or similar proceedings, the equitable power of the courts to stay proceedings before them and the execution of judgments and to the extent that equitable remedies such as specific performance and injunction are in the discretion of the court from which they are sought.

Ownership, etc. The Seller (or, if applicable, one or more of its direct or indirect subsidiaries or one of its affiliates) is the sole beneficial owner of such Seller’s Shares or holds the Seller’s Shares on behalf of beneficial owners who have fully managed accounts with the Seller. The Seller’s Shares constitute all of the Subject Shares owned or controlled, directly or indirectly, by the Seller. The total number of Subject Shares beneficially owned or over which the Seller exercises control or direction, is set forth in Schedule “A” hereto. The Seller has the sole and exclusive right to dispose of such Seller’s Shares as provided in this Agreement and to vote all such Subject Shares, and the Seller is not a party to, bound or affected by or subject to, any law or regulation of which a breach would occur as a result of the execution and delivery of this Agreement or the consummation of any of the transactions provided for in this Agreement.

Good Title. The Seller’s Shares to be acquired by the Offeror directly or indirectly from the Seller pursuant to the Offer will be acquired with good and marketable title, free and clear of any and all mortgages, liens, charges, restrictions, security interests, adverse claims, pledges, encumbrances and demands or rights of others of any nature or kind whatsoever, and such Seller’s Shares are not subject to any shareholders’ agreement, voting trust or similar agreement or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming a shareholders’ agreement, voting trust or other agreement affecting the Seller’s Shares or the ability of such holder thereof to exercise ownership rights thereto, including the voting of any such Subject Shares. No approval of the securityholders of the Seller is or will be required in order to sell the Seller’s Shares to the Offeror.

No Agreements. No person, firm, body corporate or other entity whatsoever has any agreement or option, or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement or option, for the purchase, requisition or transfer from the Seller, or any registered holder of the Seller’s Shares, of any of the Seller’s Shares, or any interest therein or right thereto, except pursuant to this Agreement. There does not exist any agreement, understanding or commitment giving rise to any obligations, financial or otherwise, on the part of Fibrek or any of its subsidiaries or affiliates to the Seller, or any subsidiaries or affiliates of the Seller as applicable.

No Proceeding Pending. There is no claim, action, lawsuit, arbitration, mediation or other proceeding pending or threatened against the Seller (or its subsidiaries or affiliates), which relates to this Agreement or otherwise materially impairs or could materially impair the ability of the Seller to consummate the transactions contemplated hereby.

Consents. To the best of the Seller’s knowledge, there is no requirement of the Seller to make any filing with, give any notice to, or obtain any permit, licence, sanction, ruling, order, exemption or consent, approval or waiver of, any governmental authority or other person (including the lapse, without objection, of a prescribed time under applicable law that states that a transaction may be implemented if a prescribed time lapses following the giving of notice) as a condition to the lawful completion of the transactions contemplated by this Agreement or the Offer, or the execution and delivery by the Seller and enforcement against the Seller of this Agreement.

Non-Contravention. This Agreement does not (or would not with the giving of notice, the lapse of time or the happening of any other event or condition) result in a breach or a violation of, or conflict with in any material manner, or allow any other person to exercise any rights under any of the terms or provisions of the constating documents and/or by-laws of the Seller (or of any of its subsidiaries or affiliates which is the legal or beneficial owner of the Seller’s Shares) or any agreement, contract or indenture to which the Seller is a party or by which the Seller’s property is bound (as applicable), and will not result in the violation of any law or regulation.

Representations and Warranties of the Offeror

Organization. Each of the Parent and Bidco is a corporation duly incorporated and validly existing under the laws of its jurisdiction of incorporation.

