EXHIBIT 10.2

EMPLOYMENT AGREEMENT

MEMORANDUM OF AGREEMENT

entered into at Stamford, Connecticut, this 28th day of June, 2000.

BY AND BETWEEN:

REPAP ENTERPRISES INC.

, a company duly incorporated under the laws of Canada, having its executive
offices at 300 Atlantic Street, Suite 200, Stamford, Connecticut, 06901, herein
acting and represented by Stephen C. Larson and Harold (Hap) Stephen, duly
authorized to act hereunder for the purposes of the present Agreement as they so
declare;

 

(hereinafter the "Corporation")

AND

MICHELLE A. CORMIER

, business executive, having her address for the purposes of the present
Agreement at 45 Whitney Glen Drive, Westport, Connecticut, 06880;

 

(hereinafter the "Executive")

THE PARTIES DECLARE AS FOLLOWS:

WHEREAS the Corporation wishes to retain the Executive's services as Vice
President and Chief Financial Officer and the Executive wishes to continue to
offer her services to the Corporation in that capacity, the whole in accordance
with the conditions stipulated in the present Agreement;

WHEREAS

the Corporation considers the continuous maintenance of sound and vital
management to be essential to protecting and enhancing the best interests of the
Corporation and its shareholders;

WHEREAS

the Corporation recognizes that the possibility of a Change in Control or other
circumstances may exist and that such possibility, and the uncertainty and
questions which it may raise among the Corporation's management, may result in
the departure or distraction of management personnel to the detriment of the
Corporation and its shareholders;

WHEREAS

the Corporation's Board of Directors has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of members of the Corporation's management employees to their
assigned duties;

NOW, THEREFORE

, in consideration of the mutual promises and covenants herein contained, the
parties agree as follows:

 

ARTICLE 1
PREAMBLE

1.1

The preamble forms an integral part of this Agreement.

ARTICLE 2
DEFINITIONS

2.1

Definitions.

For the purpose of this Agreement, or for the purposes of any notice or
communication required hereunder, the words and expressions set out in Schedule
A shall have the respective meanings set out therein, except where the context
dictates otherwise.

2.2

Gender.

Any reference in this Agreement to any gender shall include all genders and
words used herein importing the singular number only shall include the plural
and vice versa.

2.3

Headings.

The insertion of headings is for convenience of reference only and shall not
affect or be utilized in the construction or interpretation hereof.

2.4

Entire Agreement.

This Agreement together with any instruments to be delivered pursuant hereto
constitute the entire Agreement between the parties pertaining to the subject
matter hereof and supersede all prior agreements, understandings, negotiations,
and discussions, whether oral or written, by or among the said parties in
respect of such subject matter.

2.5

Amendment.

No amendment hereto shall be binding unless expressly provided for in an
instrument duly executed by both parties.

2.6

Waiver.

No waiver by any party hereto, whether by conduct or otherwise, of any of the
provisions of this Agreement shall be deemed to constitute a waiver by such
party of any other provisions (whether or not similar) nor shall such waiver
constitute a continuing waiver hereof, unless otherwise expressly provided in an
instrument duly executed by the party or parties to be bound thereby.

2.7

Governing Law.

This Agreement shall be governed by, interpreted and construed in accordance
with the laws of New York.

2.8

Currency.

Unless otherwise particularly indicated herein, all dollar amounts set forth in
this Agreement shall be in U.S. dollars.

ARTICLE 3
DURATION

3.1

This Agreement is hereby concluded for an indefinite term, effective as of the
date hereof.

 

ARTICLE 4
ACCEPTANCE, POSITION AND DUTIES

4.1

The Executive hereby accepts such employment and agrees faithfully to render the
services described below to the best of her ability and knowledge and to devote
her full time, attention, skill and talents to the performance of her duties
hereunder in the best interests of the Corporation.

4.2

During the term of this Agreement, the Executive will serve as Vice President
and Chief Financial Officer. In this capacity, the Executive shall have duties
and responsibilities that are consistent with the Executive's position as Chief
Financial Officer including but not limited to developing and maintaining
banking, investment banking, investor and other financial relationships,
ensuring adequate internal control systems, reporting to the Audit Committee and
Board of Directors of the Corporation on all financial related matters pertinent
to the executive strategic and financial objectives, reviewing internal
financial reports and analyses, preparing and reviewing all financial reporting
for external purposes and participating from time to time in investor/bondholder
conferences.

4.3

The Executive hereby agrees to execute such additional tasks as may be assigned
to her by the Corporation from time to time, the whole in accordance with the
directives of the CEO of the Corporation.

ARTICLE 5
LOYALTY

5.1

The Executive shall devote the whole of her working time, attention, skills and
competence to the Corporation. The Executive shall act with diligence, loyalty
and honesty and shall make all necessary efforts to promote the Corporation's
legitimate interests for the duration of this Agreement.

5.2

The Executive shall not, during the term of this Agreement, on the Executive's
own behalf or on behalf of any Person, whether directly or indirectly, in any
capacity whatsoever, alone, through or in connection with any Person, carry on
or be engaged in or have any financial or other interest in or be otherwise
commercially involved in any endeavor, activity or business that is the same as,
substantially similar to or in competition with the activities of the
Corporation.

5.3

The Executive shall not be in default under this Article 5 by virtue of the
Executive holding, strictly for portfolio purposes and as a passive investor, no
more than five percent (5 percent) of the issued and outstanding shares of any
corporation which is listed on a recognized stock exchange, the business of
which corporation is the same, substantially similar to or in competition with
the activities of the Corporation.

ARTICLE 6
PLACE OF WORK

6.1

The Executive's duties shall be carried out and performed at or from the
Corporation's establishment located in the city of Stamford, Connecticut,
although the Executive may be required by the Corporation to travel elsewhere
from time to time.

ARTICLE 7
OTHER DUTIES

7.1

The Executive shall not engage in duties other than those provided for in this
Agreement, nor be employed with respect, or in relation, to any Person other
than the Corporation without the prior written consent of the Corporation.

7.2

Nothing herein shall prevent the Executive from undertaking charitable,
community or recreational activities which are not in conflict with obligations
hereunder and for which the Executive is not remunerated.

ARTICLE 8
CONFIDENTIALITY

8.1

General.

During the term of this Agreement and at any time thereafter, the Executive
agrees not to use, sell, circulate or otherwise distribute to any Person, or in
any way disclose to any Person or to the public, any Confidential Information.

8.2

Permitted Uses.

Notwithstanding the above, the Executive shall have the right to make use of
Confidential Information as required in the performance of her duties with the
Corporation provided the Executive shall at all times take necessary, useful and
desirable measures to prevent the non-authorized use or disclosure of
Confidential Information. Reproduction of Confidential Information shall be
governed by the same principles.

8.3

Works.

Any document or work assembled or composed by the Executive or the Corporation
which contains Confidential Information shall constitute and be treated as
Confidential Information. The Executive shall not publish or allow the
publication of any material containing Confidential Information without the
prior written consent of the CEO of the Corporation.

8.4

Property.

Confidential Information and the documents, works, instruments or other medium
containing Confidential Information shall remain the property of the Corporation
and be returned to the Corporation upon request or at the latest immediately
upon termination of the Executive's employment.

8.5

Governmental Request.

Nothing in this Agreement shall prevent the disclosure of Confidential
Information where such disclosure must be made in response to the formal request
of a governmental body, agency or a court of law but the Executive shall inform
the Corporation of such request immediately and prior to disclosure in order to
allow the Corporation to take the appropriate measures to contest such request
for disclosure if it so decides. The Executive shall fully cooperate with the
Corporation in its efforts to contest such request for disclosure.

ARTICLE 9
SALARY

9.1

As Vice President and Chief Financial Officer of the Corporation, the Executive
shall receive an annual base compensation of gross $230,000 ("Base Salary") to
be paid in equal monthly installments, less the applicable deductions at source.
Such compensation shall be reviewed annually by the Board of Directors of the
Corporation in accordance with its internal policies in effect from time to
time, but shall never be less than the amount stipulated herein.

ARTICLE 10
INCENTIVE PLANS

10.1

In addition to the Base Salary, the Executive shall be eligible to receive an
annual payment pursuant to all bonus and incentive compensation plans in force
and offered to key executives of the Corporation at the time, as may be modified
by the Corporation at its sole discretion from time to time, in accordance with
such plans, including but not limited to participation in Tier 1 of the Key
Management Bonus Plan. Such bonus will be prorated for any calendar year during
which the Executive was employed for less than twelve (12) months. The
Corporation agrees that during the term of this Agreement, the Executive cannot
be removed as a member of the Bonus Plan.

ARTICLE 11
STOCK OPTIONS

11.1

The parties recognize that the Corporation has granted to the Executive options
to purchase five million (5,000,000) common shares of the Corporation, which are
fully vested, (the "Stock Options") at a price equal to Cdn $0.13 per share.

11.2

The parties recognize that the Corporation has, subject to all regulatory
approvals and filings, granted to the Executive an additional two million
(2,000,000) Stock Options of the Corporation at an exercise price of Cdn $0.13
per option as follows:

Date of Vesting

February 28, 2000
February 28, 2001
February 28, 2002
February 28, 2003
February 28, 2004

Options to Acquire

400,000 common shares
400,000 common shares
400,000 common shares
400,000 common shares
400,000 common shares

Expiry Date

February 28, 2010
February 28, 2010
February 28, 2010
February 28, 2010
February 28, 2010

11.3

The Stock Options have been granted subject to the terms and conditions set
forth in the Corporation's applicable Stock Option Plan, the Share Option
Agreement of February 28, 2000, and the Share Option Agreement and amendments of
May 4, 2000, and the Share Option Repricing Agreement of May 4, 2000.

11.4

Unless otherwise terminated and expired in accordance with the terms hereof, the
Stock Options under Article 11.1 (5,000,000) shall expire and terminate at the
close of business on August 30, 2007, and the Stock Options under Article 11.2
(2,000,000) shall expire and terminate at the close of business on February 28,
2010, as to such of the optioned shares in respect of which the options granted
have not then been exercised, and thereafter the Executive shall have no further
rights in respect thereof.

11.5

The Stock Options shall be exercised by delivering to the Secretary of the
Corporation:

i.

a written notice signed by the Executive ("Option Notice") setting forth the
number of Optioned Shares to be purchased (which shall not be greater than the
number of Optioned Shares with respect to which the Executive is entitled to
exercise options in accordance with the provisions of subparagraph 11.1 and
11.2);

ii.

a certified cheque in the amount of the purchase price thereof.

11.6

Any such Option Notice must be received by the Secretary of the Corporation
prior to the close of business on the Expiry Date mentioned in section 11.1 and
11.2 above.

ARTICLE 12
BENEFITS AND VACATION

12.1

The Senior Executive shall continue to participate in all benefit programs
and/or plans granted to key executives of the Corporation, the whole in
accordance with the actual programs or plans that the Corporation may institute
from time to time or as may otherwise be paid under any applicable law. The
Executive is entitled to five (5) weeks paid vacation annually in accordance
with the Corporation's existing policy as amended from time to time as well as
banked vacation days in accordance with the Corporation's policy on banked
vacation.

12.2

The benefit programs in place at the time of this Agreement are outlined in
Articles 12.1, 12.3, 13 and 14 of this Agreement.

12.3

Insurance Related Benefits:

(a)

The Executive is entitled to participate in the Corporation's Group Life
Insurance Plan (Union) in the case of death and the Executive is also entitled
to an individual life insurance policy (N.W. Life) for CDN $450,000. All
premiums are paid by the Corporation. Upon any termination of the Executive's
employment (other than Executive's termination for Cause or the death of the
Executive) the Executive shall have the right to convert the N.W. Life policy
into an individual life insurance policy where the Executive becomes the owner
of such policy at no additional cost to the Executive, other than the payment of
premiums following the said conversion in accordance with the terms and
conditions of Article 18.1.

(b)

The Executive is entitled to participate in the Corporation's Group Disability
Insurance which pays a monthly benefit equal to the lesser of 60 percent of Base
Salary or $10,000. The Corporation also supplements the Group Disability
Insurance with individual Supplemental Long Term Disability Insurance, such
policy being currently underwritten by The Guardian Insurance Company and
providing an additional benefit of $3,250 per month. It is understood that the
amount of the benefit may change from time to time, in accordance with the Base
Salary of the Executive.

(c)

The Executive is entitled to participate in the Corporation's Health, Dental and
Vision Plans which may change from time to time in accordance with the
Corporation's policies. All premiums on health and dental are paid by the
Corporation.

ARTICLE 13
PENSION BENEFITS

13.1

The Executive is eligible to enroll in the Corporation 401(K) Plan and the Top
Executive Supplemental Retirement Plan (the "Supplemental Plan"), the whole in
accordance with the terms and conditions of any such plans.

13.2

The Corporation recognizes that the Executive has been credited with ten (10)
years and five (5) months of service under the Supplemental Plan as at
December 31, 1999.

13.3

The Executive is entitled to participate in the Corporation's 401(K) Plan, the
terms of which require the Corporation to match employee contributions equal to
4 percent of earnings up to a maximum of $6,800 per year, as at January 1, 2000.

ARTICLE 14
AUTOMOBILE AND OTHER

 

 

14.1

A company car of the Executive's choice shall continue to be provided to the
Executive for her personal and professional use and all reasonable and direct
expenses relating thereto shall be reimbursed to the Executive by the
Corporation, upon presentation of all receipts and other documentation in
support thereof; the make and model of the said car shall first be approved by
the CEO of the Corporation.

14.2

The Company will reimburse up to $5,000 per year to the Executive for annual
accounting, financial planning and tax preparation fees upon presentation of
receipts and other documentation in support thereof.

14.3

The Executive shall be entitled to $36,000 annually in rent offset expenses.

14.4

The Corporation shall pay the costs incurred by the Executive to join one
business club and one sport club.

14.5

The Corporation shall reimburse the Executive for two round trips per month
(coach class) between New York City and Montreal.

14.6

The Executive shall be reimbursed for all reasonable out-of-pocket expenses
actually and properly incurred by her in the performance of her duties
hereunder, upon presentation of expense statements, vouchers, receipts or other
such supporting documentation as the Corporation may reasonably require.

ARTICLE 15
TERMINATION OF THE AGREEMENT

15.1

The parties hereto acknowledge and expressly agree that the employment of the
Executive by the Corporation may be terminated upon any one of the following
eventualities:

(a)

at any time, for Cause, upon simple written notice from the Corporation to the
Executive, the whole without other notice or pay in lieu of notice or any
indemnity whatsoever, except for accrued but unpaid vacation pay; or

(b)

upon thirty (30) days notice in writing from the Executive to the Corporation,
specifying the intention of the Executive to resign effective at the end of such
notice period, in which event, the Corporation shall pay to the Executive her
Base Salary up to the end of the notice period and any accrued and unpaid
vacation pay and earned but unpaid bonuses, as well as the amounts and benefits
provided under Article 18, and the Corporation shall have no further obligations
hereunder in the event of such resignation of the Executive; or

(c)

at any time, without Cause, upon thirty (30) days notice in writing from the
Corporation to the Executive, in which event the Corporation shall pay to the
Executive her Base Salary to the end of the notice period, her banked vacation
pay, earned but unpaid bonuses, as well as the amounts and applicable
termination benefits provided under Article 18; or

(d)

in accordance with Article 16.1, or

(e)

upon the death or Incapacity of the Executive. In any of these circumstances,
the Executive's spouse or estate shall to the extent applicable, be entitled to
the amounts and applicable benefits under Article 18.

15.2

The Executive hereby recognizes and accepts that the Corporation shall not, in
any case, be responsible for any additional amount, indemnity in lieu of notice,
severance pay or other damages arising from the termination of this Agreement,
above and beyond those specifically provided for in this Agreement;

15.3

If the Board of Directors is satisfied that doing so will not prejudice the
Corporation or materially increase the cost to the Corporation, the Corporation
shall accede to a request by the Executive to vary the nature, manner and timing
of payments to be made to the Executive pursuant to this Agreement in order to
optimize the Executive's financial planning.

15.4

It shall be a condition precedent of any payment to the Executive or for the
Executive's benefit on termination, other than Base Salary and vacation pay,
that the Executive sign and deliver to the Corporation a full and satisfactory
release of all claims against the Corporation other than for the payments and
benefits provided for in this Agreement.

ARTICLE 16
CHANGE IN CONTROL

16.1

In the event that a Change in Control occurs after the date hereof and during
the term of the Executive's employment with the Corporation, and the Executive's
employment is thereafter terminated either:

(a)

within the period of twelve (12) months following the Change of Control, by the
Corporation without Cause, other than for death, disability or voluntary
retirement at normal retirement age; or

(b)

within the period of two hundred and sixty-five (265) days that follow the first
one hundred (100) days following the Change in Control, by the Executive for any
reason whatsoever,

 

the Executive shall be entitled to a lump sum payment of gross $230,000, less
applicable deductions, payable within five (5) business days following the
Executive's last day of work.

ARTICLE 17
TRANSACTION BONUS

17.1

The parties recognize that it may be in the Corporation's best interest for the
parties to actively seek a Strategic Corporate Transaction for the Corporation.

17.2

In the event that during the term of the Executive's employment with the
Corporation, a Strategic Corporate Transaction is completed, the Executive shall
be entitled to receive as a bonus, in one lump sum payment payable to the
Executive within five (5) business days of the completion of the said
transaction, the applicable one of the following gross amounts:

(a)

$250,000, less applicable deductions, in the event that the aggregate of the
cash consideration and the cash equivalent value of the non-cash consideration
payable on completion of the Strategic Corporate Transaction is less than
Canadian $0.19 per outstanding common share of the Corporation; or

(b)

$500,000, less applicable deductions, in the event that the aggregate of the
cash consideration and the cash equivalent value of the non-cash consideration
payable on completion of the Strategic Corporate Transaction is equal to or
greater than Canadian $0.19 per outstanding common share of the Corporation.

17.3

For the purpose of determining the cash equivalent value of any non-cash
consideration payable in connection with a Strategic Corporate Transaction if
such non-cash consideration consists of shares of a publicly traded company, the
weighted average trading price at which such shares have traded, on the
principal stock exchange on which they are listed or posted for trading, on the
ten trading days preceding the date on which such transaction was completed
shall be used.

ARTICLE 18
OTHER TERMINATION BENEFITS

18.1

In addition to any amounts that may be owed to the Executive pursuant to
Articles 15.1 or 16.1, the Corporation shall remit to the Executive upon the
termination of the Executive's employment for any reason other than Cause, the
amount of $230,000, less applicable deductions, which amount has been fully
accrued in the Corporation's 1998 audited financial statements, plus the
following benefits:

(i)

a lump sum payment equal to the present value, as of the date of termination, of
the Corporation's cost of providing coverage under the non-group portion of the
Executive's life insurance policies owned by the Corporation on the Executive's
life in force immediately prior to the date of termination for a period of three
(3) years from the date of termination;

(ii)

entitlement, for a period of three (3) years following the date of termination,
to the Corporation's medical, dental, drug and other health benefits and
thereafter, at the election of the Executive and upon payment of all premiums
associated therewith from time to time by the Executive, to continue to be
entitled to the benefits of the Corporation's medical, dental, drug and other
health programs;

(iii)

not later than the thirtieth day following the date of termination, the
Corporation shall transfer to the Executive if the Executive so elects the
automobile, if any, placed at her disposal, at the date of termination, at no
cost to the Executive, other than such income tax as she may be required to pay;

(iv)

if the Executive incurs legal or other fees and expenses in an effort to
establish entitlement to compensation and benefits under this Agreement or
otherwise enforce the terms of this Agreement and is successful in her efforts,
the Company shall reimburse to the Executive such fees and expenses incurred
subject to and within ten (10) days of the receipt by the Corporation of proper
documentation therefor;

(v)

for the purpose of the Corporation's Head Office Top Executives Supplementary
Pension Plan only, a credit of two (2) years past service in addition to the
period of past service to which the Executive is otherwise entitled as per
Article 13.2, and the Executive shall be fully vested in any pension accrued
hereunder;

(vi)

subject to her obligations pursuant to Article 8 above, the Executive shall, at
no cost, retain possession of and acquire title to the personal computer in her
possession at the date of her cessation of employment;

(vii)

if the Executive's employment ceases, and the Executive relocates to Canada
within six (6) months from such cessation, the Corporation shall pay for all
reasonable moving costs related to such relocation;

18.2

The benefits set out in clause 18.1 shall be provided at the time and in the
manner therein set out in clause 18.1 and the payments of money shall be made in
one lump sum, less applicable deductions, no later than five (5) days following
the date of termination of the Executive's employment.

ARTICLE 19
PROPERTY OF THE CORPORATION

19.1

The Executive hereby agrees to return to the Corporation, immediately upon
termination of this Agreement and without making copies or disclosing
information relating thereto, any and all documents, reproductions thereof,
equipment, including but not limited to, printers and telecopiers if any, and
other property belonging to the Corporation.

ARTICLE 20
COOPERATION WITH EMPLOYER
AFTER TERMINATION OF THE AGREEMENT

20.1

The Executive hereby undertakes, after the termination of this Agreement (except
in the case of termination for Cause) to cooperate with the Corporation in all
matters related to the conclusion of ongoing work or projects and to facilitate
an orderly transfer of responsibilities or functions and duties hereunder to
such other employees as may be designated by the Corporation.

20.2

Notwithstanding any provision to the contrary in any unanimous shareholders'
agreement between the parties, the Executive hereby undertakes to resign as
Director and Officer of the Corporation and subsidiaries or affiliated
companies, upon termination of her employment for any reason whatsoever.

ARTICLE 21
CONFIDENTIALITY OF AGREEMENT

21.1

The Executive hereby agrees to keep strictly confidential all information
concerning the present Agreement except as required by regulatory disclosure
requirements.

ARTICLE 22
GENERAL

22.1

Further Assurances.

The parties hereby agree in their own name and on behalf of, as the case may be,
their respective heirs, legatees, successors, trustees and beneficiaries,
testamentary executors and permitted assigns, to sign all documents and to take
all necessary or desirable measures to fulfill the terms and intent of this
Agreement.

22.2

Notice.

Any offer, notice, direction or other instrument required or permitted to be
given hereunder shall be in writing and given by registered mail, by delivery or
sent by telecopier or similar telecommunications device and addressed to the
other party at the address of such party first mentioned in this Agreement.

Any notice, direction or other instrument given as aforesaid shall be deemed to
have been effectively given and received, if by registered mail then on the date
of delivery thereof, if sent by telecopier or similar telecommunications device
on the next business day following such transmission or, if delivered, to have
been given and received on the date of such a delivery. Any address for service
may be changed by written notice given as aforesaid.

22.3

Assignment.

Except as otherwise expressly provided for herein, this Agreement, and the
rights granted and the obligations incurred hereunder, are not assignable,
whether in whole or in part, by the Executive without the prior written consent
of the Corporation.

IN WITNESS WHEREOF this Agreement has been executed by the parties hereto on the
date and at the place first hereinabove mentioned.

 

 

REPAP ENTERPRISES INC.

"Michelle A. Cormier"
Michelle A. Cormier

Date: June 28, 2000

 

Per: "Harold (Hap) Stephen"
Harold (Hap) Stephen
Chairman of the Board of Directors
Date: June 28, 2000

 

 

Per: "Stephen C. Larson"
Stephen C. Larson
President & CEO
Date: June 28, 2000

SCHEDULE A

 

"Agreement" shall mean this Employment Agreement and all instruments
supplemental hereto or in amendment or confirmation hereof; "herein", "hereof",
"hereto", "hereunder" and similar expressions mean and refer to this Agreement
and not to any particular Article, Section, Subsection or other subdivision;
"Article", "Section", "Subsection" or other subdivision of this Agreement means
and refers to the specified Article, Section, Subsection or other subdivision of
this Agreement.

"Cause" shall mean any of the following circumstances: (1) the Executive shall
have been convicted of any act constituting a felony; (2) the Executive shall
have habitually abused any substance (such as alcohol or narcotics, other than
as prescribed by a physician); or (3) the Executive shall have engaged in acts
of fraud, material dishonesty or gross negligence in connection with the
business of the Company, or (4) a willful failure or refusal by the Executive to
perform her customary duties or services or any other conduct that negatively
affects the reputation of the Corporation.

"Change in Control" shall mean the occurrence of any of the following events
after the date hereof:

(a)

the purchase of at least twenty-five percent (25 percent) of the outstanding
common shares of the Corporation or of Repap New Brunswick Inc. by a buyer who
is a forest products industry participant; or

(b)

the purchase of at least thirty-three percent (33 percent) of the outstanding
common shares of the Corporation or of Repap New Brunswick Inc. by a buyer other
than a buyer who is described in sub-paragraph (a) of this definition; or

(c)

the sale of substantially all of the assets of Repap New Brunswick Inc.; or

(d)

the consummation of a merger, consolidation, statutory share exchange or similar
form of corporate transaction involving the Corporation or Repap New Brunswick
Inc. (a "Business Combination"), unless immediately following such Business
Combination: more than 66 percent of the total voting power of (x) the
Corporation resulting from such Business Combination (the "Surviving
Corporation"), or (y) if applicable, the ultimate parent corporation that
directly or indirectly has beneficial ownership of 100 percent of the voting
securities eligible to elect directors of the Surviving Corporation (the "Parent
Corporation"), is represented by the common shares of the Corporation or of
Repap New Brunswick, Inc., as applicable, that were outstanding immediately
prior to such Business Combination (or, if applicable, is represented by shares
into which such common shares were converted pursuant to such Business
Combination).

"Confidential Information" shall mean all information, howsoever received by the
Executive from, through or relating to the Corporation, and in whatever form
(whether oral, written, machine readable or otherwise), which pertains to the
Corporation; provided, however, that the phrase "Confidential Information" shall
not include information which:

(a)

is in the public domain, without any fault or responsibility on the Executive's
part;

(b)

is properly within the legitimate possession of the Executive prior to its
disclosure hereunder and without any obligation of confidence attaching thereto;

(c)

after disclosure, is lawfully received by the Executive from another Person who
is lawfully in possession of such Confidential Information and such other Person
was not restricted from disclosing the said information to the Executive;

(d)

is approved by the Corporation for disclosure prior to its actual disclosure.

"Governmental Body" shall mean:

(a)

any domestic or foreign national, federal, provincial, state, municipal or other
government body;

(b)

any subdivision, ministry, department, secretariat, bureau, agency, commission,
board, instrumentality or authority of any of the foregoing governments or
bodies;

(c)

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

(d)

any domestic or foreign judicial, quasi-judicial, arbitration or administrative
court, grand jury, commission, board or panel.

"Incapacity" shall mean any medical condition whatsoever, which leads to the
Executive's absence from job function for a continuous period of six (6) months,
without the Executive being able to resume functions on a full time basis at the
expiration of such period and unsuccessful attempts to return to work for
periods under fifteen (15) days shall not interrupt the calculation of the said
six (6) month period.

"Person" shall mean any individual or other entity possessed of juridical
personality, including, without limitation, a corporation, company, cooperative,
partnership, trust, unincorporated association or Governmental Body; and
pronouns when they refer to a Person shall have a similarly extended meaning.

"Strategic Corporate Transaction"

shall mean a major transaction that provides value to the holders of common
shares of the Corporation and includes a takeover bid with respect to all of the
common shares of the Corporation, amalgamation, merger, sale of substantially
all of the Corporation's or of Repap New Brunswick Inc.'s assets, plan of
arrangement, reorganization, recapitalization, other business combination or
similar transaction involving the Corporation or Repap New Brunswick Inc. or any
other manner which would be in the best interests of the Corporation's
shareholders and which may or may not adversely affect the Executive's
employment with the Corporation subsequent to such transaction. Provided that,
for the purposes hereof, a Strategic Corporate Transaction shall not include any
action taken or notice given by or against the Corporation or Repap New
Brunswick Inc. with a view to the winding-up, liquidation, reorganization,
relief or protection from creditors of the Corporation or of Repap New Brunswick
Inc. including under the Bankruptcy and Insolvency Act (Canada), the Companies'
Creditors Arrangement Act (Canada) or similar legislation in the United States
or any other jurisdiction; nor shall a Strategic Corporate Transaction include
an amalgamation, merger, plan of arrangement, reorganization, recapitalization
or similar form of corporate transaction involving the Corporation or Repap New
Brunswick Inc. unless immediately following such transaction, less than 50
percent of the total voting power of (x) the Corporation resulting from such
transaction (the "Surviving Corporation"), or (y) if applicable, the ultimate
parent corporation that directly or indirectly has beneficial ownership of 100
percent of the voting securities eligible to elect directors of the Surviving
Corporation (the "Parent Corporation"), is represented by the common shares of
the Corporation or of Repap New Brunswick, Inc., as applicable, that were
outstanding immediately prior to such transaction (or, if applicable, is
represented by shares into which such common shares were converted pursuant to
such transaction).