Authorization, etc. Each of the Parent and Bidco has all necessary power, authority, capacity, consent and right to enter into this Agreement and to carry out each of its obligations under this Agreement. This Agreement has been duly executed and delivered by each of the Parent and Bidco and constitutes a legal, valid and binding obligation of each of them enforceable against them in accordance with its terms; subject, however, to limitations with respect to enforcement imposed by law in connection with bankruptcy or similar proceedings, the equitable power of the courts to stay proceedings before them and the execution of judgments and to the extent

that equitable remedies such as specific performance and injunction are in the discretion of the court from which they are sought.

Non-Contravention. This Agreement does not (or would not with the giving of notice, the lapse of time or the happening of any other event or condition) result in a breach or a violation of, or conflict with in any material manner, or allow any other person to exercise any rights under any of the terms or provisions of the constating documents and/or by-laws of each of the Parent and Bidco or any agreement, contract or indenture to which either the Parent or Bidco is a party or by which their property is bound (as applicable), and will not result in the violation of any law or regulation by Parent or Bidco.

Covenants of the Seller

The Seller hereby covenants and agrees that it shall not, from the date hereof until the earlier of: (I) the termination of this Agreement pursuant to Article 4; and (II) the date and time the Offer, as it may be extended by the Offeror from time to time, expires (the “Expiry Time”); except in accordance with the terms of this Agreement:

grant or agree to grant any proxy or other right to the Subject Shares, or enter into any voting trust or pooling agreement or arrangement or enter into or subject any of such Subject Shares to any other agreement, arrangement, understanding or commitment, formal or informal, with respect to or relating to the voting thereof;

directly or indirectly, through any officer, director, employee, advisor, representative, agent or otherwise (as applicable), make, solicit, assist, initiate, encourage, or otherwise facilitate any inquiries, the submission of proposals or offers from any other person, body corporate, partnership or other business organization whatsoever regarding a potential competing or superior proposal for the acquisition of the Subject Shares (whether by way of take-over bid, asset sale, merger, amalgamation, arrangement, reorganization or other business combination) (a Competing Bid), participate in any material discussions or negotiations regarding any Competing Bid, or otherwise cooperate in any way with, or assist or participate in, knowingly facilitate or encourage, any effort or attempt by any other person to do or seek to do any of the foregoing, including by depositing or voting any of the Seller’s Shares in favour of any such Competing Bid;

option, sell, transfer, dispose of, pledge, encumber, grant a security interest in or otherwise convey any Subject Shares or any right or interest therein, or agree to do any of the foregoing except pursuant to the Offer;

acquire any additional number of Subject Shares or securities convertible into or exchangeable for Subject Shares, except to the extent that doing so would be in full compliance with the Unites States Securities and Exchange Act of 1934, as amended, and the rules and regulations thereunder;

except as required by applicable law and subject to the prior notice and consultation obligations contained in Section 6.7, prior to the public announcement of the Offer, directly or indirectly, disclose to any person, firm or corporation the existence of the terms and conditions of this Agreement, or any terms or conditions or other information concerning the Offer; and

take any action to encourage or assist any other person to do any of the prohibited acts referred to in foregoing provisions of this Subsection 3.1(a).

The Seller hereby covenants and agrees that it shall, from the date hereof until the earlier of (I) the termination of this Agreement pursuant to Article 4, and (II) the Expiry Time, except in accordance with the terms of this Agreement:

immediately cease any existing discussions or negotiations it is engaged in with any parties (other than the Offeror) with respect to any Competing Bid; and

use its reasonable commercial efforts to assist the Offeror to successfully complete the Offer and any subsequent acquisition transaction;

exercise the voting rights attaching to the Seller’s Shares to oppose any proposed action by Fibrek, its directors, officers and/or shareholders, any of its subsidiaries or any other person:

in respect of any amalgamation, merger, sale of Fibrek’s or its affiliates’ or associates’ assets, take-over bid, issuer bid, plan of arrangement, reorganization, recapitalization, issuance of shares, equity or voting securities or convertible or exchangeable securities or other business combination or similar transaction involving Fibrek or any of its subsidiaries other than the Offer;

which would reasonably be regarded as being directed towards or likely to prevent or delay the take-up and payment of the Seller’s Shares deposited under the Offer or the successful completion of the Offer, including without limitation any amendment to the constating documents of Fibrek, its subsidiaries or its organizational structure;

in respect of any new shareholder rights plan or “poison pill” subsequent to the date of this Agreement; or

which would reasonably be expected to result in a material adverse effect in respect of Fibrek.

promptly notify and provide to the Offeror a copy of any Competing Bid or proposal or document related thereto provided to the Seller, or any amendments to the foregoing; and

deposit and not withdraw all of the Seller’s Shares, together with a duly completed and executed letter of transmittal or notice of guaranteed delivery (or take all actions to cause the Seller’s Shares to be electronically deposited through the CDSX system), with the depositary specified in the Circular in accordance with all of the terms thereof and all of the terms of this Agreement.

The Seller covenants to co-operate with the Offeror in making all requisite regulatory filings in respect of the Offer.

Covenants of the Offeror

subject to the terms and conditions of the Offer, Bidco shall take up the Seller’s Shares deposited under the Offer and pay for such Seller’s Shares as set forth in the Circular;

in the event that:

the Offeror shall have waived the Minimum Tender Condition; and

the Offeror shall have taken up and paid for the Seller’s Shares under its Offer; and

there shall also exist a Competing Bid in which the offered price per Subject Share exceeds C$1.00 (a Superior Bid);

the Offeror shall use all reasonable commercial efforts, including co-operating with the Seller, to make all requisite regulatory filings in order to obtain all requisite regulatory approvals required to effect and complete the Offer.

Termination

at any time by mutual consent of the Seller and the Offeror;

by the Seller, if the Offer is not commenced within the time contemplated by Subsection 1.1(b) or if the Offer has been terminated or withdrawn;

by the Seller, provided the Seller is not in breach of any of its obligations hereunder, if the Offeror has not taken up and paid for Subject Shares deposited under the Offer within one hundred and twenty (120) days after the date of the Offer; provided, however, that if the Offeror’s take up and payment for Subject Shares deposited under the Offer is delayed by

an injunction or order made by a court or regulatory authority of competent jurisdiction, or

the Offeror not having obtained any regulatory waiver, consent or approval or a delay in the declaration of effectiveness by the SEC with respect to the

registration statement to be filed by the parent for the Parent Common Shares offered as consideration under the Offer, which are necessary to permit the Offeror to take up and pay for Subject Shares deposited under the Offer,

by the Seller, when not in material default in its performance of its obligations hereunder, at any time if the Offer is modified in a manner contrary to the terms of this Agreement or contrary to the provisions of applicable securities legislation;

by either party, when not in material default in its performance of its obligations hereunder, if the other party has not complied with its covenants contained herein in all material respects;

by either party, when not in material default in the performance of its obligations hereunder, if any of the representations and warranties of the other party contained herein is untrue or inaccurate in any material respect; or

by the Offeror, if any Condition is not satisfied at the Expiry Time of the Offer and the Offeror has not elected to waive such condition.

Alternative Form of Transaction

Headings, etc.

References to Shares

Further Assurances

Effect of Termination

Time of the Essence.

Fees

Public Announcements and Filings

Specific Performance and other Equitable Rights

Benefit of the Agreement

Assignment

Entire Agreement

Amendments and Waiver

Notices

if to the Seller:

Mohnish Pabrai, Managing Partner, Pabrai

Investment Funds

if to the Parent:

Interpretation

Severability

Governing Law

Counterparts

SPECIFIC HOLDER OF SELLER’S SHARES

Dalal Street, LLC

Pabrai Investment Fund II, L.P. (acting through its general partner, Dalal Street, LLC)

Pabrai Investment Fund IV, L.P. (acting through its general partner, Dalal Street, LLC)

Pabrai Investment Fund 3, Ltd. (acting through its Investment Manager, Dalal Street, LLC)

TOTAL: